Albion Venture Capital Trust PLC: Half-yearly Financial Report
Albion Venture Capital Trust
PLC
LEI Code: 213800JKELS32V2OK421
As required by the UK Listing Authority's
Disclosure Guidance and Transparency Rule 4.2, Albion Venture
Capital Trust PLC today makes public its information relating to
the Half-yearly Financial Report (which is unaudited) for the six
months to 30 September 2021. This announcement was approved by the
Board of Directors on 1 December 2021.
The full Half-yearly Financial Report (which is
unaudited) for the period to 30 September 2021 will shortly be sent
to shareholders and will be available on the Albion Capital Group
LLP website by clicking
www.albion.capital/funds/AAVC/30Sep2021.pdf.
Investment policy
Albion Venture Capital Trust PLC (the “Company”)
is a venture capital trust and the investment policy is intended to
produce a regular and predictable dividend stream with an
appreciation in capital value.
The Company will invest in a broad portfolio of
smaller, unquoted growth businesses across a variety of sectors
including higher risk technology companies. Investments may take
the form of equity or a mixture of equity and loans.
Allocation of funds will be determined by the
investment opportunities which become available but efforts will be
made to ensure that the portfolio is diversified both in terms of
sector and stage of maturity of company. Funds held pending
investment or for liquidity purposes will be held as cash on
deposit.
Risk diversification and maximum
exposures
Risk is spread by investing in a number of
different businesses within venture capital trust qualifying
industry sectors. The maximum amount which the Company will invest
in a single portfolio company is 15 per cent. of the Company's
assets at cost, thus ensuring a spread of investment risk. The
value of an individual investment may increase over time as a
result of trading progress and it is possible that it may grow in
value to a point where it represents a significantly higher
proportion of total assets prior to a realisation opportunity being
available.
Gearing
The Company's maximum exposure in relation to
gearing is restricted to 10 per cent. of the adjusted share capital
and reserves.
Financial calendar
Record date
for second special dividend |
10 December
2021 |
|
|
Payment date
of second special dividend |
31 December
2021 |
|
|
Record date
for second interim dividend |
7 January
2022 |
|
|
Payment date
of second interim dividend |
31 January
2022 |
|
|
Financial
year end |
31
March |
Financial highlights
|
Unaudited six months ended 30 September 2021 (pence per
share) |
Unaudited six months ended 30 September 2020 (pence per share) |
Audited year ended 31 March 2021 (pence per share) |
Opening net asset value |
73.13 |
70.13 |
70.13 |
Capital return |
2.47 |
1.48 |
5.64 |
Revenue return |
0.05 |
|
0.43 |
|
1.46 |
|
Total return |
2.52 |
1.91 |
7.10 |
Impact from share capital movements |
(0.02) |
0.05 |
0.14 |
Dividends paid |
|
(16.83) |
|
(2.50) |
|
(4.24) |
Net asset value |
58.80 |
69.59 |
73.13 |
Total dividends paid to 30 September 2021 |
180.87 |
Net asset value as at 30 September 2021 |
58.80 |
Total shareholder value to 30 September 2021 |
239.67 |
A more detailed breakdown of the dividends paid
per year can be found at www.albion.capital/funds/AAVC under the
‘Dividend History’ section.
The financial summary above is for the Company,
Albion Venture Capital Trust PLC Ordinary shares only. Details of
the financial performance of the C shares and Albion Prime VCT PLC,
which have been merged into the Company, can be found on the
Company’s webpage at www.albion.capital/funds/AAVC under the
‘Financial summary for previous funds’ section.
The Directors have declared a second
interim dividend of 1.47 pence per share for the year ending 31
March 2022, which will be paid on 31 January 2022 to shareholders
on the register on 7 January 2022.
The Board has also declared a second
special dividend of 7.00 pence per share, which will be paid on 31
December 2021 to shareholders on the register on 10 December 2021.
Further details can be found in the Interim management report
below.
Interim management report
Introduction
I am pleased to report a total return of 2.52
pence per share for the six months to 30 September 2021, which
represents a 3.4% uplift on the opening net asset value. Following
the payment of the first special dividend of 15.00 pence per share
and the first interim dividend of 1.83 pence per share paid to
shareholders on 30 July 2021, the net asset value (“NAV”) at 30
September 2021 was 58.80 pence per share (31 March 2021: 73.13p).
Our portfolio companies continue to show resilience and their
growth demonstrates the value they provide to their customers.
Valuation and results
The gain on investments for the six months to 30
September 2021 was £2.9 million compared to £1.9 million for the
same period in the previous year. The key movements in the period
include: a £0.9 million uplift in the valuation of Credit Kudos,
demonstrating the value of its software platform; and a £0.6
million uplift in the valuation of Elliptic Enterprises, supported
by an externally led Series C fundraising that raised $60 million.
We have also seen many of our other portfolio companies performing
well. For example, Arecor Therapeutics listed onto the AIM stock
exchange during the period and its share price has since increased
by 85% leading to an increase in value of £0.5 million. The
renewable energy portfolio continues to be a strong source of
income for the Company, although electricity generation has been
impacted by unfavourable weather conditions, the effect of which
has been tempered by higher electricity prices and rising
inflation. Our school investment, Radnor House in Sevenoaks, has
seen an uplift of £0.5 million following the completion of an
updated third-party valuation. In general, it is reassuring and
encouraging to see many of our portfolio companies trading strongly
as we navigate out of the pandemic.
However, there have also been some write-downs
in our portfolio, particularly Avora (£0.3 million) and Xperiome
(£0.2 million) due to slower growth than hoped.
Further details of the portfolio of investments
can be found below.
Dividends
In line with our dividend policy targeting a
dividend around 5% of NAV per annum the Company paid a first
interim dividend of 1.83 pence per share during the period to 30
September 2021 (30 September 2020: 2.50 pence per share). As noted
above, the Company also paid a special dividend of 15.00 pence per
share alongside the first interim dividend.
The Company will pay a second interim dividend
for the financial year ending 31 March 2022 of 1.47 pence per share
on 31 January 2022 to shareholders on the register on 7 January
2022, being 2.5% of the 30 September 2021 NAV.
As indicated in the Chairman’s statement in the
Annual Report and Financial Statements, as a result of the
additional liquidity generated from the sale of the Company’s care
homes in March 2021 and the requirement to maintain the Company’s
qualifying VCT status, the Board declare a second special dividend
of 7.00 pence per share. This will be paid on 31 December 2021 to
shareholders on the register on 10 December 2021.
This will result in special dividends paid for
the year ending 31 March 2022 totaling 22.00 pence per share,
representing 30.1% of opening NAV, and interim dividends paid
totaling 3.30 pence per share, representing 4.5% of opening
NAV.
Dividend Reinvestment Scheme
(“DRIS”)
The Company continues to offer a DRIS whereby
shareholders can elect to receive dividends in the form of new
shares. Shareholders not currently in the DRIS have the option to
elect to have their dividends reinvested into new shares through
the DRIS by logging into their account at www.investorcentre.co.uk.
Please note that shareholders who hold their shares in CREST will
need to contact their CREST service provider.
The terms and conditions for the DRIS can be
found on the Company’s webpage on the Manager’s website at
www.albion.capital/funds/AAVC under the ‘Fund reports’ section.
Investment activity
During the period the Company has invested £3.5
million into new and existing portfolio companies, with new
investments comprising:
- £0.8 million in Gravitee Topco Limited (trading as
Gravitee.io), an application programming interface (API) management
platform;
- £0.7 million in NuvoAir AB, a provider of digital therapeutics
and decentralised clinical trials for respiratory conditions;
- £0.6 million in Brytlyt Limited, which uses patented software
and AI, combined with the superior computation power of graphics
processing units (GPUs), to derive insights thousands of times
faster than legacy systems; and
- £0.3 million in Accelex Technology Limited, a provider of data
extraction and analytics technology for private capital
markets.
A further £1.1 million was invested in existing
portfolio companies, the largest being £0.6 million into uMotif, to
support the business as it continues to develop its electronic
patient report platform for clinical trials.
Investment portfolio by
sector
The pie chart at the end of this announcement
shows the different sectors in which the Company’s assets, at
carrying value, were invested at 30 September 2021.
Share buy-backs
It remains the Board’s primary objective to
maintain sufficient resources for investment in new and existing
portfolio companies and for the continued payment of dividends to
shareholders. The Board’s policy is to buy-back shares in the
market, subject to the overall constraint that such purchases are
in the Company’s interest. It is the Board’s intention for
such buy-backs to be in the region of a 5 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.
Transactions with the
Manager
Details of the transactions that took place with
the Manager during the period can be found in note 5. There are no
other related party transactions or balances that require
disclosure.
Principal risks and
uncertainties
The longer term implications of the Covid-19
crisis is the key risk facing the Company, including its impact on
the UK and Global economies. In accordance with DTR 4.2.7, the
Board confirms that the principal risks and uncertainties facing
the Company have not materially changed from those identified in
the Annual Report and Financial Statements for the year ended 31
March 2021. The Covid-19 pandemic has created heightened
uncertainty, but has not changed the nature of the principal risks.
The Board considers that the present processes for mitigating those
risks remain appropriate.
The principal risks faced by the Company
are:
- Investment, performance and valuation risk;
- VCT approval risk;
- Regulatory and compliance risk;
- Operational and internal control risk;
- Economic, political and social risk;
- Emerging risks;
- Market value of Ordinary shares; and
- Reputational risk.
A detailed explanation of the principal risks
facing the Company can be found in the Annual Report and Financial
Statements for the year ended 31 March 2021 on pages 18 to 20,
copies of which are available on the Company’s webpage on the
Manager’s website at www.albion.capital/funds/AAVC under the
‘Financial Reports and Circulars’ section.
Albion VCTs Top Up Offers
Your Board, in conjunction with the boards of
the other five VCTs managed by Albion Capital Group LLP, has
announced to the market the intention of the VCTs to launch
prospectus top up offers of new ordinary shares for subscription in
the 2021/2022 and 2022/2023 tax years. The prospectus is expected
to be published in early January 2022, with more information
available at www.albion.capital.
The proceeds will be used to provide support to
our existing portfolio companies and to enable us to take advantage
of new and exciting investment opportunities as they arise, four of
which are detailed above.
To ensure efficient Shareholder
communication the Board is actively encouraging
Shareholders who are currently receiving hard copy information to
change their preferences to electronic communications.
There are many reasons why we think this is the right thing to do
including being more environmentally friendly, less human
contact, and speed including the immediacy of getting
information to you regarding the Company and new
Offers.
Shareholders can sign up for e-Comms by going to:
www.investorcentre.co.uk/ecomms.
Outlook and prospects
The Board is encouraged by the performance of
the portfolio as a whole and the prospects for its portfolio
companies. The pipeline of new and follow on
investments continues to remain strong, demonstrated by the £3.5
million invested in the first six months of the year, and the
investment focus on growth and technology businesses provides the
opportunity to continue to generate shareholder value over the
medium to long term.
Richard Glover
Chairman
1 December 2021
Responsibility statement
The Directors Richard Glover, John Kerr, Ann
Berresford and Richard Wilson are responsible for preparing the
Half-yearly Financial Report. In preparing these condensed
Financial Statements for the period to 30 September 2021 we, the
Directors of the Company, confirm that to the best of our
knowledge:
(a) the condensed set of Financial Statements,
which has been prepared in accordance with Financial Reporting
Standard 104 “Interim Financial Reporting”, give a true and fair
view of the assets, liabilities, financial position and profit and
loss of the Company as required by DTR 4.2.4R;
(b) the Interim management report includes a
fair review of the information required by DTR 4.2.7R (indication
of important events during the first six months and description of
principal risks and uncertainties for the remaining six months of
the year); and
(c) the Interim management report includes a
fair review of the information required by DTR 4.2.8R (disclosure
of related parties’ transactions and changes therein).
This Half-yearly Financial Report has not been
audited or reviewed by the Auditor.
For and on behalf of the Board
Richard Glover
Chairman
1 December 2021
Portfolio of investments
Fixed asset investments |
% voting rights |
As at 30 September 2021 |
|
Change in value for the
period** £’000 |
Cost* £’000 |
Cumulative movement in value £’000 |
Value £’000 |
|
|
Chonais River Hydro Limited |
9.2 |
3,074 |
1,065 |
4,139 |
|
(132) |
Radnor House School (TopCo) Limited |
6.9 |
1,259 |
1,367 |
2,626 |
|
453 |
The Evewell Group Limited |
5.2 |
1,272 |
783 |
2,055 |
|
(20) |
Elliptic Enterprises Limited |
1.6 |
1,244 |
624 |
1,868 |
|
624 |
Gharagain River Hydro Limited |
11.5 |
1,363 |
377 |
1,740 |
|
(54) |
Cantab Research Limited (T/A Speechmatics) |
2.8 |
1,144 |
565 |
1,709 |
|
565 |
Credit Kudos Limited |
2.7 |
584 |
897 |
1,481 |
|
897 |
Phrasee Limited |
2.3 |
538 |
862 |
1,400 |
|
- |
Threadneedle Software Holdings Limited (T/A Solidatus) |
2.1 |
1,262 |
- |
1,262 |
|
- |
The Street by Street Solar Programme Limited |
6.5 |
676 |
514 |
1,190 |
|
12 |
uMotif Limited |
4.0 |
1,078 |
35 |
1,113 |
|
- |
Beddlestead Limited |
9.1 |
1,142 |
(58) |
1,084 |
|
278 |
Healios Limited |
2.4 |
678 |
339 |
1,017 |
|
- |
Concirrus Limited |
1.9 |
975 |
- |
975 |
|
- |
Seldon Technologies Limited |
4.6 |
902 |
- |
902 |
|
- |
Alto Prodotto Wind Limited |
7.4 |
530 |
330 |
860 |
|
(21) |
MHS 1 Limited |
14.8 |
1,026 |
(168) |
858 |
|
(58) |
Arecor Therapeutics PLC (previously Arecor Limited) |
0.7 |
249 |
576 |
825 |
|
469 |
Gravitee TopCo Limited (T/A Gravitee.io) |
3.7 |
813 |
- |
813 |
|
- |
NuvoAir Holdings Inc. |
2.4 |
741 |
- |
741 |
|
- |
The Voucher Market Limited (T/A WeGift) |
1.8 |
735 |
- |
735 |
|
- |
Regenerco Renewable Energy Limited |
4.5 |
451 |
276 |
727 |
|
1 |
Brytlyt Limited |
3.4 |
577 |
- |
577 |
|
- |
Limitless Technology Limited |
1.8 |
471 |
47 |
518 |
|
- |
Imandra Inc. |
1.3 |
175 |
261 |
436 |
|
261 |
Erin Solar Limited |
18.6 |
520 |
(100) |
420 |
|
(28) |
Dragon Hydro Limited |
7.3 |
264 |
147 |
411 |
|
(26) |
uMedeor Limited (T/A uMed) |
3.2 |
334 |
- |
334 |
|
- |
Accelex Technology Limited |
3.6 |
324 |
- |
324 |
|
- |
AVESI Limited |
7.4 |
242 |
81 |
323 |
|
(1) |
Harvest AD Limited |
- |
307 |
(2) |
305 |
|
(8) |
TransFICC Limited |
1.9 |
286 |
- |
286 |
|
- |
Greenenerco Limited |
3.9 |
106 |
65 |
171 |
|
(5) |
Premier Leisure (Suffolk) Limited |
9.9 |
175 |
(10) |
165 |
|
(9) |
Xperiome Limited (previously Raremark) |
2.4 |
308 |
(214) |
94 |
|
(156) |
Symetrica Limited |
0.3 |
83 |
(17) |
66 |
|
- |
Kew Green VCT (Stansted) Limited |
45.2 |
1,234 |
(1,211) |
23 |
|
- |
Avora Limited |
4.2 |
750 |
(732) |
18 |
|
(267) |
Forward Clinical Limited (T/A Pando) |
1.2 |
149 |
(145) |
4 |
|
(1) |
Total fixed asset investments |
|
28,041 |
6,554 |
34,595 |
|
2,774 |
*The cost includes the original cost from Albion
Venture Capital Trust PLC and the carried over value on merger from
Albion Prime VCT PLC as at 25 September 2012.
** As adjusted for additions and disposals
during the period.
Fixed asset investment realisations during the period to 30
September 2021 |
Cost* £’000 |
Opening carrying value £’000 |
Disposal proceeds £’000 |
Total realised gain £’000 |
Gain on opening value
£’000 |
|
|
|
|
|
|
Loan stock repayments and other: |
|
|
|
|
|
Alto Prodotto Wind Limited |
21 |
28 |
28 |
7 |
- |
Dragon Hydro Limited |
13 |
13 |
13 |
- |
- |
Greenenerco Limited |
4 |
5 |
5 |
1 |
- |
|
|
|
|
|
|
Escrow adjustments and other** |
- |
- |
165 |
165 |
165 |
Total realisations |
38 |
46 |
211 |
173 |
165 |
*The cost includes the original cost from Albion
Venture Capital Trust PLC and the carried over value on merger from
Albion Prime VCT PLC as at 25 September 2012.
**These comprise fair value movements on
deferred consideration on previously disposed investments, release
of the G. Network Communications discount which is treated as a
financing transaction, and expenses which are incidental to the
purchase or disposal of an investment.
Total change in value of investments for the
period |
|
|
2,774 |
Movement in loan stock accrued interest |
|
|
|
|
|
1 |
Unrealised gains sub-total |
|
|
|
|
|
2,775 |
Realised gains in current period |
|
|
|
|
|
165 |
Total gains on investments as per Income
statement |
|
|
2,940 |
Condensed income statement
|
|
Unaudited six months ended
30 September 2021 |
Unaudited six months ended 30 September 2020 |
Audited year ended 31 March 2021 |
|
Note |
Revenue £’000 |
Capital £’000 |
Total £’000 |
Revenue £’000 |
Capital £’000 |
Total £’000 |
Revenue £’000 |
Capital £’000 |
Total £’000 |
Gains on investments |
3 |
- |
2,940 |
2,940 |
- |
1,898 |
1,898 |
- |
6,508 |
6,508 |
Investment income |
4 |
412 |
- |
412 |
884 |
- |
884 |
2,467 |
- |
2,467 |
Investment management fee |
5 |
(158) |
(472) |
(630) |
(167) |
(501) |
(668) |
(337) |
(1,010) |
(1,347) |
Other expenses |
|
(193) |
- |
(193) |
(180) |
- |
(180) |
(363) |
- |
(363) |
Profit on ordinary activities before tax |
|
61 |
2,468 |
2,529 |
537 |
1,397 |
1,934 |
1,767 |
5,498 |
7,265 |
Tax (charge)/credit on ordinary activities |
|
(11) |
11 |
- |
(101) |
95 |
(6) |
(299) |
192 |
(107) |
Profit and total comprehensive income attributable to
shareholders |
|
50 |
2,479 |
2,529 |
436 |
1,492 |
1,928 |
1,468 |
5,690 |
7,158 |
Basic and diluted return per share (pence)* |
7 |
0.05 |
2.47 |
2.52 |
0.43 |
1.48 |
1.91 |
1.46 |
5.64 |
7.10 |
*adjusted for treasury shares
Comparative figures have been extracted from the
unaudited Half-yearly Financial Report for the six months ended 30
September 2020 and the audited statutory accounts for the year
ended 31 March 2021.
The accompanying notes below form an integral
part of this Half-yearly Financial Report.
The total column of this Condensed income
statement represents the profit and loss account of the Company.
The supplementary revenue and capital columns have been prepared in
accordance with The Association of Investment Companies’ Statement
of Recommended Practice.
Condensed balance sheet
|
Note |
Unaudited 30 September 2021
£’000 |
Unaudited 30 September 2020 £’000 |
Audited 31 March 2021 £’000 |
Fixed asset investments |
|
34,595 |
52,885 |
28,355 |
|
|
|
|
|
Current assets |
|
|
|
|
Trade and other receivables |
|
2,144 |
108 |
1,561 |
Cash and cash equivalents |
|
24,125 |
17,898 |
43,562 |
|
|
26,269 |
18,006 |
45,123 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
60,864 |
70,891 |
73,478 |
|
|
|
|
|
Payables: amounts falling due within one year |
|
|
|
|
Trade and other payables |
|
(877) |
(810) |
(790) |
Total assets less current liabilities |
|
59,987 |
70,081 |
72,688 |
|
|
|
|
|
Equity attributable to equity holders |
|
|
|
|
Called-up share capital |
8 |
1,192 |
1,162 |
1,165 |
Share premium |
|
43,061 |
40,449 |
40,668 |
Capital redemption reserve |
|
25 |
7 |
7 |
Unrealised capital reserve |
|
6,355 |
15,008 |
3,588 |
Realised capital reserve |
|
4,816 |
6,211 |
21,829 |
Other distributable reserve |
|
4,538 |
7,244 |
5,431 |
Total equity shareholders’ funds |
|
59,987 |
70,081 |
72,688 |
Basic and diluted net asset value per share
(pence)* |
|
58.80 |
69.59 |
73.13 |
*excluding treasury shares
Comparative figures have been extracted from the
unaudited Half-yearly Financial Report for the six months ended 30
September 2020 and the audited statutory accounts for the year
ended 31 March 2021.
The accompanying notes below form an integral
part of this Half-yearly Financial Report.
These Financial Statements were approved by the
Board of Directors and authorised for issue on 1 December
2021, and were signed on its behalf by
Richard Glover
Chairman
Company number: 03142609
Condensed 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 |
At 1 April 2021 |
1,165 |
40,668 |
7 |
3,588 |
21,829 |
5,431 |
72,688 |
Return/(loss) and total comprehensive income for the period |
- |
- |
- |
2,775 |
(296) |
50 |
2,529 |
Transfer of previously unrealised gains on realisations of
investments |
- |
- |
- |
(8) |
8 |
- |
- |
Purchase of shares for cancellation |
(17) |
- |
17 |
- |
- |
(943) |
(943) |
Issue of equity |
44 |
2,410 |
- |
- |
- |
- |
2,454 |
Cost of issue of equity |
- |
(17) |
- |
- |
- |
- |
(17) |
Net dividends paid (note 6) |
- |
- |
- |
- |
(16,724) |
- |
(16,724) |
At 30 September 2021 |
1,192 |
43,061 |
25 |
6,355 |
4,816 |
4,538 |
59,987 |
At 1 April 2020 |
1,148 |
39,477 |
7 |
13,178 |
6,549 |
10,269 |
70,628 |
Return/(loss) and total comprehensive income for the period |
- |
- |
- |
1,838 |
(346) |
436 |
1,928 |
Transfer of previously unrealised gains on realisations of
investments |
- |
- |
- |
(8) |
8 |
- |
- |
Purchase of treasury shares |
- |
- |
- |
- |
- |
(931) |
(931) |
Issue of equity |
14 |
1,004 |
- |
- |
- |
- |
1,018 |
Cost of issue of equity |
- |
(32) |
- |
- |
- |
- |
(32) |
Net dividends paid (note 6) |
- |
- |
- |
- |
- |
(2,530) |
(2,530) |
At 30 September 2020 |
1,162 |
40,449 |
7 |
15,008 |
6,211 |
7,244 |
70,081 |
At 1 April 2020 |
1,148 |
39,477 |
7 |
13,178 |
6,549 |
10,269 |
70,628 |
Return and total comprehensive income for the year |
- |
- |
- |
1,831 |
3,859 |
1,468 |
7,158 |
Transfer of previously unrealised gains on realisations of
investments |
- |
- |
- |
(11,421) |
11,421 |
- |
- |
Purchase of treasury shares |
- |
- |
- |
- |
- |
(2,043) |
(2,043) |
Issue of equity |
17 |
1,225 |
- |
- |
- |
- |
1,242 |
Cost of issue of equity |
- |
(34) |
- |
- |
- |
- |
(34) |
Net dividends paid (note 6) |
- |
- |
- |
- |
- |
(4,263) |
(4,263) |
At 31 March 2021 |
1,165 |
40,668 |
7 |
3,588 |
21,829 |
5,431 |
72,688 |
*These reserves amount to £9,355,000 (30
September 2020: £13,455,000; 31 March 2021: £27,260,000) which is
considered distributable.
Condensed statement of cash
flows
|
Unaudited six months ended 30 September
2021 £’000 |
Unaudited six months ended 30 September 2020 £’000 |
Audited year ended 31 March 2021 £’000 |
Cash flow from operating activities |
|
|
|
Loan stock income received |
403 |
793 |
2,985 |
Deposit interest received |
2 |
13 |
14 |
Dividend income received |
7 |
11 |
24 |
Investment management fee paid |
(790) |
(671) |
(1,337) |
Other cash payments |
(220) |
(220) |
(378) |
UK Corporation tax refund/(paid) |
97 |
- |
(204) |
Net cash flow from operating activities |
(501) |
(74) |
1,104 |
|
|
|
|
Cash flow from investing activities |
|
|
|
Purchase of fixed asset investments |
(4,180) |
(1,775) |
(5,040) |
Disposal of fixed asset investments |
191 |
264 |
30,620 |
Net cash flow from investing activities |
(3,989) |
(1,511) |
25,580 |
|
|
|
|
Cash flow from financing activities |
|
|
|
Issue of share capital |
- |
668 |
668 |
Cost of issue of equity |
(17) |
(17) |
(17) |
Dividends paid* |
(14,256) |
(2,207) |
(3,714) |
Purchase of own shares (including costs) |
(674) |
(743) |
(1,841) |
Net cash flow from financing activities |
(14,947) |
(2,299) |
(4,904) |
|
|
|
|
(Decrease)/increase in cash and cash equivalents |
(19,437) |
(3,884) |
21,780 |
Cash and cash equivalents at start of period |
43,562 |
21,782 |
21,782 |
Cash and cash equivalents at end of period |
24,125 |
17,898 |
43,562 |
*The equity dividends paid in the cash flow is
different to the dividends disclosed in note 6 due to the non-cash
effect of the Dividend Reinvestment Scheme.
Notes to the condensed Financial
Statements
1. Basis of preparation
The condensed Financial Statements have been
prepared in accordance with applicable United Kingdom law and
accounting standards, including Financial Reporting Standard 102
(“FRS 102”), Financial Reporting Standard 104 – Interim Financial
Reporting (“FRS 104”), and with the Statement of Recommended
Practice “Financial Statements of Investment Trust Companies and
Venture Capital Trusts” (“SORP”) issued by The Association of
Investment Companies (“AIC”). The Financial Statements have been
prepared on a going concern basis.
The preparation of the Financial Statements
requires management to make judgements and estimates that affect
the application of policies and reported amounts of assets,
liabilities, income and expenses. The most critical estimates and
judgements relate to the determination of carrying value of
investments at fair value through profit and loss (“FVTPL”). 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 Half-yearly Financial Report.
2. Accounting policies
Fixed asset investments
The Company’s business is investing in financial
assets with a view to profiting from their total return in the form
of income and capital growth. This portfolio of financial assets is
managed and its performance evaluated on a fair value basis, in
accordance with a documented investment policy, and information
about the portfolio is provided internally on that basis to the
Board.
In accordance with the requirements of FRS 102,
those undertakings in which the Company holds more than 20 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 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 not an active market, are valued using
an appropriate valuation technique in accordance with the IPEV
Guidelines. Indicators of fair value are derived using established
methodologies including earnings multiples, the level of third
party offers received, cost or price of recent investment rounds,
net assets and industry valuation benchmarks. Where price of recent
investment is used as a starting point for estimating fair value at
subsequent measurement dates, this has been benchmarked using an
appropriate valuation technique permitted by the IPEV
guidelines.
• In situations where cost or price of
recent investment is used, consideration is given to the
circumstances of the portfolio company since that date in
determining fair value. This includes consideration of whether
there is any evidence of deterioration or strong definable evidence
of an increase in value. In the absence of these indicators, 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:
o the performance and/or prospects of the
underlying business are significantly below the expectations on
which the investment was based;
o 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
o 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 Income statement when a share
becomes ex-dividend.
Current assets and payables
Receivables (including debtors due after more
than one year), payables and cash are carried at amortised cost, in
accordance with FRS 102. Debtors due after more than one year meet
the definition of a financing transaction held at amortised cost,
and interest will be recognised through capital over the credit
period using the effective interest method. There are no financial
liabilities other than payables.
Gains and losses on
investments
Gains and losses arising from changes in the
fair value of the investments are included in the Income statement
for the period as a capital item and allocated to the unrealised
capital reserve.
Investment income
Equity income
Dividend income is included in revenue when the
investment is quoted ex-dividend.
Unquoted loan stock
Fixed returns on non-equity shares and debt
securities are recognised when the Company’s right to receive
payment and expect settlement is established. Where interest is
rolled up and/or payable at redemption then it is recognised as
income unless there is reasonable doubt as to its receipt.
Bank interest income
Interest income is recognised on an accruals
basis using the rate of interest agreed with the bank.
Investment management fee, performance
incentive fee and other expenses
All expenses have been accounted for on an
accruals basis. Expenses are charged through the other
distributable reserve except the following which are charged
through the realised capital reserve:
- 75 per cent. of management fees and performance incentive fees
are allocated to the realised capital reserve. This is in line with
the Board’s expectation that over the long term 75 per cent. of the
Company’s investment returns will be in the form of capital gains;
and
- expenses which are incidental to the purchase or disposal of an
investment are charged through the realised capital reserve.
Taxation
Taxation is applied on a current basis in
accordance with FRS 102. Current tax is tax payable (refundable) in
respect of the taxable profit (tax loss) for the current period or
past reporting periods using the tax rates and laws that have been
enacted or substantively enacted at the financial reporting date.
Taxation associated with capital expenses is applied in accordance
with the SORP.
Deferred tax is provided in full on all timing
differences at the reporting date. Timing differences are
differences between taxable profits and total comprehensive income
as stated in the Financial Statements that arise from the inclusion
of income and expenses in tax assessments in periods different from
those in which they are recognised in the financial statements. As
a VCT the Company has an exemption from tax on capital gains. The
Company intends to continue meeting the conditions required to
obtain approval as a VCT in the foreseeable future. The Company
therefore should have no material deferred tax timing differences
arising in respect of the revaluation or disposal of investments
and the Company has not provided for any deferred tax.
Share capital and reserves
Called-up share capital
This reserve accounts for the nominal value of
the shares.
Share premium
This reserve accounts for the difference between
the price paid for shares and the nominal value of the shares, less
issue costs and transfers to the other distributable reserve.
Capital redemption reserve
This reserve accounts for amounts by which the
issued share capital is diminished through the repurchase and
cancellation of the Company’s own shares.
Unrealised capital reserve
Increases and decreases in the valuation of
investments held at the period end against cost are included in
this reserve.
Realised capital reserve
The following are disclosed in this reserve:
- gains and losses compared to cost on the realisation of
investments;
- expenses, together with the related taxation effect, charged in
accordance with the above policies; and
- dividends paid to equity holders.
Other distributable reserve
The special reserve, treasury share reserve and
the revenue reserve were combined in 2012 to form a single reserve
named other distributable reserve.
This reserve accounts for movements from the
revenue column of the Income statement, the payment of dividends,
the buy-back of shares and other non-capital realised
movements.
Dividends
Dividends by the Company are accounted for in
the period in which the dividend is paid or approved at the Annual
General Meeting.
Segmental reporting
The Directors are of the opinion that the
Company is engaged in a single operating segment of business, being
investment in smaller companies principally based in the UK.
3. Gains on
investments
|
Unaudited six months ended 30 September
2021 £’000 |
Unaudited
six months ended 30 September 2020 £’000 |
Audited
year ended 31 March 2021 £’000 |
Unrealised gains on fixed asset investments |
2,775 |
1,838 |
1,831 |
Realised
gains on fixed asset investments |
165 |
60 |
4,677 |
|
2,940 |
1,898 |
6,508 |
4. Investment
income
|
Unaudited six months ended
30 September 2021 £’000 |
Unaudited six months ended 30 September 2020 £’000 |
Audited year ended 31 March 2021 £’000 |
Loan
stock interest |
403 |
863 |
2,432 |
Dividend
income |
7 |
11 |
24 |
Bank
interest |
2 |
10 |
11 |
|
412 |
884 |
2,467 |
5. Investment
management fee
|
|
Unaudited six months ended 30 September
2021 £’000 |
|
Unaudited six months ended 30 September 2020 £’000 |
|
Audited year ended 31 March 2021 £’000 |
Investment management fee charged to revenue |
|
158 |
|
167 |
|
337 |
Investment management fee charged to capital |
|
472 |
|
501 |
|
1,010 |
|
|
630 |
|
668 |
|
1,347 |
Further details of the Management agreement
under which the investment management fee and any performance
incentive fee are paid are given in the Strategic report on pages
13 and 14 of the Annual Report and Financial Statements for the
year ended 31 March 2021.
During the period, services of a total value of
£630,000 in management fees and £28,000 in administration fees (30
September 2020: £668,000 in management fees and £27,000 in
administration fees; 31 March 2021: £1,347,000 in management fees
and £54,000 in administration fees), were purchased by the Company
from Albion Capital Group LLP. At the financial period end, the
amount due to Albion Capital Group LLP in respect of these services
disclosed within payables was £199,000 (30 September 2020:
£347,000; 31 March 2021: £359,000).
Albion Capital Group LLP is, from time to time,
eligible to receive arrangement fees and monitoring fees from
portfolio companies. During the period to 30 September 2021, fees
of £98,000 attributable to the investments of the Company were
received pursuant to these arrangements (30 September 2020:
£79,000; 31 March 2021: £193,000).
Albion Capital Group LLP, its partners and staff
hold a total of 1,000,404 shares in the Company as at 30 September
2021.
6. Dividends
|
Unaudited six months ended
30 September 2021 £’000 |
Unaudited six months ended 30 September 2020 £’000 |
Audited year ended 31 March 2021 £’000 |
First
interim and first special dividend of 16.83p per share paid on 30
July 2021 (31 July 2020: First interim dividend of 2.50p per
share) |
16,728 |
2,541 |
2,541 |
Second
interim dividend of 1.74p per share paid on 29 January 2021 |
- |
- |
1,745 |
Unclaimed
dividends |
(4) |
(11) |
(23) |
|
16,724 |
2,530 |
4,263 |
The Directors have declared a second interim
dividend for the year ending 31 March 2022 of 1.47 pence per share
(total approximately £1,500,000), payable on 31 January 2022 to
shareholders on the register on 7 January 2022.
The Directors have also declared a second
special dividend of 7.00 pence per share (total approximately
£7,141,000), which will be paid on 31 December 2021 to shareholders
on the register on 10 December 2021.
7. Basic and
diluted return per share
|
Unaudited six months ended
30 September 2021 |
Unaudited six months
ended 30 September 2020 |
Audited year ended
31 March 2021 |
|
Revenue |
Capital |
Revenue |
Capital |
Revenue |
Capital |
Return attributable to equity shares (£’000) |
50 |
2,479 |
436 |
1,492 |
1,468 |
5,690 |
Weighted
average shares in issue (adjusted for treasury shares) |
100,483,335 |
101,213,085 |
100,836,952 |
Return
attributable per equity share (pence) |
0.05 |
2.47 |
0.43 |
1.48 |
1.46 |
5.64 |
The weighted average number of shares is
calculated after adjusting for treasury shares of 17,153,431 (30
September 2020: 15,519,396; 31 March 2021: 17,153,431).
There are no convertible instruments,
derivatives or contingent share agreements in issue so basic and
diluted return per share are the same.
8. Called-up
share capital
Allotted, called-up and fully paid shares of 1 penny
each |
Unaudited 30 September 2021 |
Unaudited 30 September 2020 |
Audited 31 March 2021 |
Number of
shares |
119,164,991 |
116,220,062 |
116,549,525 |
Nominal
value of allotted shares (£’000) |
1,192 |
1,162 |
1,165 |
Voting
rights (number of shares net of treasury shares) |
102,011,560 |
100,700,666 |
99,396,094 |
|
|
|
|
During the period to 30 September 2021 the
Company purchased 1,743,454 Ordinary shares (nominal value of
£17,435) to be cancelled (30 September 2020: 1,435,365 shares for
treasury; 31 March 2021: 3,069,400 shares for treasury) at a cost
of £943,000 (30 September 2020: £931,000; 31 March 2021:
£2,043,000) representing 1.5 per cent. of the shares in issue as at
30 September 2021.
The total number of Ordinary shares held in
treasury as at 30 September 2021 was 17,153,431 (30 September 2020:
15,519,396; 31 March 2021: 17,153,431) representing 14.4 per cent.
of the share capital as at 30 September 2021.
Under the terms of the Dividend Reinvestment
Scheme Circular dated 10 July 2008, the following new Ordinary
shares of nominal value 1 penny per share were allotted during the
period:
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 July
2021 |
4,358,920 |
44 |
56.30 |
2,437 |
53.50 |
|
|
|
|
|
|
9.
Commitments and
contingencies
As at 30 September 2021, the Company had no
financial commitments (30 September 2020 and 31 March 2021:
£nil).
There are no contingencies or guarantees of the
Company as at 30 September 2021 (30 September 2020 and 31 March
2021: £nil).
10. Post
balance sheet events
Since 30 September 2021 the Company has had the
following material post balance sheet events:
• Investment of £669,000 in an existing
portfolio company, Elliptic Enterprises Limited.
11.
Related party
transactions
Other than transactions with the Manager as
described in note 5, there are no other related party
transactions.
12.
Going
concern
The Board has conducted a detailed assessment of
the Company’s ability to meet its liabilities as they fall due.
Cash flow forecasts are updated and discussed quarterly at Board
level and have been stress tested to allow for the forecasted
impact of Coronavirus (Covid-19). The Board has revisited and
updated their assessment of liquidity risk and concluded that it
remains unchanged since the last Annual Report and Financial
Statements. Further details can be found on page 67 of those
accounts.
The portfolio of investments is diversified in
terms of sector and the major cash outflows of the Company (namely
investments, dividends and share buy-backs) are within the
Company’s control. Accordingly, after making diligent enquiries,
the Directors have a reasonable expectation that the Company has
adequate cash and liquid resources to continue in operational
existence for the foreseeable future. For this reason, the
Directors have adopted the going concern basis in preparing this
Half-yearly Financial Report and this is in accordance with the
Guidance on Risk Management, Internal Control and Related Financial
and Business Reporting issued by the Financial Reporting Council in
September 2014, and the subsequent updated Going concern, risk and
viability guidance issued by the FRC due to Covid-19 in 2020.
13. Other
information
The information set out in this Half-yearly
Financial Report does not constitute the Company’s statutory
accounts within the terms of section 434 of the Companies Act 2006
for the periods ended 30 September 2021 and 30 September 2020 and
is unaudited. The information for the year ended 31 March 2021 does
not constitute statutory accounts within the terms of section 434
of the Companies Act 2006 but is derived from the audited statutory
accounts for the financial year, which have been delivered to the
Registrar of Companies. The Auditor reported on those accounts;
their report was unqualified and did not contain a statement under
s498 (2) or (3) of the Companies Act 2006.
14. Publication
This Half-yearly Financial Report is being sent
to shareholders and copies will be made available to the public at
the registered office of the Company, Companies House, the National
Storage Mechanism and also electronically at
www.albion.capital/funds/AAVC, where the Report can be accessed as
a PDF document in the ‘Financial Reports and Circulars’
section.
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