Albion Technology & General VCT PLC: Half-yearly Financial
Report
Albion Technology & General VCT PLCLEI
number: 213800TKJUY376H3KN16
As required by the UK Listing Authority's
Disclosure Guidance and Transparency Rule 4.2, Albion Technology
& General VCT PLC today makes public its information relating
to the Half-yearly Financial Report (which is unaudited) for the
six months to 30 June 2023. This announcement was approved by the
Board of Directors on 21 September 2023.
The full Half-yearly Financial Report (which is
unaudited) for the period to 30 June 2023, will shortly be sent to
shareholders. Copies of the full Half-yearly Financial Report will
be shown via the Albion Capital Group LLP website by clicking
www.albion.capital/funds/AATG/30Jun23.pdf.
Investment objective and policy
The Company’s investment objective is to provide
investors with a regular and predictable source of dividend income,
combined with the prospect of long-term capital growth, through a
balanced portfolio of predominantly unquoted growth and technology
businesses in a qualifying Venture Capital Trust (“VCT”).
Investment policy
The Company will invest in a broad portfolio of
unquoted growth and technology businesses. 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 sectors and stages of maturity of portfolio
companies.
VCT qualifying and non-qualifying investments
Application of the investment policy is designed
to ensure that the Company continues to qualify and is approved as
a VCT by HM Revenue and Customs (“VCT regulations”). The maximum
amount invested in any one company is limited to HMRC annual
investment limits. It is intended that normally at least 80% of the
Company's funds will be invested in VCT qualifying investments. The
VCT regulations also have an impact on the type of investments and
qualifying sectors in which the Company can make an investment.
Funds held either prior to investing in VCT
qualifying assets or for liquidity purposes will be held as cash on
deposit, invested in floating rate notes or similar instruments
with banks or other financial institutions with high credit ratings
or invested in liquid open-ended equity funds providing income and
capital equity exposure (where it is considered economic to do so).
Investment in such open-ended equity funds will not exceed 7.5% of
the Company’s assets at the time of investment.
Risk diversification and maximum exposures
Risk is spread by investing in a number of
different businesses within VCT qualifying industry sectors using a
mixture of securities. The maximum the Company will invest in a
single company is 15% of the Company’s assets at cost at the time
of investment. The value of an individual investment is expected to
increase over time as a result of trading progress and a continuous
assessment is made of investments' suitability for sale. It is
possible that individual holdings may grow in value to a point
where they represent a significantly higher proportion of total
assets prior to a realisation opportunity being available.
Borrowing powers
The Company’s maximum exposure in relation to
gearing is restricted to 10% of the adjusted share capital and
reserves. The Directors do not have any intention of utilising
long-term gearing.
Financial
calendar
Record date for second dividend
for the yearPayment date for second dividend for the yearFinancial
year end |
8 December 202329 December 202331 December |
Financial summary
|
Unaudited six months ended
30 June
2023(pence per
share) |
Unaudited six months ended30 June 2022(pence per share) |
Auditedyear ended31 December 2022(pence per share) |
Opening net asset value |
72.92 |
80.65 |
80.65 |
Capital return/(loss) |
4.59 |
(0.10) |
(4.51) |
Revenue return |
0.15 |
0.11 |
0.46 |
Total return/(loss) |
4.74 |
0.01 |
(4.05) |
Dividends paid |
(1.82) |
(2.02) |
(3.99) |
Impact of share capital
movements |
0.18 |
0.05 |
0.31 |
Net asset value |
76.02 |
78.69 |
72.92 |
Total shareholder value |
Ordinary shares (pence per
share) |
Total
dividends paid since inception |
125.44 |
Net asset value as
at 30 June 2023 |
76.02 |
Total
shareholder value to 30 June
2023 |
201.46 |
In addition to the dividends
paid above, the Board declared a
second dividend for the year ending 31
December 2023
of 1.90 pence per
Ordinary share to be paid
on 29 December
2023 to
shareholders on the register on
8 December
2023.
Further details regarding the total shareholder
value for the historic C Shares, Albion Income and Growth VCT PLC
and Ordinary shares, as well as the dividend record from inception
of the Company in 2000, can be found at
www.albion.capital/funds/AATG under the ‘Financial Summary for
Previous Funds’ section.
Interim management report
IntroductionI am pleased to
report a strong positive total return for the six months ended 30
June 2023 of 4.74 pence per share which represents a 6.5% return on
opening net asset value. We continue to see resilience and revenue
growth from many of our portfolio companies despite the difficult
macroeconomic and geopolitical backdrop, including continuing high
inflation, rising interest rates and volatility of quoted
technology company valuations.
Results and
dividends The net asset value per
Ordinary share as at 30 June 2023 has increased by 4.3% to 76.02
pence over the six months (30 June 2022: 78.69 pence; 31 December
2022: 72.92 pence) mainly due to the valuation uplift in Quantexa,
discussed below.
In line with our dividend policy, targeting
around 5% of NAV per annum, the Company paid a dividend of 1.82
pence per share during the period to 30 June 2023 (30 June 2022:
2.02 pence per share). The Company will pay a second dividend for
the financial year ending 31 December 2023 of 1.90 pence per share
on 29 December 2023 to shareholders on the register on 8 December
2023, being 2.5% of the latest reported NAV at 30 June 2023.
This will bring the total dividends paid for the
year ending 31 December 2023 to 3.72 pence per share, which equates
to a 5.1% yield on the opening NAV of 72.92 pence per share at 31
December 2022.
Performance and portfolio
updateThe total gain on investments for the period ended
30 June 2023 was £9.4 million (six months ended 30 June 2022: gain
of £1.6 million; year ended 31 December 2022: loss of £4.5
million). The key movement in the period was an £11.4 million
valuation uplift to the Quantexa holding following an externally
led $129 million Series E fundraising which completed in April
2023. The latest funding round made the company the first UK
“Unicorn” of 2023 (a private company valuation over $1 billion) and
the Board remain excited about its prospects. Other gains in the
period, which were driven by revenue growth, included unrealised
gains in Radnor House School of £0.8 million and Ophelos of £0.4
million.
These gains were offset by write downs in Black
Swan Data which decreased by £2.2 million, Locum’s Nest by £0.4
million and Speechmatics by £0.4 million.
The Company realised disposal proceeds of £1.0
million, the largest disposals being Zift (£0.5 million) and a part
disposal of our shareholding in our quoted investment, Arecor
Therapeutics PLC (£0.2 million). Further details of other
realisations during the period can be found in the realisations
table below.
During the period, a total of £0.4 million was
deployed as follow-on investments into the existing portfolio,
including £0.3 million into Proveca and £0.1 million into Seldon
Technologies. The economic uncertainty, high inflation rates and
rising interest rates have resulted in a quiet period of investment
in the first half of 2023. However, there is a growing pipeline of
new investments, and investment activity has started to increase
after the period end, with £1.8 million invested at the date of
this report into new and follow-on investments since 30 June
2023.
Our top 3 portfolio companies now account for
29.2% of the Company’s NAV (30 June 2022: 21.6%; 31 December 2022:
22.2%). Further details of the portfolio of investments can be
found below.
Current portfolio sector
allocationSet out at the bottom of this announcement is
the sector diversification of the portfolio of investments as at 30
June 2023.
Board composition and succession
planningDuring the period Robin Archibald retired after
nine years on the Board, including two as Chairman and seven as
Audit Committee Chairman. On behalf of the Board and the Manager, I
would like to thank and note my appreciation to Robin for his
invaluable contribution and wise guidance and leadership throughout
his time as a Director. As announced on 18 May 2023, Mary Anne
Cordeiro, having served a similar period, also retired during the
period. The Board and the Manager would like to thank her for her
strong contribution. In particular, her support and advice has been
hugely appreciated. We wish both Robin and Mary Anne well in their
future endeavours.
As part of the Board’s succession planning, we
were pleased to welcome David Benda as a Director with effect from
26 June 2023, and Peter Moorhouse from 1 September 2023. David has
extensive corporate banking experience working with investment
companies providing advice on fundraising, reorganisations and
restructurings. Peter brings a depth of corporate finance knowledge
particularly with companies in the healthcare and technology
sectors, advising primarily on equity financing, mergers and
acquisitions.
The Nomination Committee continually monitors
and reviews the membership of the Board based on the spread of
skills and contributions of its members, as well as looking at
succession planning requirements of the Company. The Company has
made several changes to the Board in recent years and continues to
review actively Board succession.
Share buy-backs It remains the
Board’s policy to buy-back shares in the market, subject to the
overall constraint that such purchases are in the Company’s
interest. This includes the maintenance of sufficient cash
resources for investment in new and existing portfolio companies
and the continued payment of dividends to shareholders.
It is the Board’s intention that such buy-backs
should be at around a 5% discount to NAV, in so far as market
conditions and liquidity permit. The Company purchased 2,117,126
Ordinary shares for treasury during the period at a total cost of
£1.6 million (30 June 2022: £1.2 million; 31 December 2022: £2.5
million). The Company continues to conduct active buy-backs to help
provide good secondary market liquidity for those who want to
dispose of all or part of their shareholdings.
Risks and
uncertainties The Company faces a number of
significant risks including rising interest rates, high levels of
inflation, the ongoing impact of geopolitical tensions, and an
expected period of economic stagnation in the UK and other markets.
The concentration risk to the technology sector is noted as
technology company valuations have become more uncertain in the
current economic climate. The Manager continually assesses the
exposure to these risks for each portfolio company and appropriate
actions, where possible, are implemented.
In accordance with Disclosure Guidance and
Transparency rules (“DTR”), the Board confirms that the principal
risks and uncertainties facing the Company have not changed
materially from those identified in the Annual Report and Financial
Statements for the year ended 31 December 2022. There is heightened
uncertainty, but this has not changed the nature of the principal
risks. The Board considers that the present processes for
mitigating those risks remain appropriate.
The principal risks faced by the Company
are:
- Investment,
performance and valuation risk;
- VCT approval
risk;
- Cyber and data
security risk;
- Reliance on key
agents and personnel risk;
- Economic,
political and social risk; and
- Discount
risk.
A detailed analysis of the principal risks and
uncertainties facing the business can be found in the Annual Report
and Financial Statements for the year ended 31 December 2022 on
pages 24 to 26, copies of which are available on the Company’s
webpage on the Manager’s website at www.albion.capital/funds/AATG
under the ‘Financial Reports and Circulars’ section.
Albion VCTs
Prospectus Top Up OffersThe
2022/23 Offers were fully subscribed and closed having raised £15.5
million for the Company. The Board was pleased to see the high
level of demand for the Company’s shares from existing and new
shareholders.
The proceeds of the Offers are being used to
provide support to our existing portfolio companies and to enable
us to take advantage of new investment opportunities as they arise.
Details of the share allotments during the period can be found in
note 8.
Transactions with the
ManagerDetails of the transactions that took place with
the Manager in the period can be found in note 5. Details of
related party transactions can be found in note 12.
Shareholder seminarThe Board is
pleased to report that the Manager, Albion Capital, will host a
shareholder seminar this year on 15 November 2023 at the Royal
College of Surgeons. The Board considers this an important part of
shareholder communication as it provides an opportunity for
shareholders to interact with the Board and the Manager;
shareholders are encouraged to attend. Places are limited and to
reserve a place please email info@albion.capital with subject
heading “Shareholder Seminar” and include your full name. You will
receive an email confirmation of your place, subject to
availability.
Move to electronic communicationsThe Board
wishes to minimise the environmental impact of how the Company
communicates with its shareholders. With this in mind, those
shareholders that continue to receive physical copies of the Annual
Report and other documentation, will receive a letter alongside
this Half-yearly Financial Report explaining the forthcoming move
to electronic communications.
OutlookAlthough there remain
many uncertainties facing the Company, with the high levels of
inflation, elevated interest rates and geopolitical tensions, the
results for the period demonstrate the resilience of our portfolio
during these challenging times. Our strategy is to focus on dynamic
sectors with long term growth prospects such as technology and
healthcare within which we maintain a diversified portfolio in
terms of companies at different stages of maturity and across a
variety of sub sectors. We remain confident that the Company will
continue to provide positive results to its shareholders over the
long-term.
Clive RichardsonChairman21
September 2023
Portfolio of
investments
|
|
As at 30 June
2023 |
|
|
Portfolio company |
% voting rights |
Cost£’000 |
Cumulative movement in
value£’000 |
Value£’000 |
|
Change in value for the
period*£’000 |
Quantexa |
2.4 |
2,740 |
25,601 |
28,341 |
|
11,408 |
Radnor House School (TopCo) |
14.8 |
2,710 |
3,375 |
6,085 |
|
840 |
Proveca |
7.2 |
1,438 |
3,648 |
5,086 |
|
103 |
Chonais River Hydro |
15.7 |
2,169 |
2,161 |
4,330 |
|
296 |
Oviva |
2.9 |
2,694 |
1,220 |
3,914 |
|
(388) |
Cantab Research (T/A Speechmatics) |
3.4 |
2,901 |
510 |
3,411 |
|
(407) |
The Evewell Group |
6.4 |
1,547 |
1,613 |
3,160 |
|
23 |
Egress Software Technologies |
2.2 |
765 |
2,136 |
2,901 |
|
(57) |
Runa Network |
3.3 |
2,101 |
591 |
2,692 |
|
- |
Gharagain River Hydro |
18.5 |
1,526 |
1,003 |
2,529 |
|
214 |
Elliptic Enterprises |
1.6 |
2,156 |
- |
2,156 |
|
- |
Convertr Media |
6.9 |
1,105 |
1,017 |
2,122 |
|
(39) |
Healios |
2.5 |
1,500 |
416 |
1,916 |
|
- |
MHS 1 |
22.5 |
1,565 |
93 |
1,658 |
|
- |
Panaseer |
3.1 |
1,122 |
532 |
1,654 |
|
(283) |
TransFICC |
2.7 |
1,275 |
377 |
1,652 |
|
- |
Peppy Health |
1.6 |
1,481 |
- |
1,481 |
|
- |
The Street by Street Solar Programme |
8.1 |
895 |
563 |
1,458 |
|
(86) |
Threadneedle Software Holdings (T/A Solidatus) |
1.7 |
1,014 |
408 |
1,422 |
|
(208) |
Toqio FinTech Holdings |
2.0 |
1,400 |
- |
1,400 |
|
- |
InCrowd Sports |
4.8 |
749 |
506 |
1,255 |
|
192 |
Regenerco Renewable Energy |
7.9 |
822 |
382 |
1,204 |
|
(117) |
Gravitee Topco (T/A Gravitee.io) |
2.2 |
920 |
235 |
1,155 |
|
- |
Beddlestead |
9.8 |
1,200 |
(127) |
1,073 |
|
(43) |
Aridhia Informatics |
4.9 |
950 |
73 |
1,023 |
|
(153) |
PeakData |
2.1 |
943 |
56 |
999 |
|
(15) |
The Q Garden Company |
33.4 |
934 |
65 |
999 |
|
- |
Ophelos |
1.9 |
492 |
412 |
904 |
|
411 |
GX Molecular (T/A CS Genetics) |
2.9 |
846 |
- |
846 |
|
- |
Seldon Technologies |
2.3 |
796 |
- |
796 |
|
- |
NuvoAir Holdings |
1.4 |
564 |
231 |
795 |
|
(41) |
Locum’s Nest |
6.9 |
813 |
(70) |
743 |
|
(439) |
Alto Prodotto Wind |
6.9 |
509 |
232 |
741 |
|
34 |
Cisiv |
5.3 |
695 |
29 |
724 |
|
311 |
OutThink |
2.7 |
687 |
- |
687 |
|
- |
PerchPeek |
2.0 |
635 |
- |
635 |
|
- |
Diffblue |
2.5 |
585 |
- |
585 |
|
- |
Premier Leisure (Suffolk) |
- |
454 |
90 |
544 |
|
- |
Accelex Technology |
2.0 |
353 |
191 |
544 |
|
191 |
PetsApp |
2.6 |
487 |
- |
487 |
|
- |
Erin Solar |
15.7 |
440 |
12 |
452 |
|
- |
DySIS Medical |
2.6 |
2,589 |
(2,167) |
422 |
|
30 |
5Mins AI |
2.2 |
390 |
- |
390 |
|
- |
Imandra |
1.6 |
215 |
101 |
316 |
|
(15) |
AVESI |
8.0 |
259 |
55 |
314 |
|
(33) |
Brytlyt |
1.9 |
406 |
(96) |
310 |
|
(95) |
Koru Kids |
1.3 |
430 |
(121) |
309 |
|
(52) |
Ramp Software |
1.9 |
277 |
- |
277 |
|
- |
Arecor Therapeutics PLC |
0.4 |
149 |
124 |
273 |
|
(9) |
Neurofenix |
2.9 |
590 |
(334) |
256 |
|
(334) |
Tem-Energy |
1.9 |
241 |
- |
241 |
|
- |
Harvest AD |
- |
210 |
23 |
233 |
|
- |
uMedeor (T/A uMed) |
0.9 |
150 |
53 |
203 |
|
51 |
Mirada Medical |
4.6 |
1,321 |
(1,125) |
196 |
|
- |
Regulatory Genome Development |
0.8 |
118 |
40 |
158 |
|
40 |
Greenenerco |
3.1 |
77 |
59 |
136 |
|
7 |
Infact Systems (T/A Infact) |
1.9 |
96 |
- |
96 |
|
- |
Symetrica |
0.2 |
91 |
(6) |
85 |
|
11 |
Black Swan Data |
8.3 |
4,714 |
(4,648) |
66 |
|
(2,195) |
uMotif |
3.6 |
1,121 |
(1,120) |
1 |
|
(119) |
Limitless Technology |
2.1 |
560 |
(560) |
- |
|
(282) |
Elements Software |
- |
19 |
(19) |
- |
|
- |
|
|
|
|
|
|
|
Total fixed asset investments |
|
63,001 |
37,840 |
100,841 |
|
8,752 |
T/A – trading as* As adjusted for additions and disposals during
the period.
Investment realisations in the
period to 30 June
2023 |
Cost£’000 |
Opening carrying value£’000 |
Disposal proceeds£’000 |
Total realised
gain/(loss)£’000 |
Gain/(loss)
on opening value £’000 |
Disposals: |
|
|
|
|
|
Zift Channel Solutions |
881 |
326 |
464 |
(417) |
138 |
Arecor Therapeutics PLC |
82 |
154 |
160 |
78 |
6 |
Oxsensis |
3,484 |
95 |
109 |
(3,375) |
14 |
Forward Clinical (T/A Pando) |
196 |
- |
- |
(196) |
- |
|
|
|
|
|
|
Loan stock repayments and
other: |
|
|
|
|
|
Alto Prodotto Wind |
20 |
31 |
31 |
11 |
- |
Greenenerco |
4 |
5 |
5 |
1 |
- |
Escrow adjustments and other* |
- |
- |
209 |
209 |
209 |
Total |
4,667 |
611 |
978 |
(3,689) |
367 |
* 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
|
|
|
|
|
|
£’000 |
Total change in value of investments for the
year |
|
|
|
|
|
8,752 |
Movement
in loan stock accrued interest |
|
|
|
|
|
35 |
Unrealised gains on fixed
asset investments sub-total |
|
|
|
|
|
8,787 |
Realised
gains on fixed asset
investments |
|
|
|
|
367 |
Finance
income from the unwinding of discount on deferred
consideration |
|
|
|
|
208 |
Total gains on investments as per Income
statement |
|
|
|
|
9,362 |
Responsibility statement
The Directors, Clive Richardson, Margaret Payn,
David Benda, Peter Moorhouse and Patrick Reeve, are responsible for
preparing the Half-yearly Financial Report. In preparing these
condensed Financial Statements for the period to 30 June 2023 we,
the Directors of the Company, confirm that, to the best of our
knowledge:
(a) the condensed set of Financial Statements,
which has been prepared in accordance with Financial Reporting
Standard 104 “Interim Financial Reporting”, gives a true and fair
view of the assets, liabilities, financial position and profit and
loss of the Company as required by DTR 4.2.4R;
(b) the Interim management report includes a
fair review of the information required by DTR 4.2.7R (indication
of important events during the first six months and description of
principal risks and uncertainties for the remaining six months of
the year); and
(c) the Interim management report includes a
fair review of the information required by DTR 4.2.8R (disclosure
of related parties’ transactions and changes therein).
This Half-yearly Financial Report has not been
audited or reviewed by the Auditor.
For and on behalf of the Board
Clive RichardsonChairman 21
September 2023
Condensed income statement
|
|
Unaudited six months ended 30 June 2023 |
Unaudited six months ended 30 June 2022 |
Audited year ended 31 December 2022 |
|
Note |
Revenue£’000 |
Capital£’000 |
Total£’000 |
Revenue£’000 |
Capital£’000 |
Total£’000 |
Revenue£’000 |
Capital£’000 |
Total£’000 |
Gains/(losses) on investments |
3 |
- |
9,362 |
9,362 |
- |
1,579 |
1,579 |
- |
(4,480) |
(4,480) |
Investment income |
4 |
713 |
- |
713 |
619 |
- |
619 |
1,631 |
- |
1,631 |
Investment Manager’s fees* |
5 |
(138) |
(1,457) |
(1,595) |
(129) |
(1,725) |
(1,854) |
(253) |
(2,541) |
(2,794) |
Other expenses |
|
(321) |
- |
(321) |
(327) |
- |
(327) |
(658) |
- |
(658) |
Profit/(loss)
on ordinary activities before tax |
|
254 |
7,905 |
8,159 |
163 |
(146) |
17 |
720 |
(7,021) |
(6,301) |
Tax charge on ordinary activities |
|
- |
- |
- |
- |
- |
- |
- |
- |
- |
Profit/(loss)
and total comprehensive income attributable to
shareholders |
|
254 |
7,905 |
8,159 |
163 |
(146) |
17 |
720 |
(7,021) |
(6,301) |
Basic and diluted return/(loss)
per share (pence)** |
7 |
0.15 |
4.59 |
4.74 |
0.11 |
(0.10) |
0.01 |
0.46 |
(4.51) |
(4.05) |
* For more information on the allocation between revenue and
capital please see the accounting policies below** adjusted for
treasury shares
Comparative figures have been extracted from the
unaudited Half-yearly Financial Report for the six months ended 30
June 2022 and the audited statutory accounts for the year ended 31
December 2022.
The accompanying notes form an integral part of
this Half-yearly Financial Report.
The total column of this Condensed 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.
Condensed
balance
sheet
|
Note |
Unaudited30 June
2023£’000 |
Unaudited30 June 2022£’000 |
Audited31 December 2022£’000 |
Fixed asset investments |
|
100,841 |
89,519 |
92,301 |
|
|
|
|
|
Current assets |
|
|
|
|
Trade and other receivables |
|
3,419 |
3,221 |
3,456 |
Cash in bank and at hand |
|
32,906 |
35,518 |
26,594 |
|
|
36,325 |
38,739 |
30,050 |
Payables: amounts falling due within one yearTrade
and other payables |
|
(1,751) |
(1,145) |
(832) |
Net current assets |
|
34,574 |
37,594 |
29,218 |
Total assets less current liabilities |
|
135,415 |
127,113 |
121,519 |
Provisions falling due after one year |
|
(248) |
(562) |
(272) |
Net assets |
|
135,167 |
126,551 |
121,247 |
Equity attributable to equity holders |
|
|
|
|
Called-up share capital |
8 |
2,041 |
1,833 |
1,905 |
Share premium |
|
15,958 |
76,358 |
5,534 |
Capital redemption reserve |
|
- |
48 |
- |
Unrealised capital reserve |
|
37,671 |
28,229 |
24,828 |
Realised capital reserve |
|
14,941 |
23,353 |
19,879 |
Other distributable reserve |
|
64,556 |
(3,270) |
69,101 |
Total equity shareholders’ funds |
|
135,167 |
126,551 |
121,247 |
|
|
|
|
|
Basic and diluted net asset value per share
(pence)* |
|
76.02 |
78.69 |
72.92 |
* excluding treasury shares
Comparative figures have been extracted from the
unaudited Half-yearly Financial Report for the six months ended 30
June 2022 and the audited statutory accounts for the year ended 31
December 2022.
The accompanying notes form an integral part of
this Half-yearly Financial Report.
These Financial Statements were approved by the
Board of Directors and authorised for issue on 21 September 2023
and were signed on its behalf by
Clive RichardsonChairmanCompany
number: 04114310
Condensed statement of changes in
equity
|
Called up
sharecapital |
Share 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 2023 |
1,905 |
5,534 |
- |
24,828 |
19,879 |
69,101 |
121,247 |
Profit/(loss) and total comprehensive income for the period |
- |
- |
- |
8,787 |
(882) |
254 |
8,159 |
Transfer of previously unrealised losses on disposal of
investments |
- |
- |
- |
4,056 |
(4,056) |
- |
- |
Purchase of own shares for treasury |
- |
- |
- |
- |
- |
(1,561) |
(1,561) |
Issue of equity |
136 |
10,700 |
- |
- |
- |
- |
10,836 |
Cost of issue of equity |
- |
(276) |
- |
- |
- |
- |
(276) |
Dividends paid |
- |
- |
- |
- |
- |
(3,238) |
(3,238) |
As at 30 June
2023 |
2,041 |
15,958 |
- |
37,671 |
14,941 |
64,556 |
135,167 |
As at 1 January 2022 |
1,536 |
52,687 |
48 |
33,469 |
18,259 |
995 |
106,994 |
Profit/(loss) and total comprehensive income for the period |
- |
- |
- |
(838) |
692 |
163 |
17 |
Transfer of previously unrealised gains on disposal of
investments |
- |
- |
- |
(4,402) |
4,402 |
- |
- |
Purchase of own shares for treasury |
- |
- |
- |
- |
- |
(1,188) |
(1,188) |
Issue of equity |
297 |
24,273 |
- |
- |
- |
- |
24,570 |
Cost of issue of equity |
- |
(602) |
- |
- |
- |
- |
(602) |
Dividends paid |
- |
- |
- |
- |
- |
(3,240) |
(3,240) |
As at 30 June 2022 |
1,833 |
76,358 |
48 |
28,229 |
23,353 |
(3,270) |
126,551 |
As at 1 January 2022 |
1,536 |
52,687 |
48 |
33,469 |
18,259 |
995 |
106,994 |
(Loss)/profit and total comprehensive income for the year |
- |
- |
- |
(6,498) |
(523) |
720 |
(6,301) |
Transfer of previously unrealised gains on disposal of
investments |
- |
- |
- |
(2,143) |
2,143 |
- |
- |
Purchase of shares for treasury |
- |
- |
- |
- |
- |
(2,512) |
(2,512) |
Issue of equity |
369 |
29,943 |
- |
- |
- |
- |
30,312 |
Cost of issue of equity |
- |
(739) |
- |
- |
- |
- |
(739) |
Cancellation of share premium and capital redemption reserve |
- |
(76,357) |
(48) |
- |
- |
76,405 |
- |
Dividends paid |
- |
- |
- |
- |
- |
(6,507) |
(6,507) |
As at 31 December 2022 |
1,905 |
5,534 |
- |
24,828 |
19,879 |
69,101 |
121,247 |
*Included within these reserves are amounts of
£28,406,000 (30 June 2022: £17,686,000; 31 December 2022:
£31,907,000) which are considered distributable at 30 June 2023.
Over the next three years an additional £41,966,000 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.
Condensed statement of
cash
flows
|
Unauditedsix months ended 30 June
2023£’000 |
Unauditedsix months ended 30 June 2022£’000 |
Auditedyear ended31 December 2022£’000 |
Cash flow from operating activities |
|
|
|
Loan
stock income received |
484 |
767 |
1,199 |
Dividend
income received |
- |
80 |
132 |
Income
from fixed term funds received |
95 |
9 |
59 |
Deposit
interest received |
147 |
9 |
50 |
Investment management fee paid |
(1,204) |
(1,196) |
(2,586) |
Other
cash payments |
(376) |
(302) |
(591) |
Corporation tax paid |
- |
- |
- |
Net cash flow generated from
operating activities |
(854) |
(633) |
(1,737) |
|
|
|
|
|
|
|
|
Cash flow from investing activities |
|
|
|
Purchase
of fixed asset investments |
(435) |
(6,308) |
(16,108) |
Proceeds
from disposals of fixed asset investments |
1,257 |
8,337 |
9,530 |
Net cash flow generated from
investing activities |
822 |
2,029 |
(6,578) |
|
|
|
|
|
|
|
|
Cash flow from financing activities |
|
|
|
Issue of
share capital |
10,054 |
23,413 |
28,484 |
Cost of
issue of equity |
- |
(18) |
(36) |
Dividends paid* |
(2,723) |
(2,671) |
(5,387) |
Purchase
of own shares (including costs) |
(987) |
(963) |
(2,513) |
Net cash flow generated from
financing activities |
6,344 |
19,761 |
20,548 |
|
|
|
|
Increase in cash in bank and at
hand |
6,312 |
21,157 |
12,233 |
Cash in
bank and at hand at start of period |
26,594 |
14,361 |
14,361 |
Cash in bank and at hand
at end of period |
32,906 |
35,518 |
26,594 |
*The dividends paid shown in the cash flow are
different to the dividends disclosed in note 6 as a result of the
non-cash effect of the Dividend Reinvestment Scheme.
Notes to the condensed
Financial Statements
1. Basis of
preparationThe condensed 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.
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 of
the Half-yearly Financial Report.
2. Accounting
policiesFixed
investmentsThe 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 Fair Value Through Profit and Loss (“FVTPL”).
Upon initial recognition (using trade date
accounting) investments, including loan stock, are classified 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 or otherwise at fair value based on published
price quotations.
- Unquoted investments, where there
is no 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 prices of recent investment rounds, net
assets and industry valuation benchmarks. Where the 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 the 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
of 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; or
- 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
payablesReceivables (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 and are 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.
Provisions Provisions relate to
the performance incentive fee payable to the Manager. The provision
requires management to make judgements and estimates under the
Basis of Preparation. The performance incentive fee provision is
the best estimate of the probable amounts payable in respect of the
five-year performance measurement period for the performance
incentive fee. The most significant assumption when calculating
this amount, is that of future performance. This has been
calculated by reference to the Company’s five year rolling historic
returns and has been corroborated by a portfolio return analysis
using appropriate benchmarks.
Investment incomeEquity
incomeDividend income is included in revenue when the investment is
quoted ex-dividend.
Unquoted loan stock and other preferred
incomeFixed returns on non-equity shares and debt securities are
recognised when the Company’s right to receive payment and expected
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.
Fixed term funds incomeFunds income is
recognised on an accruals basis using the agreed rate of
interest.
Bank deposit incomeInterest income is recognised
on an accruals basis using the rate of interest agreed with the
bank.
Investment management
fee, performance incentive fee
and expensesAll 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.
TaxationTaxation is applied on
a current basis in accordance with FRS 102. Current tax is tax
payable or refundable in respect of the taxable profit or 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 for 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
reservesCalled-up share capitalThis
accounts for the nominal value of the shares.
Share premium This accounts for the difference
between the price paid for the Company’s shares and the nominal
value of those shares, less issue costs.
Capital redemption reserveThis reserve accounts
for amounts by which the issued share capital is diminished through
the repurchase and cancellation of the Company’s own shares.
Unrealised capital reserveIncreases and
decreases in the valuation of investments held at the period end
against cost are included in this reserve.
Realised capital reserveThe 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 investments
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 reserveThe 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.
DividendsDividends by the
Company are accounted for in the period in which the liability to
make the payment has been established or approved at the Annual
General Meeting.
Segmental reportingThe
Directors are of the opinion that the Company is engaged in a
single operating segment of business, being investment in smaller
early stage companies principally based in the UK.
3. Gains/(losses)
on investments
|
Unauditedsix months ended 30 June
2023£’000 |
Unauditedsix months ended 30 June 2022£’000 |
Auditedyear ended 31 December2022£’000 |
Unrealised gains/(losses) on fixed asset investments |
8,787 |
(838) |
(6,498) |
Realised gains on fixed asset
investments |
367 |
2,238 |
1,647 |
Unwinding of discount on
deferred consideration |
208 |
179 |
371 |
|
9,362 |
1,579 |
(4,480) |
4. Investment
income
|
Unauditedsix months ended
30 June
2023£’000 |
Unauditedsix months ended 30 June 2022£’000 |
Auditedyear ended 31 December 2022£’000 |
Loan stock interest |
448 |
505 |
978 |
Bank deposit interest |
147 |
9 |
50 |
Income from fixed term funds |
95 |
9 |
59 |
Dividend income |
23 |
96 |
544 |
|
713 |
619 |
1,631 |
|
|
|
|
5. Investment
Manager’s
fees
|
Unauditedsix months ended
30 June
2023£’000 |
Unauditedsix months ended 30 June 2022£’000 |
Auditedyear ended 31 December 2022£’000 |
Investment management fee charged to revenue |
138 |
129 |
253 |
Investment management fee
charged to capital |
1,240 |
1,163 |
2,269 |
Total investment management
fee |
1,378 |
1,292 |
2,522 |
|
|
|
|
Movement in provision for
performance incentive fee charged to capital |
217 |
562 |
272 |
|
1,595 |
1,854 |
2,794 |
Further details of the Management agreement
under which the investment management fee and performance incentive
fee are paid are given in the Strategic report on page 19 of the
Annual Report and Financial Statements for the year ended 31
December 2022.
During the period, services for a total value of
£1,478,000 (30 June 2022: £1,392,000; 31 December 2022: £2,722,000)
were purchased by the Company from Albion Capital Group LLP
(“Albion Capital”) comprising £1,378,000 of management fees (30
June 2022: £1,292,000; 31 December 2022: £2,522,000) and £100,000
of administration fees (30 June 2022: £100,000; 31 December 2022:
£200,000). At the financial period end, the amount due to Albion
Capital in respect of these services disclosed as accruals was
£822,000 (administration fee accrual £50,000, management fee
accrual £772,000) (30 June 2022: £807,000; 31 December 2022:
£647,000).
Currently a best estimate provision of £489,000
has been calculated and included in relation to potential
performance incentive fees which arise from performance to 30 June
2023, which would become payable over the periods to 31 December
2027. Within this amount, £241,000 is included in payables falling
due within one year in relation to the first payment calculated on
the five-year period ending 31 December 2023, which is payable
after the adoption of the audited accounts at the 2024 AGM based on
actual year end performance. Further details can be found in note
9.
During the period, the Company was not charged
by Albion Capital in respect of Patrick Reeve’s services as a
Director (30 June 2022 and 31 December 2022: £nil).
Albion Capital, its partners and staff
(including Patrick Reeve), held 1,636,367 Ordinary shares in the
Company as at 30 June 2023.
Albion Capital is, from time to time, eligible
to receive arrangement fees and monitoring fees from portfolio
companies. During the period to 30 June 2023, fees of £81,000
attributable to the investments of the Company were received by
Albion Capital pursuant to these arrangements (30 June 2022:
£132,000; 31 December 2022: £345,000).
6. Dividends |
Unaudited six months
ended30 June
2023£’000 |
Unaudited six months ended30 June 2022£’000 |
Audited year ended31 December 2022£’000 |
First dividend of 1.82p per
share paid on 30 June 2023 (30 June 2022: 2.02p per share) |
3,238 |
3,240 |
3,240 |
Second dividend of 1.97p per
share paid on 30 December 2022 |
- |
- |
3,267 |
|
3,238 |
3,240 |
6,507 |
The Directors have declared a dividend of 1.90
pence per Ordinary share (total approximately £3,378,000) payable
on 29 December 2023, to shareholders on the register on 8 December
2023.
7. Basic
and diluted return/(loss) per
share
|
Unauditedsix months ended
30 June
2023 |
Unauditedsix months ended 30 June 2022 |
Auditedyear ended 31 December 2022 |
|
Revenue |
Capital |
Revenue |
Capital |
Revenue |
Capital |
Profit/(loss) attributable to equity shares (£’000) |
254 |
7,905 |
163 |
(146) |
721 |
(7,022) |
Weighted average shares in issue
(adjusted for treasury shares) |
172,268,564 |
149,501,675 |
155,471,219 |
Return/(loss) attributable per
equity share (pence) |
0.15 |
4.59 |
0.11 |
(0.10) |
0.46 |
(4.51) |
The weighted average number of shares is
calculated after adjusting for treasury shares of 26,353,527 (30
June 2022: 22,449,076; 31 December 2022: 24,236,401).
There are no convertible instruments,
derivatives or contingent share agreements in issue, and therefore
no dilution affecting the return/(loss) per share. The basic
return/(loss) per share is therefore the same as the diluted
return/(loss) per share.
8.
Share
capital
Allotted, called up and fully paid shares of 1 penny
each |
Unaudited30 June
2023 |
Unaudited30 June 2022 |
Audited 31 December 2022 |
Number of shares |
204,149,764 |
183,280,301 |
190,510,554 |
Nominal value of allotted
shares (£’000) |
2,041 |
1,833 |
1,905 |
Voting rights (number of
shares net of treasury shares) |
177,796,237 |
160,831,225 |
166,274,153 |
During the period to 30 June 2023 the Company
purchased 2,117,126 Ordinary shares (nominal value £21,171) for
treasury at a cost of £1,561,000. The total number of Ordinary
shares held in treasury as at 30 June 2023 was 26,353,527 (30 June
2022: 22,449,076; 31 December 2022: 24,236,401) representing 12.9%
of the Ordinary shares in issue as at 30 June 2023.
Under the terms of the Dividend Reinvestment
Scheme, the following new Ordinary shares of nominal value 1 penny
each were allotted during the period to 30 June 2023:
Date of allotment |
Number of shares allotted |
Aggregatenominal value of
shares (£’000) |
Issue price (pence per
share) |
Net invested
(£’000) |
Opening market price on allotment date (pence per
share) |
30 June 2023 |
685,420 |
7 |
76.77 |
506 |
73.00 |
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 period to 30
June 2023:
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 |
12,395,704 |
124 |
79.60 |
9,621 |
74.00 |
14 April 2023 |
95,387 |
1 |
78.80 |
74 |
74.00 |
14 April 2023 |
31,564 |
- |
79.20 |
24 |
74.00 |
14 April 2023 |
431,135 |
4 |
79.60 |
335 |
74.00 |
|
12,953,790 |
129 |
|
10,054 |
|
9.
Provisions
and significant estimatesIn accordance with the AIC SORP
and FRS102, a provision for a performance incentive fee (“PIF") is
required to be estimated and accounted for in the financial
statements. The PIF is calculated on a five-year rolling average
performance basis, with a 5% hurdle applied to the opening net
asset value each year, which is in line with our current dividend
target. The first five year performance period will take into
account the audited results of the five years ending 31 December
2023.
Any PIF will only be paid on actual year end
audited results, and this provision is the Board’s best estimate of
the potential obligation relating to the inclusion of realised
performance from 1 January 2019 to 30 June 2023 in any future
five-year rolling periods.
Movement in provision |
Unauditedsix months ended
30 June
2023£’000 |
Unauditedsix months ended30 June 2022£’000 |
Audited year ended31 December 2022£’000 |
Opening provision |
272 |
- |
- |
Movement in provision |
217 |
562 |
272 |
Closing provision |
489 |
562 |
272 |
|
|
|
|
Payable within one year: |
241 |
- |
- |
Payable in more than one
year: |
248 |
562 |
272 |
The most significant assumption when calculating
this amount, is that of future performance. Results for the
period from 1 January 2019 to 30 June 2023 are included in the
calculation; a forecast has been used for current year performance
and future years assume performance is achieved in line with the
five year historic rolling average. The provision included in the
financial statements has been calculated on this basis and has been
corroborated by a portfolio return analysis using appropriate
benchmarks. Performance fees are only paid on final audited results
for a five year period.
The average return per annum over each rolling
five year period since the Company’s inception in 2000 to the date
of approval of the new performance fee arrangements was 5.85%. This
smooths the performance through the various economic events and
cycles seen since inception. This has resulted in a provision of
£489,000 at 30 June 2023.
10.
Commitments and
contingenciesAs at 30 June 2023, the Company had no
financial commitments in respect of investments (30 June 2022 and
31 December 2022: £nil).
There are no contingencies or guarantees of the
Company as at 30 June 2023 (30 June 2022 and 31 December 2022:
£nil).
11.
Post balance sheet eventsThere
have been no material post balance sheet events since 30 June
2023.
12. Related
party transactionsOther than transactions with the Manager
as disclosed in note 5, there are no other related party
transactions requiring disclosure.
13.
Going
concern The Board has conducted a detailed assessment of
the Company’s ability to meet its liabilities as they fall due.
Cash flow forecasts are updated and discussed quarterly at Board
meetings and have been stress tested to allow for the forecast
impact of the current economic climate and increasingly volatile
geopolitical backdrop. The Board has revisited and updated its
assessment of liquidity risk and concluded that it remains
unchanged since the last Annual Report and Financial Statements.
Further details can be found on page 91 of those accounts.
The portfolio of investments is diversified in
terms of sector and the major cash outflows of the Company (namely
investments, dividends and share buy-backs) are within the
Company’s control. Accordingly, after making diligent enquiries,
the Directors have a reasonable expectation that the Company has
adequate cash and liquid resources to continue in operational
existence for the foreseeable future. For this reason, the
Directors have adopted the going concern basis in preparing this
Half-yearly Financial Report and this is in accordance with the
Guidance on Risk Management, Internal Control and Related Financial
and Business Reporting issued by the Financial Reporting Council in
September 2014, and the subsequent updated Going concern, risk and
viability guidance issued by the FRC in 2021.
14. Other
informationThe information set out in this Half-yearly
Financial Report does not constitute the Company’s statutory
accounts within the terms of section 434 of the Companies Act 2006
for the periods ended 30 June 2023 and 30 June 2022 and is
unaudited. The information for the year ended 31 December 2022 does
not constitute statutory accounts within the terms of section 434
of the Companies Act 2006 and is derived from the statutory
accounts for that financial year, which have been delivered to the
Registrar of Companies. The Auditor reported on those accounts;
their report was unqualified and did not contain a statement under
s498 (2) or (3) of the Companies Act 2006.
15. PublicationThis
Half-yearly Financial Report is being sent to shareholders and
copies will be made available to the public at the registered
office of the Company, Companies House, the National Storage
Mechanism and also electronically at www.albion.capital/funds/AATG,
where the Report can be accessed from the 'Financial Reports and
Circulars' section.
- Current portfolio sector allocation
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