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KAY Kings Arms Yard Vct Plc

19.90
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Kings Arms Yard Vct Plc LSE:KAY London Ordinary Share GB0007174294 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 19.90 19.40 20.40 19.90 19.90 19.90 32,090 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Investors, Nec 3.32M 726k 0.0014 142.14 103.51M

Kings Arms Yard Kings Arms Yard Vct Plc: Half-yearly Financial Report

03/09/2020 2:20pm

UK Regulatory


 
TIDMKAY 
 
 
   Kings Arms Yard VCT PLC 
 
   LEI Code 213800DK8H27QY3J5R45 
 
   As required by the UK Listing Authority's Disclosure Guidance and 
Transparency Rule 4.2, Kings Arms Yard VCT PLC today makes public its 
information relating to the Half-yearly Financial Report (which is 
unaudited) for the six months to 30 June 2020. This announcement was 
approved by the Board of Directors on 3 September 2020. 
 
   The full Half-yearly Financial Report (which is unaudited) for the 
period to 30 June 2020, will shortly be sent to shareholders and will be 
available on the Albion Capital Group LLP website by clicking 
https://www.globenewswire.com/Tracker?data=F-1vgJ3-g1MpTObDfBJcywtL3aCqYaGg_gIZeql0Nwk6_UUGh3oaMvAvjmFrC8JGcjKMr6A4anLN3Lz4Z46V4MMRRIwl6wBLlKmMUBiWrkJL9R9jp9wHwIXfdNqNt3OZaLbQyJ75g3YAyERL75adMNCPqbRgEgl9PsIyFBq3Htk= 
www.albion.capital/funds/KAY/30Jun2020.pdf. 
 
   Investment policy 
 
   Kings Arms Yard VCT PLC is a Venture Capital Trust and the investment 
policy is intended to produce a regular dividend stream with an 
appreciation in capital value. 
 
   The Company will invest in a broad portfolio of higher growth businesses 
across a variety of sectors of the UK economy including higher risk 
technology companies. Allocation of assets will be determined by the 
investment opportunities which become available but efforts will be made 
to ensure that the portfolio is diversified both in terms of sector and 
stage of maturity of company. 
 
   Funds held pending investment or for liquidity purposes are held as cash 
on deposit or similar instruments with banks or other financial 
institutions with high credit ratings assigned by international credit 
rating agencies. 
 
   Risk diversification and maximum exposures 
 
   Risk is spread by investing in a number of different businesses within 
venture capital trust qualifying industry sectors using a mixture of 
securities. The maximum amount which the Company will invest in a single 
portfolio company is 15 per cent. of the Company's assets at cost, thus 
ensuring a spread of investment risk. The value of an individual 
investment may increase over time as a result of trading progress and it 
is possible that it may grow in value to a point where it represents a 
significantly higher proportion of total assets prior to a realisation 
opportunity being available. 
 
   The Company's maximum exposure in relation to gearing is restricted to 
the amount equal to its adjusted capital and reserves. 
 
   Financial calendar 
 
 
 
 
Record date for second dividend   2 October 2020 
Payment date of second dividend  30 October 2020 
Financial year end                   31 December 
 
 
   Financial summary 
 
 
 
 
                      Unaudited            Unaudited                   Audited 
                   six months ended     six months ended            year ended 
                     30 June 2020         30 June 2019        31 December 2019 
                  (pence per share)    (pence per share)     (pence per share) 
---------------  -------------------  -------------------  ------------------- 
 
Opening net 
 asset value                   22.02                22.78                22.78 
Revenue return        0.15               0.24                   0.44 
Capital 
 (loss)/return      (1.31)               0.11                 (0.02) 
                 ---------            -------              --------- 
Total 
 (loss)/return                (1.16)                 0.35                 0.42 
Impact from 
 share capital 
 movements                      0.04                    -                 0.02 
Dividends paid                (0.60)               (0.60)               (1.20) 
                            --------           ----------             -------- 
Net asset value                20.30                22.53                22.02 
---------------  -------------------  -------------------  ------------------- 
 
 
 
 
 
 
Shareholder return and shareholder value                (pence per share) 
 
Shareholder return from launch to 1 January 2011: 
Total dividends paid to 1 January 2011                              58.66 
Decrease in net asset value                                       (83.40) 
------------------------------------------------------  ----------------- 
Total shareholder return to 1 January 2011                        (24.74) 
------------------------------------------------------  ----------------- 
 
Shareholder return from 1 January 2011 to 30 June 
 2020 (period that Albion Capital has been investment 
 manager): 
Total dividends paid                                                 9.67 
Increase in net asset value                                          3.70 
------------------------------------------------------  ----------------- 
Total shareholder return from 1 January 2011 to 30 
 June 2020                                                          13.37 
------------------------------------------------------  ----------------- 
 
Shareholder value since launch: 
Total dividends paid to 30 June 2020                                68.33 
Net asset value as at 30 June 2020                                  20.30 
------------------------------------------------------  ----------------- 
Total shareholder value as at 30 June 2020                          88.63 
------------------------------------------------------  ----------------- 
 
 
 
   The Directors have declared a second dividend of 0.51 pence per share 
for the year ending 31 December 2020, which will be paid on 30 October 
2020 to shareholders on the register on 2 October 2020. 
 
   The details of the new dividend policy can be found in the Interim 
management report below. 
 
   The above financial summary is for the Company, Kings Arms Yard VCT PLC 
only. Details of the financial performance of the various Quester, SPARK 
and Kings Arms Yard VCT 2 PLC companies, which have been merged into the 
Company, can be found at 
https://www.globenewswire.com/Tracker?data=F-1vgJ3-g1MpTObDfBJcywtL3aCqYaGg_gIZeql0NwnArDScq9FGFYh0_b0n4gHD3B_RYxqe4ix9A680Ra8Ug7xw_df6mUFYUDlKjbuyrwy_oQpGUwFv_3sGjUy8nsUt 
www.albion.capital/funds/KAY under the 'Financial summary for previous 
funds' section. 
 
   Interim management report 
 
   Introduction 
 
   The duration and the final scale of the global Covid-19 pandemic are 
still unknown. What we do know is that many industries have been very 
severely disrupted, many businesses are struggling for survival and a 
rash of quoted companies have suspended or drastically reduced their 
dividends for the first time in decades. Against this background Kings 
Arms Yard has proved resilient. Despite a decline of 5% in NAV since 31 
December 2019, none of our investee companies have ceased trading, few 
have been adversely affected and the majority continue to grow strongly 
given the focus on the software and healthcare sectors which have 
benefitted from the shift to remote working, the increasing adoption of 
software and the increased interest in healthcare. 
 
   Valuations and results 
 
   Since the year ended 31 December 2019, the Board has been closely 
monitoring the ongoing disruption caused by the Covid-19 pandemic and 
its current and potential impact on portfolio companies. 
 
   The net effect of the Board's regular portfolio revaluation has been an 
overall loss on investments of GBP4.3m. The key movements in the period 
include: a GBP1.6m uplift in the valuation of Quantexa following a GBP50 
million externally led fundraising, a GBP1.2m uplift in the valuation of 
Proveca, offset by a GBP0.9m reduction in the valuation of Sandcroft 
Avenue (T/A Hussle), a GBP0.9m reduction in the valuation of Elateral 
Group and based on the disruption caused by Covid-19 to the rail sector, 
the valuation of Perpetuum was written down significantly. After the 
period end, contracts were exchanged, subject to regulatory approval, 
for the sale of Perpetuum at a small uplift to its carrying value at 30 
June 2020. 
 
   Further details of the portfolio of investments can be found below. 
 
   This has resulted in a total loss for the six month period to 30 June 
2020 of 1.16 pence per share, compared to a total return of 0.35 pence 
per share for the six month period to 30 June 2019. 
 
   Net asset value decreased from 22.02 pence per share at 31 December 2019 
to 20.30 pence per share at 30 June 2020, following the loss during the 
period and the payment of a 0.60 pence per share dividend on 30 April 
2020. 
 
   New dividend policy 
 
   The Board is aware of the importance of dividends to shareholders and it 
remains its intention to continue to pay regular dividends, as far as 
liquidity permits. Given the uncertainty that the current pandemic has 
created and the volatile nature of investing in small unquoted growth 
businesses, the Board considers it appropriate to move to a variable 
dividend policy targeting an annual dividend yield of around 5%. 
Semi-annual dividends will be paid calculated as 2.5% of the most 
recently announced net asset value when the dividend is declared (in 
most cases this will be the net asset value announced in the Half-yearly 
Financial Report or in the Annual Report and Financial Statements). This 
has the advantage of avoiding unsustainably high dividends if the net 
asset value falls, whilst rewarding shareholders more immediately if the 
net asset value rises. 
 
   This new policy will take effect immediately and apply to the second 
dividend for the financial year ending 31 December 2020 and dividends 
declared thereafter. The Board is therefore pleased to declare a second 
dividend for the financial year ending 31 December 2020 of 0.51 pence 
per share (31 October 2019: 0.60 pence per share) payable on 30 October 
2020 to shareholders on the register on 2 October 2020. 
 
   The Company continues to offer a Dividend Reinvestment Scheme whereby 
shareholders can elect to receive dividends in the form of new shares. 
 
   Investment activity 
 
   Largely as a result of the Government lockdown, investment activity in 
the six months ended 30 June 2020 has been slower than in previous 
periods. The Company has invested GBP649,000 into 3 new portfolio 
companies with the expectation of further funding rounds over time to 
support success. In addition, the Company invested GBP714,000 to support 
growth in 5 existing portfolio companies. Since the period end 
investment activity has increased and the Company has made GBP1.7 
million of investments, the largest being GBP891,000 into Quantexa. 
Further details of post balance sheet events can be found in note 9. 
 
   New investments in the period were: 
 
 
   -- An initial investment of GBP308,000 (Albion VCTs: GBP5.0m) in Concirrus, 
      a software provider bringing real time behavioural data analytics to the 
      marine and transport insurance industries; 
 
   -- An initial investment of GBP185,000 (Albion VCTs: GBP3.0m) in Credit 
      Kudos, a challenger credit bureau helping lenders optimise and automate 
      their affordability and risk assessments; and 
 
   -- An initial investment of GBP156,000 (Albion VCTs: GBP1.5m) in TransFICC, 
      a provider of connectivity solutions, connecting financial institutions 
      with trading venues via a single API. 
 
 
   There were no disposals during the six month period to 30 June 2020. For 
further information on loan stock repayments and escrow adjustments, 
please see the realisations table below. 
 
   Portfolio sector allocation 
 
   The pie chart at the end of this announcement outlines the different 
sectors in which the Company's assets, at carrying value, were invested 
at 30 June 2020. 
 
   Transactions with the Manager 
 
   Details of transactions with the Manager for the reporting period can be 
found in note 4. Details of related party transactions can be found in 
note 10. 
 
   Albion VCTs Top Up Offers 
 
   The Company is pleased to announce that its participation in the Albion 
VCTs Prospectus Top Up Offers 2019/20 was fully subscribed and closed 
early raising net proceeds of GBP9.6m. Further details can be found in 
note 7. The proceeds of the Offer are being deployed into new 
investments as mentioned above and supporting further funding of 
existing portfolio companies to promote growth. 
 
   Corporate broker and share buy-backs 
 
   The Board was pleased to announce on 17 June 2020 the appointment of 
Panmure Gordon (UK) Limited as corporate broker. 
 
   It remains the Board's policy to buy-back shares in the market, subject 
to the overall constraint that such purchases are in the Company's 
interest. This includes the maintenance of sufficient cash resources for 
investment in new and existing portfolio companies and the continued 
payment of dividends to shareholders. The Board has decided to limit the 
amount of share buybacks in the six month period to 31 December 2020 to 
GBP1 million. 
 
   It is the Board's intention over time for such buy-backs to be in the 
region of a 5% discount to net asset value, so far as market conditions 
and liquidity permit. 
 
   Risks and uncertainties 
 
   The implication of the financial turmoil arising from the Covid-19 
crisis is the key risk facing the Company. There are also potential 
implications of increasing tensions in international trade and of the UK 
leaving the European Union which may adversely affect our underlying 
portfolio companies. The Manager is continually assessing the exposure 
to these risks for each portfolio company, and appropriate actions, 
where possible, are being implemented. 
 
   Other risks and uncertainties remain unchanged and are detailed in note 
12 below. 
 
   Outlook 
 
   The outlook for the UK and the world economy has perhaps not been so 
uncertain for a generation.  Covid-19, together with growing 
interference in free trade may change the global economic picture in 
ways that will dwarf Brexit. 
 
   The one thing of which we can be certain is continuing change and a 
greater reliance on technology. Our policy of investing in young 
businesses with emerging technologies has proved robust so far and the 
Board has every confidence that it continues to offer the best course 
going forward. 
 
   Robin Field 
 
   Chairman 
 
   3 September 2020 
 
   Responsibility statement 
 
   The Directors, Robin Field, Thomas Chambers, Martin Fiennes and Fiona 
Wollocombe, are responsible for preparing the Half-yearly Financial 
Report. In preparing these condensed Financial Statements for the period 
to 30 June 2020 we, the Directors of the Company, confirm that to the 
best of our knowledge: 
 
   (a) the condensed set of Financial Statements, which has been prepared 
in accordance with Financial Reporting Standard 104 "Interim Financial 
Reporting", gives a true and fair view of the assets, liabilities, 
financial position and profit and loss of the Company as required by DTR 
4.2.4R; 
 
   (b) the Interim management report includes a fair review of the 
information required by DTR 4.2.7R (indication of important events 
during the first six months and description of principal risks and 
uncertainties for the remaining six months of the year); and 
 
   (c) the Interim management report includes a fair review of the 
information required by DTR 4.2.8R (disclosure of related parties' 
transactions and changes therein). 
 
   This Half-yearly Financial Report has not been audited or reviewed by 
the Auditor. 
 
   For and on behalf of the Board 
 
   Robin Field 
 
   Chairman 
 
   3 September 2020 
 
   Portfolio of investments 
 
 
 
 
                                         As at 30 June 2020 
                               --------------------------------------- 
                                         Cumulative movement                   Change in 
Fixed asset          % voting  Cost(1)         in value        Value     value for the period(2) 
investments           rights    GBP'000        GBP'000         GBP'000           GBP'000 
-------------------  --------  --------  -------------------  --------  ------------------------ 
Active Lives Care 
 Limited                 20.3     4,395                2,690     7,085                     (468) 
Proveca Limited          15.1     2,259                4,668     6,927                     1,166 
Ryefield Court Care 
 Limited                 18.7     3,070                1,786     4,856                     (618) 
Egress Software 
 Technologies 
 Limited                  4.8     1,644                2,901     4,545                         - 
Quantexa Limited          1.7       438                2,971     3,409                     1,593 
Chonais River Hydro 
 Limited                  6.5     2,428                  939     3,367                        10 
Antenova Limited         28.7     1,733                  617     2,350                     (590) 
The Street by 
 Street Solar 
 Programme Limited       10.0     1,040                  809     1,849                      (57) 
Regenerco Renewable 
 Energy Limited           9.8       988                  622     1,610                      (58) 
Alto Prodotto Wind 
 Limited                 11.1       882                  607     1,489                         3 
MyMeds&Me Limited        15.4     1,459                 (71)     1,388                         7 
OmPrompt Holdings 
 Limited                 14.8     1,377                 (45)     1,332                         - 
Dragon Hydro 
 Limited                 17.2       684                  435     1,119                        33 
G.Network 
 Communications 
 Limited                  2.0       204                  901     1,105                         - 
Shinfield Lodge 
 Care Limited             2.9       535                  528     1,063                         2 
Sift Limited             42.1     2,306              (1,331)       975                       228 
Black Swan Data 
 Limited                  2.3       941                    -       941                         - 
Perpetuum Limited        11.9     3,136              (2,280)       856                   (2,188) 
Gharagain River 
 Hyrdo Limited            5.0       620                  199       819                        16 
Academia Inc.             3.0       351                  380       731                     (316) 
Symetrica Limited         3.7       685                   19       704                     (163) 
Elateral Group 
 Limited                 47.9     5,488              (4,798)       690                     (897) 
AVESI Limited            14.8       484                  197       681                      (42) 
Oviva AG                  2.0       585                   90       675                     (121) 
The Evewell (Harley 
 Street) Limited          4.7       642                 (59)       583                      (58) 
MPP Global 
 Solutions Limited        1.7       550                    -       550                         - 
SBD Automotive 
 Limited                  1.7       260                  267       527                        21 
Avora Limited             2.8       510                    -       510                         - 
Convertr Media 
 Limited                  3.0       482                   13       495                         2 
Elliptic 
 Enterprises 
 Limited                  0.6       488                    -       488                         - 
Panaseer Limited          1.5       342                  128       470                         - 
Cantab Research 
 Limited (T/A 
 Speechmatics)            1.1       460                    -       460                         - 
Beddlestead Limited       5.1       606                (160)       446                     (157) 
Greenenerco Limited       8.6       259                  185       444                       (2) 
Koru Kids Limited         1.6       345                   36       381                     (156) 
Phrasee Limited           1.8       374                    -       374                         - 
Locum's Nest 
 Limited                  3.6       375                 (12)       363                         7 
Anthropics 
 Technology 
 Limited                 13.8        19                  312       331                     (151) 
Concirrus Limited         0.6       308                    -       308                         - 
ePatient Network 
 Limited (T/A 
 Raremark)                2.4       230                   53       283                      (27) 
uMotif Limited            1.0       240                   32       272                        98 
InCrowd Sports 
 Limited                  2.1       272                  (6)       266                      (85) 
Limitless 
 Technology 
 Limited                  1.7       260                    -       260                         - 
Abcodia Limited           4.3       735                (475)       260                         - 
Celoxica Holdings 
 plc                      4.4       513                (255)       258                         - 
Aridhia Informatics 
 Limited                  2.1       409                (152)       257                       203 
Clear Review 
 Limited                  1.6       203                   51       254                        51 
Arecor Limited            1.2       220                    -       220                         - 
Healios Limited           0.7       216                    -       216                         - 
Mirada Medical 
 Limited                  1.8       390                (198)       192                     (288) 
Credit Kudos 
 Limited                  0.9       185                    -       185                         - 
TransFICC Limited         1.0       156                    -       156                         - 
Erin Solar Limited        5.7       160                 (22)       138                      (16) 
Cisiv Limited             3.1       278                (144)       134                      (27) 
Innovation Broking 
 Group Limited            4.5        45                   72       117                        16 
Sandcroft Avenue 
 Limited (T/A 
 Hussle)                  5.1     1,026                (929)        97                     (915) 
Imandra Inc.              1.0        91                    -        91                         - 
Harvest AD 
 Limited(i)                 -        70                    1        71                       (4) 
Zift Channel 
 Solutions Inc.           0.6       321                (260)        61                     (122) 
Forward Clinical 
 Limited (T/A 
 Pando)                   1.5       184                (123)        61                      (47) 
Xention Limited          10.6        38                 (28)        10                         - 
Other holdings (5 
 companies)                          26                 (21)         5                         - 
                                                                        ------------------------ 
Total fixed asset investments    50,020               11,140    61,160                   (4,117) 
-----------------------------  --------  -------------------  --------  ------------------------ 
 
 
   1. Amounts shown as cost represent the acquisition cost in the case of 
      investments originally made by the Company and/or the valuation 
      attributed to the investments acquired from Quester VCT 2 plc and Quester 
      VCT 3 plc at the date of the merger in 2005, and those acquired from 
      Kings Arms Yard VCT 2 PLC at the merger on 30 September 2011, plus any 
      subsequent acquisition costs, as reduced in certain cases by amounts 
      written off as representing an impairment value. 
 
   2. The column shows the movement in the period from the opening balance as 
      at 1 January 2020 to the closing balance as at 30 June 2020 after 
      adjustments for additions and disposals. 
 
 
   (i) Early stage investment of convertible loan stock. 
 
 
 
 
Realisations 
in the period                Opening 
to 30 June       Cost     carrying value  Disposal proceeds    Realised gain on cost  Gain on opening or acquired value 
2020            GBP'000      GBP'000           GBP'000                GBP'000                      GBP'000 
-------------  --------  ---------------  -----------------  -----------------------  --------------------------------- 
 
Loan stock 
repayments 
and other: 
------------- 
Alto Prodotto 
 Wind 
 Limited             24               36                 36                       12                                  - 
Greenenerco 
 Limited              7               10                 10                        3                                  - 
 
Escrow 
 adjustments          -                -                 19                       19                                 19 
Total                31               46                 65                       34                                 19 
-------------  --------  ---------------  -----------------  -----------------------  --------------------------------- 
 
 
 
 
 
 
Total change in value of investments for the period          (4,117) 
Movement in loan stock accrued interest                        (188) 
                                                             ------- 
Unrealised losses on fixed asset investments sub-total       (4,305) 
Realised gains in current period                                  19 
Total losses on investments as per Income statement          (4,286) 
-----------------------------------------------------------  ------- 
 
 
   Condensed income statement 
 
 
 
 
                                                                           Unaudited                     Unaudited                      Audited 
                                                                        six months ended              six months ended                 year ended 
                                                                          30 June 2020                  30 June 2019                31 December 2019 
----------------------------------------------------------  ----  ----------------------------  ----------------------------  ---------------------------- 
                                                                  Revenue   Capital    Total    Revenue   Capital    Total    Revenue   Capital    Total 
                                                            Note   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
----------------------------------------------------------  ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
(Losses)/gains on investments                                  2         -   (4,286)   (4,286)         -       865       865         -     1,002     1,002 
 
Investment income                                              3       917         -       917     1,112         -     1,112     2,144         -     2,144 
 
Investment management fee                                      4     (185)     (554)     (739)     (175)     (524)     (699)     (364)   (1,092)   (1,456) 
 
 
Other expenses                                                       (182)         -     (182)     (163)         -     (163)     (331)         -     (331) 
 
(Loss)/profit on ordinary activities before tax                        550   (4,840)   (4,290)       774       341     1,115     1,449      (90)     1,359 
Tax on ordinary activities                                               -         -         -         -         -         -         -         -         - 
----------------------------------------------------------  ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
(Loss)/profit and total comprehensive income attributable 
 to shareholders                                                       550   (4,840)   (4,290)       774       341     1,115     1,449      (90)     1,359 
----------------------------------------------------------  ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
Basic and diluted (loss)/return per share (pence)*             6      0.15    (1.31)    (1.16)      0.24      0.11      0.35      0.44    (0.02)      0.42 
----------------------------------------------------------  ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 
 
   *adjusted for treasury shares 
 
   The accompanying notes below form an integral part of this Half-yearly 
Financial Report. 
 
   Comparative figures have been extracted from the unaudited Half-yearly 
Financial Report for the six months ended 30 June 2019 and the audited 
statutory accounts for the year ended 31 December 2019. 
 
   The total column of this Condensed income statement represents the 
profit and loss account of the Company. The supplementary revenue and 
capital columns have been prepared in accordance with The Association of 
Investment Companies' Statement of Recommended Practice. 
 
   Condensed balance sheet 
 
 
 
 
                                    Unaudited      Unaudited         Audited 
                                   30 June 2020   30 June 2019   31 December 2019 
                            Note     GBP'000        GBP'000          GBP'000 
--------------------------  ----  -------------  -------------  ----------------- 
 
 
  Fixed asset investments                61,160         63,259             63,960 
 
Current assets 
Trade and other 
 receivables less than one 
 year                                       105            887                115 
Cash and cash equivalents                15,554         11,872              9,867 
                                  -------------  -------------  ----------------- 
                                         15,659         12,759              9,982 
 
Total assets                             76,819         76,018             73,942 
 
Payables: amounts falling 
due within one year 
Trade and other payables 
 less than one year                       (461)          (449)              (486) 
                                  -------------  -------------  ----------------- 
 
Total assets less current 
 liabilities                             76,358         75,569             73,456 
                                  -------------  -------------  ----------------- 
 
Equity attributable to 
equity holders 
Called up share capital        7          4,333          3,872              3,883 
Share premium                            45,253         35,595             35,825 
Capital redemption reserve                   11             11                 11 
Unrealised capital reserve               10,387         15,343             14,707 
Realised capital reserve                  8,680          8,995              9,200 
Other distributable 
 reserve                                  7,694         11,753              9,830 
                                  -------------  -------------  ----------------- 
 
Total equity shareholders' 
 funds                                   76,358         75,569             73,456 
                                  -------------  -------------  ----------------- 
 
Basic and diluted net 
 asset value per share 
 (pence)*                                 20.30          22.53              22.02 
--------------------------  ----  -------------  -------------  ----------------- 
 
 
   *excluding treasury shares 
 
   The accompanying notes below form an integral part of this Half-yearly 
Financial Report. 
 
   Comparative figures have been extracted from the unaudited Half-yearly 
Financial Report for the six months ended 30 June 2019 and the audited 
statutory accounts for the year ended 31 December 2019. 
 
   These Financial Statements were approved by the Board of Directors, and 
authorised for issue on 3 September 2020 and were signed on its behalf 
by 
 
   Robin Field 
 
   Chairman 
 
   Company number: 03139019 
 
   Condensed statement of changes in equity 
 
 
 
 
                                                                                  Capital    Unrealised  Realised      Other 
                                                       Called up share   Share   redemption   capital    capital   distributable 
                                                           capital      premium   reserve     reserve    reserve*    reserve*      Total 
                                                           GBP'000      GBP'000   GBP'000     GBP'000    GBP'000      GBP'000     GBP'000 
-----------------------------------------------------  ---------------  -------  ----------  ----------  --------  -------------  ------- 
At 1 January 2020                                                3,883   35,825          11      14,707     9,200          9,830   73,456 
(Loss)/profit and total comprehensive income for the 
 period                                                              -        -           -     (4,305)     (535)            550  (4,290) 
Transfer of previously unrealised gains on disposal 
 of investments                                                      -        -           -        (15)        15              -        - 
Purchase of own shares for treasury                                  -        -           -           -         -          (447)    (447) 
Issue of equity                                                    450    9,662           -           -         -              -   10,112 
Cost of issue of equity                                              -    (234)           -           -         -              -    (234) 
Dividends paid                                                       -        -           -           -         -        (2,239)  (2,239) 
At 30 June 2020                                                  4,333   45,253          11      10,387     8,680          7,694   76,358 
-----------------------------------------------------  ---------------  -------  ----------  ----------  --------  -------------  ------- 
 
At 1 January 2019                                                3,519   27,896          11      15,358     8,639         13,727   69,150 
Profit/(loss) and total comprehensive income for the 
 period                                                              -        -           -         443     (102)            774    1,115 
Transfer of previously unrealised gains on disposal 
 of investments                                                      -        -           -       (458)       458              -        - 
Purchase of own shares for treasury                                  -        -           -           -         -          (745)    (745) 
Issue of equity                                                    353    7,888           -           -         -              -    8,241 
Cost of issue of equity                                              -    (189)           -           -         -              -    (189) 
Dividends paid                                                       -        -           -           -         -        (2,003)  (2,003) 
-----------------------------------------------------  ---------------  -------  ----------  ----------  --------  -------------  ------- 
At 30 June 2019                                                  3,872   35,595          11      15,343     8,995         11,753   75,569 
-----------------------------------------------------  ---------------  -------  ----------  ----------  --------  -------------  ------- 
 
At 1 January 2019                                                3,519   27,896          11      15,358     8,639         13,727   69,150 
Profit/(loss) and total comprehensive income for the 
 period                                                              -        -           -         274     (364)          1,449    1,359 
Transfer of previously unrealised gains on disposal 
 of investments                                                      -        -           -       (925)       925              -        - 
Purchase of own shares for treasury                                  -        -           -           -         -        (1,367)  (1,367) 
Issue of equity                                                    364    8,120           -           -         -              -    8,484 
Cost of issue of equity                                              -    (191)           -           -         -              -    (191) 
Dividends paid                                                       -        -           -           -         -        (3,979)  (3,979) 
-----------------------------------------------------  ---------------  -------  ----------  ----------  --------  -------------  ------- 
At 31 December 2019                                              3,883   35,825          11      14,707     9,200          9,830   73,456 
-----------------------------------------------------  ---------------  -------  ----------  ----------  --------  -------------  ------- 
 
 
   *The total distributable reserves are GBP16,374,000 (30 June 2019: 
GBP20,748,000; 31 December 2019: GBP19,030,000). 
 
   The accompanying notes below form an integral part of this Half-yearly 
Financial Report. 
 
   Comparative figures have been extracted from the unaudited Half-yearly 
Financial Report for the six months ended 30 June 2019 and the audited 
statutory accounts for the year ended 31 December 2019. 
 
   Condensed statement of cash flows 
 
 
 
 
                         Unaudited          Unaudited           Audited 
                      six months ended   six months ended      year ended 
                        30 June 2020       30 June 2019     31 December 2019 
                          GBP'000            GBP'000            GBP'000 
------------------   -----------------  -----------------  ----------------- 
Cash flow from 
operating 
activities 
Investment income 
 received                          656              1,020              2,000 
Deposit interest 
 received                           25                 18                 35 
Dividend income 
 received                           49                228                254 
Investment 
 management fee 
 paid                            (745)              (694)            (1,425) 
Performance 
 incentive fee 
 paid                                -              (637)              (637) 
Other cash payments              (198)              (154)              (309) 
UK corporation tax 
paid                                 -                  -                  - 
                     -----------------  -----------------  ----------------- 
Net cash flow from 
 operating 
 activities                      (213)              (219)               (82) 
 
 
Cash flow from 
investing 
activities 
Purchase of fixed 
 asset investments             (1,363)            (3,053)            (5,637) 
Disposal of fixed 
 asset investments                  60              2,344              5,172 
                     -----------------  -----------------  ----------------- 
Net cash flow from 
 investing 
 activities                    (1,303)              (709)              (465) 
 
 
Cash flow from 
financing 
activities 
Issue of share 
 capital                         9,588              7,804              7,804 
Cost of issue of 
 equity                            (2)                (2)                (4) 
Purchase of own 
 shares (including 
 costs)                          (447)              (745)            (1,367) 
Equity dividends 
 paid*                         (1,936)            (1,742)            (3,504) 
                     -----------------  -----------------  ----------------- 
Net cash flow from 
 financing 
 activities                      7,203              5,315              2,929 
 
 
Increase in cash 
 and cash 
 equivalents                     5,687              4,387              2,382 
Cash and cash 
 equivalents at 
 start of period                 9,867              7,485              7,485 
                     -----------------  -----------------  ----------------- 
Cash and cash 
 equivalents at end 
 of period                      15,554             11,872              9,867 
-------------------  -----------------  -----------------  ----------------- 
 
 
   * The equity dividend paid in the cash flow is different to the dividend 
disclosed in note 5 due to the non-cash effect of the Dividend 
Reinvestment Scheme. 
 
   The accompanying notes below form an integral part of this Half-yearly 
Financial Report. 
 
   Comparative figures have been extracted from the unaudited Half-yearly 
Financial Report for the six months ended 30 June 2019 and the audited 
statutory accounts for the year ended 31 December 2019. 
 
   Notes to the condensed Financial Statements 
 
   1.            Accounting policies 
 
   Basis of accounting 
 
   The condensed Financial Statements have been prepared in accordance with 
applicable United Kingdom law and accounting standards, including 
Financial Reporting Standard 102 ("FRS 102"), Financial Reporting 
Standard 104 -- Interim Financial Reporting ("FRS 104"), and with the 
Statement of Recommended Practice "Financial Statements of Investment 
Trust Companies and Venture Capital Trusts" ("SORP") issued by The 
Association of Investment Companies ("AIC"). The Financial Statements 
have been prepared on a going concern basis. 
 
   The preparation of the Financial Statements requires management to make 
judgements and estimates that affect the application of policies and 
reported amounts of assets, liabilities, income and expenses. The most 
critical estimates and judgements relate to the determination of 
carrying value of investments at fair value through profit and loss 
("FVTPL"). The Company values investments by following the International 
Private Equity and Venture Capital Valuation ("IPEV") Guidelines and 
further detail on the valuation techniques used are outlined below. 
 
   This Half-yearly Financial Report has not been audited, nor has it been 
reviewed by the auditor pursuant to the FRC's guidance on Review of 
interim financial information. 
 
   Company information can be found on page 2 of the Half-yearly Financial 
Report. 
 
   Fixed asset investments 
 
   The Company's business is investing in financial assets with a view to 
profiting from their total return in the form of income and capital 
growth. This portfolio of financial assets is managed and its 
performance evaluated on a fair value basis, in accordance with a 
documented investment policy, and information about the portfolio is 
provided internally on that basis to the Board. 
 
   In accordance with the requirements of FRS 102, those undertakings in 
which the Company holds more than 20% of the equity as part of an 
investment portfolio are not accounted for using the equity method. In 
these circumstances the investment is measured at FVTPL. 
 
   Upon initial recognition (using trade date accounting) investments, are 
designated by the Company as FVTPL and are included at their initial 
fair value, which is cost (excluding expenses incidental to the 
acquisition which are written off to the Income statement). 
 
   Subsequently, the investments are valued at 'fair value', which is 
measured as follows: 
 
 
   -- Investments listed on recognised exchanges are valued at their bid prices 
      at the end of the accounting period or otherwise at fair value based on 
      published price quotations; 
 
   -- Unquoted investments, where there is not an active market, are valued 
      using an appropriate valuation technique in accordance with the IPEV 
      Guidelines. Indicators of fair value are derived using established 
      methodologies including earnings multiples, the level of third party 
      offers received, cost or price of recent investment rounds, net assets 
      and industry valuation benchmarks. Where price of recent investment is 
      used as a starting point for estimating fair value at subsequent 
      measurement dates, this has been benchmarked using an appropriate 
      valuation technique permitted by the IPEV guidelines. 
 
   -- In situations where cost or price of recent investment is used, 
      consideration is given to the circumstances of the portfolio company 
      since that date in determining fair value.  This includes consideration 
      of whether there is any evidence of deterioration or strong definable 
      evidence of an increase in value. In the absence of these indicators, the 
      investment in question is valued at the amount reported at the previous 
      reporting date. Examples of events or changes that could indicate a 
      diminution include: 
 
          -- the performance and/or prospects of the underlying business are 
             significantly below the expectations on which the investment was 
             based; 
 
          -- a significant adverse change either in the portfolio company's 
             business or in the technological, market, economic, legal or 
             regulatory environment in which the business operates; or 
 
          -- market conditions have deteriorated, which may be indicated by a 
             fall in the share prices of quoted businesses operating in the 
             same or related sectors. 
 
   Investments are recognised as financial assets on legal completion of 
the investment contract and are de-recognised on legal completion of the 
sale of an investment. 
 
   Dividend income is not recognised as part of the fair value movement of 
an investment, but is recognised separately as investment income through 
the Income statement when a share becomes ex-dividend. 
 
   Current assets and payables 
 
   Receivables and payables and cash are carried at amortised cost, in 
accordance with FRS 102. There are no financial liabilities other than 
payables. 
 
   Gains and losses on investments 
 
   Gains and losses arising from changes in the fair value of the 
investments are included in the Income statement for the period as a 
capital item and are allocated to the unrealised capital reserve. 
 
   Investment income 
 
   Equity income 
 
   Dividend income is included in revenue when the investment is quoted 
ex-dividend. 
 
   Unquoted loan stock and other preferred income 
 
   Fixed returns on non-equity shares and debt securities are recognised 
when the Company's right to receive payment and expected settlement is 
established. Where interest is rolled up and/or payable at redemption 
then it is recognised as income unless there is reasonable doubt as to 
its receipt. 
 
   Bank interest income 
 
   Interest income is recognised on an accruals basis using the rate of 
interest agreed with the bank. 
 
   Investment management fee, performance incentive fee and other expenses 
 
   All expenses have been accounted for on an accruals basis. Expenses are 
charged through the other distributable reserve except the following 
which are charged through the realised capital reserve: 
 
   -- 75 per cent. of management fees and performance incentive fees are 
allocated to the realised capital reserve. This is in line with the 
Board's expectation that over the long term 75 per cent. of the 
Company's investment returns will be in the form of capital gains; and 
 
   -- expenses which are incidental to the purchase or disposal of an 
investment are charged through the realised capital reserve. 
 
   Taxation 
 
   Taxation is applied on a current basis in accordance with FRS 102. 
Current tax is tax payable (refundable) in respect of the taxable profit 
(tax loss) for the current period or past reporting periods using the 
tax rates and laws that have been enacted or substantively enacted at 
the financial reporting date. Taxation associated with capital expenses 
is applied in accordance with the SORP. 
 
   Deferred tax is provided in full on all timing differences at the 
reporting date. Timing differences are differences between taxable 
profits and total comprehensive income as stated in the Financial 
Statements that arise from the inclusion of income and expenses in tax 
assessments in periods different from those in which they are recognised 
in the Financial Statements. As a VCT the Company has an exemption from 
tax on capital gains. The Company intends to continue meeting the 
conditions required to obtain approval as a VCT in the foreseeable 
future. The Company therefore, should have no material deferred tax 
timing differences arising in respect of the revaluation or disposal of 
investments and the Company has not provided for any deferred tax. 
 
   Reserves 
 
   Share premium 
 
   This reserve accounts for the difference between the price paid for 
shares and the nominal value of the shares, less issue costs. 
 
   Capital redemption reserve 
 
   This reserve accounts for amounts by which the issued share capital is 
diminished through the repurchase and cancellation of the Company's own 
shares. 
 
   Unrealised capital reserve 
 
   Increases and decreases in the valuation of investments held at the 
period end against cost are included in this reserve. 
 
   Realised capital reserve 
 
   The following are disclosed in this reserve: 
 
 
   -- gains and losses compared to cost on the realisation of investments; 
 
   -- expenses, together with the related taxation effect, charged in 
      accordance with the above policies; and 
 
   -- dividends paid to equity holders. 
 
   Other distributable reserve 
 
   The special reserve, treasury share reserve and the revenue reserve were 
combined in 2012 to form a single reserve named other distributable 
reserve. 
 
   This reserve accounts for movements from the revenue column of the 
Income Statement, the payment of dividends, the buy-back of shares and 
other non-capital realised movements. 
 
   Dividends 
 
   Dividends by the Company are accounted for in the period in which the 
dividend is paid or approved at the Annual General Meeting. 
 
   Segmental reporting 
 
   The Directors are of the opinion that the Company is engaged in a single 
operating segment of business, being investment in smaller companies 
principally based in the UK. 
 
   2.            (Losses)/gains on investments 
 
 
 
 
                     Unaudited          Unaudited            Audited 
                  six months ended   six months ended       year ended 
                    30 June 2020       30 June 2019      31 December 2019 
                      GBP'000            GBP'000             GBP'000 
---------------  -----------------  -----------------  ------------------ 
Unrealised 
 (losses)/gains 
 on fixed asset 
 investments               (4,305)                816                 647 
Unrealised 
 losses on 
 current asset 
 investments                     -              (373)               (373) 
Realised gains 
 on fixed asset 
 investments                    19                422                 728 
                           (4,286)                865               1,002 
                 -----------------  -----------------  ------------------ 
 
 
 
   3.            Investment income 
 
 
 
 
                      Unaudited          Unaudited            Audited 
                   six months ended   six months ended       year ended 
                     30 June 2020       30 June 2019      31 December 2019 
                       GBP'000            GBP'000             GBP'000 
----------------  -----------------  -----------------  ------------------ 
Interest from 
 loans to 
 portfolio 
 companies                      844                863               1,855 
Dividends                        49                231                 254 
Bank deposit 
 interest                        24                 18                  35 
                                917              1,112               2,144 
                  -----------------  -----------------  ------------------ 
 
 
   4.            Investment management fee 
 
 
 
 
                      Unaudited          Unaudited            Audited 
                   six months ended   six months ended       year ended 
                     30 June 2020       30 June 2019      31 December 2019 
                       GBP'000            GBP'000             GBP'000 
----------------  -----------------  -----------------  ------------------ 
Investment 
 management fee 
 charged to 
 revenue                        185                175                 364 
Investment 
 management fee 
 charged to 
 capital                        554                524               1,092 
                                739                699               1,456 
                  -----------------  -----------------  ------------------ 
 
 
   Further details of the Management agreement under which the investment 
management fee and any performance incentive fee are paid are given in 
the Strategic report on page 13 of the Annual Report and Financial 
Statements for the year ended 31 December 2019. 
 
   During the period, services with a value of GBP739,000 (30 June 2019: 
GBP699,000; 31 December 2019: GBP1,456,000) and GBP25,000 (30 June 2019: 
GBP25,000; 31 December 2019: GBP50,000) were purchased by the Company 
from Albion Capital Group LLP in respect of management and 
administration fees respectively. At the period end, the amount due to 
Albion Capital Group LLP in respect of these services disclosed as 
accruals was GBP385,000 (30 June 2019: GBP366,000; 31 December 2019: 
GBP391,000). 
 
   Albion Capital Group LLP is, from time to time, eligible to receive 
arrangement fees and monitoring fees from portfolio companies. During 
the period, fees of GBP155,000 (30 June 2019: GBP168,000; 31 December 
2019: GBP200,000) attributable to the investments of the Company were 
paid pursuant to these arrangements. 
 
   Albion Capital Group LLP, its partners and staff hold 1,399,153 Ordinary 
shares in the Company as at 30 June 2020. 
 
   The Company entered into an offer agreement relating to the Offers with 
the Company's investment manager Albion Capital Group LLP ("Albion"), 
pursuant to which Albion received a fee of 2.5% of the gross proceeds of 
the Offers and out of which Albion paid the costs of the Offers, as 
detailed in the Prospectus. The Offers closed on 16 January 2020. 
 
   5.            Dividends 
 
 
 
 
                                                         Unaudited          Unaudited           Audited 
                                                      six months ended   six months ended      year ended 
                                                        30 June 2020       30 June 2019     31 December 2019 
                                                          GBP'000            GBP'000            GBP'000 
---------------------------------------------------  -----------------  -----------------  ----------------- 
First dividend of 0.60 pence per share paid on 30 
 April 2019                                                          -              2,010              2,010 
Second dividend of 0.60 pence per share paid on 31 
 October 2019                                                        -                  -              2,005 
First dividend of 0.60 pence per share paid on 30 
 April 2020                                                      2,256                  -                  - 
Unclaimed dividends returned to the Company                       (17)                (7)               (36) 
                                                                 2,239              2,003              3,979 
                                                     -----------------  -----------------  ----------------- 
 
 
   The Directors have declared a second dividend of 0.51 pence per share 
for the year ending 31 December 2020, which will be paid on 30 October 
2020 to shareholders on the register on 2 October 2020. Details of the 
new dividend policy can be found in the Interim management report above. 
 
   6.            Basic and diluted (loss)/return per share 
 
 
 
 
                                                              Unaudited            Unaudited                   Audited 
                                                           six months ended     six months ended            year ended 
                                                             30 June 2020         30 June 2019        31 December 2019 
                                                         Revenue    Capital   Revenue    Capital   Revenue    Capital 
-------------------------------------------------------  --------  ---------  --------  ---------  --------  --------- 
 
  (Loss)/profit attributable to shareholders (GBP'000)        550    (4,840)       774        341     1,449       (90) 
 
Weighted average shares in issue (excluding treasury 
 shares)                                                         369,249,306          319,703,183          327,246,191 
 
(Loss)/return attributable per equity share (pence)          0.15     (1.31)      0.24       0.11      0.44     (0.02) 
 
 
   The weighted average number of Ordinary shares is calculated after 
adjusting for treasury shares of 57,096,607 (30 June 2019: 51,789,000; 
31 December 2019: 54,723,000). 
 
   There are no convertible instruments, derivatives or contingent share 
agreements in issue so basic and diluted (loss)/return per share are the 
same. 
 
   7.            Called up share capital 
 
 
 
 
Allotted, called up and fully paid Ordinary shares     Unaudited      Unaudited         Audited 
 of 1 penny each                                      30 June 2020   30 June 2019   31 December 2019 
---------------------------------------------------  -------------  -------------  ----------------- 
Number of shares                                       433,336,785    387,227,906        388,335,260 
Nominal value of allotted shares (GBP'000)                   4,333          3,872              3,883 
Voting rights (number of shares net of treasury 
 shares)                                               376,240,178    335,438,906        333,612,260 
 
 
   The Company operates a share buy-back programme, as detailed in the 
Interim management report above. During the period the Company purchased 
2,373,607 Ordinary shares with a nominal value of GBP23,736 (30 June 
2019: 3,516,000; 31 December 2019: 6,450,000) representing 0.5% of the 
issued called up share capital as at 30 June 2020, at a cost of 
GBP447,000 (30 June 2019: GBP745,000; 31 December 2019: GBP1,367,000), 
including stamp duty, to be held in treasury. The Company holds a total 
of 57,096,607 Ordinary shares in treasury, representing 13.2% of the 
issued Ordinary share capital as at 30 June 2020. 
 
   During the period from 1 January 2020 to 30 June 2020, the Company 
issued the following new Ordinary shares of 1 penny each under the terms 
of the Dividend Reinvestment Scheme Circular dated 19 April 2011: 
 
 
 
 
            Number of 
 Date of     shares      Aggregate nominal value of shares     Issue price      Net invested  Opening market price on allotment date 
allotment   allotted                 (GBP'000)               (pence per share)    (GBP'000)              (pence per share) 
----------  ---------  -----------------------------------  ------------------  ------------  -------------------------------------- 
30 April 
 2020       1,521,895                                   15               19.19           290                                   18.50 
 
 
   Under the terms of the Albion VCTs Prospectus Top Up Offers 2019/20, the 
following new Ordinary shares of nominal value 1 penny each were 
allotted during the period to 30 June 2020: 
 
 
 
 
                     Number of 
                       shares      Aggregate nominal value of shares     Issue price      Net consideration received  Opening market price on allotment date 
 Date of allotment    allotted                 (GBP'000)               (pence per share)           (GBP'000)                     (pence per share) 
-------------------  ----------  -----------------------------------  ------------------  --------------------------  -------------------------------------- 
31 January 2020       5,082,101                                   51               22.40                       1,121                                   21.10 
31 January 2020       1,019,398                                   10               22.50                         225                                   21.10 
31 January 2020      36,336,304                                  363               22.70                       8,042                                   21.10 
30 April 2020           418,451                                    4               19.50                          80                                   18.50 
30 April 2020           623,376                                    6               19.70                         120                                   18.50 
                     43,479,630                                  435                                           9,588 
                     ----------  -----------------------------------                      -------------------------- 
 
   8.   Commitments, contingencies and guarantees 
 
   As at 30 June 2020, the Company had no financial commitments (30 June 
2019: GBPnil; 31 December 2019: GBPnil). 
 
   There were no contingent liabilities or guarantees given by the Company 
as at 30 June 2020 (30 June 2019: GBPnil; 31 December 2019: GBPnil). 
 
 
 
   9.   Post balance sheet events 
 
   Since 30 June 2020, the Company has had the following post balance sheet 
events: 
 
   --Investment of GBP891,000 in Quantexa Limited; 
 
   --Investment of GBP361,000 in a new portfolio company, which provides a 
cloud platform that enables corporates to purchase digital gift cards 
and to distribute them to employees and customers; 
 
   --Investment of GBP274,000 in Phrasee Limited; 
 
   --Investment of GBP175,000 in uMotif Limited; 
 
   --Investment of GBP29,000 in The Evewell (Harley Street) Limited; and 
 
   --Contracts were exchanged for the sale of Perpetuum Limited. 
 
   10. Related party disclosures 
 
   Other than transactions with the Manager as disclosed in note 4, there 
are no related party transactions or balances requiring disclosure. 
 
   11. Going concern 
 
   The Board has conducted a detailed assessment of the Company's ability 
to meet its liabilities as they fall due. Cash flow forecasts are 
updated and discussed quarterly at Board level and have been stress 
tested to allow for the forecasted impact of Coronavirus (Covid-19). The 
Board have revisited and updated their assessment of liquidity risk and 
concluded that it remains unchanged since the last Annual Report and 
Financial Statements. Further details can be found on pages 66 and 67 of 
the Annual Report and Financial Statements for the year ended 31 
December 2019. 
 
   The portfolio of investments is diversified in terms of sector, and the 
major cash outflows of the Company (namely investments, dividends and 
share buy-backs) are within the Company's control. Accordingly, after 
making diligent enquiries, the Directors have a reasonable expectation 
that the Company has adequate cash and liquid resources to continue in 
operational existence for the foreseeable future. For this reason, the 
Directors have adopted the going concern basis in preparing this 
Half-yearly Financial Report and this is in accordance with the Guidance 
on Risk Management, Internal Control and Related Financial and Business 
Reporting issued by the Financial Reporting Council. 
 
   12. Risks and uncertainties 
 
   In addition to the risks and uncertainties outlined in the Interim 
management report, the Board confirms that the following major risks and 
uncertainties facing the Company have not materially changed from those 
identified in the Annual Report and Financial Statements for the year 
ended 31 December 2019. The impact of the Coronavirus (Covid-19) 
pandemic has created heightened uncertainty but has not changed the 
nature of these risks. The Board considers that the processes for 
mitigating these risks remain appropriate. 
 
   1.       Investment, performance and valuation risk 
 
   The risk of investment in poor quality businesses, which could reduce 
the capital and income returns to shareholders, and could negatively 
impact on the Company's current and future valuations. By nature, 
smaller unquoted businesses, such as those that qualify for venture 
capital trust purposes, are more volatile than larger, long established 
businesses. Investments in open-ended equity funds result in exposure to 
market risk through movements in price per unit. The Company's 
investment valuation methodology is reliant on the accuracy and 
completeness of information that is issued by portfolio companies. In 
particular, the Directors may not be aware of or take into account 
certain events or circumstances which occur after the information issued 
by such companies is reported. 
 
 
 
   To reduce this risk, the Board places reliance upon the skills and 
expertise of the Manager and its track record over many years of making 
successful investments in this segment of the market. In addition, the 
Manager operates a formal and structured investment appraisal and review 
process, which includes an Investment Committee, comprising investment 
professionals from the Manager and at least one external investment 
professional. The Manager also invites and takes account of comments 
from non-executive Directors of the Company on matters discussed at the 
Investment Committee meetings. Investments are actively and regularly 
monitored by the Manager (investment managers normally sit on portfolio 
company boards), including the level of diversification in the portfolio, 
and the Board receives detailed reports on each investment as part of 
the Manager's report at quarterly board meetings. The unquoted 
investments held by the Company are designated at fair value through 
profit or loss and valued in accordance with the International Private 
Equity and Venture Capital Valuation Guidelines. These guidelines set 
out recommendations, intended to represent current best practice on the 
valuation of venture capital investments. The valuation takes into 
account all known material facts up to the date of approval of the 
Financial Statements by the Board. 
 
   2.       VCT approval risk 
 
   The Company must comply with section 274 of the Income Tax Act 2007 
which enables its investors to take advantage of tax relief on their 
investment and on future returns. Breach of any of the rules enabling 
the Company to hold VCT status could result in the loss of that status. 
 
   To reduce this risk, the Board has appointed the Manager, which has a 
team with significant experience in venture capital trust management, 
and are used to operating within the requirements of the venture capital 
trust legislation. In addition, to provide further formal reassurance, 
the Board has appointed Philip Hare & Associates LLP as its taxation 
adviser, who report quarterly to the Board to independently confirm 
compliance with the venture capital trust legislation, to highlight 
areas of risk and to inform on changes in legislation. Each investment 
in a portfolio company is also pre-cleared with our professional 
advisers or H.M. Revenue & Customs. 
 
   3.       Regulatory and compliance risk 
 
   The Company is listed on The London Stock Exchange and is required to 
comply with the rules of the UK Listing Authority, as well as with the 
Companies Act, Accounting Standards and other legislation. Failure to 
comply with these regulations could result in a delisting of the 
Company's shares, or other penalties under the Companies Act or from 
financial reporting oversight bodies. 
 
 
 
   Board members and the Manager have experience of operating at senior 
levels within or advising quoted companies. In addition, the Board and 
the Manager receive regular updates on new regulation, including 
legislation on the management of the Company, from its auditor, lawyers 
and other professional bodies. The Company is subject to compliance 
checks through the Manager's compliance officer, and any issues arising 
from compliance or regulation are reported to its own board on a monthly 
basis. These controls are also reviewed as part of the quarterly Board 
meetings, and also as part of the review work undertaken by the 
Manager's compliance officer. The report on controls is also evaluated 
by the internal auditors. 
 
 
 
   4.       Operational and internal control risk 
 
   The Company relies on a number of third parties, in particular the 
Manager, for the provision of investment management and administrative 
functions. Failures in key systems and controls within the Manager's 
business could place assets of the Company at risk or result in reduced 
or inaccurate information being passed to the Board or to shareholders. 
 
   The Company and its operations are subject to a series of rigorous 
internal controls and review procedures exercised throughout the year, 
and receives reports from the Manager on internal controls and risk 
management, including on matters relating to cyber security. The Audit 
Committee reviews the Internal Audit Reports prepared by the Manager's 
internal auditors, PKF Littlejohn LLP and has access to the internal 
audit partner of PKF Littlejohn LLP to provide an opportunity to ask 
specific detailed questions in order to satisfy itself that the Manager 
has strong systems and controls in place including those in relation to 
business continuity and cyber security. From 1 October 2018, Ocorian 
(UK) Limited was appointed as Depositary to oversee the custody and cash 
arrangements and provide other AIFMD duties. The Board reviews the 
quarterly reports prepared by Ocorian (UK) Limited to ensure that Albion 
Capital is adhering to its duties as a full-scope Alternative Investment 
Fund Manager under the AIFMD. In addition, the Board regularly reviews 
the performance of its key service providers, particularly the Manager, 
to ensure they continue to have the necessary expertise and resources to 
deliver the Company's investment policy. The Manager and other service 
providers have also demonstrated to the Board that there is no undue 
reliance placed upon any one individual. 
 
   5.       Economic, political and social risk 
 
   Changes in economic conditions, including, for example, interest rates, 
rates of inflation, industry conditions, competition, political and 
diplomatic events and other factors could substantially and adversely 
affect the Company's prospects in a number of ways. This also includes 
risks of social upheaval, including from infection and population 
re-distribution, as well as economic risk challenges as a result of 
healthcare pandemics/infection. 
 
   The Company invests in a diversified portfolio of companies across a 
number of industry sectors and in addition often invests in a mixture of 
instruments in portfolio companies and has a policy of minimising any 
external bank borrowings within portfolio companies. At any given time, 
the Company has sufficient cash resources to meet its operating 
requirements, including share buy backs and follow on investments. In 
common with most commercial operations, exogenous risks over which the 
Company has no control are always a risk and the Company does what it 
can to address these risks where possible, not least as the nature of 
the investments the Company makes are long term. 
 
   6.       Market value of Ordinary shares 
 
   The market value of Ordinary shares can fluctuate. The market value of 
an Ordinary share, as well as being affected by its net asset value and 
prospective net asset value, also takes into account its dividend yield 
and prevailing interest rates. As such, the market value of an Ordinary 
share may vary considerably from its underlying net asset value. The 
market prices of shares in quoted investment companies can, therefore, 
be at a discount or premium to the net asset value at different times, 
depending on supply and demand, market conditions, general investor 
sentiment and other factors, including the ability to exercise share 
buybacks. Accordingly, the market price of the Ordinary shares may not 
fully reflect their underlying net asset value. 
 
 
 
   The Company operates a share buyback policy, which is designed to limit 
the discount at which the Ordinary shares trade to around 5 per cent. to 
net asset value, by providing a purchaser through the Company in absence 
of market purchasers. From time to time buy-backs cannot be applied, for 
example when the Company is subject to a close period, or if it were to 
exhaust and could not renew any buyback authorities. New Ordinary shares 
are issued at sufficient premium to net asset value to cover the costs 
of issue and to avoid asset value dilution to existing investors. 
 
   13. Other information 
 
   The information set out in this Half-yearly Financial Report does not 
constitute the Company's statutory accounts within the terms of section 
434 of the Companies Act 2006 for the periods ended 30 June 2020 and 30 
June 2019, and is unaudited. The information for the year ended 31 
December 2019 does not constitute statutory accounts within the terms of 
section 434 of the Companies Act 2006 and is derived from the statutory 
accounts for that financial year, which have been delivered to the 
Registrar of Companies. The Auditor reported on those accounts; their 
report was unqualified and did not contain a statement under s498 (2) or 
(3) of the Companies Act 2006. 
 
   14. Publication 
 
   This Half-yearly Financial Report is being sent to shareholders and 
copies will be made available to the public at the registered office of 
the Company, Companies House, the National Storage Mechanism and also 
electronically at www.albion.capital/funds/KAY, where the Report can be 
accessed from the 'Financial Reports and Circulars' section. 
 
 
 
   Attachment 
 
 
   -- Portfolio sector split 
      https://ml-eu.globenewswire.com/Resource/Download/31c34c69-f092-4625-990d-8ffc2f1991cf 
 
 
 
 
 
 
 

(END) Dow Jones Newswires

September 03, 2020 09:20 ET (13:20 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.

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