Half-Yearly Financial Report
19/09/2023 11:00
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(Albion Development VCT PLC)
LEI Code 213800FDDMBD9QLHLB38
As required by the UK Listing Authority's Disclosure Guidance and Transparency
Rule 4.2, Albion Development 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 19 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/AADV/30Jun2023.pdf.
Investment policy
The Company will invest in a broad portfolio of higher growth businesses with
a stronger focus on technology companies across a variety of sectors of the UK
economy. Allocation of assets will be determined by the investment
opportunities which become available but efforts will be made to ensure that
the portfolio is diversified in terms of sector and stage of maturity of
company.
Funds held pending investment or for liquidity purposes will be held as cash
on deposit or up to 8% of its assets, at the time of investment, in liquid
open-ended equity funds providing income and capital equity exposure (where it
is considered economic to do so).
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 10% of
the adjusted share capital and reserves.
Financial calendar
8 September 2023 Record date for second dividend
29 September 2023 Payment of second dividend
31 December Financial year end
Financial summary
Ordinary shares Unaudited six months ended 30 June 2023 (pence per share) Unaudited six months ended 30 June 2022 (pence per share) Audited year ended 31 December 2022 (pence per share)
Opening net asset value 88.65 94.98 94.98
Capital return/(loss) 4.89 0.69 (2.36)
Revenue return 0.26 0.26 0.49
Total return/(loss) 5.15 0.95 (1.87)
Dividends paid (2.22) (2.37) (4.71)
Impact of share capital movements 0.17 (0.01) 0.25
Net asset value 91.75 93.55 88.65
Total dividends paid to 30 June 2023 115.79
Net asset value as at 30 June 2023 91.75
Total shareholder value to 30 June 2023 207.54
The financial summary above is for the Company, Albion Development VCT PLC
Ordinary shares only. Details of the financial performance of the C shares and
D shares, which have been merged into the Ordinary shares, can be found at
www.albion.capital/funds/AADV under the ‘Financial summary for previous
funds’ section.
A more detailed breakdown of the dividends paid per year can be found at
www.albion.capital/funds/AADV under the ‘Dividend History’ section.
In addition to the dividends summarised above, the Board has declared a second
dividend for the year ending 31 December 2023, of 2.29 pence per Ordinary
share to be paid on 29 September 2023 to shareholders on the register on 8
September 2023.
Interim management report
Introduction
In the six months to 30 June 2023, the Company generated a positive total
return of 5.15 pence per share, representing a 5.8% return on opening net
asset value (“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
companies. 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 period to 30 June 2023 was £7.7 million
(30 June 2022: £1.9 million; 31 December 2022: loss of £0.6 million). The
key movement to the total gain was Quantexa increasing its value by £10.0
million following an externally led $129 million Series E fundraising, which
completed in April 2023. The latest funding round made it the first
“Unicorn” of 2023 (a private company valuation over $1 billion) and the
Board are excited about its future prospects.
Other gains in the period included Radnor House School and Ophelos, which
resulted in a combined uplift of £0.9 million. These gains were partially
offset by write downs with the most significant being in Black Swan Data which
decreased by £1.7 million.
The NAV per share has increased to 91.75 pence per share (30 June 2022: 93.55
pence per share; 31 December 2022: 88.65 pence per share).
Our top 3 portfolio companies now account for 33.8% of the Company’s NAV (30
June 2022: 26.6%; 31 December 2022: 27.6%). Further details of the portfolio
of investments can be found below.
Dividends
In line with our variable dividend policy targeting 5% of NAV per annum, the
Company paid a dividend of 2.22 pence per share during the period to 30 June
2023 (30 June 2022: 2.37 pence per share). The Company will pay a second
dividend for the financial year ending 31 December 2023 of 2.29 pence per
share on 29 September 2023 to shareholders on the register on 8 September
2023, being 2.5% of this 30 June 2023 NAV.
This will bring the total dividends paid for the year ending 31 December 2023
to 4.51 pence per share, which equates to a 5.1% yield on the opening NAV of
88.65 pence per share.
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 £0.6 million into existing portfolio
companies to help support them as they continue to grow, including £0.4
million into Proveca and £0.1 million into Seldon Technologies.
Investment activity has started to increase after the period end, with £1.6
million invested into new and follow on investments since 30 June 2023.
The chart at the end of this announcement illustrates the composition of the
portfolio by industry sector as at 30 June 2023.
Share buy-backs
It remains the Board’s primary objective to maintain sufficient resources
for investment in existing and new 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, as far as market conditions and liquidity permit.
Risks and uncertainties
The Company faces a number of significant risks including rising interest
rates, high levels of inflation, the ongoing impact of geopolitical tensions,
and an expected period of economic stagnation, or even recession in the UK.
The concentration risk to the technology sector, is noted as technology
company valuations have become more volatile in the current economic climate.
Overall investment risk is mitigated through a variety of processes. The
Manager is continually assessing the exposure to these risks for each
portfolio company and appropriate actions, where possible, are being
implemented.
In accordance with the Disclosure Guidance and Transparency Rules (“DTR”),
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. There is
heightened uncertainty, but this 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;
• Operation and internal control risk;
• Cyber and data security risk;
• Economic, political and social risk;
• Liquidity risk; and
• Environmental, social and governance (“ESG”) risk.
A detailed analysis of the principal risks and uncertainties facing the
business can be found in the Annual Report and Financial Statements for the
year ended 31 December 2022 on pages 23 to 25, copies of which are available
on the Company’s webpage on the Manager’s website at
www.albion.capital/funds/AADV under the ‘Financial Reports and Circulars’
section.
Transactions with the Manager
Details of transactions with the Manager for the reporting period can be found
in note 5. Details of related party transactions can be found in note 11.
Albion VCTs Top Up Offers
The 2022/23 Offers were fully subscribed and closed having raised £13 million
for the Company. The Board was pleased to see the high level of demand for the
Company’s shares from existing and new shareholders.
The proceeds are being used to provide support to our existing portfolio
companies and to enable us to take advantage of new investment opportunities
as they arise. Details on the share allotments during the period can be found
in note 8.
Shareholder seminar
The Board is pleased to report that the Manager, Albion Capital, is to host a
physical shareholder seminar this year on 15 November 2023, at the Royal
College of Surgeons, Lincoln’s Inn Fields, London. The Board considers this
an important interactive event and invites shareholders to attend. To reserve
a place, please email info@albion.capital.
Move to electronic communications
The Board wishes to minimise the environmental impact of how the Company
communicates with its shareholders. With this in mind, those shareholders that
continue to receive physical copies of the Annual Report and other
documentation, will receive a letter alongside this Half-yearly Financial
Report explaining the forthcoming move to electronic communications.
Prospects
Although there remains many uncertainties facing the Company, with the high
levels of inflation, elevated interest rates and geopolitical tensions, the
results for the period demonstrate the resilience of our portfolio during
these challenging times. The portfolio remains well diversified, with
companies at different stages of maturity and across a variety of different
sectors, many of which have minimal exposure to consumer expenditure. We
remain confident that the Company will continue to provide positive results to
its shareholders over the long-term.
Ben Larkin
Chairman
19 September 2023
Portfolio of investments
As at 30 June 2023
Fixed asset investments % voting rights Cost £’000 Cumulative movement in value £’000 Value £’000 Change in value for the period* £’000
Quantexa 2.1 2,101 22,857 24,958 10,046
Egress Software Technologies 6.9 2,332 6,517 8,849 (174)
Proveca 11.8 2,244 5,957 8,201 165
Oviva 2.8 2,601 1,179 3,780 (375)
Radnor House School (TopCo) 8.5 1,560 1,943 3,503 484
The Evewell Group 5.8 1,407 1,454 2,861 21
Healios 3.3 1,977 522 2,499 -
Chonais River Hydro 4.6 1,705 714 2,419 86
The Street by Street Solar Programme 12.4 1,291 952 2,243 (132)
Convertr Media 6.2 992 913 1,905 (35)
Regenerco Renewable Energy 11.9 1,204 606 1,810 (176)
Threadneedle Software Holdings (T/A Solidatus) 2.0 1,209 488 1,697 (248)
Panaseer 3.1 1,122 532 1,654 (283)
Cantab Research (T/A Speechmatics) 1.6 1,337 235 1,572 (188)
Runa Network 1.9 1,259 285 1,544 -
Peppy Health 1.6 1,424 - 1,424 -
Toqio FinTech Holdings 1.9 1,369 - 1,369 -
Aridhia Informatics 5.8 1,129 88 1,217 (183)
Gravitee TopCo 2.2 923 236 1,159 -
TransFICC 1.8 891 196 1,087 -
InCrowd Sports 4.1 642 433 1,075 165
Alto Prodotto Wind 9.4 590 425 1,015 46
Seldon Technologies 2.9 1,002 - 1,002 -
Elliptic Enterprises 0.7 984 - 984 -
PeakData 2.1 922 54 976 (15)
Ophelos 2.0 527 441 968 441
Beddlestead 8.6 1,026 (121) 905 (38)
NuvoAir Holdings 1.4 570 234 804 (41)
GX Molecular (T/A CS Genetics) 2.5 741 - 741 -
Cisiv 5.3 686 29 715 307
OutThink 2.4 610 - 610 -
Locum's Nest 5.6 663 (57) 606 (358)
Perchpeek 1.9 597 - 597 -
Accelex Technology 2.0 361 195 556 195
Diffblue 2.2 509 - 509 -
The Q Garden Company 16.6 466 32 498 -
PetsApp 2.3 425 - 425 -
Koru Kids 1.8 573 (160) 413 (69)
AVESI 10.5 340 70 410 (44)
Imandra 1.8 236 112 348 (16)
Arecor Therapeutics PLC 0.5 190 157 347 (12)
5Mins AI 1.9 340 - 340 -
Dragon Hydro 5.5 187 133 320 13
Brytlyt 2.0 416 (98) 318 (98)
Neurofenix 2.6 523 (296) 227 (296)
Ramp Software 1.8 267 - 267 -
uMedeor (T/A uMed) 1.2 192 68 260 66
MHS 1 3.3 231 14 245 -
Tem Energy 1.6 212 - 212 -
Greenenerco 4.0 96 75 171 9
DySIS Medical 1.0 1,038 (869) 169 12
Regulatory Genome Development 0.8 125 42 167 42
Premier Leisure (Suffolk) - 109 21 130 -
Erin Solar 4.3 120 3 123 -
Mirada Medical 2.7 909 (806) 103 -
Symetrica 0.3 102 (6) 96 12
Infact Systems 1.8 91 - 91 -
Black Swan Data 6.3 3,307 (3,257) 50 (1,660)
uMotif 3.1 941 (940) 1 (93)
Limitless Technology 2.4 648 (648) - (326)
Elements Software 0.6 3 (3) - -
Total fixed asset investments 52,594 40,951 93,545 7,250
* As adjusted for additions and disposals during the year; including realised
gains/(losses).
Investment realisations in the period to 30 June 2023 Cost £’000 Opening value £’000 Disposal proceeds £’000 Total realised gain/(loss) £’000 Gain/(loss) on opening value £’000
Disposals:
Zift Channel Solutions 885 326 468 (417) 142
Arecor Therapeutics PLC 104 196 203 99 7
Oxsensis 439 10 11 (428) 1
Forward Clinical (T/A Pando) 219 - - (219) -
Loan stock repayments and other:
Alto Prodotto Wind 28 42 42 14 -
Greenenerco 4 6 6 2 -
Escrow adjustments* - - 74 74 74
Total 1,679 580 804 (875) 224
* These comprise fair value movements on deferred consideration on previously
disposed investments
£’000
Total change in value of investments for the year 7,250
Movement in accrued loan stock interest 33
Unrealised gains on fixed asset investments sub-total 7,283
Realised gains in the current period 224
Unwind of discount on deferred consideration 168
Total gains on investments as per Income statement 7,675
Responsibility statement
The Directors, Ben Larkin, Lyn Goleby, Lord O’ Shaughnessy and Patrick
Reeve, are responsible for the preparation of 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”, give a true and fair view of the assets, liabilities, financial
position and profit and loss of the Company as required by DTR 4.2.4R;
(b) the Interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year); and
(c) the Interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties’ transactions and
changes therein).
This Half-yearly Financial Report has not been audited or reviewed by the
Auditor.
For and on behalf of the Board
Ben Larkin
Chairman
19 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/(losses) on investments 3 - 7,675 7,675 - 1,880 1,880 - (636) (636)
Investment income 4 684 - 684 591 - 591 1,194 - 1,194
Investment Manager’s fees 5 (133) (1,201) (1,334) (120) (1,079) (1,199) (245) (2,207) (2,452)
Other expenses (201) - (201) (168) - (168) (358) - (358)
Profit/(loss) on ordinary activities before tax 350 6,474 6,824 303 801 1,104 591 (2,843) (2,252)
Tax charge on ordinary activities - - - - - - - - -
Profit/(loss) and total comprehensive income attributable to shareholders 350 6,474 6,824 303 801 1,104 591 (2,843) (2,252)
Basic and diluted return/(loss) per share (pence)* 7 0.26 4.89 5.15 0.26 0.69 0.95 0.49 (2.36) (1.87)
* 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 Unaudited 30 June 2023 £’000 Unaudited 30 June 2022 £’000 Audited 31 December 2022 £’000
Fixed asset investments 93,545 80,152 86,286
Current assets
Trade and other receivables 2,531 2,604 2,403
Cash in bank and at hand 29,273 33,776 26,491
31,804 36,380 28,894
Payables: amounts falling due within one year
Trade and other payables (958) (933) (722)
Net current assets 30,846 35,447 28,172
Total assets less current liabilities 124,391 115,599 114,458
Equity attributable to equity holders
Called-up share capital 8 1,536 1,388 1,456
Share premium 34,277 20,772 26,837
Unrealised capital reserve 40,897 33,434 32,516
Realised capital reserve 6,125 10,759 8,032
Other distributable reserve 41,556 49,246 45,617
Total equity shareholders’ funds 124,391 115,599 114,458
Basic and diluted net asset value per share (pence)* 91.75 93.55 88.65
*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.
These Financial Statements were approved by the Board of Directors and
authorised for issue on 19 September 2023, and were signed on its behalf by
Ben Larkin
Chairman
Company number: 03654040
Condensed statement of changes in equity
Called-up share capital Share premium Capital redemption reserve Unrealised capital reserve Realised capital reserve* Other distributable reserve* Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
As at 1 January 2023 1,456 26,837 - 32,516 8,032 45,617 114,458
Profit/(loss) and total comprehensive income for the period - - - 7,283 (809) 350 6,824
Transfer of previously unrealised losses on disposal of investments - - - 1,098 (1,098) - -
Purchase of shares for treasury - - - - - (1,399) (1,399)
Issue of equity 80 7,639 - - - - 7,719
Cost of issue of equity - (199) - - - - (199)
Dividends paid - - - - - (3,012) (3,012)
As at 30 June 2023 1,536 34,277 - 40,897 6,125 41,556 124,391
As at 1 January 2022 1,167 - - 36,048 7,344 53,080 97,639
Profit/(loss) and total comprehensive income for the period - - - (885) 1,686 303 1,104
Transfer of previously unrealised gains on disposal of investments - - - (1,729) 1,729 - -
Purchase of shares for treasury - - - - - (1,212) (1,212)
Issue of equity 221 21,297 - - - - 21,518
Cost of issue of equity - (525) - - - - (525)
Dividends paid - - - - - (2,925) (2,925)
As at 30 June 2022 1,388 20,772 - 33,434 10,759 49,246 115,599
As at 1 January 2022 1,167 - - 36,048 7,344 53,080 97,639
Profit/(loss) and total comprehensive income for the year - - - (3,258) 415 591 (2,252)
Transfer of previously unrealised gains on disposal of investments - - - (273) 273 - -
Purchase of shares for treasury - - - - - (2,244) (2,244)
Issue of equity 288 27,509 - - - - 27,797
Cost of issue of equity - (672) - - - - (672)
Dividends paid - - - - - (5,810) (5,810)
As at 31 December 2022 1,456 26,837 - 32,516 8,032 45,617 114,458
*Included within these reserves is an amount of £26,789,000 (30 June 2022:
£31,131,000; 31 December 2022: £24,619,000) which is considered
distributable. Over the next two years an additional £18,627,000 will become
distributable. This is due to the HMRC requirement that the Company cannot use
capital raised in the past three years to make a payment or distribution to
shareholders.
Condensed statement of cash flows
Unaudited six months ended 30 June 2023 £’000 Unaudited six months ended 30 June 2022 £’000 Audited year ended 31 December 2022 £’000
Cash flow from operating activities
Loan stock income received 452 586 996
Dividend income received 5 78 133
Income from fixed term funds received 95 9 59
Deposit interest received 131 9 47
Investment Manager’s fees paid (1,247) (2,916) (4,216)
Other cash payments (220) (213) (338)
Corporation tax paid - - -
Net cash flow generated from operating activities (784) (2,447) (3,319)
Cash flow from investing activities
Purchase of fixed asset investments (589) (5,136) (14,235)
Disposal of fixed asset investments 887 7,265 7,946
Net cash flow generated from investing activities 298 2,129 (6,289)
Cash flow from financing activities
Issue of share capital 7,043 20,491 26,132
Cost of issue of shares (19) - (36)
Equity dividends paid* (2,508) (2,405) (4,785)
Purchase of own shares (including costs) (1,248) (1,024) (2,244)
Net cash flow generated from financing activities 3,268 17,062 19,067
Increase in cash in bank and at hand 2,782 16,744 9,459
Cash in bank and at hand at start of period 26,491 17,032 17,032
Cash in bank and at hand at end of period 29,273 33,776 26,491
*The equity dividends paid shown in the cash flow are different to the
dividends disclosed in note 6 as a result of the non-cash effect of the
Dividend Reinvestment Scheme.
Notes to the condensed Financial Statements
1. Basis of preparation
The Financial Statements have been prepared in accordance with applicable
United Kingdom law and accounting standards, including Financial Reporting
Standard 102 (“FRS 102”), and with the Statement of Recommended Practice
“Financial Statements of Investment Trust Companies and Venture Capital
Trusts” (“SORP”) issued by The Association of Investment Companies
(“AIC”). The Financial Statements have been prepared on a going concern
basis.
The preparation of the Financial Statements requires management to make
judgements and estimates that affect the application of policies and reported
amounts of assets, liabilities, income and expenses. The most critical
estimates and judgements relate to the determination of carrying value of
investments at Fair Value Through Profit and Loss (“FVTPL”) in accordance
with FRS 102 sections 11 and 12. The Company values investments by following
the International Private Equity and Venture Capital Valuation (“IPEV”)
Guidelines as updated in 2022 and further detail on the valuation techniques
used are outlined in note 2 below.
Company information can be found on page 4 of the full Half-yearly Financial
Report.
2. Accounting policies
Fixed asset investments
The Company’s business is investing in financial assets with a view to
profiting from their total return in the form of income and capital growth.
This portfolio of financial assets is managed and its performance evaluated on
a fair value basis, in accordance with a documented investment policy, and
information about the portfolio is provided internally on that basis to the
Board.
In accordance with the requirements of FRS 102, those undertakings in which
the Company holds more than 20% of the equity as part of an investment
portfolio are not accounted for using the equity method. In these
circumstances the investment is measured at FVTPL.
Upon initial recognition (using trade date accounting) investments, including
loan stock, are classified by the Company as FVTPL and are included at their
initial fair value, which is cost (excluding expenses incidental to the
acquisition which are written off to the Income statement).
Subsequently, the investments are valued at ‘fair value’, which is
measured as follows:
* Investments listed on recognised exchanges are valued at their bid prices at
the end of the accounting period or otherwise at fair value based on published
price quotations.
* Unquoted investments, where there is not an active market, are valued using
an appropriate valuation technique in accordance with the IPEV Guidelines.
Indicators of fair value are derived using established methodologies including
earnings multiples, revenue multiples, the level of third party offers
received, cost or price of recent investment rounds, net assets, and industry
valuation benchmarks. Where price of recent investment is used as a starting
point for estimating fair value at subsequent measurement dates, this has been
benchmarked using an appropriate valuation technique permitted by the IPEV
guidelines.
* In situations where cost or price of recent investment is used,
consideration is given to the circumstances of the portfolio company since
that date in determining fair value. This includes consideration of whether
there is any evidence of deterioration or strong definable evidence of an
increase in value. In the absence of these indicators, 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
other distributable reserve when a share becomes ex-dividend.
Current assets and payables
Receivables (including debtors due after more than one year), payables and
cash are carried at amortised cost, in accordance with FRS 102. Deferred
consideration meets the definition of a financing transaction held at
amortised cost, and interest will be recognised through capital over the
credit period using the effective interest method. There are no financial
liabilities other than payables.
Investment income
Dividend income
Dividend income is included in revenue when the investment is quoted
ex-dividend.
Unquoted loan stock
Fixed returns on non-equity shares and debt securities are recognised when the
Company’s right to receive payment and expect settlement is established.
Where interest is rolled up and/or payable at redemption then it is recognised
as income unless there is reasonable doubt as to its receipt.
Fixed term funds income
Funds income is recognised on an accruals basis using the agreed rate of
interest.
Bank deposit income
Interest income is recognised on an accruals basis using the rate of interest
agreed with the bank.
Investment management fee, performance incentive fee and 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.
Reserves
Called-up share capital
This accounts for the nominal value of the Company’s shares.
Share premium
This accounts for the difference between the price paid for shares and the
nominal value of those shares, less issue costs and transfers to the other
distributable reserves.
Capital redemption reserve
This reserve accounts for amounts by which the issued share capital is
diminished through the repurchase and cancellation of the Company’s own
shares.
Unrealised capital reserve
Increases and decreases in the valuation of investments held at the year end
against cost are included in this reserve.
Realised capital reserve
The following are disclosed in this reserve:
* gains and losses compared to cost on the realisation of investments, or
permanent diminutions in value (including gains recognised on the realisation
of investment where consideration is deferred that are not distributable as a
matter of law);
* finance income in respect of the unwinding of the discount on deferred
consideration that is not distributable as a matter of law;
* expenses, together with the related taxation effect, charged in accordance
with the above policies; and
* dividends paid to equity holders where paid out by capital.
Other distributable reserve
The special reserve, treasury share reserve and the revenue reserve were
combined in 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, transfers from
the share premium and capital redemption reserve, and other non-capital
realised movements.
Dividends
Dividends by the Company are accounted for when the liability to make the
payment (record date) has been established.
Segmental reporting
The Directors are of the opinion that the Company is engaged in a single
operating segment of business, being investment in smaller companies
principally based in the UK.
3. Gains/(losses) on investments
Unaudited six months ended 30 June 2023 £’000 Unaudited six months ended 30 June 2022 £’000 Audited year ended 31 December 2022 £’000
Unrealised gains/(losses) on fixed asset investments 7,283 (885) (3,258)
Realised gains on fixed asset investments 224 2,621 2,322
Unwinding of discount on deferred consideration 168 144 300
7,675 1,880 (636)
4. Investment income
Unaudited six months ended 30 June 2023 £’000 Unaudited six months ended 30 June 2022 £’000 Audited year ended 31 December 2022 £’000
Loan stock interest 420 474 916
Dividend income 37 100 172
Income from fixed term funds 95 9 59
Bank interest 132 8 47
684 591 1,194
5. Investment Manager’s fees Unaudited six months ended 30 June 2023 £’000 Unaudited six months ended 30 June 2022 £’000 Audited year ended 31 December 2022 £’000
Investment management fee charged to revenue 133 120 245
Investment management fee charged to capital 1,201 1,079 2,207
1,334 1,199 2,452
Further details of the Management agreement under which the investment
management fee and performance incentive fee are paid are given in the
Strategic report on page 18 of the Annual Report and Financial Statements for
the year ended 31 December 2022.
During the period, services to a total value of £1,344,000 (30 June 2022:
£1,199,000; 31 December 2022: £2,452,000) were purchased by the Company from
Albion Capital Group LLP (“Albion”). At the financial period end, the
amount due to Albion in respect of these services was £690,000 (30 June 2022:
£650,000; 31 December 2022: £618,000). The total annual running costs of the
Company are capped at an amount equal to 2.5% of the Company’s net assets,
with any excess being met by Albion by way of a reduction in management fees.
During the period, the management fee was reduced by £10,000 as a result of
this cap (30 June 2022: £nil; 31 December 2022: £41,000).
During the period, the Company was not charged by Albion in respect of Patrick
Reeve’s services as a Director (30 June 2022: £nil; 31 December 2022:
£nil).
Albion, its Partners and staff (including Patrick Reeve) hold 1,158,636
Ordinary shares in the Company as at 30 June 2023.
The Manager is, from time to time, eligible to receive arrangement fees and
monitoring fees from portfolio companies. During the period ended 30 June
2023, fees of £65,000 attributable to the investments of the Company were
paid pursuant to these arrangements (30 June 2022: £108,000; 31 December
2022: £257,000).
The Company has entered into an offer agreement relating to the Offers with
the Company’s investment manager Albion, pursuant to which Albion will
receive a fee of 2.5% of the gross proceeds of the Offers and out of which
Albion will pay the costs of the Offers, as detailed in the Prospectus.
6. Dividends
Unaudited six months ended 30 June 2023 £’000 Unaudited six months ended 30 June 2022 £’000 Audited year ended 31 December 2022 £’000
First dividend of 2.22p per share paid on 31 May 2023 (31 May 2022: 2.37p per share) 3,012 2,925 2,925
Second dividend of 2.34p per share paid on 30 September 2022 - - 2,892
Unclaimed dividends - - (7)
3,012 2,925 5,810
In addition to the dividends summarised above, the Board has declared a second
dividend for the year ending 31 December 2023 of 2.29 pence per share (total
approximately £3,105,000), payable on 29 September 2023 to shareholders on
the register on 8 September 2023.
7. Basic and diluted return/(loss) 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
Return/(loss) attributable to Ordinary shares (£’000) 350 6,474 303 801 591 (2,843)
Weighted average shares in issue 132,550,358 115,738,554 120,150,815
Return/(loss) per Ordinary share (pence) 0.26 4.89 0.26 0.69 0.49 (2.36)
The weighted average number of shares is calculated after adjusting for
treasury shares of 18,036,957 (30 June 2022: 15,282,637; 31 December 2022:
16,468,548).
There are no convertible instruments, derivatives or contingent share
agreements in issue so basic and diluted return per share are the same.
8. Called-up share capital
Allotted, called-up and fully paid Ordinary shares of 1 penny each Unaudited 30 June 2023 Unaudited 30 June 2022 Audited 31 December 2022
Number of shares 153,611,717 138,850,411 145,582,300
Nominal value of allotted shares (£’000) 1,536 1,388 1,456
Voting rights (number of shares net of treasury shares) 135,574,760 123,567,774 129,113,752
During the period to 30 June 2023 the Company purchased 1,568,409 Ordinary
shares (nominal value £15,684) for treasury at a cost of £1,399,000. The
total number of Ordinary shares held in treasury as at 30 June 2023 was
18,036,957 (30 June 2022: 15,282,637; 31 December 2022: 16,468,548)
representing 11.7% of the Ordinary shares in issue as at 30 June 2023.
Under the terms of the Dividend Reinvestment Scheme, the following new
Ordinary shares of nominal value 1 penny each, were allotted during the period
to 30 June 2023:
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)
31 May 2023 536,739 5 92.70 478 88.50
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 7,134,319 71 96.40 6,706 89.50
14 April 2023 98,702 - 95.40 93 89.50
14 April 2023 26,068 - 95.90 24 89.50
14 April 2023 233,589 2 96.40 220 89.50
7,492,678 7,043
9. Commitments and contingencies
As at 30 June 2023, the Company had no financial commitments (30 June 2022:
£nil; 31 December 2022: £nil).
There were no contingencies or guarantees of the Company as at 30 June 2023
(30 June 2022: £nil; 31 December 2022: £nil).
10. Post balance sheet events
There have been no material post balance sheet events since 30
June 2023.
11. Related party transactions
Other than transactions with the Manager as disclosed in note 5, there are no
other related party transactions or balances requiring disclosure.
12. Going concern
The Board has conducted a detailed assessment of the Company’s ability to
meet its liabilities as they fall due. Cash flow forecasts are updated and
discussed quarterly at Board level and have been stress tested to allow for
the forecasted impact of of the current economic climate and increasingly
volatile geopolitical backdrop. The Board have revisited and updated their
assessment of liquidity risk and concluded that it remains unchanged since the
last Annual Report and Financial Statements. Further details can be found on
page 88 of those accounts.
The portfolio of investments is diversified in terms of sector and the major
cash outflows of the Company (namely investments, dividends and share
buy-backs) are within the Company’s control. Accordingly, after making
diligent enquiries, the Directors have a reasonable expectation that the
Company has adequate cash and liquid resources to continue in operational
existence for the foreseeable future. For this reason, the Directors have
adopted the going concern basis in preparing this Half-yearly Financial Report
and this is in accordance with the Guidance on Risk Management, Internal
Control and Related Financial and Business Reporting issued by the Financial
Reporting Council in September 2014, and the subsequent updated Going concern,
risk and viability guidance issued by the FRC in 2021.
13. Other information
The information set out in this Half-yearly Financial Report does not
constitute the Company’s statutory accounts within the terms of section 434
of the Companies Act 2006 for the periods ended 30 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 but is derived from the audited statutory accounts for the
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.
14. Publication
This Half-yearly Financial Report is being sent to shareholders and copies
will be made available to the public at the registered office of the Company,
Companies House, the National Storage Mechanism and also electronically at
www.albion.capital/funds/AADV, where the Report can be accessed from the
‘Financial Reports and Circulars’ section.
Attachment
* AADV Pie Chart 30 June 2023
(https://ml-eu.globenewswire.com/Resource/Download/912c9c4a-2670-49c5-9828-23c01fb5154d)