Albion Venture VCT AGM (2017)

[timbo003]

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This year’s Albion Venture VCT AGM was held on Monday (August 14th 2017) starting at 11.00. The venue was the same as the previous seven AGMs: The City of London Club, 19 Old Broad Street, London, EC2N 1DS.

My notes from last year’s Albion VCT AGM can be found here:
http://sharesoc.ning.com/forum/topics/t ... nt%3A41308

The Annual Report for year ending March 31st 2017 report can be found here:
https://tinyurl.com/ybonm38k

The IMS (April 1st to June 30th 2017) was also released on Monday, this reported NAV at 75.7p/share (on June 30th), which was an increase of 3.4p/share from June the previous year.
https://www.investegate.co.uk/albion-ve ... t-plc---...

For this year’s AGM there were around 30 ordinary shareholders in attendance. The meeting began with a portfolio review followed by Q&As with the Manager; we then had the formal AGM followed by a presentation by one of the investee companies (G Network) before breaking for lunch.


Manager’s presentation:

For year ending March 2017, the total returns (8.7p/share) exceeded the dividend payment (5p/share) by 3.7p/share, with revenue contributing 1.9p/share and capital 6.8p/share.

The capital increase was mostly down to an increase in value of the Healthcare portfolio (£6.7m) where income is running ahead of budget for the three new care homes, even though none of the three care homes are yet full. Albion has recently acquired another healthcare related asset backed business, which is a Woman’s Medical Clinic located in Central London.

There was a small uplift in value for the renewable project portfolio, although further capital increases are now expected to be limited. The renewable assets are highly income generative and they are currently regarded as a long-term hold.

Schools had an uplift of £0.6M during the year with Radnor House now almost at full capacity and Seven Oaks now at 60% capacity. Post year end (June 2017), Albion acquired a third school (Mount House School, located in Barnet) as a going concern: http://st-marthas.co.uk/st-marthas-scho ... se-school/

The value of the Hotels decreased slightly (£0.9m), Stanstead had a good year, but going forward, it is anticipated that trade will be adversely effected by a new hotel opening nearby. Performance at Heathrow was satisfactory, whilst Harrogate is likely to be sold in the coming year.

Albion has recently ventured into two new types of asset-backed investments: Wedding venues and a fibre optic infrastructure company (G network).

There is currently a healthy pipeline in new investment opportunities and one of the proposed new investments is likely to be a co-investment with another VCT manager.


Manager Q&As

Q: Some of the other Albion VCTs have been parking spare cash in Olim prior to deployment in qualifying investments; do you intend to do the same for this VCT?
A: No, we will keep things simple.

Q: There has been quite a bit of bad press regarding care homes recently, has that in anyway affected our care homes?
A: No, the bad press mainly relates to LA run care homes not private sector care homes.

Q: Looking at the current and forthcoming VCT offers on Club-Finance, some VCTs are raising huge amounts of cash this year and/or restricting investments to current shareholders. Do you intend to do this?
A: We intend to raise £6m for 5 Albion VCTs and £8m for the 6th VCT. We do not intend to restrict our offers to existing shareholders.

Q: Why do you suppose so many of the VCTs are raising early this year?
A: We cannot speak for the others, but we are about ready to launch our offer.

Q: The recently published Patient Capital Review (PCR) consultation document seems to suggest the government is trying to focus investment on earlier stage riskier investments and away from safe asset backed investments. If this was reflected in future government legislation, could it adversely affect asset backed VCTs and this VCT (with its large pre-1997 pool of money) in particular?
A: It is difficult to say what the outcome of the PCR will be. There have been two different groups inputting into the consultation document, the Treasury and the advisory panel (who are not venture capitalists). If there were to be a change in policy/rules that affect this VCT’s investment policy, we would ask shareholders for authorization to change the investments policy to comply with the rule changes.

Q: Can you tell us more about the new Woman’s Health Clinic, is it a freehold property?
A: It’s a leasehold property located in Harley Street with a 15-year lease and a lease renewal option, it will specialize in IVF and IVF follow up/after care.


Formal AGM

Before starting on the resolutions, the Chairman, David Watkins announced that he would be retiring in the forthcoming year along with one other director and for that reason the BOD were requesting shareholders to authorize an increase in aggregate remuneration of the BOD (resolution 11). This would allow for a temporary increase in Director numbers, which should help facilitate a smooth handover.

We then proceeded to run through the resolutions, with just one question which concerned the requirement for share buybacks. The chairman responded that share buybacks help facilitate liquidity; he added that this need has diminished in recent years, as the market demand for secondhand shares was steadily increasing, with more shares now bought by secondary investors than by the VCT during the previous year. All resolutions were passed with comfortable majorities, details of the proxy voting can be found here:
https://www.albion.capital/sites/defaul ... esult%2014%...


G.Network

David Sangster (company co-founder) gave the presentation on behalf of G.Network.

Links to the press release announcing Albion’s investment and the G.Network web site are shown below:
https://www.albion.capital/news/albion- ... m-gnetwork
http://g.network/

G.Network is an ultra-fast fibre Broadband ISP focused on SMEs located in central London, they dig up streets and install fire optic cable in every building on the street. Only 10% of businesses in London have fibre going directly into their premises and so most have to rely on (asymmetric) ASDL through copper wire, which may sometimes be sufficient for download but inadequate for fast uploads. London currently lags behind most other major cities and ranks 26th out of 33 in Europe for speed and the Westminster parliamentary constituency ranks number 630 out of 650 for broadband speed. The upfront costs for installing fibre optic cable are prohibitive for many businesses and most fibre optic cable runs up and down the street (not into the buildings).

G.Network have completed 42 streets so far and they are currently digging up 10 further streets which include Harley Street and Wimpole Street, they currently have 150 customers signed up and aim to gain 15 to 20 customers/week and 8 new customers for every 100 metres of street.

There are about 500-600 broadband providers in London but most are re-sellers for the majors such as BT and Virgin. BT currently take 90 working days to install to a new premises, G.Network will typically take 3 days.


Q&As

Q: How much did Albion invest and when?
A: Albion invested £4.65m between their VCTs during May this year.

Q: When Open Reach is finally spun out of BT, will they present a greater threat?
A: Our know-how probably gives us a 6 – 12 month advantage over any new entrants wishing to reproduce our model (including Open Reach). BT/Open Reach are currently concentrating their efforts elsewhere, for example fixing rural “not spots”. They are also investing heavily in G-fast (fibre to the cabinet) but this is still ASDL technology and introducing a fast symmetrical fibre optic only service would cannibalize their G-fast business. BT currently has around half the market, but they are expensively priced.

Q: What about Virgin?
A: Virgin concentrates on the Suburbs and domestic customers.

Q: What about satellite?
A: Satellite does not compete, although Wireless providers do have a small market share.

Q: How do you avoid other services when digging?
A: We only work with quality contractors. We maintain a close relationship with Westminster council and go with contractors recommended by them. Avoiding water mains can be a bit tricky and we use scanners to help with this.

Q: Did you look at other potential funders as well as Albion?
A: Yes, we spoke to five potential funders and received one firm offer from Albion who were our preferred choice anyway.
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[tjh290633]

Moderator Message:
Are these your own notes, or have you copied them from elsewhere? Your link to last year's report by you is not accessible.

Please be mindful of our guidance on copyright.

TJH

[dspp]

Thank you. Most thorough. Thought provoking. dspp

[UncleEbenezer]

Moderator Message:
Are these your own notes, or have you copied them from elsewhere? Your link to last year's report by you is not accessible.

Please be mindful of our guidance on copyright.

TJH

For heavens' sake, timbo has a long track record back on TMF of posting superb meeting notes. And indeed, original analysis. Not to mention educating acolytes like myself and other TMF veterans who have learned at the feet of the master.

He's more likely to be copied than to copy someone else's material. If his notes appear elsewhere, that's because he's active elsewhere too.

[tjh290633]

I'm only asking. I'm not aware of what he used to post on TMF, but at first glance it looks like it could be plagiarism.

TJH

[james188]

I think that the caution administered to Tim was overzealous. He clearly refers to a note he provided of the previous year's AGM and in any event you do not need to trawl back to TMF posts, because there are a number of relatively recent AGM posts by Tim on this board which are in similar style. Moderators have a very important but largely thankless task, so time to move on. Keep posting, Tim.

Andrew

[mswjr]

Thanks very much for the write up.

[Karellan]

Excellent write up Tim , as per usual. Personally I am pretty happy with the way Albion is progressing.

[Gostevie]

Excellent write-up as always Tim. Nothing to add other than that the lunch and wine were very good, as they always are at Albion events.

I understand that Albion will be doing another shareholder seminar in the autumn but that it may move from the Royal Automobile Club to a larger venue to accommodate demand.

[BusyBumbleBee]

Moderator Message:
Are these your own notes, or have you copied them from elsewhere? Your link to last year's report by you is not accessible.

Please be mindful of our guidance on copyright.
TJH

Hmmm... Tim is one of the most respected figures in the VCT field - and we all wait for his full and insightful reports on the many AGMs he attends. Many of us know him personally and the very thought of him copying from someone else without attributing it, is unthinkable. Anyway we all know it is his post cos his choice of colours is somewhat weird

Thanks for the excellent write up Tim - kind regards - BBB

[rhowitt]

I wish to echo previous contributors support for Timbo. As an investor in Albion VCTs for many years and due to living in the North of England I do not attend the AGMs, I await Timbo's annual report on the Albion AGM. He has a deep knowledge of the VCT and to suggest that he copied any of his report when he is the best person to write such a report from an investors perspective is ludicrous. I have just been re-reading his report on the 2015 AGM which was a major reason why I made a further in investment in Albion VCT and found it to be insightful and probably the most useful post to me of any that I have read in the last few years. Keep up the good work Timbo and Lemon need to get themselves better informed.

[tjh290633]

I reiterate that I asked the question because I had not come across such a report from Timbo in the past. I did not read boards on TMF which dealt with VCTs, but I do here because it is a forum which I moderate. Timbo himself did not reply to the question, perhaps because he does not come here very often. Various posters here have supported his endeavours, but the fact remains that the link to his previous report, which he posted, was inaccessible.

Copyright is a sensitive subject, to which all the moderators pay particular attention.

TJH

[scotia]

TJH - many thanks for acting as a moderator
The VCT board contributors make up a fairly compact set with a past history on the TMF board. We occasionally get some new blood.
I think you will find that this board needs little or no moderation, but I do appreciate that you may have a need to occasionally ask questions - which I'm sure we will quickly respond to.