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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Augmentum Fintech Plc | LSE:AUGM | London | Ordinary Share | GB00BG12XV81 | ORD GBP0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 1.00 | 0.95% | 106.50 | 103.50 | 107.50 | 107.00 | 103.50 | 103.50 | 151,443 | 14:39:53 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Finance Services | 10.27M | 4.89M | 0.0287 | 37.28 | 182.15M |
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TIDMAUGM
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
THE MARKET ABUSE REGULATION (EC NO. 596/2014) ("MAR")
Legal Entity Identifier: 213800OTQ44T555I8S71
26 November 2018
Augmentum Fintech plc
Interim Report for the period from incorporation on 19 December 2017 to 30
September 2018
Augmentum Fintech plc (LSE: AUGM) one of Europe's leading venture capital
investors focusing exclusively on the fintech sector announces its interim
results for the period ending 30 September 2018.
Financial highlights
* Launch size of fund was GBP94 million (13 March 2018).
* Unrealised annualised IRR of 30% on seed portfolio, taking value to GBP38.5
million.
* New investments worth GBP15 million in a diversified portfolio of high growth
fintech companies.
* GBP44 million of available cash.
* NAV per share increased to 104 pence.
Operational highlights
* Reviewed 350 deals seeking over GBP650 million of growth capital
* Invested in five new deals, approximately 1.5% of deals seen.
* Secured 85% of the deals where term sheets have been offered.
Neil England, Chairman of Augmentum Fintech plc commented:
The Company raised GBP94 million at its launch in March this year and we have a
diverse and growing range of shareholders. Our rate of capital deployment is as
anticipated. We expect to make announcements on further investments in due
course as our Portfolio Manager works toward our objective of being
substantially fully deployed by mid-2019.
Tim Levene, CEO of Augmentum Fintech Management Limited commented:
Our strategy is clear, we want to back Europe's most exciting fintech
businesses that are disrupting and enhancing the traditional financial services
industry. Typically, this will be at an early stage, not seed capital but at
Series A and B investment rounds where we have more visibility on a company's
potential and where we can make the greatest impact. At the same time, we are
not afraid to be contrarian and will also look for value in fintechs that have
not fulfilled their early promise and perhaps lofty valuations. These companies
can require fresh capital, restructuring and impetus to build on a solid base
that has sometimes taken longer to mature than early investors anticipated. We
have seen this first hand in our Initial Portfolio, with Zopa and interactive
investor.
Every investment we have made, whether primary, secondary or within our current
portfolio, demonstrates the same characteristics: strong long-term unit
economics, a compelling path to profitability, a market leading position in
their markets with high potential for growth and led by extraordinary
management teams.
For further information
Augmentum Fintech plc +44 (0)7802 362088
Nigel Szembel nigel@augmentum.vc
Fidante Capital +44 (0)20 7832 0900
Nick Donovan/Tom Skinner
Peel Hunt +44 (0)20 7418 8900
Luke
Simpson
Liz Yong
Notes to Editors
Augmentum Fintech plc is one of Europe's leading venture capital investors
focusing exclusively on the fintech sector. Augmentum Fintech invests in fast
growing fintech businesses that are disrupting the banking, insurance, asset
management and wider financial services sectors. Augmentum Fintech is the only
listed fintech-focused venture capital firm in the UK, 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.
CHAIRMAN'S STATEMENT
Introduction
I am delighted to present the first Interim Report of Augmentum Fintech plc
("the Company" or "Augmentum Fintech") since our incorporation on 19 December
2017 and the subsequent listing of its shares on the London Stock Exchange on
13 March 2018.
This report covers the period from incorporation to 30 September 2018.
Investment Policy
The Company will invest in early stage fintech businesses which are high
growth, with scalable opportunities, and have disruptive technologies in the
banking, insurance and asset management sectors, including other cross-industry
propositions.
Share Capital
The Company raised GBP94 million at its launch. There are a total of 94 million
ordinary shares in issue and we have a diverse and growing range of
shareholders.
Performance and portfolio development
The Net Asset Value ("NAV") total return for the period was 5.1%. Our Portfolio
Manager provides an update on the Initial Portfolio, acquired through the
purchase of Augmentum I LP at launch, in their report and it is pleasing to
note the positive revaluations of two of these investments, Zopa and
interactive investor.
To add to the Initial Portfolio, our investment team have been working very
hard evaluating hundreds of opportunities, reviewing and challenging financial
and commercial metrics, to identify those most likely to be successful. That
process has resulted in five new investments since IPO and there are several
interesting opportunities in the final stages of due diligence.
Our rate of capital deployment is as anticipated. We expect to make
announcements on further investments in due course as our Portfolio Manager
works toward our objective of our being substantially fully deployed by
mid-2019.
Discount
As expected, the share price has remained relatively stable despite some
volatility in the UK market. At the date of this report, the Company's share
price was 96.1 pence per share, representing a 7.6% discount to the NAV per
share. No shares have been bought back in the period under review.
Dividends
The directors have resolved not to pay a dividend. The Company is focused on
providing capital growth, and given the investment opportunities in the sector,
we do not anticipate recommending to pay a dividend in the near future unless
required to do so to maintain our investment trust status.
Augmentum Fintech Management Limited
It was reported in the Company's launch prospectus that Augmentum Fintech
Management Limited (a wholly owned subsidiary of the Company) would manage the
investment portfolio of the Company as a delegate of the Alternative Investment
Fund Manager ("AIFM") once the FCA had granted the necessary authorisation. I
am pleased to report that Augmentum Fintech Management Limited received this
authorisation on 1 November 2018.
Interim Report
In the interests of cost control, Interim Reports to shareholders will only be
available on the Company's website. These can be viewed and downloaded at
www.augmentum.vc. Annual Reports, the first being for the period ending 31
March 2019, will be available on the website and in printed form.
People
We have a young and growing investment team, well supported by our advisor
group, with a passion to succeed. I want to take this opportunity to thank them
for their commitment and sheer hard work during this initial very busy period
for the Company.
Outlook
As the UK's only listed 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. Our success will
ultimately derive from us backing the right businesses at the right value. We
have an excellent investment team focussed on that and they have made a
positive start. The market for fintech will continue to evolve and grow and we
believe that we are well positioned to play an increasingly prominent part in
that journey. Your board are therefore confident for the future.
Neil England
Chairman
23 November 2018
INVESTMENT OBJECTIVE AND POLICY
Investment Objective
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 purchased the Initial
Portfolio and will invest in early (but not seed) or later stage investments in
unquoted fintech businesses. The Company intends to realise value through
exiting investments over time.
The Company will invest in early stage businesses which are high growth, with
scalable opportunities, and have disruptive technologies in the banking,
insurance and asset management sectors, including other cross-industry
propositions.
Investments will 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 invests in unquoted companies and the
Portfolio Manager will ensure that the Company has suitable investor protection
rights where appropriate. The Company may 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 Augmentum l LP).
The Portfolio Manager has historically taken a board position on investee
companies and, where in the best interests of the Company, will do so in
relation to future investee companies.
Once fully invested, the Company's portfolio is expected to comprise 15-20
holdings. 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 Portfolio Manager will actively manage the portfolio to maximise returns,
including helping to scale management teams, 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 objective 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% of NAV, provided
that one investment in the portfolio may represent up to 20% of NAV; and
* at least 80% of NAV will be invested in businesses which are headquartered
in or have their main centre of business in the UK or wider Europe.
Each of the restrictions above will apply once the Company is fully invested
and will be calculated at the time of 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.
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. Cash and cash equivalents will
be held with approved counterparties, and in line with prudent cash management
guidelines, agreed with the Board, AIFM and Portfolio Manager, to ensure an
appropriate risk/return profile is maintained.
Once the net proceeds of the Issue are substantially fully deployed, 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.
Borrowing
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.
PORTFOLIO
as at 30 September 2018
Fair value Net Investment Fair value % of
of holding investments/ return of holding portfolio
on (realisations) GBPm at
acquisition GBPm 30 September
on 2018
13 March GBPm
2018
GBPm
Zopa 18.5 - 3.5 22.0 40.8
BullionVault* 8.4 - - 8.4 15.6
Interactive Investor 3.0 0.2 1.5 4.7 8.7
Seedrs 1.9 - - 1.9 3.5
SRL Global 1.5 - - 1.5 2.8
Augmentum I LP - Total^ 33.3 0.2 5.0 38.5 71.4
Monese - 5.3 0.6 5.9 10.9
Tide - 3.0 - 3.0 5.6
Unmortgage - 2.5 - 2.5 4.7
Previse - 2.0 - 2.0 3.7
Duedil - 2.0 - 2.0 3.7
Total Investments 33.3 15.0 5.6 53.9 100.0
* includes WhiskyInvestDirect
^ Augmentum I LP (the 'LP') was acquired on the 13 March 2018 following
the successful IPO of the Company. The LP and its portfolio of investments is
referred to in this report as the Initial Portfolio. Further details on the
acquisition of the LP are included in Note 7.
PORTFOLIO MANAGER'S REVIEW
Overview
It has been an extraordinarily busy first half of the financial year deploying
your money effectively - the number of opportunities we are seeing is
encouraging. However, our investment criteria remain stringent, our quality bar
incredibly high and we only invest in those opportunities that we feel have the
right profile for success and are at the right stage in their lifecycle to make
for effective investments. In the past six months we have seen over 350 new
investment opportunities in European fintech and invested in five exciting
businesses with great potential.
The strength of our deal flow emphasises how vibrant the UK and wider European
fintech scene is. It also highlights one of the key strengths of our team and
advisory board who have built an extraordinary network within the wider tech
and fintech ecosystem amongst entrepreneurs, angel investors and other venture
capital investors. Our value-add philosophy and reputation in the market has
led us to become the preferred investor in many competitive fundraisings.
Our strategy is clear, we want to back Europe's most exciting fintech
businesses that are disrupting and enhancing the traditional financial services
industry. Typically, this will be at an early stage, not seed capital but at
Series A and B investment rounds where we have more visibility on a company's
potential and where we can make the greatest impact. At the same time, we are
not afraid to be contrarian and will also look for value in fintechs that have
not fulfilled their early promise and perhaps lofty valuations. These companies
can require fresh capital, restructuring and impetus to build on a solid base
that has sometimes taken longer to mature than early investors anticipated. We
have seen this first hand in our Initial Portfolio, with Zopa and interactive
investor (ii).
Every investment we have made, whether primary, secondary or within our current
portfolio, demonstrates the same characteristics: strong long-term unit
economics, a compelling path to profitability, a market leading position in
their markets with high potential for growth and led by extraordinary
management teams.
The Initial Portfolio
Our Initial Portfolio has seen positive activity in the period, leading to
revaluations of our holdings in Zopa and interactive investor.
Zopa recently announced the closure of a GBP60m funding round as it continues its
progress to launching a bank and acquiring a full UK banking licence. The
funding round was at a premium to the price that we acquired our holding in
March and required us to increase our valuation to GBP22m, representing an
increase of GBP3.5m or 3.7 pence per share. Zopa continues to meet the milestones
it has set itself on its journey to acquire a banking licence and we retain a
strong conviction that the model it is pursuing will maximise shareholder value
in the long term.
During the period there was a small amount of secondary stock available to us
in interactive investor. We bought as much as we were able to buy at a 50%
increase on our holding value, and our ambition is to buy more if the
opportunity arises at the right price. The business has successfully integrated
the acquisition of TD Direct and continues to trade well. Since the reporting
period it has also announced the intention to acquire Alliance Trust Savings
which will take its total assets under administration to GBP35bn and make it the
clear number two in the D2C market. It also sold Internaxx for EUR25m (a non-core
Luxembourg asset) which should complete at the end of January 2019.
Across the rest of our initial portfolio, BullionVault, (including
WhiskyInvestDirect), Seedrs and SRL remain well funded and consequently there
was no change in the valuation of these investments. We continue to hold these
investments at our acquisition cost set in March 2018.
The adjustment in valuation for Zopa and interactive investor mean that the NAV
of our Initial Portfolio has increased by GBP5m, representing an annualised IRR
of 30% since IPO. This is in excess of our long-term aim of delivering a
portfolio return over 20% per annum.
New Investments
We announced five new investments in the period, each of which represent
exciting opportunities for growth.
Tide is bringing SME banking into the 21st century by removing many of the pain
points SME customers experience with the banking providers, not least the
account opening process which is shortened from weeks to just minutes.
Duedil provides access to information on businesses that helps both prospecting
and on-boarding. In fintech terms, the business is more mature, but we believe
it has now found its product market fit and is poised to grow strongly over the
coming years.
Previse is tackling the massive and politically charged issue of getting
suppliers paid faster for their goods and services. We invested in Previse
alongside Bessemer Venture Partners, the pioneers of Venture Capital in the US.
Unmortgage is tackling the dual problem of people in the UK being unable to
afford to buy homes and of finding a way for pension funds to effectively
access the residential property market.
Monese provides banking services typically to those who work abroad and need a
local bank account but who find it difficult to meet the usual account opening
requirements such as residential history. They have found good traction across
Europe and we invested in a heavily competitive funding round alongside Kinnevik, Paypal and IAG (Avios). Our rate of capital deployment is as expected and our conversion rate of deals where we submit a term sheet to completion is high. Outlook In the first nine months of 2018 global VC investment in fintech exceeded the total investment seen in 2017, and the current year is on track to be a record year. We are seeing more deal flow than ever before, and the quality of companies continues to increase. With Brexit on the horizon and the uncertainty it is creating, it is clear to us that young and dynamic fintech businesses are often better placed to respond to these new challenges than the incumbents that they are looking to disrupt. We believe that the UK will remain the epicentre of fintech within Europe. But other European cities will develop strong capabilities in fintech. Accordingly, we will continue to expand our coverage across Europe, especially in Germany, France, Sweden, and the Netherlands. We are conscious of the growth in diversity of investors in the sector and are seeing more corporate venture funds focusing on fintech as an asset class. There will be times when working alongside corporate funds can make sense, however such funds do not always have a pure financial rationale in their investment criteria, which forces us to choose our partners carefully. As the UK's only listed fintech fund Augmentum Fintech's investment criteria will always be driven by a pure financial rationale. This will ensure we retain independence and objectivity at the heart of our entrepreneurial DNA, a key factor in why some of the most exciting fintechs choose Augmentum Fintech over other potential investors. The exit markets for fintech businesses are also showing proof points of our strategy. The sale of iZettle to Paypal, the listing of Adyen (now valued at GBP 15bn) and the recent IPO of Funding Circle are just three examples of successful exits for early stage investors in European fintech. The debate over valuation at IPO becomes moot for those investors who can access fintech opportunities in early rounds at much lower valuations. The only way for public market investors to access these businesses at an early stage are through funds such as Augmentum Fintech. It is early in our evolution, but we are delighted with the make-up of the portfolio so far. Our focus on the lending, digital banking, asset and wealth management space has seen us gain excellent exposure in these sub sectors, and we expect to add to those areas over time. We also remain focused on the large number of companies disrupting the insurance space, as well as several exciting businesses starting to scale in the regtech arena. In addition to the investments already completed, we have several other investment opportunities that are in the final stages of due diligence, and we anticipate further announcements in the coming months. Finally, my thanks to the Augmentum Fintech team who have worked incredibly hard over these past 6 months to get us off to such a positive start, and of course to our portfolio companies who ultimately will be the key determinants of success for Augmentum Fintech. As a team we could not be more excited about the potential of the portfolio we are building. Tim Levene CEO Augmentum Fintech Management Limited PORTFOLIO COMPANIES Augmentum Fintech is building a diversified portfolio of high growth fintech companies across the sector The NAV of our Initial Portfolio has increased by GBP5m, which equates to an annualised IRR of 30% since IPO LING Zopa is the world's first, and Europe's leading, peer-to-peer consumer lending platform. It directly matches people looking for a competitive rate loan with investors looking for a higher rate of return, offering great products and an award-winning customer experience. Founded in 2004, Zopa has helped half a million customers take the stress out of money by building a business on fair value, transparency, and trust. To date, Zopa has lent more than GBP3.7 billion, and more than GBP1 billion in the last 12 months, to low risk UK borrowers. Zopa owes its success to its customer obsessed culture, world class analytics and cutting-edge proprietary technology. The company has been voted Moneywise's Trusted Loan Provider nine years in a row, awarded Moneyfact's Best Customer Service 2018 title and scooped MoneySuperMarket's Best Personal Loans Provider 2016. Zopa is on the road to launching a next generation bank alongside its peer-to-peer business. At launch it will focus on credit cards, auto finance, deposits and open banking in addition to loans and P2P investments. Cost: GBP18.5m Value: GBP22m Previse is an AI powered platform that gives corporate buyers the tools and incentives to pay all of their suppliers instantly on receipt of invoice. They have one of the few truly innovative products in B2B commerce, a $127 trillion market. Previse's smart tech analyses the data of a large company to predict the very few invoices that are unlikely to get paid, so that they can pay the rest instantly. The 1% fee paid by suppliers who opt for instant payment is shared between the buyer, the funder and Previse. Previse was founded in late 2016 by a team of senior industry specialists. It has signed up eight multinational clients, including in the US, UK and Australia. Augmentum Fintech led the Series A in August 2018, investing GBP2 million as part of a GBP5.3 million round. Other investors include Bessemer Venture Partners, Hambro Perks and Founders Factory. Cost: GBP2m Value: GBP2m WEALTH MANAGEMENT interactive investor (ii) is the UK's number one flat fee investment platform, offering a wealth of unbiased information, analysis, tools and expert ideas to help customers make better informed investment decisions. Its award-winning trading platform provides access to an extensive choice of markets, instruments and currencies within Trading, ISA and SIPP accounts. ii is 100% equity funded with no external debt, and with net assets of over GBP 100 million. Since 2013 the UK's investment platforms market has almost doubled in size to GBP 500 billion AUM, with an extra 2.2 million customer accounts opened in the same period. ii has approximately 10% of the UK direct to consumer investment platform market and is the second-largest player in this space. In October 2018, ii agreed to acquire Alliance Trust Savings (ATS) subject to regulatory approval. The transaction brings together the two largest fixed price retail investment platforms. In an increasing technology and data-driven environment, the increased scale will support the sustained investment in technology and talent necessary to provide the best customer experience and service in the sector. Cost: GBP3.2m Value: GBP4.7m Seedrs is a leading European marketplace for private equity investment. It operates an online platform which provides investors of all shapes and sizes (including retail, intermediary and institutional) a transparent, straightforward and cost-efficient way to invest in the equity of private companies; at the same time offering growing private companies (from seed-stage to pre-IPO) access to a broad base of investors who can provide patient capital together with community engagement. To date Seedrs has seen over GBP450 million invested on its platform and has funded over 700 deals, including many high-profile ventures like Revolut, Perkbox, Tossed, Chapel Down, WeSwap, FreeAgent (since sold to RBS), Wealthify (since sold to Aviva), Urban Massage. Seedrs was named one of the 50 fastest growing tech companies in the UK in 2017 by Deloitte, and the most active funder of UK private companies in 2016 and 2017 by independent research agency Beauhurst. Alongside Augmentum Fintech, Seedrs' investors include Woodford Investment Management, Faber Ventures and over 2,500 of Seedrs' own users. Cost: GBP1.9m Value: GBP1.9m BANKING Tide is one of the emerging leaders in SME challenger banking in the UK. Tide's mission is to help SMEs save time (and money) in running their businesses. The Tide platform not only offers business bank account and related banking services, but also a comprehensive set of highly usable administrative solutions, such as full integration with accounting systems. Using advanced technology, all solutions are designed with SMEs in mind. Tide is rapidly approaching a 1% market penetration and is estimated to have a share of around 10% of new business current accounts. Tide believes that truly serving SMEs well requires relentless focus on their needs. That is why Tide is SME only. Founded by George Bevis and launched in January 2017, Tide is now led by Oliver Prill. Early backers of Tide include LocalGlobe, Passion Capital, Anthemis and Creandum. Augmentum Fintech invested in August 2018. Cost: GBP3.0m Value: GBP3.0m Monese offers a smart and globally connected banking service for internationally mobile individuals, be they locals or foreign born. These are 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 20 countries, and both the app and its customer service available in 11 languages, Monese already allows people and businesses to bank like a local across the UK and Europe. Founded by Norris Koppel, after his first-hand experience of the hassle involved with opening a bank account in a new country, Monese launched in late 2015. Now, with more than 600,000 sign-ups, 75% of incoming funds being from salary payments, and a 9.2/10 TrustPilot score, Monese has become one of the most popular and trusted banking services in the UK and Europe. Customers are now moving over GBP2 billion annually through their Monese accounts.
Augmentum Fintech participated in the company's recent GBP45m funding round
alongside Kinnevik, Paypal and International Airlines Group
Cost: GBP5.3m Value: GBP5.9m
ASSET MANAGEMENT
BullionVault is the world's largest physical gold and silver online market,
offering private investors the cheapest access to and storage of
investment-grade bullion. Founded by Paul Tustain in 2005, BullionVault has
enabled more than 70,000 private investors across 183 countries to benefit from
the low dealing costs, deep liquidity and ultra-high security of the wholesale
bullion market. BullionVault users - 89% of whom live in North America or
Western Europe - today own $1.5 billion worth of gold bullion between them,
more than is held by most of the world's central banks, plus a further $350
million in physical silver and $17 million of physical platinum. In 2008,
BullionVault became a full member of professional trade body the London Bullion
Market Association (LBMA).
In 2011, it was one of only four businesses to feature on both The Sunday
Times' Fast Track and Top Track league tables of private companies by growth
and by size. Winner of a 2009 Queen's Award for Enterprise Innovation,
BullionVault received a second award in 2013, this time for International Trade
after growing overseas sales by 140% in four years.
Alongside Augmentum Fintech, BullionVault's investors include The World Gold
Council and Piton Capital.
Cost: GBP8.4m Value: GBP8.4m
WhiskyInvestDirect, a subsidiary of BullionVault, is the online market for
buying and selling Scotch whisky as it matures in barrel - a compelling new
asset class showing better than 7% annual appreciation after storage costs and
inflation over the last decade. Accounting for 25% of UK food and drink exports
by value, sales of Scotch whisky overseas equal 35 bottles per second.
WhiskyInvestDirect supports this centuries-old business by providing cash-flow
to distillers, and by introducing for the first time an electronic exchange
where brand-owners can then source a range of high-quality single malts and
grain whiskies.
Funded with a GBP2 million cash investment from BullionVault and co-founded by
CEO Rupert Patrick - a 25-year drinks industry veteran - WhiskyInvestDirect
launched in September 2015. A convertible preference share issue made available
to the general public raised an additional GBP1.5 million from 60 angel
investors. Employing BullionVault's proven trading and custody technology,
WhiskyInvestDirect now cares for more than 6 million Litres of Pure Alcohol
(the industry's standard wholesale unit) for its users, who each own GBP8,000
worth of maturing spirit on average. Worth over GBP20m at current wholesale
prices, that's enough spirit to make almost 17m bottles of Scotch once mature.
WhiskyInvestDirect wholly owns James Eadie Limited, a bottler of a selection of
aged single malts now distributed in 10 export markets and has revived James
Eadie's original Trade Mark 'X' blended Scotch, first registered in 1877.
Value: Included within BullionVault valuation
Unmortgage was founded in 2016 by Ray Rafiq-Omar, Josef Wasinski and Nigel
Purves who thought it was unfair that younger generations would never be able
to buy the home that they could afford to rent.
In the last ten years the number of families in rented accommodation in the UK
has increased from 3 million to 5.5 million. By renting many of these families
are in fact paying off someone else's mortgage when they would prefer to be
paying off their own, yet the public policy response has failed to address this
growing problem.
Unmortgage, with significant backing from the government and institutional
investors, has found a market solution to this issue by replacing mortgage debt
with institutional equity finance. At the heart of the Unmortgage proposition,
which will launch to the public in 2019, is the principle that if someone can
afford to rent, they should be able to buy.
Cost: GBP2.5m Value: GBP2.5m
DATA AND ANALYTICS
DueDil is a predictive company intelligence platform building the world's most
complete source of information on companies and the people behind them. It uses
proprietary matching technology to link billions of company data points from
authoritative sources, providing unique insight through its Business
Information Graph. DueDil's powerful API and web platform provide its clients
with the data and tools to target, assess and on-board SMEs at scale.
In the last three years, DueDil has expanded its client base to more than 400
clients across the financial services, fintech, and technology sectors,
including notable brands such as Santander, Transferwise and Growth Street. The
company has grown 80%+ year-on-year for three years in a row as it adds to the
depth and breadth of its offering. Alongside Augmentum Fintech, major investors
include Notion Capital and Oak Investment Partners.
Cost: GBP2.0m Value: GBP2.0m
SRL Global, founded in 2007, serves the interests of the most prominent and
distinguished families and their private investment offices around the world,
providing clarity, control and certainty around a family's wealth.
By working as an extension to their investment office, SRL's unique combination
of enterprise data management, portfolio reporting technology and world-class
operations support offer a critical and comprehensive financial decision-making
tool to transform the way families and their private offices view and manage
wealth.
Cost: GBP1.5m Value: GBP1.5m
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the period from incorporation on 19 December 2017 to 30 September 2018
(Unaudited)
Period ended 30 September 2018
Revenue Capital
return return Total
Note GBP'000 GBP'000 GBP'000
Gains on investments held at fair value - 5,840 5,840
Investment income 144 - 144
AIFM and Investment Advisory fees 2 (888) - (888)
Other expenses (292) (61) (353)
Return before taxation (1,036) 5,779 4,743
Taxation - - -
Return attributable to equity shareholders (1,036) 5,779 4,743
of the parent company
Earnings per share since incorporation * 3 (1.6)p 8.7p 7.1p
Earnings per share since IPO* 3 (1.1)p 6.1p 5.0p
The total column of this statement represents the Group's Consolidated
Statement of Comprehensive Income, prepared in accordance with IFRSs 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 from incorporation is the figure calculated in
accordance with IAS 33 'Earnings per share'. The earnings per share from IPO
figure has been disclosed as all earnings were earned subsequently to the IPO,
and the issue of the 94,000,000 shares. The Directors have decided to disclose
this as it better reflects the return generated for Shareholders.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period from incorporation on 19 December 2017 to 30 September 2018
(Unaudited)
Period ended 30 September 2018
Ordinary Share Other
share premium capital Revenue
capital account reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Issue of shares following 940 93,060 - - 94,000
placing and offer for
subscription
Costs of placing and offer for - (959) - - (959)
subscription
Return for the period - - 5,779 (1,036) 4,743
At 30 September 2018 940 92,101 5,779 (1,036) 97,784
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 September 2018
(Unaudited)
30
September
2018
Note GBP'000
Non current assets
Investments held at fair value 53,904
Current assets
Other receivables 100
Cash and cash equivalents 43,887
Total assets 97,891
Current liabilities
Other payables (107)
Total assets less current liabilities 97,784
Net assets 97,784
Capital and reserves
Share capital 4 940
Share premium account 4 92,101
Retained earnings:
Capital reserves 5,779
Revenue reserve (1,036)
Total equity 97,784
Net asset value per share 5 104.0p
CONSOLIDATED CASH FLOW STATEMENT
for the period from incorporation on 19 December 2017 to 30 September 2018
(Unaudited)
Period
ended
30
September
2018
GBP'000
Cash flows from operating activities
Purchases of investments (26,646)
Interest received 85
Operating expenses paid (1,143)
Net cash outflow from operating activities (27,704)
Cash flow from financing activities
Issue of shares following placing and offer for subscription 72,550
Costs of placing and offer for subscription (959)
Net cash inflow from financing 71,591
Increase in cash and cash equivalents 43,887
Cash and cash equivalents at the end of the period 43,887
NOTES TO THE FINANCIAL STATEMENTS
for the period from incorporation on 19 December 2017 to 30 September 2018
1 Accounting policies
1.1 Basis of preparation
The Group Financial Statements for the period ended 30 September 2018 have been
prepared in accordance with the Companies Act 2006 and International Financial
Reporting Standards ("IFRS"). IFRS comprises standards and interpretations
approved by the International Accounting Standards Board ("IASB") and the IFRS
Interpretations Committee ("IFRS IC") as adopted in the European Union as at 30
September 2018.
The Financial Statements have been prepared on a going concern basis and under
the historical cost basis of accounting, modified to include the revaluation of
certain assets at fair value, as disclosed in Note 1.4.
In order to reflect the activities of an investment trust company,
supplementary information which analyses the Consolidated Income Statement
between items of a revenue and capital nature has been presented alongside the
Consolidated Income Statement. In analysing total income between capital and
revenue returns, the Directors have followed the guidance contained in the
Statement of Recommended Practice for investment companies issued by the
Association of Investment Companies in November 2014 (the "SORP").
The recommendations of the SORP which have been followed include:
? Realised and unrealised profits or losses arising on the revaluation or
disposal of investments classified as held at fair value through profit or loss
should be shown in the capital column of the Consolidated Income Statement.
Realised gains are taken to the realised reserves in equity and unrealised
gains are transferred to the unrealised reserves in equity.
? Other returns on any investment (whether in respect of dividends,
interest or otherwise) should be shown in the revenue column of the
Consolidated Income Statement. The total of the revenue column of the
Consolidated Income Statement is taken to the revenue reserve in equity.
? The Board should determine whether the indirect costs of generating
capital returns should be allocated to capital as well as the direct costs
incurred in generating capital profits. In this regard the Board has decided to
follow a non-allocation approach to indirect costs, which will therefore be
charged in full to the revenue column of the Consolidated Income Statement.
1.2 Basis of Consolidation
The Consolidated Financial Statements include the Company and certain
subsidiary undertakings.
IFRS 10 and 12 define an investment entity and include an exception from the
consolidation requirements for investment entities.
The Company has been deemed to meet the definition of an investment entity per
IFRS 10 as the following conditions exist:
? The Company has multiple unrelated investors which are not related
parties, and holds multiple investments
? Ownership interests in the Company are exposed to variable returns from
changes in the fair value of the Company's net assets
? The Company has obtained funds for the purpose of providing investors
with investment management services
? The Company's business purpose is investing solely for returns from
capital appreciation and investment income
? The performance of investments is measured and evaluated on a fair value
basis
The Company will not consolidate the portfolio companies or other investment
entities it controls. The principal subsidiary as set out in note 6 is wholly
owned. It provides investment related services through the provision of
investment management or advice. As the primary purpose of this subsidiary is
to provide investment related services that relate to the Company's investment
activities it is not considered to be an investment entity. This subsidiary
will be consolidated.
As setout in Note 7 the Company also owns 100% of the interests in Augmentum I
LP (the "LP"). As this LP itself is an investment entity and is held as part
of the Company's investment portfolio it has not been consolidated.
1.3 Application of New Standards
The following new IFRSs have been issued by the IASB, effective for annual
periods beginning on or after 1 January 2018. The Group has not early adopted
these standards for the period ended 30 September 2018, however full impact
assessments on IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts
with Customers have been completed.
IFRS 9 Financial Instruments
Financial assets within the Group are measured at fair value. The new
requirements on initial recognition and subsequent measurement of financial
assets under IFRS 9 are not expected to have any impact on the Group.
There are currently no hedging arrangements in the Group. Therefore
requirements on hedging and hedge accounting under IFRS 9 are considered to be
not applicable. Should hedging arrangements be put in place in future, the
provisions of IFRS 9 will be considered.
IFRS 15 Revenue from Contracts with Customers
The main revenue generating assets held by the Group are classified as
financial assets within the scope of IAS 39 Financial Instruments: Recognition
and Measurement and will be within the scope of IFRS 9 Financial Instruments
when it becomes effective. On this basis, the Group's main revenue stream will
be outside the scope of IFRS 15.
1.4 Investments
All investments are defined by IFRS at fair value through profit or loss
(described in the Financial Statements as investments held at fair value) and
are subsequently measured at reporting dates at fair value. The fair value of
direct unquoted investments is calculated in accordance with the Principles of
Valuation of Investments below. Purchases and sales of unlisted investments are
recognised when the contract for acquisition or sale becomes unconditional.
Increases or decreases in valuation are recognised as part of gains on
investments at fair value in the Consolidated Income Statement.
Principles of Valuation of Investments
(i) General
The Group estimates the fair value of each investment at the reporting date in
accordance with IFRS 13 and the International Private Equity and Venture
Capital Association Valuation ("IPEVCA") Guidelines.
Fair value is the price for which an asset could be exchanged between
knowledgeable, willing parties in an arm's length transaction. In estimating
fair value, the AIFM and Board apply valuation techniques which are appropriate
in light of the nature, facts and circumstances of the investment and use
reasonable current market data and inputs combined with judgement and
assumptions. Valuation techniques are applied consistently from one reporting
date to another except where a change in technique results in a better estimate
of fair value.
In general, the enterprise value of the investee company in question will be
determined using one of a range of valuation techniques; adjust the enterprise
value for factors that would normally be taken into account such as surplus
assets, excess liabilities or other contingencies or relevant factors; and
apportion the resulting amount between the investee company's relevant
financial instruments according to their ranking and taking into account the
effect of any instrument that may dilute the economic entitlement of a given
instrument.
(ii) Unlisted Equity Investments
In respect of each unlisted investment one or more of the following valuation
techniques is used:
? A market approach, based on the price of the recent investment, earnings
multiples or industry valuation benchmarks
? An income approach, employing a discounted cash flow technique
In assessing whether a methodology is appropriate the use of techniques that
draw heavily on observable market-based measures of risk and return are
maximised.
Price of Recent Investment/Transaction
Where the investment being valued was itself made recently, or there has been a
third party transaction in the investment, the price of the transaction may
provide a good indication of fair value. Using the Price of Recent Investment
technique is not a default and at each reporting date the fair value of recent
investments is estimated to assess whether changes or events subsequent to the
relevant transaction would imply a material change in the investment's fair
value.
Multiple
Under the multiple methodology an earnings or revenue multiple technique is
used. This involves the application of an appropriate and reasonable multiple
to the maintainable earnings of an investee company.
Multiples used are usually taken from current market-based multiples, reflected
in the market valuations of quoted comparable companies or the price at which
comparable companies have changed ownership. Differences between these
market-based multiples and the investee company being valued are reflected by
adjusting the multiple for points of difference which might affect the risk and
growth prospects which underpin the multiple. Such points of difference might
include the relative size and diversity of the entities, rate of revenue/
earnings growth, reliance on a small number of key employees, diversity of
product ranges, diversity and quality of customer base, level of borrowing, and
any other reason the quality of revenue or earnings may differ.
In respect of maintainable revenue/earnings, the most recent 12 month period.
adjusted if necessary to represent a reasonable estimate of the maintainable
amount, is usually used. Such adjustments might include exceptional or
non-recurring items, the impact of discontinued activities and acquisitions, or
forecast material changes.
Discounted Cash Flow
The Discounted Cash Flow (DCF) technique involves deriving the value of a
business or an investment by calculating the present value of the estimated
future cash flows from that business or investment using reasonable assumptions
and estimations of expected future cash flows, the terminal value or maturity
amount and date, and the appropriate risk-adjusted rate that captures the risk
inherent to the business or investment.
1.5 Cash and Cash Equivalents
Cash comprises cash at bank and short-term deposits with an original maturity
of less than 3 months.
1.6 Presentational and Functional Currency
The Group's and Company's presentational and functional currency is Pounds
Sterling ("Sterling"), since that is the currency of the primary economic
environment in which the Group operates.
1.7 Other income
Interest income received from cash equivalents is accounted for on an accruals
basis.
1.8 Expenses
Expenses are accounted for on an accruals basis, and are charged through the
revenue column of the Consolidated Income Statement except for transaction
costs as noted below.
Transaction costs are legal and professional fees incurred when undertaking due
diligence on investment transactions. Transaction costs, when incurred, are
recognised in the Income Statement. If a transaction successfully completes,
the related transaction cost is charged to the capital column of the Income
Statement. If the transaction falls through the related cost is charged to the
revenue column of the Income Statement.
1.9 Taxation
The tax effect of different items of income/gain and expense/loss is allocated
between capital and revenue on the same basis as the particular item to which
it relates, using the Company's effective rate of tax for the accounting year.
1.10 Deferred Tax
Deferred taxation is provided on all timing differences other than those
differences regarded as permanent. Deferred tax assets are only recognised to
the extent that it is probable that taxable profits will be available from
which the reversal of timing differences can be utilised. Deferred tax is not
recognised if the temporary difference arises from the initial recognition of
assets and liabilities in a transaction that affects neither the taxable profit
nor the accounting profit.
Deferred tax is provided at the tax rates that are expected to apply in the
year when the liability is settled or the asset is realised based on tax laws
and rates that have been enacted or substantively enacted at the Statement of
Financial Position date.
1.11 Revenue and Capital Reserves
Net capital return is added to the Capital Reserve in the Consolidated
Statement of Financial Position, while the net revenue return is added to the
Revenue Reserve.
1.12 Receivables and Payables
Receivables and payables are typically settled in a short time frame and are
carried at the amount due to be settled. As a result, the fair value of these
balances is considered to be materially equal to the carrying value, after
taking into account potential impairment losses.
1.13 Share Capital
Ordinary shares issued by the Group are recognised at the proceeds or fair
value received with the excess of the amount received over nominal value being
credited to the share premium account. Direct issue costs are deducted from
equity.
1.14 Going Concern
The Directors considered it appropriate to adopt the going concern basis of
accounting in preparing the Financial Statements, as the Board considers that
the Group has sufficient liquid financial resources to continue in business for
the foreseeable future.
1.15 Critical Accounting Judgements and Key Sources of Estimation Uncertainty
Critical accounting judgements and key sources of estimation uncertainty used
in preparing the financial information are continually evaluated and are based
on historical experience and other factors, including expectations of future
events that are believed to be reasonable. The resulting judgements and
estimates will, by definition, seldom equal the related actual results.
In the course of preparing the Condensed Financial Statements, the Company has
determined it is an investment company as set out in Note 1.2.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation
uncertainty in the reporting year, that may have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within
the next financial year, are discussed below.
Fair value measurements and valuation processes
Unquoted assets are measured at fair value in accordance with IFRS 13 and the
IPEVCA Valuation Guidelines for financial reporting purposes. Judgement is
required in order to determine the appropriate valuation methodology and
subsequently in determining the inputs into the valuation model used. These
judgements include making assessments of the future potential of portfolio
companies, appropriate multiples to apply, and adjustments to comparable
multiples. In estimating the fair value of an asset, market-observable data is
used, to the extent it is available.
The Audit Committee, which is chaired by a Non-Executive Director, determines
the appropriate valuation techniques and inputs for fair value measurements.
The Audit Committee works closely with the AIFM to establish the appropriate
valuation techniques and inputs to the model. The Chairman of the Audit
Committee reports its findings to the Board of Directors of the Group every six
months to explain the cause of fluctuations in the fair value of the
investment.
Information about the valuation techniques and inputs used in determining the
fair value of various assets and liabilities are disclosed in Note 1.4.
2 AIFM and Investment Advisory Fees
(Unaudited)
Period
ended
30 September
Revenue Capital 2018
GBP'000 GBP'000 GBP'000
AIFM fees 116 - 116
Investment Advisory fees* 772 - 772
888 - 888
* For the period from 13 March 2018 to 30 September 2018, and
subsequently to 31 October 2018, Augmentum Capital LLP was employed as the
Company's Investment Advisor. With effect from 1 November 2018 Augmentum
Fintech Management Limited, a subsidiary of the Company, became the Company's
delegated Portfolio Manager and the Investment Advisory Agreement was
terminated.
3 Earnings per share
The earnings per share figures are based on the following figures:
(Unaudited)
Period
ended
30
September
2018
GBP'000
Net revenue return (1,036)
Net capital return 5,779
Net total return 4,743
Weighted average number of ordinary shares in issue during the period from 66,294,737
the incorporation of the Company on 19 December 2017 to 30 September 2019
Pence
Revenue earnings per share from incorporation (1.6)
Capital earnings per share from incorporation 8.7
Total earnings per share from incorporation 7.1
Weighted average number of ordinary shares in issue during the period from 94,000,000
the
IPO of the Company on 13 March 2018 to 30 September 2019
Pence
Revenue earnings per share from IPO (1.1)
Capital earnings per share from IPO 6.1
Total earnings per share from IPO 5.0
The earnings per share from incorporation is the figure calculated in
accordance with IAS 33 'Earnings per share'.
The earnings per share from IPO figure has been disclosed as all earnings were
earned subsequently to the IPO, and the issue of the 94,000,000 shares. The
Directors have decided to disclose this as it better reflects the return
generated for Shareholders.
4 Share capital
On 13 March 2018, 94,000,000 ordinary shares were issued.
The nominal value of the shares issued was GBP940,000 and the total consideration
received was GBP94,000,000. 72,549,697 shares were issued in exchange for gross
cash proceeds of GBP72,549,697. 21,450,303 shares were issued to the Limited
Partners of Augmentum I LP (the 'LP') in exchange for their interests in the LP
totalling GBP21,450,303.
The balance of the Limited Partners interests in the LP was acquired for GBP
11,858,170 in cash. The amount paid to one of the Limited Partners was reduced
by GBP930,299 to reflect their contribution to the costs of the issue. This
contribution has been offset against the costs of the issue, which totalled GBP
1,889,000, in the Consolidated Statement of Changes in Equity. The net costs of
the issue were GBP959,000. At 30 September 2018 there were 94,000,000 shares in
issue and no shares were held in treasury at 30 September 2018.
5 Net asset value per share
The net asset value per share is based on the net assets attributable to the
equity shareholders of GBP97,784,000 and 94,000,000 shares being the number of
shares in issue 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 Acquisition of Augmentum I LP
Immediately following the Company's successful IPO, on the 13 March 2018, the
Company acquired 100% of the interests in Augmentum Capital I LP (the LP) for
consideration of GBP33,308,473. The consideration for the LP was made up of
21,450,303 ordinary shares, worth GBP21,450,303 based on their issue price of GBP1,
and cash of GBP11,858,170.
The acquisition provided the Company with the portfolio of investments held by
the LP. The breakdown, and initial fair value of, the LP's investments is shown
in the Portfolio. The fair value of the LP's investments equalled the
consideration paid.
8 Financial instruments
Financial instruments carried at fair value
(i) Management of Risk
As an investment trust, the Group's investment objective is to seek capital
growth from a portfolio of securities. The holding of these financial
instruments to meet this objective results in certain risks.
The Group's financial instruments comprise securities in unlisted companies,
partnership interests, trade receivables, trade payables, and cash and cash
equivalents.
The main risks arising from the Group's financial instruments are fluctuations
in market price, and credit and liquidity risk. The policies for managing each
of these risks are summarised below. These policies have remained constant
throughout the period under review. The financial risks of the Company are
aligned to the Group's financial risks.
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 deemed to be the multiple used in the valuation or other
appropriate 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 and the
level of cash is reviewed on a regular basis. Cash was principally held with
four UK banks (see table below) and totalled GBP43.9 million.
Bank Credit Ratings at 30 September 2017 Moody's
Silicon Valley Bank A3
Emirates London* A3
Santander UK PLC (Jersey)* Aa3
ABN Amro Bank N.V. A1
* Rating is for parent company
The Group manages the levels of cash and cash equivalents held whilst
maintaining sufficient liquidity for investments and to meet operating
liabilities as they fall due.
(ii) Fair Value Hierarchy
Fair value is the amount for which an asset could be exchanged 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 fair values measured using quoted prices (unadjusted) in active markets for
1: identical assets or liabilities.
Level fair values measured using valuation techniques for all inputs significant to
2: 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 fair values measured using valuation techniques for which any significant input
3: 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 2018.
The Level 3 investments are valued in accordance with the Principles of
Valuation of Unlisted Equity Investments as detailed within the Basis of
Accounting and Significant Accounting Policies (Note 1.4).
All investments within Level 3 were valued using the price of recent
transaction approach. For three investments, with a total value of GBP11,823,000
the price of recent transactions was the price set at the time of the Company's
IPO. As this is more than six months old a DCF model was prepared to assess if
the transaction price remained reasonable. If the DCF model had been adopted to
value these investments their value would have increased by GBP401,000.
The unobservable input into all Level 3 valuations was recent transaction
prices. If these were unobservable inputs were to change by 10%, the valuation
of the investments increase/decrease by GBP5,390,000.
The following table presents the movement of investments measured at fair
value, based on fair value measurement levels.
Level 3
2018
GBP'000
Investments fair value on acquisition on 13 March 2018 33,308
Purchases 14,795
Gains on investments held at fair value 5,801
Closing balance as at 30 September 53,904
9 Comparative information
As this is the Group's first interim report since incorporation there is no
comparative financial information to present.
INDEPENT REVIEW REPORT TO AUGMENTUM FINTECH PLC
Report on the consolidated interim condensed financial statements Our conclusion We have reviewed Augmentum Fintech plc's consolidated interim condensed financial statements (the "interim financial statements") in the interim report of Augmentum Fintech plc for the period from incorporation on 19 December 2017 to 30 September 2018. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. What we have reviewed The interim condensed financial statements comprise: ? the consolidated statement of financial position as at 30 September 2018; ? the consolidated statement of comprehensive income for the period then ended; ? the consolidated cash flow statement for the period then ended; ? the consolidated statement of changes in equity for the period then ended; and ? the explanatory notes to the interim financial statements. The interim condensed financial statements included in the interim report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. As disclosed in Note 1 to the interim condensed financial statements, the financial reporting framework that has been applied in the preparation of the interim financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. Responsibilities for the interim financial statements and the review Our responsibilities and those of the directors The half year report, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. Our responsibility is to express a conclusion on the interim financial statements in the interim report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. What a review of interim financial statements involves 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 Auditing Practices Board 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. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim condensed financial statements. PricewaterhouseCoopers LLP Chartered Accountants London 23 November 2018 INTERIM MANAGEMENT REPORT Going concern The Directors consider it is appropriate to adopt the going concern basis in preparing the financial statements as the Group has adequate resources to continue in operational existence for the foreseeable future. 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. Related party transactions During the period under review no material transactions with related parties have taken place which have affected the financial position or the performance of the Group. Principal risks and uncertainties The principal risks and uncertainties associated with the Group and Company are explained in detail within this announcement. In the view of the Board these principal risks and uncertainties are as applicable to the remaining six months of the financial period to 31 March 2019, as they were to the period under review. Alternative performance measures The Financial Statements set out the required statutory reporting measures of the Group's financial performance. In addition, the Board assesses the Group's performance against a range of criteria which are viewed as particularly relevant for investment trusts, further details of these will be included in the Annual Report. Directors' responsibility statement The Directors confirm that, to the best of their knowledge: (a) the condensed set of financial statements has been prepared in accordance with applicable accounting standards; (b) the interim management report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.7R (an indication of important events that have occurred during the first six months of the financial year and a description of the principal risks and uncertainties for the remaining six months of the financial year); and (c) the Interim Management Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein). The Interim Report has been reviewed by the Company's auditor and their Independent Review Report to the Company can be found within this announcement. For and on behalf of the Board Neil England Chairman 23 November 2018 PRINCIPAL RISKS AND UNCERTAINTIES Principal Risks and Risk Management The Board considers that the risks detailed below are the principal risks facing the Company currently, along with the risks detailed in Note 8 to the Interim Financial Statements. These are the risks that could affect the ability of the Company to deliver its investment strategy and objective. The Board can confirm that the principal risks of the Company, including those which would threaten its future performance, solvency or liquidity, have been robustly assessed during the period ended 30th September 2018, and that processes are in place to continue this assessment. Macroeconomic Risks The performance of the Group's investment portfolio is materially influenced by economic and regulatory conditions. These may affect demand for services supplied by investee companies, foreign exchange rates, input costs, interest rates, debt and equity capital markets and the number of active trade and financial buyers. All of these factors could be influenced by the outcomes of the Brexit negotiations, and all have an impact on the Group's ability to realise a return from its investment portfolio and cannot be directly controlled by the Group. Strategy Implementation Risks The Group is subject to the risk that its long-term strategy and its level of performance fail to meet the expectations of its shareholders. A robust and sustainable corporate governance structure has been implemented with the Board responsible for continued delivery for shareholders. Experienced fintech portfolio managers have been retained in order to deliver the strategy. Investment Risks The performance of the Group's portfolio is influenced by a number of factors. These include, but are not limited to: (i) the quality of the initial investment decision; (ii) reliance on co-investment parties; (iii) the quality of the management team of each underlying portfolio company and the ability of that team to successfully implement its business strategy; (iv) the success of the Portfolio Manager in building an effective working relationship with each team in order to agree and implement value-creation strategies; (v) changes in the market or competitive environment in which each portfolio company operates; and (vi) the macroeconomic risks described above. Any one of these factors could have an impact on the valuation of an investment and on the Group's ability to realise the investment in a profitable and timely manner. The Portfolio Manager has put in place a rigorous investment process which ensures disciplined investment selection and portfolio management. This includes detailed due diligence, regular portfolio reviews and in many cases an active engagement with portfolio companies, by way of Board representation. Portfolio Diversification Risk The Group is subject to the risk that its portfolio may not be diversified, being heavily concentrated in the fintech sector, and on the UK economy where the investments are located. The Company is expected to invest its assets in early-stage companies which, by their nature, may be smaller capitalisation companies. Such companies may not have the financial strength, diversity and resources of larger and more established companies and may find it more difficult to operate, especially in periods of low economic growth. The Group attempts to mitigate this risk by making investments in a range of companies and fintech subsectors in accordance with the Investment Objective and Investment Policy but given the nature of the Company's Investment
Objective this remains a significant risk.
Cash Risk
Returns to the Company through holding cash and cash equivalents are currently
low. If there are delays in deploying the cash proceeds from the IPO this may
have an adverse impact on the Company's performance.
Credit Risk
Until the proceeds of the IPO are fully invested the Group will be holding
significant cash balances. There is a risk that the banks with which the cash
is deposited fail and the Company could be adversely affected through either
delay in accessing the cash deposits or the loss of the cash deposit. To
mitigate this risk the Board has agreed prudent cash management guidelines with
the AIFM and Portfolio Manager. These set limits on the maximum exposure to any
one counterparty and require all counterparties to have a high credit rating
and financial strength. Compliance with these guidelines is monitored regularly
and reported to the Board on a quarterly basis. When evaluating counterparties
there can be no assurance that the review will reveal or highlight all relevant
facts and circumstances that may be necessary or helpful in evaluating the
creditworthiness of the counterparty.
Valuation Risk
The valuation of investments in accordance with IFRS 13 and IPEVCA Valuation,
Guidelines requires considerable judgement and is explained in Note 1.4.
The Group mitigates this risk by having a rigorous valuation policy and process
as set out Note 1.4. This process involves benchmarking valuations against
actual prices received when a sale is made, as well as taking account of
liquidity issues and/or any restrictions over investments.
The Company's investments may be illiquid and a sale may require consent of
other interested parties. Such investments may therefore be difficult to value
and realise. Such realisations may involve significant time and cost and/or
result in realisations at levels below the value of such investments estimated
by the Company.
Operational Risk
The Board is reliant on the Group and systems of the Company's service
providers and as such disruption to, or a failure of, those systems could lead
to a failure to comply with law and regulations leading to reputational damage
and/or financial loss to the Group.
To manage these risks the Board:
? receives a quarterly compliance report from Frostrow, which includes,
inter alia, details of compliance with applicable laws and regulations;
? reviews internal control reports, key policies, including measures taken
to combat cyber-security issues, and also the disaster recovery procedures of
its service providers;
? maintains a risk matrix with details of risks the Group and Company are
exposed to, the controls relied on to manage those risks and the frequency of
the controls operation; and
? receives updates on pending changes to the regulatory and legal
environment and progress towards Group and the Company's compliance with these.
Key person risk
There is a risk that the individuals responsible for advising on the Group's
Company's portfolio may leave their employment or may be prevented from
undertaking their duties.
The Board manage this risk by:
? receiving reports from the Portfolio Manager at each Board meeting, such
report includes any significant changes in the make-up of the team supporting
the Company; and
? delegating to the Management Engagement & Remuneration Committee,
responsibility to perform an annual review of the service received from the
Portfolio Manager, including, inter alia, the team supporting the lead managers
and succession planning.
DIRECTORS AND OTHER INFORMATION
Directors
Neil England (Chairman)
Karen Brade (Audit Committee Chairman)
David Haysey (Management & Remuneration
Committee Chairman)
Registered Office
Augmentum Fintech plc
25 Southampton Buildings
London WC2A 1AL
United Kingdom
Incorporated in England and Wales with
company no. 11118262 and registered as an
investment company under Section 833 of the
Companies Act 2006
AIFM, Company Secretary and Administrator
Frostrow Capital LLP
25 Southampton Buildings
London WC2A 1AL
United Kingdom
Tel: 0203 008 4910
Email: info@frostrow.com
Portfolio Manager
Augmentum Fintech Management Limited
5-23 Old Street
London EC1V 9HL
United Kingdom
Joint Corporate Brokers
Fidante Capital
1 Tudor Street
London EC4Y 0AH
United Kingdom
Peel Hunt LLP
Moor House
120 London Wall
London EC2Y 5ET
United Kingdom
Depositary
Augentius Depositary Company Limited
2 London Bridge
London SE1 9RA
United Kingdom
Legal Adviser to the Company
Stephenson Harwood LLP
1 Finsbury Circus
London EC2M 7SH
United Kingdom
Auditors
PricewaterhouseCoopers LLP
7 More London Riverside
London SE1 2RT
United Kingdom
Registrar
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
United Kingdom
Telephone (in UK): 0371 664 0300?
E-Mail: shareholderenquiries@link.co.uk
Website: www.linkassetservices.com
Please contact the Registrars if you have a
query about a certificated holding in the
Company's shares.
? Calls outside the UK will be charged at the applicable
International rate and may be recorded for training
purposes.Lines are open from 9.00 a.m. to 5.30 p.m. Monday
to Friday excluding public holidays in England and Wales.
Identification codes
SEDOL: BG12XV8
ISIN: GB00BG12XV81
BLOOMBERG: AUGM LN
EPIC: AUGM
Legal Entity Identifier:
213800OTQ44T555I8S71
WARNING TO SHAREHOLDERS
Many companies have become aware that their shareholders have received
unsolicited phone calls or correspondence concerning investment matters. These
are typically from overseas based 'brokers' who target UK shareholders offering
to sell them what often turn out to be worthless or high risk shares in US or
UK investments. They can be very persistent and extremely persuasive.
Shareholders are therefore advised to be very wary of any unsolicited advice,
offers of shares at a discount or offers of free company reports.
Please note that it is very unlikely that either the Company or the Company's
Registrar, Link Asset Services, would make unsolicited telephone calls to
shareholders and that any such calls would relate only to official
documentation already circulated to shareholders and never in respect of
investment 'advice'.
Shareholders who suspect they may have been approached by fraudsters should
advise the Financial Conduct Authority ('FCA') using the share fraud reporting
form at www.fca.org. uk/scams or call the FCA Consumer Helpline on
0800 111 6768. You may also wish to contact either the Company Secretary or the
Registrar.
GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES
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.
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.
Intial 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.
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.
NAV Total Return
The theoretical total return on shareholders' funds per share, including an
assumed GBP100 original investment at the beginning of the period specified,
reflecting the change in NAV assuming that any dividends paid to shareholders
were reinvested at NAV at the time the shares were quoted ex-dividend. A way of
measuring investment management performance of investment trusts which is not
affected by movements in the Share price discount/premium.
To view the report online
If you would like to view video updates about the company, please visit:
www.augmentum.vc
-ENDS-
The Company's interim report and financial statements for the period ended 30
September 2018 has been submitted to the UK Listing Authority, and will shortly
be available for inspection on the National Storage Mechanism (NSM):
http://www.morningstar.co.uk/uk/NSM
and on the Company's website:
www.augmentum.vc
(Documents will usually be available for inspection within two business days of
this notice being given)
Victoria Hale
Frostrow Capital LLP
Company Secretary
Tel: 020 3170 8732
END
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November 26, 2018 02:00 ET (07:00 GMT)
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