REG-Augmentum Fintech Plc: Half-year Report
02/12/2020 07:05
Legal Entity Identifier: 213800OTQ44T555I8S71
2 December 2020
Augmentum Fintech plc
(the “Company” or “Augmentum Fintech”)
Interim results for the six months ended 30 September 2020
Augmentum Fintech plc (LSE: AUGM), the UK’s only publicly listed fintech
investment fund, announces its unaudited interim results for the six months
ended 30 September 2020.
Financial highlights
* Overall NAV increased to £139.4 million (31 March 2020: £135.8 million).
* NAV per share increased by 2.8% to 119.3 pence (31 March 2020: 116.1 pence).
* Unrealised IRR of 14.1% on investments since IPO.
* £8.7 million of available cash as at 30 September 2020 (31 March 2020
£15.1 million).
* Post period end, raised £27.5 million through an oversubscribed placing and
retail offer.
Operational highlights
* AUGM included in FTSE Small Cap Index and FTSE All Share Index (June).
* Made follow-on investments into seven portfolio companies totaling £5.1
million.
* Strong progress made in the portfolio companies: * Zopa awarded full banking
licence in June.
* Funding rounds were completed by Onfido and Previse in April and Habito in
August.
* interactive investor completed the part cash part share acquisition of Share
plc in July.
* Tide (alongside its partner Clearbank) was awarded a £25 million Banking
Competition Remedies Pool E Grant in September.
* iwoca was accredited as a lender by the British Business Bank for the
Coronavirus Business Interruption Scheme in May.
Neil England, Chairman of Augmentum Fintech plc commented:
“I am pleased to report that in the period, despite many sectors in the UK
and wider European economies being hit hard by the effects of the pandemic,
our NAV per share increased by 2.8%. The Company’s share price has doubled
since the March lows, reflecting investor confidence in our proposition.
We have an interesting and diverse portfolio and an experienced management
team looking to add compelling new investments. The fintech market offers a
substantial opportunity for further growth and your Board remains confident
that the long term investor will be well rewarded.”
Tim Levene, CEO of Augmentum Fintech Management Limited commented:
“Over the period, like most venture capital funds, we have been focused on
ensuring our portfolio has been able to react and respond to the challenges of
Covid 19 as well as being well placed to benefit from the growing shift to a
digital economy, accelerated by the pandemic. Notwithstanding the
uncertainties emerging in the economy our portfolio has been tracking our
expectations since the Annual Results were published in July, and we believe
our portfolio remains balanced and able to capitalise on the opportunities
ahead.”
For further information, please contact:
Augmentum Tim Levene, Portfolio Manager Nigel Szembel, Investor Relations +44 (0)20 3961 5420 +44 (0)7802 362088 nigel@augmentum.vc
Peel Hunt LLP Liz Yong, Luke Simpson, Tom Pocock (Investment Banking) +44 (0)20 7418 8900
Nplus1 Singer Advisory LLP Harry Gooden, Robert Peel, James Moat (Investment Banking) +44 (0)20 7496 3000
Frostrow Capital LLP Victoria Hale, Company Secretary +44 (0)20 3170 8732 info@frostrow.com
Notes to Editors
Augmentum Fintech invests in fast growing fintech businesses that are
disrupting the financial services sector. Augmentum Fintech is the UK’s only
publicly listed investment company focusing on the fintech sector in the UK
and wider Europe, having launched on the Main Market of the London Stock
Exchange in 2018, giving businesses access to patient capital and support,
unrestricted by conventional fund timelines and giving public markets
investors access to a largely privately held investment sector during its main
period of growth.
CHAIRMAN’S STATEMENT
Introduction
This report covers your Company’s progress in the six months to 30 September
2020 and its financial position as at that date. The global pandemic continues
to create difficult and uncertain times for many and I hope that all of our
shareholders and their families are managing well through this period.
The trend towards the digital economy has accelerated as a result of the
change in life and work routines over the period under review. The fintech
sector has been a beneficiary of this acceleration and the Company is well
positioned to take advantage of this.
Net asset value and share price performance
Our key financial objective is to deliver long term shareholder value by
growing our NAV. I am pleased to report that in the period, despite many
sectors in the UK and wider European economies being hit hard by the effects
of the pandemic, our NAV per share increased from 116.1 pence per share to
119.3 pence per share, an increase of 2.8% (31 March 2020: 5.9%).
Our Portfolio Manager gives a full review of the portfolio and investments
made during the period in their report beginning on page 7.
At the start of the period, the Company’s share price was 63.0p,
representing a significant discount to NAV per share, and we repurchased
75,000 shares during April 2020. Over the period, our share price has
recovered strongly, to stand at 119.8p as at 30 September 2020. The share
price premium over NAV per share as at 30 September 2020 was 0.4%. This
premium has continued to grow as the fintech sector attracts investor interest
and at the date of this report is 21.1%.
New share issue
I am pleased to report that demand for the Company’s October fundraise,
through an institutional placing and retail offer, exceeded the maximum issue
size and accordingly applications were scaled back. Your Company raised
£27.5 million net of costs and there are now a total of 140,423,291 ordinary
shares in issue, of which 195,000 shares are held in Treasury. We have a
diverse and growing range of supportive shareholders. At the time of writing
we have over £30 million of capital available for further investment which
stands the Company on a firm footing as we move into 2021.
Portfolio Management
Our investment team continues to work very hard evaluating a wide range of
investment opportunities, reviewing and challenging financial and commercial
metrics in order to identify those most likely to be successful. We are not
passive investors and have a team that works actively across our companies
typically taking either a board or an observer seat and working with
management to guide strategy consistent with long term value creation. We
remain focused on building a balanced portfolio across different fintech
sectors and maturity stages.
Valuations
Together with our advisors, we have carefully reviewed the status of our
portfolio companies in light of the ongoing pandemic. For several of these
companies, the crisis has had a positive impact with record levels of trading.
Where the impact has been negative, our stake is often protected by the
structure of our investments. Further details are set out in the Portfolio
Manager’s Review.
Outlook
As we continue to adapt in this changing world, the opportunity for fintech
businesses remains considerable and the Company is well positioned to
capitalise on this. As the UK’s only listed specialist fintech fund, the
Company offers shareholders access to some of Europe’s most exciting fintech
businesses that are disrupting and enhancing the traditional financial
services industry. The recent successful fundraise will help the Company take
further advantage of these opportunities.
As I have stated on previous occasions, the Company’s success will
ultimately derive from backing the right businesses at the right time. We
already have an interesting and diverse portfolio and have an experienced
portfolio management team looking to add compelling new propositions to the
Company. The fintech market offers a substantial opportunity for further
growth and your board remains confident that the long term investor will be
well rewarded.
Neil England
Chairman
1 December 2020
INVESTMENT OBJECTIVE AND POLICY
Investment objective
The Company’s investment objective is to generate capital growth over the
long term through investment in a focused portfolio of fast growing and/or
high potential private financial services technology (“fintech”)
businesses based predominantly in the UK and wider Europe.
Investment policy
In order to achieve its investment objective, the Company invests in early
(but not seed) or later stage investments in unquoted fintech businesses. The
Company intends to realise value through exiting the investments over time.
The Company will seek exposure to early stage businesses which are high
growth, with scalable opportunities, and have disruptive technologies in the
banking, insurance and asset management sectors as well as those that provide
services to underpin the financial sector and other cross-industry
propositions.
Investments are expected to be mainly in the form of equity and equity-related
instruments issued by portfolio companies, although investments may be made by
way of convertible debt instruments. The Company intends to invest in unquoted
companies and will ensure that the Company has suitable investor protection
rights where appropriate. The Company may also invest in partnerships, limited
liability partnerships and other legal forms of entity. The Company will not
invest in publicly traded companies. However, portfolio companies may seek
initial public offerings from time to time, in which case the Company may
continue to hold such investments without restriction.
The Company may acquire investments directly or by way of holdings in special
purpose vehicles or intermediate holding entities (such as the Partnership)*.
The Management Team has historically taken a board or board observer position
on investee companies and, where in the best interests of the Company, will do
so in relation to future investee companies.
The Company’s portfolio is expected to be diversified across a number of
geographical areas predominantly within the UK and wider Europe, and the
Company will at all times invest and manage the portfolio in a manner
consistent with spreading investment risk.
The Management Team will actively manage the portfolio to maximise returns,
including helping to scale the team, refining and driving key performance
indicators, stimulating growth, and positively influencing future financing
and exits.
Investment restrictions
The Company will invest and manage its assets with the object of spreading
risk through the following investment restrictions:
· the value of no single investment (including related
investments in group entities or related parties) will represent more than 15
per cent. of Net Asset Value; and
· at least 80 per cent. of Net Asset Value will be invested in
businesses which are headquartered in or have their main centre of business in
the UK or wider Europe.
In addition, the Company will itself not invest more than 15 per cent. of its
gross assets in other investment companies or investment trusts which are
listed on the Official List.
Each of the restrictions above will be calculated at the time of investment
and disregard the effect of the receipt of rights, bonuses, benefits in the
nature of capital or by reason of any other action affecting every holder of
that investment. The Company will not be required to dispose of any investment
or to rebalance the portfolio as a result of a change in the respective
valuations of its assets.
Hedging and derivatives
Save for investments made using equity-related instruments as described above,
the Company will not employ derivatives of any kind for investment purposes.
Derivatives may be used for currency hedging purposes.
Borrowing policy
The Company may, from time to time, use borrowings to manage its working
capital requirements but shall not borrow for investment purposes. Borrowings
will not exceed 10 per cent. of the Company’s Net Asset Value, calculated at
the time of borrowing.
* Please refer to the Glossary.
Cash management
The Company may hold cash on deposit and may invest in cash equivalent
investments, which may include short-term investments in money market type
funds and tradeable debt securities.
There is no restriction on the amount of cash or cash equivalent investments
that the Company may hold or where it is held. The Board has agreed prudent
cash management guidelines with the AIFM to ensure an appropriate risk/return
profile is maintained. Cash and cash equivalents are held with approved
counterparties, and in line with prudent cash management guidelines, agreed
with the Board, AIFM and Portfolio Manager.
It is expected that the Company will hold between 10 and 20 per cent. of its
Gross Assets in cash or cash equivalent investments, for the purpose of making
follow-on investments in accordance with the Company’s investment policy and
to manage the working capital requirements of the Company.
Changes to the investment policy
No material change will be made to the investment policy without the approval
of Shareholders by ordinary resolution. Non-material changes to the investment
policy may be approved by the Board. In the event of a breach of the
investment policy set out above and the investment and gearing restrictions
set out therein, the Management Team shall inform the AIFM and the Board upon
becoming aware of the same and if the AIFM and/or the Board considers the
breach to be material, notification will be made to a Regulatory Information
Service.
PORTFOLIO
as at 30 September 2020
Fair value of Fair value of
holding at Net holding at
31 March investments/ Investment 30 September
2020 (realisations) return 2020 % of
£’000 £’000 £’000 £’000 portfolio
Interactive Investor^ 21,807 – 387 22,194 16.9%
Tide 14,221 – – 14,221 10.9%
BullionVault^ 11,191 (446)* 923 11,668 8.8%
Onfido 10,867 – 1 10,868 8.3%
Farewill 7,216 2,573 802 10,591 8.1%
Monese 10,159 1,000 (879) 10,280 7.9%
Zopa^ 7,930 503 398 8,831 6.7%
Grover 6,267 894 863 8,024 6.1%
Iwoca 7,600 252 15 7,867 6.0%
Receipt Bank 7,500 – – 7,500 5.7%
Top 10 Investments 104,758 4,776 2,510 112,044 85.4%
Other Investments 18,374 345 176 18,895 14.6%
Total Investments 123,132 5,121 2,686 130,939 100.0%
^ Held via Augmentum I LP
* During the period WhiskyInvestDirect was spun out of
BullionVault and is now held directly by Augmentum I LP.
WhiskyInvestDirect’s value of £446,000 is included within Other Investments
as at 30 September 2020.
There are eight other investments (31 March 2020: seven) held in the
portfolio, see page 16 for further details of their make up.
PORTFOLIO MANAGER’S REVIEW
Overview
The period under review has seen the world in which we live change in many
ways, in some ways beyond recognition, but in others the fundamental needs and
requirements of consumers and businesses remain unchanged. It has become
incumbent on suppliers and service providers to adapt the way they deliver
their goods and services at an unprecedented rate if they want to keep their
customers, and indeed if they want to grow.
As countries first locked down across the world in March of this year, most
venture capital funds turned inward and focused on ensuring adequate liquidity
amongst their own existing portfolio investments. This activity was further
reinforced by state aid programmes quickly ushered in by governments around
the world, encouraging further matched capital from private investors.
Fintech was already equipping the market with advantages that are now
increasingly in demand as we transition to a “new normal” – enhancing
access to capital, scaling distribution, digitising physical processes and
reducing costs through automation of previously inefficient or
labour-intensive processes. Times of dislocation, such as we have seen this
year, provide an opportunity for challengers to accelerate traction and to
capitalise on shifts in consumer behaviour.
Fundamental attributes of successful fintech companies are world class
technology, data driven processes, operational efficiency, and customer
centricity, but the attributes that are particularly advantageous in these
challenging and fast changing times are their responsiveness and agility.
Our Investments
Over the last six months, like most venture capital funds, we have been
overwhelmingly focused on ensuring the stability of our own portfolio as
companies responded to Covid-19, and over this period we have deployed
investment totalling £5.1 million across seven of our existing portfolio
companies.
In May, we invested a further €1 million (£0.9 million) in Grover alongside
other existing investors. The funding round, alongside new debt facilities,
has positioned Grover, with its consumer electronics subscription rental
model, very well to benefit from the changing trends. In September Grover
surpassed €50m in annual subscription value. More than 95% of subscriptions
are now committed, representing a 2.2x annual increase in recurring revenue.
In July, we also added £2.6 million to our existing investment in Farewill as
part of a £20 million Series B round led by European growth fund Highland
Capital. The investment represented a 100% increase in the share price we paid
for our initial Series A investment, although the majority of this uplift was
captured in our March 31st results given the near completion of the round at
the time. The business has performed strongly in 2020 with growth across all
product lines, benefiting from Covid-related market conditions. Three products
are live: Wills, Probate and Cremation with development efforts focused around
further ‘planning for death’ and ‘dealing with death’ products.
In July we invested £1 million in Monese alongside a further £1 million
investment from co-investors PayPal and Kinnevik. In response to market
conditions Monese acted to reduce its cost base and improved its unit
economics. In July Monese became the first European neobank to offer French
and other individual EU country IBANs to its customers, and also launched a
partnership with Paysafe, creating one of the largest cash networks in the UK
and Europe with 87,000 cash top-up locations. At the end of the reporting
period Monese signed a strategic partnership with Mastercard to deliver better
local banking experiences to underserved consumers across Europe, and becoming
a principal Mastercard issuer. Although the neobank industry has lost some of
its sizzle in certain parts of the investment community we believe that Monese
is sufficiently differentiated from other neobanks to continue to thrive,
although there is still much to do.
Following the receipt of a full banking license from the PRA in June, we added
a further £0.5 million to our investment holding in Zopa via a secondary
purchase of shares. Since June, Zopa has launched a fixed term savings product
and a credit card to address gaps in the market. Alongside this, demand has
begun to return for unsecured personal loans, the core of Zopa’s current
lending business, and where it is starting with a freshly capitalised clean
balance sheet. With more than £5 billion lent in personal loans since
inception, and £1 billion in 2019 alone, Zopa’s P2P business has been
profitable since 2016. Although it took longer than expected for Zopa to
become a fully licenced bank, we anticipate the new banking platform will
create a number of opportunities for Zopa in 2021.
In addition, we have topped up our investments in three of our portfolio
companies with a further £0.7 million of capital – iwoca, Habito and Duedil
– alongside existing and new investors to ensure they had sufficient runway
to navigate what has been an uncertain period.
Habito, despite the backdrop of a volatile home buying market, has experienced
record revenue in Q3 benefiting from homeowners and first-time buyers shifting
to digital platforms at the expense of many traditional brokers and lenders.
In August, the business announced the successful close of its £35 million
series C, with the addition of new investors SBI Group and Mojo Capital.
iwoca, an SME lender in UK and Germany, has faced significant challenges
throughout the Covid period. New origination of loans as well as the
performance of the loan book was challenged in March and April. Despite the
early shock, the business nimbly adapted to the new conditions, leveraging its
technology advantages and evolving its product to ensure the company is well
placed to return to growth in 2021. iwoca was accredited in May by the British
Business Bank for the Coronavirus Business Interruption Loan Scheme
(“CBILS”) and is on track to issue £150 million of loans as one of the
leading non-bank lenders under the scheme. iwoca is well capitalised and
positioned to exploit the gap that banks are likely to leave, if they retrench
from SME lending once the Government schemes wind down.
Interactive investor (ii) has continued to build on its strong foundations,
delivering 53% year-on-year growth in revenues through the first three
quarters. A record number of new customers were acquired in the first three
quarters of 2020, with net new business of £0.8 billion in Q3 alone. This
included a significant increase in younger investors, with commensurate levels
of new assets added to the platform. On 3 July 2020, ii completed the part
cash part share acquisition of Share plc and is now working on migrating these
customers onto the ii platform.
In September, Tide (alongside its partner, Clearbank) was awarded a £25
million Banking Competition Remedies (“BCR”) Pool E grant, in addition to
the £60 Million Pool A grant it was awarded in 2019. Tide/Clearbank is the
only awardee to have received two major grants from the BCR, recognising
Tide’s impact on competition in the SME banking sector and its on-track
performance with its Pool A grant. The business has experienced strong growth
in customer numbers in the past three months benefiting from the accelerated
digitisation trend during the pandemic. Tide passed 4% market share of
business accounts in September, and now serves close to 250,000 SMEs.
BullionVault has continued to perform strongly during the year, consolidating
its position in the ‘digital gold’ space for private investors. Amid the
financial uncertainty and lower interest rates, growth in new users coupled
with increased activity amongst existing customers set record demand for gold,
silver and platinum on the company’s platform, with price volatility further
contributing to dealing commissions. Pre-tax profit as at the end of September
2020 saw over 100% growth YTD. In September WhiskyInvestDirect was spun out of
BullionVault to become a standalone company and we now hold our investment in
it directly.
In April Onfido successfully completed a $100 million financing round led by
US investment fund TPG Growth, and recently announced Q2 revenue growth of 40%
year-on-year driven in part by performance in its US business. The company now
aims to build out its vision for an alternative “identity verification”
layer of the internet with a new set of use cases such as virtual voting
through to health passports and digital health wallets, now even more relevant
due to the pandemic.
Performance
We are reporting an uplift of £3.7 million in our NAV as at 30 September 2020
in absolute terms, a 2.8% increase in NAV per share. Since IPO this represents
an IRR of 14.1% on the capital that we have deployed.
Outlook
As we stated in our March results, the opportunity to capitalise on the shifts
in consumer and business behaviour in regard to digital financial services is
greater than ever. With the opportunity still in its nascency (incumbent
players still control >90% of the global market for financial services) it’s
all very much still to play for.
Our focus remains on investing in exceptional companies where we have high
conviction, and where we see significant potential returns. We anticipate that
over the coming 12 months there will be increasing potential for M&A,
consolidation, and in some parts of our sector some keenly priced investment
opportunities.
Tim Levene
CEO
Augmentum Fintech Management Limited
1 December 2020
KEY INVESTMENTS
Augmentum is building a diversified portfolio of high growth fintechs across
the sector
interactive investor is the No.1 UK direct-to-consumer fixed fee investment
platform, with over £30 billion of assets under administration and over
300,000 customers across its general trading, ISA and SIPP account. It has a
14% share of UK retail equity trading. The company offers execution-only
trading and investing services in shares, funds, ETFs and investment trusts,
all for a market-leading monthly subscription fee.
interactive investor completed a £40 million acquisition of Alliance Trust
Savings in 2019, bringing together the two largest UK fixed price platforms,
and in July 2020 completed £40 million acquisition of Share PLC.
Source: ii
31 March 2020 30 Sept 2020
£’000 £’000
Cost: 3,175 3,175
Value: 21,807 22,194
% ownership (fully diluted): 3.7% 3.7%
Turnover (1): 72,956 90,170
Pre tax profits (1): 8,925 13,933
Net assets (1): 116,624 128,005
1 As per last filed audited accounts of the investee
company for the year to 31 December 2019. Comparative is for year to 31
December 2018.
Tide’s mission is to help SMEs save time and money in the running of their
businesses. Customers are set up with an account number and sort code in as
little as 5 minutes, and the company is building a comprehensive suite of
digital banking services for businesses, including automated accounting,
instant access to credit, card control and quick, mobile invoicing. Tide is
the fifth largest business banking challenger in the UK (by volume
of customers), and the largest digital challenger. Tide has 4% market
penetration and is estimated to have a share of 12-15% of new-to-market
business current accounts.
In September 2019 Augmentum led Tide’s £44.1m first round of Series B
funding, alongside Japanese investment firm The SBI Group.
Source: Tide
31 March 2020 30 Sept 2020
£’000 £’000
Cost: 9,261 9,261
Value: 14,221 14,221
% ownership (fully diluted): 5.9% 5.9%
Turnover (1): 5,485 –
Pre tax losses (1): (12,663) –
Net assets (1): 18,101 –
1 As per last audited accounts of the investee company for
the 15 month period to 31 December 2018. Audited accounts for 31 December 2019
are not available yet.
BullionVault is a physical gold and silver market for private investors
online. It enables people across 175 countries to buy and sell
professional-grade bullion at the very best prices online, with $2 billion of
assets under administration and over $100 million worth of gold and silver
traded monthly.
Each user’s property is stored at an unbeaten low cost in secure, specialist
vaults in London, New York, Toronto, Singapore and Zurich. BullionVault’s
unique Daily Audit then proves the full allocation of client property every
day.
The company generates solid monthly profits from trading, commission and
interest. It is cash generative, dividend paying, and well-placed for any
cracks in the wider financial markets.
On 15 September 2020 WhiskyInvestDirect spun out from BullionVault and the
Company now holds both investments directly.
Source: BullionVault
31 March 2020 30 Sept 2020
£’000 £’000
Cost: 8,424 8,424
Value: 11,191 11,531
% ownership (fully diluted): 11.1% 11.1%
Dividends paid: 360 –
Turnover (1): 9,341 –
Pre tax profits (1): 5,198 –
Net assets (1): 35,712 –
1 As per last filed audited accounts of the investee
company for the year to 31 October 2019. Audited accounts for 31 October 2020
are not available yet.
* During the period WhiskyInvestDirect was spun out of
BullionVault and is now held directly by Augmentum I LP.
WhiskyInvestDirect’s value of £446,000 is included within Other Investments
as at 30 September 2020.
Onfido is building the new identity standard for the internet. Its AI-based
technology assesses whether a user’s government-issued ID is genuine or
fraudulent, and then compares it against their facial biometrics. Using
computer vision and a number of other AI technologies, Onfido can verify
against 4,500 different types of identity documents across 195 countries,
using techniques like “facial liveness’’ to see patterns invisible to
the human eye.
Onfido was founded in 2012 and has offices in London, San Francisco, New York,
Lisbon, Paris, New Delhi and Singapore. The company has attracted over 1,500
customers in 60 countries worldwide, including industry leaders such as
GoCardless, Nutmeg, Bitstamp and Revolut. These customers are choosing Onfido
over others because of its ability to scale, speed in on-boarding new
customers (15 seconds for flash verification), preventing fraud, and its
advanced biometric technology.
In April 2020 Augmentum’s £5.7 million convertible loan note converted into
equity as Onfido raised an additional £64.7m in equity.
Source: Onfido
31 March 2020 30 Sept 2020
£’000 £’000
Cost: 7,750 7,750
Value: 10,867 10,868
% ownership (fully diluted): 1.7%* 2.7%
Turnover (1): 18,591 27,561
Pre tax losses (1): (17,265) (26,488)
Net assets (1): 13,576 (9,494)
1 As per last filed audited accounts of the investee
company for the year to 31 December 2019. Comparative is for year to 31
December 2018.
* 31 March 2020: £5.7 million of the investment was in
a convertible loan note.
In the next 10 years, £1 trillion of inheritance will pass between
generations in the UK. Farewill is a digital, all-in-one financial and legal
services platform for dealing with death and after-death services, including
wills, probate and cremation. “The nation’s favourite will writer”
according to Trustpilot reviews, Farewill aims to be the first major consumer
brand in death services.
Farewill writes 1 in 25 UK wills and has raised £125m for charity in pledged
income.
Augmentum led Farewill’s £7.5 million Series A fundraise, with a £4
million investment.
In April 2020 the company closed a £20 million Series B fundraise led by
Highland Europe and in which Augmentum invested a further £2.6 million.
Source: Farewill
31 March 2020 30 Sept 2020
£’000 £’000
Cost: 4,000 6,573
Value 7,216 10,591
% ownership (fully diluted): 13.4% 14.1%
Turnover: N/A^ N/A^
Pre tax profits: N/A^ N/A^
Net assets: N/A^ N/A^
^ No audited accounts filed.
With Monese you can open a UK or European current account in minutes from your
mobile, with a photo ID and a video selfie. Their core customers are amongst
the hundreds of millions of people who live some part of their life in another
country - whether it’s for travel, work, business, study, family, or
retirement.
With its mobile-only dual UK and Euro IBAN current account, its portability
across 30 countries, and both the app and its customer service available in 14
languages, Monese allows people and businesses to bank like a local across the
UK and Europe. Launched in 2015 Monese already has more than 2 million
registered users. 70% of incoming funds are from salary payments, indicating
that customers are using Monese as their primary account. Monese has become
one of the most popular and trusted banking services in the UK and Europe.
Customers move over £5 billion annually through their Monese accounts.
Augmentum is invested alongside Kinnevik, PayPal and International Airlines
Group.
Source: Monese
31 March 2020 30 Sept 2020
£’000 £’000
Cost: 9,261 10,261
Value: 10,159 10,280
% ownership (fully diluted)*: 5.4% 7.5%
Turnover (1): 5,485 –
Pre tax losses (1): (12,663) –
Net assets (1): 18,101 –
1 As per last audited accounts of the investee company for
the year to 31 December 2018. Audited accounts for 31 December 2019 are not
available yet.
* £0.8m (31 March 2020: £4.0m) of investment in a
convertible loan note.
Zopa built the first peer-to-peer (P2P) lending company to give people access
to simpler, better-value loans and investments. Silverstripe invested £140m
in May 2020 following which Zopa were granted their full UK banking license in
June.
Zopa’s proprietary technology has contributed to their leading digital
acquisition position. The company has lent over £5 billion in personal loans
since inception and generated positive returns every year through the cycle.
New products include a fixed term savings product protected by the Financial
Services Compensation Scheme (FSCS), a credit card and a money management
product.
In June 2020, we added a further £0.5 million to our investment holding in
Zopa via a secondary purchase of shares.
Source: Zopa
31 March 2020 30 Sept 2020
£’000 £’000
Cost: 18,500 19,003
Value: 7,930 8,831
% ownership (fully diluted): 6.1% 3.3%
Turnover (1): 38,550 –
Pre tax losses (1): (18,295) –
Net assets (1): 48,903 –
1 As per last filed audited accounts of the investee
company for the year to 31 December 2018. Audited accounts for 31 December
2019 are not available yet.
Grover brings the access economy to the consumer electronics market by
offering a simple, monthly subscription model for technology products. Private
and business customers have access to over 2,000 products including
smartphones, laptops, virtual reality technology and wearables. The Grover
service allows users to keep, switch, buy, or return products depending on
their individual needs. With a total financing volume of €103m, the company
has over 300,000 registered users.
In September 2019 Augmentum led a €11 million funding round with a €6
million investment. This coincided with Grover signing a new €30 million
debt facility with Varengold Bank, one of Germany’s major fintech banking
partners. In May 2020 Augmentum invested an additional €1 million in a
convertible note.
Source: Grover
31 March 2020 30 Sept 2020
£’000 £’000
Cost: 5,347 6,241
Value: 6,267 8,024
% ownership (fully diluted)*: N/A N/A
Turnover: ^ ^
Pre tax profits: ^ ^
Net assets: ^ ^
* Investment via a convertible loan note.
^ As an unquoted German company, Grover is not required to
publicly file audited accounts.
Founded in 2011, iwoca uses award-winning technology to disrupt small business
lending across Europe. They offer short-term loans of up to £200,000 to SMEs
across the UK, Germany and Poland. iwoca leverage online integrations with
high-street banks, payment processors and sector-specific providers to look at
thousands of data points for each business. These feed into a risk engine that
enables the company to make a fair assessment of any business – from a
retailer to a restaurant, a factory to a farm – and approve a credit
facility within hours. The company has issued over £1 billion in funding to
over 50,000 SMEs in total and was awarded £10m from the Banking Competition
Remedies’ Capability and Innovation Fund (CIF) in 2019.
Source: iwoca
31 March 2020 30 Sept 2020
£’000 £’000
Cost: 7,600 7,852
Value: 7,600 7,867
% ownership (fully diluted)*: 2.5% 2.5%
Turnover (1): 47,534 68,587
Pre tax (losses)/profits (1): 506 (1,427)
Net assets (1): 28,957 (43,051)
1 As per last filed audited accounts of the investee
company for the year to 31 December 2019. Comparative is for year to 31
December 2018.
* £0.3m (31 March 2020: nil) of investment in a
convertible loan note.
Receipt Bank was founded in 2010 out of frustration from the amount of time
and money lost in forgotten expenses, lost receipts and weekends spent sorting
through paperwork. The founders decided there must be a better way to track
business expenses and share them with accountants.
With over 400,000 businesses using the platform, Receipt Bank has processed
over 250 million receipts, bills and bank statements. It uses powerful machine
learning technology to connect accountants, bookkeepers and businesses to
unlock the value of accounting data. It employs 450 people in offices across 4
continents.
Augmentum’s £7.5 million investment in January 2020 was part of Receipt
Bank’s £55m Series C round led by US based Inside Partners.
Source: ReceiptBank
31 March 2020 30 Sept 2020
£’000 £’000
Cost: 7,500 7,500
Value: 7,500 7,500
% ownership: 3.7% 3.7%
Turnover (1): 18,619 –
Pre tax losses (1): (17,619) –
Net assets (1): 3,601 –
1 As per last filed audited accounts for the year to 31
December 2018. Audited accounts for 31 December 2019 are not available yet.
DueDil is a predictive company intelligence platform whose mission is to
inform and connect the economy by telling the story behind every business.
DueDil’s purpose-built matching technology links together data from
authoritative sources, helping its clients find, verify and monitor
opportunities and risks. More than four hundred B2B financial services and
technology companies rely on DueDil’s web platform and API as an end-to-end
solution for go to market execution, compliant on-boarding and lifecycle risk
assessment.
DueDil has over 20 years’ worth of financial data, 57 million pieces of
company information and indexes 680 million news articles every day. Alongside
Augmentum, major investors include Notion Capital and Oak Investment Partners.
Previse allows suppliers to be paid instantly. Previse’s artificial
intelligence (“AI”) analyses the data from the invoices that sellers send
to their large corporate customers. Predictive analytics identify the few
problematic invoices, enabling the rest to be paid instantly. Previse charges
the suppliers a small fee for the convenience, and shares the
profit with the corporate buyer and the funder. Previse precisely quantifies
dilution risk so that funders can underwrite pre-approval payables at scale.
Augmentum invested £250,000 in a convertible loan note in August 2019. This
converted into equity as part of the company’s $11 million funding round in
March 2020, alongside Reefknot Investments and Mastercard, as well as existing
investors Bessemer Venture Partners and Hambro Perks.
SRL Global focuses on assisting owners and operators of private wealth with
the problems of financial data management, portfolio valuation and reporting
by combining cutting-edge technology with back-office and middle-office
operations. SRL Global’s Nexus Platform provides access to an entire wealth
picture on demand by creating an encompassing relationship between every part
of the investment process.
Serving as an enterprise business intelligence platform, the solution provides
clients with a single investment repository and reporting platform that helps
enforce consistency and accuracy by standardising the way information is
accessed, analysed and shared. SRL Global is profitable, has served family
offices in 14 countries worldwide and offers 24/7 online access.
Habito is transforming the United Kingdom’s £1.3 trillion mortgage market
by taking the stress, arduous paperwork, hidden costs and confusing process
out of financing a home.
Since launching in April 2016, Habito has helped over 200,000 people better
understand their mortgage needs and completed £2.4 billion in mortgage
submissions. Habito launched their own buy-to-let mortgages in July 2019 and
‘Habito Go’ cash advances in October 2019.
Seedrs is the leading online platform for investing in the equity of startups
and other growth companies in Europe, and has been named the most active
investor in private companies in the UK.
Seedrs allows all types of investors to invest in businesses they believe in
and share in their success, and allows all types of growth- focused businesses
to raise capital and business community in the process. The Seedrs Secondary
Market (launched in June 2017) enables investors to buy and sell shares from
each other, and has delivered over 10,000+ exits to investors to date. £700
million has been invested into pitches to date (£280 million in 2019) from
investors from over 70 countries, with 110 successful fundraises of over £1
million.
Wayhome (previously Unmortgage) offers a unique part-own part-rent model of
home ownership, requiring as little as 5% deposit with customers paying a
market rent on the portion of the home that Wayhome owns, with the ability to
increase the equity in the property as their financial circumstances allow.
Wayhome opens up owner-occupied residential property as an asset class for
pension funds, who will earn inflation?linked rent on the portion the occupier
doesn’t own.
Intellis is an automated forex trading platform governed by AI.
WhiskyInvestDirect allows retail customers to invest in maturing whisky. It
spun out of BullionVault in September 2020.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 September 2020
Six months ended Six months ended
30 September 2020 30 September 2019
Revenue Capital Revenue Capital
return return Total return return Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Gains on investments held at fair value – 2,686 2,686 – 4,646 4,646
Investment income 7 – 7 57 – 57
AIFM Fees and Carried Interest 2 (153) 2,367 2,214 (130) (182) (312)
Other expenses (1,190) (20) (1,210) (1,052) (38) (1,090)
(Loss)/return before taxation (1,336) 5,033 3,697 (1,125) 4,426 3,301
Taxation – – – – – –
(Loss)/return attributable to equity shareholders of the parent company (1,336) 5,033 3,697 (1,125) 4,426 3,301
Earnings per share* 3 (1.1) 4.3 3.2 (1.1)p 4.2p 3.1p
The total column of this statement represents the Group’s Consolidated
Statement of Comprehensive Income, prepared in accordance with IFRS as adopted
by the European Union.
The revenue return and capital return columns are supplementary to this and
are prepared under guidance published by the Association of Investment
Companies.
The Group does not have any other comprehensive income and hence the total
return, as disclosed above, is the same as the Group’s total comprehensive
income.
All items in the above statement derive from continuing operations.
All income is attributable to the equity holders of Augmentum Fintech plc, the
parent company. There are no non?controlling interests.
* The earnings per share is the figure calculated in
accordance with IAS 33 ‘Earnings per share’.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 September 2020
Six months ended 30 September 2020
Ordinary Share Other
share premium Special capital Revenue
capital account reserve reserve reserve Total
£’000 £’000 £’000 £’000 £’000 £’000
Opening shareholders funds 1,171 24,760 92,033 22,328 (4,499) 135,793
Purchase of own shares into Treasury – – (51) – – (51)
Return/(loss) for the period – – – 5,033 (1,336) 3,697
At 30 September 2020 1,171 24,760 91,982 27,361 (5,835) 139,439
Six months ended 30 September 2019
Ordinary Share Other
share premium Special capital Revenue
capital account reserve reserve reserve Total
£’000 £’000 £’000 £’000 £’000 £’000
Opening shareholders funds 940 – 92,101 12,055 (2,026) 103,070
Issue of shares following placing and offer for subscription 231 25,587 – – – 25,818
Costs of placing and offer for subscription – (827) – – – (827)
Return/(loss) for the period – – – 4,426 (1,125) 3,301
At 30 September 2019 1,171 24,760 92,101 16,481 (3,151) 131,362
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 September 2020
30 September 31 March
2020 2020
Note £’000 £’000
Non current assets
Investments held at fair value 7 130,939 123,132
Fixed assets 8 17
Current assets
Right of use asset 211 333
Other receivables 33 112
Cash and cash equivalents 8,746 15,111
Total assets 139,937 138,705
Current liabilities
Other payables (284) (212)
Lease liability (214) (333)
Provisions – (2,367)
Total assets less current liabilities 139,439 135,793
Net assets 139,439 135,793
Capital and reserves
Share capital 4 1,171 1,171
Share premium account 4 24,760 24,760
Special reserve 91,982 92,033
Retained earnings:
Capital reserves 27,361 22,328
Revenue reserve (5,835) (4,499)
Total equity 139,439 135,793
Net asset value per share 5 119.3p 116.1p
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 September 2020
Six months Six months
ended ended
30 September 30 September
2020 2019
£’000 £’000
Cash flows from operating activities
Purchases of investments (5,121) (13,850)
Interest received 67 1
Operating expenses paid (1,260) (1,249)
Net cash outflow from operating activities (6,314) (15,098)
Cash flow from financing activities
Issue of shares following placing and offer for subscription – 25,818
Costs of placing and offer for subscription – (827)
Purchase of own shares into Treasury (51) –
Net cash (outflow)/inflow from financing (51) 24,991
(Decrease)/increase in cash and cash equivalents (6,365) 9,893
Cash and cash equivalents at the beginning of the period 15,111 25,592
Cash and cash equivalents at the end of the period 8,746 35,485
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 September 2020
1.a General information
Augmentum Fintech plc is a company limited by shares, incorporated and
domiciled in the UK. Its registered office and principal place of business is
at 25 Southampton Buildings, London WC2A 1AL, UK. Its shares are listed on the
London Stock Exchange.
These condensed interim financial statements were approved for issue on 1
December 2020. These condensed interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 March 2020 were approved by the
board of directors on 15 July 2020 and delivered to the Registrar of
Companies.
The report of the auditors on those accounts was unqualified, did not contain
an emphasis of matter paragraph and did not contain any statement under
section 498 of the Companies Act 2006.
The financial statements have been reviewed, not audited.
1.b Basis of preparation
This condensed consolidated interim financial report for the half-year
reporting period ended 30 September 2020 has been prepared in accordance with
the Disclosure Guidance and Transparency Rules of the Financial Conduct
Authority and Accounting Standard IAS 34, ‘Interim Financial Reporting’,
as adopted by the European Union.
The accounting policies adopted are consistent with those of the previous
financial year and corresponding interim reporting period, except for the
adoption of new and amended standards as set out below.
1.c New and amended standards adopted by the group
No new or amended standards became applicable for the current reporting period
that have an impact on the Group or Company.
1.d Going Concern
The Directors believe that it is appropriate to adopt the going concern basis
in preparing these condensed consolidated financial statements, as the Board
considers the Group has sufficient liquid financial resources after the
successful fundraise to continue in business for the foreseeable future.
1.e Segmental Analysis
The Group operates a single business segment for reporting purposes and is
managed as a single investment company. Reporting is provided to the Board of
Directors on an aggregated basis. The investments are all located in the UK
and continental Europe.
1.f Related Party Transactions
There have been no changes to the nature of the related party arrangements or
transactions during the period to those reported in the Annual Report for the
year ended 31 March 2020.
1.g Events after the reporting period
Subsequent to the period end the Company raised net proceeds of £27,506,525
in exchange for the issue of 23,371,380 ordinary shares.
2 AIFM Fees and Carried Interest
Six months Six months
ended ended
30 September 30 September
Revenue Capital 2020 Revenue Capital 2019
£’000 £’000 £’000 £’000 £’000 £’000
AIFM fees 153 – 153 130 – 130
Carried Interest^ – (2,367) (2,367) – 182 182
153 (2,367) (2,214) 130 182 312
^ Carried interest is only payable once the Group has
received an aggregate annualised 10% realised return on investments (the
‘hurdle’). Based on the investment valuations as at 30 September 2020 the
hurdle has not been met, on an unrealised basis, as such the carried interest
acccrued as at 31 March 2020 has been reversed in the Income Statement.
Carried interest is only payable if the hurdle is met on a realised basis and
a carried interest fee is paid by the Company to AFML, its subsidiary. See
page 22 and Note 20.9 of the Company’s Annual Report for further details.
The carried interest arrangements have been set up as a long term employee
benefit plan with the aim of incentivising employees of AFML and aligning them
with shareholders through participation in the realised investment profits of
the Group. The Management Engagement & Remuneration Committee determine the
allocation of the carried interest amongst employees of AFML and any
unallocated carried interest on receipt of a carried interest fee from the
company, or unvested carried interest resulting from a participant becoming a
leaver, is expected to be allocated to remaining participants. Non-executive
Directors of the Company are not eligible to participate in the carried
interest arrangements.
3 Earnings per share
The earnings per share figures are based on the following figures:
Six months Six months
ended ended
30 September 30 September
2020 2019
£’000 £’000
Net revenue return (1,336) (1,125)
Net capital return 5,033 4,426
Net total return 3,697 3,301
Weighted average number of ordinary shares in issue 116,860,757 105,085,072
Pence Pence
Revenue earnings per share (1.1) (1.1)
Capital earnings per share 4.3 4.2
Total earnings per share 3.2 3.1
4 Share capital
On 4 July 2019 23,051,911 ordinary shares were issued. The nominal value of
the shares issued was £230,519 and the total gross cash consideration
received was £25,818,140. This consideration has been offered against costs
of issue, which totalled £826,523.
During the period 75,000 shares were bought back for £51,000. As at 30
September 2020 there were 117,051,911 shares in issue of which 195,000 shares
were held in treasury.
5 Net asset value per share
The net asset value per share is based on the net assets attributable to the
equity shareholders of £139,439,000 and 116,856,911 shares being the number
of shares in issue (excluding shares held in treasury) at the period end.
6 Subsidiary undertakings
The Company has an investment in the issued ordinary share capital of its
wholly owned subsidiary undertaking, Augmentum Fintech Management Limited,
which is registered in England and Wales, operates in the United Kingdom and
is regulated by the Financial Conduct Authority as of 1 November 2018.
7 Principal Risks and Uncertainties
The principal risks which the Company faces from its financial instruments
are:
* Market Price Risk
* Liquidity Risk; and
* Credit Risk
Market Price Risk
Market price risk arises mainly from uncertainty about future prices of
financial instruments in the Group’s portfolio. It represents the potential
loss the Group might suffer through holding market positions in the face of
price movements, mitigated by stock diversification.
The Group is exposed to the risk of the change in value of its unlisted equity
and non-equity investments. For unlisted equity and non-equity investments the
market risk is principally deemed to be the assumptions used in the valuation
methodology as set out in the accounting policy.
Liquidity Risk
The Group’s assets comprise unlisted equity and non-equity investments.
Whilst unlisted equity is illiquid, short-term flexibility is achieved through
cash and cash equivalents.
Credit Risk
The Group’s exposure to credit risk principally arises from cash and cash
equivalents. Only highly rated banks (with credit ratings above A3, based on
Moodys ratings or the equivalent from another ratings agency) are used for
cash deposits and the level of cash is reviewed on a regular basis.
Further details of the Company’s management of these risks can be found in
note 13 of the Company’s 2020 Annual Report.
There have been no changes to the management of or the exposure to credit risk
since the date of the Annual Report.
Fair Value Hierarchy
Fair value is the amount for which an asset could be exchanged, or a liability
settled between knowledgeable willing parties in an arm’s length
transaction.
The Group complies with IFRS 13 in respect of disclosures about the degree of
reliability of fair value measurements. This requires the Group to classify,
for disclosure purposes, fair value measurements using a fair value hierarchy
that reflects the significance of the inputs used in making the measurements.
The levels of fair value measurement bases are defined as follows:
Level 1: fair values measured using quoted prices (unadjusted) in active
markets for identical assets or liabilities.
Level 2: fair values measured using valuation techniques for all inputs
significant to the measurement other than quoted prices included within Level
1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices).
Level 3: fair values measured using valuation techniques for which any
significant input to the valuation is not based on observable market data
(unobservable inputs).
The determination of what constitutes ‘observable’ requires significant
judgement by the Directors.
The Group considers observable data to be market data that is readily
available, regularly distributed or updated, reliable and verifiable, not
proprietary and provided by independent sources that are actively involved in
the relevant market.
All investments were classified as Level 3 investments as at, and throughout
the period to, 30 September 2020. Details of movements in, and changes in
value of the, Level 3 investments are included on the next page.
All investments were valued in accordance with accounting policy set out in
note 20.4 of the Company’s Annual Report for the year ended 31 March 2020.
When using the price of a recent transaction in the valuations the Company
looks to ‘re-calibrate’ this price at each valuation point by reviewing
progress within the investment, comparing against the initial investment
thesis, assessing if there are any significant events or milestones that would
indicate the value of the investment has changed and considering whether a
market-based methodology (ie. using multiples from comparable public
companies) or a discounted cashflow forecast would be more appropriate.
The main inputs into the calibration exercise, and for the valuation models
using multiples, are revenue, EBITDA and P/E multiples (based on the most
recent revenue, EBITDA or earnings achieved and equivalent corresponding
revenue, EBITDA or earnings multiples of comparable public companies), quality
of earnings assessments and comparability difference adjustments. Revenue
multiples are often used, rather than EBITDA or earnings, due to the nature of
the Group’s investments, being in fast-growing, small financial services
companies which are not normally expected to achieve profitability or scale
for a number of years. Where an investment has achieved scale and
profitability the Group would normally then expect to switch to using an
EBITDA or earnings multiple methodology.
In the calibration exercise and in determining the valuation for the Group’s
equity instruments, comparable trading multiples are used. In accordance with
the Group’s policy, appropriate comparable public companies based on
industry, size, developmental stage, revenue generation and strategy are
determined and a trading multiple for each comparable company identified is
then calculated. The multiple is calculated by dividing the enterprise value
of the comparable group by its revenue, EBITDA or earnings. The trading
multiple is then adjusted for considerations such as illiquidity,
marketability and other differences, advantages and disadvantages between the
Group’s portfolio company and the comparable public companies based on
company specific facts and circumstances.
The main input into the PWERM (‘Probability Weighed Expected Return
Methodology’) was the probability of conversion. This method was used for
the convertible loan notes held by the Company.
Total gains and losses on assets measured at Level 3 are recognised as part of
Gains on Investments in the Consolidated Income Statement, and no other
comprehensive income has been recognised on these assets. The total unrealised
return for the period was £5,033,000 (period ended 30 September 2019:
£4,646,000).
The table below presents those investments in portfolio companies whose fair
values are recognised in whole or in part using valuation techniques based on
assumptions that are not supported by prices or other inputs from observable
current market transactions in the same instrument and the effect of changing
one or more of those assumptions behind the valuation techniques adopted based
on reasonable possible alternative assumptions.
Fair Value Fair Value
30 September 31 March Reasonably Change in
2020 2020 possible shift valuation
Valuation Technique £’000 £’000 Unobservable Inputs in input +/- £’000
Multiple methodology 23,106 34,554 Multiple 10% 1,971/(1,480)
Illiquidity adjustment 30% (2,606)/2,755
CPORT* 94,405 69,437 Transaction price 10% 7,869/(7,869)
PWERM** 13,428 19,141 Probability of conversion 25% 1,044/(1,012)
* Price of recent transaction.
** Probability weighted expected return methodology.
The following table presents the movement of investments measured at fair
value, based on fair value measurement levels.
Level 3
6 months to Year to
30 Sept 31 March
2020 2020
£’000 £’000
Opening balance 123,132 77,600
Purchases 5,121 32,849
Gains on investments held at fair value 2,686 12,683
Closing balance as at 30 September 130,939 123,132
INDEPENDENT REVIEW REPORT TO AUGMENTUM FINTECH PLC
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2020 which comprises the Condensed Consolidated Statement of
Comprehensive Income, Consolidated Statement of changes in Equity, Condensed
Consolidated Statement of Financial Position, Condensed Consolidated Statement
of Cash Flows and the related notes.
We have read the other information contained in the half-yearly financial
report and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set of
financial statements.
Directors’ responsibilities
The half-yearly financial report is the responsibility of and has been
approved by the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom’s Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union. The condensed set of financial
statements included in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, “Interim Financial
Reporting”, as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half?yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, “Review of Interim Financial Information
Performed by the Independent Auditor of the Entity”, issued by the Financial
Reporting Council for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and consequently does
not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2020 is not prepared,
in all material respects, in accordance with International Accounting Standard
34, as adopted by the European Union, and the Disclosure Guidance and
Transparency Rules of the United Kingdom’s Financial Conduct Authority.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting its responsibilities in respect of half-yearly
financial reporting in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom’s Financial Conduct Authority and
for no other purpose. No person is entitled to rely on this report unless such
a person is a person entitled to rely upon this report by virtue of and for
the purpose of our terms of engagement or has been expressly authorised to do
so by our prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other purpose
and we hereby expressly disclaim any and all such liability.
BDO LLP
Chartered Accountants
London, UK
1 December 2020
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
INTERIM MANAGEMENT REPORT
Principal Risks and Uncertainties
Equity markets continued to be volatile during the period due to the continued
uncertainties linked to the Covid-19 pandemic. The Directors have considered
the impact on the Group’s financial position and, based on the information
available to them at the date of this report, have concluded that no
adjustments are required to the accounts as at 30 September 2020.
A review of the half year and the outlook for the Company can be found in the
Chairman’s Statement and in the Portfolio Manager’s Review. The principal
risks and uncertainties faced by the Company fall into the following broad
categories: macroeconomic risk, Strategy implementation risk; investment risk;
portfolio diversification risk, cash risk, credit risk, valuations risk,
operational risk and key person risk. Information on these risks is given in
the Annual Report for the year ended 31 March 2020.
The Board believes that the Company’s principal risks and uncertainties have
not changed materially since the date of that report and are not expected to
change materially for the remaining six months of the Company’s financial
year.
Related Party Transactions
During the first six months of the current financial year, no transactions
with related parties have taken place which have materially affected the
financial position or the performance of the Group.
Going Concern
The Directors believe, having considered the Company’s investment objective,
risk management policies, capital management policies and procedures, and the
nature of the portfolio and the expenditure projections, that the Group has
adequate resources, an appropriate financial structure and suitable management
arrangements in place to continue in operational existence for the foreseeable
future, and, more specifically, that there are no material uncertainties
relating to the Group that would prevent its ability to continue in such
operational existence for the foreseeable future. For these reasons, they
consider there is reasonable evidence to continue to adopt the going concern
basis in preparing the financial statements. In reviewing the position as at
the date of this report, the Board has considered the guidance on this matter
issued by the Financial Reporting Council.
Directors’ Responsibilities
The Board of Directors confirms that, to the best of its knowledge:
(i) that the condensed set of financial statements have been
prepared in accordance with Accounting Standards Board’s 2007 Statement
Half-Yearly Reports; and
(ii) the condensed set of financial statements, which has been
prepared in accordance with the applicable set of accounting standards, gives
a true and fair view of the assets, liabilities, financial position and profit
or loss of the issuer/the undertakings included in the consolidation; and
(iii) the interim management report includes a fair review of the
information required by 4.2.7R and 4.2.8R of the UK Listing Authority
Disclosure Guidance and Transparency Rules. In order to provide these
confirmations, and in preparing these financial statements, the Directors are
required to:
* select suitable accounting policies and then apply them consistently;
* make judgements and accounting estimates that are reasonable and prudent;
* state whether applicable IFRS have been followed, subject to any material
departures disclosed and explained in the financial statements; and
* prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business;
and the Directors confirm that they have done so.
On behalf of the Board of Directors
Neil England
Chairman
1 December 2020
GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES
Within the Strategic Report and Business Review, certain financial measures
common to investment trusts are shown. Where relevant, these are prepared in
accordance with guidance from the AIC, and this glossary provides additional
information in relation to them.
Admission
Admission to trading, when the Company’s shares were listed and admitted for
trading on an official stock exchange.
Alternative Investment Fund Managers
Directive (“AIFMD”)
Agreed by the European Parliament and the Council of the European Union and
transposed into UK legislation, the AIFMD classifies certain investment
vehicles, including investment companies, as Alternative Investment Funds
(“AIFs”) and requires them to appoint an Alternative Investment Fund
Manager (“AIFM”) and depositary to manage and oversee the operations of
the investment vehicle. The Board of the Company retains responsibility for
strategy, operations and compliance and the Directors retain a fiduciary duty
to shareholders.
Alternative Performance Measures (“APMs”)
The measures the Board of Directors uses to assess the Company’s
performance, which are not specifically defined under the International
Financial Reporting Standards but which are viewed as particularly relevant
for investment trusts. Definitions of the terms used and the basis of
calculation are set out in this Glossary and the APMs are indicated with an
asterisk(*).
Convertible Loan Note
A convertible loan note is a loan which bears interest and is repayable but
may convert into shares under certain circumstances.
Discount or Premium
A description of the difference between the share price and the net asset
value per share. The size of the discount or premium is calculated by
subtracting the share price from the net asset value per share and is usually
expressed as a percentage (%) of the net asset value per share. If the share
price is higher than the net asset value per share the result is a premium. If
the share price is lower than the net asset value per share, the shares are
trading at a discount.
Initial Public Offering (“IPO”)
An IPO is a type of public offering in which shares of a company are sold to
institutional investors and usually also retail (individual) investors.
Through this process, colloquially known as floating, or going public, a
privately held company is transformed into a public company.
Internal Rate of Return (“IRR”)
Is the annualised return on an investment calculated from the cash flows
arising from that investment taking account of the timing of each cash flow.
It is derived by computing the discount rate at which the present value of all
subsequent cash flows arising from an investment are equal to the original
amount invested.
NAV per share Total Return*
The theoretical total return on the NAV per share, reflecting the change in
NAV during the period assuming that any dividends paid to shareholders were
reinvested at NAV at the time the shares were quoted ex-dividend. This is a
way of measuring investment management performance of investment trusts which
is not affected by movements in the share price discount/premium.
Net Asset Value (“NAV”)
The value of the Company’s assets, principally investments made in other
companies and cash being held, minus any liabilities. The NAV per share is
also described as ‘shareholders’ funds’ per share. The NAV is often
expressed in pence per share after being divided by the number of shares which
are in issue. The NAV per share is unlikely to be the same as the share price
which is the price at which the Company’s shares can be bought or sold by an
investor. The share price is determined by the relationship between the demand
and supply of the shares.
Partnership
Augmentum I LP, a limited partnership registered in Jersey and a wholly-owned
subsidiary of the Company.
Total Shareholder Return*
The theoretical total return per share reflecting the change in share price
during the period and assuming that any dividends paid were reinvested at the
share price at the time the shares were quoted ex-dividend.
Unquoted investment
Investments in unquoted securities such as shares and debentures which are not
quoted or traded on a stock market.
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