TIDMKAY
Kings Arms Yard VCT PLC
LEI Code 213800DK8H27QY3J5R45
As required by the UK Listing Authority's Disclosure Guidance
and Transparency Rule 4.2, Kings Arms Yard VCT PLC today makes
public its information relating to the Half-yearly Financial Report
(which is unaudited) for the six months to 30 June 2023. This
announcement was approved by the Board of Directors on 22 September
2023.
The full Half-yearly Financial Report (which is unaudited) for
the period to 30 June 2023 will shortly be sent to shareholders and
will be available on the Albion Capital Group LLP website by
clicking www.albion.capital/funds/KAY/30Jun2023.pdf.
Investment policy
The Company is a Venture Capital Trust and the investment policy
is intended to produce a regular and predictable dividend stream
with an appreciation in capital value.
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.
Funds held pending investment or for liquidity purposes are held
as cash on deposit or similar instruments with banks or other
financial institutions with high credit ratings assigned by
international credit rating agencies.
Risk diversification and maximum exposures
Risk is spread by investing in a number of different businesses
within venture capital trust qualifying industry sectors using a
mixture of securities. The maximum amount which the Company will
invest in a single portfolio company is 15% of the Company's assets
at cost, thus ensuring a spread of investment risk. The value of an
individual investment may increase over time as a result of trading
progress and it is possible that it may grow in value to a point
where it represents a significantly higher proportion of total
assets prior to a realisation opportunity being available.
The Company's maximum exposure in relation to gearing is
restricted to the amount equal to its adjusted capital and
reserves.
Financial calendar
6 October 2023 Record date for second dividend
31 October 2023 Payment of second dividend
31 December Financial year end
Financial highlights
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2023 30 June 2022 31 December 2022
(pence per share) (pence per share) (pence per share)
--------------- ------------------- ------------------- -------------------
Opening net
asset value 20.95 23.05 23.05
Capital return 0.75 0.55 0.07
Revenue return 0.06 0.05 0.09
-------- -------- --------
Total return 0.81 0.60 0.16
Dividends paid (0.52) (0.58) (2.30)
Impact of share
capital
movements 0.04 - 0.04
--------- --------- ---------
Net asset value 21.28 23.07 20.95
Shareholder return and shareholder value
Shareholder value from launch to 1 January 2011: (pence per share)
Subscription price per share at launch 100.00
Total dividends paid to 1 January 2011 58.66
Decrease in net asset value (83.40)
------------------------------------------------------ -----------------
Total shareholder value to 1 January 2011 75.26
------------------------------------------------------ -----------------
Shareholder return from 1 January 2011 to 30 June
2023 (period that Albion Capital has been investment
manager):
Total dividends paid 15.34
Increase in net asset value 4.68
------------------------------------------------------ -----------------
Total shareholder return from 1 January 2011 to 30
June 2023 20.02
------------------------------------------------------ -----------------
Shareholder value since launch:
Total dividends paid to 30 June 2023 74.00
Net asset value as at 30 June 2023 21.28
------------------------------------------------------ -----------------
Total shareholder value as at 30 June 2023 95.28
------------------------------------------------------ -----------------
The above financial summary is for the Company, Kings Arms Yard
VCT PLC only. Details of the financial performance of the various
Quester, SPARK and Kings Arms Yard VCT 2 PLC companies, which have
been merged into the Company, can be found at
www.albion.capital/funds/KAY under the 'Financial summary for
previous funds' section.
The Directors have declared a second dividend of 0.53 pence per
share for the year ending 31 December 2023, which will be paid on
31 October 2023 to shareholders on the register on 6 October
2023.
Interim management report
Introduction
In the six months to 30 June 2023, the Company generated a total
return of 0.81 pence per share, representing a 3.9% return on
opening NAV. During the period, the Company continued to face a
difficult macroeconomic and geopolitical backdrop, including
persistent high levels of inflation, rising interest rates and
volatility of quoted technology company valuations. Despite this,
the Board is encouraged by the positive total return generated by
the Company and optimistic that many of the portfolio companies
will continue to grow.
Valuations and results
The total gain on investments for the six-month period was
GBP4.8 million (30 June 2022: gain of GBP3.5 million). The key
movement to the total gain was Quantexa increasing its value by
GBP6.1 million following an externally led $129 million Series E
fundraising, which completed in April 2023. The latest funding
round made it the first UK "Unicorn" of 2023 (a private company
valuation over $1 billion) and the Board is excited about its
future prospects.
Other gains in the period included Ophelos, Accelex Technology
and Proveca, which resulted in a combined uplift of GBP1.2 million
to the portfolio. These gains were partially offset by write downs
in Black Swan Data, which decreased by GBP1.1 million, Neurofenix
by GBP0.3 million and Locum's Nest by GBP0.2 million.
The NAV per share has increased to 21.28 pence per share (30
June 2022: 23.07 pence per share; 31 December 2022: 20.95 pence per
share).
Our top 3 portfolio companies, being Quantexa, Proveca and
Egress Software Technologies, now account for 28.7% of the
Company's NAV (30 June 2022: 22.5%; 31 December 2022: 24.2%).
Further details of the portfolio of investments and investment
realisations can be found below.
Dividends and results
In line with our dividend policy targeting around 5% of NAV per
annum the Company paid a first dividend of 0.52 pence per share
during the period to 30 June 2023 (30 June 2022: 0.58 pence per
share). The Company will pay a second dividend for the financial
year ending 31 December 2023 of 0.53 pence per share on 31 October
2023 to shareholders on the register on 6 October 2023, being 2.5%
of the 30 June 2023 NAV.
This will bring the total regular dividends paid for the year
ending 31 December 2023 to 1.05 pence per share, which equates to a
5.0% yield on the opening NAV of 20.95 pence per share, in line
with the Boards dividend target.
Investment activity
Given the economic uncertainty of high inflation and rising
interest rates, in addition to the 15 new investments the Company
made in 2022, the first half of 2023 has been more subdued in terms
of new investment activity. During the period the Company has
invested GBP0.9 million in existing portfolio companies, the
largest being GBP0.5 million into Proveca, which specialises in the
reformulation of medicines for children, GBP0.2 million into Seldon
Technologies, which enables enterprises to deploy Machine Learning
models in production, and GBP0.2 million into Symetrica, a designer
and manufacturer of radiation detection equipment.
Investment activity has started to increase after the period
end, with GBP1.8 million invested into new and follow-on
investments since 30 June 2023.
Portfolio sector allocation
The pie chart at the end of this announcement outlines the
different sectors in which the Company's assets, at carrying value,
were invested at 30 June 2023.
Board composition and succession planning
As part of the Board's succession planning, we are pleased to
welcome Simon Thorpe as a Director with effect from 1 September
2023. Simon is a qualified Chartered Accountant and former
chairman, and current Director, of Cambridge Angels with extensive
experience of analysing and investing in early-stage public and
private companies in the technology and technology enabled
healthcare sectors. His previous roles include him working as the
Chief Operating Officer for European Equity Research and UBS Global
Equity Research.
The Nomination Committee continually monitors and reviews the
membership of the Board based on the spread of skills and
contributions of its members, as well as looking at succession
planning requirements of the Company.
Share buy-backs
It remains the Board's primary objective to maintain sufficient
resources for investment in new and existing portfolio companies
and for the continued payment of dividends to shareholders. The
Board's policy is to buy-back shares in the market, subject to the
overall constraint that such purchases are in the Company's
interest. It is the Board's intention for such buy-backs to be in
the region of a 5% discount to net asset value, so far as market
conditions and liquidity permit. The Board continues to review the
use of buy-backs and is satisfied that it is an important means of
providing market liquidity for shareholders.
Transactions with the Manager
Details of transactions with the Manager for the reporting
period can be found in note 4. Details of related party
transactions can be found in note 10.
Risks and uncertainties
The Company faces a number of significant risks including rising
interest rates, persistent high levels of inflation, geopolitical
tensions, and an expected period of economic stagnation, or even
recession, in the UK.
Our investment portfolio, while concentrated mainly in the
technology and healthcare sectors, remains diversified in terms of
both sub-sector and stage of maturity.
In accordance with DTR 4.2.7, the Board confirms that the
principal risks and uncertainties facing the Company have not
materially changed from those identified in the Annual Report and
Financial Statements for the year ended 31 December 2022. The
current high levels of inflation and geopolitical tensions have
created heightened uncertainty, but has not changed the nature of
the principal risks. The Board considers that the present processes
for mitigating those risks remain appropriate.
The principal risks faced by the Company are:
-- Investment, performance, 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 explanation of the principal risks facing the Company
can be found in the Annual Report and Financial Statements for the
year ended 31 December 2022 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/KAY under the 'Financial Reports and
Circulars' section.
Albion VCTs Top Up Offer
As announced in the Annual Report and Financial Statements for
the year ended 31 December 2022, the Board was pleased the 2022/23
Offer was fully subscribed and closed, having raised GBP8
million.
The proceeds are being used to provide support to our existing
portfolio companies and to enable us to take advantage of new and
exciting investment opportunities as they arise. Details on the
share allotments during the period can be found in note 7.
Shareholder seminar
The Board is pleased to report that the next Shareholder Seminar
will be held in person at the Royal College of Surgeons, Lincoln's
Inn Field, London on 15 November 2023 and the Board will be
delighted to see as many shareholders as possible at the event. The
Board and Manager are keen to interact with shareholders and look
forward to sharing with you further portfolio updates, as well as
answering any questions. Places are limited and to reserve a place
please email info@albion.capital
https://www.globenewswire.com/Tracker?data=LlsUfpy9yrmw7WVLx4M-TVU8hjd5vBAzrCqAChsjUU8hMxCQUnBbQu9PdZYUW57ZdDByDSgqMZ4BjB1tZW6MGfe-y7trt70vXHeR8swEv6s=
with subject heading "Shareholder Seminar" and include your full
name. You will receive an email confirmation of your place, subject
to availability.
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
The Board is cautious of the risks and uncertainties referred to
above, but are assured that the portfolio remains well diversified,
with companies at different stages of maturity and targeted at
sectors such as healthcare, mission critical software and a minimal
exposure to consumer expenditure. We believe that these sectors can
continue to provide opportunities for resilient growth, yielding
positive results for the Company and its shareholders in the
longer-term.
Fiona Wollocombe
Chairman
22 September 2023
Portfolio of investments
As at 30 June 2023
---------------------------------------
Cumulative movement Change in
Fixed asset % voting Cost(1) in value Value value for the period(2)
investments rights GBP'000 GBP'000 GBP'000 GBP'000
------------------- -------- -------- ------------------- -------- ------------------------
Quantexa 1.3 1,329 13,945 15,274 6,148
Proveca 15.2 2,792 7,623 10,415 210
Egress Software
Technologies 4.8 1,644 4,594 6,238 (123)
Chonais River Hydro 6.5 2,428 1,016 3,444 123
Oviva 1.6 1,489 671 2,160 (214)
The Evewell Group 4.4 1,057 960 2,017 19
Healios 2.6 1,591 417 2,008 -
Gravitee Topco (T/A
Gravitee.io) 3.8 1,561 400 1,961 -
The Street by
Street Solar
Programme 10.0 1,040 768 1,808 (106)
Academia 2.3 351 1,361 1,712 105
Toqio FinTech
Holdings 2.1 1,498 - 1,498 -
Regenerco Renewable
Energy 9.8 988 497 1,485 (144)
TransFICC 2.4 1,305 148 1,453 -
Celoxica Holdings
PLC 4.4 513 926 1,439 -
Runa Network 1.7 1,164 209 1,373 -
NuvoAir Holdings 2.4 971 399 1,370 (70)
Peppy Health 1.5 1,359 - 1,359 -
Ophelos 2.8 724 606 1,330 606
Threadneedle
Software Holdings
(T/A Solidatus) 1.5 917 369 1,286 (188)
Alto Prodotto Wind 11.1 706 499 1,205 54
Seldon Technologies 3.4 1,178 - 1,178 -
PerchPeek 3.6 1,142 - 1,142 -
PeakData 2.3 1,009 59 1,068 (17)
Cantab Research
(T/A
Speechmatics) 1.1 898 158 1,056 (126)
Sift 42.1 2,256 (1,244) 1,012 (157)
Dragon Hydro 17.2 590 421 1,011 42
Accelex Technology 3.6 630 340 970 340
Symetrica 3.7 835 128 963 109
Convertr Media 3.0 482 444 926 (17)
Gharagain River
Hydro 5.0 620 269 889 57
GX Molecular (T/A
CS Genetics) 3.0 871 - 871 -
Panaseer 1.4 510 242 752 (128)
Elliptic
Enterprises 0.5 750 - 750 -
OutThink 2.6 644 - 644 -
Diffblue 2.6 597 - 597 -
AVESI 14.8 484 101 585 (62)
Brytlyt 3.4 713 (168) 545 (168)
InCrowd Sports 2.1 321 217 538 82
Beddlestead 5.1 606 (72) 534 (22)
PetsApp 2.7 497 - 497 -
Aridhia Informatics 2.1 409 32 441 (66)
Locum's Nest 3.8 452 (39) 413 (244)
5Mins AI 2.2 398 - 398 -
Greenenerco 8.6 211 157 368 18
Koru Kids 1.3 430 (121) 309 (52)
uMedeor (T/A uMed) 1.4 228 80 308 78
Cisiv 2.1 277 13 290 124
Arecor Therapeutics
PLC 0.4 149 124 273 (9)
Ramp Software 1.7 255 - 255 -
Neurofenix 2.7 552 (312) 240 (312)
Regulatory Genome
Development 1.1 173 59 232 59
Tem Energy 1.6 206 - 206 -
Imandra 1.0 138 60 198 (9)
Erin Solar 5.7 160 4 164 -
Anthropics
Technology 13.8 19 110 129 (11)
InFact Systems (T/A
InFact) 1.7 90 - 90 -
Harvest AD - 70 7 77 -
Black Swan Data 4.1 2,002 (1,970) 32 (1,076)
Mirada Medical 0.6 390 (375) 15 -
Xention 10.6 38 (28) 10 -
uMotif 3.6 979 (978) 1 (103)
Limitless
Technology 1.4 383 (383) - (193)
Other holdings (2
companies) 2 - 2 -
Total fixed asset investments 49,071 32,743 81,814 4,557
----------------------------- -------- ------------------- -------- ------------------------
(1) Amounts shown as cost represent the acquisition cost in the case of investments originally made by the Company and/or the valuation attributed to the investments acquired from Quester VCT 2 PLC and Quester VCT 3 PLC at the date of the merger in 2005, and those acquired from Kings Arms Yard VCT 2 PLC at the merger on 30 September 2011, plus any subsequent acquisition costs, as reduced in certain cases by amounts written off as representing an impairment value.
(2) The column shows the movement in the period from the opening balance as at 1 January 2023 to the closing balance as at 30 June 2023 after adjustments for additions and disposals.
Realisations
in the period Opening
to 30 June Cost value Disposal proceeds Realised (loss)/gain Gain/(loss) on opening or acquired value
2023 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- -------- -------- ----------------- -------------------- ----------------------------------------
Disposals:
-------------
Zift Channel
Solutions 320 118 168 (152) 50
Arecor
Therapeutics
PLC 82 154 160 78 6
Forward
Clinical
(T/A Pando) 184 - - (184) -
ErgoMed PLC - 1 - - (1)
Loan stock
repayments
and other:
-------------
Alto Prodotto
Wind 33 49 49 16 -
Greenenerco 9 13 13 4 -
Escrow
adjustments* - - 506 50 50
Total 628 335 440 (188) 105
*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 4,557
Movement in loan stock accrued interest 20
--------------------------------------------------------- -------
Unrealised gains on fixed asset investments sub-total 4,577
Realised gains in current period 105
Unwinding of discount on deferred consideration 126
Total gains on investments as per Income statement 4,808
---------------------------------------------------------- -------
Responsibility statement
The Directors, Fiona Wollocombe, Thomas Chambers, Swarupa
Pathakji and Simon Thorpe, are responsible for preparing the
Half-yearly Financial Report. In preparing these condensed
Financial Statements for the period to 30 June 2023 we, the
Directors of the Company, confirm that to the best of our
knowledge:
(a) the condensed set of Financial Statements, which has been
prepared in accordance with Financial Reporting Standard 104
"Interim Financial Reporting", 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
Fiona Wollocombe
Chairman
22 September 2023
Condensed income statement
Unaudited six months ended Unaudited six months ended Audited year ended
30 June 2023 30 June 2022 31 December 2022
--------------------------------------------------- ---- ------------------------------ ------------------------------ ----------------------------
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------------- ---- --------- --------- -------- --------- --------- -------- -------- -------- --------
Gains on investments 2 - 4,808 4,808 - 3,507 3,507 - 2,237 2,237
Investment income 3 673 - 673 544 - 544 1,079 - 1,079
Investment Manager's fees 4 (110) (990) (1,100) (107) (964) (1,071) (214) (1,923) (2,137)
Other expenses (234) - (234) (224) - (224) (453) - (453)
Profit on ordinary activities before tax 329 3,818 4,147 213 2,543 2,756 412 314 726
Tax charge on ordinary activities - - - - - - - - -
--------------------------------------------------- ---- --------- --------- -------- --------- --------- -------- -------- -------- --------
Profit and total comprehensive income attributable
to shareholders 329 3,818 4,147 213 2,543 2,756 412 314 726
--------------------------------------------------- ---- --------- --------- -------- --------- --------- -------- -------- -------- --------
Basic and diluted return per share (pence)* 6 0.06 0.75 0.81 0.05 0.55 0.60 0.09 0.07 0.16
--------------------------------------------------- ---- --------- --------- -------- --------- --------- -------- -------- -------- --------
*adjusted for treasury shares
The accompanying notes below form an integral part of this
Half-yearly Financial Report.
Comparative figures have been extracted from the unaudited
Half-yearly Financial Report for the six months ended 30 June 2022
and the audited statutory accounts for the year ended 31 December
2022.
The total column of this Condensed income statement represents
the profit and loss account of the Company. The supplementary
revenue and capital columns have been prepared in accordance with
The Association of Investment Companies' Statement of Recommended
Practice.
Condensed balance sheet
Unaudited Unaudited Audited
30 June 2023 30 June 2022 31 December 2022
Note GBP'000 GBP'000 GBP'000
------------------------- ---- ------------- ------------- -----------------
Fixed asset investments 81,814 69,013 76,706
Current assets
Trade and other
receivables 1,819 2,001 1,773
Cash in bank and at hand 28,690 38,813 26,179
------------- ------------- -----------------
30,509 40,814 27,952
Payables: amounts falling
due within one year
Trade and other payables (1,192) (866) (659)
------------- ------------- -----------------
Net current assets 29,317 39,948 27,293
Total assets less current
liabilities 111,131 108,961 103,999
------------- ------------- -----------------
Equity attributable to
equity holders
Called-up share capital 7 6,101 5,460 5,757
Share premium 21,016 7,848 13,888
Capital redemption
reserve - - -
Unrealised capital
reserve 32,503 27,512 27,634
Realised capital reserve 5,624 9,026 6,675
Other distributable
reserve 45,887 59,115 50,045
------------- ------------- -----------------
Total equity
shareholders' funds 111,131 108,961 103,999
------------- ------------- -----------------
Basic and diluted net
asset value per share
(pence)* 21.28 23.07 20.95
------------------------- ---- ------------- ------------- -----------------
*excluding treasury shares
The accompanying notes below form an integral part of this
Half-yearly Financial Report.
Comparative figures have been extracted from the unaudited
Half-yearly Financial Report for the six months ended 30 June 2022
and the audited statutory accounts for the year ended 31 December
2022.
The Financial Statements were approved by the Board of
Directors, and authorised for issue on 22 September 2023 and were
signed on its behalf by
Fiona Wollocombe
Chairman
Company number: 03139019
Condensed statement of changes in equity
Capital Unrealised Realised Other
Called-up share Share redemption capital capital distributable
capital premium reserve reserve reserve* reserve* Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------------- --------------- -------- ---------- ---------- -------- ------------- --------
At 1 January 2023 5,757 13,888 - 27,634 6,675 50,045 103,999
Profit/(loss) and total comprehensive income for the
period - - - 4,577 (759) 329 4,147
Transfer of previously unrealised losses on disposal
of investments - - - 292 (292) - -
Purchase of own shares for treasury - - - - - (1,752) (1,752)
Issue of equity 344 7,329 - - - - 7,673
Cost of issue of equity - (201) - - - - (201)
Dividends paid - - - - - (2,735) (2,735)
At 30 June 2023 6,101 21,016 - 32,503 5,624 45,887 111,131
----------------------------------------------------- --------------- -------- ---------- ---------- -------- ------------- --------
At 1 January 2022 5,103 60,854 11 29,199 4,796 1,868 101,831
Profit/(loss) and total comprehensive income for the
period - - - (77) 2,620 213 2,756
Transfer of previously unrealised gains on disposal
of investments - - - (1,610) 1,610 - -
Purchase of own shares for treasury - - - - - (1,089) (1,089)
Issue of equity 357 8,053 - - - - 8,410
Cost of issue of equity - (205) - - - - (205)
Dividends paid - - - - - (2,742) (2,742)
Cancellation of share premium and capital redemption
reserve - (60,854) (11) - - 60,865 -
----------------------------------------------------- --------------- -------- ---------- ---------- -------- ------------- --------
At 30 June 2022 5,460 7,848 - 27,512 9,026 59,115 108,961
----------------------------------------------------- --------------- -------- ---------- ---------- -------- ------------- --------
At 1 January 2022 5,103 60,854 11 29,199 4,796 1,868 101,831
Profit/(loss) and total comprehensive income for the
period - - - (1,269) 1,583 412 726
Transfer of previously unrealised gains on disposal
of investments - - - (296) 296 - -
Purchase of own shares for treasury - - - - - (2,254) (2,254)
Issue of equity 654 14,247 - - - - 14,901
Cost of issue of equity - (359) - - - - (359)
Dividends paid - - - - - (10,846) (10,846)
Cancellation of share premium and capital redemption
reserve - (60,854) (11) - - 60,865 -
----------------------------------------------------- --------------- -------- ---------- ---------- -------- ------------- --------
At 31 December 2022 5,757 13,888 - 27,634 6,675 50,045 103,999
----------------------------------------------------- --------------- -------- ---------- ---------- -------- ------------- --------
*These reserves include an amount of GBP23,428,000 (30 June
2022: GBP32,896,000; 31 December 2022: GBP22,036,000) which is
considered distributable. Over the next three years an additional
GBP25,029,000 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.
The accompanying notes below form an integral part of this
Half-yearly Financial Report.
Comparative figures have been extracted from the unaudited
Half-yearly Financial Report for the six months ended 30 June 2022
and the audited statutory accounts for the year ended 31 December
2022.
Condensed statement of cash flows
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2023 30 June 2022 31 December 2022
GBP'000 GBP'000 GBP'000
-------------------- ----------------- ----------------- -----------------
Cash flow from
operating
activities
Investment income
received 398 348 725
Bank interest
received 142 14 68
Interest from fixed
term funds received 95 9 59
Dividend income
received 17 71 125
Investment Manager's
fees paid (1,041) (2,059) (3,166)
Other cash payments (275) (258) (448)
UK corporation tax
paid - - -
----------------- ----------------- -----------------
Net cash flow
generated from
operating
activities (664) (1,875) (2,637)
Cash flow from
investing
activities
Purchase of fixed
asset investments (885) (5,977) (15,249)
Disposal of fixed
asset investments 539 8,260 8,818
Net cash flow
generated from
investing
activities (346) 2,283 (6,431)
Cash flow from
financing
activities
Issue of share
capital 7,080 7,808 12,926
Cost of issue of
equity (19) - (52)
Purchase of own
shares (including
costs) (1,250) (922) (2,254)
Equity dividends
paid* (2,290) (2,326) (9,218)
----------------- ----------------- -----------------
Net cash flow
generated from
financing
activities 3,521 4,560 1,402
Increase/(decrease)
in cash in bank and
at hand 2,511 4,968 (7,666)
Cash in bank and at
hand at start of
period 26,179 33,845 33,845
----------------- ----------------- -----------------
Cash in bank and at
hand at end of
period 28,690 38,813 26,179
--------------------- ----------------- ----------------- -----------------
* The equity dividends paid shown in the cash flow are different
to the dividends disclosed in note 5 as a result of the non-cash
effect of the Dividend Reinvestment Scheme.
The accompanying notes below form an integral part of this
Half-yearly Financial Report.
Comparative figures have been extracted from the unaudited
Half-yearly Financial Report for the six months ended 30 June 2022
and the audited statutory accounts for the year ended 31 December
2022.
Notes to the condensed Financial Statements
1. Accounting policies
Basis of accounting
The condensed Financial Statements have been prepared in
accordance with applicable United Kingdom law and accounting
standards, including Financial Reporting Standard 102 ("FRS 102"),
Financial Reporting Standard 104 -- Interim Financial Reporting
("FRS 104"), and with the Statement of Recommended Practice
"Financial Statements of Investment Trust Companies and Venture
Capital Trusts" ("SORP") issued by The Association of Investment
Companies ("AIC"). The Financial Statements have been prepared on a
going concern basis.
The preparation of the Financial Statements requires management
to make judgements and estimates that affect the application of
policies and reported amounts of assets, liabilities, income and
expenses. The most critical estimates and judgements relate to the
determination of carrying value of investments at fair value
through profit and loss ("FVTPL") in accordance with FRS 102
sections 11 and 12. The Company values investments by following the
International Private Equity and Venture Capital Valuation ("IPEV")
Guidelines as updated in 2022 and further detail on the valuation
techniques used are outlined below.
Company information can be found on page 4 of the Half-yearly
Financial Report.
Fixed asset investments
The Company's business is investing in financial assets with a
view to profiting from their total return in the form of income and
capital growth. This portfolio of financial assets is managed and
its performance evaluated on a fair value basis, in accordance with
a documented investment policy, and information about the portfolio
is provided internally on that basis to the Board.
In accordance with the requirements of FRS 102, those
undertakings in which the Company holds more than 20% of the equity
as part of an investment portfolio are not accounted for using the
equity method. In these circumstances the investment is measured at
FVTPL.
Upon initial recognition (using trade date accounting)
investments, including loan stock, are designated by the Company as
FVTPL and are included at their initial fair value, which is cost
(excluding expenses incidental to the acquisition which are written
off to the Income statement).
Subsequently, the investments are valued at 'fair value', which
is measured as follows:
-- Investments listed on recognised exchanges are valued at their bid prices
at the end of the accounting period or otherwise at fair value based on
published price quotations.
-- Unquoted investments, where there is not an active market, are valued
using an appropriate valuation technique in accordance with the IPEV
Guidelines. Indicators of fair value are derived using established
methodologies including earnings multiples, revenue multiples, the level
of third party offers received, cost or price of recent investment rounds,
net assets and industry valuation benchmarks. Where price of recent
investment is used as a starting point for estimating fair value at
subsequent measurement dates, this has been benchmarked using an
appropriate valuation technique permitted by the IPEV guidelines.
-- In situations where cost or price of recent investment is used,
consideration is given to the circumstances of the portfolio company
since that date in determining fair value. This includes consideration of
whether there is any evidence of deterioration or strong definable
evidence of an increase in value. In the absence of these indicators,
other valuation techniques are employed to conclude on the fair value as
at the measurement date. Examples of events or changes that could
indicate a diminution include:
-- the performance and/or prospects of the underlying business are
significantly below the expectations on which the investment was
based;
-- a significant adverse change either in the portfolio company's
business or in the technological, market, economic, legal or
regulatory environment in which the business operates; or
-- market conditions have deteriorated, which may be indicated by a
fall in the share prices of quoted businesses operating in the
same or related sectors.
Investments are recognised as financial assets on legal
completion of the investment contract and are de-recognised on
legal completion of the sale of an investment.
Dividend income is not recognised as part of the fair value
movement of an investment, but is recognised separately as
investment income through the Income statement when a share becomes
ex-dividend.
Current assets and payables
Receivables (including debtors due after more than one year),
payables and cash are carried at amortised cost, in accordance with
FRS 102. Deferred consideration meets the definition of a financing
transaction held at amortised cost, and interest will be ecognized
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 income
Fixed returns on non-equity shares and debt securities are
ecognized 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 ecognized as income unless there
is reasonable doubt as to its receipt.
Fixed term funds income
Funds income is recognised on an accruals basis using the agreed
rate of interest.
Bank deposit income
Interest income is recognised on an accruals basis using the
rate of interest agreed with the bank.
Investment management fee, performance incentive fee and other
expenses
All expenses have been accounted for on an accruals basis.
Expenses are charged through the other distributable reserve except
the following which are charged through the realised capital
reserve:
-- 90% of management fees and 100% of performance incentive fees if any, are
allocated to the realised capital reserve; and
-- expenses which are incidental to the purchase or disposal of an
investment are charged through the realised capital reserve.
Taxation
Taxation is applied on a current basis in accordance with FRS
102. Current tax is tax payable (refundable) in respect of the
taxable profit (tax loss) for the current period or past reporting
periods using the tax rates and laws that have been enacted or
substantively enacted at the financial reporting date. Taxation
associated with capital expenses is applied in accordance with the
SORP.
Deferred tax is provided in full on all timing differences at
the reporting date. Timing differences are differences between
taxable profits and total comprehensive income as stated in the
financial statements that arise from the inclusion of income and
expenses in tax assessments in periods different from those in
which they are recognised in the financial statements. As a VCT the
Company has an exemption from tax on capital gains. The Company
intends to continue meeting the conditions required to obtain
approval as a VCT in the foreseeable future. The Company therefore,
should have no material deferred tax timing differences arising in
respect of the revaluation or disposal of investments and the
Company has not provided for any deferred tax.
Share capital and reserves
Called-up share capital
This reserve accounts for the nominal value of the shares.
Share premium
This reserve accounts for the difference between the price paid
for the Company's shares and the nominal value of those shares,
less issue costs.
Capital redemption reserve
This reserve accounts for amounts by which the issued share
capital is diminished through the repurchase and cancellation of
the Company's own shares.
Unrealised capital reserve
Increases and decreases in the valuation of investments held at
the period end against cost are included in this reserve.
Realised capital reserve
The following are disclosed in this reserve:
-- gains and losses compared to cost on the realisation of investments or
permanent diminution in value (including gains recognised on the
realisation of investment where consideration is deferred and not
distributable as a matter of law);
-- finance income in respect of the unwinding of the discount on deferred
consideration that is not distributable as a matter of law;
-- expenses, together with the related taxation effect, charged in
accordance with the above policies; and
-- dividends paid to equity holders where paid out by capital.
Other distributable reserve
The special reserve, treasury share reserve and the revenue
reserve were combined in 2012 to form a single reserve named other
distributable reserve.
This reserve accounts for movements from the revenue column of
the Income statement, the payment of dividends, the buy-back of
shares and other non-capital realised movements.
Dividends
Dividends by the Company are accounted for in the period in
which the dividend is paid or approved at the Annual General
Meeting.
Segmental reporting
The Directors are of the opinion that the Company is engaged in
a single operating segment of business, being investment in smaller
companies principally based in the UK.
2. Gains on investments
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2023 30 June 2022 31 December 2022
GBP'000 GBP'000 GBP'000
-----------------
Unrealised
gains/(losses)
on fixed asset
investments 4,577 (77) (1,269)
Realised gains on
fixed asset
investments 105 3,477 3,282
Unwinding of
discount on
deferred
consideration 126 107 224
4,808 3,507 2,237
----------------- ----------------- -----------------
3. Investment income
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2023 30 June 2022 31 December 2022
GBP'000 GBP'000 GBP'000
-----------------
Loan stock
interest 378 421 827
Bank interest 142 14 68
Income from fixed
term funds 95 9 59
Dividends 58 100 125
----------------- ----------------- -----------------
673 544 1,079
----------------- ----------------- -----------------
4. Investment Manager's fee
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2023 30 June 2022 31 December 2022
GBP'000 GBP'000 GBP'000
-----------------
Investment
management fee
charged to
revenue 110 107 214
Investment
management fee
charged to
capital 990 964 1,923
1,100 1,071 2,137
----------------- ----------------- -----------------
Further details of the Management agreement under which the
investment management fee and performance incentive fee are paid
are given in the Strategic report on pages 18 and 19 of the Annual
Report and Financial Statements for the year ended 31 December
2022.
During the period, services with a value of GBP1,100,000 (30
June 2022: GBP1,071,000; 31 December 2022: GBP2,137,000) and
GBP25,000 (30 June 2022: GBP25,000; 31 December 2022: GBP50,000)
were purchased by the Company from Albion Capital Group LLP
("Albion") in respect of management and administration fees
respectively. At the period end, the amount due to Albion in
respect of these services disclosed as accruals was GBP592,000 (30
June 2022: GBP574,000; 31 December 2022: GBP534,000). For the
period to 30 June 2023, no performance incentive fee has been
accrued, however any performance incentive fee is calculated on
year end results and payable in line with the Management agreement
(30 June 2022: GBPnil; 31 December 2022: GBPnil).
Albion is, from time to time, eligible to receive arrangement
fees and monitoring fees from portfolio companies. During the
period, fees of GBP62,000 (30 June 2022: GBP116,000; 31 December
2022: GBP274,000) attributable to the investments of the Company
were paid pursuant to these arrangements.
Albion, its partners and staff hold 3,458,571 Ordinary shares in
the Company as at 30 June 2023.
The Company entered into an offer agreement relating to the
Offers with the Company's investment manager Albion, pursuant to
which Albion received a fee of 2.5% of the gross proceeds of the
Offers and out of which Albion paid the costs of the Offers, as
detailed in the Prospectus.
5. Dividends
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2023 30 June 2022 31 December 2022
GBP'000 GBP'000 GBP'000
----------------------------------------------------
Special dividend of 1.14 pence per share paid on 29
July 2022 - - 5,385
Second dividend of 0.58 pence per share paid on 31
October 2022 - - 2,761
First dividend of 0.52 pence per share paid on 28
April 2023 (29 April 2022: 0.58 pence per share) 2,743 2,742 2,742
Unclaimed dividends returned to the Company (8) - (42)
2,735 2,742 10,846
----------------- ----------------- -----------------
The Directors have declared a second dividend of 0.53 pence per
share for the year ending 31 December 2023, which will be paid on
31 October 2023 to shareholders on the register on 6 October
2023.
6. Basic and diluted return per share
Unaudited six months ended Unaudited six months ended Audited year ended
30 June 2023 30 June 2022 31 December 2022
Revenue Capital Revenue Capital Revenue Capital
--------------------------------------------------------
Profit attributable to shareholders (GBP'000) 329 3,818 213 2,543 412 314
Weighted average shares in issue (adjusted for treasury
shares) 510,894,955 463,540,737 471,274,000
Return attributable per equity share (pence) 0.06 0.75 0.05 0.55 0.09 0.07
The weighted average number of Ordinary shares is calculated
after adjusting for treasury shares of 87,982,092 (30 June 2022:
73,661,999; 31 December 2022: 79,380,503).
There are no convertible instruments, derivatives or contingent
share agreements in issue so basic and diluted return per share are
the same.
7. Called-up share capital
Allotted, called-up and fully paid Ordinary shares Unaudited Unaudited Audited
of 1 penny each 30 June 2023 30 June 2022 31 December 2022
---------------------------------------------------
Number of shares 610,110,901 546,010,920 575,728,901
Nominal value of allotted shares (GBP'000) 6,101 5,460 5,757
Voting rights (number of shares net of treasury
shares) 522,128,809 472,348,921 496,348,398
The Company operates a share buy-back programme, as detailed in
the Interim management report above. During the period the Company
purchased 8,601,589 Ordinary shares with a nominal value of
GBP86,016 (30 June 2022: 5,052,674; 31 December 2022: 10,771,178)
representing 1.4% of the issued called-up share capital as at 30
June 2023, at a cost of GBP1,752,000 (30 June 2022: GBP1,089,000;
31 December 2022: GBP2,254,000), including stamp duty, to be held
in treasury. The Company holds a total of 87,982,092 Ordinary
shares in treasury, representing 14.4% of the issued Ordinary share
capital as at 30 June 2023.
During the period from 1 January 2023 to 30 June 2023, the
Company issued the following new Ordinary shares of 1 penny each
under the terms of the Dividend Reinvestment Scheme Circular dated
19 April 2011:
Number of
Date of shares Aggregate nominal value of shares Issue price Net invested Opening market price on allotment date
allotment allotted (GBP'000) (pence per share) (GBP'000) (pence per share)
----------
28 April
2023 1,933,358 19 21.27 391 20.30
Under the terms of the Albion VCTs Prospectus Top Up Offers
2022/23, the following new Ordinary shares of nominal value 1 penny
each were allotted during the period to 30 June 2023:
Number of
shares Aggregate nominal value of shares Issue price Net consideration received Opening market price on allotment date
Date of allotment allotted (GBP'000) (pence per share) (GBP'000) (pence per share)
-------------------
31 March 2023 31,071,626 311 22.40 6,786 20.70
14 April 2023 195,210 2 21.60 42 20.30
14 April 2023 114,678 1 21.80 24 20.30
14 April 2023 1,067,128 11 21.90 228 20.30
32,448,642 7,080
---------- --------------------------
8. Commitments, contingencies and guarantees
As at 30 June 2023, the Company had no financial commitments (30
June 2022: GBPnil; 31 December 2022: GBPnil).
There were no contingent liabilities or guarantees given by the
Company as at 30 June 2023 (30 June 2022: GBPnil; 31 December 2022:
GBPnil).
9. Post balance sheet events
Since 30 June 2023, there have not been any material post
balance sheet events.
10. Related party disclosures
Other than transactions with the Manager as disclosed in note 4,
there are no related party transactions or balances requiring
disclosure.
11. Going concern
The Board has conducted a detailed assessment of the Company's
ability to meet its liabilities as they fall due. Cash flow
forecasts are updated and discussed quarterly at Board level and
have been stress tested to allow for the forecasted impact of the
current economic climate and increasingly volatile geopolitical
backdrop. The Board has revisited and updated their assessment of
liquidity risk and concluded that it remains unchanged since the
last Annual Report and Financial Statements. Further details can be
found on page 26 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.
12. Other information
The information set out in this Half-yearly Financial Report
does not constitute the Company's statutory accounts within the
terms of section 434 of the Companies Act 2006 for the periods
ended 30 June 2023 and 30 June 2022, and is unaudited. The
information for the year ended 31 December 2022 does not constitute
statutory accounts within the terms of section 434 of the Companies
Act 2006 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.
13. 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
https://www.globenewswire.com/Tracker?data=8A56o-8jPGr8L6-jFJr1pmyf4pCE2Oj-RvYxXUbR5nCaCXDr_2xHCy3n46nPdlwADpkUbAU9WSqmhFlUqJcyeqZVRgGpG84xcLY41t3xrlr-ENQZi03nJJtYDFPc4tJh
www.albion.capital/funds/KAY, where the Report can be accessed from
the 'Financial Reports and Circulars' section.
Attachment
-- Investment Portfolio by Sector
https://ml-eu.globenewswire.com/Resource/Download/b117925a-2010-40af-96d5-e6d62ac50306
(END) Dow Jones Newswires
September 22, 2023 07:50 ET (11:50 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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