Albion Venture Capital Trust PLC LEI Code: 213800JKELS32V2OK421 As required by the UK Listing Authority's Disclosure Guidance and Transparency Rule 4.2, Albion Venture Capital Trust PLC today makes public its information relating to the Half-yearly Financial Report (which is unaudited) for the six months to 30 September 2020. This announcement was approved by the Board of Directors on 3 December 2020. The full Half-yearly Financial Report (which is unaudited) for the period to 30 September 2020 will shortly be sent to shareholders and will be available on the Albion Capital Group LLP website by clicking www.albion.capital/funds/AAVC/30Sep2020.pdf. Investment policy Albion Venture Capital Trust PLC (the “Company”) 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 smaller, unquoted growth businesses across a variety of sectors including higher risk technology companies. Investments may take the form of equity or a mixture of equity and loans. Allocation of funds 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 will be held as cash on deposit. Risk diversification and maximum exposures Risk is spread by investing in a number of different businesses within venture capital trust qualifying industry sectors. 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. Gearing The Company's maximum exposure in relation to gearing is restricted to 10 per cent. of the adjusted share capital and reserves. Financial calendar Record date for second dividend Payment date for second dividend Financial year end8 January 2021 29 January 2021 31 March Financial highlights Unaudited six months ended 30 September 2020 (pence per share)Unaudited six months ended 30 September 2019 (pence per share) Audited year ended 31 March 2020 (pence per share)Opening net asset value 70.13 79.0079.00Capital return/(loss)1.48 0.52 (5.98) Revenue return0.43 1.03 1.88 Total return/(loss) 1.91 1.55 (4.10)Impact from share capital movements 0.05(0.09)0.23Dividends paid (2.50) (2.50) (5.00)Net asset value69.5977.9670.13 Total shareholder return to 30 September 2020Ordinary shares(pence per share) Total dividends paid during the year ended: 31 March 19972.00 31 March 19985.20 31 March 199911.05 31 March 20003.00 31 March 20018.55 31 March 20027.60 31 March 20037.70 31 March 20048.20 31 March 20059.75 31 March 200611.75 31 March 200710.00 31 March 200810.00 31 March 200910.00 31 March 20105.00 31 March 20115.00 31 March 20125.00 31 March 20135.00 31 March 20145.00 31 March 20155.0031 March 20165.0031 March 20175.0031 March 20185.0031 March 20195.0031 March 20205.00 Dividends paid in the six months to 30 September 20202.50 Total dividends paid to 30 September 2020162.30 Net asset value as at 30 September 202069.59 Total shareholder return to 30 September 2020231.89 The financial summary above is for the Company, Albion Venture Capital Trust PLC Ordinary shares only. Details of the financial performance of the C shares and Albion Prime VCT PLC, which have been merged into the Company, can be found on the Company’s webpage at www.albion.capital/funds/AAVC under the ‘Financial summary for previous funds’ section. In addition to the dividends summarised above, the Directors have declared a second dividend for the year ending 31 March 2021 of 1.74 pence per share, to be paid on 29 January 2021 to shareholders on the register on 8 January 2021. Notes • Dividends paid before 5 April 1999 were paid to qualifying shareholders inclusive of the associated tax credit. The dividends for the year to 31 March 1999 were maximised in order to take advantage of this tax credit. Interim management report IntroductionThe evolving coronavirus (Covid-19) pandemic continues to disrupt our economy and has created challenges for our portfolio companies during the period. However, despite these exceptional times, the portfolio has proved largely resilient and we are pleased to report a total return of 1.91 pence per share for the Company for the six months to 30 September 2020, which represents a 2.7% return on opening net asset value per share. Results and dividendsAs at 30 September 2020, the net asset value of the Company was £70.1 million or 69.59 pence per share, having paid a first dividend of 2.50 pence per share on 31 July 2020, compared to £70.6 million or 70.13 pence per share at 31 March 2020. The Board has declared a second dividend of 1.74 pence per share payable on 29 January 2021, to shareholders on the register on 8 January 2021. This is in line with the new variable dividend policy outlined in the Annual Report and Financial Statements of targeting an annual dividend yield of around 5%. The Company continues to offer a Dividend Reinvestment Scheme whereby shareholders can elect to receive dividends in the form of new shares. Performance and portfolio update At the Company’s year end, the Board worked closely with the Manager to ensure that the effect of the coronavirus (Covid-19) pandemic on the valuation of the portfolio was reflected. Since then, the Board has been closely monitoring the ongoing disruption caused by the pandemic and its current and potential impact on portfolio companies. The valuation of the Company’s care homes, schools and renewable energy assets have proved particularly resilient, reflecting their important work during the coronavirus (Covid-19) pandemic and the attractiveness of the income they generate. During the period, £1.8 million was invested into new and existing portfolio companies and an additional £1.5 million invested after the period end. The new investments, both of which are likely to require further investment as the companies prove themselves and grow, are: The Voucher Market (trading as WeGift), which provides a cloud platform that enables corporates to purchase digital gift cards and to distribute them to employees and customers; andTransFICC, a provider of connectivity solutions, connecting financial institutions with trading venues via a single application programming interface. There were no disposals during the six month period to 30 September 2020. However, shortly after the period end, our holding in Clear Review was sold, realising a profit of £409,000 and generating a return of 2.1 times cost. During our short investment period of less than two years, the Company scaled rapidly, becoming a leading provider of employee performance management and engagement software. The Company’s unrealised and realised gains amounted to £1.9 million for the six months to 30 September 2020. The key movements in the period include: a £0.9 million uplift in the valuation of Shinfield Lodge Care following a reduction in the discount applied to the third party valuation at 31 March 2020 to reflect the Covid-19 uncertainty at the year-end; and an uplift of £0.4 million in the valuation of Clear Review following its sale shortly after the period end. Split of investment portfolio by sector as at 30 September 2020Set out at the bottom of this announcement is the sector split of the investment portfolio as at 30 September 2020. Healthcare, which is predominantly our care homes, continues to be our largest sector and accounted for 39 per cent. of the Company’s net assets. Growth and technology continues to increase after the two new investments detailed above and now accounts for 13 per cent. of the portfolio as at 30 September 2020. Share buy-backs 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, including the maintenance of sufficient resources for investment in new and existing portfolio companies and the continued payment of dividends to shareholders. It is the Board’s intention 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 wide reaching implications arising from the coronavirus (Covid-19) crisis represent the key risk facing the Company, including its impact on the UK and Global economies. There are also the potential implications of the UK’s departure from the European Union which may adversely affect our underlying portfolio companies. The Manager is continually assessing the exposure to such risks for each portfolio company, and where possible appropriate actions are being implemented. Other principal risks and uncertainties remain unchanged and are as detailed in note 13 below. 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. Albion VCTs Prospectus Top Up Offers Details of the final allotment of shares under the Albion VCTs Prospectus Top Up Offers 2019/20 can be found in note 8. The Offer was fully subscribed and the Board elected not to exercise the over allotment facility, having raised £6 million. The proceeds are continually being used to support our existing portfolio and to enable us to take advantage of new and exciting investment opportunities as they arise, and two of such are detailed above. Transactions with the Manager Details of the transactions that took place with the Manager during the period can be found in note 5. There are no other related party transactions or balances that require disclosure. Outlook and prospects The investment focus on growth and technology businesses provides the opportunity to continue to generate shareholder value over the medium to long term. It is therefore pleasing to have had our first successful exit of a software company shortly after the period end. Whilst the portfolio may be further impacted by the economic consequences of the current health crisis, a focus on areas such as software and healthcare provide a strong opportunity for future growth during these times. Richard Glover Chairman3 December 2020 Responsibility statement The Directors Richard Glover, John Kerr, Ann Berresford and Richard Wilson are responsible for preparing the Half-yearly Financial Report. In preparing these condensed Financial Statements for the period to 30 September 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”, give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company as required by DTR 4.2.4R; (b) the Interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and (c) the Interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties’ transactions and changes therein). This Half-yearly Financial Report has not been audited or reviewed by the Auditor. For and on behalf of the Board Richard GloverChairman3 December 2020 Portfolio of investments Fixed asset investments% voting rights As at 30 September 2020 Change in value for the period**£’000 Cost*£’000Cumulative movement in value £’000Value£’000 Shinfield Lodge Care Limited35.36,4256,24312,668 943Active Lives Care Limited22.24,8102,8247,634 (79)Ryefield Court Care Limited23.63,8802,2926,172 98Chonais River Hydro Limited 9.23,0741,1684,242 (83)Radnor House School (TopCo) Limited6.91,2598882,147 91Gharagain River Hydro Limited11.51,3634031,766 24Elliptic Enterprises Limited1.61,244-1,244 -The Street by Street Solar Programme Limited6.56755641,239 25G. Network Communications Limited2.32281,0081,236 -Cantab Research Limited (T/A Speechmatics)2.81,144-1,144 -Alto Prodotto Wind Limited7.4571410981 15Concirrus Limited1.9975-975 -MHS1 Limited14.81,026(110)916 (2)The Evewell (Harley Street) Limited6.0863-863 150Beddlestead Limited9.11,142(316)826 (42)Clear Review Limited3.1384409793 409Regenerco Renewable Energy Limited4.5451311762 55Avora Limited4.2750-750 -The Voucher Market Limited (T/A WeGift)2.0735-735 -Phrasee Limited2.3538187725 187Credit Kudos Limited2.7584-584 -uMotif Limited2.148635521 97Kew Green VCT (Stansted) Limited45.21,234(722)512 (30)Dragon Hydro Limited7.3277179456 21Erin Solar Limited18.6520(72)448 -AVESI Limited7.4242110352 7Limitless Technology Limited2.1320-320 -ePatient Network Limited (T/A Raremark)2.326451315 -Harvest AD Limited-3076313 -TransFICC Limited1.9286-286 -Greenenerco Limited3.911480194 5Arecor Limited1.0180-180 -Premier Leisure (Suffolk) Limited9.9175-175 -Healios Limited0.6175-175 -Imandra Inc.1.3121-121 -Symetrica Limited0.383(17)66 18Forward Clinical Limited (T/A Pando)1.2149(100)49 -Total fixed asset investments 37,05415,83152,885 1,909 *The cost includes the original cost from Albion Venture Capital Trust PLC and the carried over value on merger from Albion Prime VCT PLC as at 25 September 2012. ** As adjusted for additions and disposals during the period. Fixed asset investment realisations during the period to 30 September 2020Cost*£’000Opening carrying value £’000Disposal proceeds£’000Total realised gain£’000Gain on opening value £’000 Loan stock repayments and other: Alto Prodotto Wind Limited1925256-Dragon Hydro Limited121212--Greenenerco Limited3552- Escrow adjustments** and other--606060 Total realisations34421026860 *The cost includes the original cost from Albion Venture Capital Trust PLC and the carried over value on merger from Albion Prime VCT PLC as at 25 September 2012. ** Fair value movements on deferred consideration from previously disposed investments. Total change in value of investments for the period 1,909Movement in loan stock accrued interest (71)Unrealised gains sub-total 1,838Realised gain in current period 60Total gains on investments as per Income statement 1,898 Condensed income statement Unauditedsix months ended 30 September 2020 Unauditedsix months ended 30 September 2019 Auditedyear ended 31 March 2020 NoteRevenue£’000Capital£’000Total£’000Revenue£’000Capital£’000Total£’000Revenue£’000Capital£’000Total£’000Gains/(losses) on investments3-1,8981,898-907907-(4,925)(4,925)Investment income4884-8841,563-1,5632,858-2,858Investment management fees5(167)(501)(668)(168)(504)(672)(340)(1,020)(1,360)Other expenses (180)-(180)(194)-(194)(375)-(375)Profit/(loss) on ordinary activities before tax 5371,3971,9341,2014031,6042,143(5,945)(3,802)Tax (charge)/ credit on ordinary activities (101)95(6)(222)96(126)(333)194(139)Profit/(loss) and total comprehensive income attributable to shareholders 4361,4921,9289794991,4781,810(5,751)(3,941)Basic and diluted return/(loss) per share (pence)*70.431.481.911.030.521.551.88(5.98)(4.10) *adjusted for treasury shares Comparative figures have been extracted from the unaudited Half-yearly Financial Report for the six months ended 30 September 2019 and the audited statutory accounts for the year ended 31 March 2020. The accompanying notes form an integral part of this Half-yearly Financial Report. 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 NoteUnaudited30 September 2020£’000Unaudited30 September 2019£’000Audited31 March 2020£’000Fixed asset investments 52,88557,68549,243 Current assets Trade and other receivables less than one year 1081,375252Cash and cash equivalents 17,89815,79221,782 18,00617,16722,034 Total assets 70,89174,85271,277 Payables: amounts falling due within one year Trade and other payables (810)(812)(649)Total assets less current liabilities 70,08174,04070,628 Equity attributable to equity holders Called up share capital81,1621,0751,148Share premium 40,44934,06239,477Capital redemption reserve 777Unrealised capital reserve 15,00821,74113,178Realised capital reserve 6,2114,2366,549Other distributable reserve 7,24412,91910,269Total equity shareholders’ funds 70,08174,04070,628Basic and diluted net asset value per share (pence)* 69.5977.9670.13 *excluding treasury shares Comparative figures have been extracted from the unaudited Half-yearly Financial Report for the six months ended 30 September 2019 and the audited statutory accounts for the year ended 31 March 2020. The accompanying notes form an integral part of this Half-yearly Financial Report. These Financial Statements were approved by the Board of Directors and authorised for issue on 3 December 2020, and were signed on its behalf by Richard GloverChairmanCompany number: 03142609 Condensed statement of changes in equity Called up sharecapitalShare premiumCapital redemption reserveUnrealised capital reserveRealised capital reserve*Other distributable reserve*Total £’000£’000£’000£’000£’000£’000£’000At 1 April 20201,14839,477713,1786,54910,26970,628Return/(loss) and total comprehensive income for the period---1,838(346)4361,928Transfer of previously unrealised gains on realisations of investments---(8)8--Purchase of treasury shares-----(931)(931)Issue of equity141,004----1,018Cost of issue of equity-(32)----(32)Net dividends paid (note 6)-----(2,530)(2,530)At 30 September 20201,16240,449715,0086,2117,24470,081At 1 April 201997026,042719,3276,15115,05067,547Return/(loss) and total comprehensive income for the period---946(447)9791,478Transfer of previously unrealised losses on realisations of investments---1,468(1,468)--Purchase of treasury shares-----(740)(740)Issue of equity1058,210----8,315Cost of issue of equity-(190)----(190)Net dividends paid-----(2,370)(2,370)At 30 September 20191,07534,062721,7414,23612,91974,040At 1 April 201997026,042719,3276,15115,05067,547(Loss)/return and total comprehensive income for the year---(5,217)(534)1,810(3,941)Transfer of previously unrealised gains on realisations of investments---(932)932--Purchase of treasury shares-----(1,866)(1,866)Issue of equity17813,751----13,929Cost of issue of equity-(316)----(316)Net dividends paid-----(4,725)(4,725)At 31 March 20201,14839,477713,1786,54910,26970,628 *These reserves amount to £13,455,000 (30 September 2019: £17,155,000; 31 March 2020: £16,818,000) which is considered distributable. Condensed statement of cash flows Unauditedsix months ended 30 September 2020£’000Unauditedsix months ended 30 September 2019£’000 Auditedyear ended31 March 2020£’000Cash flow from operating activities Loan stock income received7931,6542,810Deposit interest received134087Dividend income received113150Investment management fees paid(671)(642)(1,345)Other cash payments(220)(211)(360)UK Corporation tax paid--(178)Net cash flow from operating activities(74)8721,064 Cash flow from investing activities Purchase of fixed asset investments(1,775)(2,873)(4,650)Disposal of fixed asset investments2646,52612,129Net cash flow from investing activities(1,511)3,6537,479 Cash flow from financing activities Issue of share capital6687,82313,019Cost of issue of equity(17)(15)(32)Dividends paid*(2,207)(2,043) (4,087)Purchase of own shares (including costs)(743)(703)(1,866)Net cash flow from financing activities(2,299)5,0627,034 (Decrease)/increase in cash and cash equivalents(3,884)9,58715,577Cash and cash equivalents at start of period21,7826,2056,205Cash and cash equivalents at end of period17,89815,79221,782 *The equity dividend paid in the cash flow is different to the dividend disclosed in note 6 due to the non-cash effect of the Dividend Reinvestment Scheme. Notes to the condensed Financial Statements 1. Basis of preparationThe 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 in note 2 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. 2. Accounting policiesFixed asset investmentsThe 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 per cent. of the equity as part of an investment portfolio are not accounted for using the equity method. In these circumstances the investment is measured at FVTPL. Upon initial recognition (using trade date accounting) investments, including loan stock, are classified by the Company as FVTPL and are included at their initial fair value, which is cost (excluding expenses incidental to the acquisition which are written off to the Income statement). Subsequently, the investments are valued at ‘fair value’, which is measured as follows: ● Investments listed on recognised exchanges are valued at their bid prices at the end of the accounting period or otherwise at fair value based on published price quotations; ● Unquoted investments, where there is not an active market, are valued using an appropriate valuation technique in accordance with the IPEV Guidelines. Indicators of fair value are derived using established methodologies including earnings multiples, 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: o the performance and/or prospects of the underlying business are significantly below the expectations on which the investment was based; o 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 o 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 payablesReceivables 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 investmentsGains 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 allocated to the unrealised capital reserve. Investment incomeEquity incomeDividend income is included in revenue when the investment is quoted ex-dividend. Unquoted loan stock Fixed returns on non-equity shares and debt securities are recognised when the Company’s right to receive payment and expect settlement is established. Where interest is rolled up and/or payable at redemption then it is recognised as income unless there is reasonable doubt as to its receipt. Bank interest incomeInterest income is recognised on an accrual basis using the rate of interest agreed with the bank. Investment management fees, performance incentive fees and other expensesAll 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; andexpenses which are incidental to the purchase or disposal of an investment are charged through the realised capital reserve. TaxationTaxation 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. ReservesShare 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 reserveIncreases and decreases in the valuation of investments held at the period end against cost are included in this reserve. Realised capital reserveThe 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; anddividends paid to equity holders. Other distributable reserveThe 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. DividendsDividends by the Company are accounted for in the period in which the dividend is paid or approved at the Annual General Meeting. Segmental reportingThe Directors are of the opinion that the Company is engaged in a single operating segment of business, being investment in smaller companies principally based in the UK. 3. Gains/(losses) on investments Unaudited six months ended 30 September 2020£’000Unaudited six months ended 30 September 2019£’000Audited year ended 31 March 2020£’000Unrealised gains/(losses) on fixed asset investments1,838946(5,217)Realised gains/(losses) on fixed asset investments60(39)292 1,898907(4,925) 4. Investment income Unaudited six months ended 30 September 2020 £’000Unaudited six months ended 30 September 2019£’000Audited year ended 31 March 2020 £’000Loan stock interest8631,4922,719Dividend income113150Bank interest104089 8841,5632,858 5. Investment management fees Unaudited six months ended 30 September 2020 £’000Unaudited six months ended 30 September 2019 £’000Audited year ended 31 March 2020 £’000Investment management fee charged to revenue167168340Investment management fee charged to capital5015041,020 6686721,360 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 pages 13 and 14 of the Annual Report and Financial Statements for the year ended 31 March 2020. During the period, services of a total value of £668,000 in management fees and £27,000 in administration fees (30 September 2019: £672,000 in management fees and £27,000 in administration fees; 31 March 2020: £1,360,000 in management fees and £53,000 in administration fees), were purchased by the Company from Albion Capital Group LLP. At the financial period end, the amount due to Albion Capital Group LLP in respect of these services disclosed within payables was £347,000 (30 September 2019: £365,000; 31 March 2020: £349,000). Albion Capital Group LLP is, from time to time, eligible to receive arrangement fees and monitoring fees from portfolio companies. During the period to 30 September 2020, fees of £79,000 attributable to the investments of the Company were received pursuant to these arrangements (30 September 2019: £157,000; 31 March 2020: £232,000). Albion Capital Group LLP, its partners and staff hold a total of 885,754 shares in the Company as at 30 September 2020. 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 receives a fee of 2.5 per cent. of the gross proceeds of the Offers and out of which Albion Capital will pay the costs of the Offers, as detailed in the Prospectus. 6. DividendsUnaudited six months ended 30 September 2020 £’000Unaudited six months ended 30 September 2019£’000Audited year ended 31 March 2020 £’000Dividend of 2.50p per share paid on 31 July 2019-2,3822,382Dividend of 2.50p per share paid on 31 January 2020--2,365Dividend of 2.50p per share paid on 31 July 20202,541--Unclaimed dividends(11)(12)(22) 2,5302,3704,725 The Directors have declared a second dividend for the year ending 31 March 2021 of 1.74 pence per share (total approximately £1,752,000), payable on 29 January 2021 to shareholders on the register on 8 January 2021. 7. Basic and diluted return per share Unauditedsix months ended 30 September 2020Unauditedsix months ended 30 September 2019Auditedyear ended 31 March 2020 RevenueCapitalRevenueCapitalRevenueCapitalReturn/(loss) attributable to equity shares (£’000)4361,4929794991,810(5,751)Weighted average shares in issue (adjusted for treasury shares)101,213,08595,382,18696,167,014Return/(loss) attributable per equity share (pence)0.431.481.030.521.88(5.98) The weighted average number of shares is calculated after adjusting for treasury shares of 15,519,396 (30 September 2019: 12,525,188; 31 March 2020: 14,084,031). There are no convertible instruments, derivatives or contingent share agreements in issue so basic and diluted return per share are the same. 8. Called up share capital Allotted, called up and fully paid shares of 1 penny eachUnaudited 30 September 2020Unaudited 30 September 2019Audited 31 March 2020Number of shares116,220,062107,499,248114,789,539Nominal value of allotted shares (£’000)1,1621,0751,148Voting rights (number of shares net of treasury shares)100,700,66694,974,060100,705,508 During the period to 30 September 2020 the Company purchased 1,435,365 Ordinary shares (nominal value of £14,354) to be held in treasury (30 September 2019: 1,008,000; 31 March 2020: 2,566,843) at a cost of £931,000 (30 September 2019: £740,000; 31 March 2020: £1,866,000) representing 1.2 per cent. of the shares in issue as at 30 September 2020. The total number of Ordinary shares held in treasury as at 30 September 2020 was 15,519,396 (30 September 2019: 12,525,188; 31 March 2020: 14,084,031) representing 13.4 per cent. of the share capital as at 30 September 2020. Under the terms of the Dividend Reinvestment Scheme Circular dated 10 July 2008, the following new Ordinary shares of nominal value 1 penny per share were allotted during the period: Date of allotmentNumber of shares allottedAggregate nominal value of shares(£’000)Issue price (pence per share)Net invested(£’000)Opening-market price on allotment date(pence per share)31 July 2020494,534567.6331865.00 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 September 2020: Date of allotmentNumber of shares allottedAggregate nominal value of shares(£’000)Issue price (pence per share)Net consideration received(£’000)Opening market price on allotment date(pence per share)30 April 2020193,917272.5013863.5030 April 2020742,072773.2053063.50 935,9899 668 9. Commitments and contingencies As at 30 September 2020, the Company had no financial commitments (30 September 2019 and 31 March 2020: £nil). There are no contingencies or guarantees of the Company as at 30 September 2020 (30 September 2019 and 31 March 2020: £nil). 10. Post balance sheet events Since 30 September 2020 the Company has had the following post balance sheet events: Proceeds of £793,000 received from the sale of Clear Review Limited on a cost of £384,000;Investment of £902,000 in a new portfolio company, Seldon Technologies Limited;Investment of £334,000 in a new portfolio company, uMedeor Limited (T/A uMed);Investment of £151,000 in an existing portfolio company, Limitless Technology Limited; andInvestment of £69,000 in an existing portfolio company Arecor Limited. 11. Related party transactions Other than transactions with the Manager as described in note 5, there are no other related party transactions. 12. Going concern The Board has conducted a detailed assessment of the Company’s ability to meet its liabilities as they fall due. Cash flow forecasts are updated and discussed quarterly at Board level and have been stress tested to allow for the forecasted impact of 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 page 65 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. 13. 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 March 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 riskThe 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 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 riskThe 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, 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 new 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 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 riskThe 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 put 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. On an annual basis, the Audit Committee Chairman meets with the internal audit partner 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. 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 policies and procedures as required by 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 objective and 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 current risk to the Company, and the wider population and economy, is the coronavirus (Covid-19) pandemic. The Company invests in a diversified portfolio of companies across a number of industry sectors and in addition often invests 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. With regards to coronavirus (Covid-19), the Manager is having ongoing discussions with all portfolio companies, in order to ascertain where support is most needed. Cash comprises a significant proportion of net assets, following a strong year of exits and the most recent Top Up, which can be used in part to help mitigate any immediate cashflow problems for these portfolio companies. The portfolio is structured as an all-weather portfolio with c.35 companies which are diversified as discussed above. Exposure is small to at-risk sectors that include leisure, hospitality, retail and travel. 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. Accordingly, the market price of the Ordinary shares may not fully reflect their underlying net asset value. The Company operates a share buy-back policy, which is designed to limit the discount at which the Ordinary shares trade to around 5 per cent of 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 any buy-back 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. 7. Reputational risk The Company relies on the judgement and reputation of the Manager which is itself subject to the risk of loss. The Board regularly questions the Manager on its ethics, procedures, safeguards and investment philosophy, which should consequently result in the risk to reputation being minimised. 14. 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 September 2020 and 30 September 2019 and is unaudited. The information for the year ended 31 March 2020 does not constitute statutory accounts within the terms of section 434 of the Companies Act 2006 but is derived from the audited statutory accounts for the financial year, which have been delivered to the Registrar of Companies. The Auditor reported on those accounts; their report was unqualified and did not contain a statement under s498 (2) or (3) of the Companies Act 2006. 15. 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/AAVC, where the Report can be accessed as a PDF document in the ‘Financial Reports and Circulars’ section.
Portfolio sector split