Albion Development VCT PLC: Half-Yearly Financial Report
Albion Development VCT PLC
LEI Code 213800FDDMBD9QLHLB38
As required by the UK Listing Authority's
Disclosure Guidance and Transparency Rule 4.2, Albion Development
VCT PLC today makes public its information relating to the
Half-yearly Financial Report (which is unaudited) for the six
months to 30 June 2023. This announcement was approved by the Board
of Directors on 19 September 2023.
The full Half-yearly Financial Report (which is
unaudited) for the period to 30 June 2023 will shortly be sent to
shareholders and will be available on the Albion Capital Group LLP
website by clicking
www.albion.capital/funds/AADV/30Jun2023.pdf.
Investment policy
The Company will invest in a broad portfolio of
higher growth businesses with a stronger focus on technology
companies across a variety of sectors of the UK economy. Allocation
of assets will be determined by the investment opportunities which
become available but efforts will be made to ensure that the
portfolio is diversified in terms of sector and stage of maturity
of company.
Funds held pending investment or for liquidity
purposes will be held as cash on deposit or up to 8% of its assets,
at the time of investment, in liquid open-ended equity funds
providing income and capital equity exposure (where it is
considered economic to do so).
Risk diversification and maximum
exposures
Risk is spread by investing in a number of
different businesses within venture capital trust qualifying
industry sectors using a mixture of securities. The maximum amount
which the Company will invest in a single portfolio company is 15%
of the Company's assets at cost thus ensuring a spread of
investment risk. The value of an individual investment may increase
over time as a result of trading progress and it is possible that
it may grow in value to a point where it represents a significantly
higher proportion of total assets prior to a realisation
opportunity being available.
The Company's maximum exposure in relation to
gearing is restricted to 10% of the adjusted share capital and
reserves.
Financial calendar
8 September
2023 |
Record date
for second dividend |
29 September
2023 |
Payment of
second dividend |
31
December |
Financial
year end |
Financial
summary
Ordinary shares |
Unaudited six months ended 30 June
2023 (pence per share) |
Unaudited six months ended 30 June 2022 (pence per share) |
Audited year ended 31 December 2022 (pence per share) |
Opening net asset value |
88.65 |
94.98 |
94.98 |
Capital return/(loss) |
4.89 |
0.69 |
(2.36) |
Revenue return |
0.26 |
0.26 |
0.49 |
Total return/(loss) |
5.15 |
0.95 |
(1.87) |
Dividends paid |
(2.22) |
(2.37) |
(4.71) |
Impact of share capital movements |
0.17 |
(0.01) |
0.25 |
Net asset value |
91.75 |
93.55 |
88.65 |
Total dividends paid to 30 June 2023 |
115.79 |
Net asset value as at 30 June 2023 |
91.75 |
Total shareholder value to 30 June 2023 |
207.54 |
The financial summary above is for the Company,
Albion Development VCT PLC Ordinary shares only. Details of the
financial performance of the C shares and D shares, which have been
merged into the Ordinary shares, can be found at
www.albion.capital/funds/AADV under the ‘Financial summary for
previous funds’ section.
A more detailed breakdown of the dividends paid
per year can be found at www.albion.capital/funds/AADV under the
‘Dividend History’ section.
In addition to the dividends summarised
above, the Board has declared a second dividend for the year ending
31 December 2023, of 2.29 pence per Ordinary share to be paid on 29
September 2023 to shareholders on the register on 8 September
2023.
Interim management report
Introduction
In the six months to 30 June 2023, the Company
generated a positive total return of 5.15 pence per share,
representing a 5.8% return on opening net asset value (“NAV”).
During the period, the Company continued to face a difficult
macroeconomic and geopolitical backdrop, including persistent high
levels of inflation, rising interest rates and volatility of quoted
technology companies. Despite this, the Board is encouraged by the
positive total return generated by the Company and optimistic that
many of the portfolio companies will continue to grow.
Valuations and results
The total gain on investments for the period to
30 June 2023 was £7.7 million (30 June 2022: £1.9 million; 31
December 2022: loss of £0.6 million). The key movement to the total
gain was Quantexa increasing its value by £10.0 million following
an externally led $129 million Series E fundraising, which
completed in April 2023. The latest funding round made it the first
“Unicorn” of 2023 (a private company valuation over $1 billion) and
the Board are excited about its future prospects.
Other gains in the period included Radnor House
School and Ophelos, which resulted in a combined uplift of £0.9
million. These gains were partially offset by write downs with the
most significant being in Black Swan Data which decreased by £1.7
million.
The NAV per share has increased to 91.75 pence
per share (30 June 2022: 93.55 pence per share; 31 December 2022:
88.65 pence per share).
Our top 3 portfolio companies now account for
33.8% of the Company’s NAV (30 June 2022: 26.6%; 31 December 2022:
27.6%). Further details of the portfolio of investments can be
found below.
Dividends
In line with our variable dividend policy
targeting 5% of NAV per annum, the Company paid a dividend of 2.22
pence per share during the period to 30 June 2023 (30 June 2022:
2.37 pence per share). The Company will pay a second dividend for
the financial year ending 31 December 2023 of 2.29 pence per share
on 29 September 2023 to shareholders on the register on 8 September
2023, being 2.5% of this 30 June 2023 NAV.
This will bring the total dividends paid for the
year ending 31 December 2023 to 4.51 pence per share, which equates
to a 5.1% yield on the opening NAV of 88.65 pence per share.
Investment activity
Given the economic uncertainty of high inflation
and rising interest rates, in addition to the 15 new investments
the Company made in 2022, the first half of 2023 has been more
subdued in terms of new investment activity. During the period the
Company has invested £0.6 million into existing portfolio companies
to help support them as they continue to grow, including £0.4
million into Proveca and £0.1 million into Seldon Technologies.
Investment activity has started to increase
after the period end, with £1.6 million invested into new and
follow on investments since 30 June 2023.
The chart at the end of this announcement
illustrates the composition of the portfolio by industry sector as
at 30 June 2023.
Share buy-backs
It remains the Board’s primary objective to
maintain sufficient resources for investment in existing and new
portfolio companies and for the continued payment of dividends to
shareholders. The Board’s policy is to buy back shares in the
market, subject to the overall constraint that such purchases are
in the Company’s interest.
It is the Board’s intention for such buy-backs
to be in the region of a 5% discount to net asset value, as far as
market conditions and liquidity permit.
Risks and uncertainties
The Company faces a number of significant risks
including rising interest rates, high levels of inflation, the
ongoing impact of geopolitical tensions, and an expected period of
economic stagnation, or even recession in the UK. The concentration
risk to the technology sector, is noted as technology company
valuations have become more volatile in the current economic
climate. Overall investment risk is mitigated through a variety of
processes. The Manager is continually assessing the exposure to
these risks for each portfolio company and appropriate actions,
where possible, are being implemented.
In accordance with the Disclosure Guidance and
Transparency Rules (“DTR”), 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 December 2022. There is heightened
uncertainty, but this has not changed the nature of the principal
risks. The Board considers that the present processes for
mitigating those risks remain appropriate.
The principal risks faced by the Company
are:
• Investment,
performance, technology and valuation risk;
• VCT approval
risk;
• Regulatory and
compliance risk;
• Operation and
internal control risk;
• Cyber and data
security risk;
• Economic,
political and social risk;
• Liquidity risk;
and
• Environmental,
social and governance (“ESG”) risk.
A detailed analysis of the principal risks and
uncertainties facing the business can be found in the Annual Report
and Financial Statements for the year ended 31 December 2022 on
pages 23 to 25, copies of which are available on the Company’s
webpage on the Manager’s website at
www.albion.capital/funds/AADV under the ‘Financial Reports and
Circulars’ section.
Transactions with the
Manager
Details of transactions with the Manager for the
reporting period can be found in note 5. Details of related party
transactions can be found in note 11.
Albion VCTs Top Up Offers
The 2022/23 Offers were fully subscribed and
closed having raised £13 million for the Company. The Board was
pleased to see the high level of demand for the Company’s shares
from existing and new shareholders.
The proceeds are being used to provide support
to our existing portfolio companies and to enable us to take
advantage of new investment opportunities as they arise. Details on
the share allotments during the period can be found in note 8.
Shareholder seminar
The Board is pleased to report that the Manager,
Albion Capital, is to host a physical shareholder seminar this year
on 15 November 2023, at the Royal College of Surgeons, Lincoln’s
Inn Fields, London. The Board considers this an important
interactive event and invites shareholders to attend. To reserve a
place, please email info@albion.capital.
Move to electronic
communications
The Board wishes to minimise the environmental
impact of how the Company communicates with its shareholders. With
this in mind, those shareholders that continue to receive physical
copies of the Annual Report and other documentation, will receive a
letter alongside this Half-yearly Financial Report explaining the
forthcoming move to electronic communications.
Prospects
Although there remains many uncertainties facing
the Company, with the high levels of inflation, elevated interest
rates and geopolitical tensions, the results for the period
demonstrate the resilience of our portfolio during these
challenging times. The portfolio remains well diversified, with
companies at different stages of maturity and across a variety of
different sectors, many of which have minimal exposure to consumer
expenditure. We remain confident that the Company will continue to
provide positive results to its shareholders over the
long-term.
Ben Larkin
Chairman
19 September 2023
Portfolio of
investments
|
|
As at 30 June 2023 |
|
Fixed asset investments |
% voting rights |
Cost £’000 |
Cumulative movement in value
£’000 |
Value £’000 |
Change in value for the period*
£’000 |
Quantexa |
2.1 |
2,101 |
22,857 |
24,958 |
10,046 |
Egress Software Technologies |
6.9 |
2,332 |
6,517 |
8,849 |
(174) |
Proveca |
11.8 |
2,244 |
5,957 |
8,201 |
165 |
Oviva |
2.8 |
2,601 |
1,179 |
3,780 |
(375) |
Radnor House School (TopCo) |
8.5 |
1,560 |
1,943 |
3,503 |
484 |
The Evewell Group |
5.8 |
1,407 |
1,454 |
2,861 |
21 |
Healios |
3.3 |
1,977 |
522 |
2,499 |
- |
Chonais River Hydro |
4.6 |
1,705 |
714 |
2,419 |
86 |
The Street by Street Solar Programme |
12.4 |
1,291 |
952 |
2,243 |
(132) |
Convertr Media |
6.2 |
992 |
913 |
1,905 |
(35) |
Regenerco Renewable Energy |
11.9 |
1,204 |
606 |
1,810 |
(176) |
Threadneedle Software Holdings (T/A Solidatus) |
2.0 |
1,209 |
488 |
1,697 |
(248) |
Panaseer |
3.1 |
1,122 |
532 |
1,654 |
(283) |
Cantab Research (T/A Speechmatics) |
1.6 |
1,337 |
235 |
1,572 |
(188) |
Runa Network |
1.9 |
1,259 |
285 |
1,544 |
- |
Peppy Health |
1.6 |
1,424 |
- |
1,424 |
- |
Toqio FinTech Holdings |
1.9 |
1,369 |
- |
1,369 |
- |
Aridhia Informatics |
5.8 |
1,129 |
88 |
1,217 |
(183) |
Gravitee TopCo |
2.2 |
923 |
236 |
1,159 |
- |
TransFICC |
1.8 |
891 |
196 |
1,087 |
- |
InCrowd Sports |
4.1 |
642 |
433 |
1,075 |
165 |
Alto Prodotto Wind |
9.4 |
590 |
425 |
1,015 |
46 |
Seldon Technologies |
2.9 |
1,002 |
- |
1,002 |
- |
Elliptic Enterprises |
0.7 |
984 |
- |
984 |
- |
PeakData |
2.1 |
922 |
54 |
976 |
(15) |
Ophelos |
2.0 |
527 |
441 |
968 |
441 |
Beddlestead |
8.6 |
1,026 |
(121) |
905 |
(38) |
NuvoAir Holdings |
1.4 |
570 |
234 |
804 |
(41) |
GX Molecular (T/A CS Genetics) |
2.5 |
741 |
- |
741 |
- |
Cisiv |
5.3 |
686 |
29 |
715 |
307 |
OutThink |
2.4 |
610 |
- |
610 |
- |
Locum's Nest |
5.6 |
663 |
(57) |
606 |
(358) |
Perchpeek |
1.9 |
597 |
- |
597 |
- |
Accelex Technology |
2.0 |
361 |
195 |
556 |
195 |
Diffblue |
2.2 |
509 |
- |
509 |
- |
The Q Garden Company |
16.6 |
466 |
32 |
498 |
- |
PetsApp |
2.3 |
425 |
- |
425 |
- |
Koru Kids |
1.8 |
573 |
(160) |
413 |
(69) |
AVESI |
10.5 |
340 |
70 |
410 |
(44) |
Imandra |
1.8 |
236 |
112 |
348 |
(16) |
Arecor Therapeutics PLC |
0.5 |
190 |
157 |
347 |
(12) |
5Mins AI |
1.9 |
340 |
- |
340 |
- |
Dragon Hydro |
5.5 |
187 |
133 |
320 |
13 |
Brytlyt |
2.0 |
416 |
(98) |
318 |
(98) |
Neurofenix |
2.6 |
523 |
(296) |
227 |
(296) |
Ramp Software |
1.8 |
267 |
- |
267 |
- |
uMedeor (T/A uMed) |
1.2 |
192 |
68 |
260 |
66 |
MHS 1 |
3.3 |
231 |
14 |
245 |
- |
Tem Energy |
1.6 |
212 |
- |
212 |
- |
Greenenerco |
4.0 |
96 |
75 |
171 |
9 |
DySIS Medical |
1.0 |
1,038 |
(869) |
169 |
12 |
Regulatory Genome Development |
0.8 |
125 |
42 |
167 |
42 |
Premier Leisure (Suffolk) |
- |
109 |
21 |
130 |
- |
Erin Solar |
4.3 |
120 |
3 |
123 |
- |
Mirada Medical |
2.7 |
909 |
(806) |
103 |
- |
Symetrica |
0.3 |
102 |
(6) |
96 |
12 |
Infact Systems |
1.8 |
91 |
- |
91 |
- |
Black Swan Data |
6.3 |
3,307 |
(3,257) |
50 |
(1,660) |
uMotif |
3.1 |
941 |
(940) |
1 |
(93) |
Limitless Technology |
2.4 |
648 |
(648) |
- |
(326) |
Elements Software |
0.6 |
3 |
(3) |
- |
- |
Total fixed asset investments |
52,594 |
40,951 |
93,545 |
7,250 |
* As adjusted for additions and
disposals during the year; including realised gains/(losses).
Investment realisations in the period to 30 June
2023 |
Cost £’000 |
Opening value £’000 |
Disposal proceeds £’000 |
Total realised gain/(loss)
£’000 |
Gain/(loss) on opening value
£’000 |
Disposals: |
|
|
|
|
|
Zift Channel Solutions |
885 |
326 |
468 |
(417) |
142 |
Arecor Therapeutics PLC |
104 |
196 |
203 |
99 |
7 |
Oxsensis |
439 |
10 |
11 |
(428) |
1 |
Forward Clinical (T/A Pando) |
219 |
- |
- |
(219) |
- |
Loan stock repayments and other: |
|
|
|
|
|
Alto Prodotto Wind |
28 |
42 |
42 |
14 |
- |
Greenenerco |
4 |
6 |
6 |
2 |
- |
Escrow adjustments* |
- |
- |
74 |
74 |
74 |
Total |
1,679 |
580 |
804 |
(875) |
224 |
* These comprise fair value movements on deferred
consideration on previously disposed investments
|
|
|
£’000 |
Total change in value of investments for the year |
|
|
7,250 |
Movement in accrued loan stock interest |
|
|
33 |
Unrealised gains on fixed asset investments
sub-total |
|
|
7,283 |
Realised gains in the current period |
|
|
224 |
Unwind of discount on deferred consideration |
|
|
168 |
Total gains on investments as per Income
statement |
|
|
7,675 |
Responsibility statement
The Directors, Ben Larkin, Lyn Goleby, Lord O’
Shaughnessy and Patrick Reeve, are responsible for the preparation
of the Half-yearly Financial Report. In preparing these condensed
Financial Statements for the period to 30 June 2023 we, the
Directors of the Company, confirm that to the best of our
knowledge:
(a) the condensed set of Financial Statements,
which has been prepared in accordance with Financial Reporting
Standard 104 “Interim Financial Reporting”, 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
Ben Larkin
Chairman
19 September 2023
Condensed income statement
|
|
Unaudited six months ended
30 June 2023 |
Unaudited six months ended 30 June 2022 |
Audited year ended 31 December 2022 |
|
Note |
Revenue £’000 |
Capital £’000 |
Total £’000 |
Revenue £’000 |
Capital £’000 |
Total £’000 |
Revenue £’000 |
Capital £’000 |
Total £’000 |
|
|
|
|
|
|
|
|
|
|
|
Gains/(losses) on investments |
3 |
- |
7,675 |
7,675 |
- |
1,880 |
1,880 |
- |
(636) |
(636) |
Investment income |
4 |
684 |
- |
684 |
591 |
- |
591 |
1,194 |
- |
1,194 |
Investment Manager’s fees |
5 |
(133) |
(1,201) |
(1,334) |
(120) |
(1,079) |
(1,199) |
(245) |
(2,207) |
(2,452) |
Other expenses |
|
(201) |
- |
(201) |
(168) |
- |
(168) |
(358) |
- |
(358) |
Profit/(loss) on ordinary activities before
tax |
|
350 |
6,474 |
6,824 |
303 |
801 |
1,104 |
591 |
(2,843) |
(2,252) |
Tax charge on ordinary activities |
|
- |
- |
- |
- |
- |
- |
- |
- |
- |
Profit/(loss) and total comprehensive income attributable
to shareholders |
|
350 |
6,474 |
6,824 |
303 |
801 |
1,104 |
591 |
(2,843) |
(2,252) |
Basic and diluted return/(loss) per share
(pence)* |
7 |
0.26 |
4.89 |
5.15 |
0.26 |
0.69 |
0.95 |
0.49 |
(2.36) |
(1.87) |
* adjusted for treasury shares
The accompanying notes below form an integral
part of this Half-yearly Financial Report.
Comparative figures have been extracted from the
unaudited Half-yearly Financial Report for the six months ended 30
June 2022 and the audited statutory accounts for the year ended 31
December 2022.
The 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 June 2023
£’000 |
Unaudited 30 June 2022 £’000 |
Audited 31 December 2022 £’000 |
|
|
|
|
|
Fixed asset investments |
|
93,545 |
80,152 |
86,286 |
|
|
|
|
|
Current assets |
|
|
|
|
Trade and other receivables |
|
2,531 |
2,604 |
2,403 |
Cash in bank and at hand |
|
29,273 |
33,776 |
26,491 |
|
|
31,804 |
36,380 |
28,894 |
|
|
|
|
|
Payables: amounts falling due within one year |
|
|
|
|
Trade and other payables |
|
(958) |
(933) |
(722) |
|
|
|
|
|
Net current assets |
|
30,846 |
35,447 |
28,172 |
|
|
|
|
|
Total assets less current liabilities |
|
124,391 |
115,599 |
114,458 |
|
|
|
|
|
Equity attributable to equity holders |
|
|
|
|
Called-up share capital |
8 |
1,536 |
1,388 |
1,456 |
Share premium |
|
34,277 |
20,772 |
26,837 |
Unrealised capital reserve |
|
40,897 |
33,434 |
32,516 |
Realised capital reserve |
|
6,125 |
10,759 |
8,032 |
Other distributable reserve |
|
41,556 |
49,246 |
45,617 |
Total equity shareholders’ funds |
|
124,391 |
115,599 |
114,458 |
|
|
|
|
|
Basic and diluted net asset value per share
(pence)* |
|
91.75 |
93.55 |
88.65 |
*excluding treasury shares
The accompanying notes below form an integral
part of this Half-yearly Financial Report.
Comparative figures have been extracted from the
unaudited Half-yearly Financial Report for the six months ended 30
June 2022 and the audited statutory accounts for the year ended 31
December 2022.
These Financial Statements were approved by the
Board of Directors and authorised for issue on 19 September 2023,
and were signed on its behalf by
Ben Larkin
Chairman
Company number: 03654040
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 |
As at 1 January 2023 |
1,456 |
26,837 |
- |
32,516 |
8,032 |
45,617 |
114,458 |
Profit/(loss) and total comprehensive income for the period |
- |
- |
- |
7,283 |
(809) |
350 |
6,824 |
Transfer of previously unrealised losses on disposal of
investments |
- |
- |
- |
1,098 |
(1,098) |
- |
- |
Purchase of shares for treasury |
- |
- |
- |
- |
- |
(1,399) |
(1,399) |
Issue of equity |
80 |
7,639 |
- |
- |
- |
- |
7,719 |
Cost of issue of equity |
- |
(199) |
- |
- |
- |
- |
(199) |
Dividends paid |
- |
- |
- |
- |
- |
(3,012) |
(3,012) |
As at 30 June 2023 |
1,536 |
34,277 |
- |
40,897 |
6,125 |
41,556 |
124,391 |
As at 1 January 2022 |
1,167 |
- |
- |
36,048 |
7,344 |
53,080 |
97,639 |
Profit/(loss) and total comprehensive income for the period |
- |
- |
- |
(885) |
1,686 |
303 |
1,104 |
Transfer of previously unrealised gains on disposal of
investments |
- |
- |
- |
(1,729) |
1,729 |
- |
- |
Purchase of shares for treasury |
- |
- |
- |
- |
- |
(1,212) |
(1,212) |
Issue of equity |
221 |
21,297 |
- |
- |
- |
- |
21,518 |
Cost of issue of equity |
- |
(525) |
- |
- |
- |
- |
(525) |
Dividends paid |
- |
- |
- |
- |
- |
(2,925) |
(2,925) |
As at 30 June 2022 |
1,388 |
20,772 |
- |
33,434 |
10,759 |
49,246 |
115,599 |
As at 1 January 2022 |
1,167 |
- |
- |
36,048 |
7,344 |
53,080 |
97,639 |
Profit/(loss) and total comprehensive income for the year |
- |
- |
- |
(3,258) |
415 |
591 |
(2,252) |
Transfer of previously unrealised gains on disposal of
investments |
- |
- |
- |
(273) |
273 |
- |
- |
Purchase of shares for treasury |
- |
- |
- |
- |
- |
(2,244) |
(2,244) |
Issue of equity |
288 |
27,509 |
- |
- |
- |
- |
27,797 |
Cost of issue of equity |
- |
(672) |
- |
- |
- |
- |
(672) |
Dividends paid |
- |
- |
- |
- |
- |
(5,810) |
(5,810) |
As at 31 December 2022 |
1,456 |
26,837 |
- |
32,516 |
8,032 |
45,617 |
114,458 |
*Included within these reserves is an amount of
£26,789,000 (30 June 2022: £31,131,000; 31 December 2022:
£24,619,000) which is considered distributable. Over the next two
years an additional £18,627,000 will become distributable. This is
due to the HMRC requirement that the Company cannot use capital
raised in the past three years to make a payment or distribution to
shareholders.
Condensed statement of cash
flows
|
Unaudited six months ended
30 June 2023 £’000 |
Unaudited six months ended 30 June 2022 £’000 |
Audited year ended 31 December 2022 £’000 |
Cash flow from operating activities |
|
|
|
Loan stock income received |
452 |
586 |
996 |
Dividend income received |
5 |
78 |
133 |
Income from fixed term funds received |
95 |
9 |
59 |
Deposit interest received |
131 |
9 |
47 |
Investment Manager’s fees paid |
(1,247) |
(2,916) |
(4,216) |
Other cash payments |
(220) |
(213) |
(338) |
Corporation tax paid |
- |
- |
- |
Net cash flow generated from operating
activities |
(784) |
(2,447) |
(3,319) |
|
|
|
|
Cash flow from investing activities |
|
|
|
Purchase of fixed asset investments |
(589) |
(5,136) |
(14,235) |
Disposal of fixed asset investments |
887 |
7,265 |
7,946 |
Net cash flow generated from investing
activities |
298 |
2,129 |
(6,289) |
|
|
|
|
Cash flow from financing activities |
|
|
|
Issue of share capital |
7,043 |
20,491 |
26,132 |
Cost of issue of shares |
(19) |
- |
(36) |
Equity dividends paid* |
(2,508) |
(2,405) |
(4,785) |
Purchase of own shares (including costs) |
(1,248) |
(1,024) |
(2,244) |
Net cash flow generated from financing
activities |
3,268 |
17,062 |
19,067 |
|
|
|
|
Increase in cash in bank and at hand |
2,782 |
16,744 |
9,459 |
Cash in bank and at hand at start of period |
26,491 |
17,032 |
17,032 |
Cash in bank and at hand at end of period |
29,273 |
33,776 |
26,491 |
*The equity dividends paid shown in the cash
flow are different to the dividends disclosed in note 6 as a result
of the non-cash effect of the Dividend Reinvestment Scheme.
Notes to the condensed Financial
Statements
1. Basis of 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.
The preparation of the Financial Statements
requires management to make judgements and estimates that affect
the application of policies and reported amounts of assets,
liabilities, income and expenses. The most critical estimates and
judgements relate to the determination of carrying value of
investments at Fair Value Through Profit and Loss (“FVTPL”) in
accordance with FRS 102 sections 11 and 12. The Company values
investments by following the International Private Equity and
Venture Capital Valuation (“IPEV”) Guidelines as updated in 2022
and further detail on the valuation techniques used are outlined in
note 2 below.
Company information can be found on page 4 of
the full 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% 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, revenue
multiples, the level of third party offers received, cost or price
of recent investment rounds, net assets, and industry valuation
benchmarks. Where price of recent investment is used as a starting
point for estimating fair value at subsequent measurement dates,
this has been benchmarked using an appropriate valuation technique
permitted by the IPEV guidelines.
- In situations where cost or price of recent investment is used,
consideration is given to the circumstances of the portfolio
company since that date in determining fair value. This includes
consideration of whether there is any evidence of deterioration or
strong definable evidence of an increase in value. In the absence
of these indicators, other valuation techniques are employed to
conclude on the fair value as at the measurement date. Examples of
events or changes that could indicate a diminution include:
- the performance and/or prospects of the underlying business are
significantly below the expectations on which the investment was
based;
- a significant adverse change either in the portfolio company’s
business or in the technological, market, economic, legal or
regulatory environment in which the business operates; or
- market conditions have deteriorated, which may be indicated by
a fall in the share prices of quoted businesses operating in the
same or related sectors.
Investments are recognised as financial assets
on legal completion of the investment contract and are
de-recognised on legal completion of the sale of an investment.
Dividend income is not recognised as part of the
fair value movement of an investment, but is recognised separately
as investment income through the other distributable reserve when a
share becomes ex-dividend.
Current assets and payables
Receivables (including debtors due after more
than one year), payables and cash are carried at amortised cost, in
accordance with FRS 102. Deferred consideration meets the
definition of a financing transaction held at amortised cost, and
interest will be recognised through capital over the credit period
using the effective interest method. There are no financial
liabilities other than payables.
Investment income
Dividend 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.
Fixed term funds income
Funds income is recognised on an accruals basis
using the agreed rate of interest.
Bank deposit 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:
- 90% of management fees and 100% of performance incentive fees,
if any, are allocated to the realised capital reserve; 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.
Reserves
Called-up share capital
This accounts for the nominal value of the
Company’s shares.
Share premium
This accounts for the difference between the
price paid for shares and the nominal value of those shares, less
issue costs and transfers to the other distributable reserves.
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 year end against cost are included in this
reserve.
Realised capital reserve
The following are disclosed in this reserve:
- gains and losses compared to cost on the realisation of
investments, or permanent diminutions in value (including gains
recognised on the realisation of investment where consideration is
deferred that are not distributable as a matter of law);
- finance income in respect of the unwinding of the discount on
deferred consideration that is not distributable as a matter of
law;
- expenses, together with the related taxation effect, charged in
accordance with the above policies; and
- dividends paid to equity holders where paid out by
capital.
Other distributable reserve
The special reserve, treasury share reserve and
the revenue reserve were combined in 2012 to form a single reserve
named other distributable reserve.
This reserve accounts for movements from the
revenue column of the Income statement, the payment of dividends,
the buy-back of shares, transfers from the share premium and
capital redemption reserve, and other non-capital realised
movements.
Dividends
Dividends by the Company are accounted for when
the liability to make the payment (record date) has been
established.
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/(losses)
on investments
|
Unaudited six months ended
30 June 2023 £’000 |
Unaudited six months ended 30 June 2022 £’000 |
Audited year ended 31 December 2022 £’000 |
Unrealised gains/(losses) on fixed asset investments |
7,283 |
(885) |
(3,258) |
Realised
gains on fixed asset investments |
224 |
2,621 |
2,322 |
Unwinding of
discount on deferred consideration |
168 |
144 |
300 |
|
7,675 |
1,880 |
(636) |
4. Investment
income
|
|
|
|
|
Unaudited six months ended
30 June 2023 £’000 |
Unaudited six months ended 30 June 2022 £’000 |
Audited year ended 31 December 2022 £’000 |
Loan stock interest |
420 |
474 |
916 |
Dividend
income |
37 |
100 |
172 |
Income
from fixed term funds |
95 |
9 |
59 |
Bank
interest |
132 |
8 |
47 |
|
684 |
591 |
1,194 |
|
|
|
|
5.
Investment
Manager’s fees |
Unaudited six months ended
30 June 2023 £’000 |
Unaudited six months ended 30 June 2022 £’000 |
Audited year ended 31 December 2022 £’000 |
Investment management fee charged to revenue |
133 |
120 |
245 |
Investment management fee charged to capital |
1,201 |
1,079 |
2,207 |
|
1,334 |
1,199 |
2,452 |
Further details of the Management agreement
under which the investment management fee and performance incentive
fee are paid are given in the Strategic report on page 18 of the
Annual Report and Financial Statements for the year ended 31
December 2022.
During the period, services to a total value of
£1,344,000 (30 June 2022: £1,199,000; 31 December 2022: £2,452,000)
were purchased by the Company from Albion Capital Group LLP
(“Albion”). At the financial period end, the amount due to Albion
in respect of these services was £690,000 (30 June 2022: £650,000;
31 December 2022: £618,000). The total annual running costs of the
Company are capped at an amount equal to 2.5% of the Company’s net
assets, with any excess being met by Albion by way of a reduction
in management fees. During the period, the management fee was
reduced by £10,000 as a result of this cap (30 June 2022: £nil; 31
December 2022: £41,000).
During the period, the Company was not charged
by Albion in respect of Patrick Reeve’s services as a Director (30
June 2022: £nil; 31 December 2022: £nil).
Albion, its Partners and staff (including
Patrick Reeve) hold 1,158,636 Ordinary shares in the Company as at
30 June 2023.
The Manager is, from time to time, eligible to
receive arrangement fees and monitoring fees from portfolio
companies. During the period ended 30 June 2023, fees of £65,000
attributable to the investments of the Company were paid pursuant
to these arrangements (30 June 2022: £108,000; 31 December 2022:
£257,000).
The Company has entered into an offer agreement
relating to the Offers with the Company’s investment manager
Albion, pursuant to which Albion will receive a fee of 2.5% of the
gross proceeds of the Offers and out of which Albion will pay the
costs of the Offers, as detailed in the Prospectus.
6. Dividends
|
Unaudited six months ended
30 June 2023 £’000 |
Unaudited six months ended 30 June 2022 £’000 |
Audited year ended 31 December 2022 £’000 |
First
dividend of 2.22p per share paid on 31 May 2023 (31 May 2022: 2.37p
per share) |
3,012 |
2,925 |
2,925 |
Second
dividend of 2.34p per share paid on 30 September 2022 |
- |
- |
2,892 |
Unclaimed
dividends |
- |
- |
(7) |
|
3,012 |
2,925 |
5,810 |
In addition to the dividends summarised above,
the Board has declared a second dividend for the year ending 31
December 2023 of 2.29 pence per share (total approximately
£3,105,000), payable on 29 September 2023 to shareholders on the
register on 8 September 2023.
7. Basic and
diluted return/(loss) per share
|
Unaudited six months ended
30 June 2023 |
Unaudited
six months ended 30 June 2022 |
Audited
year ended 31 December 2022 |
|
Revenue |
Capital |
Revenue |
Capital |
Revenue |
Capital |
Return/(loss) attributable to Ordinary shares (£’000) |
350 |
6,474 |
303 |
801 |
591 |
(2,843) |
Weighted
average shares in issue |
132,550,358 |
115,738,554 |
120,150,815 |
Return/(loss) per Ordinary share (pence) |
0.26 |
4.89 |
0.26 |
0.69 |
0.49 |
(2.36) |
The weighted average number of shares is
calculated after adjusting for treasury shares of 18,036,957 (30
June 2022: 15,282,637; 31 December 2022: 16,468,548).
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 Ordinary shares of 1
penny each |
Unaudited 30 June 2023 |
Unaudited 30 June 2022 |
Audited 31 December 2022 |
|
|
|
|
Number of
shares |
153,611,717 |
138,850,411 |
145,582,300 |
Nominal
value of allotted shares (£’000) |
1,536 |
1,388 |
1,456 |
Voting
rights (number of shares net of treasury shares) |
135,574,760 |
123,567,774 |
129,113,752 |
During the period to 30 June 2023 the Company
purchased 1,568,409 Ordinary shares (nominal value £15,684) for
treasury at a cost of £1,399,000. The total number of Ordinary
shares held in treasury as at 30 June 2023 was 18,036,957 (30 June
2022: 15,282,637; 31 December 2022: 16,468,548) representing 11.7%
of the Ordinary shares in issue as at 30 June 2023.
Under the terms of the Dividend Reinvestment
Scheme, the following new Ordinary shares of nominal value 1 penny
each, were allotted during the period to 30 June 2023:
Date of allotment |
Number of shares allotted |
Aggregate nominal value of shares (£’000) |
Issue price (pence per share) |
Net invested (£’000) |
Opening market price on allotment date (pence per
share) |
31 May 2023 |
536,739 |
5 |
92.70 |
478 |
88.50 |
Under the terms of the Albion VCTs Prospectus
Top Up Offers 2022/23, the following new Ordinary shares, of
nominal value 1 penny each, were allotted during the period to 30
June 2023:
Date of allotment |
Number of shares allotted |
Aggregate nominal value of shares (£’000) |
Issue price (pence per share) |
Net consideration received (£’000) |
Opening market price on allotment date (pence per
share) |
31 March
2023 |
7,134,319 |
71 |
96.40 |
6,706 |
89.50 |
14 April
2023 |
98,702 |
- |
95.40 |
93 |
89.50 |
14 April
2023 |
26,068 |
- |
95.90 |
24 |
89.50 |
14 April
2023 |
233,589 |
2 |
96.40 |
220 |
89.50 |
|
7,492,678 |
|
|
7,043 |
|
9. Commitments
and contingencies
As at 30 June 2023, the Company had no financial
commitments (30 June 2022: £nil; 31 December 2022: £nil).
There were no contingencies or guarantees of the
Company as at 30 June 2023 (30 June 2022: £nil; 31 December 2022:
£nil).
10. Post
balance sheet events
There
have been no material post balance sheet events since 30 June
2023.
11.
Related
party transactions
Other than transactions with the Manager as
disclosed in note 5, there are no other related party transactions
or balances requiring disclosure.
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 of the current economic climate and increasingly volatile
geopolitical backdrop. The Board have 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 88 of those accounts.
The portfolio of investments is diversified in
terms of sector and the major cash outflows of the Company (namely
investments, dividends and share buy-backs) are within the
Company’s control. Accordingly, after making diligent enquiries,
the Directors have a reasonable expectation that the Company has
adequate cash and liquid resources to continue in operational
existence for the foreseeable future. For this reason, the
Directors have adopted the going concern basis in preparing this
Half-yearly Financial Report and this is in accordance with the
Guidance on Risk Management, Internal Control and Related Financial
and Business Reporting issued by the Financial Reporting Council in
September 2014, and the subsequent updated Going concern, risk and
viability guidance issued by the FRC in 2021.
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 June 2023 and 30 June 2022 and is
unaudited. The information for the year ended 31 December 2022,
does not constitute statutory accounts within the terms of section
434 of the Companies Act 2006 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/AADV, where the Report can be accessed
from the ‘Financial Reports and Circulars’ section.
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