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Crown Place VCT PLC : Half-yearly Financial Report

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Crown Place VCT PLC
·45 min read
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Crown Place VCT PLC
LEI number: 213800SYIQPA3L3T1Q68

As required by the UK Listing Authority's Disclosure Guidance and Transparency Rule 4.2, Crown Place VCT PLC (the “Company”) today makes public its information relating to the Half-yearly Financial Report (which is unaudited) for the six months to 31 December 2020. This announcement was approved by the Board of Directors on 15 February 2021.

The full Half-yearly Financial Report for the period to 31 December 2020 will shortly be sent to shareholders and will be available on the Albion Capital Group LLP website by clicking www.albion.capital/funds/CRWN/31Dec20.pdf.

Investment policy
The Company invests in a broad portfolio of smaller, unquoted growth businesses across a variety of sectors including higher risk technology companies. Investments take the form of equity or a mixture of equity and loans.

Whilst allocation of funds is determined by the investment opportunities which are available, efforts are made to ensure that the portfolio is diversified both in terms of sector and stage of maturity of investee businesses. Funds held pending investment or for liquidity purposes are principally 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 using a mixture of securities, as permitted. 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 of its adjusted share capital and reserves. The Directors do not have any intention of utilising long-term gearing.

Financial calendar

Record date for second interim dividend

5 March 2021

Payment date of second interim dividend

31 March 2021

Financial year end

30 June 2021

Financial summary

Six months ended

Six months ended

Year ended

31 December 2020

31 December 2019

30 June 2020

(pence per share)

(pence per share)

(pence per share)

Opening net asset value

33.14

35.29

35.29

Revenue (loss)/return

(0.02)

0.21

0.25

Capital return/(loss)

0.84

0.22

(0.46)

Total return/(loss)

0.82

0.43

(0.21)

Dividends paid

(2.83)

(1.00)

(2.00)

Impact from share capital movements

-

0.01

0.06

Closing net asset value

31.13

34.73

33.14

Shareholder return and shareholder value

(pence per share)

Shareholder return from launch to April 2005:

Total dividends paid to 6 April 2005(i)

24.93

Decrease in net asset value

(56.60)

Total shareholder return to 6 April 2005

(31.67)

Shareholder return from April 2005 to 31 December 2020
(period that Albion Capital has been investment manager):

Total dividends paid

37.63

Decrease in net asset value

(12.27)

Total shareholder return from April 2005 to 31 December 2020

25.36

Shareholder value since launch:

Total dividends paid to 31 December 2020(i)

62.56

Net asset value as at 31 December 2020

31.13

Total shareholder value as at 31 December 2020

93.69

Notes

(i) Prior to 6 April 1999, Venture Capital Trusts were able to add 20 per cent. to dividends and figures for the period up until 6 April 1999 are included at the gross equivalent rate actually paid to shareholders.

In addition to the dividends above, the Board has declared a second dividend for the year ending 30 June 2021 of 0.78 pence per share to be paid on 31 March 2021 to shareholders on the register on 5 March 2021. Further details on the dividends paid by the Company can be found at www.albion.capital/funds/CRWN under ‘Dividend History’.

Interim management report

Results
We are pleased to report that, despite the continuing impact of the coronavirus (Covid-19) on the economy and the way in which we live, for the six month period to 31 December 2020 your Company achieved a total return of 0.82 pence per share, which is a 2.5% return on opening net asset value per share. Since the Company’s year end many of our portfolio companies have demonstrated resilient growth, providing products and services that are both innovative and necessary, even in these uncertain times.

Following payment of dividends totalling 2.83 pence per share during the period, the net asset value as at 31 December 2020 was 31.13 pence per share (30 June 2020: 33.14 pence per share).

Board Composition
During the period Richard Huntingford retired after almost eight years on the Board including six years as Chairman. I would like to thank Richard for his stewardship, contributions and professionalism.

Portfolio review
During the six month period, the Company deployed £3.9 million into qualifying investments (31 December 2019: £2.5 million). Of this amount, £1.4 million was invested into the following three new portfolio companies, all of which are likely to require further investment as they continue to grow:

  • £828,000 into The Voucher Market (T/A WeGift), a provider of a cloud platform that enables corporates to purchase digital gift cards and to distribute them to employees and customers;

  • £424,000 into Seldon Technologies, a software company that enables enterprises to deploy machine learning models in production; and

  • £152,000 into uMedeor (T/A uMed), a provider of a middleware technology platform that enables life science organisations to conduct medical research programmes.

Further investments were made into existing portfolio companies to support their continuing growth, most notably: £1,359,000 into Quantexa, a leader in entity resolution software used to detect financial crime; £346,000 into uMotif which is a patient engagement and data capture platform for use in real world and observational research; £261,000 into Phrasee which is an Artificial Intelligence platform that optimises digital marketing copy creations; and £132,000 into Limitless Technology which provides a customer service platform powered by the crowd and machine learning technology.

After the period end, we invested £1,239,000 into a new portfolio company, Threadneedle Software Holding (T/A 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.

There were two disposals in the period. Our investment in G. Network Communications was sold for a total return on all monies invested of 3.8 times cost or 31% IRR. The holding in Clear Review was sold generating a return of 2.1 times cost within a relatively short 16 months holding period. Further details on realisations and loan stock repayments can be found in the realisations table below.

The Company’s unrealised and realised gains amounted to £2.1 million for the six months to 31 December 2020. The key movements in the period include: a £519,000 uplift on Proveca following strong trading across Europe; a £442,000 uplift in Healios following an external investment at an increased valuation after the period end; and an uplift of £304,000 in The Evewell as it continues to trade strongly following the re-opening of its clinic. Against this, Black Swan Data was written down by £260,000 following the restructuring of the business to focus on its growing data analytics products.

Investment portfolio by sector
The chart at the end of this announcement illustrates the composition of the portfolio by industry sector as at 31 December 2020.

Dividends
In-line with the variable dividend policy targeting an annual dividend yield of 5% on the prevailing net asset value, the first interim dividend for the current financial year of 0.83 pence per share was paid on 30 November 2020. A second interim dividend of 0.78 pence per share will be paid on 31 March 2021 to shareholders on the register on 5 March 2021. The Board aims to maintain this level of annualised dividend distribution, in percentage terms, going forward, subject to the availability of cash resources and distributable reserves.

A special dividend of 2.0 pence per share was also paid on 30 October 2020 following a number of significant disposals and the additional liquidity they generated.

Dividends are paid free of tax to shareholders. Qualifying shareholders who elect to participate in the Dividend Reinvestment Scheme will be able, in respect of further dividends, to receive their dividends in the form of new shares rather than cash, which will entitle them to income tax relief at the current rate of 30% (new shares have to be held for at least five years to retain the tax relief). Further details of the Dividend Reinvestment Scheme can be found on the Company’s webpage on the Manager’s website at www.albion.capital/funds/CRWN.

Risks and uncertainties
The wide-reaching implications arising from the coronavirus (Covid-19) crisis is the key risk facing the Company, including its impact on the UK and Global economies. There are also 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 alongside its management and other co-investors, and appropriate mitigating actions, where possible, are being implemented.

Other risks and uncertainties remain unchanged and are as detailed in note 13. 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.

Share buy-backs
It remains the Board’s primary objective to maintain sufficient resources for investment in existing and new 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, and 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.

During the period, the Company bought back and held in treasury 1,929,245 shares at a total cost of £568,000, in-line with the share buy-back policy.

Transactions with the Manager
Details of the transactions that took place with the Manager in the period can be found in note 5.

Albion VCTs’ Prospectus Top Up Offers
Your Board, in conjunction with the boards of other VCTs managed by Albion Capital Group LLP, launched a prospectus top up offer of new Ordinary shares on 5 January 2021. The Board announced on 26 January 2021 that, following strong demand for the Company’s shares, it had elected to exercise its £3 million over-allotment facility, taking the total offer to £9 million.

On 10 February 2021, the Company was pleased to announce that it had reached its £9 million limit under its Offer which was fully subscribed and closed to further applications. The proceeds of the Offer will be used to provide further resources at a time when a number of attractive investment opportunities are being seen.

Outlook
Whilst there are still uncertainties as to the full extent of the ongoing economic and societal impact of coronavirus (Covid-19), we are encouraged by the resilience of the portfolio and many of the companies in which we have invested continue to show strong growth. It continues to be our priority to support our existing portfolio and to make new investments in businesses that can innovate and grow despite the pandemic. The Board remains confident that the Company and its portfolio are well positioned to continue to generate long-term value for shareholders.

Penny Freer
Chairman
15 February 2021

Responsibility statement
The Directors, Penny Freer, James Agnew, Pam Garside and Ian Spence, are responsible for preparing the Half-yearly Financial Report. In preparing these condensed Financial Statements for the period to 31 December 2020 we, the Directors of the Company, confirm that to the best of our knowledge:

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

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

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

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

For and on behalf of the Board

Penny Freer
Chairman
15 February 2021

Portfolio of investments

As at 31 December 2020
(unaudited)

As at 30 June 2020
(audited)

Change in value for the period*
£’000

Portfolio company

Nature of business

%
voting
rights

Cost
£’000

Value
£’000

Cost
£’000

Value
£’000

Quantexa Limited

Network analytics platform to detect financial crime

1.8

1,797

4,768

438

3,409

-

Shinfield Lodge Care Limited

Owner and operator of a 66 bed care home in Shinfield, Berkshire

11.8

2,140

4,305

2,140

4,279

26

Proveca Limited

Reformulation of paediatric medicines

6.1

974

3,378

974

2,859

519

Chonais River Hydro Limited

Owner and operator of a 2 MW hydro-power scheme in the Scottish Highlands

14.0

1,549

3,106

1,549

3,275

(169)

Radnor House School (TopCo) Limited

Independent school for children aged 3-18 years

8.7

1,592

2,678

1,592

2,645

33

Active Lives Care Limited

Owner and operator of a 75 bed care home in Cumnor Hill, Oxfordshire

7.5

1,620

2,573

1,620

2,593

(20)

Ryefield Court Care Limited

Owner and operator of a 60 bed care home in Hillingdon, Middlesex

7.7

1,275

2,020

1,275

2,001

19

Gharagain River Hydro Limited

Owner and operator of a 1 MW hydro-power scheme in the Scottish Highlands

15.0

1,116

1,663

1,116

1,717

(54)

The Evewell (Harley Street) Limited

Operator of a women’s health centre focusing on fertility

6.2

894

1,120

856

778

304

Oviva AG

A technology enabled service business in Medical Nutritional Therapy (MNT)

2.3

781

1,001

692

801

111

Egress Software Technologies Limited

Encrypted email and file transfer service provider

0.9

306

996

306

846

150

The Street by Street Solar Programme Limited

Owner and operator of photovoltaic systems on domestic properties

4.4

461

871

461

819

52

Phrasee Limited

AI platform that generates optimised marketing campaigns

2.7

617

831

356

356

214

The Voucher Market Limited (T/A WeGift)

A cloud platform that enables corporates to purchase digital gift cards

2.1

828

828

-

-

-

Cantab Research Limited (T/A Speechmatics)

Provider of low footprint automated speech recognition software

1.9

779

779

779

779

-

Concirrus Limited

A software provider bringing real-time behavioural data analytics to the marine and transport insurance industries

1.5

755

755

755

755

-

Beddlestead Limited

Developer and operator of a dedicated wedding venue

8.2

1,060

742

1,060

818

(76)

Elliptic Enterprises Limited

Provider of anti-money laundering services to digital asset institutions

0.9

724

724

724

724

-

Convertr Media Limited

Digital lead generation software

4.3

680

701

680

698

3

Healios Limited

Provider of an online platform delivering family centric psychological care

1.9

203

645

203

203

442

Panaseer Limited

Provider of cyber security services

1.5

342

598

342

470

128

uMotif Limited

A patient engagement and data capture platform for use in research

2.4

556

596

210

238

12

Regenerco Renewable Energy Limited

Generator of renewable energy from roof top solar installations

3.4

344

587

344

561

26

MPP Global Solutions Limited

Provider of a digital subscription management platform

1.7

550

550

550

550

-

Alto Prodotto Wind Limited

Owner and operator of community scale wind energy projects

4.1

316

538

326

552

1

Avora Limited

Developer of software to improve decision making through augmented analytics and machine learning

2.8

510

510

510

510

-

Credit Kudos Limited

Challenger credit bureau helping lenders optimise and automate their affordability and risk assessments

2.1

454

454

454

454

-

Limitless Technology Limited

Provider of a customer service platform powered by the crowd and machine learning technology

1.5

412

453

280

280

41

Black Swan Data Limited

Data analysis that supports corporate decision making

1.7

700

440

700

700

(260)

MHS 1 Limited

Education

6.9

481

430

481

431

(1)

Seldon Technologies Limited

Software that enables enterprises to deploy Machine Learning models in production

2.2

424

424

-

-

-

MyMeds&Me Limited

Provider of a platform for collecting data from pharmaceutical adverse events

4.6

440

418

440

418

-

Oxsensis Limited

Developer and producer of high temperature sensors

1.6

386

382

274

163

107

Locum’s Nest Limited

Provider of a technology solution for the management of locum doctors for the NHS

4.6

400

375

400

387

(12)

Koru Kids Limited

Online marketplace connecting parents and nannies

1.6

338

373

338

373

-

ePatient Network Limited (T/A Raremark)

Online community connecting people affected by rare diseases

2.4

276

330

230

283

1

Aridhia Informatics Limited

Healthcare informatics and analysis provider

2.3

442

324

442

277

47

Mirada Medical Limited

Developer of medical imaging software

5.8

511

313

511

313

-

InCrowd Sports Limited

Developer of mobile apps for professional sports clubs

2.5

318

312

318

311

1

SBD Automotive Limited

Automotive technology research and consultancy provider

1.5

147

307

220

447

(67)

Arecor Limited

Development of biopharmaceuticals through the application of a formulation technology platform

1.1

290

290

210

210

-

DySIS Medical Limited

Medical devices for the detection of cervical cancer

1.5

1,038

283

1,038

223

60

OmPrompt Holdings Limited

A provider of process automation software

1.6

153

277

153

148

129

TransFICC Limited

A provider of a connectivity solution, connecting financial institutions with trading venues via a single API

1.5

220

220

220

220

-

Cisiv Limited

Software and services for non-interventional clinical trials

3.1

278

179

278

134

45

AVESI Limited

Owner and operator of photovoltaic systems on domestic properties

3.8

123

179

123

173

6

uMedeor Limited (T/A uMed)

Middleware technology platform that enables life science organisations to conduct medical research programmes

1.4

152

152

-

-

-

memsstar Limited

Refurbisher and manufacturer of MEMS and semiconductor fabrication equipment

3.0

64

138

72

125

18

Abcodia Limited

Validation and discovery of serum biomarkers

1.7

304

108

304

108

-

Imandra Inc.

Provider of automated software testing and an enhanced learning experience for artificial neural networks

1.1

106

106

106

106

-

Greenenerco Limited

Owner and operator of a 500kW wind project

1.9

54

94

55

97

-

Innovation Broking Group Limited

Commercial insurance broker

2.7

27

82

27

70

12

Zift Channel Solutions Inc.

Business collaboration and communication solutions

0.6

321

59

321

61

(2)

Forward Clinical Limited (T/A Pando)

A secure mobile communication and collaboration platform in healthcare

1.5

184

51

184

61

(10)

Symetrica Limited

A designer and manufacturer of radiation detection equipment

0.2

50

40

50

40

-

Sandcroft Avenue Limited (T/A Hussle)

A provider of flexible access to gyms

0.9

172

23

172

16

7

Mi-Pay Group PLC

Provider of mobile payment services

3.0

20

20

20

20

-

Palm Tree Technology Limited

Software company

0.2

102

12

102

12

-

Kew Green VCT (Stansted) Limited

Operator of a Holiday Inn Express hotel at Stansted Airport

2.0

22

5

22

24

(19)

Avanti Communications Limited

Supplier of satellite communications

0.1

136

1

136

1

-

Other holdings

422

400

422

400

-

Total fixed asset investments

32,736

45,917

28,961

40,322

1,824

* As adjusted for additions and disposals between the two accounting periods.

The total comparative cost and valuations for 30 June 2020 do not agree to the Annual Report and Financial Statements for the year ended 30 June 2020 as the above list does not include brought forward investments that were fully disposed of in the period.

Realisations in the period to 31 December 2020

Cost
£’000

Opening carrying
value
£’000

Disposal
proceeds
£’000

Total realised
gain
£’000

Gain on opening
value
£’000

Disposals:

G. Network Communications Limited

186

1,009

1,046

860

37

Clear Review Limited

231

290

478

247

188

Loan stock repayments and other:

SBD Automotive Limited

73

73

73

-

-

Alto Prodotto Wind Limited

10

14

14

4

-

memsstar Limited

7

7

7

-

-

Greenenerco Limited

1

2

2

1

-

Escrow adjustments and other**

-

-

38

38

38

Total fixed asset investment realisations

508

1,395

1,658

1,150

263

** Fair value movements on deferred consideration from previously disposed investments and expenses which are incidental to the purchase or disposal of an investment.

Total change in value of investments

1,824

Movement in loan stock accrued interest

(9)

Unrealised gains sub-total

1,815

Realised gains in current period

263

Total gains on investments as per condensed income statement

2,078

Condensed income statement

Unaudited

Unaudited

Audited

six months ended
31 December 2020

six months ended
31 December 2019

year ended
30 June 2020

Revenue

Capital

Total

Revenue

Capital

Total

Revenue

Capital

Total

Note

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

Gains/(losses) on investments

3

-

2,078

2,078

-

844

844

-

(21)

(21)

Investment income

4

311

-

311

699

-

699

1,112

-

1,112

Investment management fees

5

(140)

(420)

(560)

(144)

(431)

(575)

(285)

(856)

(1,141)

Other expenses

(204)

-

(204)

(167)

-

(167)

(354)

-

(354)

(Loss)/profit on ordinary activities before tax

(33)

1,658

1,625

388

413

801

473

(877)

(404)

Tax on ordinary activities

-

-

-

-

-

-

-

-

-

(Loss)/profit and total comprehensive income attributable to shareholders

(33)

1,658

1,625

388

413

801

473

(877)

(404)

Basic and diluted (loss)/earnings per Ordinary share (pence)*

7

(0.02)

0.84

0.82

0.21

0.22

0.43

0.25

(0.46)

(0.21)

* Adjusting for treasury shares.

Comparative figures have been extracted from the unaudited Half-yearly Financial Report for the six months ended 31 December 2019 and the audited statutory accounts for the year ended 30 June 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 are prepared under guidance published by The Association of Investment Companies.

Condensed balance sheet

Unaudited

Unaudited

Audited

31 December 2020

31 December 2019

30 June 2020

Note

£’000

£’000

£’000

Fixed asset investments

45,917

40,764

41,621

Current assets

Trade and other receivables

1,107

164

81

Cash and cash equivalents

14,977

24,183

23,966

16,084

24,347

24,047

Total assets

62,001

65,111

65,668

Payables: amounts falling due within one year

Trade and other payables less than one year

(371)

(360)

(395)

Total assets less current liabilities

61,630

64,751

65,273

Equity attributable to equity holders

Called up share capital

8

2,229

2,080

2,200

Share premium

14,219

9,338

13,366

Unrealised capital reserve

12,960

12,260

12,032

Realised capital reserve

5,720

6,052

4,990

Other distributable reserve

26,502

35,021

32,685

Total equity shareholders’ funds

61,630

64,751

65,273

Basic and diluted net asset value per share (pence)*

31.13

34.73

33.14

* Excluding treasury shares.

Comparative figures have been extracted from the unaudited Half-yearly Financial Report for the six months ended 31 December 2019 and the audited statutory accounts for the year ended 30 June 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 15 February 2021 and were signed on its behalf by:

Penny Freer
Chairman

Company number 03495287

Condensed statement of changes in equity

Called up
share capital
£’000

Share
premium
£’000

Unrealised capital
reserve
£’000

Realised capital
reserve*
£’000

Other distributable reserve*
£’000

Total
£’000

As at 1 July 2020

2,200

13,366

12,032

4,990

32,685

65,273

Profit/(loss) and total comprehensive income

-

-

1,815

(157)

(33)

1,625

Transfer of previously unrealised gains on disposal of investments

-

-

(887)

887

-

-

Dividends paid

-

-

-

-

(5,582)

(5,582)

Purchase of shares for treasury (including costs)

-

-

-

-

(568)

(568)

Issue of equity

29

871

-

-

-

900

Cost of issue of equity

-

(18)

-

-

-

(18)

As at 31 December 2020

2,229

14,219

12,960

5,720

26,502

61,630

As at 1 July 2019

2,072

9,061

19,756

(1,857)

36,963

65,995

Profit and total comprehensive income

-

-

146

267

388

801

Transfer of previously unrealised gains on disposal of investments

-

-

(7,642)

7,642

-

-

Dividends paid

-

-

-

-

(1,861)

(1,861)

Purchase of shares for treasury (including costs)

-

-

-

-

(469)

(469)

Issue of equity

9

292

-

-

-

301

Cost of issue of equity

-

(16)

-

-

-

(16)

As at 31 December 2019

2,080

9,338

12,260

6,052

35,021

64,751

As at 1 July 2019

2,072

9,061

19,756

(1,857)

36,963

65,995

(Loss)/profit and total comprehensive income

-

-

(651)

(226)

473

(404)

Transfer of previously unrealised gains on disposal of investments

-

-

(7,073)

7,073

-

-

Dividends paid

-

-

-

-

(3,814)

(3,814)

Purchase of shares for treasury (including costs)

-

-

-

-

(937)

(937)

Issue of equity

129

4,418

-

-

-

4,547

Cost of issue of equity

-

(114)

-

-

-

(114)

As at 30 June 2020

2,200

13,366

12,032

4,990

32,685

65,273

* Included within these reserves is an amount of £27,036,000 (31 December 2019: £29,836,000; 30 June 2020: £26,438,000) which is considered distributable. In time, a further £5,186,000 will become distributable.

Condensed statement of cash flows

Unaudited
six months ended
31 December
2020
£’000

Unaudited
six months ended
31 December 2019
£’000

Audited
year ended
30 June
2020
£’000

Cash flow from operating activities

Loan stock income received

297

646

935

Deposit interest received

1

45

89

Dividend income received

4

9

16

Investment management fees paid

(572)

(578)

(1,145)

Other cash payments

(225)

(194)

(341)

Corporation tax paid

-

-

-

Net cash flow from operating activities

(495)

(72)

(446)

Cash flow from investing activities

Purchase of fixed asset investments

(3,867)

(2,475)

(4,195)

Disposal of fixed asset investments

629

12,676

12,837

Net cash flow from investing activities

(3,238)

10,201

8,642

Cash flow from financing activities

Issue of share capital

-

-

3,839

Cost of issue of equity

(17)

(15)

(30)

Equity dividends paid

(4,671)

(1,545)

(3,185)

Purchase of own shares for treasury (including costs)

(568)

(469)

(937)

Net cash flow from financing activities

(5,256)

(2,029)

(313)

(Decrease)/increase in cash and cash equivalents

(8,989)

8,100

7,883

Cash and cash equivalents at the start of the period

23,966

16,083

16,083

Cash and cash equivalents at the end of the period

14,977

24,183

23,966

Notes to the unaudited condensed Financial Statements

1. Basis of preparation

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 in note 2 below.

The 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 full Half-yearly Financial Report.

2. Accounting policies

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 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, 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 other distributable reserve when a share becomes ex-dividend.

Current assets and payables
Receivables, payables and cash are carried at amortised cost, in accordance with FRS 102. 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 fees, performance incentive fees and other expenses
All expenses have been accounted for on an accruals basis. Expenses are charged through the other distributable reserve except the following which are charged through the realised capital reserve:

  • 75 per cent. of management fees and performance incentive fees, if any, are allocated to the capital account to the extent that these relate to an enhancement in the value of the investments. This is in line with the Board’s expectation that over the long term 75 per cent. of the Company’s investment returns will be in the form of capital gains; and

  • expenses which are incidental to the purchase or disposal of an investment are charged through the realised capital reserve.

Taxation
Taxation is applied on a current basis in accordance with FRS 102. Current tax is tax payable (refundable) in respect of the taxable profit (tax loss) for the current period or past reporting periods using the tax rates and laws that have been enacted or substantively enacted at the financial reporting date. Taxation associated with capital expenses is applied in accordance with the SORP.

Deferred tax is provided in full on all timing differences at the reporting date. Timing differences are differences between taxable profits and total comprehensive income as stated in the Financial Statements that arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the Financial Statements. As a VCT the Company has an exemption from tax on capital gains. The Company intends to continue meeting the conditions required to obtain approval as a VCT in the foreseeable future. The Company therefore, should have no material deferred tax timing differences arising in respect of the revaluation or disposal of investments and the Company has not provided for any deferred tax.

Reserves
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 shares and the nominal value of the shares, less issue costs.

Capital redemption reserve
This reserve accounts for amounts by which the issued share capital is diminished through the repurchase and cancellation of the Company’s own shares.

Unrealised capital reserve
Increases and decreases in the valuation of investments held at the year 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.

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.

3. Gains/(losses) on investments

Unaudited
six months ended
31 December 2020
£’000

Unaudited
six months ended
31 December 2019
£’000

Audited
year ended
30 June 2020
£’000

Unrealised gains/(losses) on fixed asset investments

1,815

146

(651)

Realised gains on fixed asset investments

263

698

630

2,078

844

(21)

4. Investment income

Unaudited
six months ended
31 December 2020
£’000

Unaudited
six months ended
31 December 2019
£’000

Audited
year ended
30 June 2020
£’000

Loan stock interest

306

644

1,007

UK dividend income

4

9

16

Bank deposit interest

1

46

89

311

699

1,112

5. Investment management fees

Unaudited
six months ended
31 December 2020

Unaudited
six months ended
31 December 2019

Audited
year ended
30 June 2020

Revenue
£’000

Capital
£’000

Total
£’000

Revenue
£’000

Capital
£’000

Total
£’000

Revenue
£’000

Capital
£’000

Total
£’000

Investment management fee

140

420

560

144

431

575

285

856

1,141

Further details of the management agreement under which the investment management fee is paid are given on page 16 of the Strategic report in the Annual Report and Financial Statements for the year ended 30 June 2020.

During the period, services of a total value of £585,000 (31 December 2019: £600,000; 30 June 2020: £1,191,000) were purchased by the Company from Albion Capital Group LLP; comprising £560,000 management fee and £25,000 administration fee. At the financial period end, the amount due to Albion Capital Group LLP disclosed as payables was £284,500 (administration fee accrual: £12,500, management fee accrual: £272,000) (31 December 2019: £297,000; 30 June 2020: £296,500).

Albion Capital Group LLP is, from time to time, eligible to receive arrangement fees and monitoring fees from portfolio companies. During the period to 31 December 2020, fees of £89,000 attributable to the investments of the Company were received pursuant to these arrangements (31 December 2019: £74,000; 30 June 2020: £131,000).

Albion Capital Group LLP, its partners and staff hold 1,166,274 Ordinary shares in the Company as at 31 December 2020.

6. Dividends

Unaudited
six months ended
31 December 2020
£’000

Unaudited
six months ended
31 December 2019
£’000

Audited
year ended
30 June 2020
£’000

First interim dividend of 1.00 pence per share paid on 29 November 2019

-

1,861

1,861

Second interim dividend of 1.00 pence per share paid on 31 March 2020

-

-

1,964

Special dividend of 2.00 pence per share paid on 30 October 2020

3,940

-

-

First interim dividend of 0.83 per share paid on 30 November 2020

1,642

-

-

Unclaimed dividends

-

-

(11)

5,582

1,861

3,814

In addition, the Board has declared a second interim dividend of 0.78 pence per share for the year ending 30 June 2021. This will be paid on 31 March 2021 to shareholders on the register on 5 March 2021. This is expected to amount to approximately £1,754,000.

7. Basic and diluted (loss)/return per share

Unaudited
six months ended
31 December 2020

Unaudited
six months ended
31 December 2019

Audited
year ended
30 June 2020

Revenue

Capital

Total

Revenue

Capital

Total

Revenue

Capital

Total

(Loss)/return attributable to equity shares (£’000)

(33)

1,658

1,625

388

413

801

473

(877)

(404)

Weighted average shares in issue (adjusting for treasury shares)

197,216,343

186,644,811

190,892,747

(Loss)/return attributable per Ordinary share (pence) (basic and diluted)

(0.02)

0.84

0.82

0.21

0.22

0.43

0.25

(0.46)

(0.21)

The return/(loss) per share has been calculated after adjusting for treasury shares of 24,990,875 (31 December 2019: 21,589,410; 30 June 2020: 23,061,630).

There are no convertible instruments, derivatives or contingent share agreements in issue, and therefore no dilution affecting the return/(loss) per share. The basic return/(loss) per share is therefore the same as the diluted return/(loss) per share.

8. Called up share capital

Allotted, called up and fully paid Ordinary shares of 1 penny each

Unaudited
31 December 2020

Unaudited
31 December 2019

Audited
30 June 2020

Number of shares

222,945,670

208,035,211

220,036,874

Nominal value of allotted shares (£’000)

2,229

2,080

2,200

Voting rights (number of shares net of treasury shares)

197,954,795

186,445,801

196,975,244

During the period to 31 December 2020 the Company purchased 1,929,245 Ordinary shares (nominal value £19,000) for treasury at a cost of £568,000. The total number of Ordinary shares held in treasury as at 31 December 2020 was 24,990,875 (31 December 2019: 21,589,410; 30 June 2020: 23,061,630) representing 11.2 per cent. of the Ordinary shares in issue as at 31 December 2020.

Under the terms of the Dividend Reinvestment Scheme Circular dated 26 February 2009, the following new Ordinary shares of nominal value 1 penny per share were allotted during the period:

Allotment date

Number of shares allotted

Aggregate nominal value of shares
(£’000)

Issue price
(pence per share)

Net invested
(£’000)

Opening market price on allotment date
(pence per share)

30 October 2020

2,031,730

20

31.14

616

30.00

30 November 2020

877,066

9

30.51

266

29.40

2,908,796

29

882

9. Contingencies and guarantees

As at 31 December 2020 the Company had no financial commitments in respect of investments (31 December 2019: £nil; 30 June 2020: £nil).

There are no external contingencies or guarantees of the Company as at 31 December 2020 (31 December 2019: £nil; 30 June 2020: £nil).

10. Post balance sheet events

Since 31 December 2020, the Company has completed the following material transactions:

  • Investment of £1,239,000 in a new portfolio company, Threadneedle Software Holding Limited (T/A Solidatus), a provider of data lineage software to enterprise customers in regulated markets; and

  • Investment of £486,000 in an existing portfolio company, Healios Limited, a provider of an online platform delivering family centric psychological care primarily to children and adolescents.

On 10 February 2021, the Company was pleased to announce that it had reached its £9 million limit under its Offer which was fully subscribed and closed to further applications. The proceeds of the Offer will be used to provide further resources to our existing portfolio and to enable us to take advantage of new investment opportunities being seen.

11. Related party transactions

Other than transactions with the Manager as disclosed in note 5, there are no other related party transactions requiring disclosure.

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 72 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 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 30 June 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 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. 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 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 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 risk
The Company relies on a number of third parties, in particular the Manager, for the provision of investment management and administrative functions. Failures in key systems and controls within the Manager’s business could place assets of the Company at risk or result in reduced or inaccurate information being passed to the Board or to shareholders.

The Company and its operations are subject to a series of rigorous internal controls and review procedures exercised throughout the year, and receives reports from the Manager on internal controls and risk management, including on matters relating to cyber security. The Audit and Risk Committee reviews the Internal Audit Reports prepared by the Manager’s internal auditor, PKF Littlejohn LLP and has access to the internal audit partner of PKF Littlejohn LLP to provide an opportunity to ask specific detailed questions in order to satisfy itself that the Manager has strong systems and controls in place including those in relation to business continuity and cyber security.

From 1 October 2018, Ocorian (UK) Limited was appointed as Depositary to oversee the custody and cash arrangements and provide other AIFMD duties. The Board reviews the quarterly reports prepared by Ocorian (UK) Limited to ensure that Albion Capital is adhering to its 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.60 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. 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 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 the 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 31 December 2020 and 31 December 2019 and is unaudited. The financial information for the year ended 30 June 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 the financial year, which have been delivered to the Registrar of Companies. The Auditor’s report on those accounts was unqualified and did not contain statements 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/CRWN.

Attachment