Albion news. Contents. Albion seeks to make long term investments in UK businesses from early stage venture to FTSE 100

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1 Albion news November 2016 Albion acquired OLIM Investment Managers OLIM manages around 500m of quoted UK equity portfolios A year of change for Albion The Albion Group now has over 950m under investment management or administration Contents A year of change and lots to celebrate 2016 Investment summary Investors are underestimating & underpricing digital disruption A health-technology perfect storm? Radnor House School included in The Good Schools Guide & Albion care homes achieve top ratings Renewable Energy? Albion VCTs Performance Albion VCTs - The Burning Questions Albion Growth Report Highlights OLIM an introduction Albion seeks to make long term investments in UK businesses from early stage venture to FTSE 100

2 Albion manages or administers the following: Six venture capital trusts with assets of over 300 million Albion Community Power with commitments of 80 million Albion Care Communities with commitments of 25 million The UCL Technology Fund with commitments of 50 million Albion has six VCTs seeking to provide investors with exposure to a broad portfolio of UK private companies delivering both income and the prospect of capital growth. Core to Albion s VCT investment strategy is to invest approximately 50% of the portfolio in lower risk income generating asset backed business with the balance in higher growth companies. The current VCT portfolio is invested across 65 businesses with thematic focus on Healthcare, Education, Renewable Energy and Technology. launched in 2013 as a power generation company developing community-scale renewable energy projects in the UK. The company builds, owns and operates a range of renewable energy projects using proven technologies including hydroelectricity, on-shore wind, biogas and Anaerobic Digestion. The investor base is predominantly institutional, in particular local authority pension funds. The investment strategy is now increasingly focused on acquiring existing assets that are operational. launched in 2015 as a developer and operator of high end care homes for the elderly. Albion Care Communities combines Albion s care home investment experience with one of the best operating teams in the sector. Two care homes are under construction with a further site in exclusivity. Albion Care Communities is currently looking for land and property to develop. launched in January 2016, the fund is dedicated to investing in intellectual property commercialisation opportunities arising from University College London s world-class research base, focusing in particular on the physical and life sciences. To date the UCLTF has committed over 8m across these areas. In managing the fund Albion is partnering with UCL Business, the university s technology transfer arm, with whom we have been working for 10 years. OLIM manages assets of 495 million acquired by Albion in November 2016 to add quoted equities to Albion s unquoted investment activities. OLIM is a specialist quoted fund manager with a value-orientated approach driven by a high conviction portfolio of around 35 UK stocks typically split equally between large-cap and mid-cap. The OLIM team manages: the Charity Value and Income Fund (an investment fund aimed at charities), OLIM UK Equity Income Fund (a unit trust offering retail investors the opportunity to benefit from investment in UK equities), and Value and Income Trust (unique amongst investment trusts in that it invests both in UK equities and direct property). OLIM also manages discrete portfolios for Charities and individuals.

3 A year of change Patrick Reeve, Managing Partner 2016 was a pretty exciting year for almost everyone, though there might be some discussion as to which bits were good, and which weren t. But for Albion, things overall were very positive. Albion invested in a number of exciting businesses including marketing technology, Big Data management, automotive & cyber security and digital health. On top of the fullysubscribed 36 million top-up offer for our VCTs, we raised the 50 million UCL Technology Fund from institutional investors. In this fund, where we work in partnership with UCL Business, the university s technology transfer arm, we seek to back the technology produced by one of the world s top universities, and the European leader in Life Sciences. Patrick Reeve, Managing Partner...and lots to celebrate We also acquired OLIM Investment Managers from Close Brothers, our former parent. OLIM, which was founded 30 years ago, manages just under 500 million of UK quoted equities on behalf of charities and other clients, with a valueorientated investment process that has a strong emphasis on conviction-based stock selection and income generation. So together, this means that Albion now manages or advises funds of just under 1 billion, with emphasis on: Long term investment UK businesses From start-ups through to FTSE-100. So how do we, as investors, create value for our clients in a fast-changing world? Well, our job is to really examine those changes, to work out whether they will result in growth, and then to see whether that growth will itself result in value. And for that value to be lasting, rather than temporary, and for it to have resonance over many years to come, it needs to enhance the way that we live. That, in turn, makes investment a particularly thought-provoking exercise; but it also makes it fun. Albion now manages or advises funds of just under 1billion with emphasis on long term investment. Patrick Reeve, Managing Partner Investment activities Equities: Start up Venture Growth Mid Cap FTSE100 UCL VCTs VCTs OLIM OLIM Property / Asset-Based: Energy Healthcare Leisure Education

4 2016 Investment summary Albion Ventures leads a 1.6m funding round in InCrowd Sports InCrowd Sports is a mobile fan engagement and sports marketing company that develops mobile apps for professional sports clubs. The technology solves the problem of poor connectivity in crowded places and allows phones to share all available connectivity. Albion is investing alongside Sky and a number of angel investors, and is backing Aidan Cooney, who led Opta Sports Data, a previous, highly successful Albion investment. Albion Ventures invests in Black Swan Data Black Swan s product platform, The Nest, has achieved outstanding growth based on its unique capability of applying big data and predictive data science techniques to consumer marketing. It works with many of the world s leading consumer-focused brands including PepsiCo, Vodafone, Samsung, Disney and Panasonic. Albion Ventures invests in Convertr Media Convertr Media is an award winning enterprise technology platform which helps advertisers enhance their digital marketing through real-time efficiencies in customer acquisition and data partnerships. Based in Farringdon London, Convertr is expanding its client base and scaling the business globally. Albion Ventures invests in SBD Automotive SBD is an automotive consultancy, headquartered in Milton Keynes with offices in North America, Japan and India. SBD provides strategic consultancy, research and insight to approximately 95% of the world s leading vehicle manufacturers as well as suppliers, investors and governments in more than 70 countries. Albion Ventures invests in Oviva Oviva is a digital health business providing medical nutritional counselling. The company has developed mobile technology solutions that enable its dietitians to provide superior care in a highly efficient way. Oviva is headquartered in Zurich and currently has operations in Germany and the UK. Albion had a number of exits in 2016, most notable of which were Exco Intouch which delivered one of the best VC returns in the UK digital health market to date and Haemostatix, where Albion sold its stake to international drug development business Ergomed plc. For full details of the portfolio, investments and exits please visit

5 Investors are underestimating and underpricing digital disruption Ed Lascelles, Partner, Head of Technology Investment In 1943 the Chairman of IBM at the time famously said I think there is a world market for maybe 5 computers. In 1999 the then Chairman of IBM said Amazon is a very interesting retail concept but wait till you see what Wal-Mart is gearing up to do IBM is already generating more revenue, and certainly more profit, than all of the top Internet companies combined. At the time of writing, IBM market cap: $157bn, Amazon market cap: $378bn. It is not just chairmen of IBM whose predictions have been so inaccurate. Consider the response of Western Union in 1867 when offered the chance to buy the patent for the telephone: What use could this company make of an electric toy? What is particularly exciting is the breadth, pace and magnitude of the digital disruption currently seen across so many industries. Yet, even though the mainstream press now comments on the impact of disruption, and old economy multi-nationals develop innovation units and accelerators, many people still underestimate the level of change that we will see over the next 10 years. In a widely read article in Wired in 2004, Chris Anderson noted the effect of the Long Tail in the new economy: sales of books outside Amazon s top 130,000 accounted for a quarter of Amazon s total sales. For many, the major point drawn from this observation was the aggregate size of the long tail, and what this would mean for markets that migrated online. However, of more significance is the figure 130,000, which was how many titles the average Barnes & Noble stocked. Ecommerce meant that niche markets could be served profitably due to the significant reduction in distribution costs. It is this latter point which underpins the enormous disruption we are now seeing across multiple industries. Sure, new business ideas and markets are created as we become ever more connected. But the greater change is the impact on incumbents whose old economy barriers to entry are crumbling: location, distribution costs, infrastructure costs, access to skills, information asymmetry etc. are no longer sufficient to maintain leadership. Indeed the significant investment in legacy infrastructure and incentive structures are a major impediment to change. This is creating huge opportunity for agile, digital-native businesses which can now be built and delivered for a fraction of the cost compared to even 10 years ago. In a world in which 90% of an enterprise-class service can be built on open source software, and delivered using infrastructure rented on a pay-as-you go model, it has never been cheaper and easier to take a new idea to market. Companies that are leading the charge in the digital economy are winning big: on 1 August 2016 the 5 most valuable businesses globally were tech companies (Apple, Google, Facebook, Microsoft & Amazon). Notably, two of these are just over 10 years old, and one 20 years old. By contrast, the five largest companies in the UK at the end of 2016 were Shell, HSBC, BP, BAT and GSK. Indeed, Europe s 100 most valuable companies have an average age of 123 years. There is so much more to come. It s a great time to be investing. We are seeing considerable opportunity in data businesses, which are benefiting from mainstream adoption of big data infrastructure and recent breakthroughs in artificial intelligence, a field in which the UK is a world leader. Ed Lascelles, Partner

6 A health-tech Perfect Storm? Dr. Andrew Elder, Partner, Head of Healthcare Investment Created by a confluence of unforeseen circumstances and leading to drastic outcomes, a perfect storm can occur in any complex system. Hollywood told the tragic story of a fatal weather version, but the confluence is not always destructive - one could argue that a perfect storm of rapidly converging digital technologies is currently causing massive disruption in many business sectors. So is the healthcare sector about to experience something similar.or will its idiosyncrasies ultimately get in the way? Healthcare has seen plenty of technology-based hype-bubbles come and go, often due to a lack of convergence of certain factors: genomics; monoclonal antibodies; minimally invasive surgery, MRI and X-rays were all dragged into common practice a generation after they showed their first glimmers of promise to revolutionise patient care. Many got there in the end, but were more akin to years of drizzle than a perfect storm. But there is now a sense that something big is brewing in healthcare. Digital health, where digital tools and data are used to help both patients and healthcare systems to track, manage and improve health, has seen over $12bn of venture capital and private equity invested in the US in the last 3 years, across more than 900 deals - up from less than $1bn across 90 deals in The confluence of factors driving this revolution suggests the time is now right for digital health to make an impact. Rising healthcare demand, coupled with severe cost pressures are now creating an imperative for healthcare systems to innovate and deliver improved outcomes at lower cost. The arrival of multiple game-changing technologies which are accessible, powerful and cheap promise to power that innovation. Technologies such as smart-phones, genomic sequencing and editing tools, machine learning and advanced sensors are converging to make investigation and treatment of disease radically different - more personal, earlier, more effective. They are enabling patient-empowerment, creating the potential to open up vast new markets for consumer health and wellness - it s no coincidence that all the large tech companies such as Apple, Google and IBM are investing heavily in the sector. Digital health

7 offers the potential to deliver what the system is craving for. better care for less cost. So will we see the digital health explosion this side of the pond? We ve seen non-healthcare business models ripped apart by these technologies in the US, and doing the same here a couple of years later. Data is increasingly at the core of high value business models, and with data as a common currency and the need for scale, these models are becoming more global. But healthcare can be slow to change, held back by its complex regulatory systems, obtuse payment mechanisms and with practitioners steeped in doing no harm. With a more fragmented market and a more complex data ownership model, investment in digital health in Europe is well behind the US, barely reaching three figure millions per year. However, we are seeing signs of change. Keeping models simple, with clear and tangible efficiency benefits, seems to be the key to early digital health adoption over here. Even the simple switch from paper to digital still offers plenty of investment opportunity our recent sale of Exco Intouch, which provides digital patient engagement solutions to the pharmaceutical industry, in the process replacing paper methods, has seen rapid growth and delivered one of the best VC returns in the UK digital health market to date. And where the pharma industry leads, others in healthcare may well follow in a system now striving to put the patient at the centre, engaging with patients through technology will be core. Tools that deliver outcome benefits tend to be more complex than those driving efficiency. However digital therapies are now emerging and adoption is fastest where patients can easily measure clear benefits from simple behaviour change.for example, in the simple bodily functions of sleeping, eating and thinking: sleep improvement tools, mental health platforms and our recent investment example of Oviva (providing digitally enabled dietetic services), are all seeing rapid growth. All promise to deliver better outcomes at lower cost and are signs of an emerging, digitally enhanced care system. Complex analytics and artificial intelligence promise further insightbased value in future and are the focus of much attention in both the US and UK, but for now key to adoption this side of the pond is keeping it simple. So it looks like the confluence of drivers for digital health is strong and the tidal shift inevitable. Don t believe all the hype, but do believe there s a storm coming - it just may not be perfect. Rising healthcare demand, coupled with severe cost pressures are now creating an imperative for healthcare systems to innovate and deliver outcomes at lower cost. Andrew Elder, Partner

8 Radnor House School has now been included in The Good Schools Guide Emil Gigov, Partner, Head of Education and Care Home Investment Back in September 2011 Albion invested in its first school. Today, with over 400 students on the roll, it is now well established and we are very proud that, only five years after the first students were admitted to Radnor House School, it has been included in The Good Schools Guide with a very positive review. The school is taking its academic mission extremely seriously but equally its commitment to the wider well-being of all its pupils and their families. Once you re in, they want you to stay and to work hard and that, in practice, is what happens. The results tell a good story, states the review. Radnor House works hugely hard but has a sense of its underlying values and of the direction it wishes to follow and these both mark it out as a credible and confident player in the independent school world. The atmosphere is calm as well as energetic, and the head and her colleagues communicate values which are humane and imaginative. It is now poised to become a school of first choice and thoroughly deserving of all the good fortune which comes its way. Radnor House School also has a track record of strong financial performance, which is reflected in the growth of Albion s initial investment. Radnor House works hugely hard but has a sense of its underlying values and of the direction it wishes to follow. The Good Schools Guide Encouraged by the early success of Radnor House in Twickenham, in 2015 the Albion VCTs funded the acquisition of Combe Bank School in Kent, recently renamed Radnor House (Sevenoaks). This second school is now being turned round and the student roll grew in 2016 after several years of decline under the previous management. The school s aim is to replicate the success of Radnor House in Twickenham. It has capacity to educate over 600 children, approximately double the number enrolled today. Therefore, we see further growth opportunities for the group with the potential to increase the student roll to over 1,000 children. We are also proud that the Radnor Charitable Trust has now sponsored several children to attend Radnor House in Twickenham. The Trust was established to provide financial assistance to those families with modest financial resources who would benefit from sending their children to the school. Many thanks to all our shareholders and friends who have donated to the Trust; we continue to seek new ways to raise finance for the Trust and to expand its activities. If you wish to make a donation please contact vscott@albion-ventures.co.uk.

9 Albion funded care homes achieve top ratings Much has been said in the media over the past year about the state of the elderly care sector and most of it makes difficult reading. Government funding is under severe pressure at a time when demand for care places is increasing rapidly due to demographic change. While government funded fees are seeing only inflationary increases, the rise in the living wage and other operating costs is driving many operators to the wall. So why is Albion excited about investing in elderly care homes? Government funding is under severe pressure at a time when demand for care places is increasing rapidly. Emil Gigov, Partner The care home market is estimated to be worth 16bn per annum, with some 450,000 elderly people living in a care home. While demand is large, the market is very fragmented and the quality of supply is mostly poor. Over 50% of care home residents are responsible for paying their fees and many are demanding a higher level of accommodation and service. This has led to the emergence of new business models focused on the private pay market only, a trend Albion spotted several years ago. Such homes offer larger rooms with en-suite facilities, multiple well furnished lounges and dining rooms, a hairdressing salon, cinema room, a therapy room, a café or bistro and ample gardens. Residents have the choice to participate in regular activities and organised trips. To be able to provide all these facilities, operators charge fees 50% to 100% higher than those paid by local authorities. Weekly fees in excess of 1,000 are now the norm in the private pay market and can be as high as 1,500. At such levels operators can make an attractive return on capital and it is in this area that Albion has focused its investment activities. As it is financially prohibitive for existing care homes to be adapted to provide such a high level of service, we fund new developments of purpose built homes. In addition, we work with operators who excel not only in the provision of care but also in the auxiliary hotel services. In 2016 in conjunction with our partner Berkley Care Management we opened three new care homes with a total of 201 beds. The homes are now well established in the local communities and filling rapidly. Importantly, they deliver a high level of care and much improved quality of life to their residents. Shinfield View, our care home near Reading, and Ryefield Court, our home in Greater London, were recently rated 10 out of 10 by residents and their families at industry leading review site carehome.co.uk. while Cumnor Hill House near Oxford was rated 9.9. Albion first invested in the sector nearly 20 years ago and has established a strong investment track record during this period. We have a wide network of professionals and operators and understand the market better than most investors. This gives us the ability to make in depth assessments of investment risk and find opportunities which are often not available to others. In 2015 we launched Albion Care Communities to take full advantage of our expertise in this sector and this now has two homes under construction with more in the pipeline.

10 Renewable Energy? David Gudgin, Partner, Head of Renewable Energy Investment In 2015 the UK produced 25% of its electricity from renewable sources for the first time. This was a big increase from the 5% of renewable electricity produced in The VCTs played their part in this, with all Albion VCTs having 20% of their funds invested in renewable energy. These investments include 1,500 individual solar rooftop installations across East Anglia and the Home Counties, 4 wind turbines in Wales, 3 hydro projects in Scotland and Wales, and a biogas plant in Scotland. All of these plants produce electricity under the Feed-in-Tariff or Renewable Obligation Certificates schemes and generate a yield across all the technologies of 10% pa. Albion continues to play a worthwhile part in the drive to re-balance UK electricity generation towards renewable sources. David Gudgin, Partner In 2013 the Albion team, together with four non-executive Directors who have considerable experience in the renewable energy sector, launched Albion Community Power. The team is working with project partners on a number of renewable energy projects and further projects have been identified which will be suitable for ownership and operation by Albion Community Power. Renewables form a long-term part of our investment portfolio, generating inflation-linked returns and providing balance with the earlier stage, higher risk opportunities elsewhere. But they also provide a real service - across VCTs and Albion Community Power, we now provide sufficient electricity for c.25,000 homes - equal to the size of Sevenoaks, Kent. 25% of all UK electricity came from renewables in % 25% 21% Renewables Nuclear Coal & Gas Source: DBEIS

11 Performance of the Albion VCTs Albion VCTs continue to pay a regular stream of tax-free dividends to their investors. For details of recent dividends, fund share prices and the latest reports, please visit the Investor Centre section of the Albion website Dates of forthcoming AGMs can also be found on our website. Performance of VCTs managed by Albion Ventures LLP Fund Year of launch Total return since launch Mid-market share price Total net assets Dividend target in next 12 months Albion Venture Capital Trust PLC Ordinary Shares C Shares* Albion Prime VCT PLC* p 203.7p 130.7p 67.0p 56.2m 5.0p Albion Development VCT PLC Ordinary Shares C Shares* D Shares* / p 150.2p 135.2p 64.8p 43.2m 4.0p Albion Technology & General VCT PLC Ordinary Shares C Shares* Albion Income & Growth VCT PLC* p 89.1p 92.9p 63.0p 62.6m 4.0p Albion Enterprise VCT PLC p 95.0p 46.0m 5.0p Crown Place VCT PLC** p 28.5p 38.6m 2.0p Kings Arms Yard VCT PLC** p 19.3p 48.9m 1.0p Albion VCTs Linked Top Up Offers 2010/2011*** Albion VCTs Linked Top Up Offers 2011/2012*** Albion VCTs Linked Top Up Offers 2012/2013*** 2010/ p 5.2p for every 1 invested 2011/ p 5.4p for every 1 invested 2012/ p 5.4p for every 1 invested Albion VCTs Linked Top Up Offers 2013/2014*** 2013/ p 5.5p for every 1 invested Albion VCTs Top Up Offers 2014/2015*** 2014/ p 5.6p for every 1 invested Albion VCTs Linked Top Up Offers 2015/2016*** 2015/ p 5.6p for every 1 invested All data is prepared as at 6 February 2017, using the latest published net asset value of the relevant fund. *The Albion Venture Capital Trust PLC C shares were converted to Ordinary shares at a rate of 1 Ordinary share for each C share. Albion Development VCT PLC C shares were converted to Ordinary shares at a rate of Ordinary shares for each C share. Albion Development VCT PLC D shares were converted to Ordinary shares at a rate of Ordinary shares for each D share. Albion Technology & General VCT PLC C shares were converted to Ordinary shares at a rate of Ordinary shares for each C share. Albion Prime VCT PLC merged with Albion Venture Capital Trust PLC at a ratio of Albion Venture Capital Trust PLC shares for each Albion Prime VCT PLC share. Albion Income & Growth VCT PLC merged with Albion Technology & General VCT PLC at a ratio of Albion Income & Growth VCT PLC shares for each Albion Technology & General VCT PLC share. Dividends paid/declared plus NAV. Please note: the above excludes all tax reliefs. ** Albion Ventures LLP took over the management of Crown Place VCT PLC in April 2005 and Kings Arms Yard VCT PLC in January *** Performance data for the Albion VCTs Top Up Offers are based on pro forma calculations based on the performance of each of the VCTs which were part of the Offers. Assumes investment across the VCTs as per the Investor Guides, or equally across each VCT as applicable. Risk Warning This newsletter is not a prospectus or offer document and should not be relied upon in making a decision to invest in any of our funds. That decision should be based solely on the relevant prospectus or fund raising document. None of the figures quoted herein should be regarded as a dividend or profit forecast. Past performance is not a reliable indicator of future results. This newsletter is issued by Albion Ventures LLP which is authorised and regulated by the Financial Conduct Authority.

12 Albion VCTS - The Burning Questions Albion Deputy Managing Partner, Will Fraser-Allen, answers questions commonly asked by shareholders of the Albion VCTs and their financial advisers. Q: Why and when were VCTs introduced? Q: What is the investment proposition for the Albion VCTs? A: The VCT scheme was introduced in 1995 to encourage individuals to invest in UK smaller businesses in a tax efficient way. VCTs are currently providing 3.6bn of support with recent research by the AIC showing that on average each company backed by VCTs created 60 jobs, increased turnover by 2.9m and spent 1.19m on research and development. Structured as investment trusts, VCTs are ideally placed to provide long term capital to growing UK companies looking to scale up. A: Albion VCTs are long term investment vehicles which provide a predictable tax-free dividend yield with the prospect of capital growth over the longer term. This is achieved by creating a diversified portfolio of investments balanced between lower risk asset based and higher risk growth companies. Our VCTs provide exposure to the creation and growth of UK small, private companies in a highly tax advantageous way. Q: Does Albion consider social impact when selecting new investments? Q: What else do you look for? A: Albion s job is to invest to create value by identifying how the world is changing and backing those companies best placed to exploit these changes. For this value to be long term we believe it needs to enhance the way we live in a socially positive manner. Our focus on renewable energy, healthcare and education is driven by the pressures of climate change, increased demands of an aging population and the need to equip the young for a changing world. A: We seek to invest in companies operating in strong growth markets with clear product differentiation. We back management teams with strong track records who are motivated to work with Albion to create substantial shareholder value. A well thought out strategy to grow the business and ultimately to sell the business is critical to success.

13 Q: What support does Albion offer to its portfolio companies? Q: What are the key tax benefits of investing in a VCT offer? A: Making an investment in a young business is only the beginning of a journey through to a successful sale. An Albion executive typically takes a board seat and becomes a part of key strategy decisions including management structures, recruitment decisions, financial planning and timing of final sale. The Albion investment team has a broad range of backgrounds including healthcare, accounting, management consultancy and corporate finance. Combined with Albion s twenty years experience of making venture capital investments, Albion provides far more than just money! A: VCTs enjoy a generous set of tax incentives. The key ones are 30% income tax relief on amounts subscribed, ongoing tax free dividends and capital gains tax relief on the disposal of VCT shares. To fully qualify for these reliefs the maximum that can be subscribed for in any tax year is 200,000 per investor and the VCT shares must be held for at least five years. Q: Can shareholders receive communications from the Albion VCTs electronically rather than through the post? Q: What are the advantages of a Dividend Reinvestment Scheme (DRIS)? A: The DRIS offers shareholders a convenient, easy and cost effective way to increase their holdings by using their dividends to subscribe for further new shares in the VCT. There are no dealing costs or stamp duty. Furthermore, the additional shares issued are usually eligible for the income and capital gains tax advantages available to subscribers for VCT shares including upfront tax relief of 30%. A: Albion is committed to communicating regularly with VCT shareholders while recognising the environmental impact of printed material and traditional post. All our VCTs provide the facility for shareholders to receive the majority of communications electronically. Shareholders wishing to make use of this facility should contact the registrar. Contact details for the registrar for each VCT can be found on the Albion Ventures website. Portfolio split across our VCTs Jan % 54% 32% 14% 5% 4% 3% 10% 20% 12% 13% 3% 16%

14 Albion Growth Report Highlights The Albion Growth Report is our annual survey across a broad sample of UK SMEs, aimed at examining growth trends amongst smaller businesses, and trying to understand why some companies grow, and others don t. This is now our fourth Report, and the period covered by them all, from 2013 to 2016, represents one of the most fascinating periods in recent history, with dramatic constitutional events overlying a torpid recovery from the worst recession in living memory, and against a backdrop of a broader global socio-political dynamic that has been changing with alarming speed. SMEs with more than 5 employees ranked barriers to growth as follows: Ranking 2016 Ranking 2015 Ranking 2014 Finding skilled staff Red Tape Regulatory change Political uncertainty Difficulty accessing new markets Decision to leave the EU Cash Flow Technological limitations Lack of management expertise Scale of management ambition Workspace costs Pace of technological change Lack of access to finance Absence of business mentoring Finding unskilled staff =9 =7 =7 = SMEs with more than 5 employees F Lack of access to finance 2016

15 One element that has remained unchanged is the essential optimism underlying our economy, and this is a source of real reassurance. Particularly interesting is the fact that, of the 556 companies in our survey which have more than 5 employees, 73% believe that they will grow over the next two years. But many barriers to growth remain, and for the first time, it is a shortage of skilled staff that is the key concern, with the perennial complaint of Red Tape falling to second place. So this problem of success, which has been increasing in importance over recent years, is finally entrenched at the summit of worries on growth. But perhaps most dramatic of all, access to finance has now fallen to 13th place, compared to 6th place last year. The downside of all this, of course, is that the economy is coming under capacity constraints at a time of considerable political uncertainty. Concern over Brexit is the biggest worry for Scottish businesses and the third most important for London ones, while for this latter category, political uncertainty is the single greatest worry. Regions most and least optimistic about increasing staff over next two years 73% 13% Scotland Foreseeing fall 48% London Foreseeing growth SMEs confidence of growth by sector 65% From the point of view of a long-term equity investor, this requires a clear focus on our companies hierarchy of priorities. This is particularly the case for those chief executives under 35 years old, who whilst being the most worried about Global competition, are also the most likely to look to enter new markets. And recognising the assistance that they need, an impressive 43% of them would consider raising long term equity finance from venture capitalists or business angels. Manufacturing 54% Retailing IT/Telecoms 48% Construction For the full report please visit

16 Extending into Quoted Equities Albion welcomes OLIM Investment Managers to the Albion group Robert Whitby-Smith, Partner and OLIM Director The Albion and OLIM teams have known each other for many years. Both share a similar history, being part of the Close Brothers Group for over a decade. Importantly both share a similar culture of honesty, openness, transparency, fairness and a focus on the long term. It was natural for the two teams to wish to merge. OLIM and Albion share investment philosophies. Like Albion, OLIM recognises the importance of investment income and OLIM seeks to deliver a high and increasing investment income over the long-term within the context of a prudent approach. Like Albion, OLIM recognises the importance of both diversification and conviction. The OLIM portfolio comprises investment in around 35 UK companies. Typically no sector accounts for over 10% of the portfolio and no single stock accounts for more than 5% of the portfolio. The portfolio is split broadly equally between the FTSE 100 and FTSE 250, as OLIM often finds hidden gems in the less well covered midcap index. The OLIM investment team comprises three senior fund managers with over 20 years experience each managing UK quoted equity and fixed income portfolios. The team has worked together now for over 8 years. The OLIM team has significant personal holdings in the funds they manage. Currently OLIM manages around 500m of quoted UK equity portfolios on behalf of investment funds, charities and private individuals. OLIM s expertise and network is highly complementary to Albion s investment expertise. For Charities, OLIM manages (i) a common investment fund (Smith & Williamson Charity Value and Income Fund) and (ii) segregated portfolios for charities with investment portfolios of more than 2m. For private individuals, OLIM offers a unit trust (OLIM UK Equity Income Fund) and an investment trust (Value and Income Trust, Ticker VIN.L) and manages segregated portfolios for individuals with 2m+ portfolios. If you would like to find out more, please contact Robert Whitby-Smith of Albion on robert@albion-ventures.co.uk. The Albion Charity Investment Forum We are delighted to extend an invitation to all charity trustees or charity executives to this inaugural event. We have a full agenda of notable experts and commentators from the charity sector speaking on a variety of subjects designed to inform and inspire. Social Media Albion shares news and views and portfolio updates on our Linked In business page and also on our Twitter feed. Please join us to receive the latest news as it comes through. LinkedIn Albion Ventures LLP Albion Ventures LLP 1 King s Arms Yard London EC2R 7AF T: E: info@albion-ventures.co.uk The forum will be held from 10am until 3pm on Thursday 8th June at the Royal Automobile Club, Pall Mall. Entry will require an invitation card. If you would like to join us please contact Victoria Scott on vscott@albion-ventures.co.uk