Kings Arms Yard VCT PLC: Half-yearly Financial Report
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 policyThe 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
exposuresRisk 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 six months ended
30 June
2023 |
Unaudited six months ended 30 June 2022 |
Audited year ended 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 resultsThe total
gain on investments for the six-month period was £4.8 million (30
June 2022: gain of £3.5 million). The key movement to the total
gain was Quantexa increasing its value by £6.1 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 £1.2 million to the portfolio. These gains were partially offset
by write downs in Black Swan Data, which decreased by £1.1 million,
Neurofenix by £0.3 million and Locum’s Nest by £0.2 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 resultsIn 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 activityGiven the
economic uncertainty of high inflation and rising interest rates,
in addition to the 15 new investments the Company made in 2022, the
first half of 2023 has been more subdued in terms of new investment
activity. During the period the Company has invested £0.9 million
in existing portfolio companies, the largest being £0.5 million
into Proveca, which specialises in the reformulation of medicines
for children, £0.2 million into Seldon Technologies, which enables
enterprises to deploy Machine Learning models in production, and
£0.2 million into Symetrica, a designer and manufacturer of
radiation detection equipment.
Investment activity has started to increase
after the period end, with £1.8 million invested into new and
follow-on investments since 30 June 2023.
Portfolio sector allocationThe
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
planningAs 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-backsIt 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
ManagerDetails 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 uncertaintiesThe
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 £8 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 seminarThe 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 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
communicationsThe 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.
ProspectsThe 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 WollocombeChairman 22 September 2023
Portfolio of investments
|
|
As at 30 June
2023 |
|
|
Fixed asset investments |
% voting rights |
Cost(1)£’000 |
Cumulative movementin
value£’000 |
Value£’000 |
|
Change in value for the
period(2)£’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 to 30 June
2023 |
Cost£’000 |
Opening
value£’000 |
Disposal proceeds£’000 |
Realised
(loss)/gain£’000 |
Gain/(loss) on
opening or acquired
value£’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.
|
|
|
|
|
£'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 WollocombeChairman
22 September 2023
Condensed income statement
|
|
Unaudited six months ended
30 June
2023 |
Unaudited six months ended 30 June 2022 |
Audited year ended 31 December 2022 |
|
Note |
Revenue£’000 |
Capital£’000 |
Total£’000 |
Revenue£’000 |
Capital£’000 |
Total£’000 |
Revenue£’000 |
Capital£’000 |
Total£’000 |
Gains 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
|
Note |
Unaudited30 June
2023£’000 |
|
Unaudited30 June 2022£’000 |
|
Audited31 December 2022£’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
|
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 |
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 £23,428,000
(30 June 2022: £32,896,000; 31 December 2022: £22,036,000) which is
considered distributable. Over the next three years an additional
£25,029,000 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
|
|
Unauditedsix months
ended30 June
2023£’000 |
|
Unauditedsix months ended30 June 2022£’000 |
|
Auditedyear ended31 December 2022£’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
accountingThe 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 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% 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 payablesReceivables (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
incomeDividend 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 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 incomeFunds income is recognised on an accruals
basis using the agreed rate of interest.
Bank deposit incomeInterest income is recognised
on an accruals basis using the rate of interest agreed with the
bank.
Investment management
fee, performance incentive fee
and other
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:
- 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.
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
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 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 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.
DividendsDividends 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.
2.
Gains on
investments
|
Unauditedsix months
ended30 June
2023£’000 |
|
Unauditedsix months ended30 June 2022£’000 |
|
Auditedyear ended31 December 2022£’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
|
Unauditedsix months
ended30 June
2023£’000 |
|
Unauditedsix months ended30 June 2022£’000 |
|
Auditedyear ended31 December 2022£’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
|
Unauditedsix months
ended30 June
2023£’000 |
|
Unauditedsix months ended30 June 2022£’000 |
|
Auditedyear ended31 December 2022£’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
£1,100,000 (30 June 2022: £1,071,000; 31 December 2022: £2,137,000)
and £25,000 (30 June 2022: £25,000; 31 December 2022: £50,000) 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 £592,000 (30 June 2022:
£574,000; 31 December 2022: £534,000). 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: £nil;
31 December 2022: £nil).
Albion is, from time to time, eligible to
receive arrangement fees and monitoring fees from portfolio
companies. During the period, fees of £62,000 (30 June 2022:
£116,000; 31 December 2022: £274,000) 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
|
Unauditedsix months
ended30 June
2023£’000 |
Unauditedsix months ended30 June 2022£’000 |
Audited year ended31 December 2022£’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
30 June
2023 |
Unaudited six months ended 30 June 2022 |
Audited year ended 31 December 2022 |
|
Revenue |
Capital |
Revenue |
Capital |
Revenue |
Capital |
Profit attributable to shareholders (£’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 of 1 penny each |
Unaudited30 June
2023 |
Unaudited30 June 2022 |
Audited31 December 2022 |
Number of shares |
610,110,901 |
546,010,920 |
575,728,901 |
Nominal value of allotted
shares (£’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 £86,016 (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 £1,752,000 (30 June 2022:
£1,089,000; 31 December 2022: £2,254,000), 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:
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) |
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:
Date of allotment |
Number of shares allotted |
Aggregate nominal value of
shares(£’000) |
Issue price (pence per
share) |
Net consideration
received(£’000) |
Opening market price on allotment
date(pence per share) |
31 March 2023 |
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 guaranteesAs at 30
June 2023, the Company had no financial commitments (30 June 2022:
£nil; 31 December 2022: £nil).
There were no contingent liabilities or
guarantees given by the Company as at 30 June 2023 (30 June 2022:
£nil; 31 December 2022: £nil).
9.
Post balance sheet eventsSince 30 June 2023, there
have not been any material post balance sheet events.
10.
Related party disclosuresOther than transactions
with the Manager as disclosed in note 4, there are no related party
transactions or balances requiring disclosure.
11.
Going concernThe 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 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 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.
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/KAY, where the Report can be accessed from
the 'Financial Reports and Circulars' section.
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