Albion Technology & General VCT PLC: Half-yearly Financial
Report
Albion Technology & General VCT PLCLEI
number: 213800TKJUY376H3KN16
As required by the UK Listing Authority's
Disclosure Guidance and Transparency Rule 4.2, Albion Technology
& General VCT PLC today makes public its information relating
to the Half-yearly Financial Report (which is unaudited) for the
six months to 30 June 2021. This announcement was approved by the
Board of Directors on 20 September 2021.
The full Half-yearly Financial Report (which is
unaudited) for the period to 30 June 2021, 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/AATG/30Jun21.pdf.
Investment objective and policyThe Company’s
investment objective is to provide investors with a regular and
predictable source of dividend income, combined with the prospect
of long-term capital growth, through a balanced portfolio of
predominantly unquoted growth and technology businesses in a
qualifying Venture Capital Trust (“VCT”).
Investment policyThe Company will invest in a
broad portfolio of unquoted growth and technology businesses.
Allocation of assets will be determined by the investment
opportunities which become available, but efforts will be made to
ensure that the portfolio is diversified in terms of sectors and
stages of maturity of portfolio companies.
VCT qualifying and non-qualifying investments
Application of the investment policy is designed
to ensure that the Company continues to qualify and is approved as
a VCT by HM Revenue and Customs (“VCT regulations”). The maximum
amount invested in any one company is limited to any HMRC annual
investment limits. It is intended that normally at least 80 per
cent. of the Company's funds will be invested in VCT qualifying
investments. The VCT regulations also have an impact on the type of
investments and qualifying sectors in which the Company can make an
investment.
Funds held either 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 7.5 per
cent. of the Company’s assets at the time of investment.
Risk diversification and maximum exposures
Risk is spread by investing in a number of
different businesses within VCT qualifying industry sectors using a
mixture of securities. The maximum the Company will invest in a
single company is 15 per cent. of the Company’s assets at cost at
the time of investment. The value of an individual investment is
expected to increase over time as a result of trading progress and
a continuous assessment is made of investments' suitability for
sale. It is possible that individual holdings may grow in value to
a point where they represent a significantly higher proportion of
total assets prior to a realisation opportunity being
available.
Borrowing powers
The Company’s maximum exposure in relation to
gearing is restricted to 10 per cent. of the adjusted share capital
and reserves. The Directors do not have any intention of utilising
long-term gearing.
Financial
calendar
Record date for second dividend
for the yearPayment date for second dividend for the yearFinancial
year end |
3 December 202131 December 202131 December |
Financial highlights
|
Unaudited six months ended
30 June
2021(pence
per share) |
Unaudited six months ended30 June 2020(pence per share) |
Audited year ended31 December 2020 (pence per share) |
Opening net asset value |
69.35 |
82.58 |
82.58 |
Capital return/(loss) |
11.15 |
(2.70) |
(0.06) |
Revenue loss |
(0.11) |
(0.07) |
(0.22) |
Total return/(loss) |
11.04 |
(2.77) |
(0.28) |
Ordinary dividends paid |
(1.73) |
(2.00) |
(3.95) |
Special dividend paid |
- |
- |
(9.00) |
Impact from share capital
movements |
(0.49) |
0.04 |
- |
Net asset value |
78.17 |
77.85 |
69.35 |
Total shareholder value
to 30 June 2021 |
Ordinary shares
(pence per
share) |
Total dividends
paid during the period ended: |
|
31 December
2001 |
1.00 |
31 December
2002 |
2.00 |
31 December
2003 |
1.50 |
31 December
2004 |
7.50 |
31 December
2005 |
9.00 |
31 December
2006 |
8.00 |
31 December
2007 |
8.00 |
31 December
2008 |
16.00 |
31 December
2009 |
- |
31 December
2010 |
8.00 |
31 December
2011 |
5.00 |
31 December
2012 |
5.00 |
31 December
2013 |
5.00 |
31 December
2014 |
5.00 |
31 December
2015 |
5.00 |
31 December
2016 |
5.00 |
31 December
2017 |
4.00 |
31 December
2018 |
4.00 |
31 December
2019 |
4.00 |
31 December
2020 |
12.95 |
30 June 2021 |
1.73 |
Total
dividends paid to 30 June 2021 |
117.68 |
Net asset value as
at 30 June 2021 |
78.17 |
Total
shareholder value to 30 June
2021 |
195.85 |
In addition to the dividends paid above, the
Board declared a second dividend for the year ending 31 December
2021 of 1.95 pence per Ordinary share to be paid on 31 December
2021 to shareholders on the register on 3 December 2021.
Further details regarding the total shareholder
value for C Shares and Albion Income and Growth VCT PLC can be
found at www.albion.capital/funds/AATG under the ‘Financial Summary
for Previous Funds’ section.
NotesTotal shareholder value for every 100 pence
invested on initial allotment. The table above excludes tax
benefits upon subscription.
Interim management report
IntroductionI am delighted to
report a strong positive total return for the six months to 30 June
2021 of 11.04 pence per share, which represents a 15.9% uplift on
opening net asset value. We continue to see resilience and, in many
cases, growth from our portfolio, with many of our portfolio
companies demonstrating the value of the services they provide to
their customers as the economy emerges from the Covid-19 pandemic
(“the Pandemic”).
Results and
dividends The net asset value per
Ordinary share as at 30 June 2021 has increased to 78.17 pence in
the six months (31 December 2020: 69.35 pence; 30 June 2020: 77.85
pence (pre special dividend payment of 12.95 pence per share)),
mainly due to the continuing progress of a number of our portfolio
companies as discussed below.
In line with our dividend policy, targeting 5%
of NAV per annum, the Company paid a dividend of 1.73 pence per
share during the period to 30 June 2021 (2020: 2.00 pence per
share). The Company will pay a second dividend for the financial
year to 31 December 2021 of 1.95 pence per share on 31 December
2021 to shareholders on the register on 3 December 2021, being 2.5%
of the latest reported NAV at 30 June 2021.
This will bring the total dividends paid for the
year ending 31 December 2021 to 3.68 pence per share, which equates
to a 5.3% yield on the opening NAV of 69.35 pence per share at 31
December 2020.
Performance and portfolio
updateThe total gain on investments for the period ended
30 June 2021 was £15.0 million (31 December 2020: gain of £1.5
million; 30 June 2020: loss of £2.2 million). The key
movements in the period include £8.9 million valuation uplift to
Quantexa, and £2.2 million uplift to Oviva following their
successful, externally led, funding rounds. Encouragingly, we have
also seen many of our other portfolio companies performing well,
including £1.0 million uplift to Black Swan Data, £0.9 million
uplift to Phrasee and £0.8 million uplift to The Evewell Group.
There have also been some write-downs in our
portfolio, the largest being memsstar (£0.8m) reflecting the effect
of the Pandemic on its trading, and Mirada (£0.7 million) as its
ability to sell its software into hospitals has also been hampered
by the Pandemic.
The period saw a number of disposals with
proceeds totalling £1.7 million, which has led to realised gains of
£0.9 million. The principal exit was the sale of OmPrompt Holdings
in March which resulted in a return of 2.3 times cost, and
generated proceeds of £0.7 million. SBD Automotive was also sold
generating 2.1 times cost. Further details on these disposals can
be found in the table below.
Further information on the portfolio of
investments can be found below.
During the period, a total of £4.6 million was
deployed into portfolio companies, of which £2.4 million was
invested in five new portfolio companies, all of which should
result in further investment as the companies prove themselves and
grow. These are:
- £1.0 million
into 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;
- £0.5 million
into Gravitee Topco Limited (trading as Gravitee.io), an API
management platform;
- £0.4 million
into NuvoAir AB, a provider of digital therapeutics and
decentralised clinical trials for respiratory conditions;
- £0.3 million
into Brytlyt Limited, which uses patented software and AI, combined
with the superior computation power of graphics processing units
(GPUs), to derive insights thousands of times faster than legacy
systems; and
- £0.2 million
into Accelex Technology Limited (trading as Accelex), a provider of
data extraction and analytics technology for private capital
markets.
A further £2.2 million was invested in existing
portfolio companies, including £0.9 million into Black Swan Data to
support the restructure of its business to focus primarily on
predictive analytics for consumer brands; £0.4 million into uMotif
to take advantage of a growing market for its software which
gathers data from clinical trials; and £0.4 million into Panaseer
to continue to develop its cyber security platform.
Current portfolio sector
allocation Set out at the bottom of this announcement is
the sector diversification of the portfolio of investments as at 30
June 2021.
Board CompositionDuring the
period, Neil Cross retired after being Chairman of your Company
since its launch in 2000. I would like to thank Neil for his
outstanding stewardship, insightful contributions and guidance, not
least in his assistance to me during my time on the Board.
After serving as a non-executive Director of the
Company for nine years, Modwenna Rees-Mogg will be retiring from
the Board on 20 September 2021. We have valued her hugely
thoughtful contributions and wish her well in the future.
The Nomination Committee is engaged in
succession planning, but the Board has adequate skills and
experience, amongst the four ongoing directors, to oversee the
activities of the Company. I was pleased to accept the role of
chair during the next stage of the Company’s development, including
refreshing the Board. In relinquishing the role of Audit Chair, I
am confident that Margaret Payn will fulfil the role well. The
roles of Senior Independent Director and Remuneration Committee
chair will be filled in due course as part of the succession
planning.
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. The Company purchased
1,514,472 Ordinary shares for treasury during the period at a total
cost of £1.0 million. The Company continues to provide active
buy-back to help provide good secondary market liquidity for those
who want to dispose of all or part of their shareholdings.
Risks,
uncertainties and prospectsThe
continuing uncertainty and wide-reaching implications arising from
the Pandemic remains the key risk facing the Company, including the
impact on the UK and Global economies and the prospect of inflation
as a result of government intervention during the crisis. There are
also continuing potential implications of the UK’s departure from
the European Union which may adversely affect our underlying
portfolio companies. The Manager is continually assessing the
exposure to such risks for each portfolio company, and where
possible appropriate actions are being implemented. Overall
investment risk, however, is mitigated through a variety of
processes, including our policy of aiming to achieve balance in the
portfolio through the inclusion of sectors that are less exposed to
the business and consumer cycles and in trying to identify, and
nurture, good individual investment opportunities.
Other principal risks and uncertainties are
detailed in note 13 below.
Albion VCTs Top Up OffersAs
announced in the Annual Report and Financial Statements for the
year ended 31 December 2020, the 2020/21 Offers were fully
subscribed and closed having raised £15.5 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 Board will
consider participating in any Albion VCTs Top Up Offers for
2021/22.
The proceeds of the Offer 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, a number of which are noted above. Details on the
share allotments during the period can be found in note 8.
Transactions with the
ManagerDetails of the transactions that took place with
the Manager in the period can be found in note 5. Details of
related party transactions can be found in note 11.
The Company has had a Management Performance
Incentive scheme in place since the Company launched in 2000, with
the last changes to the scheme being in 2013. The circumstances of
the Company and markets in general have changed dramatically since
2000, not least in the ownership of the Company through Top Up
Offers, a merger in 2013 and share buy-backs. The portfolio of the
Company, and the demands on Managing such a portfolio, are quite
different from two decades ago, as is the VCT market more
generally, with technology and sector specialisation becoming more
important, and against more stringent VCT eligibility
requirements.
Consequently, the Board and Manager recognise
that the current Management Performance Incentive scheme is not in
alignment with the Company’s current and future circumstances.
Accordingly, the Board has agreed with the Manager to review the
current arrangements and to make a proposal to shareholders, which
will require shareholder approval, in the Annual Report and
Financial Statements for the year ending 31 December 2021. The
proposal will include full detail and explanation of changed
circumstances and the impact of what is being proposed.
It continues to be the Board’s belief that an
appropriate incentive fee structure is an important tool for
ensuring efficiency of returns for investors and for attracting and
retaining good investment management skills, and aligning these two
related ingredients in the best interests of shareholders.
Shareholder seminarThe Board is
pleased to report that the current intention of the Manager, Albion
Capital, is to host a physical rather than virtual shareholder
seminar this year on 12 November 2021, in central London, with the
venue to be confirmed. This will be dependent on government
guidelines and any changes thereto, and we will keep shareholders
informed as the date approaches. The Board and Manager are keen to
interact with shareholders and look forward to updating you on
portfolio developments, as well as answering any questions.
More details will shortly be available on the
Albion Capital website: www.albion.capital.
OutlookThe Board is encouraged
by the very positive result for the period, which demonstrates the
resilience of our portfolio which is both diversified in terms of
companies at different stages of maturity and across a variety of
different sectors, as well as capable of delivering good returns.
We remain confident that our portfolio companies are well
positioned to grow, despite the uncertainty around the longer-term
impact of the Pandemic and other market uncertainties, and that our
Manager is well positioned to find new opportunities for us, as
well as manage our existing investments. The Board believes the
Company is well placed to continue to deliver long term value to
our shareholders.
Robin Archibald Chairman20
September 2021
Responsibility
statement The Directors, Robin
Archibald, Margaret Payn, Mary Anne Cordeiro, Modwenna Rees-Mogg
and Patrick Reeve, are responsible for preparing the Half-yearly
Financial Report. In preparing these condensed Financial Statements
for the period to 30 June 2021 we, the Directors of the Company,
confirm that to the best of our knowledge:
(a) the condensed set of Financial Statements,
which has been prepared in accordance with Financial Reporting
Standard 104 “Interim Financial Reporting”, 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
Robin Archibald Chairman 20
September 2021
Portfolio of
investments
|
|
As at 30 June
2021 |
|
|
Portfolio company |
% voting
rights |
Cost£’000 |
Cumulative movement in
value£’000 |
Value£’000 |
|
Change in value for the
period*£’000 |
Quantexa Limited |
2.6 |
2,740 |
14,145 |
16,885 |
|
8,907 |
Radnor House School (TopCo) Limited |
14.8 |
2,710 |
2,001 |
4,711 |
|
152 |
Proveca Limited |
7.2 |
1,184 |
3,465 |
4,649 |
|
650 |
Chonais River Hydro Limited |
15.7 |
2,169 |
1,769 |
3,938 |
|
(18) |
Oviva AG |
3.5 |
1,192 |
2,568 |
3,760 |
|
2,231 |
Oxsensis Limited |
15.9 |
2,968 |
729 |
3,697 |
|
- |
Black Swan Data Limited |
9.2 |
3,268 |
- |
3,268 |
|
1,005 |
Egress Software Technologies Limited |
2.2 |
765 |
1,895 |
2,660 |
|
170 |
The Evewell Group Limited |
6.1 |
1,195 |
1,121 |
2,316 |
|
820 |
Cantab Research Limited (T/A Speechmatics) |
3.7 |
1,486 |
734 |
2,220 |
|
734 |
Gharagain River Hydro Limited |
18.5 |
1,526 |
670 |
2,196 |
|
(7) |
Phrasee Limited |
2.9 |
680 |
1,091 |
1,771 |
|
854 |
Panaseer Limited |
3.1 |
1,122 |
534 |
1,656 |
|
(30) |
Concirrus Limited |
3.2 |
1,632 |
- |
1,632 |
|
- |
The Street by Street Solar Programme Limited |
8.1 |
895 |
576 |
1,471 |
|
(113) |
Elliptic Enterprises Limited |
1.8 |
1,402 |
26 |
1,428 |
|
26 |
MHS 1 Limited |
22.5 |
1,565 |
(255) |
1,310 |
|
(86) |
Regenerco Renewable Energy Limited |
7.9 |
822 |
453 |
1,275 |
|
(89) |
uMotif Limited |
3.8 |
1,121 |
49 |
1,170 |
|
- |
Convertr Media Limited |
6.9 |
1,105 |
40 |
1,145 |
|
5 |
Healios Limited |
2.5 |
633 |
417 |
1,050 |
|
(54) |
The Voucher Market Limited (T/A WeGift) |
2.5 |
1,020 |
- |
1,020 |
|
- |
Threadneedle Software Holdings Limited (T/A Solidatus) |
1.7 |
1,014 |
- |
1,014 |
|
- |
Credit Kudos Limited |
4.5 |
979 |
- |
979 |
|
- |
MPP Global Solutions Limited |
2.9 |
950 |
- |
950 |
|
- |
Beddlestead Limited |
9.8 |
1,200 |
(277) |
923 |
|
111 |
Aridhia Informatics Limited |
4.9 |
950 |
(86) |
864 |
|
169 |
InCrowd Sports Limited |
5.0 |
636 |
228 |
864 |
|
240 |
Alto Prodotto Wind Limited |
6.9 |
586 |
241 |
827 |
|
(42) |
The Q Garden Company Limited |
33.4 |
934 |
(150) |
784 |
|
(52) |
DySIS Medical Limited |
3.5 |
2,589 |
(1,867) |
722 |
|
15 |
Locum’s Nest Limited |
9.8 |
675 |
41 |
716 |
|
82 |
Cisiv Limited |
7.7 |
695 |
(28) |
667 |
|
220 |
memsstar Limited |
30.1 |
515 |
117 |
632 |
|
(760) |
Limitless Technology Limited |
2.1 |
560 |
55 |
615 |
|
- |
Arecor Therapeutics PLC (Previously Arecor Limited) |
0.9 |
304 |
266 |
570 |
|
266 |
MyMeds&Me Limited |
4.6 |
439 |
130 |
569 |
|
151 |
Gravitee Topco Limited (T/A Gravitee.io) |
2.3 |
490 |
- |
490 |
|
- |
Albion Investment Properties Limited |
31.8 |
434 |
34 |
468 |
|
12 |
Imandra Inc. |
1.6 |
151 |
313 |
464 |
|
313 |
NuvoAir AB |
1.4 |
443 |
- |
443 |
|
- |
Innovation Broking Group Limited |
6.0 |
60 |
371 |
431 |
|
247 |
Premier Leisure (Suffolk) Limited |
- |
454 |
(28) |
426 |
|
(28) |
TransFICC Limited |
2.6 |
397 |
- |
397 |
|
- |
Koru Kids Limited |
1.6 |
345 |
36 |
381 |
|
- |
Erin Solar Limited |
15.7 |
440 |
(85) |
355 |
|
(24) |
AVESI Limited |
8.0 |
259 |
84 |
343 |
|
(33) |
Brytlyt Limited |
1.9 |
322 |
- |
322 |
|
- |
Seldon Technologies Limited |
1.4 |
283 |
- |
283 |
|
- |
Zift Channel Solutions Inc. |
1.6 |
881 |
(633) |
248 |
|
85 |
Harvest AD Limited |
- |
210 |
(2) |
208 |
|
(6) |
Xperiome Limited (Previously Raremark) |
2.4 |
322 |
(121) |
201 |
|
(176) |
Accelex Technology Limited (T/A Accelex) |
2.0 |
181 |
- |
181 |
|
- |
Avora Limited |
2.2 |
400 |
(249) |
151 |
|
(249) |
Greenenerco Limited |
3.1 |
90 |
57 |
147 |
|
(6) |
uMedeor Limited (T/A uMed) |
0.9 |
100 |
- |
100 |
|
- |
Symetrica Limited |
0.3 |
79 |
(16) |
63 |
|
- |
Sandcroft Avenue Limited (T/A Hussle) |
2.1 |
427 |
(403) |
24 |
|
(34) |
Palm Tree Technology Limited |
0.5 |
320 |
(304) |
16 |
|
(16) |
Forward Clinical Limited (T/A Pando) |
1.6 |
196 |
(190) |
6 |
|
(48) |
Abcodia Limited |
3.2 |
568 |
(564) |
4 |
|
(209) |
Mirada Medical Limited |
12.9 |
1,321 |
(1,321) |
- |
|
(683) |
Elements Software Limited |
3.3 |
19 |
(19) |
- |
|
- |
Total fixed asset
investments |
|
55,418 |
27,658 |
83,076 |
|
14,702 |
T/A – trading as* As adjusted for additions and disposals during
the period.
Investment realisations in the
period to 30 June
2021 |
Cost£’000 |
Opening carrying value£’000 |
Disposal proceeds£’000 |
Total realised gain£’000 |
Gain/(loss)
on opening value £’000 |
Disposals: |
|
|
|
|
|
OmPrompt Holdings Limited |
306 |
678 |
701 |
395 |
23 |
SBD Automotive Limited |
273 |
569 |
567 |
294 |
(2) |
Mi-Pay Group PLC |
135 |
135 |
150 |
15 |
15 |
|
|
|
|
|
|
Loan stock repayments and
other: |
|
|
|
|
|
Alto Prodotto Wind Limited |
17 |
25 |
25 |
8 |
- |
Greenenerco Limited |
3 |
5 |
5 |
2 |
- |
Escrow adjustments and other** |
- |
- |
228 |
228 |
228 |
Total |
734 |
1,412 |
1,676 |
942 |
264 |
** These comprise fair value movements on
deferred consideration on previously disposed investments, release
of the G.Network Communications discount which is treated as a
financing transaction, and expenses which are incidental to the
purchase or disposal of an investment
Unrealised gains on fixed asset investments |
|
|
|
|
|
14,702 |
Realised
gains on fixed asset
investments |
|
|
|
|
264 |
Total gains on investments as per Income
statement |
|
|
|
|
14,966 |
Condensed income statement
|
|
Unauditedsix
months ended 30 June
2021 |
Unauditedsix months ended 30 June 2020 |
Auditedyear ended 31 December 2020 |
|
Note |
Revenue£’000 |
Capital£’000 |
Total£’000 |
Revenue£’000 |
Capital£’000 |
Total£’000 |
Revenue£’000 |
Capital£’000 |
Total£’000 |
Gains/(losses) on investments |
3 |
- |
14,966 |
14,966 |
- |
(2,224) |
(2,224) |
- |
1,453 |
1,453 |
Investment income |
4 |
330 |
- |
330 |
348 |
- |
348 |
604 |
- |
604 |
Investment management fee |
5 |
(270) |
(807) |
(1,077) |
(260) |
(779) |
(1,039) |
(505) |
(1,516) |
(2,021) |
Other expenses |
|
(193) |
- |
(193) |
(163) |
- |
(163) |
(347) |
- |
(347) |
(Loss)/profit
on ordinary activities before tax |
|
(133) |
14,159 |
14,026 |
(75) |
(3,003) |
(3,078) |
(248) |
(63) |
(311) |
Tax (charge)/credit on ordinary activities |
|
- |
- |
- |
- |
- |
- |
- |
- |
- |
(Loss)/profit and total comprehensive
income attributable to shareholders |
|
(133) |
14,159 |
14,026 |
(75) |
(3,003) |
(3,078) |
(248) |
(63) |
(311) |
Basic and diluted
(loss)/return per share
(pence)* |
7 |
(0.11) |
11.15 |
11.04 |
(0.07) |
(2.70) |
(2.77) |
(0.22) |
(0.06) |
(0.28) |
* adjusted for treasury shares
Comparative figures have been extracted from the
unaudited Half-yearly Financial Report for the six months ended 30
June 2020 and the audited statutory accounts for the year ended 31
December 2020.
The accompanying notes form an integral part of
this Half-yearly Financial Report.
The total column of this Condensed income
statement represents the profit and loss account of the Company.
The supplementary revenue and capital columns have been prepared in
accordance with The Association of Investment Companies’ Statement
of Recommended Practice.
Condensed
balance
sheet
|
Note |
Unaudited30 June
2021£’000 |
Unaudited30 June 2020£’000 |
Audited31 December 2020£’000 |
|
|
|
|
|
Fixed asset investments |
|
83,076 |
58,658 |
65,152 |
|
|
|
|
|
Current assets |
|
|
|
|
Current asset investments |
|
- |
1,662 |
- |
Trade and other receivables |
|
2,133 |
132 |
2,038 |
Cash and cash equivalents |
|
19,957 |
26,200 |
11,451 |
|
|
22,090 |
27,994 |
13,489 |
Total assets |
|
105,166 |
86,652 |
78,641 |
Payables: amounts falling due within one yearTrade
and other payables |
|
(947) |
(659) |
(613) |
Total assets less current
liabilities |
|
104,219 |
85,993 |
78,028 |
|
|
|
|
|
Equity attributable to equity holders |
|
|
|
|
Called up share capital |
8 |
1,530 |
1,287 |
1,307 |
Share premium |
|
52,293 |
35,246 |
37,036 |
Capital redemption reserve |
|
48 |
42 |
48 |
Unrealised capital reserve |
|
27,619 |
11,234 |
13,595 |
Realised capital reserve |
|
23,752 |
23,038 |
23,617 |
Other distributable reserve |
|
(1,023) |
15,146 |
2,425 |
Total equity shareholders’ funds |
|
104,219 |
85,993 |
78,028 |
|
|
|
|
|
Basic and diluted net asset value per share
(pence)* |
|
78.17 |
77.85 |
69.35 |
* excluding treasury shares
Comparative figures have been extracted from the
unaudited Half-yearly Financial Report for the six months ended 30
June 2020 and the audited statutory accounts for the year ended 31
December 2020.
The accompanying notes form an integral part of
this Half-yearly Financial Report.
These Financial Statements were approved by the
Board of Directors and authorised for issue on 20 September 2021
and were signed on its behalf by
Robin ArchibaldChairmanCompany
number: 04114310
Condensed statement of changes in
equity
|
Called up
sharecapital |
Share premium |
Capital redemption reserve |
Unrealised capital reserve |
Realised capital reserve* |
Other distributable reserve* |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
As at 1 January 2021 |
1,307 |
37,036 |
48 |
13,595 |
23,617 |
2,425 |
78,028 |
Profit/(loss) and total comprehensive income for the period |
- |
- |
- |
14,702 |
(543) |
(133) |
14,026 |
Transfer of previously unrealised gains on disposal of
investments |
- |
- |
- |
(678) |
678 |
- |
- |
Purchase of own shares for treasury |
- |
- |
- |
- |
- |
(1,009) |
(1,009) |
Issue of equity |
223 |
15,643 |
- |
- |
- |
- |
15,866 |
Cost of issue of equity |
- |
(386) |
- |
- |
- |
- |
(386) |
Dividends paid |
- |
- |
- |
- |
- |
(2,306) |
(2,306) |
As at 30 June
2021 |
1,530 |
52,293 |
48 |
27,619 |
23,752 |
(1,023) |
104,219 |
As at 1 January 2020 |
1,296 |
34,949 |
28 |
13,708 |
23,567 |
18,474 |
92,022 |
Loss and total comprehensive income for the period |
- |
- |
- |
(2,561) |
(442) |
(75) |
(3,078) |
Transfer of previously unrealised losses on disposal of
investments |
- |
- |
- |
87 |
(87) |
- |
- |
Purchase of own shares for cancellation |
(14) |
- |
14 |
- |
- |
(1,052) |
(1,052) |
Issue of equity |
4 |
314 |
- |
- |
- |
- |
318 |
Cost of issue of equity |
- |
(16) |
- |
- |
- |
- |
(16) |
Dividends paid |
- |
- |
- |
- |
- |
(2,201) |
(2,201) |
As at 30 June 2020 |
1,287 |
35,246 |
42 |
11,234 |
23,038 |
15,146 |
85,993 |
As at 1 January 2020 |
1,296 |
34,949 |
28 |
13,708 |
23,567 |
18,474 |
92,022 |
Profit/(loss) and total comprehensive income for the year |
- |
- |
- |
1,233 |
(1,296) |
(248) |
(311) |
Transfer of previously unrealised gains on disposal of
investments |
- |
- |
- |
(1,346) |
1,346 |
- |
- |
Purchase of shares for cancellation |
(20) |
- |
20 |
- |
- |
(1,473) |
(1,473) |
Issue of equity |
31 |
2,138 |
- |
- |
- |
- |
2,169 |
Cost of issue of equity |
- |
(51) |
- |
- |
- |
- |
(51) |
Dividends paid |
- |
- |
- |
- |
- |
(14,328) |
(14,328) |
As at 31 December 2020 |
1,307 |
37,036 |
48 |
13,595 |
23,617 |
2,425 |
78,028 |
*These reserves amount to £22,729,000 (30 June
2020: £38,184,000; 31 December 2020: £26,042,000) which is
considered distributable.
Condensed statement
of cash
flows
|
Unauditedsix months ended 30 June
2021£’000 |
Unauditedsix months ended 30 June 2020£’000 |
Auditedyear ended31 December 2020£’000 |
Cash flow from operating activities |
|
|
|
Loan
stock income received |
315 |
269 |
511 |
Dividend
income received |
15 |
82 |
108 |
Deposit
interest received |
1 |
51 |
58 |
Investment management fee paid |
(871) |
(996) |
(2,062) |
Other
cash payments |
(231) |
(180) |
(344) |
Corporation tax paid |
- |
- |
- |
Net cash flow from operating activities |
(771) |
(774) |
(1,729) |
|
|
|
|
|
|
|
|
Cash flow from investing activities |
|
|
|
Purchase
of current asset investments |
- |
(4) |
(4) |
Purchase
of fixed asset investments |
(4,634) |
(3,497) |
(9,158) |
Disposal
of current asset investments |
- |
- |
1,616 |
Disposal
of fixed asset investments |
1,587 |
952 |
1,936 |
Net cash flow from investing activities |
(3,047) |
(2,549) |
(5,610) |
|
|
|
|
|
|
|
|
Cash flow from financing activities |
|
|
|
Issue of
share capital |
15,120 |
- |
- |
Cost of
issue of equity |
(19) |
- |
(47) |
Dividends paid |
(1,932) |
(1,898) |
(12,158) |
Purchase
of own shares (including costs) |
(845) |
(1,047) |
(1,473) |
Net cash flow from financing activities |
12,324 |
(2,945) |
(13,678) |
|
|
|
|
Increase/(decrease)
in cash and cash equivalents |
8,506 |
(6,268) |
(21,017) |
Cash and
cash equivalents at start of period |
11,451 |
32,468 |
32,468 |
Cash and cash equivalents at end of period |
19,957 |
26,200 |
11,451 |
Notes to the
condensed Financial
Statements
1. Basis of
preparationThe condensed 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 2 of
the Half-yearly Financial Report.
2. Accounting
policiesFixed and
current asset investmentsThe 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
payablesReceivables (including debtors due after more than
one year), payables and cash are carried at amortised cost, in
accordance with FRS 102. Debtors due after more than one year meet
the definition of a financing transaction held at amortised cost,
and interest will be recognised through capital over the credit
period using the effective interest method. There are no financial
liabilities other than payables.
Investment incomeEquity
incomeDividend income is included in revenue when the investment is
quoted ex-dividend.
Unquoted loan stock incomeFixed returns on
non-equity shares and debt securities are recognised when the
Company’s rights to receive payment and expected settlement are
established. Where interest is rolled up and/or payable at
redemption then it is recognised as income unless there is
reasonable doubt as to its receipt.
Bank interest incomeInterest income is
recognised on an accruals basis using the rate of interest agreed
with the bank.
Investment management
fee, performance incentive fee
and expensesAll expenses have been accounted for
on an accruals basis. Expenses are charged through the other
distributable reserve except the following which are charged
through the realised capital reserve:
- 75 per cent. 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 per cent. of the Company’s investment returns
will be in the form of capital gains; and
- expenses which are incidental to
the purchase or disposal of an investment are charged through the
realised capital reserve.
TaxationTaxation is applied on
a current basis in accordance with FRS 102. Current tax is tax
payable (refundable) in respect of the taxable profit (tax loss)
for the current period or past reporting periods using the tax
rates and laws that have been enacted or substantively enacted at
the financial reporting date. Taxation associated with capital
expenses is applied in accordance with the SORP.
Deferred tax is provided in full on all timing
differences at the reporting date. Timing differences are
differences between taxable profits and total comprehensive income
as stated in the Financial Statements that arise from the inclusion
of income and expenses in tax assessments in periods different from
those in which they are recognised in the Financial Statements. As
a VCT the Company has an exemption from tax on capital gains. The
Company intends to continue meeting the conditions required to
obtain approval as a VCT 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
reservesCalled-up share capitalThis
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 reserveThis reserve accounts
for amounts by which the issued share capital is diminished through
the repurchase and cancellation of the Company’s own shares.
Unrealised capital reserveIncreases and
decreases in the valuation of investments held at the period end
against cost are included in this reserve.
Realised capital reserveThe following are
disclosed in this reserve:
- gains and losses compared to cost
on the realisation of investments, or permanent diminutions in
value;
- expenses, together with the related
taxation effect, charged in accordance with the above policies;
and
- dividends paid to equity holders
where paid out in the form of capital.
Other distributable reserveThe special reserve,
treasury share reserve and the revenue reserve were combined in
2012 to form a single reserve named other distributable
reserve.
This reserve accounts for movements from the
revenue column of the Income statement, the payment of dividends,
the buy-back of shares and other non-capital realised
movements.
DividendsDividends distributed
by the Company are accounted for in the period in which the
dividend is paid or approved at the Annual General Meeting.
Segmental reportingThe
Directors are of the opinion that the Company is engaged in a
single operating segment of business, being investment in smaller
companies principally based in the UK.
3. Gains/(losses)
on investments
|
Unauditedsix months ended 30 June
2021£’000 |
Unauditedsix months ended 30 June 2020£’000 |
Auditedyear ended 31 December 2020£’000 |
Unrealised gains/(losses) on fixed asset investments |
14,702 |
(2,026) |
1,233 |
Unrealised losses on current
asset investments |
- |
(535) |
- |
Realised gains on fixed asset
investments |
264 |
337 |
801 |
Realised losses on current
asset investments |
- |
- |
(581) |
|
14,966 |
(2,224) |
1,453 |
4. Investment
income
|
Unauditedsix months ended
30 June
2021£’000 |
Unauditedsix months ended 30 June 2020£’000 |
Auditedyear ended 31 December 2020£’000 |
Loan stock interest |
314 |
269 |
510 |
Dividend income |
15 |
30 |
39 |
Bank deposit interest |
1 |
49 |
55 |
|
330 |
348 |
604 |
|
|
|
|
5. Investment
management fee
|
Unauditedsix months
ended30 June
2021£’000 |
Unauditedsix months ended30 June 2020£’000 |
Auditedyear ended31 December 2020£’000 |
Investment management fee charged to revenue |
270 |
260 |
505 |
Investment management fee
charged to capital |
807 |
779 |
1,516 |
|
1,077 |
1,039 |
2,021 |
Further details of the Management agreement
under which the investment management fee is paid are given in the
Strategic report on page 13 of the Annual Report and Financial
Statements for the year ended 31 December 2020.
During the period, services for a total value of
£1,077,000 (30 June 2020: £1,039,000; 31 December 2020: £2,021,000)
were purchased by the Company from Albion Capital Group LLP in
respect of management fees. At the financial period end, the amount
due to Albion Capital Group LLP in respect of these services
disclosed as accruals was £683,000 (30 June 2020: £561,000; 31
December 2020: £477,000). The total annual running costs of the
Company are capped at an amount equal to 2.75 per cent. of the
Company’s net assets, with any excess being met by Albion Capital
by way of a reduction in management fees. During the period, the
management fee was reduced by £162,000 as a result of this cap (30
June 2020: £37,000; 31 December 2020: £78,000).
During the period, the Company was not charged
by Albion Capital Group LLP in respect of Patrick Reeve’s services
as a Director (30 June 2020 and 31 December 2020: £nil).
Albion Capital Group LLP, its partners and staff
(including Patrick Reeve), held 1,219,349 Ordinary shares in the
Company as at 30 June 2021.
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 June 2021, fees of
£145,000 attributable to the investments of the Company were
received by Albion Capital Group LLP pursuant to these arrangements
(30 June 2020: £99,000; 31 December 2020: £237,000).
The Company entered into an offer agreement
relating to the Offers with the Company’s investment manager Albion
Capital Group LLP, pursuant to which Albion Capital would receive a
fee of 2.5% of the gross proceeds of the Offers and out of which
Albion Capital would pay the costs of the Offers, as detailed in
the Prospectus.
6. Dividends |
Unaudited |
Unaudited |
Audited |
|
six months ended30 June
2021£’000 |
six months ended30 June 2020£’000 |
year ended31 December 2020£’000 |
Special dividend of 9.00p per share paid on 30 October 2020 |
- |
- |
9,942 |
Dividend of 1.95p per share
paid on 31 December 2020 |
- |
- |
2,185 |
Dividend of 1.73p per share
paid on 30 June 2021 (30 June 2020: 2.00p per share) |
2,306 |
2,201 |
2,201 |
|
2,306 |
2,201 |
14,328 |
The Directors have declared a dividend of 1.95
pence per Ordinary share (total approximately £2,600,000) payable
on 31 December 2021, to shareholders on the register on 3 December
2021.
7. Basic
and diluted (loss)/return per
share
Ordinary
shares |
Unauditedsix months ended
30 June
2021 |
Unauditedsix months ended 30 June 2020 |
Auditedyear ended 31 December 2020 |
|
Revenue |
Capital |
Revenue |
Capital |
Revenue |
Capital |
(Loss)/profit attributable to equity shares (£’000) |
(133) |
14,159 |
(75) |
(3,003) |
(248) |
(63) |
Weighted average shares in issue
(adjusted for treasury shares) |
127,004,453 |
110,973,597 |
110,981,864 |
(Loss)/return attributable per
equity share (pence) |
(0.11) |
11.15 |
(0.07) |
(2.70) |
(0.22) |
(0.06) |
The weighted average number of shares is
calculated after adjusting for treasury shares of 19,710,942 (30
June 2020: 18,196,470; 31 December 2020: 18,196,470).
There are no convertible instruments,
derivatives or contingent share agreements in issue, and therefore
no dilution affecting the (loss)/return per share. The basic
(loss)/return per share is therefore the same as the diluted
(loss)/return per share.
8. Share
capital
Allotted, called up and fully paid shares of 1 penny
each |
Unaudited30 June
2021 |
Unaudited30 June 2020 |
Audited31 December 2020 |
Number of shares |
153,035,258 |
128,657,872 |
130,710,891 |
Nominal value of allotted
shares (£’000) |
1,530 |
1,287 |
1,307 |
Voting rights (number of
shares net of treasury shares) |
133,324,316 |
110,461,402 |
112,514,421 |
During the period to 30 June 2021 the Company
purchased 1,514,472 Ordinary shares (nominal value £15,145) for
treasury at a cost of £1,009,000. The total number of Ordinary
shares held in treasury as at 30 June 2021 was 19,710,942 (30 June
2020: 18,196,470; 31 December 2020: 18,196,470) representing 12.9
per cent. of the Ordinary shares in issue as at 30 June 2021.
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 2021:
Date of allotment |
Number of shares
allotted |
Aggregate nominal
value of shares
(£’000) |
Issue price
(pence per
share) |
Net invested
(£’000) |
Opening market price on allotment date (pence per
share) |
30 June 2021 |
512,667 |
5 |
73.62 |
360 |
70.00 |
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 30
June 2021:
Date of allotment |
Number of shares allotted |
Aggregate nominal value of shares (£’000) |
Issue price (pence per share) |
Net consideration received (£’000) |
Opening market price on allotment date (pence per
share) |
26 February 2021 |
2,059,020 |
21 |
70.30 |
1,426 |
66.00 |
26 February 2021 |
520,699 |
5 |
70.70 |
361 |
66.00 |
26 February 2021 |
18,541,660 |
185 |
71.10 |
12,854 |
66.00 |
9 April 2021 |
175,959 |
2 |
70.50 |
122 |
66.00 |
9 April 2021 |
16,384 |
- |
70.80 |
11 |
66.00 |
9 April 2021 |
497,978 |
5 |
71.20 |
346 |
66.00 |
|
21,811,700 |
|
|
15,120 |
|
9. Commitments
and
contingencies As
at 30 June 2021, the Company had no financial commitments in
respect of investments (30 June 2020 and 31 December 2020:
£nil).
There are no contingencies or guarantees of the
Company as at 30 June 2021 (30 June 2020 and 31 December 2020:
£nil).
10. Post
balance sheet
events Since
30 June 2021, the Company has completed the following material
transactions:
- Investment of £1,501,000 in Oviva
AG; and
- Investment of £352,000 in The
Evewell Group Limited.
11. Related
party transactionsOther than transactions with the Manager
as disclosed in note 5, there are no other related party
transactions 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
meetings and have been stress tested to allow for the forecasted
impact of the Covid-19 pandemic. The Board has revisited and
updated its 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 Financial Reporting Council in
September 2014, and the subsequent updated Going concern, risk and
viability guidance issued by the FRC due to Covid-19 in 2020.
13. Risks
and uncertaintiesIn 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 31
December 2020. The impact of the Coronavirus (Covid-19) pandemic
has created heightened uncertainty but has not changed the nature
of these risks. The Board considers that the processes for
mitigating these risks remain appropriate.
1. Investment,
performance and valuation riskThe risk of investment in poor
quality businesses, which could reduce the returns to shareholders
and could negatively impact the Company’s current and future
valuations.
By nature, smaller unquoted businesses, such as
those that qualify for VCT purposes, are more volatile than larger,
long established businesses.
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 riskThe 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 VCT
management which is used to operating within the requirements of
the VCT legislation. In addition, to provide further formal
reassurance, the Board has appointed Philip Hare & Associates
LLP as its taxation adviser, who report quarterly to the Board to
independently confirm compliance with the VCT legislation, to
highlight areas of risk and to inform on changes in legislation.
Each investment in a portfolio company is also pre-cleared with our
professional advisers or H.M. Revenue & Customs. The Company
monitors closely the extent of qualifying holdings and addresses
this as required.
3. Regulatory
and compliance riskThe Company is listed on The London Stock
Exchange and is required to comply with the rules of the UK Listing
Authority, as well as with the Companies Act, Accounting Standards
and other legislation. Failure to comply with these regulations
could result in a delisting of the Company’s shares, or other
penalties under the Companies Act or from financial reporting
oversight bodies.
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. Market
value of Ordinary sharesThe market value of Ordinary shares can
fluctuate. The market value of an Ordinary share, as well as being
affected by its net asset value (“NAV”) and prospective NAV, also
takes into account its dividend yield and prevailing interest
rates. As such, the market value of an Ordinary share may vary
considerably from its underlying NAV. The market prices of shares
in quoted investment companies can, therefore, be at a discount or
premium to the NAV at different times, depending on supply and
demand, market conditions, general investor sentiment and other
factors, including the ability to exercise share buybacks.
Accordingly, the market price of the Ordinary shares may not fully
reflect their underlying NAV.
The Company operates a share buy-back policy,
which aims to limit the discount at which the Ordinary shares trade
to around 5 per cent. to NAV, by providing a purchaser through the
Company in absence of market purchasers. From time to time
buy-backs cannot be applied, for example when the Company is
subject to a close period, or if it were to exhaust and could not
renew any buyback authorities.
New Ordinary shares are issued at sufficient
premium to NAV to cover the costs of issue and to avoid asset value
dilution to existing investors.
5. Operational
and internal control riskThe 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, PKF Littlejohn
LLP. On an annual basis, the Audit Committee chairman meets with
the internal audit partner to provide an opportunity to ask
specific detailed questions in order to satisfy the Committee that
the Manager has strong systems and controls in place including
those in relation to business continuity and cyber security.
Ocorian Depositary (UK) Limited is appointed as
Depositary to oversee the custody and cash arrangements and provide
other AIFMD duties. The Board reviews the quarterly reports
prepared by Ocorian Depositary (UK) Limited to ensure that Albion
Capital Group LLP is adhering to its duties as a full-scope AIFM
under the AIFMD.
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 and remain
compliant with regulations. The Manager and other service providers
have also demonstrated to the Board that there is no undue reliance
placed upon any one individual.
6. Economic,
political and social riskChanges 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.
The current significant exogenous risk to the
Company, the wider population and economy, is the Coronavirus
(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
Coronavirus (Covid-19) pandemic, 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.
14. Other
informationThe 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 2021 and 30 June 2020 and is
unaudited. The information for the year ended 31 December 2020,
does not constitute statutory accounts within the terms of section
434 of the Companies Act 2006 and is derived from the statutory
accounts for that 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.
15. PublicationThis
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/AATG,
where the Report can be accessed from the 'Financial Reports and
Circulars' section.
- Current portfolio sector allocation
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