Albion Technology & General VCT PLC : Annual Financial Report
Albion Technology & General VCT PLC
LEI number: 213800TKJUY376H3KN16
As required by the UK Listing Authority's
Disclosure Guidance and Transparency Rules 4.1 and 6.3, Albion
Technology & General VCT PLC today makes public its information
relating to the Annual Report and Financial Statements for the year
ended 31 December 2021.
This announcement was approved for release by
the Board of Directors on 13 April 2022.
This announcement has not been audited.
The Annual Report and Financial Statements for
the year ended 31 December 2021 (which have been audited), will
shortly be sent to shareholders. Copies of the full Annual Report
and Financial Statements will be shown via the Albion Capital Group
LLP website by clicking
www.albion.capital/funds/AATG/31Dec21.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 remains
approved as a VCT by HM Revenue and Customs (“VCT regulations”).
The maximum amount invested in any one company is limited to any
HMRC annual investment limits. It is intended that normally at
least 80 per cent. 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 to invest 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. They may also be
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 per
cent. 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
mix of securities. The maximum the Company will invest in a single
company is 15 per cent. 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 per cent. of the adjusted share capital
and reserves. The Directors do not have any intention of utilising
long-term gearing.
Financial calendar
| |
|
| Annual General Meeting |
3pm on 26 May 2022 |
| General Meeting |
4pm on 26 May 2022 |
| |
|
| Record date for first
dividend |
6 June 2022 |
| |
|
| Payment date of first
dividend |
30 June 2022 |
| Announcement of Half-yearly
results for the six months ending 30 June 2022 |
September 2022 |
Financial highlights
| 200.28p |
Total shareholder value – being net asset value plus dividends paid
per Ordinary share since launch † |
| |
|
| 14.98p |
Increase in total shareholder value for the year ended 31 December
2021 † |
| |
|
| 21.6% |
Total uplift on opening net asset value per share † |
| |
|
| 3.68p |
Total tax-free dividend per Ordinary share paid in the year ended
31 December 2021 (a dividend yield of 5.3% on opening net asset
value) |
| |
|
| 80.65p |
Net asset value per Ordinary share as at 31 December 2021 |
†These are considered Alternative Performance Measures, see
notes 2 and 3 in the Strategic report below for further
explanation.
|
|
31 December 2021
(pence per share) |
31 December 2020 (pence per share) |
| |
|
|
| Opening net asset value |
69.35 |
82.58 |
| Capital return/(loss) |
14.93 |
(0.06) |
| Revenue return/(loss) |
0.37 |
(0.22) |
| Total return/(loss) |
15.30 |
(0.28) |
| Ordinary dividends paid |
(3.68) |
(3.95) |
| Special dividend paid |
- |
(9.00) |
| Impact from share capital
movements |
(0.32) |
- |
| Net
asset value |
80.65 |
69.35 |
| |
|
| |
Ordinary
share (pence
per share) |
| Total dividends paid to 31 December
2021 |
119.63 |
| Net asset value as at 31 December 2021 |
80.65 |
| Total
shareholder value to 31 December
2021 |
200.28 |
In addition to the dividends noted above, the
Board has declared a first dividend for the year ending 31 December
2022 of 2.02 pence per share to be paid on 30 June 2022 to
shareholders on the register on 6 June 2022.
For historic shareholders, further details regarding the total
shareholder value for C Shares and Albion Income and Growth VCT PLC
can be found at www.albion.capital/funds/AATG 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/AATG under the ‘Dividend History’
section.
Chairman’s statement
IntroductionThe Company has undergone a series
of changes in recent years in the makeup of its portfolio; how
returns are earned, with income from the portfolio being reduced
relative to capital return given the nature of the portfolio
companies; and has faced some dramatic economic challenges, with
the Covid-19 pandemic (“the Pandemic”) and more recent geopolitical
crisis having direct economic and market implications for the
Company.
It is pleasing, therefore, with these headwinds
to report a strong positive total return for the year ended 31
December 2021 of 15.30 pence per share, which represents a 22.1%
return on opening net asset value. This is the highest annual
return achieved by the Company since 2003 and is in no small part a
reflection of the different type of portfolio in which the Company
invests, with technology, FinTech and health companies providing
most of the return.
We continue to see resilience and growth from
our portfolio, with many of our portfolio companies demonstrating
the value of the services they provide to their customers as the
economy emerges from the Pandemic. However, with heightened risks
through increased inflation and more recent events in Ukraine, it
is difficult to be entirely positive about what lies ahead when
there are such significant issues outside the Company’s control but
with impact on economic outlook generally. Returns from venture
capital can be volatile but are not necessarily correlated to
listed markets.
As you will read later in the report and in the
accompanying Circular, the Board has worked with the Manager to
reduce the ongoing costs of the Company and to do so in a way that
aligns the interests of shareholders with the Manager over the
longer term. The proposed changes to the Manager’s remuneration,
including to the performance incentive, will be subject to
shareholder approval. If approved, management costs will be
substantially reduced, an administration fee will be introduced and
the performance incentive arrangements will be re-structured,
potentially rewarding the Manager for outperformance over a hurdle
of 5 per cent., calculated over a period of 5 years, and at the
same rate as under the existing performance incentive of 15 per
cent. of outperformance earned as a fee.
Investment in the Company remains a longer-term
proposition. The Manager and Board are conscious of this in how the
portfolio is structured, costs are incurred (with ongoing costs
capped at 2.75%), dividends are calculated and paid and in how
liquidity is provided in the secondary market through share
buy-backs at a pre-determined level (circa 5 per cent. discount) to
the prevailing net asset value. It is encouraging that the Company
continues to raise fresh funds through the top up offers and
through dividend re-investment, as the Manager continues to see new
and exciting investment opportunities and uses ‘five-year, five per
cent total return’ horizons as its targets, recognising that there
will be ‘ups and downs’ along the way, as has been the case since
the Company was launched in 2000 in very different market
circumstances.
Results and dividendsAs at 31 December 2021,
the net asset value was 80.65 pence per share compared to 69.35
pence per share at 31 December 2020. The total return after tax was
£19.9 million compared to £0.3 million total loss in the year to 31
December 2020.
In line with our variable dividend policy
targeting 5% of NAV per annum, the Company paid semi-annual
dividends totalling 3.68 pence per share during the year to 31
December 2021 (2020: 12.95 pence per share, which included a 9
pence per share special dividend). The Board has declared a first
dividend for the year ending 31 December 2022 of 2.02 pence per
share to be paid on 30 June 2022 to shareholders on the register on
6 June 2022.
Investment
portfolioThe results for the year
showed net gains on investments of £21.5 million, against gains of
£1.5 million for the previous year, which are largely driven by
unrealised gains across the portfolio. Quantexa increased in value
by £9.0 million and Oviva by £2.4 million, both following
externally led funding rounds, and Credit Kudos increased by £3.1
million as a result of a third party offer. Against these gains,
unrealised write-downs were made against our investment in
Concirrus (£1.2 million) and Memsstar (£0.8 million) following
difficult trading conditions for both portfolio companies.
The Company had a number of investment
realisations in the year with proceeds totalling £4.2 million,
leading to realised gains of £0.4 million. The sale of Innovation
Broking Group delivered 10.3 times return on equity. OmPrompt
Holdings was sold which resulted in a return of 2.3 times cost and
SBD Automotive was also sold generating 2.1 times cost. Against
this, we have realised a loss of £0.4 million on our investment in
Xperiome, which went into administration following the year end.
Further details on the above disposals, and other realisations, can
be found in the realisations table on page 30 of the full Annual
Report and Financial Statements.
During the year, a total of £7.7 million was
invested into portfolio companies, of which £2.4 million was
invested across five new portfolio companies, all of which are
likely to require further investment as the companies develop and
hopefully grow:
- £1.0 million into Threadneedle
Software Holdings (trading as Solidatus) a provider of data lineage
software to enterprise customers in regulated sectors, which allows
them to rapidly discover, visualise, catalogue and understand how
data flows through their systems;
- £0.5 million into Gravitee TopCo
(trading as Gravitee.io) an application programming interface (API)
management platform;
- £0.4 million into NuvoAir Holdings
a provider of digital therapeutics and decentralised clinical
trials for respiratory conditions;
- £0.3 million into Brytlyt which
uses patented software and artificial intelligence (AI), combined
with the superior computation power of graphics processing units
(GPUs), to derive insights thousands of times faster than legacy
systems; and
- £0.2 million into Accelex
Technology, a data extraction and analytics technology for private
capital markets.
A further £5.3 million was invested into
existing portfolio companies, the largest being: £1.5 million into
Oviva, £0.9 million into Black Swan and £0.8 million into
Elliptic.
The three largest investments in the Company’s
portfolio, being Quantexa, Radnor House School and Oviva, are
valued at £28.0 million and represent 26.2 per cent. of the
Company’s net asset value.
Overall, 32% of the portfolio by value is
profitable, measured by earnings before interest, tax and
depreciation, with a number of our investments showing strong
growth in fast-developing markets. Given the evolving nature of the
portfolio, increasingly the return will be in the form of capital
rather than income, which is why the basis of charging a proportion
of the management fee to capital has increased from 75% to 90%, as
explained in the notes to the accounts. As part of portfolio
management, the Board always maintains liquidity to meet future
potential investments, running costs and, importantly, cash for
payment of dividends and to facilitate share buy-backs.
New management performance incentive and
reduction in annual management fee
Accompanying this Annual Report is a Circular to shareholders
proposing changes to the Management Agreement with Albion Capital
Group LLP. These changes will be implemented by a deed of variation
to the Company’s existing Management Agreement. Full details of the
changes are set out in the Circular. The proposed changes will be
voted on by shareholders under a single Ordinary resolution at a
General Meeting (“GM”) which will follow the Annual General Meeting
(“AGM”) on 26 May 2022. The proposed changes include: lowering the
Management fee from 2.5 per cent. of NAV to 2.0 per cent. of NAV;
introduction of an administration fee; and revisions to the
performance incentive arrangements. The net result is to
significantly reduce operating costs (whilst retaining the cap of
2.75 per cent.) and to have performance incentive arrangements
which apply a hurdle and term in their calculation that are more in
accordance with the Companies long term investment returns and
timing of returns profile, but represent the same percentage of
outperformance payable as is in place currently, namely 15 per
cent.
In supporting this management remuneration
package, the Board is conscious of being fair to all the
stakeholders in the Company, with shareholders’ and the Manager’s
interests being balanced and aligned around outperformance being
achieved from the portfolio before any fee is earned. There is also
a reduction in the running costs of managing the portfolio,
including for circumstances where the portfolio continues to
increase materially in value, as has been the case in the last five
years, as well as having a cap on the level of expenses the Company
might bear if its assets were to fall.
Board The Board continues with
its succession planning, which includes looking at fresh
appointments and focusing the roles on the Board. During the last
year I assumed the Chair, Margaret Payn became Audit Chair and Mary
Anne Cordeiro became Senior Independent Director. This followed the
retirement of Dr Neil Cross and Modwenna Rees-Mogg. Patrick Reeve
continues to serve as a non-independent Director on the Board of
four, with three independent Directors being remunerated by the
Company. We have established a clear committee structure for
nominations, remuneration and management engagement amongst the
independent non-executive Directors (all reported on later in this
report). The aim is to have a small and focussed Board, with
remuneration in line with the responsibilities borne, skills and
experience required and more in line with the investment company
arena taken as a whole. This will result in a reduction in absolute
board costs and a more precise period for serving on the Board of
nine years, absent unforeseen circumstances. We are also mindful of
diversity in how the Board is structured, as has been the case for
a number of years.
Risks and uncertaintiesThe highly uncertain
outlook for the UK and Global economies remains the key risk
affecting the Company, with the continuing health risk clouding any
evaluation of risk and returns for many companies in the developed
world. The Russian invasion of Ukraine has led to increased global
geopolitical tensions and headline figures for inflation are not
encouraging reaching levels in the UK not seen for some decades.
While many of our portfolio companies have shown remarkable growth
and resilience during the Pandemic, there are some underlying
portfolio companies that continue to be adversely affected. The
Manager is continually assessing the exposure to these risks for
each portfolio company and appropriate actions, where possible, are
being implemented, which includes provision of financial support
where necessary.
A detailed analysis of the principal risks and
uncertainties facing the business is shown in the Strategic report
below.
Share buy-backs and reservesIt
remains a primary objective to maintain sufficient cash resources
for investment in new and existing portfolio companies, for the
continued payment of dividends to shareholders and to provide
liquidity in the secondary market through share buy-backs. 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 per cent. discount to net asset value, so far as
market conditions and liquidity permit. The Board continues to
review the use of buy-backs and is satisfied that it is an
important means of providing market liquidity for shareholders.
Details of shares bought back during the year can be found in note
15. During the last year, the Company raised substantially more
through the top up offer and dividend re-investment than was
required to fund share buy-backs, but this might not always be the
case, which is why managing relatively high cash resources is
prudent for investment and structural purposes.
The Company also manages a relatively high level
of distributable reserves which can be used for share buy-backs and
the payment of dividends. As in the past, the Company has sought
authority from shareholders for reclassification of the share
premium account to create additional distributable reserves, which
is being done again this year as explained on page 40 of the full
Annual Report and Financial Statements.
Albion VCTs’ Prospectus Top Up OffersA
prospectus top up offer of new Ordinary shares was launched on 6
January 2022. The Board announced on 22 March 2022 that, following
strong demand for the Company’s shares, it had elected to exercise
its £4 million over-allotment facility, taking the total offer to
£24 million. On 29 March 2022, the Company was pleased to announce
that it had reached its limit under its Offer which was fully
subscribed and closed to further applications.
The funds raised by the Company pursuant to the
Offer will be added to the cash resources available for investment,
putting the Company into a position to take advantage of investment
opportunities over the next two to three years. The proceeds of the
Offer will be applied in accordance with the Company’s investment
policy.
Annual General Meeting and General
MeetingDue to the proposed changes to the Management
Agreement, the Board has decided to adopt a hybrid format for the
AGM and GM this year to ensure maximum participation and
shareholder engagement. The AGM will be held at 3pm on 26 May 2022
at the offices of Bird & Bird LLP, 12 New Fetter Lane, London
EC4A 1JP, with virtual participation via the Lumi platform, which
will be followed immediately by the GM at 4pm. Information on how
to attend or participate in the live webcast can be found on the
Manager’s website www.albion.capital/vct-hub/agms-events. The Board
intends to hold AGMs virtually in the future as this has seen
record numbers of shareholders attending the AGM.
The Board welcomes questions from shareholders
at the AGM and GM and shareholders will be able to ask questions
using the Lumi platform, or in person. Alternatively, shareholders
can email their questions to AATGchair@albion.capital prior to the
Meeting.
Further details on the format and business to be
conducted at the AGM can be found in the Directors’ report on page
39 of the full Annual Report and Financial Statements and in the
Notice of the Meeting on pages 76 to 79 of the full Annual Report
and Financial Statements.
The Board also encourages shareholders to vote
on the Company business at the AGM and GM and is strongly
recommending that shareholders should vote in favour of the
resolutions being proposed at both meetings.
Outlook and prospectsThe former chairman served
the Company well since its inception in 2000 and he saw changes in
how and where the Company invested, as well as what the prospects
were during different market cycles. This year is no different, but
with some positive corporate changes envisaged and some portfolio
challenges ahead. Whilst there are uncertainties as to the full
extent of the ongoing economic and societal impact of the Pandemic
as well as the Russian invasion of Ukraine, the positive results
for the year just ended demonstrate the resilience of our portfolio
during what where challenging times. The portfolio is diversified
with companies at different stages of maturity and targeted at
sectors such as software, FinTech and healthcare. We believe that
the sectors in which we invest can continue to provide
opportunities where growth can be resilient and sustainable. The
Board remains confident that the Company and its portfolio are well
positioned to continue to generate long term value for shareholders
and that the proposed changes to Management arrangements and the
Board are designed to assist in that direction.
Robin ArchibaldChairman13 April 2022
Strategic report
Investment objective and
policyThe 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 unquoted growth and technology businesses in
a qualifying VCT.
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.
The full investment policy can be found
above.
Current portfolio sector
allocationThe pie charts at the end of this announcement
show the split of the portfolio valuation as at 31 December 2021 by
sector, stage of investment and number of employees. This is a
useful way of assessing how the Company and its portfolio are
diversified across sector, portfolio companies’ maturity measured
by revenues and their size measured by the number of employees. As
the Company continues to invest in software and other technology
companies, FinTech (technology specifically applicable to financial
services companies) becomes a more prominent investment, and
therefore is included as a subsector. Details of the principal
investments made by the Company are shown in the Portfolio of
investments on pages 28 to 30 of the full Annual Report and
Financial Statements.
Direction of portfolioThe current portfolio
remains well-balanced both in terms of stage of investment and
sectors, with FinTech accounting for 26%, software and other
technology accounting for 21%, healthcare (including digital
healthcare) accounting for 19%, renewable energy accounting for 10%
and other (including education) accounting for 9%. The performance
of two of the Company’s largest investments (by value), Quantexa
and Credit Kudos, in FinTech companies have driven the material
increase in FinTech as a proportion of the overall portfolio.
During the year, Quantexa increased in value by £9.0 million, and
Credit Kudos by £3.1 million.
In line with the Company’s investment policy,
investment continues to be made predominately into higher growth
technology companies. The Company will support those portfolio
companies who require it, as well as capitalise on any new
investment opportunities that arise. We therefore expect that
investments in the FinTech, software and other technology and
healthcare sectors (including digital healthcare) will continue to
increase, and that asset-based investments will decrease over the
coming years.
|
Results and dividends |
Ordinary shares |
|
|
£'000 |
|
|
|
|
Net capital return for the year ended 31 December 2021 |
19,412 |
|
Net revenue return for the year ended 31 December 2021 |
476 |
|
Total return for
the year ended 31 December
2021 |
19,888 |
|
Dividend of 1.73 pence per share paid on 30 June 2021 |
(2,306) |
|
Dividend of 1.95 pence per share paid on 31 December 2021 |
(2,590) |
|
Transferred to
reserves |
14,992 |
|
|
|
|
Net assets as at 31 December 2021 |
106,994 |
|
|
|
|
Net asset value per share as at 31 December
2021 |
80.65p |
The Company paid ordinary dividends of 3.68
pence per share during the year ended 31 December 2021 (2020: 3.95
pence per share); there were no special dividends paid in this year
(2020: 9.0 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. The Board has declared a first dividend
for the year ending 31 December 2022 of 2.02 pence per share to be
paid on 30 June 2022 to shareholders on the register on 6 June
2022.
As shown in the Income statement below,
investment income has increased to £1,077,000 (2020: £604,000).
This is due to the payment of previously rolled up interest. As a
result, there is an overall revenue gain to shareholders of
£476,000 (2020: loss of £248,000). This gain is also partially
driven by an increased percentage of investment management fees
being allocated to the realised capital reserve; this better aligns
with the Board’s expectation that over the long term the majority
of the Company’s investment returns will be in the form of capital
gains. Further information can be found in the Notes to the
Financial Statements below.
The net capital gain for the year was
£19,412,000 (2020: loss of £63,000). The net gain was generated
largely by unrealised gains on investments, together with gains on
disposals, partially offset by the capital portion of investment
management fees. Key valuation movements during the year are
outlined in the Investment portfolio section of the Chairman's
statement. The total gain for the period was 15.30 pence per share
(2020: loss of 0.28 pence per share).
The Balance sheet below shows that the net asset
value per share increased over the year to 31 December 2021 to
80.65 pence per share (2020: 69.35 pence per share). The increase
in net asset value was driven principally by investment gains
offset by dividend payments.
The cash inflow for the year was £2.9 million
(2020: £21.0 million outflow). This resulted mainly from the issue
of new Ordinary shares under the Top Up Offer, disposal proceeds
and loan stock income, offset by new investments, dividends paid,
share buy-backs and ongoing expenses.
Review of business and
outlookA review of the Company’s business during
the year and its future prospects is contained in the Chairman’s
statement above and in this Strategic report.
There is a continuing focus on growing
investments in the FinTech, healthcare and other software and
technology sectors, and, therefore, we expect the portfolio to
continue to increase its weighting in these sectors.
Investment income largely comprises of loan
stock interest on our renewable energy investments, which the
Company intends to hold for the longer term. As a result,
investment income is expected to remain relatively flat over the
near term and most of the investment returns are expected to be
delivered by capital gains.
Since the end of the financial year, the Company
has made a number of follow-on investments in existing portfolio
companies as well as making small new investments and disposals. In
addition, a successful top-up offer has raised £24 million.
Future prospectsThe Company’s financial results
for the year to 31 December 2021 demonstrate the resilience of the
portfolio which is a consequence of the portfolio remaining well
balanced across sectors and risk classes, despite the effects of
the Pandemic so far. Many of the companies in the portfolio have
continued to grow throughout the Pandemic and have been providing
products and services that are considered innovative and essential
to their customers.
The Board remains confident that the Company and
its portfolio are well positioned to continue to generate long term
value for shareholders. The Manager has a strong pipeline of
investment opportunities in which the Company’s cash can be
deployed.
Key
Performance
Indicators
(“KPIs”) and
Alternative
Performance
Measures
(“APMs”)The Directors
believe that the following KPIs and APMs, which are typical for
VCTs, used in the Board’s 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. These are:
1. Net
asset value per share and total shareholder valuePlease see the
“Total shareholder value to 31 December 2021” table above in the
Financial highlights section which shows the NAV per share as at 31
December 2021 and total shareholder value. Total shareholder value
is net asset value plus cumulative dividends paid since launch.
Total shareholder value increased by 14.98 pence
to 200.28 pence per Ordinary share for the year ended 31 December
2021 (21.6 per cent. on the opening net asset value).
The graph on page 4 of the full Annual Report
and Financial Statements reflects the total shareholder value
performance of the Company relative to the FTSE All-share
Index.
2. Movement in shareholder
value in the year †
|
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
2021 |
|
4.6% |
8.0% |
2.5% |
(4.7%) |
3.6% |
6.0% |
13.2% |
11.9% |
(0.3%) |
21.6% |
† Calculated as the movement in total
shareholder value for the year compared with the opening net asset
value.
The figures in the table above show that total
shareholder value, despite some annual volatility, has delivered an
average increase of 6.6% per annum over the past ten years.
The returns to shareholders who have acquired
shares through the C share issue in 2006 and the merger with Albion
Income & Growth VCT in 2013 are shown on the Company’s Webpage
on the Manager’s website at www.albion.capital/funds/AATG under
“Financial Summary for Previous Funds”. Shareholders who have
acquired shares through Top Up Offers, the dividend reinvestment
scheme or in the market outside the corporate events will be able
to calculate their own returns based on the price at which they
acquired their shares, the dividends they have received since the
purchase and the current net asset value of their holding.
3. Dividend
distributionsDividends paid in respect of the year ended 31
December 2021 were 3.68 pence per share (2020: 12.95 pence per
share; 3.95 pence per share in ordinary dividends and a 9.00 pence
per share special dividend). Cumulative dividends paid since
inception are 119.63 pence per Ordinary share.
4. Ongoing charges As
agreed with the Manager in 2015, the ongoing charges ratio for the
year ended 31 December 2021 was capped at 2.75 per cent. (2020:
2.75 per cent.) with any excess over the cap being a reduction in
the management fee. The ongoing charges ratio has been calculated
using The Association of Investment Companies’ (AIC) recommended
methodology. This figure shows shareholders the total recurring
annual running expenses (including investment management fees
charged to capital reserves) as a percentage of the average net
assets attributable to shareholders. Subject to shareholder
approval at the General Meeting on 26 May 2022, the Directors
expect the ongoing charges ratio for the year ahead to decrease to
2.5 per cent. following the changes to the Management Fee as
detailed in the Circular to shareholders accompanying this Annual
Report and Financial Statements. If the resolution does not pass at
the General Meeting, the Directors expect the ongoing charges ratio
for the year to remain at 2.75% for the 2022 financial year.
The reduction in management fees payable to
Albion Capital Group LLP in the year, due to the expense cap,
amounted to £231,000 (2020: £78,000).
5. 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 VCT 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 37 of the full Annual Report and
Financial Statements.
The relevant tests to measure compliance have
been carried out and independently reviewed for the year ended 31
December 2021. These confirmed that the Company has complied with
all tests and continues to do so.
*VCT compliance is not a numerical measure of
performance and thus cannot be defined as an APM.
GearingAs defined by the Articles of
Association, the Company’s maximum exposure in relation to gearing
is restricted to 10 per cent. 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 arrangementsThe
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 under the Management Agreement, as well as acting as
the Company’s Alternative Investment Fund Manager (“AIFM”).
Management
AgreementShareholders
should note that accompanying this Annual Report and Financial
Statements is a Circular proposing changes to the Management
Agreement with Albion Capital Group LLP. Details of the proposed
changes can be found in the Chairman’s Statement above and in the
Circular. The following information covers the current Management
Agreement.
Under the Management Agreement, the Manager
provides investment management, secretarial and administrative
services to the Company. The Management Agreement can 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 2.5 per
cent. of the net asset value of the Company, payable quarterly in
arrears. The total annual running costs of the Company, including
management fees payable to Albion Capital Group LLP, Directors’
fees, professional fees and the costs incurred by the Company in
the ordinary course of business (but excluding any exceptional
items and performance fees payable to Albion Capital Group LLP) are
capped at an amount equal to 2.75 per cent. of the Company’s net
assets, with any excess being met by Albion Capital Group LLP by
way of a reduction in management fees.
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 2.0 per cent. of the investment
made, and also monitoring fees where the Manager has a
representative on the portfolio company’s board. Further details of
the Manager’s fee can be found in note 5.
Management performance
incentiveShareholders should note that accompanying this
Annual Report and Financial Statements is a Circular proposing
changes to the Manager’s remuneration which includes changes to the
performance incentive arrangement with Albion Capital Group LLP.
Details of the proposed changes can be found in the Chairman’s
Statement above and in the Circular. The following information
covers the current incentive arrangement.
To provide the Manager with an incentive to
maximise the return to investors, the Manager is entitled to charge
an incentive fee in the event that the returns exceed minimum
target levels per share.
Under the current incentive arrangement, if the
net asset value per share at the end of a financial period, when
added to the aggregate dividends per share (both revenue and
capital) paid to that date, exceeds £1 (increased at the rate of
RPI plus 2 per cent. per annum uncompounded from the date of first
admission to the Official List of the relevant class of share),
then the Manager will be entitled to an incentive fee equal to 15
per cent. of such excess. In the event that the performance of the
Company falls short of the target in any period, such shortfall
must be made up in future periods before the Manager is entitled to
any incentive in respect of such future periods. This methodology
creates a cumulative hurdle to be beaten before any fee is
payable.
The fee if applicable, will be payable annually.
No performance fee has arisen during the year (2020: £nil). There
has been no performance fee paid since the year ended 31 December
2005. The performance threshold is set in proportion to historic
share classes and at 31 December 2021 was 212.47 pence for the
Ordinary shares, 185.67 pence for the former C shares and 191.47
pence for the former Income & Growth shares which compares to
total returns of 200.28 pence, 119.85 pence and 123.80 pence
respectively, based on the latest NAV.
New management performance incentive
feeSince 2005, the Company’s total return for all shares
has fallen significantly short of the cumulative hurdle detailed
above and the performance from the early years of the measurement
period mean that the current arrangements are ineffective in
sharing the portfolio returns with the Manager. In addition, the
challenge to find and retain investment talent continues to be
strong and performance fee arrangements are viewed as an important
factor in attracting new investment professionals. Maintaining the
calibre of investment professionals is strongly in the interests of
shareholders. In light of this, and having a performance incentive
more closely aligned with the target performance and investment
period, the Board have agreed with the Manager that the existing
management performance incentive arrangements be reviewed to align
the interests of the Manager and the Company.
Please refer to the Circular to shareholders
containing details of the proposed new management performance
incentive which, subject to approval by shareholders at the
forthcoming General Meeting will replace the existing incentive
arrangements.
Investment and co-investmentThe 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.
Liquidity ManagementThe Board examines
regularly both the liquidity of the Company’s shares in the
secondary market, which is substantially influenced by the use of
share buybacks and share issuance, and the liquidity of the
Company’s portfolio. The nature of investments in a venture capital
portfolio is longer term and these are relatively illiquid in the
short term. Consequently, the Company maintains sufficient
liquidity in cash and near cash assets to cover the operating costs
of the Company and to meet dividend payments and share buy-backs,
as well as to have the capacity to make fresh investments when the
opportunities arise. Although the Company is authorised to borrow,
in practice it does not borrow. The Board has no intention that the
Company should borrow given the nature of the Company’s
investments, a number of which have their own gearing. Management
of liquidity is one of the key operational areas that the Board
discusses regularly with the Manager.
Evaluation of the ManagerThe
Board, via the Management Engagement Committee, has evaluated the
performance of the Manager based on:
- the returns generated by the
Company;
- the continued compliance with the
VCT regulation;
- the long term prospects of the
current portfolio of investments;
- the management of treasury,
including use of share buy-backs and participation in fund
raising;
- a review of the Management
Agreement and the services provided therein;
- benchmarking the performance of the
Manager to other service providers, including the performance of
other VCTs that the Manager is responsible for managing: and
- the contribution made by the
administration and secretarial team to the operation of the
Company.
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 became a full-scope AIFM under the AIFMD in 2018. As a
result, from that date, Ocorian Depositary (UK) Limited was
appointed as Depositary to oversee the custody and cash
arrangements and provide other AIFMD duties with respect to the
Company. This provides another degree of oversight over the custody
of the Company’s assets.
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 on
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
the Board considers most relevant, 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.
|
Stakeholder |
Engagement with Stakeholder |
Outcome 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 changes to the Board, and the publication of a
Prospectus in connection with the Top Up Offer
- Maintenance of a user friendly
Website
- Conversations with the Company’s
broker on shareholder trends in the VCT marketplace
|
- Shareholders’ views are important
and the Board encourages Shareholders to exercise their right to
vote on the resolutions at the AGM or any other General Meetings of
the Company. The Company’s AGM is typically used as an opportunity
to communicate with investors, including through a presentation
made by the investment management team. In light of the Covid-19
pandemic, the Board took the decision to update the Company’s
Articles of Association to allow for virtual/hybrid events in order
for the 2021 AGM to be live streamed for shareholders. The Board
was able to take questions from shareholders at the AGM enabling
maximum shareholder engagement in the absence of a face-to-face
event and saw higher number of attendees compared to previous
years. The Board has decided that this year’s AGM will be held as a
hybrid event to facilitate maximum shareholder
participation.
- Shareholders are also encouraged to
attend the annual Shareholders’ Seminar. This year’s event took
place on 12 November 2021. The seminar included Quantexa and
Healios sharing insights into their businesses and also
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 2022.
- 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 been enacted, and has resulted in a dividend
yield of 5.3% on opening net asset value.
- During the year, the decision to
publish a Prospectus was taken, 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, the decision was made to use different
issue prices based on the most recent published NAVs 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. The Board has therefore proposed a special
resolution at the 2022 AGM to increase the Company’s distributable
reserves by way of a reduction of share premium account and capital
redemption reserve. This will provide flexibility, if it is
required, for the Company to make buy backs and dividend payments.
Further details on this can be found on page 40 of the full Annual
Report and Financial Statements.
|
|
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.
- During the year a Management
Engagement Committee was established to review the performance of
the Company’s key providers, annually, in line with the Manager.
The review took place during the year, and the Committee is
satisfied with the performance of the key suppliers. Full Terms of
Reference can be found on the Company’s webpage on the Manger’s
website at www.albion.capital/funds/AATG.
|
|
Manager |
The performance of Albion Capital Group LLP is essential to the
long-term success of the Company, including meeting the investment
policy and generating returns to shareholders, as well as the
impact the Company has on Environment, Social and Governance issues
by its activities.The quality of investment and administration
staff and their continuity is an important part of the Management
service level to the Company and an area that the Board engages
regularly with Albion to ensure that the quality continues. |
- 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 by the Management Engagement Committee, 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.
- Following a thorough review by the
Management Engagement Committee, the Board have agreed with the
Manager that the existing management fee, which includes
administration services, and performance incentive arrangements be
reviewed to align the interests of the Manager and the Company.
Accompanying these accounts is a Circular to shareholders
containing details of the proposed new management fees and changes
to the performance incentive which, subject to approval by
shareholders at the forthcoming General Meeting, will replace the
existing management arrangements.
- During the year, the Board has
reviewed the current Management Agreement, and a new agreement was
signed which updated the agreement for new regulatory requirements,
such as GDPR and AIFMD, but did not change any commercial terms
with the Manager.
- Details of the Manager’s
responsibilities can be found in the Statement of corporate
governance on pages 43 and 44 of the full Annual Report and
Financial Statements.
|
|
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 22 to 24 of the full Annual Report and
Financial Statements, 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 at the end
of this announcement.
- In most cases, an Albion executive
is on the board of a portfolio company, to help with both business
operation decisions, as well as good ESG practices.
- The Manager ensures good dialogue
with portfolio companies, and often holds events 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. The Manager is a
signatory of the United Nations Principles for Responsible
Investment (“UN PRI”). Further details of this are set out in the
ESG report on pages 22 to 24 of the full Annual Report and
Financial Statements. 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.
|
Environmental, Social, and Governance
(“ESG”)The Board and the Company’s Manager, Albion Capital
Group LLP, take ESG very seriously and more detail can be found in
the ESG report on pages 22 to 24 of the full Annual Report and
Financial Statements.
Social and
community
issues,
employees and
human
rightsThe 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 the effectiveness of these policies.
As an externally managed investment company with no employees, the
Company has no requirement for formal policies in these matters,
however, it is at the core of its responsible investment approach
as detailed above.
General Data Protection Regulation
(“GDPR”)The GDPR has the objective of unifying
data privacy requirements across the European Union and continues
to apply in the United Kingdom after Brexit. The Manager continues
to take action to ensure that the Manager and the Company are
compliant with the regulation.
Further policiesThe 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
page 38 of the full Annual Report and Financial Statements.
Risk managementThe 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 affect the
Company. In the year ended 31 December 2021 the most noticeable
continuing risk to operational and investment risk has been the
global pandemic which has impacted not only public health and
mobility but also has had an adverse impact on the economy, the
full impact of which is likely to be uncertain for some time.
Inflation has increased which is also being factored into the risks
facing the Company. Since the year end, geopolitical risk has
become heightened, further affecting the economic outlook. Again,
the effects will not be known in the short term.
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:
|
Risk |
Possible consequence |
Risk assessment during the year |
Risk management |
|
Investment, performance and valuation risk |
Investment in smaller unquoted growth businesses carries a higher
degree of risk and is more volatile than investing in larger,
long-established businesses. This could negatively impact
shareholder returns. The Company relies on the judgement and
reputation of the Manager to provide strong investment returns and
valuations for shareholders.The Company’s investment valuation
methodology is based on fair value, which for smaller unquoted
growth businesses can be difficult to determine due to the lack of
observable market data and the limitation of external reference
points.The Company publishes quarterly net asset values and uses
the most contemporary net asset values for issuing and buying back
shares. |
No change. |
The Board places reliance on the skills and expertise of the
Manager and its track record of making successful investments in
higher growth technology businesses. The Manager operates a
structured investment appraisal and due diligence process. This
includes a review from one external investment professional and
comments from non-executive Directors of the Company on matters
discussed at the Investment Committee meetings.Investments are
monitored by the Manager, through monthly portfolio updates and
typically an investment manager sitting on portfolio company
boards. The Board receives detailed reports on each investment and
their valuation as part of their quarterly board meetings.Review
and oversight by non-executive Directors ensures that the risk to
the Company’s and Manager’s reputation is kept to a
minimum.Investments are valued in accordance with the International
Private Equity and Venture Capital Valuation Guidelines, which
represent current best practice for investment valuation and are
reviewed by the Manager’s Valuation Committee. |
|
VCT approval risk |
Any breach of section 274 of the Income Tax Act 2007, including any
legislative changes, could result in the loss of the Company’s HMRC
qualifying status and tax reliefs for investors. |
No change. |
The Company’s VCT qualifying status is monitored monthly by the
Manager and quarterly by the Board. The Board has appointed Philip
Hare & Associates LLP as its taxation adviser, which
independently confirms compliance, highlights areas of risk and
informs on any legislative changes. |
|
Regulatory and compliance risk |
The Company is listed on The London Stock Exchange and is required
to comply with the rules of the UK Listing 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. |
The Board and the Manager receive regular updates on new
regulation, including legislation on the management of the Company,
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. The
Board ensures the Company is compliant as part of its quarterly
Board meetings.The Board reviews the quarterly reports prepared by
Ocorian Depositary (UK) Limited (the Company’s Depositary) to
ensure the Manager is adhering to the AIFMD requirements. |
|
Market value of Ordinary shares |
The market value of Ordinary shares can fluctuate. The market value
of an Ordinary share, as well as being affected by its net asset
value (“NAV”) and prospective NAV, also takes into account its
dividend yield and prevailing interest rates. As such, the market
value of an Ordinary share may vary considerably from its
underlying NAV. The market prices of shares in quoted investment
companies can, therefore, be at a discount or premium to the NAV at
different times, depending on supply and demand, market conditions,
general investor sentiment and other factors, including the ability
to exercise share buybacks. Accordingly, the market price of the
Ordinary shares may not fully reflect their underlying NAV. |
No change. |
The Company operates a share buy-back policy, which aims to limit
the discount at which the Ordinary shares trade to around 5 per
cent. to NAV, by providing a purchaser through the Company in
absence of market purchasers. From time to time buy-backs cannot be
applied, for example when the Company is subject to a close period,
or if it were to exhaust and could not renew any buyback
authorities.New Ordinary shares are issued at sufficient premium to
NAV to cover the costs of issue and to avoid asset value dilution
to existing investors. |
|
Operational and internal control risk (including cyber and data
security) |
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 IT systems and controls
within the Manager’s business could place assets of the Company at
risk, resulting in inaccurate information being passed to the Board
or shareholders. This could additionally result in losses for the
Company and its shareholders. |
No change. |
The Company’s operations and IT systems are subject to rigorous
internal controls which are reviewed on a regular basis and
reported to the Board. The Audit and Risk Committee reviews the
Internal Audit Reports prepared by the Manager’s internal auditors
(from 2022 Azets) and has access to their internal audit partner of
whom it can ask specific detailed questions to satisfy itself that
the Manager has strong systems and controls in place including
those in relation to risk management, business continuity and cyber
security. The Board reviews the systems and processes (including
cyber and data security) in place for the Company’s key suppliers
to ensure that there is an appropriate risk mitigation. |
|
Economic and political risk |
Events such as the Covid-19 pandemic, the impact of Brexit, an
economic recession, fluctuation in inflation and interest rates, or
significant political events and economic sanctions could adversely
affect the companies within the portfolio and consequently the
Company’s net asset value.Covid-19 impacts, while lessening,
continue to pose a significant exogenous risk to the Company, the
wider population and economy. Inflation is now running at levels
where it might affect economic prospects.Emerging riskRussia’s
invasion of Ukraine is at an early stage and the effects on the
Company, if any, over the medium term are unknown. Immediate
impacts from supply-chain driven inflation have seen material falls
in tech stock prices in listed markets. An abatement of investor
appetite to fund the tech sector could be both a risk and a threat
to the portfolio. |
Increased (ongoing Covid-19 uncertainty and the invasion of Ukraine
by Russia). |
The Company invests in a diversified portfolio of circa 60
companies predominantly in the United Kingdom, and has a policy of
minimising any external bank borrowings within portfolio companies.
Exogenous risks over which the Company has no control are always a
risk and the Company does what it can to address these risks. The
inherent long-term nature of the portfolio, and the closed-ended
nature of the Company, help to mitigate exogeneous risks as the
Company should not be a forced seller of investments.The Board and
Manager continuously assess the resilience of the portfolio as a
result of economic and political risks, to ascertain where support
is required. The Company has sufficient cash resources to cope with
unexpected pressures. Exposure is relatively small to at-risk
sectors that include leisure, hospitality, retail and travel.
Inflationary factors are taken into account in examining
prospective costs and returns in portfolio companies.The Company’s
investment policy and the Boards scrutiny of the investment
portfolio ensures that this increased risk continues to be
mitigated where possible.The Manager monitors the situation closely
insofar as it affects any portfolio company. The Board receives
papers for each new or follow-on investment and can raise queries
covering this situation.The portfolio is diversified and is
invested in UK based companies with little European exposure. |
Viability statementIn 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 for the three years to 31 December
2024. 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 also considered the procedures in place to identify emerging
risks and the risk management processes in place to avoid or reduce
the impact of the underlying risks. The Board carefully assessed,
and was satisfied with, the risk management processes in place to
avoid or reduce the impact of these risks. The Board considers that
the Covid-19 pandemic and the geopolitical risk arising from
Russia’s invasion of Ukraine are the largest uncertainties facing
the Company, and thus has carried out robust stress testing of
cashflows which included; assessing the resilience of portfolio
companies, including the requirement for any future financial
support and the ability to fulfil interest requirements on debt
instruments.
The Board assessed the ability of the Company to
raise finance and deploy capital, as well as the existing cash
resources of the Company. 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. In assessing the prospects of the Company, the
Directors have considered the cash flow by looking at the Company’s
income and expenditure projections and funding pipeline over the
assessment period of three years and they appear realistic. It is
also satisfied that the Company can maintain its VCT qualifying
status.
Taking into account the processes for mitigating
risks, monitoring costs, implementing share buy-backs and issuance
of new shares, the Manager’s compliance with the investment
objective, achievement of the VCT qualifying status, policies and
business model and the balance of the portfolio, 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 2024. The
Board is mindful of the ongoing and emerging 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.
This Strategic report of the Company for the
year ended 31 December 2021 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.
On behalf of the Board,
Robin ArchibaldChairman13 April 2022
Responsibility StatementIn preparing these
financial statements for the year to 31 December 2021, the
Directors of the Company, being Robin Archibald, Margaret Payn,
Mary Anne Cordeiro and Patrick Reeve, confirm that to the best of
their knowledge:
- summary financial information contained in
this announcement and the full Annual Report and Financial
Statements for the year ended 31 December 2021 for the Company has
been prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (UK Accounting Standards and applicable law)
and give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company; and
-the Chairman's statement and Strategic
report include a fair review of the development and performance of
the business and the position of the Company, together with a
description of the principal risks and uncertainties it faces.
We consider that the Annual Report and Financial
Statements, taken as a whole, are fair, balanced, and
understandable and provide the information necessary for
shareholders to assess the Company’s position, performance,
business model and strategy.
A detailed "Statement of Directors'
responsibilities” is contained on page 42 within the full audited
Annual Report and Financial Statements.
On behalf of the Board,
Robin ArchibaldChairman13 April 2022
Income statement
|
|
|
Year ended 31 December
2021 |
Year ended 31 December 2020 |
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
Note |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
|
Gains on investments |
3 |
- |
21,527 |
21,527 |
- |
1,453 |
1,453 |
|
Investment income |
4 |
1,077 |
- |
1,077 |
604 |
- |
604 |
|
Investment management fee* |
5 |
(235) |
(2,115) |
(2,350) |
(505) |
(1,516) |
(2,021) |
|
Other expenses |
6 |
(366) |
- |
(366) |
(347) |
- |
(347) |
|
Profit/(loss)
on ordinary activities before tax |
|
476 |
19,412 |
19,888 |
(248) |
(63) |
(311) |
|
Tax charge on ordinary activities |
8 |
- |
- |
- |
- |
- |
- |
|
Profit/(loss) and total comprehensive income attributable
to shareholders |
|
476 |
19,412 |
19,888 |
(248) |
(63) |
(311) |
|
Basic and diluted profit/(loss)
per share (pence)** |
10 |
0.37 |
14.93 |
15.30 |
(0.22) |
(0.06) |
(0.28) |
*For more information on the allocation of the
split between revenue and capital please see the accounting
policies below.
**Adjusted for treasury shares
The accompanying notes 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.
Balance
sheet
|
|
|
31 December
2021 |
31 December 2020 |
|
|
Note |
£’000 |
£’000 |
|
Fixed asset investments |
11 |
90,535 |
65,152 |
|
|
|
|
|
|
Current assets |
|
|
|
| Trade
and other receivables |
13 |
2,878 |
2,038 |
| Cash and
cash equivalents |
|
14,361 |
11,451 |
|
|
|
17,239 |
13,489 |
|
|
|
|
|
|
Total assets |
|
107,774 |
78,641 |
|
|
|
|
|
|
Payables: amounts falling due within one year |
|
|
|
| Trade
and other payables |
14 |
(780) |
(613) |
|
|
|
|
|
|
Total assets less current
liabilities |
|
106,994 |
78,028 |
|
|
|
|
|
|
Equity attributable to equity holders |
|
|
|
|
Called-up share capital |
15 |
1,536 |
1,307 |
| Share
premium |
|
52,687 |
37,036 |
| Capital
redemption reserve |
|
48 |
48 |
|
Unrealised capital reserve |
|
33,469 |
13,595 |
| Realised
capital reserve |
|
18,259 |
23,617 |
| Other
distributable reserve |
|
995 |
2,425 |
|
Total equity shareholders’ funds |
|
106,994 |
78,028 |
|
Basic and diluted net asset value per share
(pence)* |
16 |
80.65 |
69.35 |
|
|
|
|
|
*Excluding treasury shares
The accompanying notes form an integral part of
these Financial Statements.
These Financial Statements were approved by the
Board of Directors, and were authorised for issue on 13 April 2022
and were signed on its behalf by
Robin ArchibaldChairmanCompany
number: 04114310
Statement of changes in equity
|
|
Called-up
share capital |
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 2021 |
1,307 |
37,036 |
48 |
13,595 |
23,617 |
2,425 |
78,028 |
|
Return/(loss) and total comprehensive income for the year |
- |
- |
- |
20,761 |
(1,349) |
476 |
19,888 |
| Transfer
of previously unrealised gains on disposal of investments |
- |
- |
- |
(887) |
887 |
- |
- |
| Purchase
of shares for treasury |
- |
- |
- |
- |
- |
(1,906) |
(1,906) |
| Issue of
equity |
229 |
16,056 |
- |
- |
- |
- |
16,285 |
| Cost of
issue of equity |
- |
(405) |
- |
- |
- |
- |
(405) |
|
Dividends paid |
- |
- |
- |
- |
(4,896) |
- |
(4,896) |
|
As at 31 December
2021 |
1,536 |
52,687 |
48 |
33,469 |
18,259 |
995 |
106,994 |
|
As at 1 January 2020 |
1,296 |
34,949 |
28 |
13,708 |
23,567 |
18,474 |
92,022 |
|
Return/(loss) and total comprehensive income for the year |
- |
- |
- |
1,233 |
(1,296) |
(248) |
(311) |
| Transfer
of previously unrealised gains on disposal of investments |
- |
- |
- |
(1,346) |
1,346 |
- |
- |
| Purchase
of shares for cancellation |
(20) |
- |
20 |
- |
- |
(1,473) |
(1,473) |
| Issue of
equity |
31 |
2,138 |
- |
- |
- |
- |
2,169 |
| Cost of
issue of equity |
- |
(51) |
- |
- |
- |
- |
(51) |
|
Dividends paid |
- |
- |
- |
- |
- |
(14,328) |
(14,328) |
|
As at 31 December 2020 |
1,307 |
37,036 |
48 |
13,595 |
23,617 |
2,425 |
78,028 |
*Included within these reserves are amounts of
£17,035,000 (2020: £26,042,000) which are considered
distributable.
Statement of cash flows
|
|
Year ended 31 December
2021 |
Year ended 31 December 2020 |
|
|
£’000 |
£’000 |
|
Cash flow from operating activities |
|
|
| Loan
stock income received |
674 |
511 |
| Dividend
income received |
15 |
108 |
| Deposit
interest received |
1 |
58 |
|
Investment management fee paid |
(2,166) |
(2,062) |
| Other
cash payments |
(373) |
(344) |
|
Corporation tax paid |
- |
- |
|
Net cash flow from operating activities |
(1,849) |
(1,729) |
|
|
|
|
|
Cash flow from investing activities |
|
|
| Purchase
of current asset investments |
- |
(4) |
| Purchase
of fixed asset investments |
(8,229) |
(9,158) |
| Disposal
of current asset investments |
- |
1,616 |
| Disposal
of fixed asset investments |
3,910 |
1,936 |
|
Net cash flow from investing activities |
(4,319) |
(5,610) |
|
|
|
|
|
|
|
|
|
Cash flow from financing activities |
|
|
| Issue of
share capital |
15,120 |
- |
| Cost of
issue of equity |
(37) |
(47) |
|
Dividends paid* |
(4,099) |
(12,158) |
| Purchase
of own shares (including costs) |
(1,906) |
(1,473) |
|
Net cash flow from financing activities |
9,078 |
(13,678) |
|
|
|
|
|
|
|
|
|
Increase/(decrease)
in cash and cash equivalents |
2,910 |
(21,017) |
| Cash and
cash equivalents at start of period |
11,451 |
32,468 |
|
Cash and cash equivalents at end of period |
14,361 |
11,451 |
|
|
|
|
*The dividends paid shown in the cash flow are different to the
dividends disclosed in note 9 as a result of the non-cash effect of
the Dividend Reinvestment Scheme.
Notes to the Financial
Statements
- 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 36 of the full Annual Report and Financial
Statements.
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 2018
and further detail on the valuation techniques used are outlined in
note 2 below.
Company information can be found on page 2 of
the full Annual Report and Financial Statements.
2. Accounting
policiesFixed and
current 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 per
cent. 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, the
investment in question is valued at the amount reported at the
previous reporting 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.
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.
Bank interest 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. This changed from 75% for both management fees and
performance incentive fees in the year ended 31 December 2020, to
better align with the Board’s expectation that over the long term
the majority of the Company’s investment returns will be in the
form of capital gains. This is a change in accounting estimate and
does not require prior year adjustment.
- 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 (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 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 capital This
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 year 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.
Going concernThe 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.
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
|
|
Year ended 31 December
2021£’000 |
Year ended 31 December 2020£’000 |
|
Unrealised gains on fixed asset investments |
20,761 |
1,233 |
| Realised gains on fixed asset
investments |
448 |
801 |
| Unwinding of discount on
deferred consideration |
318 |
- |
|
| Realised losses on current
asset investments |
- |
(581) |
| |
21,527 |
1,453 |
4. Investment
income
|
|
Year ended 31 December
2021£’000 |
Year ended 31 December 2020£’000 |
|
Loan stock interest |
1,060 |
510 |
| Dividend income |
15 |
39 |
| Bank deposit interest |
2 |
55 |
| |
1,077 |
604 |
5. Investment management
fees
|
|
Year ended31 December
2021£’000 |
Year ended31 December 2020£’000 |
|
Investment management fee charged to revenue |
235 |
505 |
| Investment management fee
charged to capital |
2,115 |
1,516 |
| |
2,350 |
2,021 |
Further details of the Management Agreement
under which the investment management fee is paid are given in the
Strategic report above.
During the year, services of a total value of
£2,350,000 (2020: £2,021,000) were purchased by the Company from
Albion Capital Group LLP in respect of management fees. At the
financial year end, the amount due to Albion Capital Group LLP in
respect of these services disclosed as accruals was £660,000 (2020:
£477,000). The total annual running costs of the Company are capped
at an amount equal to 2.75 per cent. of the Company’s net assets,
with any excess being met by Albion Capital Group LLP by way of a
reduction in management fees. During the year, the management fee
was reduced by £231,000 as a result of this cap (2020:
£78,000).
During the year, the Company was not charged by
Albion Capital Group LLP in respect of Patrick Reeve’s services as
a Director (2020: nil).
Albion Capital Group LLP, its partners and staff
(including Patrick Reeve) held 1,215,644 Ordinary shares in the
Company as at 31 December 2021. After the year end, Albion Capital
Group LLP, its partners and staff subscribed for new shares under
the Albion VCTs Prospectus Top Up Offers 2021/22 and were issued
with 193,878 shares as part of the allotments.
Albion Capital Group LLP is, from time-to-time,
eligible to receive arrangement fees and monitoring fees from
portfolio companies. During the year ended 31 December 2021, fees
of £207,000 attributable to the investments of the Company were
received by Albion Capital Group LLP pursuant to these arrangements
(2020: £237,000).
The Company has entered into an offer agreement
relating to the Top Up Offers 2021/22 with the Company’s Manager,
Albion Capital Group LLP (“Albion”), pursuant to which Albion will
receive a fee of 2.5 per cent. of the gross proceeds of the Offer
and out of which Albion will pay the costs of the Offer, as
detailed in the Prospectus.
6. Other expenses
|
|
Year ended31 December
2021£’000 |
Year ended31 December 2020£’000 |
|
Directors’ fees (including NIC) |
111 |
119 |
| Auditor’s remuneration for
statutory audit services (excluding VAT) |
38 |
34 |
| Tax services |
18 |
19 |
| Other administrative
expenses |
199 |
175 |
| |
366 |
347 |
7. Directors’ fees
The amounts paid to and on behalf of the
Directors during the year are as follows:
|
|
Year ended 31 December
2021£’000 |
Year ended 31 December 2020£’000 |
|
Directors’ fees |
103 |
110 |
| National insurance |
8 |
9 |
| |
111 |
119 |
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 49 to 51 of the full Annual Report and Financial
Statements.
8. Tax on ordinary
activities
|
|
Year ended 31 December
2021£’000 |
Year ended 31 December 2020£’000 |
|
UK corporation tax charge |
- |
- |
Factors affecting the tax
charge:
|
|
Year ended 31 December
2021£’000 |
Year ended 31 December 2020£’000 |
| Return/(loss) on ordinary
activities before taxation |
19,888 |
(311) |
| |
|
|
| Tax charge on profit/(loss) at
the average companies rate of 19% (2020: 19%) |
3,779 |
(59) |
| |
|
|
| Factors affecting the
charge: |
|
|
| Non-taxable gains |
(4,090) |
(276) |
| Income not taxable |
(3) |
(7) |
| Excess management expenses
carried forward |
314 |
342 |
| |
- |
- |
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 per cent. (2020: 19 per cent.). The differences
are explained above.
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 £7,063,000 (2020: £5,407,000) that are available for offset
against future profits. A deferred tax asset of £1,766,000 (2020:
£1,027,000) 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.
9.
Dividends
|
|
Year ended 31 December
2021£’000 |
Year ended 31 December 2020£’000 |
|
|
|
|
| Special dividend of 9.00p per
share paid on 30 October 2020 |
- |
9,942 |
| First interim dividend of
1.73p per share paid on 30 June 2021 (30 June 2020: 2.00p per
share) |
2,306 |
2,201 |
| Second interim dividend of
1.95p per share paid on 31 December 2021 (31 December 2020: 1.95p
per share) |
2,590 |
2,185 |
| |
4,896 |
14,328 |
In addition to the dividends summarised above,
the Board has declared a first dividend for the year ending 31
December 2022 of 2.02 pence per share. The dividend will be paid on
30 June 2022 to shareholders on the register on 6 June 2022. The
total dividend will be approximately £3,266,000.
10. Basic and diluted
return/(loss) per
share
|
|
Year ended 31 December
2021 |
Year ended 31 December 2020 |
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
|
|
|
|
|
| Profit/(loss) attributable to
equity shares (£’000) |
476 |
19,412 |
19,888 |
(248) |
(63) |
(311) |
| Weighted average shares in
issue (adjusted for treasury shares) |
|
130,014,383 |
|
110,981,864 |
| Return/(loss) attributable per
equity share (pence) |
0.37 |
14.93 |
15.30 |
(0.22) |
(0.06) |
(0.28) |
The weighted average number of shares is
calculated after adjusting for treasury shares of 20,904,204 (2020:
18,196,470).
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.
11.
Fixed asset investments
|
Investments held at fair value through profit or
loss |
31 December
2021£’000 |
31 December 2020£’000 |
|
Unquoted equity and preference shares |
70,209 |
45,891 |
| Quoted equity |
936 |
- |
| Unquoted loan stock |
19,390 |
19,261 |
| |
90,535 |
65,152 |
|
|
31 December
2021£’000 |
31 December 2020£’000 |
|
Opening valuation |
65,152 |
57,468 |
| Purchases at cost |
7,681 |
10,375 |
| Disposal proceeds |
(3,893) |
(4,724) |
| Realised gains |
448 |
801 |
| Movement in loan stock accrued
income |
386 |
(1) |
| Unrealised gains |
20,761 |
1,233 |
| Closing
valuation |
90,535 |
65,152 |
| |
|
|
| Movement in loan stock
accrued income |
|
|
| Opening accumulated loan stock
accrued income |
87 |
88 |
| Movement in loan stock accrued
income |
386 |
(1) |
| Closing accumulated
loan stock accrued income |
473 |
87 |
| |
|
|
| Movement in unrealised
gains |
|
|
| Opening accumulated unrealised
gains |
13,547 |
13,727 |
| Transfer of previously
unrealised gains to realised reserve on disposal of
investments |
(887) |
(1,413) |
| Movement in unrealised
gains |
20,761 |
1,233 |
| Closing accumulated
unrealised gains |
33,421 |
13,547 |
| |
|
|
| Historic cost
basis |
|
|
| Opening book cost |
51,518 |
43,653 |
| Purchases at cost |
7,681 |
10,375 |
| Sales at cost |
(2,558) |
(2,510) |
| Closing book
cost |
56,641 |
51,518 |
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
2021£’000 |
31 December 2020£’000 |
| Cost and price of recent
investment (reviewed for impairment or uplift) |
41,065 |
30,244 |
| Revenue multiple |
20,019 |
12,507 |
| Third party valuation –
discounted cash flow |
9,987 |
10,937 |
| Discounted offer price |
9,137 |
678 |
| Third party valuation –
earnings multiple |
7,017 |
5,955 |
| Net assets |
1,797 |
2,869 |
| Bid price |
936 |
- |
|
| Earnings multiple |
577 |
1,962 |
| |
90,535 |
65,152 |
When using the cost or price of a 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 or milestones 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 main inputs into the calibration exercise,
and for the valuation models using multiples, are revenue, EBITDA
and P/E multiples (basedon 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 re-classifications
between valuation methodologies:
|
Change in valuation methodology
(2020 to
2021) |
Valuation at 31 December
2021£’000 |
Explanatory note |
| Cost and price of recent
investment (reviewed for impairment or uplift) to discounted offer
price |
6,667 |
Third party offers
received |
| Cost and price of recent
investment (reviewed for impairment or uplift) to revenue
multiple |
4,403 |
More appropriate valuation
methodology |
| Revenue multiple to discounted
offer price |
2,018 |
Third party offer
received |
| Net assets to bid price |
936 |
Company listed on AIM in
period |
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,
there are no other more relevant methods of valuation which would
be reasonable as at 31 December 2021.
FRS 102 and the SORP requires the Company to disclose the inputs
to the valuation methods applied to its investments measured at
FVTPL in a fair value hierarchy. The table below sets out fair
value hierarchy definitions using FRS102 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:
|
|
31 December
2021 |
31 December 2020 |
|
|
£’000 |
£’000 |
|
Opening balance |
65,152 |
57,333 |
| Purchases at cost |
7,681 |
10,510 |
| Disposals proceeds |
(3,893) |
(4,724) |
| Movement in loan stock accrued
income |
386 |
(1) |
| Realised gains |
448 |
801 |
| Unrealised gains |
20,129 |
1,233 |
| Transfer to level 1 |
(304) |
- |
| Closing balance |
89,599 |
65,152 |
| |
|
|
|
|
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 per cent. of the portfolio of investments, consisting of equity
and loan stock, is based on recent investment price, discounted
offer price, net assets and cost, and as such the Board believes
that changes to reasonable possible alternative input assumptions
(by adjusting the earnings and revenue multiples) for the valuation
of the remainder of the portfolio could lead to a significant
change in the fair value of the portfolio. Therefore, for the
remainder of the portfolio, the Board has adjusted the inputs for a
number of the largest portfolio companies (by value) resulting in a
total coverage of 81 per cent. of the portfolio of investments. The
main inputs considered for each type of valuation are 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 and other technology |
Revenue multiple |
7.0x |
+0.7x |
239 |
0.18 |
|
-0.7x |
(239) |
(0.18) |
|
Revenue multiple |
Software and other technology |
Revenue multiple |
6.0x |
+0.6x |
302 |
0.23 |
|
-0.6x |
(302) |
(0.23) |
|
Third party valuation – discounted cash flow |
Renewable energy |
Discount rate |
5.5% |
+0.25% |
(240) |
(0.18) |
|
-0.25% |
264 |
0.20 |
|
Third party valuation – earnings multiple |
Other (including education) |
Earnings multiple |
22.5x |
+2.25x |
400 |
0.30 |
|
-2.25x |
(400) |
(0.30) |
* As detailed in the accounting policies above,
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
£1,205,000 (1.7%) or a decrease in the valuation of equity
investments by £1,181,000 (1.7%).
12.
Significant interests
The principal activity of the Company is to
select and hold a portfolio of investments. Although the Company,
through the Manager, will, in some cases, be represented on the
Board of the portfolio company, it will not take a controlling
interest or become involved in the management. The size and
structure of the 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 investments listed below are
held as part of an investment portfolio and therefore, as permitted
by FRS 102 section 14.4B, they are measured at FVTPL and not
accounted for using the equity method.
The Company has interests of greater than 20 per
cent. of the nominal value of any class of the allotted shares in
the portfolio companies as at 31 December 2021 as described
below:
|
Company |
Registered postcode |
Profit/(loss) before
tax£’000 |
Net
(liabilities)/assets£’000 |
Result for year ended |
% class and share
type |
% total voting
rights |
|
| MHS 1 Limited |
EC1M 5QL, UK |
(1,017) |
(9,982) |
31 August 2021 |
22.5% Ordinary |
22.5% |
|
| memsstar Limited |
EH3 9EP, UK |
1,090 |
3,534 |
31 December 2020 |
67.3% A Ordinary |
30.1% |
|
| Premier Leisure
(Suffolk) Limited |
EC1M 5QL, UK |
n/a* |
(1,506) |
31 August 2020 |
25.8% Ordinary |
25.8% |
|
| The Q Garden Company
Limited |
EC1M 5QL, UK |
n/a* |
(4,595) |
31 August 2020 |
33.4% A Ordinary |
33.4% |
|
*The company files filleted accounts which does
not disclose this information.
13.
Current assets
| Trade and other
receivables |
31 December
2021 |
31 December 2020 |
|
|
£’000 |
£’000 |
| Prepayments and accrued
income |
25 |
25 |
| Other receivables |
546 |
1 |
| Deferred consideration under
one year |
88 |
111 |
| Deferred consideration over
one year |
2,219 |
1,901 |
| |
2,878 |
2,038 |
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
2021 |
31 December 2020 |
|
|
£’000 |
£’000 |
| Trade payables |
7 |
33 |
| Accruals and deferred
income |
773 |
580 |
| |
780 |
613 |
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 |
£’000 |
|
130,710,891 Ordinary shares of 1 penny each at 31 December
2020 |
1,307 |
|
22,852,406 Ordinary shares of 1 penny each issued during the
year |
229 |
|
153,563,297 Ordinary shares of 1 penny
each at 31 December
2021 |
1,536 |
|
|
|
|
18,196,470 Ordinary shares of 1 penny each held in treasury at 31
December 2020 |
(182) |
|
2,707,734 Ordinary shares of 1 penny each purchased for treasury
during the year |
(27) |
|
20,904,204 Ordinary shares of 1 penny each
held in treasury at 31 December
2021 |
(209) |
|
|
|
|
Voting rights of
132,659,093 Ordinary
shares of 1 penny each at 31 December
2021 |
1,327 |
The Company purchased 2,707,734 Ordinary shares
to be held in treasury (2020: 2,031,283 to be cancelled) at a cost
of £1,906,000 including stamp duty (2020: £1,473,000) during the
year ended 31 December 2021. Total share buy backs in 2021
represents 1.8 per cent. (2020: 1.6 per cent.) of called-up share
capital.
The Company holds a total of 20,904,204 shares
(2020: 18,196,470) in treasury representing 13.6 per cent. (2020:
13.9 per cent.) of the issued Ordinary share capital at 31 December
2021.
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) |
| 30
June 2021 |
512,667 |
5 |
73.62 |
360 |
70.00 |
| 31 December 2021 |
528,039 |
5 |
79.21 |
400 |
76.00 |
| |
1,040,706 |
|
|
760 |
|
Under the terms of the Albion VCTs Prospectus
Top Up Offers 2020/21, 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) |
| 26 February 2021 |
2,059,020 |
21 |
70.30 |
1,426 |
66.00 |
| 26 February 2021 |
520,699 |
5 |
70.70 |
361 |
66.00 |
| 26 February 2021 |
18,541,660 |
185 |
71.10 |
12,854 |
66.00 |
| 9 April 2021 |
175,959 |
2 |
70.50 |
122 |
66.00 |
| 9 April 2021 |
16,384 |
- |
70.80 |
11 |
66.00 |
| 9 April 2021 |
497,978 |
5 |
71.20 |
346 |
66.00 |
| |
21,811,700 |
|
|
15,120 |
|
16. Basic and diluted
net asset value per share
|
|
31 December
2021 |
31 December 2020 |
|
|
(pence per
share) |
(pence per share) |
|
Basic and diluted net asset value per share |
80.65 |
69.35 |
The basic and diluted net asset value per share
at the year end is calculated in accordance with the Articles of
Association and is based upon total shares in issue (less treasury
shares) of 132,659,093 at 31 December 2021 (2020: 112,514,421).
17.
Capital and financial instruments risk managementThe
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 more
detail in the Chairman’s statement above.
The Company’s financial instruments comprise
equity and loan stock investments in quoted and unquoted companies,
cash balances, receivables and payables which arise from its
operations. The main purpose of these financial instruments is to
generate cash flow 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 risks arising from the
Company’s operations are:
- investment (or market) 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 apart from where noted below, there have been no changes
in the objectives, policies or processes for managing risks during
the past year. The key risks are summarised below.
Investment riskAs a Venture
Capital Trust, it is the Company’s specific nature to evaluate and
control the investment risk of its portfolio in quoted and unquoted
investments, details of which are shown on pages 28 to 30 of the
full Annual Report and Financial Statements. Investment risk is the
exposure of the Company to the revaluation and devaluation of
investments. The main driver of investment risk is the operational
and financial performance of the portfolio company and the dynamics
of market quoted comparators. 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 risk.
The Manager and the Board formally review
investment risk (which includes market price 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 quoted and
unquoted investments.
The maximum investment risk as at the Balance
sheet date is the value of the fixed asset investment portfolio
which is £90,535,000 (2020: £65,152,000). Fixed asset investments
form 85 per cent. of the net asset value as at 31 December 2021
(2020: 83 per cent.).
More details regarding the classification of
fixed asset investments are shown in note 11.
Investment price riskInvestment
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. As a Venture
Capital Trust, the Company invests in accordance with the
investment policy set out above. 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
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 Portfolio of investments section on
pages 28 to 30 of the full Annual Report and Financial Statements
and in the Strategic report.
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 £9,054,000. Further sensitivity
analysis on fixed asset investments is included in note 11.
Interest rate
riskThe Company is exposed to fixed and floating rate
interest rate risk on its financial assets. On the basis of the
Company’s analysis, it was estimated that a rise of 1% in all
interest rates would have increased the profit before tax for the
year by approximately £129,000 (2020: £232,000). Furthermore, it
was considered that a fall of interest rates below current levels
during the year would have been very unlikely.
The weighted average effective interest rate
applied to the Company’s unquoted loan stock during the year was
approximately 7.1 per cent. (2020: 3.2 per cent.). The weighted
average period to maturity for the unquoted loan stock is
approximately 3.4 years (2020: 3.9 years).
The Company’s financial assets and liabilities,
all denominated in pounds sterling, consist of the following:
|
|
31 December
2021 |
31 December 2020 |
|
|
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 |
- |
- |
70,209 |
70,209 |
- |
- |
45,891 |
45,891 |
| Quoted equity |
- |
- |
936 |
936 |
- |
- |
- |
- |
| Unquoted loan stock |
18,700 |
- |
690 |
19,390 |
18,297 |
- |
964 |
19,261 |
| Receivables* |
- |
- |
2,853 |
2,853 |
- |
- |
2,013 |
2,013 |
| Current liabilities |
- |
- |
(780) |
(780) |
- |
- |
(613) |
(613) |
| Cash |
- |
14,361 |
- |
14,361 |
- |
11,451 |
- |
11,451 |
| Total |
18,700 |
14,361 |
73,908 |
106,969 |
18,297 |
11,451 |
48,255 |
78,003 |
*The receivables do not reconcile to the Balance
sheet as prepayments are not included in the above table.
Credit riskCredit 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
prior to investment, and as part of its ongoing monitoring of
investments. In doing this, it takes into account the extent and
quality of any security held. For loan stock investments made prior
to 6 April 2018, which account for 58.6 per cent. 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
sit on the boards of unquoted portfolio companies; this enables the
close identification, monitoring and management of investment
specific credit risk.
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 as at 31
December 2021 was limited to £19,390,000 (2020: £19,261,000) of
unquoted loan stock instruments, £14,361,000 (2020: £11,451,000)
cash deposits with banks and £2,878,000 (2020: £2,038,000) of other
receivables.
At the Balance sheet date, the cash and cash
equivalents held by the Company were held with Lloyds Bank plc,
Scottish Widows Bank plc (part of Lloyds Banking Group), Barclays
Bank plc, 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 and floating rate note exposure to a maximum
of 20 per cent. of net asset value for any one counterparty.
The credit profile of unquoted loan stock is
described under liquidity risk below.
Liquidity riskLiquid assets are
held as cash on current account, on deposit, in bonds or short term
money market account. Under the terms of its Articles, the Company
has the ability to borrow up to 10 per cent. of its adjusted
capital and reserves of the latest published audited Balance sheet,
which amounts to £10,373,000 as at 31 December 2021 (2020:
£7,572,000).
The Company has no committed borrowing
facilities as at 31 December 2021 (2020: £nil). The Company had
cash balances of £14,361,000 (2020: £11,451,000). The main cash
outflows are for new investments, share buy-backs 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 the Company’s financial
liabilities are short term in nature and total £780,000 as at 31
December 2021 (2020: £613,000).
The carrying value of loan stock investments
analysed by expected maturity dates is as follows:
| |
31 December
2021 |
31 December 2020 |
|
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 |
4,436 |
2,746 |
620 |
7,802 |
2,266 |
2,341 |
1,673 |
6,280 |
| 1-2 years |
195 |
1 |
- |
196 |
2,036 |
26 |
79 |
2,141 |
| 2-3 years |
3,571 |
6 |
64 |
3,641 |
195 |
92 |
- |
287 |
| 3-5 years |
4,525 |
- |
- |
4,525 |
7,012 |
- |
65 |
7,077 |
| 5+ years |
2,871 |
- |
355 |
3,226 |
3,097 |
- |
379 |
3,476 |
| Total |
15,598 |
2,753 |
1,039 |
19,390 |
14,606 |
2,459 |
2,196 |
19,261 |
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 £3,743,000 (2020: £3,033,000).
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.
In view of the factors identified above, the
Board considers that the Company is subject to low liquidity
risk.
Fair values of financial assets and
financial liabilitiesAll the Company’s financial assets
and liabilities as at 31 December 2021 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. Commitments and
contingenciesThe Company had no financial commitments in
respect of investments as at 31 December 2021 (2020: nil).
There were no contingent liabilities or
guarantees given by the Company as at 31 December 2021 (2020:
nil).
19. Post balance sheet
eventsSince 31 December 2021 the Company has had the
following material post balance sheet events:
- Disposal of Credit Kudos Limited
for proceeds of £4,697,000;
- Disposal of Phrasee Limited for
proceeds of £2,046,000;
- Disposal of MyMeds&Me Limited
for proceeds of £1,467,000;
- Investment of £953,000 in an
existing portfolio company, Black Swan Data Limited;
- Investment of £877,000 in an
existing portfolio company, TransFICC Limited;
- Investment of £849,000 in an
existing portfolio company, Cantab Research Limited (T/A
Speechmatics); and
- Investment of £546,000 in a new
portfolio company, PerchPeek Limited.
Since 31 December 2021, the Company issued the
following new Ordinary shares of nominal value 1 penny each under
the Albion VCTs’ Prospectus Top Up Offers 2021/22:
|
Date of allotment |
Number of shares allotted |
Aggregate
nominalvalue of
shares(£’000) |
Issue
price(pence per
share) |
Net consideration
received(£’000) |
Opening market price on allotment
date(pence per
share) |
|
25 February 2022 |
1,308,032 |
13 |
81.90 |
1,055 |
77.00 |
|
25 February 2022 |
443,854 |
4 |
82.30 |
358 |
77.00 |
|
25 February 2022 |
12,172,712 |
122 |
82.80 |
9,828 |
77.00 |
|
31 March 2022 |
14,154,989 |
142 |
82.80 |
11,428 |
77.00 |
|
11 April 2022 |
170,608 |
2 |
81.90 |
138 |
77.00 |
|
11 April 2022 |
13,972 |
- |
82.30 |
11 |
77.00 |
|
11 April 2022 |
737,806 |
7 |
82.80 |
596 |
77.00 |
|
|
29,001,973 |
290 |
|
23,414 |
|
20.
Related party
transactions Other than
transactions with the Manager as disclosed in note 5, the
Directors’ remuneration disclosed in the Directors’ remuneration
report on pages 49 to 51 of the full Annual Report and Financial
Statements, and that disclosed above, there are no other related
party transactions requiring disclosure.
21. Other Information The
information set out in this announcement does not constitute the
Company's statutory accounts within the terms of Section 434 of the
Companies Act 2006 for the years ended 31 December 2021 and 31
December 2020, and is derived from the statutory accounts
for those financial years, which have been, or in the case of the
accounts for the year ended 31 December 2021, which will be,
delivered to the Registrar of Companies. The Auditor reported on
those accounts; the reports were unqualified and did not contain a
statement under Section 498 (2) or (3) of the Companies Act
2006.
22. PublicationThe full audited
Annual Report and Financial Statements are 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 as a PDF document via a link in the 'Financial Reports and
Circulars' section.
- Split of Portfolio by sector, stage of investment and number of
employees
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