TIDMAAEV
Albion Enterprise VCT PLC
LEI Code 213800OVSRDHRJBMO720
As required by the UK Listing Authority's Disclosure Guidance
and Transparency Rule 4.2, Albion Enterprise VCT PLC today makes
public its information relating to the Half-yearly Financial Report
(which is unaudited) for the six months to 30 September 2023. This
announcement was approved by the Board of Directors on 7 December
2023.
The full Half-yearly Financial Report (which is unaudited) for
the period to 30 September 2023, will shortly be sent to
shareholders. Copies of the full Half-yearly Financial Report will
be shown via the Albion Capital Group LLP website by clicking
www.albion.capital/funds/AAEV/30Sep23.pdf.
Investment objective and policy
Albion Enterprise VCT PLC (the "Company") is a Venture Capital
Trust and the investment objective of the Company is to provide
investors with a regular source of income, combined with the
prospect of longer term capital growth.
Investment policy
The Company will invest in a broad portfolio of higher growth
businesses across a variety of sectors of the UK economy including
higher risk technology companies. 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 both in terms of sector and stage of maturity of
company.
VCT qualifying and non-VCT qualifying investments
Application of the investment policy is designed to ensure that
the Company continues to qualify and is approved as a VCT by HM
Revenue and Customs ("VCT regulations"). The maximum amount
invested in any one company is limited to relevant HMRC annual
investment limits. It is intended that normally at least 80 per
cent. of the Company's funds will be invested in VCT qualifying
investments. The VCT regulations also have an impact on the type of
investments and qualifying sectors in which the Company can make
investment.
Funds held prior to investing in VCT qualifying assets or for
liquidity purposes will be held as cash on deposit, invested in
floating rate notes or similar instruments with banks or other
financial institutions with high credit ratings or invested in
liquid open-ended equity funds providing income and capital equity
exposure (where it is considered economic to do so). Investment in
such open-ended equity funds will not exceed 10 per cent. of the
Company's assets at the time of investment.
Risk diversification and maximum exposures
Risk is spread by investing in a number of different businesses
within Venture Capital Trust qualifying industry sectors using a
mixture of securities. The maximum amount which the Company will
invest in a single 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 its adjusted share capital and
reserves.
Financial calendar
2 February 2024 Record date for second dividend
29 February 2024 Payment of second dividend
31 March Financial year end
Financial summary
Audited
Unaudited six months ended Unaudited six months ended year ended
30 September 2023 30 September 2022 31 March 2023
(pence per share) (pence per share) (pence per share)
-------------- -------------------------- -------------------------- -----------------
Opening net
asset value 128.60 132.28 132.28
Capital
(loss)/return (3.22) (2.13) 2.64
Revenue return 0.35 0.15 0.39
-------------------------- -------------------------- -----------------
Total
(loss)/return (2.87) (1.98) 3.03
Dividends paid (3.22) (3.31) (6.49)
Impact of
share capital
movements 0.02 0.01 (0.22)
-------------------------- -------------------------- -----------------
Net asset
value 122.53 127.00 128.60
-------------------------- -------------------------- -----------------
Total shareholder value Pence per share
--------------------------------------------- ---------------
Net asset value on 30 September 2023 122.53
Total dividends paid to 30 September 2023 72.09
Total shareholder value to 30 September 2023 194.62
--------------------------------------------- ---------------
A more detailed breakdown of the dividends paid per year can be
found at www.albion.capital/funds/AAEV under the 'Dividend History'
section.
In addition to the dividends summarised above, the Board has
declared a second dividend for the year ending 31 March 2024, of
3.06 pence per share to be paid on 29 February 2024 to shareholders
on the register on 2 February 2024.
Interim management report
Introduction
In the six months to 30 September 2023, the Company generated a
total loss of 2.87 pence per share, representing a 2.2% decrease on
the opening net asset value ("NAV"). Whilst disappointing, this
reduction in valuations is not too surprising given the current
difficult macroeconomic and geopolitical backdrop, the Board is
encouraged by the resilience of the portfolio with many of our
portfolio companies growing their revenues.
Results and dividends
The total loss for the six months to 30 September 2023 was
GBP2.9 million (30 September 2022: loss of GBP0.9 million; year
ended 31 March 2023: gain of GBP2.8 million). The Company paid a
first dividend of 3.22 pence per share during the period to 30
September 2023 (30 September 2022: 3.31 pence per share). As a
result, the NAV has decreased to 122.53 pence per share on 30
September 2023 (31 March 2023: 128.60 pence per share).
In line with our variable dividend policy targeting a dividend
around 5% of NAV per annum, the Company will pay a second interim
dividend for the financial year ending 31 March 2024 of 3.06 pence
per share on 29 February 2024 to shareholders on the register on 2
February 2024, being 2.5% of the 30 September 2023 NAV.
This will bring the total dividends paid for the year ending 31
March 2024 to 6.28 pence per share, which equates to a 4.9% yield
on the opening NAV of 128.60 pence per share.
Investment performance and progress
The total loss on investments for the six months to 30 September
2023 was GBP2.1 million (30 September 2022: loss of GBP0.9 million;
year ended 31 March 2023: gain of GBP4.5 million). The key upward
movements in the period resulting from strong trading include: a
GBP0.7 million increase in the valuation of Proveca and a GBP0.5
million increase in the valuation of Oviva. Ophelos, an investment
that was held for only one year, was sold after the period end for
2 times cost, an uplift of GBP0.5 million during the period.
The challenging economic environment has resulted in falling
valuations in some technology and healthcare companies which has
consequently led to several write-downs in our portfolio. The
largest of these has been Healios (loss of GBP0.8 million) and
Threadneedle Software Holdings (T/A Solidatus) (loss of GBP0.7
million).
Our top 3 portfolio companies (Quantexa, Proveca and Egress) now
account for 36.1% of the Company's NAV (30 September 2022: 29.3%;
31 March 2023: 33.8%).
Given the macroeconomic uncertainty resulting from high
inflation and rising interest rates, the period to 30 September
2023 has been subdued in terms of new investment activity. During
the period, the Company has invested GBP0.6 million into two new
portfolio companies (Phasecraft and Kennek Solutions) and GBP1.3
million into existing portfolio companies to help support them as
they continue to grow, including GBP0.7 million into Gravitee and
GBP0.4 million into uMed.
Investment activity has seen a recovery after the period end,
with GBP3.2 million invested into new and follow on investments
since 30 September 2023.
Further details of the portfolio of investments and investment
realisations can be found below.
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 on 30 September 2023.
Change of Auditor
As announced on 30 October 2023, following a formal audit tender
process, the Company announced the appointment of Johnston
Carmichael LLP ("Johnston Carmichael") as the Company's Auditor
with immediate effect. Johnston Carmichael will conduct the audit
of the Annual Report and Financial Statements for the year ended 31
March 2024.
The Company and the Manager would like to express their
appreciation and gratitude to BDO for its diligent service over the
last 16 years.
Board composition and succession planning
After 17 years on the Board of Albion Enterprise VCT PLC, I will
retire from the Board and my position as Chairman on 31 August 2024
after the AGM. Christopher Burrows, who has been a member of the
Board since 2018, will succeed me as Chairman.
The Nomination Committee continually reviews and evaluates the
membership of the Board based on the spread of skills and
contributions of its members, as well as actively planning and
reviewing Board succession.
Share buy-backs
It remains the Board's policy to buy-back shares in the market,
subject to the overall constraint that such purchases are in the
Company's interest. This includes the maintenance of sufficient
cash resources for investment in new and existing portfolio
companies and the continued payment of dividends to
shareholders.
It is the Board's intention that such buy-backs should be at
around a 5% discount to net asset value, in so far as market
conditions and liquidity permit.
Risks and uncertainties
The Company faces a number of significant risks including high
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 Company's focus on technology
investments may result in greater valuation volatility in the
current economic climate. Overall investment risk is mitigated in a
number of ways. In particular, the Manager is continually assessing
the exposure to these risks for each portfolio company and
mitigating actions, where possible, are being implemented.
In accordance with the Disclosure Guidance and Transparency
Rules ("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 2023. There is heightened uncertainty,
but this has not changed the nature of the principal risks. The
Board considers that the present actions to mitigate 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;
-- Operational and internal control risk;
-- Cyber and data security risk;
-- Economic, political and social risk;
-- Environmental, social and governance ("ESG") risk; and
-- Liquidity 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 March 2023 on pages 23 to 26,
copies of which are available on the Company's webpage on the
Manager's website at www.albion.capital/funds/AAEV 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
Your Board, in conjunction with the boards of four of the other
VCTs managed by Albion Capital Group LLP, intends to launch a
prospectus top up offer of new Ordinary shares for subscription in
the 2023/24 and 2024/25 tax years. Full details of the Offer will
be contained in a prospectus that is expected to be published prior
to launch in early January 2024 and will be made available at
www.albion.capital/vct-hub/current-offers.
The proceeds will be used to provide support to our existing
portfolio companies and to enable us to take advantage of new
investment opportunities.
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 remain many uncertainties facing the Company,
with high levels of inflation, elevated interest rates and ongoing
geopolitical tensions, the portfolio remains encouragingly
resilient during these challenging times. The portfolio remains
well diversified with companies at different stages of maturity and
targeted at growth sectors such as healthcare, data analytics and
FinTech. We believe these sectors can provide opportunities for
positive results for the Company and its shareholders over the
longer-term.
Maxwell Packe
Chairman
7 December 2023
Portfolio of investments
On 30 September 2023
Cumulative movement Change in
Fixed asset % voting Cost in value Value value for the period(*)
investments rights GBP'000 GBP'000 GBP'000 GBP'000
------------------- -------- -------- ------------------- -------- ------------------------
Quantexa 2.1 2,108 22,211 24,319 -
Egress Software
Technologies 9.9 3,365 9,460 12,825 68
Proveca 9.6 1,850 5,613 7,463 739
Oviva 2.8 2,601 1,823 4,424 482
Radnor House School
(TopCo) 9.4 1,729 2,207 3,936 80
The Evewell Group 6.1 1,477 1,202 2,679 (575)
Gravitee TopCo (T/A
Gravitee.io) 3.8 2,168 367 2,535 -
Healios 4.0 2,500 (325) 2,175 (847)
Regenerco Renewable
Energy 12.5 1,261 628 1,889 (10)
Convertr Media 6.2 992 880 1,872 (201)
Runa Network 1.9 1,396 414 1,810 88
Cantab Research
(T/A
Speechmatics) 1.6 1,359 239 1,598 -
The Street by
Street Solar
Programme 8.6 891 629 1,520 (75)
Threadneedle
Software Holdings
(T/A Solidatus) 2.2 1,360 156 1,516 (654)
Aridhia Informatics 6.4 1,244 158 1,402 87
Peppy Health 1.5 1,372 - 1,372 -
Toqio FinTech
Holdings 1.8 1,279 - 1,279 -
Panaseer 2.3 816 437 1,253 51
Elliptic
Enterprises 0.9 1,219 - 1,219 -
TransFICC 1.9 938 223 1,161 -
Alto Prodotto Wind 11.1 687 386 1,073 (84)
Seldon Technologies 3.1 1,046 - 1,046 (133)
Ophelos 2.0 526 513 1,039 513
Greenenerco 28.6 604 418 1,022 (83)
InCrowd Sports 3.8 589 390 979 144
NuvoAir Holdings 2.0 826 108 934 (264)
Accelex Technology 2.9 644 250 894 250
Beddlestead 8.1 966 (75) 891 44
Cisiv 6.1 799 33 832 66
GX Molecular (T/A
CS Genetics) 2.7 786 - 786 -
uMedeor (T/A uMed) 2.2 603 66 669 -
OutThink 2.6 644 - 644 -
Locum's Nest 5.1 602 (12) 590 39
Diffblue 2.3 541 - 541 -
PeakData 1.9 862 (330) 532 (387)
Phasecraft 0.8 455 - 455 -
PetsApp 2.4 450 - 450 -
Perchpeek 1.9 591 (146) 445 (146)
Koru Kids 2.1 674 (311) 363 (204)
5Mins AI 2.0 360 - 360 -
Arecor Therapeutics
PLC 0.4 145 119 264 (32)
Imandra 1.3 173 90 263 2
Ramp Software 1.7 257 - 257 -
AVESI 5.5 179 38 217 (2)
Tem Energy 1.7 213 - 213 -
Mirada Medical 5.0 1,487 (1,279) 208 -
Kennek Solutions 0.6 186 - 186 -
Regulatory Genome
Development 0.8 126 43 169 43
Neurofenix 2.7 552 (388) 164 (223)
Brytlyt 1.8 390 (274) 116 (274)
Infact Systems 1.7 88 - 88 -
MHS 1 1.2 83 5 88 1
Symetrica 0.2 63 (4) 59 (1)
Black Swan Data 3.5 2,237 (2,202) 35 (238)
DySIS Medical 2.7 2,742 (2,735) 7 (439)
Limitless
Technology 1.8 471 (471) - (113)
Total fixed asset
investments 54,572 40,554 95,126 (2,288)
------------------- -------- -------- ------------------- -------- ------------------------
T/A = trading as
* As adjusted for additions and disposals during the period.
Opening Total Gain/(loss) on
carrying Disposal realised opening
Investment realisations in the period to 30 September Cost value proceeds gain/(loss) value
2023 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------ -------- --------- --------- ------------ --------------
Disposals:
------------------------------------------------------
Arecor Therapeutics PLC 65 133 106 41 (27)
uMotif 1,109 66 1 (1,108) (65)
Loan stock repayments, conversions and other:
------------------------------------------------------
uMedeor (T/A uMed) 67 70 71 4 1
Greenenerco 33 50 50 17 -
Alto Prodotto Wind 36 51 51 15 -
Escrow adjustments* - - 36 36 36
Total fixed asset realisations 1,310 370 315 (995) (55)
------------------------------------------------------ -------- --------- --------- ------------ --------------
* These comprise fair value movements on deferred consideration
on previously disposed investments and expenses which are
incidental to the purchase or disposal of an investment.
GBP'000
Total change in value of investments for the period (2,288)
Movement in loan stock accrued interest 46
-------
Unrealised losses on fixed asset investments sub-total (2,242)
Realised losses in the current period (55)
Unwind of discount on deferred consideration 175
Total losses on investments as per Income statement (2,122)
------------------------------------------------------- -------
Responsibility statement
The Directors, Maxwell Packe, Christopher Burrows, Pippa Latham,
Patrick Reeve and Rhodri Whitlock, are responsible for preparing
the Half-yearly Financial Report. In preparing these condensed
Financial Statements for the period to 30 September 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
Maxwell Packe
Chairman
7 December 2023
Condensed income statement
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 2023 30 September 2022 31 March 2023
---------------------------------------------------------- ---- ------------------------------- ------------------------------- -------------------------------
Revenue Capital Revenue Capital Revenue Capital
Note GBP'000 GBP'000 Total GBP'000 GBP'000 GBP'000 Total GBP'000 GBP'000 GBP'000 Total GBP'000
---- ------- ------- ------------- ------- ------- ------------- ------- ------- -------------
(Losses)/gains on
investments 3 - (2,122) (2,122) - (872) (872) - 4,535 4,535
Investment income 4 818 - 818 553 - 553 1,206 - 1,206
Investment
Manager's fees 5 (125) (1,129) (1,254) (116) (1,044) (1,160) (236) (2,121) (2,357)
Other expenses (342) - (342) (301) - (301) (618) - (618)
------- ------- ------------- ------- ------- ------------- ------- ------- -------------
Profit/(loss) on
ordinary activities before taxation 351 (3,251) (2,900) 136 (1,916) (1,780) 352 2,414 2,766
Tax charge on ordinary activities - - - - - - - - -
------- ------- ------------- ------- ------- ------------- ------- ------- -------------
Profit/(loss) and total comprehensive income attributable
to shareholders 351 (3,251) (2,900) 136 (1,916) (1,780) 352 2,414 2,766
------- ------- ------------- ------- ------- ------------- ------- ------- -------------
Basic and diluted profit/(loss) per share (pence)* 7 0.35 (3.22) (2.87) 0.15 (2.13) (1.98) 0.39 2.64 3.03
---- ------- ------- ------------- ------- ------- ------------- ------- ------- -------------
* 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 September
2022 and the audited statutory accounts for the year ended 31 March
2023.
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
Audited
Unaudited Unaudited 31 March
30 September 2023 30 September 2022 2023
Note GBP'000 GBP'000 GBP'000
-------------------- ----- ------------------ ------------------ ---------
Fixed asset
investments 95,126 86,182 95,798
Current assets
Trade and other
receivables 3,377 2,679 2,561
Cash in bank and at
hand 26,317 26,008 32,860
------------------ ------------------ ---------
29,694 28,687 35,421
Payables: amounts
falling due within
one year
Trade and other
payables (1,217) (828) (1,489)
------------------ ------------------ ---------
Net current assets 28,477 27,859 33,932
------------------ ------------------ ---------
Total assets less
current
liabilities 123,603 114,041 129,730
------------------ ------------------ ---------
Equity attributable
to equity holders
Called-up share
capital 8 1,163 1,028 1,154
Share premium 26,542 9,606 25,520
Unrealised capital
reserve 40,432 34,037 41,735
Realised capital
reserve 8,937 14,253 10,885
Other distributable
reserve 46,529 55,117 50,436
------------------ ------------------ ---------
Total equity
shareholders'
funds 123,603 114,041 129,730
------------------ ------------------ ---------
Basic and diluted
net asset value per
share (pence)* 122.53 127.00 128.60
* 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 September
2022 and the audited statutory accounts for the year ended 31 March
2023.
These Financial Statements were approved by the Board of
Directors, and authorised for issue on 7 December 2023 and were
signed on its behalf by
Maxwell Packe
Chairman
Company number: 05990732
Condensed statement of changes in equity
Called-up Unrealised Realised
share Share capital capital Other distributable
capital premium reserve reserve* reserve* Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------------- --------- -------- ---------- --------- ------------------- --------
As at 1 April 2023 1,154 25,520 41,735 10,885 50,436 129,730
Profit/(loss) and total comprehensive income for the
period - - (2,242) (1,009) 351 (2,900)
Transfer of previously unrealised losses on disposal
of investments - - 939 (939) - -
Issue of equity 9 1,054 - - - 1,063
Cost of issue of equity - (32) - - - (32)
Purchase of shares for treasury - - - - (1,011) (1,011)
Dividends paid - - - - (3,247) (3,247)
As at 30 September 2023 1,163 26,542 40,432 8,937 46,529 123,603
----------------------------------------------------- --------- -------- ---------- --------- ------------------- --------
As at 1 April 2022 1,017 8,278 32,790 17,416 58,914 118,415
Profit/(loss) and total comprehensive income for the
period - - (1,351) (565) 136 (1,780)
Transfer of previously unrealised losses on disposal
of investments - - 2,598 (2,598) - -
Issue of equity 11 1,366 - - - 1,377
Cost of issue of equity - (38) - - - (38)
Purchase of shares for treasury - - - - (964) (964)
Dividends paid - - - - (2,969) (2,969)
As at 30 September 2022 1,028 9,606 34,037 14,253 55,117 114,041
----------------------------------------------------- --------- -------- ---------- --------- ------------------- --------
As at 1 April 2022 1,017 8,278 32,790 17,416 58,914 118,415
Profit/(loss) and total comprehensive income for the
year - - 4,805 (2,391) 352 2,766
-----------------------------------------------------
Transfer of previously unrealised losses on disposal
of investments - - 4,140 (4,140) - -
Issue of equity 137 17,680 - - - 17,817
Cost of issue of equity - (438) - - - (438)
Purchase of shares for treasury - - - - (2,879) (2,879)
Dividends paid - - - - (5,951) (5,951)
As at 31 March 2023 1,154 25,520 41,735 10,885 50,436 129,730
----------------------------------------------------- --------- -------- ---------- --------- ------------------- --------
* Included within these reserves is an amount of GBP25,812,000
(30 September 2022: GBP30,514,000; 31 March 2023: GBP22,964,000)
which is considered distributable. Over the next two years an
additional GBP21,891,000 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 Unaudited Audited
six months ended six months ended year ended
30 September 2023 30 September 2022 31 March 2023
GBP'000 GBP'000 GBP'000
---------------------- ------------------ ------------------ --------------
Cash flow from
operating activities
Loan stock income
received 377 304 641
Dividend income
received 227 117 152
Income from fixed term
funds received 115 26 102
Deposit interest
received 266 19 82
Investment management
fee paid (1,267) (3,095) (4,233)
Other cash payments (379) (362) (626)
Net cash flow
generated from
operating activities (661) (2,991) (3,882)
Cash flow from
investing activities
Purchase of fixed
asset investments (2,865) (7,377) (12,455)
Proceeds from
disposals of fixed
asset investments 439 964 2,088
Net cash flow
generated from
investing activities (2,426) (6,413) (10,367)
Cash flow from
financing activities
Issue of share capital 528 9,178 24,753
Cost of issue of
equity (19) (18) (53)
Dividends paid* (2,725) (2,446) (4,945)
Purchase of own shares
(including costs) (1,240) (854) (2,198)
Net cash flow
generated from
financing activities (3,456) 5,860 17,557
(Decrease)/increase in
cash in bank and at
hand (6,543) (3,544) 3,308
Cash in bank and at
hand at start of
period 32,860 29,552 29,552
------------------ ------------------ --------------
Cash in bank and at
hand at end of
period 26,317 26,008 32,860
------------------ ------------------ --------------
*The dividends paid shown in the cash flow are different to the
dividends disclosed in note 6 as a result of the non-cash effect of
the Dividend Reinvestment Scheme.
Notes to the condensed Financial Statements
1. Basis of accounting
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 2018 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 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, 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 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. 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
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
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.
Share capital and 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 the
Company's shares and the nominal value of those 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 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 2013 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 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. (Losses)/gains on investments
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 2023 30 September 2022 31 March 2023
GBP'000 GBP'000 GBP'000
----------------------- ------------------ ------------------ --------------
Unrealised
(losses)/gains on
fixed asset
investments (2,242) (1,351) 4,805
Realised(losses)/gains
on fixed asset
investments (55) 329 (582)
Unwinding of discount
on deferred
consideration 175 150 312
(2,122) (872) 4,535
------------------ ------------------ --------------
4. Investment income
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 2023 30 September 2022 31 March 2023
GBP'000 GBP'000 GBP'000
---------------------- ------------------ ------------------ --------------
Loan stock interest 331 391 750
Bank deposit interest 266 19 82
Income from fixed term
funds 115 26 102
Dividend income 106 117 272
818 553 1,206
------------------ ------------------ --------------
5. Investment Manager's fees
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 2023 30 September 2022 31 March 2023
GBP'000 GBP'000 GBP'000
-------------------- ------------------ ------------------ --------------
Investment
management fee
charged to revenue 125 116 236
Investment
management fee
charged to capital 1,129 1,044 2,121
1,254 1,160 2,357
------------------ ------------------ --------------
Further details of the Management agreement under which the
investment management fee and performance incentive fee are paid is
given in the Strategic report on page 18 of the Annual Report and
Financial Statements for the year ended 31 March 2023.
During the period, services of a total value of GBP1,381,000 (30
September 2022: GBP1,276,000; 31 March 2023: GBP2,595,000) were
purchased by the Company from Albion Capital Group LLP; this
includes GBP1,254,000 (30 September 2022: GBP1,160,000; 31 March
2023: GBP2,357,000) of management fee and GBP127,000 (30 September
2022: GBP116,000; 31 March 2023: GBP238,000) of administration fee.
At the financial period end, the amount due to Albion Capital Group
LLP in respect of these services disclosed within payables was
GBP676,000 (30 September 2022: GBP625,000; 31 March 2023:
GBP692,000).
During the period, the Company was not charged by Albion Capital
Group LLP in respect of Patrick Reeve's services as a Director (30
September 2022: GBPnil; 31 March 2023: GBPnil).
Albion Capital Group LLP, its partners and staff (including
Patrick Reeve) held a total of 807,494 shares in the Company on 30
September 2023.
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 2023, fees of
GBP57,000 attributable to the investments of the Company were
received pursuant to these arrangements (30 September 2022:
GBP139,000; 31 March 2023: GBP252,000).
6. Dividends
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 2023 30 September 2022 31 March 2023
GBP'000 GBP'000 GBP'000
------------------------------------------------------- ------------------ ------------------ --------------
First dividend of 3.22p per share paid on 31 August
2023 (31 August 2022: 3.31p per share) 3,247 2,969 2,969
Second dividend of 3.18p per share paid on 28 February
2023 - - 2,985
Unclaimed dividends - - (3)
3,247 2,969 5,951
------------------ ------------------ --------------
In addition to the dividends summarised above, the Board has
declared a second dividend for the year ending 31 March 2024 of
3.06 pence per share (total approximately GBP3,087,000), which will
be paid on 29 February 2024 to shareholders on the register on 2
February 2024.
7. Basic and diluted return/(loss) per share
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 2023 30 September 2022 31 March 2023
Revenue Capital Revenue Capital Revenue Capital
---------------- --------- --------- --------- --------- ------- -------
Return/(loss)
attributable to
equity shares
(GBP'000) 351 (3,251) 136 (1,916) 352 2,414
Weighted average
shares in
issue 101,120,220 89,944,537 91,226,939
Return/(loss)
per Ordinary
share (pence) 0.35 (3.22) 0.15 (2.13) 0.39 2.64
The weighted average number of shares is calculated after
adjusting for treasury shares of 15,395,005 (30 September 2022:
12,967,934; 31 March 2023: 14,558,366).
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
Audited
Allotted, called-up and fully paid shares of 1 penny Unaudited Unaudited 31 March
each 30 September 2023 30 September 2022 2023
----------------------------------------------------- ------------------ ------------------ -----------
Number of shares 116,271,342 102,766,464 115,435,416
Nominal value of allotted shares (GBP'000) 1,163 1,028 1,154
Voting rights (number of shares net of treasury
shares) 100,876,337 89,798,530 100,877,050
During the period to 30 September 2023, the Company purchased
836,639 shares (30 September 2022: 772,366; 31 March 2023:
2,362,798) to be held in treasury at a nominal value of GBP8,366
and at a cost of GBP1,011,000. The total number of shares held in
treasury on 30 September 2023 was 15,395,005 (30 September 2022:
12,967,934; 31 March 2023: 14,558,366) representing 13.2% of the
shares in issue on 30 September 2023.
Under the terms of the Dividend Reinvestment Scheme Circular
(dated 26 November 2009), the following new shares of nominal value
1 penny each were allotted during the period to 30 September
2023:
Number
of Net
Date of shares Aggregate nominal value of shares invested Opening market price on allotment date (pence per
allotment allotted GBP'000 Issue price (pence per share) GBP'000 share)
31 August
2023 420,051 4 124.21 503 118.50
Under the terms of the Albion VCTs Prospectus Top Up Offers
2022/23, the following new shares of nominal value 1 penny each
were allotted during the period to 30 September 2023:
Number
of
Date of shares Aggregate nominal value of shares Net consideration received Opening market price on allotment date (pence per
allotment allotted GBP'000 Issue price (pence per share) GBP'000 share)
---------- -------- --------------------------------- ------------------------------ -------------------------- -------------------------------------------------
14 April
2023 66,837 1 128.90 85 120.50
14 April
2023 37,836 - 129.50 48 120.50
14 April
2023 311,202 3 130.20 395 120.50
415,875 528
-------- --------------------------
9. Commitments and contingencies
On 30 September 2023, the Company had no financial commitments
(30 September 2022: GBPnil; 31 March 2023: GBPnil).
There were no contingencies or guarantees of the Company as at
30 September 2023 (30 September 2022: GBPnil; 31 March 2023:
GBPnil).
10. Post balance sheet events
Since 30 September 2023, the company has completed the following
material investment transactions:
-- As announced on 6 October 2023, the Company sold a proportion of its
holding in Quantexa at its current holding value returning proceeds of
GBP2.2 million;
-- Disposal of Ophelos for proceeds of GBP1.1 million; and
-- Investments totalling GBP3.2 million in one new and six existing
portfolio companies.
As announced on 30 October 2023, following a formal tender
process, Johnston Carmichael LLP were appointed as the Company's
Auditor.
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 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 September 2023 and 30 September 2022, and is unaudited.
The information for the year ended 31 March 2023 does not
constitute statutory accounts within the terms of section 434 of
the Companies Act 2006 but is derived from the statutory accounts
for the financial year, which have been delivered to the Registrar
of Companies. BDO LLP, as Auditor, reported on those accounts;
their report was unqualified and did not contain statements 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/AAEV,
where the Report can be accessed from the 'Financial Reports and
Circulars' section.
Attachment
-- AAEV pie chart 30 September 2023
https://ml-eu.globenewswire.com/Resource/Download/a4377c99-4f71-4a03-801e-4b61c7e00f0a
(END) Dow Jones Newswires
December 07, 2023 07:13 ET (12:13 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
Albion Enterprise Vct (LSE:AAEV)
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