Albion Development VCT PLC

Annual Report and Financial Statements

for the year ended 31 December 2022

Albion Development VCT PLC

Annual Report and Financial Statements

for the year ended 31 December 2022

Shareholder information Financial adviser information

For help relating to dividend payments, shareholdings

and share certificates please contact Computershare

Investor Services PLC:

Tel: 0370 873 5858 (UK national rate call, lines are

open 8.30am – 5.30pm; Mon – Fri; calls are recorded)

Website: www.investorcentre.co.uk

Shareholders can access holdings and valuation

information regarding any of their shares held with

Computershare by registering on Computershare’s

website.

Shareholders can also contact the Chairman directly

on: AADVchair@albion.capital

For enquiries relating to the performance of the

Company and information for financial advisers,

please contact the Business Development team at

Albion Capital Group LLP:

Email: info@albion.capital

Tel: 020 7601 1850 (lines are open 9.00am – 5.30pm;

Mon – Fri; calls are recorded)

Website: www.albion.capital

Please note that these contacts are unable to provide financial or taxation advice.

COMPANY INFORMATION

Company name Country of incorporation Legal form

Albion Development VCT PLC

(the “Company”)

United Kingdom Public Limited Company

Directors Company number Auditor

B Larkin LLB (Chairman)

L M Goleby MA (Cantab)

Lord O’Shaughnessy MA (Oxon)

P H Reeve MA (Oxon) FCA

03654040 BDO LLP

55 Baker Street

London, W1U 7EU

Manager, company secretary,

AIFM and registered office

Registrar Corporate broker

Albion Capital Group LLP

1 Benjamin Street

London, EC1M 5QL

Computershare Investor Services

PLC

The Pavilions

Bridgewater Road

Bristol, BS99 6ZZ

Panmure Gordon (UK) Limited

40 Gracechurch Street

London, EC3V 0BT

Taxation adviser Legal adviser Depositary

Philip Hare & Associates LLP

Hamilton House

1 Temple Avenue

London, EC4Y 0HA

Bird & Bird LLP

12 New Fetter Lane

London, EC4A 1JP

Ocorian Depositary (UK) Limited

Level 5, 20 Fenchurch Street

London, EC3M 3BY

Albion Development VCT PLC is a member of The Association of Investment Companies (www.theaic.co.uk).

Cover photo © istock / shulz

All inside images © istock / AodLeo, StudioM1, NiseriN, Just_Super, shulz and © Unsplash / CHUTTERSNAP, Teemu Paananen, Ricardo Gomez Angel.

Strategic

07 Investment policy and Financial calendar

08 Financial summary

10 Chairman’s Statement

14 Strategic Report

27 Portfolio of investments

30 Portfolio companies

35 Environmental, Social and Governance (“ESG”) report

Governance

40 The Board of Directors

41 The Manager

44 Directors’ report

51 Statement of Directors’ responsibilities

52 Statement of corporate governance

59 Directors’ remuneration report

63 Independent Auditor’s report

Company information and Financials

71 Income statement

72 Balance sheet

73 Statement of changes in equity

74 Statement of cash flows

75 Notes to the Financial Statements

90 Notice of Annual General Meeting

Contents

Strategic

INVESTMENT POLICY

Investment policy

The Company will invest in a broad portfolio of higher

growth businesses with a stronger focus on technology

companies across a variety of sectors of the UK

economy. Allocation of assets will be determined by

the investment opportunities which become available

but efforts will be made to ensure that the portfolio is

diversified in terms of sector and stage of maturity of

company.

Funds held pending investment or for liquidity purposes

will be held as cash on deposit or up to 8% of its assets,

at the time of investment, in liquid open-ended equity

funds providing income and capital equity exposure

(where it is considered economic to do so).

Risk diversification and maximum exposures

Risk is spread by investing in a number of different

businesses within venture capital trust qualifying

industry sectors using a mixture of securities. The

maximum amount which the Company will invest in

a single portfolio company is 15% of the Company’s

assets at cost thus ensuring a spread of investment risk.

The value of an individual investment may increase

over time as a result of trading progress and it is

possible that it may grow in value to a point where it

represents a significantly higher proportion of total

assets prior to a realisation opportunity being available.

The Company’s maximum exposure in relation to

gearing is restricted to 10% of the adjusted share

capital and reserves.

FINANCIAL CALENDAR

5 May 2023

Record date for first dividend

Noon on 30 May 2023

Annual General Meeting

31 May 2023

Payment of first dividend

September 2023

Announcement of Half-yearly results for the six months ending 30 June 2023

7Albion Development VCT PLC

STRATEGIC

Albion Development VCT PLC8

FINANCIAL SUMMARY

202.22p (1.71)% 4.71p 88.65p

Total shareholder

value as at 31

December 2022

†

(2021: 203.84p)

††

Shareholder return

for the year ended

31 December 2022

††

(2021: gain of

20.54%)

Tax-free dividend

per share for the

year ended

31 December 2022

(2021: 4.37p)

Net asset value

per share as at

31 December 2022

(2021: 94.98p)

Methodology: The total shareholder value including original amount invested from 1 January 2013 (rebased to 100) assuming that dividends

were reinvested at the net asset value of the Company at the time that the shares were quoted ex-dividend. Transaction costs are not taken

into account.

†Total shareholder value at 31 December 2022 is calculated using net asset value per share at 31 December 2022 plus dividends paid per

Ordinary share since launch to 31 December 2022.

††These are considered Alternative Performance Measures, see note 3 on page 17 of the Strategic report for further explanation.

Total shareholder value return relative to FTSE All-Share index total return

(in both cases with dividends reinvested)

Dec 2012 Dec 2013 Dec 2014 Dec 2015 Dec 2016 Dec 2017 Dec 2018 Dec 2019 Dec 2020 Dec 2021 Dec 2022

Return (pence per share)

240

220

200

180

160

140

120

100

Ordinary Shares’ total shareholder value

FTSE All-Share Index total return

STRATEGIC

9Albion Development VCT PLC

The diagram above shows the one year, three year, five year and ten year total return to shareholders. This return comprises of dividends paid

and the change in net asset value over the relevant periods.

Financial summary

Albion Development VCT PLC – Performance data

1 year return 3 year return

(average 7.4% p.a.)

5 year return

(average 9.9% p.a.)

10 year return

(average 8.2% p.a.)

22.2%

49.7%

81.7%

-1.7%

Movements in net asset value

31 December 2022

pence per share

31 December 2021

pence per share

Opening net asset value 94.98 82.42

Capital (loss)/return (2.36) 16.74

Revenue return 0.49 0.46

Total (loss)/return (1.87) 17.20

Dividends paid (4.71) (4.37)

Impact from share capital movements 0.25 (0.27)

Net asset value 88.65 94.98

Total shareholder value

Ordinary shares

(pence per share)

Total dividends paid to 31 December 2022 113.57

Net asset value as at 31 December 2022 88.65

Total shareholder value to 31 December 2022 202.22

The financial summary above is for the Company, Albion Development VCT PLC Ordinary shares only. Details

of the financial performance of the C shares and D shares, which have been merged into the Ordinary shares,

can be found at www.albion.capital/funds/AADV under the ‘Financial summary for previous funds’ section.

A more detailed breakdown of the dividends paid per year can be found at www.albion.capital/funds/AADV

under the ‘Dividend History’ section.

In addition to the dividends paid above, the Board has declared a first dividend for the year ending

31 December 2023 of 2.22 pence per share payable on 31 May 2023 to shareholders on the register on

5 May 2023.

Results and dividends

As at 31 December 2022 the net asset value was 88.65

pence per share compared to 94.98 pence per share as

at 31 December 2021. The total loss before taxation

was £2.3 million compared to a gain of £17.5 million

for the previous year.

In line with our variable dividend policy targeting 5% of

NAV per annum, the Company paid dividends totalling

4.71 pence per share during the year to 31 December

2022 (2021: 4.37 pence per share). The Company

will pay a first dividend for the financial year to 31

December 2023 of 2.22 pence per share on 31 May

2023 to shareholders on the register on 5 May 2023,

being 2.5% of this 31 December 2022 NAV.

Investment performance and progress

The results for the year showed net losses on

investments of £0.6 million, compared with net gains

of £20.6 million for the previous year. The net loss in

During the year, the Company’s portfolio has faced a difficult

macroeconomic and geopolitical backdrop, including the war in Ukraine,

high inflation, rising interest rates and political instability. This has had an

adverse impact for the Company resulting in a loss, of 1.87 pence per share,

for the year ended 31 December 2022, representing a 2.0% loss on opening

net asset value.

Despite this loss and in the context of the considerable uncertainty the

Company has faced, the Board continues to be encouraged by the progress

being made by many of the portfolio companies, demonstrating their

resilience despite challenging market conditions. The Board recognises the

importance of evaluating the returns of the Company over the longer-term,

because a venture capital portfolio can, by its nature, experience periods of

short term volatility.

CHAIRMAN’S

STATEMENT

Ben Larkin

STRATEGIC

Albion Development VCT PLC10

the current year was driven by net unrealised losses

across the portfolio. The largest write downs were in

Black Swan Data which decreased by £1.6 million,

Oviva by £1.1 million and uMotif by £0.8 million, as

a result of difficult trading conditions. These losses

have been offset by gains in the investment portfolio,

including a realised gain on MyMeds&Me of £1.7

million and unrealised gains on Convertr of £0.9

million and Solidatus of £0.7 million. Quantexa, the

largest company within our portfolio (13% of net

asset value), continues to show strong revenue growth

which has counterbalanced the well-publicised reduced

technology sector valuations and therefore has not

seen a valuation movement during the year. After the

year end Quantexa completed an externally led Series

E fundraising, and further details can be found in the

Updated NAV announcement section that follows.

There have been several realisations during the year

totalling £7.7 million (2021: £6.3 million), leading to a

net realised gain of £2.4 million. The sales delivering

the majority of the returns were MyMeds&Me, which

delivered a 3.4 times return on cost, Phrasee, which

delivered a 3.5 times return on cost, and Credit Kudos,

which delivered a 5.2 times return on cost. Against this,

there were realised losses including the write-off of

Sandcroft Avenue (T/A Hussle) with a realised loss of

£1.3 million, and Concirrus with a realised loss of £0.6

million. Further details on the above disposals, and

other realisations, can be found in the realisations table

on page 29.

The three largest investments in the Company’s

portfolio, being Quantexa, Egress Software

Technologies and Proveca, are valued at £31.6 million

and represent 27.6% of the Company’s net asset value.

The Company has been an active investor during

the year investing a total of £15.6 million. Of this,

£8.7 million was invested into fifteen new portfolio

companies, all of which are expected to require further

investment as the companies prove themselves and

grow. The five largest new investments can be found in

the table below.

A further £6.9 million was invested into existing

portfolio companies, the largest being: £1.1 million into

Healios; £1.1 million into Black Swan Data; and £0.8

million into Runa Network (previously WeGift).

£1.4 million into

Peppy Health, a

platform providing

expert support

for underserved

areas of health

and wellness (e.g.,

menopause) via

content, video,

chat support as an

employment benefit

for employees

£1.4 million into

Toqio FinTech

Holdings, a provider

of embedded

FinTech solutions

£0.9 million into

PeakData, a

software platform

providing insights

and analytics to

pharmaceutical

companies

£0.7 million into

GX Molecular (T/A

CS Genetics), a

developer of single-

cell sequencing

solutions

£0.6 million

into OutThink, a

software platform

to measure and

manage human risk

for enterprises

A full list of the Company’s investments and disposals, including their movements in value for the year, can be

found in the Portfolio of investments section on pages 27 to 29.

11Albion Development VCT PLC

Chairman’s statement

Updated NAV announcement

On 2 March 2023, a post year end NAV update

was announced with a pleasing 5.25 pence per

share uplift, representing a 5.92% increase on the

31 December 2022 NAV. This uplift has resulted from

a portfolio company, Quantexa, undergoing an external

fundraising process after the year end. This transaction

has since completed and was announced by Quantexa

on 4 April 2023.

Risks and uncertainties

The Company faces a number of significant risks,

including rising interest rates, high levels of inflation,

the ongoing impact of Russia’s invasion of Ukraine, and

an expected period of economic stagnation, or even

recession, in the UK.

Our investment portfolio, while concentrated mainly

in the technology and healthcare sectors, remains

diversified in terms of both sub-sector and stage of

maturity.

A detailed analysis of the other risks and uncertainties

facing the business is shown in the Strategic report on

pages 23 to 25.

Share buy-backs

It remains the Board’s primary objective to maintain

sufficient resources for investment in existing and new

portfolio companies and for the continued payment

of dividends to shareholders. The Board’s policy is to

buy back shares in the market, subject to the overall

constraint that such purchases are in the Company’s

interest.

It is the Board’s intention for such buy-backs to be in

the region of a 5% discount to net asset value, so far as

market conditions and liquidity permit. Details of shares

bought back during the year can be found in note 15.

Albion VCTs Prospectus Top Up Offers

Your Board, in conjunction with the boards of the

other five VCTs managed by Albion Capital Group LLP,

launched a prospectus top up offer of new Ordinary

shares on 6 January 2022. The Offer (including

the over-allotment facility) of £21 million was fully

subscribed and closed to further applications on 23

March 2022.

A second prospectus Top Up Offer was launched on

10 October 2022. The Board announced on 4 January

Chairman’s statement

“ It remains the Board’s

primary objective to

maintain sufficient

resources for investment in

existing and new portfolio

companies and for the

continued payment of

dividends to shareholders. ”

2023 that, following strong demand, it would opt to

exercise its over-allotment facility, bringing the total

amount to be raised to £13 million. On 9 March 2023

the offers were fully subscribed and closed to further

applications.

The proceeds are being used to provide support to

our existing portfolio companies and to enable us to

take advantage of new investment opportunities. The

first allotment of the shares under the Offer was on

2 December 2022. Details of share allotments made

during and after the financial year end can be found in

notes 15 and 19 respectively.

Annual General Meeting (“AGM”)

The AGM will be held virtually at noon on 30 May

2023 via the Lumi platform. Information on how to

participate in the live webcast can be found on the

Manager’s website www.albion.capital/vct-hub/agms-

events.

The Board welcome questions from shareholders at

the AGM and shareholders will be able to ask questions

using the Lumi platform during the AGM. Alternatively,

shareholders can email their questions to AADVchair@

albion.capital prior to the Meeting.

Shareholders’ views are important, and the Board

encourages shareholders to vote on the resolutions.

Further details on the format and business to be

conducted at the AGM can be found in the Directors’

report on pages 49 and 50 and in the Notice of the

Meeting on pages 90 to 94.

Outlook and prospects

There remains many uncertainties facing the Company,

including higher levels of inflation and the war in

Ukraine, which makes it difficult to be entirely confident

about what lies ahead. However, the portfolio remains

well diversified, with companies at different stages of

maturity and targeted in sectors such as healthcare,

software and FinTech, with minimal exposure to

consumer expenditure. We believe that these sectors

can continue to provide opportunities for resilient

growth, yielding positive results for the Company and

its shareholders in the longer-term. Given this context,

the recently announced NAV uplift is encouraging.

Ben Larkin

Chairman

6 April 2023

1313Albion Development VCT PLC

STRATEGIC REPORT

Current portfolio sector allocation

The following pie charts show the split of the portfolio

valuation as at 31 December 2022 by: sector; stage of

investment; and number of employees. This is a useful

way of assessing how the Company and its portfolio is

diversified across sector, portfolio companies’ maturity

measured by revenues and their size measured by

the number of people employed. As the Company

continues to invest in software and other technology

companies, FinTech (which is technology specifically

applicable to financial services companies) becomes

a more prominent investment sector, and therefore is

included as a subsector below. Details of the principal

investments made by the Company are shown in the

Portfolio of investments on pages 27 and 28.

Investment policy

The Company will invest in a broad portfolio of

higher growth businesses with a stronger focus on

technology companies across a variety of sectors

of the UK economy. Allocation of assets will be

determined by the investment opportunities which

become available but efforts will be made to ensure

that the portfolio is diversified in terms of sector and

stage of maturity of company.

The full investment policy can be found on page 7.

Investment portfolio by sector Portfolio analysis by stage of investment

Portfolio analysis by number of employees

Cash and other net assets 25% (17%)

Healthcare (including digital healthcare) 21% (25%)

Renewable energy 8% (9%)

FinTech 18% (21%)

Software & technology 24% (23%)

Other (including Education) 4% (5%)

Comparatives for 31 December 2021 are in brackets *Renewable energy companies have no employees

Early stage (revenue less than £1 million) 10% (8%)

Growth (revenue between £1 million and £5 million) 15% (22%)

Scale up (revenue over £5 million) 75% (70%)

Under 20 4% (3%)

21 - 50 14% (24%)

51 - 100 21% (13%)

101+ 51% (50%)

Renewable energy* 10% (10%)

24%

18%

25%

21%

14%

21%

51%

10%

15%

75%

STRATEGIC

Albion Development VCT PLC14

Strategic report

Direction of portfolio

Due to the share allotments under the 2021/22

and 2022/23 Prospectus Top Up Offers, and a

number of exits during the year, cash is a significant

proportion of the portfolio at 25%. The Manager has

a deep sector knowledge in healthcare, FinTech and

software investing, and these funds will be invested

predominantly into higher growth technology

companies within these sectors.

Results and dividends

The Company paid dividends totalling 4.71 pence per

share (2021: 4.37 pence per share). The Board has

a variable dividend policy which targets an annual

dividend yield of around 5% on the prevailing net

asset value. As a result, the Board has declared a first

dividend for the year ending 31 December 2023 of

2.22 pence per share payable on 31 May 2023 to

shareholders on the register on 5 May 2023.

As shown in the Income statement on page 71, the

total investment income increased to £1,194,000

(2021: £988,000). This is a result of dividend income

increasing to £172,000 (2021: £23,000), including a

dividend declared by Memsstar immediately prior to

the disposal in the year, and bank interest increasing

to £106,000 (2021: £1,000) due to higher interest

rates. These increases were partially offset by loan

stock income decreasing slightly to £916,000 (2021:

£964,000). The revenue return to equity holders has

subsequently increased to £591,000 (2021: £466,000).

The net capital loss for the year was £2,843,000

(2021: net return of £16,988,000). The net loss

was largely due to a fall in the unrealised value of

investments, offset partially by gains on disposals.

Key valuation movements during the year are

outlined in the investment portfolio section of the

Chairman’s statement on page 11. The total loss for

the year was 1.87 pence per share (2021: gain of

17.20 pence per share).

There was a net cash inflow for the Company of

£9,459,000 for the year (2021: £1,387,000), mainly

resulting from the issue of Ordinary shares under

the Albion VCTs Top Up Offers, disposal proceeds

and loan stock income, offset by new investments,

dividends paid, share buy-backs and ongoing expenses.

Cash inflow from fundraising has been utilised by

investments into new and existing portfolio companies.

Trade and other payables at the year end amounted

to £722,000 (2021: £2,459,000). This decrease was

primarily due to the management performance

incentive fee, which was paid in 2022 as a result of the

Company’s strong return for the previous year. Further

details on this can be found on page 18.

Results and dividends

£’000

Net capital loss for the year (2,843)

Net revenue return for the year 591

Total loss for the year ended 31 December 2022 (2,252)

Dividend of 2.37 pence per share paid on 31 May 2022 (2,925)

Dividend of 2.34 pence per share paid on 30 September 2022 (2,892)

Unclaimed dividends 7

Transferred from reserves (8,062)

Net assets as at 31 December 2022 114,458

Net asset value per share as at 31 December 2022 (pence) 88.65

15Albion Development VCT PLC

Albion Development VCT PLC16

across sectors and risk classes, despite the impacts of the

ongoing global issues caused as a result of high levels

of interest rates and inflation, due in part to the Russian

invasion of Ukraine, however the full effects of these

issues will continue to be felt in years to come. Although

there remains much uncertainty, the Board considers

that the current portfolio has the potential to deliver long

term growth, whilst maintaining a predictable stream of

dividend payments to shareholders. Further details of the

Company’s outlook and prospects can be found in the

Chairman’s statement on page 13.

Key Performance Indicators (“KPIs”) and

Alternative Performance Measures (“APMs”)

The Directors believe that the following KPIs and

APMs, which are typical for Venture Capital Trusts, used

in its own assessment of the Company, will provide

shareholders with sufficient information to assess how

effectively the Company is applying its investment

policy to meet its objectives. The Directors are satisfied

that the results shown in the following KPIs and APMs

give a good indication that the Company is achieving

its investment objective and policy.

Review of business and future changes

A detailed review of the Company’s business during the

year is contained in the Chairman’s statement on pages

10 and 11. The results for the year to 31 December

2022 show total shareholder value of 202.22 pence per

share since launch (2021: 203.84 pence per share).

There is a continuing focus on growing the FinTech,

healthcare (including digital healthcare) and other

software and technology sectors. The majority of these

investment returns are delivered through equity and

capital gains, and will be the key driver of success for

the Company. Investment income, which is received

primarily from our renewable energy investments, is

expected to remain steady over the coming years.

Details of significant events which have occurred since

the end of the financial year are listed in note 19. Details

of transactions with the Manager are shown in note 5.

Future prospects

The Company’s financial results for the year

demonstrates that the portfolio remains well balanced

*Total shareholder value is net asset value plus cumulative dividends paid since launch to 31 December 2022.

Net asset value per Share and total Shareholder value*

Total Shareholder value NAV

94.7

100.7

101.7

92.3

92.9

114.4

128.3

123.4

134.7

130.6

129.0

133.2

138.2

141.7

146.9

150.9

153.8

158.4

165.6

180.5

183.7

186.9

203.8

202.2

93.7

96.8

93.8

80.3

76.3

93.9

102.5

94.6

100.9

84.8

79.3

75.4

75.5

74.0

74.1

73.1

71.1

70.7

73.8

84.7

83.5

82.4

95.0

88.7

Pence per share

325

300

275

250

225

200

175

150

125

100

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Strategic report

1. Total shareholder value relative to FTSE All-

Share Index total return

The graph on page 8 shows the Company’s total

shareholder value relative to the FTSE All-Share Index

total return, with dividends reinvested. The FTSE All-

Share index is considered a reasonable benchmark

as the Company is classed as a generalist UK VCT

investor, and this index includes over 600 companies

listed in the UK, including small-cap, covering a range

of sectors. Details on the performance of the net asset

value and return per share for the year are shown in the

Chairman’s statement.

2. Net asset value per share and total

shareholder value

The chart on page 16 illustrates the movement in net

asset value per share and cumulative dividends paid

since launch. Total return to shareholders decreased

by 1.7% on opening net asset value to 202.22 pence

per share for the year ended 31 December 2022 as a

result of the negative total return of 1.87 pence per

share.

3. Movement in shareholder value in the year

†

The table below shows the total shareholder value

over the last 10 years, with an average return of 8.0%

per annum.

4. Dividend distributions

Dividends paid in respect of the year ended 31

December 2022 were 4.71 pence per share (2021:

4.37 pence per share). Cumulative dividends paid since

inception are 113.57 pence per share.

5. Ongoing charges

The ongoing charges ratio for the year to 31 December

2022 was 2.50% (2021: 2.50%). The ongoing charges

ratio has been calculated using The Association

of Investment Companies’ (“AIC”) recommended

methodology. This figure shows shareholders the total

recurring annual operational expenses (including

investment management fees charged to capital

reserve) as a percentage of the average net assets

attributable to shareholders. The ongoing charges cap

is 2.50%, which has resulted in a saving of £41,000 to

shareholders during the year (2021: £86,000).

Dividends paid

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

6.9% 5.4% 4.1% 6.5% 10.0% 20.3% 3.8% 3.8% 20.5% (1.7%)

†Methodology: Calculated by the movement in total shareholder value for the year divided by the opening net asset value.

Dividends paid in the period Cumulative dividend

2.9

4.0

4.2

4.5

5.2

4.5

4.24

4.37

4.71

3.9

7.9

12.1

16.6

20.6

25.8

28.8

33.8

45.8

49.8

57.8

62.8

67.8

72.8

77.8

82.8

87.8

91.8

95.8

100.3

104.5

108.9

113.6

Pence per share

120

100

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

17Albion Development VCT PLC

Strategic report

6. VCT compliance*

The investment policy is designed to ensure that the

Company continues to qualify and is approved as a

VCT by HMRC. In order to maintain its status under

Venture Capital Trust legislation, a VCT must comply on

a continuing basis with the provisions of Section 274 of

the Income Tax Act 2007, details of which are provided

in the Directors’ report on page 46.

The relevant tests to measure compliance have been

carried out and independently reviewed for the year

ended 31 December 2022. These showed that the

Company has complied with all tests and continues to

do so.

Gearing

As defined by the Articles of Association, the

Company’s maximum exposure in relation to gearing

is restricted to 10% of the share capital and reserves

adjusted for any dividends declared. Although the

investment policy permits the Company to borrow, the

Directors do not currently have any intention of utilising

long-term gearing and have not done so in the past.

Operational arrangements

The Company has delegated the investment

management of the portfolio to Albion Capital Group

LLP, which is authorised and regulated by the Financial

Conduct Authority. Albion Capital Group LLP also

provides company secretarial and other accounting and

administrative support to the Company.

Management agreement

Under the Investment Management agreement, Albion

Capital Group LLP provides investment management,

company secretarial and administrative services to

the Company. The Management agreement may be

terminated by either party on 12 months’ notice and

is subject to earlier termination in the event of certain

breaches or on the insolvency of either party. The

Manager is paid an annual fee equal to 2.25% of the net

asset value of the Company paid quarterly in arrears.

Total annual ongoing expenses, including the

management fee but excluding any performance

incentive fee, are limited to 2.5% of the net asset value,

as per the resolution passed at the General Meeting in

2019.

In some instances, the Manager is entitled to an

arrangement fee, payable by a portfolio company in

which the Company invests, in the region of 2% of the

investment made, and also monitoring fees where

the Manager has a representative on the portfolio

company’s board; these fees are payable by the

portfolio company. Further details of the Manager’s fee

can be found in note 5 to the financial statements.

Management performance incentive

In order to align the interests of the Manager and

the shareholders with regards to generating positive

returns, the Company has a Management performance

incentive arrangement with the Manager. Under the

incentive arrangement, the Company will pay an

incentive fee to the Manager of an amount equal to

20% of any excess return that is calculated for each

financial year.

The performance fee hurdle requires that the growth

of the aggregate of the net asset value per share

and dividends paid by the Company compared with

the previous accounting date exceeds RPI plus 2%.

The hurdle will be calculated every year, based on

the previous year’s closing net asset value per share.

The starting net asset value is 84.70 pence per share,

being the audited net asset value at 31 December

2018. If the target return is not achieved in a period,

the cumulative shortfall is carried forward to the next

accounting period and has to be made up before an

incentive fee becomes payable.

As at 31 December 2022, the total return since 1 January

2019 was 106.47 pence, and the hurdle was 122.75

pence, resulting in a shortfall of 16.28 pence per share. As

a result, no performance incentive fee is payable to the

Manager for the year (2021: £1,838,000).

*VCT compliance is not a numerical measure of performance and thus cannot be defined as an APM.

Strategic report

Albion Development VCT PLC18

Evaluation of the Manager

The Board has evaluated the performance of the

Manager based on:

• the returns generated by the Company;

• the continuing achievement of the HMRC tests

for VCT status;

• the long term prospects of the current portfolio

of investments;

• the management of treasury, including use of

buy back and participation in fund raising; and

• benchmarking the performance of the Manager

to other service providers including the

performance of other VCTs that the Manager is

responsible for managing.

The Board believes that it is in the interests of

shareholders as a whole, and of the Company, to

continue the appointment of the Manager for the

forthcoming year.

Alternative Investment Fund Managers

Directive (“AIFMD”)

The Board appointed Albion Capital Group LLP as the

Company’s AIFM in 2014 as required by the AIFMD.

The Manager is a full-scope Alternative Investment

Fund Manager under the AIFMD. Ocorian Depositary

(UK) Limited is the appointed Depositary and oversees

the custody and cash arrangements and provides other

AIFMD duties with respect to the Company.

Companies Act 2006 Section 172 Reporting

Under Section 172 of the Companies Act 2006, the

Board has a duty to promote the success of the

Company for the benefit of its members as a whole

in both the long and short term, having regard to the

interests of other stakeholders in the Company, such

as suppliers, and to do so with an understanding of the

impact on the community and environment and with

high standards of business conduct, which includes

acting fairly between members of the Company.

The Board is very conscious of these wider

responsibilities in the ways it promotes the Company’s

culture and ensures, as part of its regular oversight,

that the integrity of the Company’s affairs is foremost

in the way the activities are managed and promoted.

This includes regular engagement with the wider

stakeholders of the Company and being alert to issues

that might damage the Company’s standing in the

way that it operates. The Board works very closely with

the Manager in reviewing how stakeholder issues are

handled, ensuring good governance and responsibility

in managing the Company’s affairs, as well as visibility

and openness in how the affairs are conducted.

The Company is an externally managed investment

company with no employees, and as such has nothing

to report in relation to employee engagement but does

keep close attention to how the Board operates as a

cohesive and competent unit. The Company also has no

customers in the traditional sense and, therefore, there

is also nothing to report in relation to relationships with

customers.

The table below sets out the key stakeholders.

Details how the Board has engaged with these key

stakeholders and the effect of these considerations on

the Company’s decisions and strategies during the year.

Strategic report

Engagement with Stakeholder Outcomes and decisions based on engagement

Shareholders

The key methods of engaging with

Shareholders are as follows:

• Annual General Meeting (“AGM”)

• Shareholder seminar

• Annual report and Financial

Statements, Half-yearly financial

report, and Interim management

statements

• RNS announcements for all key

decisions including the publication of

a Prospectus

• Albion Capital website, social media

pages, as well as publishing Albion

news shareholder magazine.

• Shareholders’ views are important and the Board encourages Shareholders to

exercise their right to vote on the resolutions at the AGM. The Company’s AGM is

typically used as an opportunity to communicate with investors, including through

a presentation made by the investment management team. The use of the Lumi

platform enabled engagement with a wider audience of shareholders from across

the country, and gave shareholders the opportunity to ask questions and vote

during the virtual AGM last year.

• Shareholders are also encouraged to attend the in person annual Shareholders’

Seminar. This year’s event took place on 23 November 2022 at the Royal College

of Surgeons. The seminar included Speechmatics and Ophelos sharing insights

into their businesses and also a Q&A from Albion executives on some of the key

factors affecting the investment outlook, as well as a review of the past year and

the plans for the year ahead. Representatives of the Board attend the seminar.

The Board considers this an important interactive event, and expects to continue

to run this in 2023.

• The Board recognises the importance to Shareholders of maintaining a share

buy-back policy, in order to provide market liquidity, and considered this when

establishing the current policy. The Board closely monitors the discount to the net

asset value to ensure this is in the region of 5%.

• The Board seeks to create value for Shareholders by generating strong and

sustainable returns to provide shareholders with regular dividends and the

prospect of capital growth. The Board takes this into consideration when making

the decision to pay dividends to Shareholders. The variable dividend policy has

resulted in a dividend yield of 5.3% on opening net asset value.

• During the year, the Board made the decision to participate in the Albion

Prospectus Top Up Offers, launched on 6 January 2022 and 10 October 2022,

in order to raise more funds for deployment into new and existing portfolio

companies. The Board carefully considered whether further funds were required,

whether the VCT tests would continue to be met, and whether it would be in the

interest of Shareholders, before agreeing to publish the Prospectus. On allotment,

an issue price formula based on the prevailing net asset value was used to ensure

there was no dilution to existing Shareholders.

• Cash management and liquidity of the Company are key quarterly discussions

amongst the Board, with focus on deployment of cash for future investments,

dividends and share buy-backs.

• Shareholders can contact the Chairman using the email AADVchair@albion.capital

Manager

The performance of Albion Capital

Group LLP is essential to the long term

success of the Company, including

achieving the investment policy and

generating returns to shareholders,

as well as the impact the Company

has on Environment, Social and

Governance practice.

• The Manager meets with the Board at least quarterly to discuss the performance

of the Company, and is in regular contact in between these meetings, e.g. to share

investment papers for new and follow-on investments. All strategic decisions are

discussed in detail and minuted, with an open dialogue between the Board and

the Manager.

• The performance of the Manager in managing the portfolio and in providing

company secretarial, administration and accounting services is reviewed in detail

each year, which includes reviewing comparator engagement terms and portfolio

performance. Further details on the evaluation of the Manager, and the decision

to continue the appointment of the Manager for the forthcoming year, can be

found in this report.

• Details of the Manager’s responsibilities can be found in the Statement of

corporate governance on pages 52 and 53.

Albion Development VCT PLC20

Strategic report

Engagement with Stakeholder Outcomes and decisions based on engagement

Suppliers

The key suppliers with regular

engagement from the Manager are:

• Corporate broker

• VCT taxation adviser

• Depositary

• Registrar

• Auditor

• Lawyer

• The Manager is in regular contact with the suppliers and the contractual

arrangements with all the principal suppliers to the Company are reviewed

regularly and formally once a year, alongside the performance of the suppliers in

acquitting their responsibilities.

• The Board reviews the performance of the providers annually in line with the

Manager, and was satisfied with their performance.

Portfolio companies

The portfolio companies are

considered key stakeholders, not least

because they are principal drivers

of value for the Company. However,

as discussed in the Environmental,

Social and Governance (“ESG”)

report on pages 35 to 38, the

portfolio companies’ impact on their

stakeholders is also important to the

Company.

• The Board aims to have a diversified portfolio in terms of sector and stage of

investment. Further details of this can be found in the pie charts on page 14.

• In most cases, an Albion executive has a place on the board of a portfolio

company, in order to help with both business operation decisions, as well as good

ESG practices.

• The AlbionVC platform team provide access to deep expertise on growth strategy

alignment, leadership team hiring, organisational scaling and founder leader

development.

• The Manager ensures good dialogue with portfolio companies, and often puts on

events in order to help portfolio companies benefit from the Albion network.

Community and environment

The Company, with no employees, has

no effect itself on the community and

environment. However, as discussed

above, the portfolio companies’ ESG

impact is extremely important to the

Board.

• The Board receives reports on ESG factors within its portfolio from the Manager as

it is a signatory of the United Nations Principles for Responsible Investment (“UN

PRI”). Further details of this are set out in the ESG report below. ESG, without its

specific definition, has always been at the heart of the responsible investing that

the Company engages in and in how the Company conducts itself with all of its

stakeholders.

21Albion Development VCT PLC

Strategic report

The Board carries out a

regular review of the risk

environment in which

the Company operates

Social and community issues, employees

and human rights

The Board recognises the requirement under section

414C of the Companies Act 2006 (the “Act”) to detail

information about social and community issues,

employees and human rights; including any policies it

has in relation to these matters and effectiveness of

these policies. As an externally managed investment

company with no employees, the Company has no

formal policies in these matters, however, it is at the

core of its responsible investment strategy as detailed

above.

Further policies

The Company has adopted a number of further policies

relating to:

• Environment

• Global greenhouse gas emissions

• Anti-bribery

• Anti-facilitation of tax evasion

• Diversity

These are set out in the Directors’ report on pages

47 and 48.

General Data Protection Regulation

The General Data Protection Regulation (“GDPR”) has

the objective of unifying data privacy requirements

across the European Union. GDPR forms part of the UK

law after Brexit, now known as UK GDPR. The Manager

continues to take action to ensure that the Manager

and the Company are compliant with the regulation.

Risk management

The Board carries out a regular review of the risk

environment in which the Company operates, together

with changes to the environment and individual risks.

The Board also identifies emerging risks which might

impact on the Company. In the period the most

noticeable risks have been the emergence of rising

interest rates and inflation, caused in part as a result of

the Russian invasion of Ukraine, whilst the pandemic

has continued to impact on mobility, public health

and have an adverse influence on the economy. The

full impacts of these risks are likely to continue to be

uncertain for some time.

The Board has carried out a robust assessment of

the Company’s principal risks and uncertaintiesand

seeks to mitigate these risks throughregular reviews

of performance and monitoring progress and

compliance. The Board applies the principles detailed

in the Financial Reporting Council’s Guidance on

Risk Management, Internal Control and Related

Financial and Business Reporting, in the mitigation

and management of these risks. More information on

specific mitigation measures for the principal risks and

uncertainties are explained below:

Albion Development VCT PLC22

Possible consequence Risk assessment

during the year

Risk management

Investment, performance, technology and valuation risk

The risk of investment in poor

quality businesses, which could

reduce the returns to shareholders

and could negatively impact on

the Company’s current and future

valuations.

By nature, smaller unquoted

businesses, such as those that

qualify for Venture Capital Trust

purposes, are more volatile than

larger, long-established businesses.

The Company’s investment

valuation methodology is reliant

on the accuracy and completeness

of information that is issued by

portfolio companies. In particular,

the Directors may not be aware of

or take into account certain events

or circumstances which occur after

the information issued by such

companies is reported.

Increased in

the year due to

the heightened

economic and

geopolitical issues

as referred to in

the Chairman’s

statement.

To reduce this risk, the Board places reliance upon the skills and

expertise of the Manager and its track record over many years

of making successful investments in this segment of the market.

In addition, the Manager operates a formal and structured

investment appraisal and review process, which includes an

Investment Committee, comprising investment professionals

from the Manager for all investments, and at least one external

investment professional for investments greater than £1 million

in aggregate across all the Albion managed VCTs. The Manager

also invites and takes account of comments from non-executive

Directors of the Company on matters discussed at the Investment

Committee meetings.

Investments are actively and regularly monitored by the Manager

(investment managers normally sit on portfolio company boards),

including the level of diversification in the portfolio, and the

Board receives detailed reports on each investment as part of the

Manager’s report at quarterly board meetings. The Board and

Manager regularly review the deployment of investments and cash

resources available to the Company in assessing liquidity required

for servicing the Company’s buy-backs, dividend payments and

operational expenses.

The unquoted investments held by the Company are designated

at fair value through profit or loss and valued in accordance

with the International Private Equity and Venture Capital

Valuation Guidelines updated in 2022. These guidelines set out

recommendations, intended to represent current best practice on

the valuation of venture capital investments. The valuation takes

into account all known material facts up to the date of approval of

the Financial Statements by the Board.

VCT approval risk

The Company must comply with

section 274 of the Income Tax Act

2007 which enables its investors

to take advantage of tax relief on

their investment and on future

returns. Breach of any of the rules

enabling the Company to hold

VCT status could result in the loss

of that status.

No change in the

year.

To reduce this risk, the Board has appointed the Manager, which

has a team with significant experience in Venture Capital Trust

management, used to operating within the requirements of the

Venture Capital Trust legislation. In addition, to provide further

formal reassurance, the Board has appointed Philip Hare &

Associates LLP as its taxation adviser, who report quarterly to

the Board to independently confirm compliance with the Venture

Capital Trust legislation, to highlight areas of risk and to inform

on changes in legislation. Each investment in a new portfolio

company is also pre-cleared with our professional advisers or H.M.

Revenue & Customs. The Company monitors closely the extent of

qualifying holdings and addresses this as required.

23Albion Development VCT PLC

Strategic report

Possible consequence Risk assessment

during the year

Risk management

Regulatory and compliance risk

The Company is listed on The

London Stock Exchange and is

required to comply with the rules

of the Financial Conduct Authority,

as well as with the Companies Act,

Accounting Standards and other

legislation. Failure to comply with

these regulations could result in a

delisting of the Company’s shares,

or other penalties under the

Companies Act or from financial

reporting oversight bodies.

No change in the

year.

Board members and the Manager have experience of operating at

senior levels within or advising quoted companies. In addition, the

Board and the Manager receive regular updates on new regulation

from its auditor, lawyers and other professional bodies. The

Company is subject to compliance checks through the Manager’s

compliance officer, and any issues arising from compliance or

regulation are reported to its own board every two months. These

controls are also reviewed as part of the quarterly Board meetings,

and also as part of the review work undertaken by the Manager’s

compliance officer. The report on controls is also evaluated by the

internal auditors.

Operational and internal control risk

The Company relies on a number

of third parties, in particular the

Manager, for the provision of

investment management and

administrative functions. Failures

in key systems and controls within

the Manager’s business could put

assets of the Company at risk or

result in reduced or inaccurate

information being passed to the

Board or to shareholders.

No change in the

year.

The Company and its operations are subject to a series of rigorous

internal controls and review procedures exercised throughout the

year. The Board receives reports from the Manager on its internal

controls and risk management.

The Audit and Risk Committee reviews the Internal Audit Reports

prepared by the Manager’s internal auditors, Azets and has

access to their internal audit partner to whom it can ask specific

detailed questions in order to satisfy itself that the Manager has

strong systems and controls in place including those in relation to

business continuity and cyber security, as mentioned below.

Ocorian Depositary (UK) Limited is the Company’s Depositary,

appointed to oversee the custody and cash arrangements and

provide other AIFMD duties. The Board reviews the quarterly

reports prepared by Ocorian Depositary (UK) Limited to ensure

that the Manager is adhering to its policies and procedures as

required by the AIFMD.

In addition, the Board annually reviews the performance of its

key service providers, particularly the Manager, to ensure they

continue to have the necessary expertise and resources to deliver

the Company’s investment objective and policy. The Manager and

other service providers have also demonstrated to the Board that

there is no undue reliance placed upon any one individual.

Cyber and data security risk

A cyber-attack on one of the

Company’s third party suppliers

could result in the security of,

potentially sensitive, data being

compromised, leading to financial

loss, disruption or damage to the

reputation of the Company.

Increased in the

year, due to an

increase in cyber-

attacks worldwide.

The Manager outsources some of its IT services, including hardware

and software procurement, server management, backup provision

and day-to-day support through an outsourcing arrangement with

an IT consultant. In house IT support is also provided.

In addition, the Manager also has a business continuity plan

which includes off-site storage of records and remote access

provisions. This is revised and tested annually and is also subject to

Compliance, Group Risk and Internal Audit reporting. Penetration

tests are also carried out to ensure that IT systems are not

susceptible to cyber-attacks.

The Manager’s Internal Auditor performs reviews on IT general

controls and data confidentiality and makes recommendations

where necessary. The most recent internal audit focused

specifically on IT systems, and was completed in February 2023.

Albion Development VCT PLC24

Strategic report

Possible consequence Risk assessment

during the year

Risk management

Economic, political and social risk

Changes in economic conditions,

including, for example, interest

rates, rates of inflation, industry

conditions, competition, political

and diplomatic events, and other

factors could substantially and

adversely affect the Company’s

prospects in a number of ways.

This also includes risks of social

upheaval, including from infection

and population re-distribution, as

well as economic risk challenges as

a result of healthcare pandemics/

infection.

Increased in the

year, due to the

high levels of

inflation, rising

interest rates and

the geopolitical

risks from the

invasion of Ukraine.

The Company invests in a diversified portfolio of companies across

a number of industry sectors and in addition often invests in a

mixture of instruments in portfolio companies and has a policy

of minimising any external bank borrowings within portfolio

companies.

At any given time, the Company has sufficient cash resources to

meet its operating requirements, including share buy-backs and

follow-on investments.

In common with most commercial operations, exogenous risks

over which the Company has no control are always a risk and the

Company does what it can to address these risks where possible,

not least as the nature of the investments the Company makes are

long term.

The Board and Manager are continuously assessing the

resilience of the portfolio, the Company and its operations and

the robustness of the Company’s external agents, as well as

considering longer term impacts on how the Company might be

positioned in how it invests and operates. Ensuring liquidity in the

portfolio to cope with exigent and unexpected pressures on the

finances of the portfolio and the Company is an important part

of the risk mitigation in these uncertain times. The portfolio is

structured as an all-weather portfolio with c.65 companies which

are diversified as discussed above. Exposure is relatively small to

at-risk sectors that include leisure, hospitality, retail and travel.

Liquidity risk

The Company may not have

sufficient cash available to meet

its financial obligations. The

Company’s portfolio is primarily

in smaller unquoted companies,

which are inherently illiquid

as there is no readily available

market, and thus it may be difficult

to realise their fair value at short

notice.

No change in the

year.

To reduce this risk, the Board reviews the Company’s three year

cash flow forecasts on a quarterly basis. These include potential

investment realisations (which are closely monitored by the

Manager), Top Up Offers, dividend payments and operational

expenditure. This ensures that there are sufficient cash resources

available for the Company’s liabilities as they fall due.

Environmental, social and governance (“ESG”) risk

An insufficient ESG policy could

lead to an increased negative

impact on the environment,

including the Company’s carbon

footprint. Non-compliance with

reporting requirements could lead

to a fall in demand from investors,

reputational damage and

penalties. Climate risks could also

negatively impact on the value of

portfolio investments.

No change in the

year.

The Manager is a signatory of the UN PRI and the Board is kept

appraised of the evolving ESG policies at quarterly Board meetings.

Full details of the specific procedures and risk mitigation can be

found in the ESG report on pages 35 to 38. These procedures ensure

that this risk continues to be mitigated where possible.

Whilst the Company itself has limited impact on climate change,

due to no employees nor greenhouse gas emissions, the Board

works closely with the Manager to ensure the Manager themselves

are working towards reducing their impact on the environment,

and that the Manager takes account of ESG factors, including

climate change, when making new investment decisions. With

specific reference to the Company, a key objective is increasing the

use of electronic communications with Shareholders, where that

preference has been specified.

25Albion Development VCT PLC

Strategic report

Viability statement

In accordance with the FRC UK Corporate Governance

Code published in 2018 and provision 36 of the AIC

Code of Corporate Governance, the Directors have

assessed the prospects of the Company over three

years to 31 December 2025. The Directors believe

that three years is a reasonable period in which they

can assess the ability of the Company to continue to

operate and meet its liabilities as they fall due. This is

the period used by the Board as part of its strategic

planning process, which includes: the estimated

timelines for finding, assessing and completing

investments; the potential impact of any new

regulations; and the availability of cash.

The Board has carried out a robust assessment of

the principal and emerging risks facing the Company,

including those that could threaten its business model,

future performance, solvency or liquidity, and focused

on the major factors which affect the economic,

regulatory and political environment. The Board

carefully assessed, and were satisfied with, the risk

management processes in place to avoid or reduce

the impact of these risks. The Board has carried out

robust stress testing of cashflows which included;

factoring in high levels of inflation when budgeting

for future expenses, only including proceeds from

investment disposals where there is a high probability

of completion, whilst also assessing the resilience of

portfolio companies given the current decline in the

global economy, including the requirement for any

future financial support.

The Board has additionally considered the ability of

the Company to comply with the ongoing conditions

to ensure it maintains its VCT qualifying status under

its current investment policy. As a result of the Board’s

quarterly valuation reviews, it has concluded that the

portfolio is well balanced and geared towards delivering

long term growth and strong returns to shareholders.

The Board has concluded that there is a reasonable

expectation that the Company will be able to continue

in operation and meet its liabilities as they fall due

over the three year period to 31 December 2025. The

Board is mindful of the ongoing risks and will continue

to ensure that appropriate safeguards are in place, in

addition to monitoring the quarterly cashflow forecasts

to ensure the Company has sufficient liquidity.

Companies Act 2006

This Strategic report of the Company for the year

ended 31 December 2022 has been prepared in

accordance with the requirements of section 414A of

the Companies Act 2006 (the “Act”). The purpose of

this report is to provide Shareholders with sufficient

information to enable them to assess the extent to

which the Directors have performed their duty to

promote the success of the Company in accordance

with Section 172 of the Act.

For and on behalf of the Board

Ben Larkin

Chairman

6 April 2023

Albion Development VCT PLC26

Strategic report

PORTFOLIO OF INVESTMENTS

As at 31 December 2022 As at 31 December 2021

Change in value

for the year**

£’000

Fixed asset investments

% voting rights

% voting rights of

Albion* managed

companies

Cost

£’000

Cumulative movement

in value

£’000

Value

£’000

Cost

£’000

Cumulative movement

in value

£’000

Value

£’000

Quantexa 2.6 11.3 2,101 12,810 14,911 2,101 12,810 14,911 -

Egress Software Technologies 6.9 24.7 2,332 6,691 9,023 2,332 6,892 9,224 (202)

Proveca 11.8 49.9 1,829 5,792 7,621 1,829 5,944 7,773 (152)

Oviva 2.8 12.2 2,601 1,554 4,155 2,601 2,607 5,208 (1,054)

Radnor House School (TopCo) 8.5 48.3 1,560 1,460 3,020 1,560 1,727 3,287 (267)

The Evewell Group 5.8 33.0 1,407 1,433 2,840 1,407 1,372 2,779 60

Healios 3.3 17.5 1,977 522 2,499 847 522 1,369 -

The Street by Street Solar Programme 12.4 50.0 1,291 1,084 2,375 1,291 1,005 2,296 78

Chonais River Hydro 4.6 50.0 1,705 628 2,333 1,705 558 2,263 70

Regenerco Renewable Energy 11.9 50.0 1,204 782 1,986 1,204 743 1,947 39

Threadneedle Software Holdings (T/A

Solidatus) 2.0 11.5 1,209 736 1,945 1,209 - 1,209 736

Convertr Media 6.2 26.6 992 948 1,940 992 40 1,032 908

Panaseer 3.1 11.4 1,122 815 1,937 1,122 534 1,656 281

Cantab Research (T/A Speechmatics) 1.6 14.4 1,337 423 1,760 685 339 1,024 84

Black Swan Data 6.3 26.1 3,307 (1,597) 1,710 2,213 (17) 2,196 (1,579)

Runa Network (previously WeGift) 1.9 13.9 1,259 285 1,544 492 - 492 285

Peppy Health 1.6 8.7 1,424 - 1,424 - - - -

Aridhia Informatics 5.8 21.6 1,129 271 1,400 1,129 346 1,475 (74)

Toqio FinTech Holdings (T/A Toqio) 1.9 10.4 1,369 - 1,369 - - - -

Gravitee TopCo (T/A Gravitee.io) 2.2 18.1 923 236 1,159 492 - 492 236

TransFICC 1.8 13.0 891 196 1,087 207 196 403 -

Alto Prodotto Wind 9.4 50.0 618 392 1,010 670 386 1,056 33

PeakData 2.1 11.2 922 69 991 - - - 69

Elliptic Enterprises 0.7 5.9 984 - 984 984 366 1,350 (366)

Locum’s Nest 5.6 25.6 663 301 964 550 33 583 268

Beddlestead 8.6 49.0 1,026 (84) 942 1,026 20 1,046 (104)

InCrowd Sports 4.1 17.2 642 269 911 545 188 733 81

Seldon Technologies 1.8 14.0 873 - 873 356 - 356 -

NuvoAir Holdings 1.4 11.2 570 275 845 448 188 636 87

GX Molecular (T/A CS Genetics) 2.5 14.8 741 - 741 - - - -

OutThink 2.4 13.9 610 - 610 - - - -

Perchpeek 1.9 13.6 597 - 597 - - - -

Arecor Therapeutics PLC 0.8 4.2 294 262 556 387 804 1,191 (350)

Ophelos 2.0 12.3 527 - 527 - - - -

Neurofenix 2.6 14.8 523 - 523 - - - -

Diffblue 2.2 12.9 509 - 509 - - - -

The Q Garden Company 16.6 50.0 466 32 498 466 (75) 391 107

27Albion Development VCT PLC

STRATEGIC

As at 31 December 2022 As at 31 December 2021

Change in value

for the year**

£’000

Fixed asset investments

% voting rights

% voting rights of

Albion* managed

companies

Cost

£’000

Cumulative movement

in value

£’000

Value

£’000

Cost

£’000

Cumulative movement

in value

£’000

Value

£’000

Koru Kids 1.8 7.9 573 (91) 482 460 256 716 (347)

AVESI 10.5 50.0 340 114 454 340 108 448 6

PetsApp 2.3 13.6 425 - 425 - - - -

Cisiv 7.4 29.6 686 (278) 408 686 327 1,013 (605)

Brytlyt 2.0 14.8 396 - 396 330 - 330 -

Imandra 1.8 8.1 236 128 364 236 357 593 (229)

Accelex Technology 2.0 16.5 361 - 361 185 - 185 -

5Mins AI 1.9 11.1 340 - 340 - - - -

Zift Channel Solutions 1.7 6.5 885 (559) 326 885 (535) 350 (23)

Limitless Technology 2.4 11.0 648 (322) 326 648 - 648 (322)

Dragon Hydro 5.5 30.0 187 120 307 197 114 311 6

Ramp Software 1.7 9.7 267 - 267 - - - -

MHS1 3.3 48.8 231 14 245 231 (38) 193 52

Tem Energy 1.6 9.5 212 - 212 - - - -

uMedeor (T/A uMed) 1.2 9.5 192 2 194 128 - 128 2

Greenenerco 4.0 50.0 101 68 169 111 67 178 4

DySIS Medical 1.4 10.1 1,038 (881) 157 1,038 (768) 270 (113)

Premier Leisure (Suffolk) 6.2 47.4 109 21 130 109 (6) 103 28

Erin Solar 4.3 50.0 120 3 123 120 (23) 97 27

Regulatory Genome Development 0.7 4.9 112 - 112 - - - -

Mirada Medical 2.7 15.0 909 (806) 103 909 (909) - 103

uMotif 3.1 20.2 941 (847) 94 941 (81) 860 (766)

Infact Systems (T/A Infact) 1.8 10.0 91 - 91 - - - -

Symetrica 0.3 5.0 89 (18) 71 89 (18) 71 -

Oxsensis 2.0 27.9 439 (429) 10 421 18 439 (429)

Elements Software 0.6 4.5 3 (3) - 3 (3) - -

Forward Clinical (T/A Pando) 1.8 9.2 219 (219) - 219 (213) 6 (6)

Total fixed asset investments 53,684 32,602 86,286 39,136 36,181 75,317 (3,338)

* Albion Capital Group LLP

** As adjusted for additions and disposals during the year; including realised gains/(losses).

The comparative cost and valuations for 31 December 2021 do not agree to the Annual Report and Financial Statements for the year ended 31

December 2021 as the above list does not include brought forward investments that were fully disposed of in the year.

Albion Development VCT PLC28

Portfolio of investments

The following is a summary of fixed asset realisations for the year ended 31 December 2022:

Fixed asset investment realisations

Cost

£’000

Opening

carrying

value*

£’000

Disposal

proceeds

£’000

Total

realised

gain/(loss)

£’000

Gain/(loss)

on opening

value

£’000

Disposals:

MyMeds&Me 940 1,422 3,134 2,194 1,712

Phrasee 712 2,112 2,495 1,783 383

Credit Kudos 344 1,424 1,776 1,432 352

Arecor Therapeutics PLC 93 285 208 115 (77)

Memmstar 62 54 61 (1) 7

Abcodia 838 3 4 (834) 1

Avora 400 9 - (400) (9)

Concirrus 632 201 - (632) (201)

Sandcroft Avenue (T/A Hussle) 1,281 15 - (1,281) (15)

Loan stock repayments and other:

Oxsensis 147 166 166 19 -

Alto Prodotto Wind 52 78 78 26 -

Greenenerco 8 12 12 4 -

Dragon Hydro 11 11 11 - -

Escrow adjustments** - - 169 169 169

Total realisations 5,520 5,792 8,114 2,594 2,322

*As adjusted for additions during the year

** These comprise fair value movements on deferred consideration on previously disposed investments and expenses which are incidental to the

purchase or disposal of an investment

Unrealised losses on fixed asset investments (3,338)

Movement in loan stock accrued interest 80

Unrealised losses sub-total (3,258)

Realised gains in the current year 2,322

Unwinding of discount on deferred consideration 300

Total losses on investments as per Income statement (636)

29Albion Development VCT PLC

Portfolio of investments

Healthcare (including digital healthcare)

Renewable energy

Software & other technology

FinTech

Other (including education)

PORTFOLIO COMPANIES

STRATEGIC

Audited results for year ended:

31 Dec 2021

£’000

31 Dec 2020

£’000

Turnover 21,890 17,336

LBITDA (8,106) (6,822)

Loss before tax (8,612) (7,056)

Net liabilities (8,537) (1,956)

Basis of

valuation

Revenue

multiple

Revenue

multiple

Audited results for year ended:

31 March 2021

£’000

31 March 2020

£’000

Turnover 30,307 17,545

LBITDA (9,078) (13,064)

Loss before tax (9,516) (13,700)

Net assets/(liabilities) 22,890 (3,495)

Basis of valuation Cost and price of

recent investment

(calibrated and

reviewed for

impairment)

Cost and price of

recent investment

(calibrated and

reviewed for

impairment)

Investment information £’000

Income recognised in the year -

Total cost 2,332

Valuation 9,023

Voting rights 6.9%

Voting rights for all Albion

managed companies

24.7%

Investment information £’000

Income recognised in the year -

Total cost 2,101

Valuation 14,911

Voting rights 2.6%

Voting rights for all Albion

managed companies

11.3%

www.quantexa.com

www.egress.com

Quantexa has developed an analytics platform which offers entity resolution,

network analytics and automated decisioning at massive scale in real time. This

capability is used to fight financial crime and reduce fraud. Quantexa now counts

many of the world’s largest banks, insurers and governments among its clients.

Egress Software Technologies has developed a secure

communication platform that uses encryption and machine learning to secure

content shared via email and other applications. Egress serves SMBs and small

enterprise customers in the public sector, legal, healthcare, financial services and

defence sectors.

31Albion Development VCT PLC

Investment information £’000

Income recognised in the year -

Total cost 1,829

Valuation 7,621

Voting rights 11.8%

Voting rights for all Albion

managed companies

49.9%

Investment information £’000

Income recognised in the year 153

Total cost 1,560

Valuation 3,020

Voting rights 8.5%

Voting rights for all Albion

managed companies

48.3%

www.proveca.com

www.oviva.com

Investment information £’000

Income recognised in the year -

Total cost 2,601

Valuation 4,155

Voting rights 2.8%

Voting rights for all Albion

managed companies

12.2%

Proveca is a specialty pharmaceutical company focused on children’s

medicines. The company is addressing a significant need in developing drugs

that are specifically formulated for children, taking advantage of a supportive

regulatory regime and market protection throughout Europe. Its first product

for chronic drooling was launched in 2017. It has a pipeline of drugs focused on

neurology, immunology and cardiovascular that it expects to reach the market

over the next one to three years.

Radnor House School (TopCo) operates a co-educational independent

school near Sevenoaks, Kent. The school is growing strongly with over 500 children

on the roll and further capacity to expand. Significant further investment has been

made into the school’s facilities to enable it to deliver a personalised education

experience to each student. The curriculum and co-curricular activities are designed

to give each child a wide range of academic and other skills in a supportive and

nurturing environment.

Oviva is the category leader in Europe for digital, reimbursed dietetic care. The

company sells digital and technology-led services solutions for conditions such

as diabetes and obesity. It consistently demonstrates best-in-class outcomes

helping its clients save costs and improve patient well-being. It is active in the UK,

Germany, France and Switzerland.

Filleted audited results for year ended:

31 Jul 2021

£’000

31 Jul 2020

£’000

Net liabilities (2,731) (4,102)

Basis of

valuation

Revenue

multiple

Revenue

multiple

Audited results for year ended:

31 Dec 2021

£’000

31 Dec 2020

£’000

Turnover 7,531 5,097

LBITDA (9,468) (4,285)

Net assets 61,700 14,661

Basis of

valuation

Cost and price of recent

investment (calibrated

and reviewed for

impairment)

Cost and price of recent

investment (calibrated

and reviewed for

impairment)

Audited results for year ended:

31 Aug 2021

£’000

31 Aug 2020

£’000

Turnover 7,548 8,367

EBITDA 622 838

Loss before tax (850) (408)

Net assets 12,205 9,211

Basis of

valuation

Third party valuation

– earnings multiple

Third party valuation

– earnings multiple

www.radnorhouse.org

Portfolio companies

Investment information £’000

Income recognised in the year 253

Total cost 1,407

Valuation 2,840

Voting rights 5.8%

Voting rights for all Albion

managed companies

33.0%

Investment information £’000

Income recognised in the year 139

Total cost 1,291

Valuation 2,375

Voting rights 12.4%

Voting rights for all Albion

managed companies

50.0%

www.evewell.com

Investment information £’000

Income recognised in the year -

Total cost 1,977

Valuation 2,499

Voting rights 3.3%

Voting rights for all Albion

managed companies

17.5%

www.healios.org.uk

The Evewell owns and operates private women’s health centres of excellence

with one clinic open on Harley Street and another in Hammersmith, both focusing

on fertility and IVF treatment but uniquely also covering all aspects of a woman’s

gynaecological health.

The Street by Street Solar Programme owns and operates solar

PV systems on circa 600 privately owned homes in England and Wales. It provides

free and clean electricity to those homes, and benefits from inflation-protected

renewable subsidies for a period of 20 to 25 years. Most of the PV systems were

commissioned in 2011 and 2012.

Healios is an online platform delivering family centric psychological care

primarily to children and adolescents. The Company provides assessment,

treatment and early intervention for a variety of mental health conditions.

Filleted audited results for year ended:

30 Nov 2021

£’000

30 Nov 2020

£’000

Net liabilities (860) (711)

Basis of

valuation

Third party valuation

– discounted cash

flow

Third party valuation

– discounted cash

flow

Filleted audited results for year ended:

31 Dec 2021

£’000

31 Dec 2020

£’000

Net liabilities (978) (3,354)

Basis of

valuation

Revenue

multiple

Discounted

offer price

Audited results for year ended:

31 Dec 2021

£’000

31 Dec 2020

£’000

Turnover 10,843 5,485

LBITDA (5,498) (1,863)

Loss before tax (5,625) (2,012)

Net assets/(liabilities) 50 (2,119)

Basis of valuation Revenue

multiple

Revenue

multiple

Portfolio companies

Regenerco Renewable Energy Limited provides small businesses

and councils access to free rooftop solar installations providing them with a

sustainable source of power.

Chonais River Hydro is a 2MW hydropower scheme near Loch Carron in

the Scottish Highlands. It is a run-of-river scheme, taking water from a small river

via an intake on the mountainside. The scheme is low visual impact with the only

visible components being a small intake and a powerhouse, both of which are

built using local material. It generates enough electricity to power approximately

2,000 homes. It benefits from inflation-protected renewable subsidies for a period

of 20 years. The scheme was commissioned in 2014 and has been generating

successfully since.

Investment information £’000

Income recognised in the year 157

Total cost 1,705

Valuation 2,333

Voting rights 4.6%

Voting rights for all Albion

managed companies

50.0%

Investment information £’000

Income recognised in the year 125

Total cost 1,204

Valuation 1,986

Voting rights 11.9%

Voting rights for all Albion

managed companies

50.0%

Filleted audited results for year ended:

30 Sep 2021

£’000

30 Sep 2020

£’000

Net liabilities (163) (138)

Basis of

valuation

Third party valuation

– discounted cash

flow

Third party valuation

– discounted cash

flow

Filleted audited results for year ended:

31 Dec 2021

£’000

31 Dec 2020

£’000

Net liabilities (645) (512)

Basis of

valuation

Third party valuation

– Discounted cash

flow

Third party valuation

– Discounted cash

flow

www.greenhighland.co.uk

Portfolio companies

The United Nations Principles for Responsible Investment (“UN PRI”)

is the world’s leading proponent of responsible investment, working to

understand the investment implications of ESG factors and to support its

international network of investor signatories in incorporating these into

their investment and ownership decisions.

As a signatory of the UN PRI, Albion (and the Board) recognise that applying

the following six principles better aligns investors with broader objectives of

society:

ENVIRONMENTAL, SOCIAL AND

GOVERNANCE (“ESG”) REPORT

Principle 1: to incorporate

ESG issues into investment

analysis and decision-

making processes.

Principle 2: to be active

owners and incorporate

ESG issues into our

ownership policies and

practices.

Principle 3: to seek

appropriate disclosure on

ESG issues by the entities

in which we invest.

Principle 4: to promote

acceptance and

implementation of the

Principles within the

investment industry.

The Company’s Manager, Albion Capital Group LLP (“Albion”),

sees sustainable and responsible investment as an integral part

of its investment mandate. In turn, the Board is kept appraised of

ESG issues in both the portfolio and in how company affairs are

conducted as part of regular Board oversight.

The Board and Albion have been

conscious in making responsible

investments throughout the life

of the Company by providing

finance for promising companies

in important sectors such as

technology, healthcare and

renewable energy. Through this,

Albion is directly involved in the

oversight and governance of these

investments, including ensuring

standards of reporting and visibility

on business practices, all of which

are reported to the Board.

By its nature, not least in making

qualifying investments which

fulfil the criteria set by HMRC,

the Company has focused on

sustainable and longer term

investment propositions, some

of which will grow and serve

important societal demands. One

of the most important drivers of

performance is the quality of the

investment portfolio, which goes

beyond the individual valuations

and examines the prospects of

Principle 5: to work

together to enhance

our effectiveness in

implementing the

Principles.

Principle 6: to report on

our activities and progress

towards implementing the

Principles.

35Albion Development VCT PLC

STRATEGIC

each portfolio company and their sectors – all of which

requires a long term view.

Given the nature of venture capital investment, Albion

is more intimately involved in the affairs of portfolio

companies than typical funds invested in listed

securities. As such, Albion is able to influence good

governance and behaviour in portfolio companies,

many of which are relatively small without the support

of a larger company’s administration and advisory

infrastructure.

The Company adheres to the principles of the AIC Code

of Corporate Governance and is also aware of other

governance and corporate conduct guidance which it

meets as far as practical. This includes the constitution

of a diversified and independent Board capable of

providing constructive challenge.

Albion is a member of VentureESG steering committee,

a global network of fund managers that drives

application of ESG principles in the ecosystem.

ESG considerations are an integrated part of Albion’s

investment process, from pre investment to exit,

designed to create value for investors and develop

sustainable long-term strategies for portfolio

companies. This is reflected in the transparency

of reporting, governance principles adopted by

the Company and the portfolio companies, and

increasingly in the positive environmental or socially

impactful nature of investments made. Where relevant,

climate-specific issues are also considered.

Albion integrates ESG through all aspects of the

investment process:

* The ESG BSC contains sustainability metrics used to determine a company’s sustainability risks and opportunities, and track progress over time.

STAGE 1

Screening

STAGE 2

Due diligence

STAGE 3

Stewardship &

monitoring

STAGE 4

Follow on

investments

Exit

• Check company

activity with Albion

Capital Group LLP’s

exclusion list

• Track Founder/

CEO gender and

ethnic diversity for

all potential new

investments

• ESG Due Diligence

questionnaire

completed pre-

investment

• ESG summary

added to investment

committee paper

and reviewed at IC

• ESG terms added

to the Shareholders

Agreement

• Leverage portfolio

company board and

platform function

to implement ESG

initiatives

• Collect information

on ESG

developments

annually via ESG

Balance Score

Card (BSC)* and

include in internal

review meetings

when significant

developments have

taken place

• Reassess ESG risks

and opportunities

during each round of

funding

• Use new funding

round to check for

improvements

• Support the

company in

demonstrating to

potential investors

how ESG risks have

been mitigated

and opportunities

realised

• To the extent

possible ensure

good ESG practices

remain in place

following exit

Albion Development VCT PLC36

Environmental, Social, and Governance (“ESG”) report

An exclusion list is used to rule out investments in unsustainable, socially

detrimental areas. ESG due diligence is performed on each potential

portfolio company to identify any sustainability risks, which are ranked

from low to high and are reported to the relevant investment committee. If

sustainability risks are identified, mitigations are assessed and, if necessary,

mitigation plans are put in place. If this is not deemed sufficient, the

committee would consider the appropriate level and structure of funding to

balance the associated risks. If this is not possible, investment committee

approval will not be provided, and the investment will not proceed.

Albion’s investment deal documents includes a sustainability clause that

reinforces individual portfolio company’s commitment to driving principles

of ESG as it scales.

An ESG clause is integrated into the shareholders’ agreement for all new

investments, which outlines the portfolio company’s commitment to

combine economic success with ecological and social success.

All new and existing portfolio companies are asked to report against the

ESG BSC annually. It contains a number of sustainability factors against

which a portfolio company is assessed and scored in order to determine the

potential sustainability risks and opportunities arising from the investment.

ESG score is reviewed annually, and key priority improvement areas

are identified for the next 12 months. It forms part of Albion’s internal

broader risk review meetings and any outstanding issues are addressed in

collaboration with the portfolio companies’ senior management.

Albion aims to ensure that good ESG practices remain in place following

exit. For example, by ensuring that the portfolio company creates a self-

sustaining ESG management system during our period of ownership,

wherever feasible.

PRE-INVESTMENT STAGE

INVESTMENT STAGE

EXIT STAGE

37Albion Development VCT PLC

Environmental, Social, and Governance (“ESG”) report

Signatories

As a signatory of UN Principles for Responsible

Investment (UN PRI) Albion is committed to the six key

principles to incorporate ESG into investment practice.

Albion is a member of VentureESG steering committee,

a venture capital-based non-profit initiative to push

the industry on ESG best practices. The current group

consists of 300 venture funds and 90 limited partners

globally who work to make ESG a standard part of the

due diligence, portfolio stewardship and internal fund

management.

Albion is a proud signatory of the Investing in Women

Code, and commits to adopt internal practices that

aim to improve female entrepreneurs’ access to the

tools, resources and finance required to scale their

companies.

The Manager’s ESG initiatives

ESG is incorporated into Albion’s own internal

operations as follows:

Environmental: Committed to ensuring that the

environmental impacts of its business operations are

positive and, as far as possible, any negative impact is

mitigated.

Overview of Albion’s ESG activity in 2022:

Social: Aims to conduct its business in a socially

responsible manner, to contribute to the communities

in which it operates and to respect the needs of all

employees and stakeholders.

Governance: Seeks to conduct business activities in an

honest, ethical and socially responsible manner. These

values underpin its business model and strategy.

ENVIRONMENTAL

• Net Zero target by 2030

• Measuring carbon footprint

with Plan A

• Purchased carbon removal

permits for 2021/2022

emissions

SOCIAL

• Fair HQ score improvement

(from 3.8 to 6.1 out of 10)

within a year

• Mentoring for under-

represented groups in VC

• Social and team activities

• Continued support for Whizz

Kidz

GOVERNANCE

• ESG principles integrated

across the full investment

cycle

• Completion of 2022 ESG

BSC portfolio reporting and

targets set for 2023

• UN PRI score 2020/21: 3/5

stars

• Regular ESG updates for all

stakeholders

Environmental, Social, and Governance (“ESG”) reportEnvironmental, Social, and Governance (“ESG”) report

Albion Development VCT PLC38

Governance

The following are the Directors of the Company, all of whom operate in a

non-executive capacity:

THE BOARD OF DIRECTORS

Ben Larkin (Chairman), LLB (appointed Director 5

December 2016, appointed Chairman 8 July 2019)

is a partner at an international law firm, Jones Day.

He heads up the business reorganisation practice

across Europe. He has spent the majority of his career

advising public and private boards on aspects of

corporate governance and has particular expertise

in the infrastructure and real estate sectors. Recent

mandates include Airwave (the mobile communication

network for the UK’s emergency services) and National

Car Parks. Prior to joining Jones Day, he led the business

recovery and reconstruction division of Berwin Leighton

Paisner LLP for 14 years.

Lyn Goleby, MA (Cantab), (appointed 3 November

2017), qualified as a solicitor at Denton Hall and Burgin

(now Dentons) and went on to business affairs roles

in the film industry before starting an independent

career as a film producer. She produced 3 films before

the start up of City Screen (which became Picturehouse

Cinemas) in 1989. She was on the board of the UK

Cinemas Association until Picturehouse was bought by

Cineworld in 2012. She has served on various boards

including the Film Committee of Arts Council England,

Dance East and the Advisory Council of Tate Modern.

Lord O’Shaughnessy, MA (Oxon) (appointed 8 July

2019),has operated at the highest levels across UK

Government, including as a Parliamentary Under

Secretary in the Department for Health & Social Care

with key policy responsibilities including life sciences;

medicines pricing and regulation; preparing the health

and social care sectors for Brexit; and, data, digital and

technology, including cyber security. He was created a

life peer in 2015 taking the title Baron O’Shaughnessy,

of Maidenhead in the Royal County of Berkshire,

and previously served as Director of Policy in No.10

Downing Street. He is a senior partner at Newmarket

Strategy, a healthcare and life sciences consultancy,

and a Trustee at Health Data Research UK.

Patrick Reeve MA, FCA, (appointed 12 November

2013) was formerly the managing partner of Albion

Capital and became chairman in 2019. He is also

a director of Albion Technology & General VCT and

Albion Enterprise VCT. Patrick is on Albion’s Valuation

Committee and its Risk Management Committee. He

is also a director of the Association of Investment

Companies. Patrick joined Close Brothers Group plc in

1989 before establishing Albion Capital LLP (originally

Close Ventures Ltd) in 1996. Prior to Close he qualified

as a chartered accountant before joining Cazenove

& Co. Patrick has an MA in Modern Languages from

Oxford University and a BA in Sanskrit from SOAS.

Patrick, although considered non-independent

for governance purposes, contributes both direct

investment experience and a wider perspective in the

venture capital markets.

All Directors, except for Patrick Reeve, are members

of the Audit and Risk Committee and Lyn Goleby is

Chairman.

All Directors, except for Patrick Reeve, are members

of the Nomination Committee and Ben Larkin is

Chairman.

All Directors, except for Patrick Reeve, are members of

the Remuneration Committee and Lord O’Shaughnessy

is Chairman.

Lyn Goleby is the Senior Independent Director.

Albion Development VCT PLC40

GOVERNANCE

Albion Capital Group LLP, is authorised and regulated by the

Financial Conduct Authority and is the Manager of Albion

Development VCT PLC. Established in 1996, Albion Capital is an

independent investment firm providing investors with access to

entrepreneurs who build enduring businesses.

The following are specifically responsible for the management

and administration of the Venture Capital Trusts managed

by Albion Capital Group LLP:

THE MANAGER

Patrick Reeve, MA, FCA,

details included in the

Board of Directors section.

Will Fraser-Allen, BA

(Hons), FCA, has been

managing partner since

2019 and chairs the

investment committee.

He is chairman of

the VCTA and sits on

the Venture Capital

Committee of the BVCA.

He joined Albion in

2001, became deputy

managing partner in

2009. He qualified as a

chartered accountant and

has a BA in History from

Southampton University.

Dr. Andrew Elder, MA,

FRCS, practised as a

neurosurgeon before

starting his career in

investment. He heads up

the healthcare investment

team and became deputy

managing partner in

2019. He joined Albion

in 2005 and became a

partner in 2009. He has

an MA plus Bachelor of

Medicine and Surgery

from Cambridge

University. He is a Fellow

of the Royal College of

Surgeons (England).

Vikash Hansrani, BA

(Hons), FCA, is a partner

and oversees the finance

and administration of

all funds under Albion’s

management. He

qualified as a chartered

accountant with RSM

before joining Albion

in 2010. He has a BA in

Accountancy & Finance

from Nottingham

Business School.

41Albion Development VCT PLC

GOVERNANCE

Valerie Aelbrecht, MSc,

MSc, joined as investment

associate in 2022. She

was at Cherry Ventures

after being a founder and

operator for 8 years in

the foodtech space. She

holds an MSc in Applied

Economics from the

University of Antwerp and

an MSc in International

Business Management

& Entrepreneurship from

Kingston University.

Lauren Apostolidis, BA

(Hons), joined as platform

director in 2022. She was

previously at Huckletree

where she built and

managed the support

network of ambassadors

and investors to help

connect founders. Prior

to this, she managed

FinTech partnerships at

Thomson Reuters.

Adam Chirkowski, MA

(Hons), is an investment

director focusing on

B2B and ClimateTech

investments. Prior to

joining Albion in 2013, he

spent five years working

in corporate finance at

Rothschild. He holds

a first-class degree in

Industrial Economics and

a Masters in Corporate

Strategy and Governance

from Nottingham

University.

Emil Gigov, BA (Hons),

FCA, is a partner focusing

on B2B SaaS businesses.

He joined Albion in 2000

and became a partner in

2009. He graduated from

the European Business

School, London, with a

BA in European Business

Administration.

Dr. Molly Gilmartin BA,

joined in 2022 as an

investment manager from

McKinsey & Company.

Before that, she was

Chief Commercial Officer

of Induction Healthcare

Group which completed

an IPO on AIM in 2019.

Before this she was a

founding team member

of start-up Pando and an

NHS Clinical Entrepreneur

as a medical doctor.

Ed Lascelles, BA (Hons),

heads up the technology

investment team. He

joined in 2004 having

started his career advising

public companies and

became a partner in

2009. He holds a first-

class honours degree in

Philosophy from UCL.

Paul Lehair, MSc, MA, is

an investment director

who joined in 2019

having spent five years

at Citymapper. He also

worked at Viagogo and

in M&A at Citigroup. He

holds a dual Masters’

degree in European

Political Economy from

the LSE and Political

Science and Sciences

Po Paris.

Catriona McDonald, BA

(Hons), is an investment

director specialising in

technology investing.

She joined in 2018 from

Goldman Sachs where she

worked on IPOs, M&A and

leveraged buyouts in New

York and London. She

graduated from Harvard

University, majoring in

Economics.

Albion Development VCT PLC42

The Manager

Kibriya Rahman, MMath,

joined as investment

associate in 2022. He

was previously at Funding

Circle and Formula 1.

Before this, he worked

at OC&C Strategy

Consultants. Kibriya

graduated from Oxford

University with an MMath

degree.

Gita Kler, BSc, joined in

2022 as platform analyst.

Before this, she worked

on data analytics at a

Dutch re-commerce start-

up. Gita holds a BSc in

Economics and Finance

from the University of

Amsterdam and an

MA in Management of

Information Systems and

Digital Innovation from

the LSE.

Jane Reddin, BA (Hons),

heads up the platform

team. She joined Albion

in 2021 and became

partner in 2022. Prior

to Albion, she spent six

years as Talent Advisor

at Balderton Capital

and then co-founded

The Talent Stack. She

graduated from Durham

University with a BA in

French and German.

Dr. Christoph Ruedig,

MBA, is a partner focusing

on digital health. He

originally practiced

radiology and was

responsible for M&A in

healthcare at GE and

venture capital with 3i.

He joined Albion in 2011

and became a partner in

2014. He holds a degree

in medicine from Ludwig-

Maximilians University

and an MBA from INSEAD.

Nadine Torbey, MSc,

BEng, is an investment

director who joined in

2018 from Berytech Fund

Management. She holds

a BSc in Electrical and

Computer Engineering

from the American

University of Beirut and

an MSc in Innovation

Management and

Entrepreneurship from

Brown University.

Robert Whitby-Smith, BA

(Hons), FCA, is a partner

focusing on software

investing. His background

was in corporate finance

at KPMG, CSFB and

ING Barings, after

qualifying as a chartered

accountant. He joined

Albion in 2005 and

became a partner in

2009. He graduated from

Reading University with a

BA in History.

Jay Wilson, MBA, MMath,

is an investment director

focusing on FinTech. He

joined in 2019 from Bain

& Co, where he had been

a consultant since 2016.

Prior to this he graduated

from the London Business

School with an MBA

having spent eight years

as a broker at ICAP

Securities.

Marco Yu, PhD, MRICS,

is head of renewables.

Prior to joining Albion in

2007, he qualified as a

Chartered Surveyor with

Bouygues and advised

on large capital projects

with EC Harris. He has a

degree in economics from

University of Cambridge

and a PhD in construction

economics from UCL.

43Albion Development VCT PLC

The Manager

number of sectors, to produce a regular source of income,

combined with the prospect of longer term growth.

All Ordinary shares (except for treasury shares which

have no right to dividend and no voting rights) rank

pari passu for dividends and voting rights. Each

Ordinary share is entitled to one vote. The Directors are

not aware of any restrictions on the transfer of shares

or on voting rights.

Shareholders are entitled to receive dividends and are

entitled to the return of capital on winding up or other

return of capital based on the surpluses attributable to

the shares.

Issue and buy-back of Ordinary shares

During the year the Company issued a total of

27,727,238 Ordinary shares (2021: 11,894,376

Ordinary shares) under the Albion VCTs Top Up Offers

and 1,107,668 Ordinary shares (2021: 878,514

Ordinary shares) under the Company’s Dividend

Reinvestment Scheme. Further information on the

share capital is detailed in note 15.

Your Board, in conjunction with the boards of the five

other VCTs managed by Albion Capital Group LLP,

launched a prospectus Top Up Offer of new Ordinary

shares on 6 January 2022, and announced on 3 March

2022 that, following strong demand, it had opted to

exercise its over-allotment facility, bringing the total

amount to be raised to £21.0 million. On 23 March

2022 the offers were fully subscribed and closed to

further applications.

A separate prospectus Top Up Offer was launched on

10 October 2022. The Board announced on 4 January

2023 that, following strong demand, it had opted to

exercise its over-allotment facility, bringing the total

amount to be raised to £13.0 million. On 9 March 2023

the offers were fully subscribed and closed to further

applications.

The Company operates a policy of buying back shares

either for cancellation or for holding in treasury. Details

regarding the current buy-back policy can be found on

page 12 of the Chairman’s statement and details of

share buy-backs in the year can be found in note 15.

The Directors submit their Annual Report and the

audited Financial Statements on the affairs of Albion

Development VCT PLC (the “Company”) for the year

ended 31 December 2022. The Statement of corporate

governance on pages 52 to 58 forms a part of the

Directors’ report.

Business review

Principal activity and status

The principal activity of the Company is that of a

venture capital trust. It has been approved by H.M.

Revenue & Customs (“HMRC”) as a venture capital trust

in accordance with Part 6 of the Income Tax Act 2007

and in the opinion of the Directors, the Company has

conducted its affairs so as to enable it to continue to

obtain such approval. In order to maintain its status

under venture capital trust legislation, a VCT must

comply on a continuing basis with the provisions

of Section 274 of the Income Tax Act 2007 and

further details of this can be found on page 46 of

this Directors’ report. As with previous years, formal

approval for the year ended 31 December 2022 is

subject to review should there be any subsequent

enquiry under corporation tax self-assessment.

The Company is not a close company for taxation

purposes and its shares are premium listed on the

official list of the London Stock Exchange.

Under current tax legislation, shares in the Company

provide tax-free capital growth and income distribution,

in addition to the income tax relief some investors

would have obtained when they invested in the

Company’s original share offers.

Capital structure

Details of the issued share capital, together with details

of the movements in the Company’s issued share

capital during the year are shown in note 15.

Ordinary shares represent 100% of the total share

capital and voting rights. The Ordinary shares are

designed for individuals who are seeking, over the long

term, investment exposure to a diversified portfolio of

unquoted investments. The investments are spread over a

DIRECTORS’ REPORT

Albion Development VCT PLC44

GOVERNANCE

quarterly at Board level with regards to going concern.

The cash flow forecasts have been updated and stress

tested, which included assessing the resilience of

portfolio companies, incorporating the requirement

for any future financial support, including proceeds

from investment disposals only when there is a high

probability of completion, and evaluating the impact of

high inflation, both within the Company and within its

portfolio. Accordingly, after making diligent enquiries,

the Directors have a reasonable expectation that

the Company has adequate resources to continue in

operational existence over a period of at least twelve

months from the date of approval of the Financial

Statements. For this reason, the Directors have adopted

the going concern basis in preparing the accounts.

The Directors do not consider there to be any material

uncertainty over going concern.

The Board’s assessment of liquidity risk and details of

the Company’s policies for managing its capital and

financial risks are shown in note 17. The Company’s

business activities, together with details of its

performance are shown in the Strategic report and this

Directors’ report.

Post balance sheet events

Details of events that have occurred since 31 December

2022 are shown in note 19.

Principal risks and uncertainties

A summary of the principal risks faced by the Company

are set out on pages 23 to 25 of the Strategic report.

Substantial interests and shareholder profile

As at 31 December 2022 and at the date of this Report,

the Company was not aware of any shareholder who

had a beneficial interest exceeding 3% of voting rights.

There have been no disclosures in accordance with

Disclosure Guidance and Transparency Rule 5 made

to the Company during the year ended 31 December

2022, and up to the date of this Report.

Results and dividends

Detailed information on the results and dividends for

the year ended 31 December 2022 can be found in the

Strategic report on page 15.

Future developments of the business

Details on the future developments of the business can

be found on page 13 of the Chairman’s statement and

on page 16 of the Strategic report.

Going concern

In accordance with the Guidance on Risk Management,

Internal Control and Related Financial and Business

Reporting issued by the Financial Reporting Council

(“FRC’) in 2014, and the subsequent updated Going

concern, risk and viability guidance issued by the FRC

due to Covid-19 in 2020, the Board has assessed the

Company’s operation as a going concern. The Company

has sufficient cash and liquid resources, its portfolio

of investments is well diversified in terms of sector,

and the major cash outflows of the Company (namely

investments, buy-backs and dividends) are within the

Company’s control. Cash flow forecasts are discussed

45Albion Development VCT PLC

VCT regulation

The investment policy is designed to ensure that the Company continues to qualify and is approved as a VCT by

HMRC. In order to maintain its status under venture capital trust legislation, a VCT must comply on a continuing

basis with the provisions of Section 274 of the Income Tax Act 2007 as follows:

1 The Company’s income must be derived wholly or mainly from shares and securities;

2 At least 80% of the HMRC value of its investments must have been represented throughout the year by

shares or securities that are classified as ‘qualifying holdings’;

3 At least 70% by HMRC value of its total qualifying holdings must have been represented throughout the year

by holdings of ‘eligible shares’. Investments made before 6 April 2018 from funds raised before 6 April 2011

are excluded from this requirement;

4 At least 30% of funds raised in accounting periods beginning on or after 6 April 2018 must be invested in

qualifying holdings by the anniversary of the end of the accounting period in which the funds were raised;

5 At the time of investment, or addition to an investment, the Company’s holdings in any one company (other

than another VCT) must not have exceeded 15% by HMRC value of its investments;

6 The Company must not have retained greater than 15% of its income earned in the year from shares and

securities;

7 The Company’s shares, throughout the year, must have been listed on a regulated market;

8 An investment in any company must not cause that company to receive more than £5 million in State aid

risk finance in the 12 months up to the date of the investment, nor more than £12 million in total (the limits

are £10 million and £20 million respectively for a ‘knowledge intensive’ company);

9 The Company must not invest in a company whose trade is more than seven years old (ten years for a

‘knowledge intensive’ company) unless the company previously received State aid risk finance in its first seven

years, or the company is entering a new market and a turnover test is satisfied;

10 The Company’s investment in another company must not be used to acquire another business, or shares in

another company; and

11 The Company may only make qualifying investments or certain non-qualifying investments permitted by

section 274 of the Income Tax Act 2007.

These tests drive a spread of investment risk through

preventing holdings of more than 15% by HMRC value

in any portfolio company. The tests have been carried

out and independently reviewed for the year ended 31

December 2022. The Company has complied with all

tests and continues to do so.

‘Qualifying holdings’ include shares or securities

(including unsecured loans with a five year or greater

maturity period) in companies which have a permanent

establishment in the UK and operate a ‘qualifying

trade’ wholly or mainly in the United Kingdom. The

investment must bear a sufficient level of risk to meet a

risk-to-capital condition. Eligible shares must comprise

at least 10% by HMRC value of the total of the shares

and securities that the Company holds in any one

portfolio company. ‘Qualifying trade’ excludes, amongst

other sectors, dealing in property or shares and

securities, insurance, banking and agriculture.Details

of the sectors in which the Company is invested can be

found in the pie chart on page 14.

A ‘knowledge intensive’ company is one which is

carrying out significant amounts of R&D from which

the greater part of its business will be derived, or where

those R&D activities are being carried out by staff with

certain higher educational attainments.

Portfolio company gross assets must not exceed £15

million immediately prior to the investment and £16

million immediately thereafter.

As at 31 December 2022, the HMRC value of the

Company’s qualifying investments (which includes a

12 month disregard for disposals) was 100.00% (2021:

96.59%). The Board continues to monitor this and all the

VCT qualification requirements very carefully in order to

ensure that all requirements are met and that qualifying

investments comfortably exceed the current minimum

threshold of 80% required for the Company to continue

to benefit from VCT tax status. The Board and Manager

are confident that the qualifying requirements can be

met during the course of the year ahead.

Albion Development VCT PLC46

Directors’ report

Environment

The management and administration of the

Company is undertaken by the Manager. Albion

Capital Group LLP recognises the importance of its

environmental responsibilities, monitors its impact

on the environment, and designs and implements

policies to reduce any damage that might be caused

by its activities. Initiatives designed to minimise

the Company’s impact on the environment include

recycling, favouring digital over printing and reducing

energy consumption. Further details can be found in

the Environmental, Social, and Governance (“ESG”)

report on pages 35 to 38.

Global greenhouse gas emissions

The Company qualifies as a low energy user with

regards to greenhouse gas emissions, producing

less than 40,000kWh of energy, and therefore is not

required to report emissions from the operations of the

Company, nor does it have responsibility for any other

emissions producing sources under the Companies

Act 2006 (Strategic report and Directors’ reports)

Regulations 2013, including those within our underlying

investment portfolio. Therefore, the Company is outside

of the scope of Streamlined Energy Carbon Reporting.

Anti-bribery

The Company has adopted a zero tolerance approach

to bribery, and will not tolerate bribery under any

circumstances in any transaction the Company is

involved in.

The Manager reviews the anti-bribery policies and

procedures of all portfolio companies.

Number of Board members Percentage of the Board

Gender Identity

Men 3 75%

Women 1 25%

Not specified/prefer not to say - -

Ethnic Background

White British or other White (including minority-white groups) 4 100%

Mixed/Multiple Ethnic Groups - -

Asian/Asian British - -

Black/African/Caribbean/Black British - -

Other ethnic group, including Arab - -

Not specified/prefer not to say - -

Anti-facilitation of tax evasion

The Company has a zero tolerance approach with

regards to the facilitation of criminal tax evasion and

has a robust risk assessment procedure in place to

ensure compliance. The Board reviews this policy and

the prevention procedures in place for all associates on

a regular basis.

Diversity

The Board’s policy on the recruitment of new Directors is

to attract a range of backgrounds, skills and experience

and to ensure that appointments are made on the

grounds of merit against clear and objective criteria and

bear in mind gender and other diversity within the Board.

The Board is required to disclose their compliance

in relation to the targets on board diversity set out

under paragraph 9.8.6R (9) of the Listing Rules (and

corresponding AIC guidance). These are as follows:

(i) At least 40% of the individuals on the Board of

Directors are women;

(ii) At least one of the senior positions on the Board of

Directors is held by a woman; and

(iii) At least one individual on the Board of Directors is

from a minority ethnic background.

The Board of Directors self-reported their gender

identity and ethnic background, which offered each of

the categories noted in the table below, along with the

additional option to indicate an ‘other category’, should

they wish to do so.

As at 31 December 2022, the breakdown of the gender

identity and ethnic background of the Board is as follows:

47Albion Development VCT PLC

Directors’ report

The Board notes that they met one of the three targets.

Due to the small size of the Board, any change in the

board membership will have a much greater impact

on representation. Therefore on future succession and

recruitment of members of the Board, the diversity

in gender identity and ethnic background will be

thoroughly considered.

More details on the Directors can be found in the Board

of Directors section on page 40.

Packaged Retail and Insurance-based

Investment Products (“PRIIPs”)

Investors should be aware that the PRIIPs Regulation

requires the Manager, as PRIIP manufacturer, to

prepare a Key Information Document (“KID”) in respect

of the Company. This KID must be made available

by the Manager to retail investors prior to them

making any investment decision and is available on

the Company’s webpage on the Manager’s website.

The Company is not responsible for the information

required to be contained in the KID and investors

should note that the procedures for calculating the

risks, costs and potential returns are prescribed by the

law. The figures in the KID may not reflect the expected

returns for the Company and anticipated performances

returns cannot be guaranteed.

Alternative Investment Fund Managers

Directive (“AIFMD”)

Under the Alternative Investment Fund Manager

Regulations 2013 (as amended) the Company is a UK

AIF and the Manager is a full scope UK AIFM. Ocorian

Depositary (UK) Limited provides depositary services

under the AIFMD.

Material changes to information required to be made

available to investors of the Company

The AIFMD outlines the required information which

has to be made available to investors prior to investing

in an AIF and directs that material changes to this

information be disclosed in the Annual Report of the

AIF. There were no material changes in the year.

Assets of the Company subject to special arrangements

arising from their illiquid nature

There are no assets of the Company which are subject to

special arrangements arising from their illiquid nature.

Remuneration (unaudited)

The Manager has a remuneration policy which

meets the requirements of the AIFMD Remuneration

Code and associated Financial Conduct Authority

guidance. The remuneration policy together with the

remuneration disclosures for the AIFM’s most recent

reporting period are available on the Company’s

webpage on the Manager’s website.

Employees

The Company is managed by Albion Capital Group

LLP and has no employees. The Board consists solely

of non-executive Directors, who are considered key

management personnel.

Directors

The Directors who held office throughout the year, and

their interests in the shares of the Company (together

with those of their immediate family) are shown in the

Directors’ remuneration report on page 61.

All Directors, except Patrick Reeve, are members

of the Audit and Risk Committee of which Lyn Goleby

is Chairman.

Patrick Reeve, as chairman of Albion Capital Group

LLP, is deemed to have an interest in the Management

agreement to which the Company is party.

Directors’ indemnity

Each Director has entered into a Deed of Indemnity

with the Company which indemnifies each Director,

subject to the provisions of the Companies Act 2006

and the limitations set out in each Deed, against any

liability arising out of any claim made against them in

relation to the performance of their duties as a Director

of the Company. A copy of each Deed of indemnity

entered into by the Company with each Director is

available at the registered office of the Company.

Re-election of Directors

Directors’ re-election is subject to the Articles of

Association and the UK Corporate Governance Code.

The AIC Code recommends that all Directors submit

themselves for re-election annually, therefore in

accordance with the AIC Code, Ben Larkin, Lyn Goleby,

Lord O’Shaughnessy and Patrick Reeve will offer

themselves for re-election.

Advising ordinary retail investors

The Company currently conducts its affairs so that its

shares can be recommended by financial intermediaries

to ordinary retail investors in accordance with the

FCA’s rules in relation to non-mainstream investment

products and intends to continue to do so for the

foreseeable future. The FCA’s restrictions which apply

to non-mainstream investment products do not apply

Albion Development VCT PLC48

Directors’ report

Annual General Meeting

to the Company’s shares because they are shares in

a Venture Capital Trust which, for the purposes of the

rules relating to non-mainstream investment products,

are excluded securities and may be promoted to

ordinary retail investors without restriction.

Investment and co-investment

The Company co-invests with other Albion Capital Group

LLP managed VCTs. Allocation of investments is on the

basis of an allocation agreement which is based, inter

alia, on the ratio of cash available for investment in each

of the entities and the HMRC VCT qualifying tests.

Auditor

The Audit and Risk Committee annually reviews and

evaluates the standard and quality of service provided

by the Auditor, as well as value for money in the

provision of these services. A resolution to re-appoint

BDO LLP will be put to the Annual General Meeting.

The Company’s Annual General Meeting (“AGM”)

will be held at noon on 30 May 2023 via the Lumi

platform. Information on how to participate in the live

webcast can be found on the Manager’s website at

www.albion.capital/vct-hub/agms-events.

The AGM will include a presentation from the

Manager, the answering of questions received from

shareholders and the formal business of the AGM,

which includes voting on the resolutions proposed by

the Board by way of a poll. Registration details for the

webcast will be emailed to shareholders and will be

available at www.albion.capital/vct-hub/agms-events

prior to the Meeting.

The Board welcomes questions from shareholders

at the AGM and shareholders will be able to ask

questions using the Lumi platform during the AGM.

Alternatively, shareholders can email their questions

to AADVchair@albion.capital prior to the Meeting.

Questions asked will be answered during the meeting

so far as possible.

Shareholders will be able to vote during the Meeting

using the Lumi platform. Shareholders are encouraged

to complete and return proxy cards in advance of the

AGM but those participating in the meeting will be

able to cast their votes through the Lumi platform

once the Chairman declares the poll open.

The results of the poll held at the Meeting will be

announced through a Regulatory Information Service

and will be published on the Company’s webpage on

the Manager’s website at www.albion.capital/funds/

AADV as soon as reasonably practicable following

the Meeting.

Shareholders’ views are important, and the Board

encourages shareholders to vote on the resolutions.

You can cast your vote by using the proxy form

enclosed with this Annual Report or electronically

at www.investorcentre.co.uk/eproxy. The Board has

carefully considered the business to be approved at

the AGM and recommends shareholders to vote in

favour of all the resolutions being proposed.

Full details of the business to be conducted at the

AGM are given in the Notice of the Meeting on pages

90 to 94.

The ordinary business resolutions 1 to 9 includes

receiving and adopting the Company’s accounts,

to approve the Directors’ remuneration policy and

report, to re-elect all Directors, and to re-appoint BDO

LLP as auditor for the next year end and to fix their

remuneration.

Resolutions relating to the following items of special

business will be proposed at the forthcoming Annual

General Meeting for which shareholder approval is

required in order to comply either with the Companies

Act or the Listing Rules of the Financial Conduct

Authority.

Resolutions number 10 to 12 replace the authorities

given to the Directors at the Annual General Meeting

in 2022. The authorities sought at the forthcoming

Annual General Meeting will expire 15 months from

the date that the resolution is passed or at the

conclusion of the next Annual General Meeting of the

Company, whichever is earlier.

49Albion Development VCT PLC

Directors’ report

Annual General Meeting (continued)

Authority to allot shares

Ordinary resolution number 10 will request the

authority to allot up to an aggregate nominal amount

of £305,433 representing approximately 20% of the

issued Ordinary share capital as at the date of this

Report.

The Directors’ current intention is to allot shares under

any future Albion VCTs Share Offers and the Dividend

Reinvestment Schemes. The Company currently holds

16,468,548 Ordinary shares in treasury representing

11.3% of the Ordinary share capital in issue as at 31

December 2022.

During the year, Ordinary shares were allotted under

the terms of the Dividend Reinvestment Scheme and

the Albion VCTs Share Offers as described in note 15.

Disapplication of pre-emption rights

Special resolution number 11 will request authority

for Directors to allot equity securities for cash without

first being required to offer such securities to existing

members. This will include the sale on a non pre-

emptive basis of any shares the Company holds in

treasury for cash. The authority relates to a maximum

aggregate of £305,433 of the nominal value of the

share capital representing approximately 20% of the

issued Ordinary share capital of the Company as at

the date of this Report.

Purchase of own shares

Special resolution number 12 proposes to renew the

existing power of the Company to purchase its own

shares up to a maximum number of 22,892,221 shares

representing 14.99% of the total number of shares

currently in issue at or between the minimum and

maximum prices specified in resolution number 12.

The Board believes that it is helpful for the Company

to continue to have the flexibility to buy its own

shares and this resolution seeks authority from

shareholders to do so.

During the financial year under review, the Company

purchased 2,522,073 Ordinary shares which were

held in treasury, at an aggregate consideration of

£2,244,000 representing 1.7% of called-up share

capital. Further information is shown in note 15.

Recommendation

The Board believes that the passing of the resolutions

are in the best interests of the Company and its

shareholders as a whole and accordingly, unanimously

recommends that you vote in favour of these

resolutions, as the Directors intend to do in respect of

their own shareholdings.

Disclosure of information to Auditor

In the case of the persons who are Directors of the

Company at the date of approval of this Report:

• so far as each of the Directors are aware, there

is no relevant audit information of which the

Company’s Auditor is unaware; and

• each of the Directors has taken all the steps

that they ought to have taken as a Director to

make themselves aware of any relevant audit

information and to establish that the Company’s

Auditor is aware of that information.

This disclosure is given and should be interpreted in

accordance with the provisions of Section 418 of the

Companies Act 2006.

By Order of the Board

Albion Capital Group LLP

Company Secretary

1 Benjamin Street

London, EC1M 5QL

6 April 2023

Albion Development VCT PLC50

Directors’ report

The Directors are responsible for preparing the Annual

Report and Financial Statements in accordance with

applicable law and regulations.

Company law requires the Directors to prepare

Financial Statements for each financial year. Under

that law the Directors have elected to prepare the

Company’s Financial Statements in accordance with

United Kingdom Generally Accepted Accounting

Practice (“UK GAAP”) (United Kingdom Accounting

Standards and applicable law). Under company law the

Directors must not approve the Financial Statements

unless they are satisfied that they give a true and fair

view of the state of affairs of the Company and of the

profit or loss for the Company for that period.

In preparing these Financial Statements, the Directors

are required to:

• select suitable accounting policies and then

apply them consistently;

• make judgements and accounting estimates that

are reasonable and prudent;

• state whether they have been prepared in

accordance with UK GAAP subject to any

material departures disclosed and explained in

the Financial Statements;

• prepare the Financial Statements on the going

concern basis unless it is inappropriate to presume

that the Company will continue in business; and

• prepare a Directors’ report, a Strategic report and

Directors’ remuneration report which comply with

the requirements of the Companies Act 2006.

The Directors are responsible for keeping adequate

accounting records that are sufficient to show and

explain the Company’s transactions and disclose with

reasonable accuracy at any time the financial position

of the Company and enable them to ensure that the

Financial Statements comply with the Companies Act

2006. They are also responsible for safeguarding the

assets of the Company and hence for taking reasonable

steps for the prevention and detection of fraud and

other irregularities.

The Directors are responsible for ensuring that the

Annual Report and Financial Statements, taken as

a whole, are fair, balanced and understandable and

provides the information necessary for shareholders to

assess the Company’s position, performance, business

model and strategy.

Website publication

The Directors are responsible for ensuring the Annual

Report and Financial Statements are made available

on a website. Financial Statements are published on

the Company’s webpage on the Manager’s website

(www.albion.capital/funds/AADV) in accordance with

legislation in the United Kingdom governing the

preparation and dissemination of Financial Statements,

which may vary from legislation in other jurisdictions.

The maintenance and integrity of the Company’s

webpage is the responsibility of the Directors. The

Directors’ responsibility also extends to the ongoing

integrity of the Financial Statements contained therein.

Directors’ responsibilities pursuant to Disclosure

Guidance and Transparency Rule 4 of the UK

Listing Authority

The Directors confirm to the best of their knowledge:

• The Financial Statements have been prepared

in accordance with UK GAAP and give a true

and fair view of the assets, liabilities, financial

position and profit or loss of the Company.

• The Annual Report includes a fair review of the

development and performance of the business

and the financial position of the Company,

together with a description of the principal risks

and uncertainties that it faces.

For and on behalf of the Board

Ben Larkin

Chairman

6 April 2023

STATEMENT OF DIRECTORS’

RESPONSIBILITIES

GOVERNANCE

51Albion Development VCT PLC

Albion Development VCT PLC52

STATEMENT OF CORPORATE GOVERNANCE

GOVERNANCE

Background

The Financial Conduct Authority requires all companies

listed on a regulated market to disclose how they have

applied the principles and complied with the provisions

of the UK Corporate Governance Code (the “Code”)

issued by the Financial Reporting Council (“FRC”) in

2018.

The Board of Albion Development VCT PLC has

considered the Principles and Provisions of the AIC

Code of Corporate Governance (“AIC Code”). The

AIC Code addresses the Principles and Provisions

set out in the Code, as well as setting out additional

Provisions on issues that are of specific relevance to

Albion Development VCT PLC and other investment

companies. Closed-ended investment companies

have particular factors which have an impact on

their governance arrangements, principally from

four features: outsourcing their day-to-day activities

to external service providers and being governed by

boards of non-executive directors; the importance of

the Manager in the outsourcing compared to a typical

supplier; having no executive directors or employees

and consequently no executive remuneration packages;

and no customers in the traditional sense, only

shareholders.

The Board considers that reporting against the

Principles and Provisions of the AIC Code, which has

been endorsed by the FRC, provides more relevant

information to shareholders. The Company has

complied with the Principles and Provisions of the AIC

Code.

The AIC Code is available on the AIC website (www.

theaic.co.uk). It includes an explanation of how the AIC

Code adapts the Principles and Provisions set out in the

Code to make them relevant for investment companies.

Board of Directors

The Board consists solely of non-executive Directors.

Ben Larkin is the Chairman and Lyn Goleby is the Senior

Independent Director and chairman of the Audit and

Risk Committee. All Directors are non-executive and

day-to-day management responsibilities are sub-

contracted to the Manager.

Ben Larkin, Lyn Goleby and Lord O’Shaughnessy are

considered independent Directors. Patrick Reeve is not

an independent Director as he is chairman of Albion

Capital Group LLP, the Manager.

The Board does not have a policy of limiting the tenure

of any Director as the Board does not consider that a

Director’s length of service reduces their ability to act

independently of the Manager. The AIC Code requires

that all Directors submit themselves for re-election

annually, therefore in accordance with the AIC Code,

Ben Larkin, Lyn Goleby, Lord O’Shaughnessy and Patrick

Reeve will offer themselves for re-election.

The Directors have a range of business and financial

skills, including serving on the boards of other

companies, which are relevant to the Company; these

are described in the Board of Directors section on page

40. All of the Directors have demonstrated that they

have sufficient time, skill and experience to acquit

their Board responsibilities and to work together

effectively. Directors are provided with key information

on the Company’s activities, including regulatory

and statutory requirements, and internal controls,

by the Manager. The Board has access to secretarial

advice and compliance services by the Manager, who

is responsible for ensuring that Board procedures are

followed and applicable procedures complied with. All

Directors are able to take independent professional

advice in furtherance of their duties if necessary. The

Company has in place Directors’ & Officers’ Liability

Insurance.

The Directors have considered diversity in relation to

the composition of the Board and have concluded that

its membership is diverse in relation to experience and

balance of skills. Further details on the recruitment

of new Directors can be found in the Nomination

Committee section on page 56.

The Board met four times during the year as part of

its regular programme of Board meetings, with all

Directors attending each meeting. A sub-committee of

the Board comprising at least two Directors met during

53Albion Development VCT PLC

Statement of corporate governance

the year to allot shares issued under the Dividend

Reinvestment Scheme and the Albion VCTs’ Top Up

Offers and also met during the year to approve the

terms and contents of the Offers document under the

Albion VCTs’ Prospectus Top Up Offers. There is regular

contact between individual members of the Board.

Representatives of the Manager attend Board meetings

and participate in Board discussions, other than on

matters where there might be a perceived conflict of

interest between the Manager and the Company.

The Chairman ensures that all Directors receive, in a

timely manner, all relevant management, regulatory

and financial information. The Board receives and

considers reports regularly from the Manager and other

key advisers, and ad hoc reports and information are

supplied to the Board as required. The Board has a formal

schedule of matters reserved for it and the agreement

between the Company and its Manager sets out the

matters over which the Manager has authority and limits

beyond which Board approval must be sought.

The Manager has authority over the management of

the investment portfolio, the organisation of custodial

services, accounting, secretarial and administrative

services, all of which are subject to Board oversight. The

main issues reserved for the Board include:

• the appointment, evaluation, remuneration and

removal of the Manager;

• the consideration and approval of future

developments or changes to the investment

policy, including risk and asset allocation;

• consideration of corporate strategy and

corporate events that arise;

• application of the principles of the AIC Code,

corporate governance and internal control;

• review of sub-committee recommendations,

including the recommendation to shareholders for

the appointment and remuneration of the Auditor;

• approving the Annual Report and Financial

Statements, the Half-yearly Financial Report,

the Interim Management Statements (which

the Company will continue to publish), net

asset value updates (where required), and the

associated announcements;

• approval of the dividend policy and payments of

appropriate dividends to shareholders;

• the performance of the Company, including

monitoring of the discount of share price to the

net asset value;

• share buy-back and treasury share policies;

• participation in dividend re-investment schemes

and Top Up Offers; and

• monitoring shareholder profile and considering

shareholder communications.

Given the size, nature and complexity of the Company,

the Board considers it unnecessary to establish a

Management Engagement Committee.

It is the responsibility of the Board to present an

Annual Report and Financial Statements that is fair,

balanced and understandable, which provides the

information necessary for shareholders to assess the

position, performance, strategy and business model of

the Company.

Committees’ and Directors’ performance

evaluation

Performance of the Board and the Directors is assessed

on the following:

• attendance at Board and Committee meetings;

• the contribution made by individual Directors at,

and outside of, Board and Committee meetings;

and

• completion of a detailed internal assessment

process and annual performance evaluation

conducted by the Chairman. The Senior

Independent Director reviews the Chairman’s

annual performance evaluation.

The evaluation process has consistently identified

that the Board works well together and has the

right balance of skills, experience, independence

and knowledge for the effective governance of the

Company. Diversity within the Board is achieved

through the appointment of Directors with different

sector experiences, skills and gender.

Directors are offered training, both at the time of

joining the Board and on other occasions where

required. The Directors attend external courses and

industry events which provide further experience to

help them fulfil their responsibilities. The Board also

undertakes a proper and thorough evaluation of its

committees on an annual basis.

In light of the performance of the individual Directors

and the structured performance evaluation, Ben Larkin,

Lyn Goleby, Lord O’Shaughnessy and Patrick Reeve, are

Albion Development VCT PLC54

considered to be effective Directors who demonstrate

strong commitment to the role. The Board believes

it to be in the best interest of the Company to re-

appoint these Directors at the forthcoming Annual

General Meeting and has nominated them for re-

election accordingly. For more details on the specific

background, skills and experience of each Director,

please see the Board of Directors section on page 40.

Remuneration Committee

The Remuneration Committee consists of all Directors

except Patrick Reeve, with Lord O’Shaughnessy as

Chairman. The Committee meets annually to review

both Directors’ responsibilities and salaries against

the market. The Committee held one formal meeting

during the year, which was fully attended by all

members of the Committee at the time the meeting

was held.

All Directors, with the exception of Patrick Reeve, sit

on the Remuneration Committee as their balance of

skills and knowledge are relevant to the Committee’s

responsibilities. The terms of reference for the

Remuneration Committee can be found on the

Company’s webpage on the Manager’s website at

www.albion.capital/funds/AADV under the Corporate

Governance section.

Audit and Risk Committee

The Audit and Risk Committee consists of all Directors

except Patrick Reeve, with Lyn Goleby as Chairman. In

accordance with the AIC Code, members of the Audit

and Risk Committee have recent and relevant financial

experience, as well as experience relevant to the sector.

Given the size of the Board and the complexity of the

business, Ben Larkin is both Chairman of the Board

and a member of the Audit and Risk Committee as his

background, skills and experience are relevant for the

Committee’s responsibilities. The Committee met twice

during the year ended 31 December 2022; all members

attended.

The independent Auditor, BDO LLP, attended the Audit

and Risk Committee meeting at which the Annual

Report and Financial Statements for the year ended

31 December 2022 were discussed. BDO LLP also met

with the Audit and Risk Committee prior to the meeting

without the presence of the Manager.

Written terms of reference have been constituted for

the Audit and Risk Committee and can be found on

the Company’s webpage on the Manager’s website at

www.albion.capital/funds/AADV under the Corporate

Governance section.

During and following the year under review, the Audit

and Risk Committee discharged its responsibilities

including:

• formally reviewing the final Annual Report

and Financial Statements and the Half-yearly

Financial Report, with particular focus on the

main areas requiring judgement and on critical

accounting policies;

• reviewing the effectiveness of the internal

controls system and examination of the Internal

Controls Report produced by the Manager;

• meeting with the external Auditor and reviewing

their findings;

• reviewing the performance of the Manager and

making recommendations regarding their re-

appointment to the Board;

• highlighting specific issues relating to

the Financial Statements including the

reasonableness of valuations produced by the

Manager, compliance with accounting standards

and UK law, corporate governance and listing

and disclosure rules as well as going concern and

viability statements. These issues were addressed

through detailed review, discussion and challenge

by the Board of the matters, as well as by

reference to underlying technical information

to back up the discussions. Taking into account

risk factors that impact on the Company both

as reflected in the annual accounts and in a

detailed risk matrix, both of which are reviewed

periodically in detail, including in the context of

emerging risks;

• advising the Board on whether the Annual Report

and Financial Statements, taken as a whole, is

fair, balanced and understandable and provides

the information necessary for shareholders to

assess the Company’s position, performance,

business model and strategy; and

• reporting to the Board on how it has discharged

its responsibilities.

The Board, and particularly the Audit and Risk

Committee, monitors closely developments in the

Statement of corporate governance

55Albion Development VCT PLC

provision of audit services and is aware that the costs

of rendering audit services from most audit firms are

increasing significantly, with more pressure on those

firms who provide services to listed companies and for

those companies operating in a regulated environment.

The Board is satisfied from discussions with the current

audit firm and from scrutiny of what is happening

elsewhere, that BDO continues to provide the Company

with an independent and expert review of its financial

reporting from an audit firm with significant experience

in the sector and on a competitive fee base for the

work required in reporting on an extensive portfolio of

unquoted investments.

The Committee also examines going concern and

viability statements, using financial projections

provided by the Manager on the Company and by

examining the liquidity in the Company’s portfolio,

including cash and realisable investments, the

committed costs of the Company and where liquidity

might be found if required. The Audit and Risk

Committee also receives regular reports on compliance

with VCT status, which is subject to various internal

controls and external review when investment

commitments are made.

Financial Statements

The Audit and Risk Committee has initial responsibility

for reviewing the Financial Statements and reporting

on any significant issues that arise in relation to the

audit of the Financial Statements as outlined below.

Such issues were communicated with the external

Auditor with the approval of the audit strategy

and at the completion of the audit of the Financial

Statements. No conflicts arose between the Audit and

Risk Committee and the external Auditor in respect of

their work during the year.

The key accounting and reporting issues considered by

the Committee were:

The valuation of the Company’s investments

Valuations of investments are prepared by the

Manager. The Audit and Risk Committee reviewed

the estimates and judgements made in relation to

these investments and were satisfied that they were

appropriate. The Audit and Risk Committee also

discussed the controls in place over the valuation

of investments. The Audit and Risk Committee

recommended investment valuations to the Board for

approval.

Revenue recognition

The revenue generated from loan stock interest and

dividend income has been considered by the Audit

and Risk Committee as part of its review of the

Annual Report as well as a quarterly review of the

management accounts prepared by the Manager.

The Audit and Risk Committee has considered the

controls in place over revenue recognition to ensure

that amounts received are in line with expectation

and budget.

Following detailed reviews of the Annual Report and

Financial Statements and consideration of the key

areas of risk identified, the Directors have concluded

that, as a whole, the Annual Report and Financial

Statements are fair, balanced and understandable

and that they provide the information necessary

for shareholders to assess the Company’s position,

performance, business model and strategy.

Albion Development VCT PLC56

Relationship with the external Auditor

The Audit and Risk Committee reviews the performance

and continued suitability of the Company’s external

Auditor on an annual basis. They assess the external

Auditor’s independence, qualification, extent of

relevant experience, effectiveness of audit procedures

as well as the robustness of their quality assurance

procedures. In advance of each audit, the Committee

obtains confirmation from the external Auditor that

they are independent and of the level of non-audit

fees earned by them and their affiliates. No non-audit

services were provided during the financial year end 31

December 2022.

As part of its work, the Audit and Risk Committee has

undertaken a formal evaluation of the external Auditor

against the following criteria:

• Qualification

• Expertise

• Resources

• Effectiveness

• Independence

• Leadership

In order to form a view of the effectiveness of the

external audit process, the Audit and Risk Committee

took into account information from the Manager

regarding the audit process, the formal documentation

issued to the Audit and Risk Committee and the Board

by the external Auditor regarding the external audit for

the year ended 31 December 2022, and assessments

made by individual Directors, using their experiences

elsewhere as required.

The Audit and Risk Committee also has an annual

meeting with the external Auditor, without the

Manager present, at which pertinent questions are

asked to help the Audit and Risk Committee determine

if the Auditor’s skills and approach to the annual audit

and issues that arise during the course of the audit

match all the relevant and appropriate criteria for the

audit to have been an effective and objective review of

the Company’s year-end reporting.

The core legislation mandates that the maximum period

for which a firm can be appointed auditor of a public

interest entity is 10 years. Member states can choose

to make this period shorter, or they can choose to allow

extensions: to 20 years if a competitive tender is held

at the 10 year point, or to 24 years in the case of a

joint audit appointment. Transition arrangements vary

depending on the length of time auditors have been

incumbent. In 2017, the Audit Committee undertook a

tendering exercise for the provision of audit services. As

a result of this process, BDO LLP was retained as Auditor.

BDO LLP first acted as Auditor for the year ended 31

December 2008 and this will be year 15 of their tenure.

This year is the third year that Peter Smith has acted as

audit engagement partner and rotation will take place

before the year ended 31 December 2025.

Based on the assurance obtained, the Audit and Risk

Committee recommended to the Board a resolution

to re-appoint BDO LLP as Auditor at the forthcoming

Annual General Meeting.

Nomination Committee

The Nomination Committee consists of all Directors,

apart from Patrick Reeve, with Ben Larkin as Chairman.

All Directors sit on the Nomination Committee as their

balance of skills and knowledge are relevant to the

Committee’s responsibilities. The terms of reference of

the Nomination Committee are to evaluate the balance

of skills, experience and time commitment of the

current Board members and make recommendations to

the Board as and when a particular appointment arises.

The Board’s policy on the recruitment of new Directors

is to attract a range of backgrounds, skills and

experience and to ensure that appointments are made

on the grounds of merit against clear and objective

criteria and bear in mind gender and other diversity

within the Board. The Board is also mindful of the

importance of creating good working relationships

within the Board and with external agents. The

Nomination Committee reviews succession planning

regularly which includes considering tenure of existing

Board members, including the Chairman, and any

potential skills gaps that might need to be addressed

when board membership changes.

The Nomination Committee held one formal meeting

during the year, which was fully attended by all

members of the Committee.

Terms of reference for the Nomination Committee can

be found on the Company’s webpage on the Manager’s

website at www.albion.capital/funds/AADV under

the Corporate Governance section. The terms and

conditions of Directors’ appointment are available for

inspection at the Annual General Meeting.

Statement of corporate governance

57Albion Development VCT PLC

Internal control

In accordance with the AIC Code, the Board has an

established process for identifying, evaluating and

managing the significant risks faced by the Company.

This process has been in place throughout the year

and continues to be subject to regular review by the

Board in accordance with the FRC guidance “Risk

Management, Internal Control and Related Financial

and Business Reporting”. The Board is responsible

for the Company’s system of internal control and for

reviewing its effectiveness. However, acknowledging

that such a system is designed to manage, rather

than eliminate, the risks of failure to achieve the

Company’s business objectives, such controls can only

provide reasonable and not absolute assurance against

material misstatement or loss.

The Board, assisted by the Audit and Risk Committee,

monitors all controls, including financial, operational

and compliance controls, and risk management. The

Audit and Risk Committee receives each year from

the Manager a formal report, which details the steps

taken to monitor the areas of risk, including those that

are not directly the responsibility of the Manager, and

which reports the details of any known internal control

failures. Steps are, and continue to be, taken to embed

the system of internal control and risk management

into the operations and culture of the Company and its

key suppliers, and to deal with areas of improvement

which come to the Manager’s and the Audit and Risk

Committee’s attention.

The Board, through the Audit and Risk Committee,

has performed a specific assessment for the purpose

of this Annual Report and Financial Statements. This

assessment considers all significant aspects of internal

control arising during the year. The Audit and Risk

Committee assists the Board in discharging its review

responsibilities.

The main features of the internal control and risk

management system with respect to financial

reporting, implemented throughout the year are:

• segregation of duties between the preparation of

valuations and recording into accounting records;

• independent third party valuations of the

majority of asset-based investments within the

portfolio are undertaken annually;

• reviews of valuations are carried out by Albion’s

Valuation Committee (who are independent of

the investment team) and reviews of financial

reports are carried out by the operations partner

of the Manager, Albion Capital Group LLP;

• bank reconciliations are carried out monthly by

the Manager;

• all published financial reports are reviewed by the

Manager’s Compliance department;

• the Board reviews financial information; and

• a separate Audit and Risk Committee of the

Company reviews financial information (including

valuations) to be published.

As the Board has delegated the investment

management and administration to Albion Capital

Group LLP, the Board feels that it is not necessary

to have its own internal audit function. Instead, the

Board has access to Azets, which, as internal auditor

for Albion Capital Group LLP from 2021, undertakes

periodic examination of the business processes and

controls environment at Albion Capital Group LLP, and

ensures that any recommendations to implement

improvements in controls are carried out. During the

year, the Audit and Risk Committee and the Board

reviewed internal audit reports prepared by Azets. The

Board will continue to monitor its system of internal

control in order to provide assurance that is operates as

intended.

In addition to this, Ocorian Depositary (UK) Limited,

the Company’s external Depositary, provides cash

monitoring, asset verification, and oversight services to

the Company and reports to the Board on a quarterly

basis. The Board and the Audit and Risk Committee will

continue to monitor its system of internal control in

order to provide assurance that it operates as intended.

Conflicts of interest

Directors review the disclosure of conflicts of interest

quarterly, with changes reviewed and noted at the

beginning of each Board meeting. A Director who has

conflicts of interest refers to an independent Director to

authorise and acknowledge those conflicts. Procedures

to disclose and authorise conflicts of interest have been

adhered to throughout the year.

Statement of corporate governance

Albion Development VCT PLC58

Capital structure and Articles of Association

Details regarding the Company’s capital structure,

substantial interests and powers to buy and issue

shares are detailed in full on pages 44 and 45 of the

Directors’ report. The Company is not party to any

significant agreements that may take effect, alter or

terminate upon a change of control of the Company

following a takeover bid.

Any amendments to the Company’s Articles of

Association are by way of a special resolution subject

to ratification by shareholders.

Relationships with shareholders and other

stakeholders

The Company’s Annual General Meeting is on 30 May

2023. The Annual General Meeting typically includes

a presentation from the Manager on the portfolio and

on the Company, as well as answering questions that

shareholders may have. The AGM will be held virtually.

Shareholders are also encouraged to attend the annual

Shareholders’ Seminar. Last year’s event was held on

23 November 2022, at the Royal College of Surgeons.

The seminar included some of the portfolio companies

sharing insights into their businesses and presentations

from Albion executives on some of the key factors

affecting the investment outlook, as well as a review

of the past year and the plans for the year ahead.

Representatives of the Board attended the seminar.

The Board considers this an important interactive

event, and expects to continue to run this in 2023.

Shareholders and financial advisers are able to obtain

information on holdings and performance using the

contact details provided on page 4.

The Company’s share buy-back programme operates

in the market through brokers. In order to sell shares,

as they are quoted on the London Stock Exchange,

investors should approach their broker to undertake

the sale. Banks may be able to assist shareholders with

a referral to a broker within their banking group. More

information on share buy-backs can be found in the

Chairman’s statement on page 12.

Statement of compliance

The Directors consider that the Company has complied

throughout the year ended 31 December 2022 with all

the relevant provisions set out in the AIC Code issued

in 2019. By reporting against the AIC Code, the Board

are meeting their obligations in relation to the 2018 UK

Corporate Governance Code (and associated disclosure

requirements under paragraph 9.8.6 of the Listing Rules).

The Directors also consider that they are complying

with their statutory responsibilities and other regulatory

provisions which have a bearing on the Company.

By Order of the Board

Ben Larkin

Chairman

6 April 2023

Statement of corporate governance

Introduction

This report is submitted in accordance with Section

420 of the Companies Act 2006 and describes how

the Board has applied the principles relating to the

Directors’ remuneration.

Ordinary resolutions will be proposed at the Annual

General Meeting of the Company to be held on 30 May

2023 for the approval of the Directors’ Remuneration

Policy and the Annual Directors’ Remuneration Report

as set out below.

The Company’s independent Auditor, BDO LLP, is

required to give its opinion on certain information

included in this report as indicated below. The Auditor’s

opinion is included in the Independent Auditor’s Report.

Annual statement from the Chairman of the

Remuneration Committee

The Remuneration Committee comprises all Directors,

excluding Patrick Reeve, with Lord O’Shaughnessy as

Chairman.

The Remuneration Committee met after the year

end to review Director’s responsibilities and fees and

concluded that the current level of remuneration

(£27,500 for the Chairman, £25,500 for the chairman

of the Audit and Risk Committee and £23,500 for all

other non-executive Directors, save for Patrick Reeve

who agreed to waive his fees), which were increased

in 2022, remained appropriate and so proposed no

increase for the forthcoming year.

Directors’ remuneration policy

The Company’s policy is that fees payable to non-

executive Directors should reflect their expertise,

responsibilities and time spent on Company matters

and should be sufficient to enable candidates of high

calibre to be recruited. In determining the level of non-

executive Directors’ remuneration, market equivalents

are considered in comparison to the overall activities and

size of the Company. There is no performance related pay

criteria applicable to non-executive Directors.

The current maximum level of non-executive Directors’

remuneration is £100,000 per annum which is fixed by

the Company’s Articles of Association.

The AIC Code requires that all Directors submit

themselves for re-election annually, therefore in

accordance with the AIC Code, Ben Larkin, Lyn Goleby,

Lord O’Shaughnessy and Patrick Reeve will offer

themselves for re-election at the forthcoming Annual

General Meeting.

None of the Directors have a service contract with

the Company, and as such there is no policy on

termination payments. There is no notice period and

no payments for loss of office were made during the

period. On being appointed to the Board, Directors

receive a letter from the Company setting out the

terms of their appointment and their specific duties

and responsibilities, which are kept at the Manager’s

registered address. The Company has no employees

other than the Directors.

Shareholders’ views in respect of Directors’

remuneration are regarded highly and the Board

encourages shareholders to communicate their

thoughts to the Board, which it takes into account

where appropriate when formulating its policy. At the

last Annual General Meeting, 95.8% of shareholders

voted for the resolution approving the Directors’

remuneration report, 4.2% of shareholders voted

against the resolution and of the total votes cast,

303,037 were withheld (being 0.1% of total voting

rights), which showed significant shareholder support.

DIRECTORS’ REMUNERATION REPORT

GOVERNANCE

Annual report on remuneration

The remuneration of individual Directors is determined

by the Remuneration Committee within the framework

set by the Board. The Committee meets at least once

a year and met once during the year under review with

full attendance from all of its members at the time of

the meeting.

The Board is responsible for reviewing the

remuneration of the Directors and the Company’s

remuneration policy to ensure that it reflects the

duties, responsibilities and value of time spent by the

Directors on the business of the Company and makes

recommendations to the Board accordingly.

Directors’ remuneration

The Director’s remuneration and interests in the shares of

the Company which are shown in the tables below have

been audited.

The table below shows an analysis of the remuneration,

excluding National Insurance, of individual Directors

who served during the year.

The base remuneration of each of the Directors’

positions has increased during the year (for the first

time since 2016), effective from 1 January 2022. The

Committee agreed to raise the fee for the Chairman to

£27,500 from £24,000, the Chairman of the Audit and

Risk Committee to £25,500 from £23,000 and all other

Directors to £23,500 from £22,000 (except for Patrick

Reeve who has agreed to waive his fees).

The Directors’ remuneration for the year ending 31

December 2023 is expected to be £76,500.

In addition to Directors’ remuneration, the Company

pays an annual premium in respect of Directors’

& Officers’ Liability Insurance of £36,000 (2021:

£30,000). The increase has been due to changes in the

market for the provision of insurance, and is in line with

the increases seen across the wider Directors’ & Officers’

Liability Insurance market.

The Company does not confer any share options, long

term incentives or retirement benefits to any Director,

nor does it make a contribution to any pension scheme

on behalf of the Directors.

Each Director of the Company was remunerated

personally through the Manager’s payroll which has

been recharged to the Company.

Directors’ remuneration

31 December 2022 31 December 2021 31 December 2020

£’000 £’000 £’000

Ben Larkin 27.5 24.0 24.0

Lyn Goleby 25.5 23.0 23.0

Patrick Reeve - - -

Lord O’Shaughnessy 23.5 22.0 22.0

76.5 69.0 69.0

Annual percentage change in Directors’ remuneration

Percentage change

2021 to 2022

Percentage change

2020 to 2021

Percentage change

2019 to 2020

% % %

Ben Larkin 14.6 - 4.3

Lyn Goleby 10.9 - 2.7

Patrick Reeve - - -

Lord O'Shaugnessy (appointed 8 July 2019) 6.8 - 93.0

Geoffrey Vero (passed away 19 May 2019) - - (100.0)

10.9 - 0.3

Albion Development VCT PLC60

Directors’ remuneration report

Directors’ interests

The Directors and their interests in the shares of the

Company (together with those of their immediate

family) are shown below:

There are no guidelines or requirements in respect of

Directors’ share holdings.

The following items have not been audited.

Albion Capital Group LLP, its partners and staff,

including Patrick Reeve, hold 1,134,269 Ordinary shares

in the Company as at 31 December 2022.

Performance graph

The graph on page 62 shows the Company’s share price

total return relative to the FTSE All-Share Index total

return, in both instances with dividends reinvested,

since 1 January 2013. The Directors consider the FTSE

All-Share Index to be the most appropriate benchmark

for the Company as it contains a large range of sectors

within the UK economy similar to a generalist VCT.

Investors should, however, be reminded that shares in

VCTs generally trade at a discount to the actual net

asset value of the Company.

There are no options, issued or exercisable, in

the Company which would distort the graphical

representation that follows.

Directors’ interests

Shares held at

31 December 2022

Shares held at

31 December 2021

Ben Larkin 499,837 372,383

Lyn Goleby 34,890 34,890

Patrick Reeve 178,887 178,887

Lord O’Shaughnessy 23,843 6,213

737,457 592,373

Directors’ remuneration report

Methodology: The share price return to the shareholder, including original amount invested (rebased to 100) from 1 January 2013, assuming

that dividends were re-invested at the share price of the Company at the time the shares were quoted ex-dividend. Transaction costs are not

taken into account.

Directors’ pay compared to distribution to shareholders

2022

£’000

2021

£’000

2020

£’000

Percentage change

from 2021 to 2022

Percentage change

from 2020 to 2021

Total distribution to shareholders

including dividends

5,810 4,502 3,916 29.1% 15.0%

Share buy-backs 2,244 1,662 1,189 35.0% 39.7%

Total Directors’ fees (excluding NIC) 76.5 69.0 69.0 10.9% -

Share price total return relative to FTSE All-Share index total return

(in both cases with dividends reinvested)

Dec 2012 Dec 2013 Dec 2014 Dec 2015 Dec 2016 Dec 2017 Dec 2018 Dec 2019 Dec 2020 Dec 2021 Dec 2022

240

220

200

180

160

140

120

100

Share price total return

FTSE All-Share Index total return

By Order of the Board

Ben Larkin

Chairman

6 April 2023

Albion Development VCT PLC62

INDEPENDENT AUDITOR’S REPORT TO THE

MEMBERS OF ALBION DEVELOPMENT VCT PLC

Opinion on the financial statements

In our opinion the financial statements:

• give a true and fair view of the state of the

Company’s affairs as at 31 December 2022 and

of its loss for the year then ended;

• have been properly prepared in accordance with

United Kingdom Generally Accepted Accounting

Practice; and

• have been prepared in accordance with the

requirements of the Companies Act 2006.

We have audited the financial statements of Albion

Development VCT PLC (the ‘Company’) for the year

ended 31 December 2022 which comprise the income

statement, the balance sheet, the statement of

changes in equity, the statement of cashflows and

notes to the financial statements, including a summary

of significant accounting policies. The financial

reporting framework that has been applied in their

preparation is applicable law and United Kingdom

Accounting Standards, including Financial Reporting

Standard 102 The Financial Reporting Standard

applicable in the UK and Republic of Ireland (United

Kingdom Generally Accepted Accounting Practice).

Basis for opinion

We conducted our audit in accordance with

International Standards on Auditing (UK) (ISAs (UK))

and applicable law. Our responsibilities under those

standards are further described in the Auditor’s

responsibilities for the audit of the financial statements

section of our report. We believe that the audit

evidence we have obtained is sufficient and appropriate

to provide a basis for our opinion. Our audit opinion

is consistent with the additional report to the audit

committee.

Independence

Following the recommendation of the audit committee,

we were appointed by the Board of Directors in 2008 to

audit the financial statements for the year ending 31

December 2008 and subsequent financial periods. The

period of total uninterrupted engagement including

retenders and reappointments is 15 years, covering the

years ending 31 December 2008 to 31 December 2022.

We remain independent of the Company in accordance

with the ethical requirements that are relevant to our

audit of the financial statements in the UK, including

the FRC’s Ethical Standard as applied to listed public

interest entities, and we have fulfilled our other ethical

responsibilities in accordance with these requirements.

The non-audit services prohibited by that standard

were not provided to the Company.

Conclusions relating to going concern

In auditing the financial statements, we have

concluded that the Directors’ use of the going

concern basis of accounting in the preparation of the

financial statements is appropriate. Our evaluation

of the Directors’ assessment of the Company’s ability

to continue to adopt the going concern basis of

accounting included:

• Obtaining the VCT compliance reports during

the year and as at year end and reviewing their

calculations to check that the Company was

meeting its requirements to retain VCT status;

• Consideration of the Company’s expected future

compliance with VCT legislation, the absence of

bank debt, contingencies and commitments and

any market or reputational risks;

• Reviewing the forecasted cash flows that support

the Directors’ assessment of going concern,

challenging assumptions and judgements

made in the forecasts, and assessing them for

reasonableness. In particular, we considered the

impact of rising inflation and the available cash

resources relative to the forecast expenditure

which was assessed against the prior year for

reasonableness; and

• Calculating financial ratios to ascertain the

financial health of the Company.

63Albion Development VCT PLC

GOVERNANCE

Based on the work we have performed, we have not identified any material uncertainties relating to events or

conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a

going concern for a period of at least twelve months from when the financial statements are authorised for issue.

In relation to the Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing

material to add or draw attention to in relation to the Directors’ statement in the financial statements about

whether the Directors considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the

relevant sections of this report.

Overview 2022 2021

Key audit matters Valuation of Unquoted Investments

Materiality Company financial statements as a whole

£1.77m (2021: £1.73m) based on 2% (2021: 2%) of net assets adjusted to exclude fundraising

during the year

An overview of the scope of our audit

Our audit was scoped by obtaining an understanding of the Company and its environment, including the

Company’s system of internal control, and assessing the risks of material misstatement in the financial statements.

We also addressed the risk of management override of internal controls, including assessing whether there was

evidence of bias by the Directors that may have represented a risk of material misstatement.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit

of the financial statements of the current period and include the most significant assessed risks of material

misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on:

the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement

team. This matter was addressed in the context of our audit of the financial statements as a whole, and in forming

our opinion thereon, and we do not provide a separate opinion on this matter.

Independent Auditor’s report to the members of Albion Development VCT PLC

Key audit matter How the scope of our audit addressed the key audit matter

Valuation of unquoted

investments (Notes 3

and 11 to the financial

statements)

There is a high level of

estimation uncertainty

involved in determining

the unquoted investment

valuations; consisting of

both equity and loan stock

instruments.

The Investment Manager’s

fee is based on the value of

the net assets of the fund,

as shown in note 5.

As the Investment

Manager is responsible for

valuing investments for

the financial statements,

there is a potential risk

of overstatement of

investment valuations by

management override.

For a sample of loans held at fair value we:

• Agreed security held to confirmation statements and Depositary stock sheet; and

• Reviewed the treatment of accrued redemption premium/other fixed returns in line with the

Statement of Recommended Practice (“SORP”): Financial Statements of Investment Trust

Companies and Venture Capital Trusts (Issued in July 2022).

For a sample of the unquoted investment portfolio, we performed the following:

• Considered whether the valuation methodology is the most appropriate in the circumstances

under the International Private Equity and Venture Capital Valuation (“IPEV”) Guidelines.

Where there has been a change in valuation methodology from prior year, we assessed

whether the change was appropriate;

• Considered the change in market multiples and discount applied from prior year to see if

these were supported by the performance of the underlying investment; and

• Checked that the valuation was based on recent financial information and reviewed the

arithmetic accuracy of the valuation.

For investments based on valuations using net assets, cost (where the investment was recently

acquired), the price of a recent investment or an offer to acquire the investee company, we

checked the cost, net assets or third party offer to supporting evidence, reviewed the calibration

of fair value and considered the Investment Manager’s determination of whether there were

any reasons why the valuation and the valuation methodology was not appropriate at 31

December 2022. This is particularly pertinent in those circumstances where the impact of rising

inflation, the war in Ukraine and the resulting impact may call into question whether the price

of recent investment remains reflective of fair value.

For a sample of investments valued with reference to more subjective techniques, we:

• Re-performed the calculation of the investment valuation;

• Agreed and benchmarked key inputs and estimates to independent information from our own

research and against metrics from the most recent management accounts of the investee

companies;

• Challenged the consistency and appropriateness of adjustments made to such market data in

establishing the revenue, cash flow or earnings multiple applied in arriving at the valuations

adopted by considering the individual performance of investee companies against plan and

relative to the peer group, the market and sector in which the investee company operates and

other factors as appropriate;

• Where a valuation has been performed by a third party management’s expert, we have

assessed the competence and capabilities of that expert, the quality of their work and their

qualifications, as well as challenging the basis of inputs and assumptions used by the expert.

We have also considered any updates for subsequent information to the valuation made by

the investment manager and obtained appropriate evidence for those changes; and

• Where appropriate, we performed sensitivity analysis on the valuation calculations where

there is sufficient evidence to suggest reasonable alternative inputs might exist.

Key observations

Based on the procedures performed we consider the investment valuations to be appropriate

considering the level of estimation uncertainty.

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of

misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could

influence the economic decisions of reasonable users that are taken on the basis of the financial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we

use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly,

65Albion Development VCT PLC

misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the

nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their

effect on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole and

performance materiality as follows:

Company financial statements

2022

2021

Materiality £1,766,000 £1,730,000

Basis for determining

materiality

2% of net assets adjusted to exclude

fundraising during the year

2% of net assets adjusted to exclude

fundraising during the year

Rationale for the benchmark

applied

In setting materiality, we have had regard to the nature and disposition of the investment

portfolio. Given that the VCT’s portfolio is comprised of largely unquoted investments which

would typically have a wider spread of reasonable alternative possible valuations, we have

applied a percentage of 2% of adjusted net asset value.

Performance materiality £1,324,000 £1,207,000

Basis for determining

performance materiality

75% of materiality

The level of performance materiality applied was set after having considered a number of

factors including the expected total value of known and likely misstatements and the level of

transactions in the year.

Lower testing threshold

We determined that for Revenue return before tax, a misstatement of less than materiality for the financial

statements as a whole, could influence users of the financial statements as it is a measure of the Company’s

performance of income generated from its investments after expenses. As a result, we determined a lower testing

threshold for those items impacting revenue return of £140,000 (2021: £207,000) based on 5% of expenditure

(2021: 5%).

Reporting threshold

We agreed with the Audit Committee that we would report to them all individual audit differences in excess of

£88,000 (2021: £34,000). We also agreed to report differences below this threshold that, in our view, warranted

reporting on qualitative grounds.

Other information

The directors are responsible for the other information. The other information comprises the information included

in the annual report and financial statements other than the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise

explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is

to read the other information and, in doing so, consider whether the other information is materially inconsistent

with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be

materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are

required to determine whether this gives rise to a material misstatement in the financial statements themselves. If,

based on the work we have performed, we conclude that there is a material misstatement of this other information,

we are required to report that fact.

We have nothing to report in this regard.

Independent Auditor’s report to the members of Albion Development VCT PLC

Albion Development VCT PLC66

Independent Auditor’s report to the members of Albion Development VCT PLC

Corporate governance statement

The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and

that part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of the

UK Corporate Governance Code specified for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the

Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained

during the audit.

Going

concern and

longer-term

viability

• The Directors’ statement with regards to the appropriateness of adopting the going concern

basis of accounting and any material uncertainties identified; and

• The Directors’ explanation as to their assessment of the Company’s prospects, the period this

assessment covers and why the period is appropriate.

Other Code

provisions

• Directors’ statement on fair, balanced and understandable;

• Board’s confirmation that it has carried out a robust assessment of the emerging and principal

risks;

• The section of the annual report that describes the review of effectiveness of risk management

and internal control systems; and

• The section describing the work of the audit committee.

Other Companies Act 2006 reporting

Based on the responsibilities described below and our work performed during the course of the audit, we are

required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.

Strategic report

and Directors’

report

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the Strategic report and the Directors’ report for the financial year for which

the financial statements are prepared is consistent with the financial statements; and

• the Strategic report and the Directors’ report have been prepared in accordance with applicable legal

requirements.

In the light of the knowledge and understanding of the Company and its environment obtained in

the course of the audit, we have not identified material misstatements in the strategic report or the

Directors’ report.

Directors’

remuneration

In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared

in accordance with the Companies Act 2006.

Corporate

governance

statement

In our opinion, based on the work undertaken in the course of the audit the information about internal

control and risk management systems in relation to financial reporting processes and about share capital

structures, given in compliance with rules 7.2.5 and 7.2.6 in the Disclosure Guidance and Transparency

Rules sourcebook made by the Financial Conduct Authority (the FCA Rules), is consistent with the

financial statements and has been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the Company and its environment obtained in the

course of the audit, we have not identified material misstatements in this information.

In our opinion, based on the work undertaken in the course of the audit information about the

Company’s corporate governance code and practices and about its administrative, management and

supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.

We have nothing to report arising from our responsibility to report if a corporate governance statement

has not been prepared by the Company.

67Albion Development VCT PLC

Matters on which

we are required

to report by

exception

We have nothing to report in respect of the following matters in relation to which the Companies Act

2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not been

received from branches not visited by us; or

• the financial statements and the part of the Directors’ remuneration report to be audited are not in

agreement with the accounting records and returns; or

• certain disclosures of Directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Responsibilities of Directors

As explained more fully in the Statement of Directors’ responsibilities, the Directors are responsible for the

preparation of the financial statements and for being satisfied that they give a true and fair view, and for such

internal control as the Directors determine is necessary to enable the preparation of financial statements that are

free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue

as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of

accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic

alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance

with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or

error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence

the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in

line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including

fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

We gained an understanding of the legal and regulatory framework applicable to the Company and the industry

in which it operates, and considered the risk of acts by the Company which were contrary to applicable laws and

regulations, including fraud. These included but were not limited to compliance with Companies Act 2006, the FCA

listing and DTR rules, the principles of the UK Corporate Governance Code, industry practice represented by the

Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital

Trusts (“the SORP”) and updated in February 2018 with consequential amendments and the applicable financial

reporting framework. We also considered the Company’s qualification as a VCT under UK tax legislation.

Our procedures included:

• obtaining an understanding of the control environment in monitoring compliance with laws and regulations;

• agreement of the financial statement disclosures to underlying supporting documentation;

• enquiries of management and those charged with governance relating to the existence of any non-

compliance with laws and regulations including fraud occurring within the Company and its operations;

Independent Auditor’s report to the members of Albion Development VCT PLC

Albion Development VCT PLC68

• obtaining the VCT compliance reports prepared by management’s expert during the year and as at year

end and reviewing their calculations to check that the Company was meeting its requirements to retain VCT

status; and

• reviewing minutes of board meetings and legal correspondence and invoices throughout the period for

instances of non-compliance with laws and regulations and fraud.

We assessed the susceptibility of the financial statement to material misstatement including fraud and considered

the fraud risk areas to be the valuation of unquoted investments and management override of controls.

Our tests included, but were not limited to:

• The procedures set out in the Key Audit Matters section above;

• Obtaining independent evidence to support the ownership of investments;

• Recalculating investment management fees in total;

• Obtaining independent confirmation of bank balances; and

• Testing journals which met a defined risk criteria by agreeing to supporting documentation and evaluating

whether there was evidence of bias by the Investment Manager and Directors that represented a risk of

material misstatement due to fraud.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team

members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout

the audit.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements,

recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of

not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery,

misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the

further removed non-compliance with laws and regulations is from the events and transactions reflected in the

financial statements, the less likely we are to become aware of it.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.

uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the

Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members

those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent

permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s

members as a body, for our audit work, for this report, or for the opinions we have formed.

Peter Smith (Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor

London, UK

6 April 2023

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Independent Auditor’s report to the members of Albion Development VCT PLC

69Albion Development VCT PLC

Company

information

and Financials

Year ended 31 December 2022 Year ended 31 December 2021

Revenue Capital Total Revenue Capital Total

Note £’000 £’000 £’000 £’000 £’000 £’000

Net (losses)/gains on investments 3 - (636) (636) - 20,592 20,592

Investment income 4 1,194 - 1,194 988 - 988

Investment Manager’s fees 5 (245) (2,207) (2,452) (196) (3,604) (3,800)

Other expenses 6 (358) - (358) (326) - (326)

Profit/(loss) on ordinary activities before tax 591 (2,843) (2,252) 466 16,988 17,454

Tax on ordinary activities 8 - - - - - -

Profit/(loss) and total comprehensive income

attributable to shareholders 591 (2,843) (2,252) 466 16,988 17,454

Basic and diluted return/(loss) per share

(pence)* 10 0.49 (2.36) (1.87) 0.46 16.74 17.20

*adjusted for treasury shares

The accompanying notes on pages 75 to 89 form an integral part of these Financial Statements.

The total column of this Income statement represents the profit and loss account of the Company. The supplementary revenue and capital

columns have been prepared in accordance with The Association of Investment Companies’ Statement of Recommended Practice.

INCOME STATEMENT

71Albion Development VCT PLC

INFORMATION

& FINANCIALS

31 December 2022 31 December 2021

Note £’000 £’000

Fixed asset investments 11 86,286 80,500

Current assets

Trade and other receivables 13 2,403 2,566

Cash in bank and in hand 26,491 17,032

28,894 19,598

Payables: amounts falling due within one year

Trade and other payables 14 (722) (2,459)

Net current assets 28,172 17,139

Total assets less current liabilities 114,458 97,639

Equity attributable to equity holders

Called-up share capital 15 1,456 1,167

Share premium 26,837 -

Capital redemption reserve - -

Unrealised capital reserve 32,516 36,048

Realised capital reserve 8,032 7,344

Other distributable reserve 45,617 53,080

Total equity shareholders’ funds 114,458 97,639

Basic and diluted net asset value per share (pence)* 16 88.65 94.98

*excluding treasury shares

The accompanying notes on pages 75 to 89 form an integral part of these Financial Statements.

These Financial Statements were approved by the Board of Directors, and authorised for issue on 6 April 2023 and were signed on its behalf by

Ben Larkin

Chairman

Company number: 03654040

BALANCE SHEET

Albion Development VCT PLC72

INFORMATION

& FINANCIALS

STATEMENT OF CHANGES IN EQUITY

Called-up

capital

premium

Capital

redemption

reserve

Unrealised

capital

reserve

Realised

capital

reserve*

Other

distributable

reserve* Total

£’000 £’000 £’000 £’000 £’000 £’000 £’000

As at 1 January 2022 1,167 - - 36,048 7,344 53,080 97,639

(Loss)/profit and total

comprehensive income for

the year - - - (3,258) 415 591 (2,252)

Transfer of unrealised

gains on disposal of

investments - - - (273) 273 - -

Purchase of shares for

treasury - - - - - (2,244) (2,244)

Issue of equity 288 27,509 - - - - 27,797

Cost of issue of equity - (672) - - - - (672)

Reduction of share

premium and capital

redemption reserve - - - - - - -

Dividends paid - - - - - (5,810) (5,810)

As at 31 December 2022 1,456 26,837 - 32,516 8,032 45,617 114,458

As at 1 January 2021 1,040 44,978 12 18,020 12,886 (1,077) 75,859

Profit/(loss) and total

comprehensive income for

the year - - - 19,786 (2,798) 466 17,454

Transfer of unrealised

gains on disposal of

investments - - - (1,758) 1,758 - -

Purchase of shares for

treasury - - - - - (1,661) (1,661)

Issue of equity 127 10,626 - - - - 10,753

Cost of issue of equity - (264) - - - - (264)

Reduction of share

premium and capital

redemption reserve - (55,340) (12) - - 55,352 -

Dividends paid - - - - (4,502) - (4,502)

As at 31 December 2021 1,167 - - 36,048 7,344 53,080 97,639

* Included within these reserves is an amount of £24,619,000 (2021: £28,992,000) which is considered distributable. Over the next three years

an additional £26,933,000 will become distributable. This is due to the HMRC requirement that the Company cannot use capital raised in the

past three years to make a payment or distribution to shareholders. On 1 January 2023, £8,306,000 became distributable in line with this.

73Albion Development VCT PLC

INFORMATION

& FINANCIALS

Year ended

31 December 2022

£’000

Year ended

31 December 2021

£’000

Cash flow from operating activities

Loan stock income received 996 736

Deposit interest received 106 1

Dividend income received 133 24

Investment Manager’s fees paid (4,216) (1,877)

Other cash payments (338) (326)

Corporation tax paid - -

Net cash flow from operating activities (3,319) (1,442)

Cash flow from investing activities

Purchase of fixed asset investments* (14,235) (7,500)

Proceeds from disposals of fixed asset investments* 7,946 6,003

Net cash flow from investing activities (6,289) (1,497)

Cash flow from financing activities

Issue of share capital 26,132 9,767

Cost of issue of equity** (36) (35)

Equity dividends paid*** (4,785) (3,744)

Purchase of own shares (2,244) (1,662)

Net cash flow from financing activities 19,067 4,326

Increase in cash in bank and in hand 9,459 1,387

Cash in bank and in hand at start of period 17,032 15,645

Cash in bank and in hand at end of period 26,491 17,032

* Purchases and disposals detailed above do not agree to note 11 due to restructuring of investments, conversion of convertible loan stock and

settlement of receivables and payables.

** The cost of issue of equity does not agree to the Statement of changes in equity due to prospectus fundraising amounts being received net of

fees.

*** The equity dividends paid shown in the cash flow are different to the dividends disclosed in the Statement of changes in equity and note 9 as

a result of the non-cash effect of the Dividend Reinvestment Scheme.

The accompanying notes on pages 75 to 89 form an integral part of these Financial Statements.

STATEMENT OF CASH FLOWS

Albion Development VCT PLC74

INFORMATION

& FINANCIALS

1. Basis of preparation

The Financial Statements have been prepared in

accordance with applicable United Kingdom law and

accounting standards, including Financial Reporting

Standard 102 (“FRS 102”), and with the Statement

of Recommended Practice “Financial Statements

of Investment Trust Companies and Venture

Capital Trusts” (“SORP”) issued by The Association

of Investment Companies (“AIC”). The Financial

Statements have been prepared on a going concern

basis and further details can be found in the Directors’

report on page 45.

The preparation of the Financial Statements requires

management to make judgements and estimates

that affect the application of policies and reported

amounts of assets, liabilities, income and expenses. The

most critical estimates and judgements relate to the

determination of carrying value of investments at Fair

Value Through Profit and Loss (“FVTPL”) in accordance

with FRS 102 sections 11 and 12. The Company

values investments by following the International

Private Equity and Venture Capital Valuation (“IPEV”)

Guidelines as updated in 2022 and further detail on the

valuation techniques used are outlined in note 2 below.

Company information can be found on page 4.

2. Accounting policies

Fixed asset investments

The Company’s business is investing in financial assets

with a view to profiting from their total return in the form

of income and capital growth. This portfolio of financial

assets is managed and its performance evaluated on

a fair value basis, in accordance with a documented

investment policy, and information about the portfolio is

provided internally on that basis to the Board.

In accordance with the requirements of FRS 102,

those undertakings in which the Company holds more

than 20% of the equity as part of an investment

portfolio are not accounted for using the equity

method. In these circumstances the investment is

measured at FVTPL.

NOTES TO THE FINANCIAL STATEMENTS

Upon initial recognition (using trade date accounting)

investments, including loan stock, are designated by

the Company as FVTPL and are included at their initial

fair value, which is cost (excluding expenses incidental

to the acquisition which are written off to the Income

statement).

Subsequently, the investments are valued at ‘fair value’,

which is measured as follows:

• Investments listed on recognised exchanges

are valued at their bid prices at the end of the

accounting period, including a discount for any

restricted sales of shares, or otherwise at fair

value based on published price quotations.

• Unquoted investments, where there is not an

active market, are valued using an appropriate

valuation technique in accordance with the

IPEV Guidelines. Indicators of fair value are

derived using established methodologies

including earnings multiples, revenue multiples,

the level of third party offers received, cost or

price of recent investment rounds, net assets

and industry valuation benchmarks. Where

price of recent investment is used as a starting

point for estimating fair value at subsequent

measurement dates, this has been benchmarked

using an appropriate valuation technique

permitted by the IPEV guidelines.

• In situations where cost or price of recent

investment is used, consideration is given to

the circumstances of the portfolio company

since that date in determining fair value. This

includes consideration of whether there is any

evidence of deterioration or strong definable

evidence of an increase in value. In the absence

of these indicators, other valuation techniques

are employed to conclude on the fair value as at

the measurement date. Examples of events or

changes that could indicate a diminution include:

– the performance and/or prospects of the

underlying business are significantly below

the expectations on which the investment was

based;

75Albion Development VCT PLC

INFORMATION

& FINANCIALS

– a significant adverse change either in the

portfolio company’s business or in the

technological, market, economic, legal or

regulatory environment in which the business

operates; or

– market conditions have deteriorated, which

may be indicated by a fall in the share prices

of quoted businesses operating in the same or

related sectors.

Investments are recognised as financial assets on

legal completion of the investment contract and are

de-recognised on legal completion of the sale of an

investment.

Dividend income is not recognised as part of the fair

value movement of an investment, but is recognised

separately as investment income through the other

distributable reserve when a share becomes ex-dividend.

Current assets and payables

Receivables (including debtors due after more than

one year), payables and cash are carried at amortised

cost, in accordance with FRS 102. Debtors due after

more than one year meet the definition of a financing

transaction held at amortised cost, and interest will be

recognised through capital over the credit period using

the effective interest method. There are no financial

liabilities other than payables.

Investment income

Equity income

Dividend income is included in revenue when the

investment is quoted ex-dividend.

Unquoted loan stock income

Fixed returns on non-equity shares and debt securities

are recognised when the Company’s right to receive

payment and expect settlement is established. Where

interest is rolled up and/or payable at redemption then

it is recognised as income unless there is reasonable

doubt as to its receipt.

Bank interest income

Interest income is recognised on an accruals basis

using the rate of interest agreed with the bank.

Investment management fee, performance

incentive fee and expenses

All expenses have been accounted for on an accruals

basis. Expenses are charged through the other

distributable reserve except the following which are

charged through the realised capital reserve:

• 90% of management fees and 100% of

performance incentive fees, if any, are allocated

to the realised capital reserve.

• expenses which are incidental to the purchase or

disposal of an investment are charged through

the realised capital reserve.

Taxation

Taxation is applied on a current basis in accordance

with FRS 102. Current tax is tax payable/(refundable)

in respect of the taxable profit/(tax loss) for the current

period or past reporting periods using the tax rates and

laws that have been enacted or substantively enacted

at the financial reporting date. Taxation associated with

capital expenses is applied in accordance with the SORP.

Deferred tax is provided in full on all timing differences

at the reporting date. Timing differences are differences

between taxable profits and total comprehensive income

as stated in the Financial Statements that arise from the

inclusion of income and expenses in tax assessments in

periods different from those in which they are recognised

in the Financial Statements. As a VCT the Company has

an exemption from tax on capital gains. The Company

intends to continue meeting the conditions required to

obtain approval as a VCT in the foreseeable future. The

Company therefore, should have no material deferred tax

timing differences arising in respect of the revaluation

or disposal of investments and the Company has not

provided for any deferred tax.

Share capital and reserves

Called-up share capital

This reserve accounts for the nominal value of the

Company’s shares.

Share premium

This reserve accounts for the difference between the

price paid for the Company’s shares and the nominal

value of those shares, less issue costs and transfers to

the other distributable reserve.

Capital redemption reserve

This reserve accounts for amounts by which the issued

share capital is diminished through the repurchase and

cancellation of the Company’s own shares.

Albion Development VCT PLC76

Notes to the Financial Statements

Unrealised capital reserve

Increases and decreases in the valuation of

investments held at the year end against cost are

included in this reserve.

Realised capital reserve

The following are disclosed in this reserve:

• gains and losses compared to cost on the

realisation of investments, or permanent

diminutions in value (including gains

recognised on the realisation of investment

where consideration is deferred that are not

distributable as a matter of law);

• finance income in respect of the unwinding of

the discount on deferred consideration that is not

distributable as a matter of law;

• expenses, together with the related taxation

effect, charged in accordance with the above

policies; and

• dividends paid to equity holders where paid out

by capital.

Other distributable reserve

The special reserve, treasury share reserve and the

revenue reserve were combined in 2012 to form a

single reserve named other distributable reserve.

This reserve accounts for movements from the revenue

column of the Income statement, the payment of

dividends, the buy-back of shares and other non-capital

realised movements.

Dividends

Dividends by the Company are accounted for when the

liability to make the payment (record date) has been

established.

Going concern

The Board has assessed the Company’s operation as

a going concern. The Company has sufficient cash

and liquid resources, its portfolio of investments

is well diversified in terms of sector, and the major

cash outflows of the Company (namely investments,

buy-backs and dividends) are within the Company’s

control. Cash flow forecasts are discussed quarterly

at Board level with regards to going concern. The

cash flow forecasts have been updated and stress

tested. Accordingly, after making diligent enquiries,

the Directors have a reasonable expectation that

the Company has adequate resources to continue in

operational existence over a period of at least twelve

months from the date of approval of the Financial

Statements. For this reason, the Directors have adopted

the going concern basis in preparing the accounts.

The Directors do not consider there to be any material

uncertainty over going concern.

Segmental reporting

The Directors are of the opinion that the Company is

engaged in a single operating segment of business,

being investment in smaller companies principally

based in the UK.

3. Net (losses)/gains on investments

Year ended

31 December 2022

£’000

Year ended

31 December 2021

£’000

Unrealised (losses)/gains on fixed asset investments (3,258) 19,786

Realised gains on fixed asset investments 2,322 549

Unwinding of discount on deferred consideration 300 257

(636) 20,592

77Albion Development VCT PLC

Notes to the Financial Statements

4. Investment income

Year ended

31 December 2022

£’000

Year ended

31 December 2021

£’000

Loan stock interest 916 964

Dividend income 172 23

Bank deposit interest 106 1

1,194 988

5. Investment Manager’s fees

Year ended

31 December 2022

£’000

Year ended

31 December 2021

£’000

Investment management fee charged to revenue 245 196

Investment management fee charged to capital 2,207 1,766

Performance incentive fee charged to capital - 1,838

2,452 3,800

Further details of the Management agreement under which the investment management fee and performance incentive fee are

paid is given in the Strategic report on page 18.

During the year, services of a total value of £2,452,000 (2021: £1,962,000) were purchased by the Company from Albion

Capital Group LLP (“Albion”) in respect of management fees. There is no performance incentive fee payable in the year (2021:

£1,838,000). At the financial year end, the amount due to Albion in respect of these services disclosed as accruals was £618,000

(2021: £2,366,000). The total annual running costs of the Company are capped at an amount equal to 2.5% of the Company’s

net assets, with any excess being met by Albion by way of a reduction in management fees. During the year, the management

fee was reduced by £41,000 as a result of this cap (2021: £86,000).

During the year, the Company was not charged by Albion in respect of Patrick Reeve’s services as a Director (2021: £nil).

Albion, its partners and staff (including Patrick Reeve) held 1,134,269 Ordinary shares in the Company as at 31 December 2022.

Albion is, from time-to-time, eligible to receive arrangement fees and monitoring fees from portfolio companies. During the year

ended 31 December 2022, fees of £257,000 attributable to the investments of the Company were received by Albion pursuant

to these arrangements (2021: £187,000).

The Company has entered into an offer agreement relating to the Offers with the Company’s investment manager Albion,

pursuant to which Albion will receive a fee of 2.5% of the gross proceeds of the Offers and out of which Albion will pay the costs

of the Offers, as detailed in the Prospectus.

6. Other expenses

Year ended

31 December 2022

£’000

Year ended

31 December 2021

£’000

Directors’ fees (including NIC) 84 75

Auditor’s remuneration for statutory audit services (excluding VAT) 48 38

Other administrative expenses 226 213

358 326

Albion Development VCT PLC78

Notes to the Financial Statements

7. Directors’ fees

The amounts paid to and on behalf of the Directors during the year are as follows:

Year ended

31 December 2022

£’000

Year ended

31 December 2021

£’000

Directors’ fees 77 69

National insurance 7 6

84 75

The Company’s key management personnel are the non-executive Directors. Further information regarding Directors’

remuneration can be found in the Directors’ remuneration report on pages 59 to 62.

8. Tax on ordinary activities

Year ended

31 December 2022

£’000

Year ended

31 December 2021

£’000

UK corporation tax charge in respect of current year - -

- -

Factors affecting the tax charge:

Year ended

31 December 2022

£’000

Year ended

31 December 2021

£’000

(Loss)/profit on ordinary activities before taxation (2,252) 17,454

Tax charge on profit at the average companies rate of 19% (2021: 19%) (428) 3,316

Factors affecting the charge:

Non-taxable gains/(losses) 121 (3,912)

Income not taxable (33) (4)

Excess management expenses carried forward 340 600

- -

The tax charge for the year shown in the Income statement is lower than the average companies rate of corporation tax in

the UK of 19% (2021: 19%). The differences are explained above. From April 2023, the Company’s rate of corporation tax will

increase in the UK from 19% to 25%.

Notes

(i) Venture Capital Trusts are not subject to corporation tax on capital gains.

(ii) Tax relief on expenses charged to capital has been determined by allocating tax relief to expenses by reference to the applicable

corporation tax rate and allocating the relief between revenue and capital in accordance with the SORP.

(iii) The Company has excess management expenses of £8,814,000 (2021: £7,026,000) that are available for offset against future profits. A

deferred tax asset of £2,204,000 (2021: £1,757,000) has not been recognised in respect of these losses as they will be recoverable only

to the extent that the Company has sufficient future taxable profits.

79Albion Development VCT PLC

Notes to the Financial Statements

9. Dividends

Year ended

31 December 2022

Year ended

31 December 2021

£’000 £’000

First dividend of 2.37p per share paid on 31 May 2022 (28 May 2021: 2.06p per

share) 2,925 2,126

Second dividend of 2.34p per share paid on 30 September 2022 (30 September

2021: 2.31p per share) 2,892 2,383

Unclaimed dividends (7) (7)

5,810 4,502

Details of the consideration issued under the Dividend Reinvestment Scheme included in the dividends above can be found in

note 15.

In addition to the dividends summarised above, the Board has declared a first dividend of 2.22 pence per share for the year

ending 31 December 2023, payable on 31 May 2023 to shareholders on the register on 5 May 2023. The total dividend will be

approximately £3,025,000.

10. Basic and diluted return per share

Year ended 31 December 2022 Year ended 31 December 2021

Revenue Capital Total Revenue Capital Total

Profit/(loss) attributable to equity shares (£’000) 591 (2,843) (2,252) 466 16,988 17,454

Weighted average shares in issue (adjusted for

treasury shares)

120,150,815 101,474,066

Return/(loss) attributable per equity share (pence) 0.49 (2.36) (1.87) 0.46 16.74 17.20

The weighted average number of Ordinary shares is calculated after adjusting for treasury shares of 16,468,548 (2021:

13,946,475).

There are no convertible instruments, derivatives or contingent share agreements in issue so basic and diluted return per share

are the same.

11. Fixed asset investments

31 December 2022

£’000

31 December 2021

£’000

Investments held at fair value through profit or loss

Unquoted equity and preference shares 70,536 66,082

Unquoted loan stock 15,194 13,227

Quoted equity 556 1,191

86,286 80,500

Albion Development VCT PLC80

Notes to the Financial Statements

31 December 2022

£’000

31 December 2021

£’000

Opening valuation 80,500 58,998

Purchases at cost 14,917 6,983

Disposal proceeds (8,114) (6,043)

Realised gains 2,322 549

Movement in loan stock accrued income (80) 227

Unrealised (losses)/gains (3,258) 19,786

Closing valuation 86,286 80,500

Movement in loan stock accrued income

Opening accumulated loan stock accrued income 340 113

Movement in loan stock accrued income (80) 227

Closing accumulated loan stock accrued income 260 340

Movement in unrealised gains

Opening accumulated unrealised gains 35,871 17,843

Transfer of previously unrealised gains to realised reserve on disposal of

investments (273) (1,758)

Movement in unrealised (losses)/gains (3,258) 19,786

Closing accumulated unrealised gains 32,341 35,871

Historic cost basis

Opening book cost 44,288 41,042

Purchases at cost 14,917 6,983

Sales at cost (5,520) (3,737)

Closing book cost 53,684 44,288

Purchases and disposals detailed above do not agree to the Statement of cash flows due to restructuring of investments,

conversion of convertible loan stock and settlement of receivables and payables.

Fixed asset investments are valued at fair value in accordance with the IPEV guidelines as follows:

Valuation methodology

31 December 2022

£’000

31 December 2021

£’000

Cost and price of recent investment (calibrated and reviewed for impairment) 46,204 34,857

Revenue multiple 23,084 25,488

Third party valuation - discounted cash flow 8,632 8,498

Third party valuation - earnings multiple 3,962 3,287

Earnings multiple 2,840 54

Net assets 998 809

Bid price 556 1,191

Discounted offer price 10 6,316

86,286 80,500

When using the cost or price of recent investment in the valuations, the Company looks to re-calibrate this price at each valuation

point by reviewing progress within the investment, comparing against the initial investment thesis, assessing if there are any

significant events, milestones or other background to the transaction that would indicate the value of the investment has changed

and considering whether a market-based methodology (i.e. Using multiples from comparable public companies) or a discounted

cashflow forecast would be more appropriate. The background to the transaction is also considered when the price of investment

may not be an appropriate measure of fair value, for example, disproportionate dilution of existing investors from a new investor

coming on board or the market conditions at the time of investment no longer being a true reflection of fair value.

81Albion Development VCT PLC

Notes to the Financial Statements

The main inputs into the calibration exercise, and for the valuation models using multiples, are revenue, EBITDA and P/E

multiples (based on the most recent revenue, EBITDA or earnings achieved and equivalent corresponding revenue, EBITDA

or earnings multiples of comparable companies), quality of earnings assessments and comparability difference adjustments.

Revenue multiples are often used, rather than EBITDA or earnings, due to the nature of the Company’s investments, being

in growth and technology companies which are not normally expected to achieve profitability or scale for a number of years.

Where an investment has achieved scale and profitability the Company would normally then expect to switch to using an

EBITDA or earnings multiple methodology.

In the calibration exercise and in determining the valuation for the Company’s equity instruments, comparable trading multiples

are used. In accordance with the Company’s policy, appropriate comparable companies based on industry, size, developmental

stage, revenue generation and strategy are determined and a trading multiple for each comparable company identified is

then calculated. The multiple is calculated by dividing the enterprise value of the comparable group by its revenue, EBITDA

or earnings. The trading multiple is then adjusted for considerations such as illiquidity, marketability and other differences,

advantages and disadvantages between the portfolio company and the comparable public companies based on company

specific facts and circumstances.

Fair value investments had the following movements between valuation methodologies between 31 December 2021 and 31

December 2022:

Change in valuation methodology (2021 to 2022)

Value as at

31 December 2022

£’000 Explanatory note

Discounted offer price to earnings multiple 2,840 Sale did not materialise

Cost and price of recent investment (calibrated and reviewed for

impairment) to revenue multiple

2,271 Revenue multiple more relevant

based on current trading

Revenue multiple to cost and price of recent investment

(calibrated and reviewed for impairment)

1,924 Recent funding round

Cost and price of recent investment (calibrated and reviewed for

impairment) to third party valuation – earnings multiple

942 Third party valuation conducted

Cost and price of recent investment (calibrated and reviewed for

impairment) to offer price

10 Third party offer received

The valuation will be the most appropriate valuation methodology for an investment within its market, with regard to the

financial health of the investment and the IPEV Guidelines. The Directors believe that, within these parameters, these are the

most relevant methods of valuation which would be reasonable as at 31 December 2022.

FRS 102 and the SORP requires the Company to disclose the inputs to the valuation methods applied to its investments

measured at fair value through profit or loss in a fair value hierarchy. The table below sets out fair value hierarchy definitions

using FRS 102 s.11.27.

Fair value hierarchy Definition

Level 1 Unadjusted quoted prices in an active market

Level 2 Inputs to valuations are from observable sources and are directly or indirectly derived from prices

Level 3 Inputs to valuations not based on observable market data

Quoted investments are valued according to Level 1 valuation methods. Unquoted equity, preference shares and loan stock are

all valued according to Level 3 valuation methods.

Investments held at fair value through profit or loss (Level 3) had the following movements:

Albion Development VCT PLC82

Notes to the Financial Statements

31 December 2022

£’000

31 December 2021

£’000

Opening balance 79,309 58,998

Additions 14,917 6,983

Movement from Level 3 to Level 1* - (1,191)

Disposals (7,906) (6,043)

Accrued loan stock interest (80) 227

Realised gains 2,399 549

Unrealised (losses)/gains (2,908) 19,786

Closing balance 85,730 79,309

* This relates to Arecor Therapeutics PLC, which listed on the AIM stock exchange during the prior period.

The Directors are required to consider the impact of changing one or more of the inputs used as part of the valuation process

to reasonable possible alternative assumptions. 71% of the portfolio of investments, consisting of equity and loan stock, is

based on recent investment price, discounted offer price, net assets and cost. For the remainder of the portfolio, the Board has

considered the reasonable possible alternative input assumptions on the valuation of the portfolio and believes that changes

to inputs (by adjusting the earnings and revenue multiples) could lead to a change in the fair value of the portfolio. The Board

has reviewed the Manager’s adjusted inputs for a number of the largest portfolio companies (by value) which covers 21% of the

portfolio. This has resulted in a total coverage of 92% of the portfolio of investments. The main inputs considered for each type

of valuation is as follows:

Valuation technique

Portfolio company

sector Input

Base

Case*

Change

in input

Change in

fair value of

investments

(£’000)

Change in

NAV (pence

per share)

Revenue multiple Software & other

technology

Revenue

multiple

5.0x +0.5 897 0.69

-0.5 (897) (0.69)

Revenue multiple Healthcare

(including digital

healthcare)

Revenue

multiple

5.4x +0.5 665 0.51

-0.5 (665) (0.51)

Earnings multiple Healthcare

(including digital

healthcare)

Earnings

multiple

7.5x +0.5 109 0.08

-0.5 (109) (0.08)

Third party valuation –

discounted cash flow

Renewable energy Discount

rate

5.5% -0.5% 71 0.06

+0.5% (65) (0.05)

*As detailed in the accounting policies on page 75 to 77, the base case is based on market comparables, discounted where appropriate for

marketability, in accordance with the IPEV guidelines.

The impact of these changes could result in an overall increase in the valuation of the equity investments by £1,742,000 (2.5%)

or a decrease in the valuation of equity investments by £1,736,000 (2.4%).

12. Significant interests

The principal activity of the Company is to select and hold a portfolio of investments in unquoted securities. Although the

Company, through the Manager, will, in some cases, be represented on the board of the portfolio company, it will not ordinarily

take a controlling interest or become involved in the management. The size and structure of companies with unquoted securities

may result in certain holdings in the portfolio representing a participating interest without there being any partnership, joint

venture or management consortium agreement.

The Company has no interests of greater than 20% of the nominal value of any class of the allotted shares in the portfolio

companies as at 31 December 2022.

83Albion Development VCT PLC

Notes to the Financial Statements

13. Current assets

Trade and other receivables 31 December 2022

£’000

31 December 2021

£’000

Prepayments and accrued income 30 24

Other receivables 142 520

Deferred consideration under one year 134 226

Deferred consideration over one year 2,097 1,796

2,403 2,566

The deferred consideration over one year relates to the sale of G.Network Communications Limited in December 2020. These proceeds

are receivable in January 2024, and have been discounted to present value at the prevailing market rate, including a provision for

counterparty risk. This constitutes a financing transaction, and has been accounted for using the policy disclosed in note 2.

The Directors consider that the carrying amount of receivables is not materially different to their fair value.

14. Payables: amounts falling due within one year

31 December 2022

£’000

31 December 2021

£’000

Accruals and deferred income 722 2,453

Trade payables - 6

722 2,459

The Directors consider that the carrying amount of payables is not materially different to their fair value.

15. Called-up share capital

Allotted, called-up and fully paid shares: £’000

116,747,394 Ordinary shares of 1 penny each at 31 December 2021 1,167

28,834,906 Ordinary shares of 1 penny each issued during the year 288

145,582,300 Ordinary shares of 1 penny each at 31 December 2022 1,456

13,946,475 Ordinary shares of 1 penny each held in treasury at 31 December 2021 (139)

2,522,073 Ordinary shares of 1 penny each purchased during the year to be held in treasury (25)

16,468,548 Ordinary shares of 1 penny each held in treasury at 31 December 2022 (165)

Voting rights of 129,113,752 Ordinary shares of 1 penny each at 31 December 2022 1,291

The Company purchased 2,522,073 shares (2021: 2,008,369) to be held in treasury at a nominal value of £25,221 and a cost

of £2,244,000 (2021: £1,661,000) representing 1.7% of the shares in issue on 31 December 2022, leading to a balance of

16,468,548 shares (2021: 13,946,475) in treasury representing 11.3% of the shares in issue on 31 December 2022.

Albion Development VCT PLC84

Notes to the Financial Statements

Under the terms of the Dividend Reinvestment Scheme, the following new Ordinary shares of nominal value 1 penny each were

allotted during the year:

Date of allotment

Number of

shares allotted

Aggregate

nominal value of

shares (£’000)

Issue price

(pence per

share)

Net invested

(£’000)

Opening

market price on

allotment date

(pence per share)

31 May 2022 548,418 5 94.78 501 90.00

30 September 2022 559,250 6 91.21 492 87.00

1,107,668 993

Under the terms of the Albion VCTs Prospectus Top Up Offers 2021/22, the following new Ordinary shares of nominal value 1

penny each, were allotted during the year:

Date of allotment

Number

of shares

allotted

Aggregate

nominal value of

shares (£’000)

Issue price (pence

per share)

Net consideration

received (£’000)

Opening market

price on allotment

date (pence per

share)

25 February 2022 1,360,570 14 96.50 1,293 91.00

25 February 2022 462,648 5 97.00 440 91.00

25 February 2022 11,077,966 111 97.50 10,532 91.00

31 March 2022 7,756,832 78 97.50 7,374 91.00

11 April 2022 162,918 2 96.50 155 91.00

11 April 2022 24,223 - 97.00 23 91.00

11 April 2022 709,442 7 97.50 674 91.00

21,554,599 20,491

Under the terms of the Albion VCTs Prospectus Top Up Offers 2022/23, the following new Ordinary shares of nominal value 1

penny each, were allotted during the year:

Date of allotment

Number

of shares

allotted

Aggregate

nominal value of

shares (£’000)

Issue price (pence

per share)

Net consideration

received (£’000)

Opening market

price on allotment

date (pence per

share)

2 December 2022 1,417,019 14 92.80 1,295 87.00

2 December 2022 278,687 3 93.20 255 87.00

2 December 2022 4,476,933 45 93.70 4,090 87.00

6,172,639 5,640

16. Basic and diluted net asset value per share

31 December 2022

(pence per share)

31 December 2021

(pence per share)

Basic and diluted net asset value per share 88.65 94.98

The basic and diluted net asset values per share at the year end are calculated in accordance with the Articles of Association

and are based upon total shares in issue (adjusting for treasury shares) of 129,113,752 Ordinary shares as at 31 December

2022 (2021: 102,800,919).

85Albion Development VCT PLC

Notes to the Financial Statements

17. Capital and financial instruments risk management

The Company’s capital comprises Ordinary shares as described in note 15. The Company is permitted to buy back

its own shares for cancellation or treasury purposes, and this is described in the Chairman’s statement.

The Company’s financial instruments comprise equity and loan stock investments in quoted and unquoted

companies, deferred receipts on disposal of fixed asset investments, cash balances and receivables and payables

which arise from its operations. The main purpose of these financial instruments is to generate cashflow and

revenue and capital appreciation for the Company’s operations. The Company has no gearing or other financial

liabilities apart from short term payables. The Company does not use any derivatives for the management of its

Balance sheet.

The principal financial instrument risks arising from the Company’s operations are:

• Market and investment risk (which comprises investment price and cash flow interest rate risk);

• credit risk; and

• liquidity risk.

The Board regularly reviews and agrees policies for managing each of these risks. There have been no changes in

the nature of the risks that the Company has faced during the past year and there have been no changes in the

objectives, policies or processes for managing risks during the past year. The key risks are summarised below.

Market risk

As a Venture Capital Trust, it is the Company’s specific nature to evaluate the market risk of its portfolio in unquoted

companies. Market risk is the exposure of the Company to the revaluation and devaluation of investments as a

result of macroeconomic changes. The main driver of market risk is the dynamics of market quoted comparators,

as well as the financial and operational performance of portfolio companies. The Board seeks to reduce this risk by

having a spread of investments across a variety of sectors. More details on the sectors the Company invests in can

be found in the pie chart on page 14.

The Manager and the Board formally review market risk, both at the time of initial investment and at quarterly

Board meetings.

The Board monitors the prices at which sales of investments are made to ensure that profits to the Company

are maximised, and that valuations of investments retained within the portfolio appear sufficiently prudent and

realistic compared to prices being achieved in the market for sales of unquoted investments.

As required under FRS 102 the Board is required to illustrate by way of a sensitivity analysis the extent to which

the assets are exposed to market risk. The Board considers that the value of the fixed asset investment portfolio

is sensitive to a change of 10% based on the current economic climate. The impact of a 10% change has been

selected as this is considered reasonable given the current level of volatility observed. When considering the

appropriate level of sensitivity to be applied, the Board has considered both historic performance and future

expectations.

The sensitivity of a 10% increase or decrease in the valuation of the fixed asset investment portfolio (keeping all

other variables constant) would increase or decrease the net asset value and return for the year by £8,629,000.

Further sensitivity analysis on fixed asset investments is included in note 11.

Investment risk (including investment price risk)

Investment risk (including investment price risk) is the risk that the fair value of future investment cash flows

will fluctuate due to factors specific to an investment instrument or to a market in similar instruments. The

management of risk within the venture capital portfolio is addressed through careful investment selection, by

diversification across different industry segments, by maintaining a wide spread of holdings in terms of financing

stage and by limitation of the size of individual holdings. The Manager receives management accounts from

portfolio companies and members of the investment management team often sit on the boards of unquoted

Albion Development VCT PLC86

Notes to the Financial Statements

portfolio companies; this enables the close identification, monitoring and management of investment risk. The

Directors monitor the Manager’s compliance with the investment policy, review and agree policies for managing

this risk and monitor the overall level of risk on the investment portfolio on a regular basis.

Valuations are based on the most appropriate valuation methodology for an investment within its market,

with regard to the financial health of the investment and the IPEV Guidelines. Details of the industries in which

investments have been made are contained in the pie chart in the Strategic report on page 14.

The maximum investment risk as at the Balance sheet date is the value of the fixed asset investment portfolio

which is £86,286,000 (2021: £80,500,000). Fixed asset investments form 75% of net asset value as at 31 December

2022 (2021: 82%).

More details regarding the classification of fixed asset investments are shown in note 11.

Interest rate risk

It is the Company’s policy to accept a degree of interest rate risk on its financial assets through the effect of interest

rate changes. On the basis of the Company’s analysis, it is estimated that a rise of 1% in all interest rates would

have increased total return before tax for the year by approximately £218,000 (2021: £163,000). Furthermore, it

was considered that a material fall in interest rates below current levels during the year would have been unlikely.

The weighted average effective interest rate applied to the Company’s fixed rate assets during the year

was approximately 6.4% (2021: 7.7%). The weighted average period to maturity for the fixed rate assets is

approximately 4.4 years (2021: 4.9 years).

The Company’s financial assets and liabilities, all denominated in pounds sterling, consist of the following:

31 December 2022 31 December 2021

Fixed rate

£’000

Floating

rate

£’000

Non-

interest

bearing

£’000

Total

£’000

Fixed rate

£’000

Floating

rate

£’000

Non-

interest

bearing

£’000

Total

£’000

Unquoted equity

- - 70,536 70,536 - - 66,082 66,082

Quoted equity - - 556 556 - - 1,191 1,191

Unquoted loan stock 14,261 175 758 15,194 12,594 175

458 13,227

Receivables* - - 2,373 2,373 - - 2,542 2,542

Current liabilities - - (722) (722) - - (2,459) (2,459)

Cash - 26,491 - 26,491 - 17,032 - 17,032

Total 14,261 26,666 73,501 114,428 12,594 17,207 67,814 97,615

*The receivables do not reconcile to the Balance sheet as prepayments are not included in the above table.

Credit risk

Credit risk is the risk that the counterparty to a financial instrument will fail to discharge an obligation or

commitment that it has entered into with the Company. The Company is exposed to credit risk through its

receivables, investment in unquoted loan stock and through the holding of cash on deposit with banks.

The Manager evaluates credit risk on loan stock instruments prior to investment and as part of its ongoing

monitoring of investments. For investments made prior to 6 April 2018, which account for 83% of loan stock value,

typically loan stock instruments will have a fixed or floating charge, which may or may not be subordinated, over

the assets of the portfolio company in order to mitigate the gross credit risk.

The Manager receives management accounts from portfolio companies and members of the investment

management team often sit on the boards of unquoted portfolio companies; this enables the close identification,

monitoring and management of investment specific credit risk.

87Albion Development VCT PLC

Notes to the Financial Statements

Bank deposits are held with banks with high credit ratings assigned by international credit rating agencies. The

Company has an informal policy of limiting counterparty banking exposure to a maximum of 20% of net asset

value for any one counterparty.

The Manager and the Board formally review credit risk (including receivables) and other risks, both at the time of

initial investment and at quarterly Board meetings.

The Company’s total gross credit risk at 31 December 2022 was limited to £15,194,000 (2021: £13,227,000) of

unquoted loan stock instruments, £26,491,000 (2021: £17,302,000) of cash deposits with banks and £2,373,000

(2021: £2,542,000) of other receivables.

At the Balance sheet date, the cash in bank and in hand held by the Company were held with Lloyds Bank plc,

Scottish Widows Bank plc (part of Lloyds Banking Group), Barclays Bank plc, Bank of Montreal, Société Générale

S.A. and National Westminster Bank plc. Credit risk on cash transactions was mitigated by transacting with

counterparties that are regulated entities subject to prudential supervision, with high credit ratings assigned by

international credit-rating agencies.

The Company has an informal policy of limiting counterparty banking exposure to a maximum of 20% of net asset

value for any one counterparty.

The credit profile of unquoted loan stock is described under liquidity risk shown below.

Liquidity risk

Liquid assets are held as cash on current account, cash on deposit or short term money market account. Under

the terms of its Articles, the Company has the ability to borrow up to 10% of its adjusted capital and reserves

of the latest published audited Balance sheet, which amounts to £11,143,000 as at 31 December 2022 (2021:

£9,490,000).

The Company had no committed borrowing facilities as at 31 December 2022 (2021: nil) and the Company had

cash balances of £26,491,000 (2021: £17,032,000). The main cash outflows are for new investments, buy-back of

shares and dividend payments, which are within the control of the Company. The Manager formally reviews the

cash requirements of the Company on a monthly basis, and the Board on a quarterly basis, as part of its review of

management accounts and forecasts. All of the Company’s financial liabilities are short term in nature and total

£722,000 (2021: £2,459,000).

The carrying value of loan stock investments, analysed by expected maturity dates is as follows:

31 December 2022 31 December 2021

Redemption date

Fully

performing

£’000

Valued

below cost

£’000

Past due

£’000

Total

£’000

Fully

performing

£’000

Valued

below cost

£’000

Past due

£’000

Total

£’000

Less than one year 5,643 - 1,612 7,255 6,055 689 - 6,744

1-2 years 297 - 76 373 175 1 - 176

2-3 years 105 - - 105 261 7 - 268

3-5 years 2,629 - 123 2,752 762 - 97 859

5 + years 4,709 - - 4,709 5,180 - - 5,180

Total 13,383 - 1,811 15,194 12,433 697 97 13,227

Loan stock can be past due as a result of interest or capital not being paid in accordance with contractual terms.

The cost of loan stock investments valued below cost is £29,000 (2021: £1,202,000).

The Company does not hold any assets as the result of the enforcement of security during the period and believes

that the carrying values for both those valued below cost and past due assets are covered by the value of security

held for these loan stock investments.

Albion Development VCT PLC88

Notes to the Financial Statements

In view of the availability of adequate cash balances and the repayment profile of loan stock investments, the

Board considers that the Company is subject to low liquidity risk.

Fair values of financial assets and financial liabilities

All the Company’s financial assets and liabilities as at 31 December 2022 are stated at fair value as determined

by the Directors, with the exception of receivables (including debtors due after more than one year), payables and

cash which are carried at amortised cost, in accordance with FRS 102. There are no financial liabilities other than

payables. The Company’s financial liabilities are all non-interest bearing. It is the Directors’ opinion that the book

value of the financial liabilities is not materially different to the fair value and all are payable within one year.

18. Contingencies and commitments

As at 31 December 2022, the Company had no financial commitments (2021: £nil).

There were no contingent liabilities or guarantees given by the Company as at 31 December 2022 (2021: £nil).

19. Post balance sheet events

Since the year end, the Company has not made any material investment transactions.

On 2 March 2023, a post year end NAV update was announced with a pleasing 5.25 pence per share uplift,

representing a 5.92% increase on the 31 December 2022 NAV. This uplift has resulted from a portfolio company,

Quantexa, undergoing an external fundraising process after the year end. This transaction has since completed and

was announced by Quantexa on 4 April 2023.

The following new Ordinary shares of nominal value 1 penny each were allotted under the Albion VCTs Prospectus

Top Up Offers 2022/23 after 31 December 2022:

Date of allotment

Number of shares

allotted

Aggregate

nominal value

of shares

£’000

Issue price

(pence per

share)

Net consideration

received

£’000

Opening market price

on allotment date

(pence per share)

31 March 2023 7,134,319 7 96.40 6,706 89.50

20. Related party transactions

Other than transactions with the Manager as disclosed in note 5, and the Directors’ remuneration disclosed in

the Directors’ remuneration report on pages 59 to 62, there are no other related party transactions or balances

requiring disclosure.

89Albion Development VCT PLC

Notes to the Financial Statements

NOTICE OF ANNUAL GENERAL MEETING

SHAREHOLDERS SHOULD TAKE NOTE THAT THIS WILL BE A VIRTUAL AGM AND FURTHER DETAILS WILL BE

MADE AVAILABLE AT WWW.ALBION.CAPITAL/VCT-HUB/AGMS-EVENTS.

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Albion Development VCT PLC (the “Company”)

will be held virtually at noon on 30 May 2023 at the registered office of the Company at 1 Benjamin Street, London,

EC1M 5QL for the purposes of considering and, if thought fit, passing the following resolutions, of which resolutions

1 to 10 will be proposed as ordinary resolutions and resolutions 11 to 12 will be proposed as special resolutions.

Ordinary Business

1. To receive and adopt the Company’s accounts for the year ended 31 December 2022 together with the

Strategic Report and the reports of the Directors and Auditor.

2. To approve the Directors’ remuneration policy.

3. To approve the Directors’ remuneration report for the year ended 31 December 2022.

4. To re-elect Ben Larkin as a Director of the Company.

5. To re-elect Lyn Goleby as a Director of the Company.

6. To re-elect Lord O’Shaughnessy as a Director of the Company.

7. To re-elect Patrick Reeve as a Director of the Company.

8. To re-appoint BDO LLP as Auditor of the Company to hold office from conclusion of the meeting to the

conclusion of the next meeting at which the audited accounts are to be laid.

9. To authorise the Directors to agree the Auditor’s remuneration.

Special Business

10. Authority to allot shares

That the Directors be generally and unconditionally authorised in accordance with section 551 of the

Companies Act 2006 (the “Act”) to allot shares in the Company up to an aggregate nominal amount of

£305,433 for Ordinary shares provided that this authority shall expire 15 months from the date that this

resolution is passed, or, if earlier, the conclusion of the next Annual General Meeting of the Company but

so that the Company may, before such expiry, make an offer or agreement which would or might require

shares to be allotted or rights to subscribe for or convert securities into shares to be granted after such

expiry and the Directors may allot shares or grant rights to subscribe for or convert securities into shares

pursuant to such an offer or agreement as if this authority had not expired.

11. Authority for the disapplication of pre-emptive rights

That, subject to the authority and conditional on the passing of resolution number 10, the Directors be

empowered, pursuant to sections 570 and 573 of the Act, to allot equity securities (within the meaning of

section 560 of the Act) for cash pursuant to the authority conferred by resolution number 10 and/or sell

Ordinary shares held by the Company as treasury shares for cash as if section 561(1) of the Act did not apply

to any such allotment or sale.

Albion Development VCT PLC90

INFORMATION

& FINANCIALS

Under this power the Directors may impose any limits or restrictions and make any arrangements which they

deem necessary or expedient to deal with any treasury shares, fractional entitlements, record dates, legal,

regulatory or practical problems in, or laws of, any territory or other matter, arising under the laws of, or the

requirements of any recognised regulatory body or any stock exchange in, any territory or any other matter.

This power shall expire 15 months from the date that this resolution is passed or, if earlier, the conclusion of

the next Annual General Meeting of the Company, save that the Company may, before such expiry, make an

offer or agreement which would or might require equity securities to be allotted after such expiry and the

Directors may allot equity securities in pursuance of any such offer or agreement as if this power had not

expired.

12. Authority to purchase own shares

That, subject to and in accordance with the Company’s Articles of Association, the Company be generally

and unconditionally authorised, pursuant to and in accordance with section 701 of the Act, to make market

purchases (within the meaning of Section 693(4) of the Act) of Ordinary shares of 1 penny each in the capital

of the Company (“Ordinary shares”), on such terms as the Directors think fit, provided always that:

(a) the maximum aggregate number of Ordinary shares hereby authorised to be purchased is 22,892,221 or,

if lower, such number of Ordinary shares as shall equal 14.99% of the issued Ordinary share capital of the

Company as at the date of the passing of this resolution;

(b) the minimum price, exclusive of any expenses, which may be paid for an Ordinary share is 1 penny;

equal to the higher of (a) 105% of the average of the middle market quotations for an Ordinary share,

as derived from the London Stock Exchange Daily Official List, for the five business days immediately

preceding the day on which the Ordinary share is purchased; and (b) the amount stipulated by Article 5(1)

of the Buy-back and Stabilisation Regulation 2003;

(d) the authority hereby conferred shall, unless previously revoked, varied or renewed, expire 15 months from

the date that this resolution is passed or, if earlier, at the conclusion of the next Annual General Meeting;

and

(e) the Company may make a contract or contracts to purchase Ordinary shares under this authority before

the expiry of the authority which will or may be executed wholly or partly after the expiry of the authority,

and may make a purchase of shares in pursuance of any such contract or contracts as if the authority

conferred hereby had not expired.

By Order of the Board

Albion Capital Group LLP

Company Secretary

Registered office

1 Benjamin Street

London, EC1M 5QL

6 April 2023

Albion Development VCT PLC is registered in England and Wales with company number 03654040

91Albion Development VCT PLC

Notice of Annual General Meeting

Notes

1. Members entitled to participate in, speak and vote at the Annual General Meeting (“AGM”) may appoint a proxy or

proxies (who need not be a member of the Company) to exercise these rights in their place at the AGM. A member may

appoint more than one proxy, provided that each proxy is appointed to exercise the rights attached to different shares.

Proxies may only be appointed by:

• completing and returning the Form of Proxy enclosed with this Notice to Computershare Investor Services PLC, The

Pavilions, Bridgwater Road, Bristol BS99 6ZY; or

• going to www.investorcentre.co.uk/eproxy and following the instructions provided there; or

• by having an appropriate CREST message transmitted, if you are a user of the CREST system (including CREST

personal members).

Return of the Form of Proxy will not preclude a member from attending the meeting and voting. A member may not use

any electronic address provided in the Notice of this meeting to communicate with the Company for any purposes other

than those expressly stated.

To be effective the Form of Proxy must be completed in accordance with the instructions and received by the Registrars of

the Company by noon on 25 May 2023.

In accordance with good governance practice, the Company is offering shareholders use of an online service, offered

by the Company’s registrar, Computershare Investor Services, at www.investorcentre.co.uk/eproxy. Shareholders

can use this service to vote or appoint a proxy online.The same voting deadline of noon on 25 May 2023 applies

as if you were using your Personalised Voting Form to vote, or appoint a proxy by post to vote for you.Shareholders

who hold their shares electronically may submit their votes through CREST, by submitting the appropriate and

authenticated CREST message so as to be received by the Company’s registrar not later than two business days

before the start of the meeting. Instructions on how to vote through CREST can be found by accessing the following

website: www.euroclear.com/CREST. Shareholders should not show this information to anyone unless they wish to

give proxy instructions on their behalf.

2. Any person to whom this Notice is sent who is a person nominated under section 146 of the Companies Act 2006 (“the

Act”) to enjoy information rights (a “Nominated Person”) may, under an agreement between him or her and the member

by whom he or she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the

AGM. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he or she may, under

any such agreement, have a right to give instructions to the member as to the exercise of voting rights.

The statement of rights of members in relation to the appointment of proxies in note 1 above does not apply to

Nominated Persons. The rights described in that note can only be exercised by members of the Company.

3. To be entitled to attend and vote at the AGM (and for the purpose of the determination by the Company of the votes

they may cast), members must be registered in the register of members of the Company at noon on 25 May 2023 (or,

in the event of any adjournment, on the date which is two business days before the time of the adjourned meeting).

Changes to the register of members after the relevant deadline shall be disregarded in determining the rights of any

person to attend and vote at the meeting.

4. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may

do so for this AGM and any adjournment(s) by using the procedures described in the CREST Manual. CREST personal

members or other CREST sponsored members, and those CREST members who have appointed a voting service

provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate

action on their behalf.

In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST

message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK and Ireland

Limited’s specifications, and must contain the information required for such instruction, as described in the CREST Manual

(available via www.euroclear.com/CREST). The message, regardless of whether it constitutes the appointment of a proxy

or is an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted

so as to be received by the issuer’s agent by noon on 25 May 2023. For this purpose, the time of receipt will be taken to

be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the

issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any

change of instructions to proxies appointed through CREST should be communicated to the appointee through other

means.

Albion Development VCT PLC92

Notice of Annual General Meeting

CREST members and, where applicable, their CREST sponsors or voting service provider(s) should note that Euroclear UK

and Ireland Limited does not make available special procedures in CREST for any particular message. Normal system

timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility

of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member

or has appointed a voting service provider, to procure that his or her CREST sponsor or voting service provider(s)

take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by

any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service

provider(s) are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST

system and timings.

The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the

Uncertificated Securities Regulations 2001.

5. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all

of its powers as a member provided that they do not do so in relation to the same shares.

6. A copy of this Notice, and other information regarding the meeting, as required by section 311A of the Act, is available

from www.albion.capital/funds/AADV under the ‘Fund reports’ section.

7. Any member attending the meeting has the right to ask questions. The Company must cause to be answered any such

question relating to the business being dealt with at the meeting but no such answer need be given if (a) to do so would

interfere unduly with the preparation for the meeting or involve the disclosure of confidential information, (b) the answer

has already been given on a website in the form of an answer to a question, or (c) it is undesirable in the interests of the

Company or the good order of the meeting that the question be answered.

8. Copies of contracts of service and letters of appointment between the Directors and the Company, together with the

Register of Directors’ Interests in the Ordinary shares of the Company, will be available for inspection at the Registered

Office of the Company during normal business hours from the date of this Notice until the conclusion of the meeting,

and at the place of the meeting for at least 15 minutes prior to the meeting until its conclusion. In addition, a copy of

the Articles of Association will be available for inspection at the Company’s registered office from the date of this Notice

until the conclusion of the meeting, and at the place of the meeting for at least 15 minutes prior to the meeting until its

conclusion.

9. Under section 527 of the Act members meeting the threshold requirements set out in that section have the right

to require the Company to publish on a website a statement setting out any matter relating to: (i) the audit of the

Company’s accounts (including the Auditor’s report and the conduct of the audit) that are to be laid before the AGM:

or (ii) any circumstances connected with an Auditor of the Company ceasing to hold office since the previous meeting

at which the annual accounts and reports were laid in accordance with section 437 of the Act. The Company may not

require the members requesting any such website publication to pay its expenses in complying with section 527 and

528 of the Act. Where the Company is required to place a statement on a website under section 527 of the Act, it must

forward the statement to the Company’s Auditor not later than the time when it makes the statement available on the

website. The business which may be dealt with at the AGM includes any statement that the Company has been required

under section 527 of the Act to publish on a website.

10. Members satisfying the thresholds in Section 338 of the Companies Act 2006 may require the Company to give, to

members of the Company entitled to receive notice of the AGM, notice of a resolution which those members intend

to move (and which may properly be moved) at the AGM. A resolution may properly be moved at the AGM unless

(i) it would, if passed, be ineffective (whether by reason of any inconsistency with any enactment of the Company’s

constitution or otherwise); (ii) it is defamatory of any person; or (iii) it is frivolous or vexatious. The business which may be

dealt with at the AGM includes a resolution circulated pursuant to this right. A request made pursuant to this right may

be in hard copy or electronic form, must identify the resolution of which notice is to be given, must be authenticated by

the person(s) making it and must be received by the Company not later than 6 weeks before the date of the AGM.

11. Members satisfying the thresholds in Section 388A of the Companies Act 2006 may request the Company to include in

the business to be dealt with at the AGM any matter (other than a proposed resolution) which may properly be included

in the business at the AGM.

A matter may properly be included in the business at the AGM unless (i) it is defamatory of any person or (ii) it is frivolous

or vexatious. A request made pursuant to this right may be in hard copy or electronic form, must identify the matter

to be included in the business, must be accompanied by a statement setting out the grounds for the request, must be

authenticated by the person(s) making it and must be received by the Company not later than 6 weeks before the date of

the AGM.

93Albion Development VCT PLC

12. As at 5 April 2023 being the latest practicable date prior to the publication of this Notice, the Company’s issued

share capital consists of 152,716,619 Ordinary shares with a nominal value of 1 penny each. The Company also

holds 16,468,548 Ordinary shares in treasury. Therefore, the total voting rights in the Company as at 5 April 2023

are 136,248,071.

Albion Development VCT PLC94

Notice of Annual General Meeting