LEI Code 213800DK8H27QY3J5R45
As required by the
The full Half-yearly Financial Report (which is unaudited) for the period to
Investment policy
The Company will invest in a broad portfolio of higher growth businesses across a variety of sectors of the
Funds held pending investment or for liquidity purposes are held as cash on deposit or similar instruments with banks or other financial institutions with high credit ratings assigned by international credit rating agencies.
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 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.
The Company’s maximum exposure in relation to gearing is restricted to the amount equal to its adjusted capital and reserves.
Financial calendar
Record date for second interim dividend and special dividend | |
Payment date of second interim dividend and special dividend | |
Financial year end | 31 December |
Financial highlights
Unaudited six months ended 30 June 2021 | Unaudited six months ended | Audited year ended | ||||
(pence per share) | (pence per share) | (pence per share) | ||||
Opening net asset value | 21.84 | 22.02 | 22.02 | |||
Capital return/(loss) | 3.00 | (1.31) | 0.59 | |||
Revenue (loss)/return | (0.03) | 0.15 | 0.32 | |||
Total return/(loss) | 2.97 | (1.16) | 0.91 | |||
Dividends paid | (0.60) | (0.60) | (1.11) | |||
Impact from share capital movements | (0.22) | 0.04 | 0.02 | |||
Net asset value | 23.99 | 20.30 | 21.84 |
Shareholder return and shareholder value | (pence per share) |
Shareholder value from launch to | |
Subscription price per share at launch | 100.00 |
Total dividends paid to | 58.66 |
Decrease in net asset value | (83.40) |
Total shareholder value to | 75.26 |
Shareholder return from | |
Total dividends paid | 10.78 |
Increase in net asset value | 7.39 |
Total shareholder return from | 18.17 |
Shareholder value since launch: | |
Total dividends paid to | 69.44 |
Net asset value as at | 23.99 |
Total shareholder value as at | 93.43 |
The Directors have declared a second dividend of 0.60 pence per share for the year ending 31 December 2021, which will be paid on 29 October 2021 to shareholders on the register on 1 October 2021. The Board has also declared a special dividend of 1.14 pence per share, also payable on
The above financial summary is for the Company,
Interim management report
Introduction
The Company has had a strong six months to
Portfolio review
Total gain on investments for the six month period was £14.4 million (
There have been write-downs in our portfolio, the largest being Avora (£0.3 million) and
There have also been a number of successful exits during the period which generated proceeds of £19.8 million. The bulk of the exit proceeds came from the sale of the Company’s three care homes for the elderly; Active Lives Care, Ryefield Court Care, and Shinfield Lodge Care. The first investments in the homes were made over 5 years ago and the sale generated proceeds of £14.7 million which represents a 2.4x return on cost (including interest received), an excellent result for the Company. The homes were built from nothing (greenfield sites) into mature businesses. During the period, the Company also completed the sale of
Further details of the portfolio of investments and investment realisations can be found below.
Dividends and results
In line with our dividend policy targeting around 5% of NAV per annum the Company paid a dividend of
As a result of the significant disposals, in particular the care homes, made by the Company during the period the Board are pleased to declare a special dividend of
This will bring the total dividends paid for the year ending
Dividend Reinvestment Scheme (“DRIS”)
The Company continues to offer a DRIS whereby shareholders can elect to receive dividends in the form of new shares. For shareholders not currently in the DRIS, the Company is offering shareholders the option to elect for a one-off sign up to have this combined special dividend and second interim dividend reinvested into new shares through the DRIS. Shareholders can take advantage of this by emailing KAYchair@albion.capital before midday on
By re-investing the combined special dividend and second interim dividend in the capital of the Company, shareholders would be expected to broadly maintain the level of relative income they have been receiving from the Company under the variable dividend policy. 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/KAY under the Fund reports section.
Investment activity
During the period the Company has invested £5.0 million into new and existing portfolio companies, with new investments comprising:
- £0.9 million (Albion VCTs: £6.8 million) in
Threadneedle Software Holdings Limited (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; - £0.8 million (Albion VCTs: £3.9 million) in
Gravitee Topco Limited (trading as Gravitee.io), an API management platform; - £0.8 million (Albion VCTs: £3.6 million) in
NuvoAir AB , a provider of digital therapeutics and decentralised clinical trials for respiratory conditions; - £0.6 million (Albion VCTs: £2.4 million) in
Brytlyt Limited , a GPU database software provider; and - £0.3 million (Albion VCTs: £1.5 million) in
Accelex Technology Limited (trading as Accelex), a provider of data extraction and analytics technology for private capital markets.
A further £1.6 million was invested in existing portfolio companies, the largest being £0.6 million into uMotif, a patient engagement and data capture platform for use in real world and observational research, and £0.5 million into Healios to continue providing psychological care to children and adolescents using a family centric approach.
The pie chart at the end of this announcement illustrates the composition of the portfolio by industry sector as at
Cancellation of share premium and capital redemption reserve
Given the current amount of distributable reserves and the announcement of the special dividend to be paid on
It is the Board’s policy to pay regular dividends to shareholders as the Directors believe that this is a key source of shareholder value. The Company also has a policy of buying back its own shares for cancellation or for holding as treasury shares, when such purposes are considered to be to the advantage of the Company and shareholders as a whole. The additional distributable reserves will facilitate those objectives.
The General Meeting will be held at noon on
The Board has carefully considered the business to be approved at the General Meeting and recommends shareholders to vote in favour of the resolution which will be proposed.
Further details of the General Meeting can be found in the Circular accompanying this Half-yearly Financial Report.
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 transactions with the Manager for the reporting period can be found in note 4. Details of related party transactions can be found in note 10.
Risks and uncertainties
The longer term implications of the Covid-19 crisis is the key risk facing the Company, including its impact on the
Other risks and uncertainties are detailed in note 12 below.
Albion VCTs Top Up Offers 2020/21
As announced in the Annual Report and Financial Statements for the year ended
The proceeds are being 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, five of which are detailed above. Details on the share allotments during the period can be found in note 8.
Shareholder seminar
The Board is pleased to report that the current intention of the Manager,
More details will shortly be available on the
Prospects
The Board is extremely encouraged by the performance of the portfolio as a whole and the prospects for its portfolio companies. The dynamic pipeline of new investments is strong, demonstrated by the number of new investments in the past six months, and despite a clear shift to digital adoption, valuation will remain important. We therefore believe that the Company’s portfolio continues to have the potential to deliver attractive returns to shareholders over the long term.
Chairman
Responsibility statement
The Directors,
(a) the condensed set of Financial Statements, which has been prepared in accordance with Financial Reporting Standard 104 “Interim Financial Reporting”, gives a true and fair view of the assets, liabilities, financial position and profit and loss of the Company as required by DTR 4.2.4R;
(b) the Interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
(c) the Interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties’ transactions and changes therein).
This Half-yearly Financial Report has not been audited or reviewed by the Auditor.
For and on behalf of the Board
Chairman
Portfolio of investments
As at | ||||||
Fixed asset investments | % voting rights | Cost(1) £’000 | Cumulative movement in value £’000 | Value £’000 | Change in value for the period(2) £’000 | |
15.1 | 2,259 | 7,276 | 9,535 | 1,342 | ||
1.4 | 1,329 | 7,771 | 9,100 | 4,800 | ||
4.8 | 1,644 | 4,074 | 5,718 | 366 | ||
28.7 | 1,733 | 3,517 | 5,250 | 2,802 | ||
6.5 | 2,428 | 853 | 3,281 | (7) | ||
1.9 | 659 | 1,415 | 2,074 | 1,231 | ||
15.4 | 1,459 | 430 | 1,889 | 501 | ||
The Street by | 10.0 | 1,040 | 785 | 1,825 | (140) | |
42.1 | 2,291 | (569) | 1,722 | 537 | ||
2.8 | 648 | 1,041 | 1,689 | 815 | ||
4.5 | 1,293 | 310 | 1,603 | 649 | ||
9.8 | 988 | 585 | 1,573 | (110) | ||
2.8 | 351 | 1,172 | 1,523 | 566 | ||
11.1 | 829 | 515 | 1,344 | (69) | ||
3.4 | 671 | 629 | 1,300 | 460 | ||
2.6 | 684 | 416 | 1,100 | (54) | ||
17.2 | 655 | 419 | 1,074 | (12) | ||
uMotif Limited | 3.7 | 979 | 47 | 1,026 | - | |
1.5 | 917 | - | 917 | - | ||
3.8 | 833 | - | 833 | - | ||
5.0 | 620 | 180 | 800 | (2) | ||
2.5 | 763 | - | 763 | - | ||
1.4 | 510 | 243 | 753 | (14) | ||
3.7 | 685 | 19 | 704 | - | ||
1.1 | 460 | 227 | 687 | 227 | ||
14.8 | 484 | 157 | 641 | (62) | ||
Arecor Therapeutics PLC (previously | 0.9 | 304 | 266 | 570 | 267 | |
3.4 | 566 | - | 566 | - | ||
1.7 | 550 | - | 550 | - | ||
3.0 | 482 | 17 | 499 | 2 | ||
0.6 | 488 | 9 | 497 | 9 | ||
5.1 | 606 | (150) | 456 | 55 | ||
1.4 | 383 | 38 | 421 | - | ||
2.1 | 418 | - | 418 | - | ||
8.6 | 244 | 156 | 400 | (20) | ||
Locum’s | 3.6 | 375 | 23 | 398 | 46 | |
1.6 | 345 | 36 | 381 | - | ||
2.1 | 409 | (36) | 373 | 73 | ||
2.1 | 272 | 98 | 370 | 103 | ||
0.9 | 361 | - | 361 | - | ||
47.9 | 5,488 | (5,138) | 350 | (57) | ||
3.6 | 323 | - | 323 | - | ||
4.5 | 45 | 278 | 323 | 186 | ||
0.6 | 308 | - | 308 | - | ||
1.0 | 91 | 187 | 278 | 187 | ||
3.1 | 278 | (11) | 267 | 88 | ||
4.4 | 513 | (255) | 258 | - | ||
13.8 | 19 | 214 | 233 | (110) | ||
2.4 | 322 | (121) | 201 | (176) | ||
2.8 | 510 | (317) | 193 | (317) | ||
0.9 | 185 | - | 185 | - | ||
1.0 | 156 | - | 156 | - | ||
uMedeor Limited (T/A uMed) | 1.4 | 152 | - | 152 | - | |
5.7 | 160 | (31) | 129 | (9) | ||
0.6 | 321 | (231) | 90 | 31 | ||
- | 70 | (1) | 69 | (2) | ||
5.1 | 1,026 | (967) | 59 | (81) | ||
10.6 | 38 | (28) | 10 | - | ||
4.3 | 761 | (755) | 6 | (280) | ||
1.5 | 184 | (179) | 5 | (46) | ||
Other holdings (3 companies) | 2 | 1 | 3 | - | ||
1.8 | 390 | (390) | - | (192) | ||
Total fixed asset investments | 44,357 | 24,225 | 68,582 | 13,583 | ||
(1) Amounts shown as cost represent the acquisition cost in the case of investments originally made by the Company and/or the valuation attributed to the investments acquired from
(2) The column shows the movement in the period from the opening balance as at
(i) Early stage investment of convertible loan stock.
Realisations in the period to 30 June 2021 | Cost £’000 | Opening carrying value £’000 | Disposal proceeds £’000 | Realised gain/(loss) on cost £’000 | Gain/(loss) on opening or acquired value £’000 |
Disposals: | |||||
4,395 | 7,971 | 7,839 | 3,444 | (132) | |
3,070 | 5,814 | 5,753 | 2,683 | (61) | |
1,377 | 3,049 | 3,152 | 1,775 | 103 | |
3,136 | 1,254 | 1,413 | (1,723) | 159 | |
535 | 1,162 | 1,138 | 603 | (24) | |
173 | 361 | 360 | 187 | (1) | |
Loan stock repayments and other: | |||||
27 | 40 | 40 | 13 | - | |
16 | 16 | 16 | - | - | |
7 | 11 | 11 | 4 | - | |
Escrow adjustments and other* | 23 | 2 | 102 | 79 | 100 |
Total | 12,759 | 19,680 | 19,824 | 7,065 | 144 |
*These comprise fair value movements on deferred consideration on previously disposed investments, release of the
Total change in value of investments for the period | 13,583 | ||||
Movement in loan stock accrued interest | 628 | ||||
Unrealised gains on fixed asset investments sub-total | 14,211 | ||||
Realised gains in current period | 144 | ||||
Total gains on investments as per Income statement | 14,355 |
Condensed income statement
Unaudited six months ended 30 June 2021 | Unaudited six months ended | Audited year ended | ||||||||
Note | Revenue £’000 | Capital £’000 | Total £’000 | Revenue £’000 | Capital £’000 | Total £’000 | Revenue £’000 | Capital £’000 | Total £’000 | |
Gains/(losses) on investments | 2 | - | 14,355 | 14,355 | - | (4,286) | (4,286) | - | 3,333 | 3,333 |
Investment income | 3 | 646 | - | 646 | 917 | - | 917 | 1,922 | - | 1,922 |
Investment management fee | 4 | (225) | (675) | (900) | (185) | (554) | (739) | (377) | (1,132) | (1,509) |
Performance incentive fee | 4 | (353) | (1,058) | (1,411) | - | - | - | - | - | - |
Other expenses | (203) | - | (203) | (182) | - | (182) | (362) | - | (362) | |
Profit/(loss) on ordinary activities before tax | (135) | 12,622 | 12,487 | 550 | (4,840) | (4,290) | 1,183 | 2,201 | 3,384 | |
Tax on ordinary activities | - | - | - | - | - | - | - | - | - | |
Profit/(loss) and total comprehensive income attributable to shareholders | (135) | 12,622 | 12,487 | 550 | (4,840) | (4,290) | 1,183 | 2,201 | 3,384 | |
Basic and diluted return/(loss) per share (pence)* | 6 | (0.03) | 3.00 | 2.97 | 0.15 | (1.31) | (1.16) | 0.32 | 0.59 | 0.91 |
*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
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 2021 £’000 | Unaudited £’000 | Audited £’000 | |||
Fixed asset investments | 68,582 | 61,160 | 69,652 | |||
Current assets | ||||||
Trade and other receivables | 1,569 | 105 | 1,293 | |||
Cash and cash equivalents | 37,739 | 15,554 | 11,266 | |||
39,308 | 15,659 | 12,559 | ||||
Total assets | 107,890 | 76,819 | 82,211 | |||
Payables: amounts falling due within one year | ||||||
Trade and other payables | (2,291) | (461) | (502) | |||
Total assets less current liabilities | 105,599 | 76,358 | 81,709 | |||
Equity attributable to equity holders | ||||||
Called-up share capital | 7 | 5,051 | 4,333 | 4,346 | ||
Share premium | 59,774 | 45,253 | 45,481 | |||
Capital redemption reserve | 11 | 11 | 11 | |||
Unrealised capital reserve | 24,076 | 10,387 | 16,786 | |||
Realised capital reserve | 14,654 | 8,680 | 9,322 | |||
Other distributable reserve | 2,033 | 7,694 | 5,763 | |||
Total equity shareholders’ funds | 105,599 | 76,358 | 81,709 | |||
Basic and diluted net asset value per share (pence)* | 23.99 | 20.30 | 21.84 |
*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
The Financial Statements were approved by the Board of Directors, and authorised for issue on
Chairman
Company number: 03139019
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 | 4,346 | 45,481 | 11 | 16,786 | 9,322 | 5,763 | 81,709 |
Profit/(loss) and total comprehensive income for the period | - | - | - | 14,211 | (1,589) | (135) | 12,487 |
Transfer of previously unrealised gains on disposal of investments | - | - | - | (6,921) | 6,921 | - | - |
Purchase of own shares for treasury | - | - | - | - | - | (939) | (939) |
Issue of equity | 705 | 14,671 | - | - | - | - | 15,376 |
Cost of issue of equity | - | (378) | - | - | - | - | (378) |
Dividends paid | - | - | - | - | - | (2,656) | (2,656) |
At 30 June 2021 | 5,051 | 59,774 | 11 | 24,076 | 14,654 | 2,033 | 105,599 |
At | 3,883 | 35,825 | 11 | 14,707 | 9,200 | 9,830 | 73,456 |
(Loss)/profit and total comprehensive income for the period | - | - | - | (4,305) | (535) | 550 | (4,290) |
Transfer of previously unrealised gains on disposal of investments | - | - | - | (15) | 15 | - | - |
Purchase of own shares for treasury | - | - | - | - | - | (447) | (447) |
Issue of equity | 450 | 9,662 | - | - | - | - | 10,112 |
Cost of issue of equity | - | (234) | - | - | - | - | (234) |
Dividends paid | - | - | - | - | - | (2,239) | (2,239) |
At | 4,333 | 45,253 | 11 | 10,387 | 8,680 | 7,694 | 76,358 |
At | 3,883 | 35,825 | 11 | 14,707 | 9,200 | 9,830 | 73,456 |
Profit/(loss) and total comprehensive income for the period | - | - | - | 3,013 | (812) | 1,183 | 3,384 |
Transfer of previously unrealised gains on disposal of investments | - | - | - | (934) | 934 | - | - |
Purchase of own shares for treasury | - | - | - | - | - | (1,100) | (1,100) |
Issue of equity | 462 | 9,892 | - | - | - | - | 10,354 |
Cost of issue of equity | - | (236) | - | - | - | - | (236) |
Dividends paid | - | - | - | - | - | (4,150) | (4,150) |
At | 4,346 | 45,481 | 11 | 16,786 | 9,322 | 5,763 | 81,709 |
*The total distributable reserves are £16,687,000 (
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
Condensed statement of cash flows
Unaudited six months ended 30 June 2021 £’000 | Unaudited six months ended £’000 | Audited year ended £’000 | ||||
Cash flow from operating activities | ||||||
Investment income received | 1,248 | 656 | 1,467 | |||
Deposit interest received | 1 | 25 | 25 | |||
Dividend income received | 25 | 49 | 220 | |||
Investment management fee paid | (796) | (745) | (1,499) | |||
Other cash payments | (242) | (198) | (359) | |||
- | - | - | ||||
Net cash flow from operating activities | 236 | (213) | (146) | |||
Cash flow from investing activities | ||||||
Purchase of fixed asset investments | (5,026) | (1,363) | (3,990) | |||
Disposal of fixed asset investments | 19,562 | 60 | 639 | |||
Net cash flow from investing activities | 14,536 | (1,303) | (3,351) | |||
Cash flow from financing activities | ||||||
Issue of share capital | 14,627 | 9,588 | 9,588 | |||
Cost of issue of equity | (18) | (2) | (4) | |||
Purchase of own shares (including costs) | (640) | (447) | (1,100) | |||
Equity dividends paid* | (2,268) | (1,936) | (3,588) | |||
Net cash flow from financing activities | 11,701 | 7,203 | 4,896 | |||
Increase in cash and cash equivalents | 26,473 | 5,687 | 1,399 | |||
Cash and cash equivalents at start of period | 11,266 | 9,867 | 9,867 | |||
Cash and cash equivalents at end of period | 37,739 | 15,554 | 11,266 |
* The equity dividends paid shown in the cash flow are different to the dividends disclosed in note 5 as a result of the non-cash effect of the Dividend Reinvestment Scheme.
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
Notes to the condensed Financial Statements
1. Accounting policies
Basis of accounting
The condensed Financial Statements have been prepared in accordance with applicable
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 below.
Company information can be found on page 2 of the Half-yearly Financial Report.
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 designated 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, 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;
- 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 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.
Investment income
Equity income
Dividend income is included in revenue when the investment is quoted ex-dividend.
Unquoted loan stock income
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% of management fees and performance incentive fees, if any, are allocated to the realised capital reserve. This is in line with the Board’s expectation that over the long term 75% 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 the Company’s shares and the nominal value of those shares, less issue costs.
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 or permanent diminution in value;
- 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 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
2. Gains/(losses) on investments
Unaudited six months ended £’000 | Unaudited six months ended £’000 | Audited year ended £’000 | ||||
Unrealised gains/(losses) on fixed asset investments | 14,211 | (4,305) | 3,013 | |||
Realised gains on fixed asset investments | 144 | 19 | 320 | |||
14,355 | (4,286) | 3,333 | ||||
3. Investment income
Unaudited six months ended 30 June 2021 £’000 | Unaudited six months ended £’000 | Audited year ended £’000 | |||
Loan stock interest | 620 | 844 | 1,678 | ||
Dividends | 25 | 49 | 220 | ||
Bank interest | 1 | 24 | 24 | ||
646 | 917 | 1,922 |
4. Investment management fee and performance incentive fee
Unaudited six months ended 30 June 2021 £’000 | Unaudited six months ended £’000 | Audited year ended £’000 | |||
Investment management fee charged to revenue | 225 | 185 | 377 | ||
Investment management fee charged to capital | 675 | 554 | 1,132 | ||
Performance incentive fee charged to revenue | 353 | - | - | ||
Performance incentive fee charged to capital | 1,058 | - | - | ||
2,311 | 739 | 1,509 |
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 13 of the Annual Report and Financial Statements for the year ended
During the period, services with a value of £900,000 (
The Company entered into an offer agreement relating to the Offers with the Company’s investment manager
5. Dividends
Unaudited six months ended £’000 | Unaudited six months ended £’000 | Audited year ended £’000 | |
Second dividend of | - | - | 1.910 |
First dividend of | 2,656 | 2,256 | 2,256 |
Unclaimed dividends returned to the Company | - | (16) | (16) |
2,656 | 2,239 | 4,150 |
The Directors have declared a second dividend of
The Directors have declared a special dividend of
6. Basic and diluted return/(loss) per share
Unaudited six months ended | Unaudited six months ended | Audited year ended | ||||
Revenue | Capital | Revenue | Capital | Revenue | Capital | |
Profit/(loss) attributable to shareholders (£’000) | (135) | 12,622 | 550 | (4,840) | 1,183 | 2,201 |
Weighted average shares in issue (adjusted for treasury shares) | 420,341,284 | 369,249,306 | 372,282,416 | |||
Return/(loss) attributable per equity share (pence) | (0.03) | 3.00 | 0.15 | (1.31) | 0.32 | 0.59 |
The weighted average number of Ordinary shares is calculated after adjusting for treasury shares of 65,014,675 (
There are no convertible instruments, derivatives or contingent share agreements in issue so basic and diluted return/(loss) per share are the same.
7. Called-up share capital
Allotted, called-up and fully paid Ordinary shares of 1 penny each | Unaudited 30 | Unaudited | Audited |
Number of shares | 505,145,955 | 433,336,785 | 434,557,477 |
Nominal value of allotted shares (£’000) | 5,051 | 4,333 | 4,346 |
Voting rights (number of shares net of treasury shares) | 440,131,280 | 376,240,178 | 374,065,868 |
The Company operates a share buy-back programme, as detailed in the Interim management report above. During the period the Company purchased 4,523,066 Ordinary shares with a nominal value of £45,231 (
During the period from
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) |
1,831,899 | 18 | 21.24 | 371 | 20.30 |
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 period to
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) |
5,412,326 | 54 | 21.60 | 1,151 | 20.10 | |
1,536,392 | 15 | 21.70 | 327 | 20.10 | |
59,778,526 | 598 | 21.80 | 12,706 | 20.10 | |
528,417 | 5 | 22.20 | 116 | 20.70 | |
29,596 | - | 22.30 | 6 | 20.70 | |
1,471,322 | 15 | 22.40 | 321 | 20.70 | |
68,756,579 | 14,627 |
8. Commitments, contingencies and guarantees
As at
There were no contingent liabilities or guarantees given by the Company as at
9. Post balance sheet events
Since
- Proceeds of £5.2 million were received for the sale of
Antenova Limited ; - Proceeds of £0.4 million were received for the sale of
Elateral Group Limited ; - Investment of £829,000 in
Oviva AG ; - Investment of £386,000 in
The Evewell Group Limited ; and - Investment of £47,000 in
Imandra Inc.
10. Related party disclosures
Other than transactions with the Manager as disclosed in note 4, there are no related party transactions or balances requiring disclosure.
11. 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 68 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
12. Risks and uncertainties
In addition to the risks and uncertainties outlined in the Interim management report, the Board confirms that the following major risks and uncertainties facing the Company have not materially changed from those identified in the Annual Report and Financial Statements for the year ended
1. Investment, performance and valuation risk
The risk of investment in poor quality businesses, which could reduce the returns to shareholders, and could negatively impact on the Company’s current and future valuations.
By nature, smaller unquoted businesses, such as those that qualify for
The Company’s investment valuation methodology is reliant on the accuracy and completeness of information that is issued by portfolio companies. In particular, the Directors may not be aware of or take into account certain events or circumstances which occur after the information issued by such companies is reported.
To reduce this risk, the Board places reliance upon the skills and expertise of the Manager and its track record over many years of making successful investments in this segment of the market. In addition, the Manager operates a formal and structured investment appraisal and review process, which includes an Investment Committee, comprising investment professionals from the Manager for all investments, and at least one external investment professional for investments greater than £1 million in aggregate across all the Albion managed VCTs. The Manager also invites and takes account of comments from non-executive Directors of the Company on matters discussed at the Investment Committee meetings. Investments are actively and regularly monitored by the Manager (investment managers normally sit on portfolio company boards), including the level of diversification in the portfolio, and the Board receives detailed reports on each investment as part of the Manager’s report at quarterly board meetings. The Board and Manager regularly review the deployment of investments and cash resources available to the Company in assessing liquidity required for servicing the Company’s buy-backs, dividend payments and operational expenses.
The unquoted investments held by the Company are designated at fair value through profit or loss and valued in accordance with the International Private Equity and Venture Capital Valuation Guidelines as updated in 2018. These guidelines set out recommendations, intended to represent current best practice on the valuation of venture capital investments. The valuation takes into account all known material facts up to the date of approval of the Financial Statements by the Board.
2. VCT approval risk
The Company must comply with section 274 of the Income Tax Act 2007 which enables its investors to take advantage of tax relief on their investment and on future returns. Breach of any of the rules enabling the Company to hold VCT status could result in the loss of that status.
To reduce this risk, the Board has appointed the Manager, which has a team with significant experience in
3. Regulatory and compliance risk
The Company is listed on
Board members and the Manager have experience of operating at senior levels within or advising quoted companies. In addition, 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 on a monthly basis. These controls are also reviewed as part of the quarterly Board meetings, and also as part of the review work undertaken by the Manager’s compliance officer. The report on controls is also evaluated by the internal auditors.
4. Operational and internal control risk
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 systems and controls within the Manager’s business could place assets of the Company at risk or result in reduced or inaccurate information being passed to the Board or to shareholders.
The Company and its operations are subject to a series of rigorous internal controls and review procedures exercised throughout the year, and receives reports from the Manager on its internal controls and risk management, including on matters relating to cyber security.
The Audit Committee reviews the Internal Audit Reports prepared by the Manager’s internal auditors,
From
In addition, the Board regularly reviews the performance of its key service providers, particularly the Manager, to ensure they continue to have the necessary expertise and resources to deliver the Company’s investment policy. The Manager and other service providers have also demonstrated to the Board that there is no undue reliance placed upon any one individual.
4. Economic, political and social risk
Changes in economic conditions, including, for example, interest rates, rates of inflation, industry conditions, competition, political and diplomatic events, such as the impact of Brexit, and other factors could substantially and adversely affect the Company’s prospects in a number of ways. This also includes risks of social upheaval, including from infection and population re-distribution, as well as economic risk challenges as a result of healthcare pandemics/infection.
The current significant exogenous risk to the Company, the wider population and economy, is the Covid-19 pandemic.
The Company invests in a diversified portfolio of companies across a number of industry sectors and in addition often invests in a mixture of instruments in portfolio companies and has a policy of minimising any external bank borrowings within portfolio companies.
At any given time, the Company has sufficient cash resources to meet its operating requirements, including share buy-backs and follow on investments.
In common with most commercial operations, exogenous risks over which the Company has no control are always a risk and the Company does what it can to address these risks where possible, not least as the nature of the investments the Company makes are long term.
The Board and Manager are continuously assessing the resilience of the portfolio, the Company and its operations and the robustness of the Company’s external agents during the health crisis, as well as considering longer term impacts on how the Company might be positioned in how it invests and operates. Ensuring liquidity in the portfolio to cope with exigent and unexpected pressures on the finances of the portfolio and the Company is an important part of the risk mitigation in these uncertain times. The portfolio is structured as an all-weather portfolio with c.66 companies, which are diversified as discussed above. Exposure is relatively small to at-risk sectors that include leisure, hospitality, retail and travel.
5. 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 and prospective net asset value, 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 net asset value. The market prices of shares in quoted investment companies can, therefore, be at a discount or premium to the net asset value 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 net asset value.
The Company operates a share buyback policy, which is designed to limit the discount at which the Ordinary shares trade to around 5 per cent. to net asset value, 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 net asset value to cover the costs of issue and to avoid asset value dilution to existing investors.
6. Reputational risk
The Company relies on the judgement and reputation of the Manager which is itself subject to the risk of losses.
The Board regularly questions the Manager on its ethics, procedures, safeguards and investment philosophy, which should consequently result in the risk to reputational damage being minimised.
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
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,
Attachment
- Portfolio split by sector
© OMX, source