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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 0.0% 21.10 20.60 21.60 21.10 21.10 21.10 0.00 01:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Equity Investment Instruments 1.9 1.2 0.3 65.9 93

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

17/09/2021 10:46am

UK Regulatory (RNS & others)


Kings Arms Yard Vct (LSE:KAY)
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From Sep 2021 to Oct 2021

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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 2021. This announcement was approved by the Board of Directors on 17 September 2021.

The full Half-yearly Financial Report (which is unaudited) for the period to 30 June 2021, will shortly be sent to shareholders and will be available on the Albion Capital Group LLP website by clicking www.albion.capital/funds/KAY https://www.globenewswire.com/Tracker?data=eDuCWkZ1c4NZ7FUpPddBC7SBtTjtk1tuuZ7XkwWpScsU8Bi0GJF-aQjPujg4EHQ0Sy2IPSNWUgZ_yw9OyMB6R2ncjxlctUE7cXZvM4CI9hI= /30Jun2021.pdf https://www.globenewswire.com/Tracker?data=xe6l4jl7CnLefmINsfDXZpQgZP7gFT3nL6M7Em_uU9a4o2gd3F63k2RYvP6h-S9XKuPlhXwq6KN_hLGt8GWdp_1_SMp0p1hbWUJ4r4C4hGvLQSRYae_moxNk485saIlo .

Investment policy

Kings Arms Yard VCT PLC is a Venture Capital Trust and the investment policy is intended to produce a regular and predictable dividend stream with an appreciation in capital value.

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 interim dividend and special   1 October 2021 
 dividend 
Payment date of second interim dividend and special  29 October 2021 
 dividend 
Financial year end                                       31 December 
 

Financial highlights

 
                      Unaudited            Unaudited                   Audited 
                   six months ended     six months ended            year ended 
                     30 June 2021         30 June 2020        31 December 2020 
                  (pence per share)    (pence per share)     (pence per share) 
---------------  -------------------  -------------------  ------------------- 
 
Opening net 
 asset value                   21.84                22.02                22.02 
Capital 
 return/(loss)        3.00                (1.31)               0.59 
Revenue 
 (loss)/return      (0.03)                  0.15               0.32 
                 ---------            ----------           -------- 
Total 
 return/(loss)                  2.97               (1.16)                 0.91 
Dividends paid                (0.60)               (0.60)               (1.11) 
Impact from 
 share capital 
 movements                    (0.22)                 0.04                 0.02 
                            --------              -------            --------- 
Net asset value                23.99                20.30                21.84 
 
 
Shareholder return and shareholder value                (pence per share) 
 
Shareholder value from launch to 1 January 2011: 
Subscription price per share at launch                             100.00 
Total dividends paid to 1 January 2011                              58.66 
Decrease in net asset value                                       (83.40) 
------------------------------------------------------  ----------------- 
Total shareholder value to 1 January 2011                           75.26 
------------------------------------------------------  ----------------- 
 
Shareholder return from 1 January 2011 to 30 June 
 2021 (period that Albion Capital has been investment 
 manager): 
Total dividends paid                                                10.78 
Increase in net asset value                                          7.39 
------------------------------------------------------  ----------------- 
Total shareholder return from 1 January 2011 to 30 
 June 2021                                                          18.17 
------------------------------------------------------  ----------------- 
 
Shareholder value since launch: 
Total dividends paid to 30 June 2021                                69.44 
Net asset value as at 30 June 2021                                  23.99 
------------------------------------------------------  ----------------- 
Total shareholder value as at 30 June 2021                          93.43 
------------------------------------------------------  ----------------- 
 

The Directors have declared a second dividend of 0.60 pence per share for the year ending 31 December 2021, which will be paid on 29 October 2021 to shareholders on the register on 1 October 2021. The Board has also declared a special dividend of 1.14 pence per share, also payable on 29 October 2021 to shareholders on the register on 1 October 2021. Further details 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 www.albion.capital/funds/KAY under the 'Financial summary for previous funds' section.

Interim management report

Introduction

The Company has had a strong six months to 30 June 2021, with a total return of 2.97 pence per share, and the net asset value ("NAV") increasing to 23.99 pence per share, representing a 13.6% return on opening NAV (after adjusting for the dividend paid). Despite the challenging period for many companies as a result of the Coronavirus pandemic, our portfolio companies are truly showing how valuable their businesses are to their customers and this has been reflected by the strong return for the period.

Portfolio review

Total gain on investments for the six month period was GBP14.4 million (30 June 2020: loss of GBP4.3 million). Hugely successful externally led fundraisings for Quantexa (Series D) and Oviva (Series C) resulted in a combined uplift of GBP6.0 million to the portfolio. In addition to this, Proveca continues to trade well both within the UK and the EU resulting in an uplift in valuation of GBP1.3 million. In addition, one of our portfolio companies, Arecor Therapeutics, listed on the AIM stock exchange during the period and led to an increase in value of GBP0.3 million. It is very reassuring and pleasing to see many of our portfolio companies trading strongly as we navigate out of the pandemic.

There have been write-downs in our portfolio, the largest being Avora (GBP0.3 million) and Abcodia (GBP0.3 million), both due to growth slower than hoped.

There have also been a number of successful exits during the period which generated proceeds of GBP19.8 million. The bulk of the exit proceeds came from the sale of the Company's three care homes for the elderly; Active Lives Care, Ryefield Court Care, and Shinfield Lodge Care. The first investments in the homes were made over 5 years ago and the sale generated proceeds of GBP14.7 million which represents a 2.4x return on cost (including interest received), an excellent result for the Company. The homes were built from nothing (greenfield sites) into mature businesses. During the period, the Company also completed the sale of OmPrompt Holdings and Perpetuum generating proceeds of GBP3.2 million and GBP1.4 million respectively. Since the period end, the Company has sold its holdings in Elateral and Antenova.

Further details of the portfolio of investments and investment realisations can be found below.

Dividends and results

In line with our dividend policy targeting around 5% of NAV per annum the Company paid a dividend of 0.60 pence per share during the period to 30 June 2021 (30 June 2020: 0.60 pence per share). The Company will pay a second dividend for the financial year ending 31 December 2021 of 0.60 pence per share on 29 October 2021 to shareholders on the register on 1 October 2021, being 2.5% of the 30 June 2021 NAV.

As a result of the significant disposals, in particular the care homes, made by the Company during the period the Board are pleased to declare a special dividend of 1.14 pence per share. This will be paid alongside the second interim dividend on 29 October 2021 to shareholders on the register on 1 October 2021.

This will bring the total dividends paid for the year ending 31 December 2021 to 2.34 pence per share, which equates to a 10.7% yield on the opening NAV of 21.84 pence per share.

Dividend Reinvestment Scheme ("DRIS")

The Company continues to offer a DRIS whereby shareholders can elect to receive dividends in the form of new shares. For shareholders not currently in the DRIS, the Company is offering shareholders the option to elect for a one-off sign up to have this combined special dividend and second interim dividend reinvested into new shares through the DRIS. Shareholders can take advantage of this by emailing KAYchair@albion.capital https://www.globenewswire.com/Tracker?data=javhJiKi6saR-pvILrAjfDlqukDorboX5FIDELOQvFAqRGXLx2xEbtHm7hKI3mlwfNTr1HKWCk-gVt2a_xdWqIl52ShwN4NoB5OIp-wjwqM= before midday on 14 October 2021. To elect for the reinvestment, please ensure your email contains your full name, Shareholder Reference Number, telephone number and confirms you have read the DRIS terms and conditions. Shareholders can also elect for the DRIS by logging into their account at www.investorcentre.co.uk. Please note that shareholders who hold their shares in CREST will need to contact their CREST service provider.

By re-investing the combined special dividend and second interim dividend in the capital of the Company, shareholders would be expected to broadly maintain the level of relative income they have been receiving from the Company under the variable dividend policy. The terms and conditions for the DRIS can be found on the Company's webpage on the Manager's website at www.albion.capital/funds/KAY under the Fund reports section.

Investment activity

During the period the Company has invested GBP5.0 million into new and existing portfolio companies, with new investments comprising:

   -- GBP0.9 million (Albion VCTs: GBP6.8 million) in Threadneedle Software 
      Holdings Limited (trading as Solidatus), a provider of data lineage 
      software to enterprise customers in regulated sectors, which allows them 
      to rapidly discover, visualise, catalogue and understand how data flows 
      through their systems; 
 
   -- GBP0.8 million (Albion VCTs: GBP3.9 million) in Gravitee Topco Limited 
      (trading as Gravitee.io), an API management platform; 
 
   -- GBP0.8 million (Albion VCTs: GBP3.6 million) in NuvoAir AB, a provider of 
      digital therapeutics and decentralised clinical trials for respiratory 
      conditions; 
 
   -- GBP0.6 million (Albion VCTs: GBP2.4 million) in Brytlyt Limited, a GPU 
      database software provider; and 
 
   -- GBP0.3 million (Albion VCTs: GBP1.5 million) in Accelex Technology 
      Limited (trading as Accelex), a provider of data extraction and analytics 
      technology for private capital markets. 

A further GBP1.6 million was invested in existing portfolio companies, the largest being GBP0.6 million into uMotif, a patient engagement and data capture platform for use in real world and observational research, and GBP0.5 million into Healios to continue providing psychological care to children and adolescents using a family centric approach.

The pie chart at the end of this announcement illustrates the composition of the portfolio by industry sector as at 30 June 2021.

Cancellation of share premium and capital redemption reserve

Given the current amount of distributable reserves and the announcement of the special dividend to be paid on 29 October 2021, by way of a General Meeting, the Board is proposing a special resolution to increase the Company's distributable reserves through a reduction of the Company's share premium account and capital redemption reserve, subject to shareholder approval and confirmation by the Court. This procedure is relatively common amongst investment companies, and the proposed resolution would create additional distributable reserves of approximately GBP60 million.

It is the Board's policy to pay regular dividends to shareholders as the Directors believe that this is a key source of shareholder value. The Company also has a policy of buying back its own shares for cancellation or for holding as treasury shares, when such purposes are considered to be to the advantage of the Company and shareholders as a whole. The additional distributable reserves will facilitate those objectives.

The General Meeting will be held at noon on 25 November 2021 at the Company's registered office, 1 Benjamin Street, London, EC1M 5QL. The General Meeting will be live streamed for shareholders and registration details will be available at www.albion.capital/funds/KAY prior to the Meeting.

The Board has carefully considered the business to be approved at the General Meeting and recommends shareholders to vote in favour of the resolution which will be proposed.

Further details of the General Meeting can be found in the Circular accompanying this Half-yearly Financial Report.

Share buy-backs

It remains the Board's primary objective to maintain sufficient resources for investment in new and existing portfolio companies and for the continued payment of dividends to shareholders. The Board's policy is to buy-back shares in the market, subject to the overall constraint that such purchases are in the Company's interest. It is the Board's intention for such buy-backs to be in the region of a 5 per cent. discount to net asset value, so far as market conditions and liquidity permit. The Board continues to review the use of buy-backs and is satisfied that it is an important means of providing market liquidity for shareholders.

Transactions with the 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.

Risks and uncertainties

The longer term implications of the Covid-19 crisis is the key risk facing the Company, including its impact on the UK and Global economies. The risk of potential implications of the UK's departure from the European Union adversely affecting our underlying portfolio companies appears to be reducing. The Manager is continually assessing the exposure to such risks for each portfolio company, and where possible appropriate mitigating actions are being taken.

Other risks and uncertainties are detailed in note 12 below.

Albion VCTs Top Up Offers 2020/21

As announced in the Annual Report and Financial Statements for the year ended 31 December 2020, the Board was pleased to close the 2020/21 Offer fully subscribed having raised GBP15 million.

The proceeds are being used to provide support to our existing portfolio companies and to enable us to take advantage of new and exciting investment opportunities as they arise, five of which are detailed above. Details on the share allotments during the period can be found in note 8.

Shareholder seminar

The Board is pleased to report that the current intention of the Manager, Albion Capital, is to host a physical rather than virtual shareholder seminar this year on 12 November 2021, in central London with the venue to be confirmed. This will be dependent on government guidelines and any changes thereof, and we will keep shareholders informed as the date approaches. The Board and Manager are keen to interact with shareholders and look forward to sharing with you further portfolio updates, as well as answering any questions.

More details will shortly be available on the Albion Capital website: www.albion.capital.

Prospects

The Board is extremely encouraged by the performance of the portfolio as a whole and the prospects for its portfolio companies. The dynamic pipeline of new investments is strong, demonstrated by the number of new investments in the past six months, and despite a clear shift to digital adoption, valuation will remain important. We therefore believe that the Company's portfolio continues to have the potential to deliver attractive returns to shareholders over the long term.

Fiona Wollocombe

Chairman

17 September 2021

Responsibility statement

The Directors, Fiona Wollocombe, Thomas Chambers and Martin Fiennes, are responsible for preparing the Half-yearly Financial Report. In preparing these condensed Financial Statements for the period to 30 June 2021 we, the Directors of the Company, confirm that to the best of our knowledge:

(a) the condensed set of Financial Statements, which has been prepared in accordance with Financial Reporting Standard 104 "Interim Financial Reporting", gives a true and fair view of the assets, liabilities, financial position and profit and loss of the Company as required by DTR 4.2.4R;

(b) the Interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

(c) the Interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

This Half-yearly Financial Report has not been audited or reviewed by the Auditor.

For and on behalf of the Board

Fiona Wollocombe

Chairman

17 September 2021

Portfolio of investments

 
 
                                            As at 30 June 2021 
                                  --------------------------------------- 
                                            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 
----------------------  --------  --------  -------------------  --------  ------------------------ 
Proveca Limited             15.1     2,259                7,276     9,535                     1,342 
Quantexa Limited             1.4     1,329                7,771     9,100                     4,800 
Egress Software 
 Technologies Limited        4.8     1,644                4,074     5,718                       366 
Antenova Limited            28.7     1,733                3,517     5,250                     2,802 
Chonais River Hydro 
 Limited                     6.5     2,428                  853     3,281                       (7) 
Oviva AG                     1.9       659                1,415     2,074                     1,231 
MyMeds&Me Limited           15.4     1,459                  430     1,889                       501 
The Street by Street 
 Solar Programme 
 Limited                    10.0     1,040                  785     1,825                     (140) 
Sift Limited                42.1     2,291                (569)     1,722                       537 
Phrasee Limited              2.8       648                1,041     1,689                       815 
Black Swan Data 
 Limited                     4.5     1,293                  310     1,603                       649 
Regenerco Renewable 
 Energy Limited              9.8       988                  585     1,573                     (110) 
Academia Inc.                2.8       351                1,172     1,523                       566 
Alto Prodotto Wind 
 Limited                    11.1       829                  515     1,344                      (69) 
The Evewell Group 
 Limited                     3.4       671                  629     1,300                       460 
Healios Limited              2.6       684                  416     1,100                      (54) 
Dragon Hydro Limited        17.2       655                  419     1,074                      (12) 
uMotif Limited               3.7       979                   47     1,026                         - 
Threadneedle Software 
 Holdings Limited (T/A 
 Solidatus)                  1.5       917                    -       917                         - 
Gravitee Topco Limited 
 (T/A Gravitee.io)           3.8       833                    -       833                         - 
Gharagain River Hydro 
 Limited                     5.0       620                  180       800                       (2) 
NuvoAir AB                   2.5       763                    -       763                         - 
Panaseer Limited             1.4       510                  243       753                      (14) 
Symetrica Limited            3.7       685                   19       704                         - 
Cantab Research 
 Limited (T/A 
 Speechmatics)               1.1       460                  227       687                       227 
AVESI Limited               14.8       484                  157       641                      (62) 
Arecor Therapeutics 
 PLC (previously 
 Arecor Limited)             0.9       304                  266       570                       267 
Brytlyt Limited              3.4       566                    -       566                         - 
MPP Global Solutions 
 Limited                     1.7       550                    -       550                         - 
Convertr Media Limited       3.0       482                   17       499                         2 
Elliptic Enterprises 
 Limited                     0.6       488                    9       497                         9 
Beddlestead Limited          5.1       606                (150)       456                        55 
Limitless Technology 
 Limited                     1.4       383                   38       421                         - 
Seldon Technologies 
 Limited                     2.1       418                    -       418                         - 
Greenenerco Limited          8.6       244                  156       400                      (20) 
Locum's Nest Limited         3.6       375                   23       398                        46 
Koru Kids Limited            1.6       345                   36       381                         - 
Aridhia Informatics 
 Limited                     2.1       409                 (36)       373                        73 
InCrowd Sports Limited       2.1       272                   98       370                       103 
The Voucher Market 
 Limited (T/A WeGift)        0.9       361                    -       361                         - 
Elateral Group Limited      47.9     5,488              (5,138)       350                      (57) 
Accelex Technology 
 Limited (T/A 
 Accelex)                    3.6       323                    -       323                         - 
Innovation Broking 
 Group Limited               4.5        45                  278       323                       186 
Concirrus Limited            0.6       308                    -       308                         - 
Imandra Inc.                 1.0        91                  187       278                       187 
Cisiv Limited                3.1       278                 (11)       267                        88 
Celoxica Holdings plc        4.4       513                (255)       258                         - 
Anthropics Technology 
 Limited                    13.8        19                  214       233                     (110) 
Xperiome Limited 
 (previously 
 Raremark)                   2.4       322                (121)       201                     (176) 
Avora Limited                2.8       510                (317)       193                     (317) 
Credit Kudos Limited         0.9       185                    -       185                         - 
TransFICC Limited            1.0       156                    -       156                         - 
uMedeor Limited (T/A 
 uMed)                       1.4       152                    -       152                         - 
Erin Solar Limited           5.7       160                 (31)       129                       (9) 
Zift Channel Solutions 
 Inc.                        0.6       321                (231)        90                        31 
Harvest AD Limited((i) 
 ()                            -        70                  (1)        69                       (2) 
Sandcroft Avenue 
 Limited (T/A Hussle)        5.1     1,026                (967)        59                      (81) 
Xention Limited             10.6        38                 (28)        10                         - 
Abcodia Limited              4.3       761                (755)         6                     (280) 
Forward Clinical 
 Limited (T/A Pando)         1.5       184                (179)         5                      (46) 
Other holdings (3 
 companies)                              2                    1         3                         - 
Mirada Medical Limited       1.8       390                (390)         -                     (192) 
                                                                           ------------------------ 
Total fixed asset investments       44,357               24,225    68,582                    13,583 
--------------------------------  --------  -------------------  --------  ------------------------ 
 
 
 
   (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 2021 to the closing balance as at 30 June 2021 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/(loss) on cost  Gain/(loss) on opening or acquired value 
2021            GBP'000      GBP'000           GBP'000                  GBP'000                              GBP'000 
-------------  --------  ---------------  -----------------  -----------------------------  ---------------------------------------- 
Disposals: 
------------- 
Active Lives 
 Care 
 Limited          4,395            7,971              7,839                          3,444                                     (132) 
Ryefield 
 Court Care 
 Limited          3,070            5,814              5,753                          2,683                                      (61) 
OmPrompt 
 Holdings 
 Limited          1,377            3,049              3,152                          1,775                                       103 
Perpetuum 
 Limited          3,136            1,254              1,413                        (1,723)                                       159 
Shinfield 
 Lodge Care 
 Limited            535            1,162              1,138                            603                                      (24) 
SBD 
 Automotive 
 Limited            173              361                360                            187                                       (1) 
 
Loan stock 
repayments 
and other: 
------------- 
Alto Prodotto 
 Wind 
 Limited             27               40                 40                             13                                         - 
Sift Limited         16               16                 16                              -                                         - 
Greenenerco 
 Limited              7               11                 11                              4                                         - 
Escrow 
 adjustments 
 and other*          23                2                102                             79                                       100 
Total            12,759           19,680             19,824                          7,065                                       144 
 

*These comprise fair value movements on deferred consideration on previously disposed investments, release of the G. Network Communications discount which is treated as a financing transaction, and expenses which are incidental to the purchase or disposal of an investment.

 
Total change in value of investments for the period         13,583 
Movement in loan stock accrued interest                        628 
---------------------------------------------------------   ------ 
Unrealised gains on fixed asset investments sub-total       14,211 
Realised gains in current period                               144 
Total gains on investments as per Income statement          14,355 
----------------------------------------------------------  ------ 
 

Condensed income statement

 
                                                                           Unaudited                     Unaudited                      Audited 
                                                                        six months ended              six months ended                 year ended 
                                                                          30 June 2021                  30 June 2020                31 December 2020 
----------------------------------------------------------  ----  ----------------------------  ----------------------------  ---------------------------- 
                                                                  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 
----------------------------------------------------------  ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 
Gains/(losses) on investments                                  2         -    14,355    14,355         -   (4,286)   (4,286)         -     3,333     3,333 
 
Investment income                                              3       646         -       646       917         -       917     1,922         -     1,922 
 
Investment management fee                                      4     (225)     (675)     (900)     (185)     (554)     (739)     (377)   (1,132)   (1,509) 
 
Performance incentive fee                                      4     (353)   (1,058)   (1,411)         -         -         -         -         -         - 
 
 
Other expenses                                                       (203)         -     (203)     (182)         -     (182)     (362)         -     (362) 
 
Profit/(loss) on ordinary activities before tax                      (135)    12,622    12,487       550   (4,840)   (4,290)     1,183     2,201     3,384 
Tax on ordinary activities                                               -         -         -         -         -         -         -         -         - 
----------------------------------------------------------  ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
Profit/(loss) and total comprehensive income attributable 
 to shareholders                                                     (135)    12,622    12,487       550   (4,840)   (4,290)     1,183     2,201     3,384 
----------------------------------------------------------  ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
Basic and diluted return/(loss) per share (pence)*             6    (0.03)      3.00      2.97      0.15    (1.31)    (1.16)      0.32      0.59      0.91 
----------------------------------------------------------  ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 

*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 2020 and the audited statutory accounts for the year ended 31 December 2020.

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 2021   30 June 2020   31 December 2020 
                           Note     GBP'000        GBP'000          GBP'000 
-------------------------  ----  -------------  -------------  ----------------- 
 
 Fixed asset investments                68,582         61,160             69,652 
Current assets 
Trade and other 
 receivables                             1,569            105              1,293 
Cash and cash equivalents               37,739         15,554             11,266 
                                 -------------  -------------  ----------------- 
                                        39,308         15,659             12,559 
 
Total assets                           107,890         76,819             82,211 
 
Payables: amounts falling 
due within one year 
Trade and other payables               (2,291)          (461)              (502) 
                                 -------------  -------------  ----------------- 
 
Total assets less current 
 liabilities                           105,599         76,358             81,709 
                                 -------------  -------------  ----------------- 
 
Equity attributable to 
equity holders 
Called-up share capital       7          5,051          4,333              4,346 
Share premium                           59,774         45,253             45,481 
Capital redemption 
 reserve                                    11             11                 11 
Unrealised capital 
 reserve                                24,076         10,387             16,786 
Realised capital reserve                14,654          8,680              9,322 
Other distributable 
 reserve                                 2,033          7,694              5,763 
                                 -------------  -------------  ----------------- 
 
Total equity 
 shareholders' funds                   105,599         76,358             81,709 
                                 -------------  -------------  ----------------- 
 
Basic and diluted net 
 asset value per share 
 (pence)*                                23.99          20.30              21.84 
-------------------------  ----  -------------  -------------  ----------------- 
 

*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 2020 and the audited statutory accounts for the year ended 31 December 2020.

The Financial Statements were approved by the Board of Directors, and authorised for issue on 17 September 2021 and were signed on its behalf by

Fiona Wollocombe

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 2021                                                4,346   45,481          11      16,786     9,322          5,763   81,709 
Profit/(loss) and total comprehensive income for the 
 period                                                              -        -           -      14,211   (1,589)          (135)   12,487 
Transfer of previously unrealised gains on disposal 
 of investments                                                      -        -           -     (6,921)     6,921              -        - 
Purchase of own shares for treasury                                  -        -           -           -         -          (939)    (939) 
Issue of equity                                                    705   14,671           -           -         -              -   15,376 
Cost of issue of equity                                              -    (378)           -           -         -              -    (378) 
Dividends paid                                                       -        -           -           -         -        (2,656)  (2,656) 
At 30 June 2021                                                  5,051   59,774          11      24,076    14,654          2,033  105,599 
-----------------------------------------------------  ---------------  -------  ----------  ----------  --------  -------------  ------- 
 
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 2020                                                3,883   35,825          11      14,707     9,200          9,830   73,456 
Profit/(loss) and total comprehensive income for the 
 period                                                              -        -           -       3,013     (812)          1,183    3,384 
Transfer of previously unrealised gains on disposal 
 of investments                                                      -        -           -       (934)       934              -        - 
Purchase of own shares for treasury                                  -        -           -           -         -        (1,100)  (1,100) 
Issue of equity                                                    462    9,892           -           -         -              -   10,354 
Cost of issue of equity                                              -    (236)           -           -         -              -    (236) 
Dividends paid                                                       -        -           -           -         -        (4,150)  (4,150) 
-----------------------------------------------------  ---------------  -------  ----------  ----------  --------  -------------  ------- 
At 31 December 2020                                              4,346   45,481          11      16,786     9,322          5,763   81,709 
-----------------------------------------------------  ---------------  -------  ----------  ----------  --------  -------------  ------- 
 

*The total distributable reserves are GBP16,687,000 (30 June 2020: GBP16,374,000; 31 December 2020: GBP15,085,000).

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 2020 and the audited statutory accounts for the year ended 31 December 2020.

Condensed statement of cash flows

 
                         Unaudited          Unaudited           Audited 
                      six months ended   six months ended      year ended 
                        30 June 2021       30 June 2020     31 December 2020 
                          GBP'000            GBP'000            GBP'000 
------------------   -----------------  -----------------  ----------------- 
Cash flow from 
operating 
activities 
Investment income 
 received                        1,248                656              1,467 
Deposit interest 
 received                            1                 25                 25 
Dividend income 
 received                           25                 49                220 
Investment 
 management fee 
 paid                            (796)              (745)            (1,499) 
Other cash payments              (242)              (198)              (359) 
UK corporation tax 
paid                                 -                  -                  - 
                     -----------------  -----------------  ----------------- 
Net cash flow from 
 operating 
 activities                        236              (213)              (146) 
 
 
Cash flow from 
investing 
activities 
Purchase of fixed 
 asset investments             (5,026)            (1,363)            (3,990) 
Disposal of fixed 
 asset investments              19,562                 60                639 
Net cash flow from 
 investing 
 activities                     14,536            (1,303)            (3,351) 
 
 
Cash flow from 
financing 
activities 
Issue of share 
 capital                        14,627              9,588              9,588 
Cost of issue of 
 equity                           (18)                (2)                (4) 
Purchase of own 
 shares (including 
 costs)                          (640)              (447)            (1,100) 
Equity dividends 
 paid*                         (2,268)            (1,936)            (3,588) 
                     -----------------  -----------------  ----------------- 
Net cash flow from 
 financing 
 activities                     11,701              7,203              4,896 
 
 
Increase in cash 
 and cash 
 equivalents                    26,473              5,687              1,399 
Cash and cash 
 equivalents at 
 start of period                11,266              9,867              9,867 
                     -----------------  -----------------  ----------------- 
Cash and cash 
 equivalents at end 
 of period                      37,739             15,554             11,266 
-------------------  -----------------  -----------------  ----------------- 
 

* The equity dividends paid shown in the cash flow are different to the dividends disclosed in note 5 as a result of the non-cash effect of the Dividend Reinvestment Scheme.

The accompanying notes below form an integral part of this Half-yearly Financial Report.

Comparative figures have been extracted from the unaudited Half-yearly Financial Report for the six months ended 30 June 2020 and the audited statutory accounts for the year ended 31 December 2020.

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") in accordance with FRS 102 sections 11 and 12. The Company values investments by following the International Private Equity and Venture Capital Valuation ("IPEV") Guidelines as updated in 2018 and further detail on the valuation techniques used are outlined below.

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, including loan stock, are designated by the Company as FVTPL and are included at their initial fair value, which is cost (excluding expenses incidental to the acquisition which are written off to the Income statement).

Subsequently, the investments are valued at 'fair value', which is measured as follows:

   -- Investments listed on recognised exchanges are valued at their bid prices 
      at the end of the accounting period or otherwise at fair value based on 
      published price quotations. 
 
   -- Unquoted investments, where there is not an active market, are valued 
      using an appropriate valuation technique in accordance with the IPEV 
      Guidelines. Indicators of fair value are derived using established 
      methodologies including earnings multiples, revenue multiples, the level 
      of third party offers received, cost or price of recent investment rounds, 
      net assets and industry valuation benchmarks. Where price of recent 
      investment is used as a starting point for estimating fair value at 
      subsequent measurement dates, this has been benchmarked using an 
      appropriate valuation technique permitted by the IPEV guidelines. 
 
   -- In situations where cost or price of recent investment is used, 
      consideration is given to the circumstances of the portfolio company 
      since that date in determining fair value. This includes consideration of 
      whether there is any evidence of deterioration or strong definable 
      evidence of an increase in value. In the absence of these indicators, 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 (including debtors due after more than one year), payables and cash are carried at amortised cost, in accordance with FRS 102. Debtors due after more than one year meet the definition of a financing transaction held at amortised cost, and interest will be recognised through capital over the credit period using the effective interest method. There are no financial liabilities other than payables.

Investment income

Equity income

Dividend income is included in revenue when the investment is quoted ex-dividend.

Unquoted loan stock income

Fixed returns on non-equity shares and debt securities are recognised when the Company's right to receive payment and expect settlement is established. Where interest is rolled up and/or payable at redemption then it is recognised as income unless there is reasonable doubt as to its receipt.

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% of management fees and performance incentive fees, if any, are 
      allocated to the realised capital reserve. This is in line with the 
      Board's expectation that over the long term 75% 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.

Share capital and reserves

Called-up share capital

This reserve accounts for the nominal value of the shares.

Share premium

This reserve accounts for the difference between the price paid for the Company's shares and the nominal value of those shares, less issue costs.

Capital redemption 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 or 
      permanent diminution in value; 
 
   -- expenses, together with the related taxation effect, charged in 
      accordance with the above policies; and 
 
   -- dividends paid to equity holders where paid out by capital. 

Other distributable reserve

The special reserve, treasury share reserve and the revenue reserve were combined in 2012 to form a single reserve named other distributable reserve.

This reserve accounts for movements from the revenue column of the Income Statement, the payment of dividends, the buy-back of shares and other non-capital realised movements.

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.        Gains/(losses) on investments 
 
                     Unaudited          Unaudited           Audited 
                  six months ended   six months ended      year ended 
                    30 June 2021       30 June 2020     31 December 2020 
                      GBP'000            GBP'000            GBP'000 
---------------  -----------------  -----------------  ----------------- 
Unrealised 
 gains/(losses) 
 on fixed asset 
 investments                14,211            (4,305)              3,013 
Realised gains 
 on fixed asset 
 investments                   144                 19                320 
                            14,355            (4,286)              3,333 
                 -----------------  -----------------  ----------------- 
 
 
   3.        Investment income 
 
                       Unaudited          Unaudited           Audited 
                    six months ended   six months ended      year ended 
                      30 June 2021       30 June 2020     31 December 2020 
                        GBP'000            GBP'000            GBP'000 
-----------------  -----------------  -----------------  ----------------- 
Loan stock 
 interest                        620                844              1,678 
Dividends                         25                 49                220 
Bank interest                      1                 24                 24 
                                 646                917              1,922 
                   -----------------  -----------------  ----------------- 
 
   4.        Investment management fee and performance incentive fee 
 
                       Unaudited          Unaudited           Audited 
                    six months ended   six months ended      year ended 
                      30 June 2021       30 June 2020     31 December 2020 
                        GBP'000            GBP'000            GBP'000 
-----------------  -----------------  -----------------  ----------------- 
Investment 
 management fee 
 charged to 
 revenue                         225                185                377 
Investment 
 management fee 
 charged to 
 capital                         675                554              1,132 
Performance 
incentive fee 
charged to 
revenue                          353                  -                  - 
Performance 
incentive fee 
charged to 
capital                        1,058                  -                  - 
                               2,311                739              1,509 
                   -----------------  -----------------  ----------------- 
 

Further details of the Management agreement under which the investment management fee and performance incentive fee are paid are given in the Strategic report on page 13 of the Annual Report and Financial Statements for the year ended 31 December 2020.

During the period, services with a value of GBP900,000 (30 June 2020: GBP739,000; 31 December 2020: GBP1,509,000) and GBP25,000 (30 June 2020: GBP25,000; 31 December 2020: 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 GBP504,000 (30 June 2020: GBP385,000; 31 December 2020: GBP400,000). For the period to 30 June 2021, a performance incentive fee of GBP1,411,000 has been accrued, however any performance incentive fee is calculated on year end results and payable in line with the Management agreement (30 June 2020: GBPnil; 31 December 2020: GBPnil).

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 GBP145,000 (30 June 2020: GBP155,000; 31 December 2020: GBP183,000) attributable to the investments of the Company were paid pursuant to these arrangements.

Albion Capital Group LLP, its partners and staff hold 1,864,783 Ordinary shares in the Company as at 30 June 2021.

The Company entered into an offer agreement relating to the Offers with the Company's investment manager Albion Capital Group LLP, pursuant to which Albion Capital received a fee of 2.5% of the gross proceeds of the Offers and out of which Albion Capital paid the costs of the Offers, as detailed in the Prospectus.

   5.        Dividends 
 
                                                         Unaudited          Unaudited           Audited 
                                                      six months ended   six months ended      year ended 
                                                        30 June 2021       30 June 2020     31 December 2020 
                                                          GBP'000            GBP'000            GBP'000 
---------------------------------------------------  -----------------  -----------------  ----------------- 
Second dividend of 0.51 pence per share paid on 30 
 October 2020                                                        -                  -              1.910 
First dividend of 0.60 pence per share paid on 30 
 April 2021 (30 April 2020: 0.60 pence per share)                2,656              2,256              2,256 
Unclaimed dividends returned to the Company                          -               (16)               (16) 
                                                                 2,656              2,239              4,150 
                                                     -----------------  -----------------  ----------------- 
 

The Directors have declared a second dividend of 0.60 pence per share for the year ending 31 December 2021, which will be paid on 29 October 2021 to shareholders on the register on 1 October 2021.

The Directors have declared a special dividend of 1.14 pence per share, which will also be paid on 29 October 2021 to shareholders on the register on 1 October 2021.

   6.        Basic and diluted return/(loss) per share 
 
                                                               Unaudited            Unaudited                   Audited 
                                                            six months ended     six months ended            year ended 
                                                              30 June 2021         30 June 2020        31 December 2020 
                                                          Revenue    Capital   Revenue    Capital   Revenue    Capital 
--------------------------------------------------------  --------  ---------  --------  ---------  --------  --------- 
 
 Profit/(loss) attributable to shareholders (GBP'000)        (135)     12,622       550    (4,840)     1,183      2,201 
 
Weighted average shares in issue (adjusted for treasury 
 shares)                                                          420,341,284          369,249,306          372,282,416 
 
Return/(loss) attributable per equity share (pence)         (0.03)       3.00      0.15     (1.31)      0.32       0.59 
 

The weighted average number of Ordinary shares is calculated after adjusting for treasury shares of 65,014,675 (30 June 2020: 57,096,607; 31 December 2020: 60,491,609).

There are no convertible instruments, derivatives or contingent share agreements in issue so basic and diluted return/(loss) 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 2021   30 June 2020   31 December 2020 
---------------------------------------------------  -------------  -------------  ----------------- 
Number of shares                                       505,145,955    433,336,785        434,557,477 
Nominal value of allotted shares (GBP'000)                   5,051          4,333              4,346 
Voting rights (number of shares net of treasury 
 shares)                                               440,131,280    376,240,178        374,065,868 
 

The Company operates a share buy-back programme, as detailed in the Interim management report above. During the period the Company purchased 4,523,066 Ordinary shares with a nominal value of GBP45,231 (30 June 2020: 2,373,607; 31 December 2020: 5,768,609) representing 0.9% of the issued called-up share capital as at 30 June 2021, at a cost of GBP939,000 (30 June 2020: GBP447,000; 31 December 2020: GBP1,100,000), including stamp duty, to be held in treasury. The Company holds a total of 65,014,675 Ordinary shares in treasury, representing 12.9% of the issued Ordinary share capital as at 30 June 2021.

During the period from 1 January 2021 to 30 June 2021, 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 
 2021       1,831,899                                  18               21.24           371                                   20.30 
 

Under the terms of the Albion VCTs Prospectus Top Up Offers 2020/21, the following new Ordinary shares of nominal value 1 penny each were allotted during the period to 30 June 2021:

 
                     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) 
-------------------  ----------  ----------------------------------  ------------------  --------------------------  -------------------------------------- 
26 February 2021      5,412,326                                  54               21.60                       1,151                                   20.10 
26 February 2021      1,536,392                                  15               21.70                         327                                   20.10 
26 February 2021     59,778,526                                 598               21.80                      12,706                                   20.10 
9 April 2021            528,417                                   5               22.20                         116                                   20.70 
9 April 2021             29,596                                   -               22.30                           6                                   20.70 
9 April 2021          1,471,322                                  15               22.40                         321                                   20.70 
                     68,756,579                                                                              14,627 
                     ----------                                                          -------------------------- 
 
   8.      Commitments, contingencies and guarantees 

As at 30 June 2021, the Company had no financial commitments (30 June 2020: GBPnil; 31 December 2020: GBPnil).

There were no contingent liabilities or guarantees given by the Company as at 30 June 2021 (30 June 2020: GBPnil; 31 December 2020: GBPnil).

   9.      Post balance sheet events 

Since 30 June 2021, the Company has had the following post balance sheet events:

   -- Proceeds of GBP5.2 million were received for the sale of Antenova 
      Limited; 
 
   -- Proceeds of GBP0.4 million were received for the sale of Elateral Group 
      Limited; 
 
   -- Investment of GBP829,000 in Oviva AG; 
 
   -- Investment of GBP386,000 in The Evewell Group Limited; and 
 
   -- Investment of GBP47,000 in Imandra Inc. 
   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 has revisited and updated their assessment of liquidity risk and concluded that it remains unchanged since the last Annual Report and Financial Statements. Further details can be found on page 68 of those accounts.

The portfolio of investments is diversified in terms of sector and the major cash outflows of the Company (namely investments, dividends and share buy-backs) are within the Company's control. Accordingly, after making diligent enquiries, the Directors have a reasonable expectation that the Company has adequate cash and liquid resources to continue in operational existence for the foreseeable future. For this reason, the Directors have adopted the going concern basis in preparing this Half-yearly Financial Report and this is in accordance with the Guidance on Risk Management, Internal Control and Related Financial and Business Reporting issued by the Financial Reporting Council in September 2014, and the subsequent updated Going concern, risk and viability guidance issued by the FRC due to Covid-19 in 2020.

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 2020. 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 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.

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 for all investments, and at least one external investment professional for investments greater than GBP1 million in aggregate across all the Albion managed VCTs. 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 Board and Manager regularly review the deployment of investments and cash resources available to the Company in assessing liquidity required for servicing the Company's buy-backs, dividend payments and operational expenses.

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 as updated in 2018. 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. The Company monitors closely the extent of qualifying holdings and addresses this as required.

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 its 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 Depositary (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 Depositary (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.

4. Economic, political and social risk

Changes in economic conditions, including, for example, interest rates, rates of inflation, industry conditions, competition, political and diplomatic events, such as the impact of Brexit, 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 current significant exogenous risk to the Company, the wider population and economy, is the Covid-19 pandemic.

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.

The Board and Manager are continuously assessing the resilience of the portfolio, the Company and its operations and the robustness of the Company's external agents during the health crisis, as well as considering longer term impacts on how the Company might be positioned in how it invests and operates. Ensuring liquidity in the portfolio to cope with exigent and unexpected pressures on the finances of the portfolio and the Company is an important part of the risk mitigation in these uncertain times. The portfolio is structured as an all-weather portfolio with c.66 companies, which are diversified as discussed above. Exposure is relatively small to at-risk sectors that include leisure, hospitality, retail and travel.

5. 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.

6. Reputational risk

The Company relies on the judgement and reputation of the Manager which is itself subject to the risk of losses.

The Board regularly questions the Manager on its ethics, procedures, safeguards and investment philosophy, which should consequently result in the risk to reputational damage being minimised.

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 2021 and 30 June 2020, and is unaudited. The information for the year ended 31 December 2020 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 https://www.globenewswire.com/Tracker?data=F-SKdejFt1Xk6CmFyc2IdkTBuUPoZNv1yQrZrSrigaoTFohoafru4YLIygn4X2GHhtpp_sY48e1vCEa7JMKEs1R-9Y8Qh5dszeke8er8PHtJs8kKsD0MX8QEET2IG8Mt www.albion.capital/funds/KAY, where the Report can be accessed from the 'Financial Reports and Circulars' section.

Attachment

   -- Portfolio split by sector 
      https://ml-eu.globenewswire.com/Resource/Download/b528d658-6e0c-4cbc-b0c8-13b9b856ec03 
 
 
 

(END) Dow Jones Newswires

September 17, 2021 05:46 ET (09:46 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.

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