Albion En. Vct Regulatory News (AAEV)

7 Dec 2023 12:13

Albion Enterprise VCT PLC: Half-yearly Financial Report

Albion Enterprise VCT PLC

LEI Code 213800OVSRDHRJBMO720

As required by the UK Listing Authority's Disclosure Guidance and Transparency Rule 4.2, Albion Enterprise VCT PLC today makes public its information relating to the Half-yearly Financial Report (which is unaudited) for the six months to 30 September 2023. This announcement was approved by the Board of Directors on 7 December 2023.

The full Half-yearly Financial Report (which is unaudited) for the period to 30 September 2023, will shortly be sent to shareholders. Copies of the full Half-yearly Financial Report will be shown via the Albion Capital Group LLP website by clicking www.albion.capital/funds/AAEV/30Sep23.pdf.

Investment objective and policy

Albion Enterprise VCT PLC (the “Company”) is a Venture Capital Trust and the investment objective of the Company is to provide investors with a regular source of income, combined with the prospect of longer term capital growth.

Investment policy

The Company will invest in a broad portfolio of higher growth businesses across a variety of sectors of the UK economy including higher risk technology companies. Allocation of assets will be determined by the investment opportunities which become available but efforts will be made to ensure that the portfolio is diversified both in terms of sector and stage of maturity of company.

VCT qualifying and non-VCT qualifying investments

Application of the investment policy is designed to ensure that the Company continues to qualify and is approved as a VCT by HM Revenue and Customs (“VCT regulations”). The maximum amount invested in any one company is limited to relevant HMRC annual investment limits. It is intended that normally at least 80 per cent. of the Company’s funds will be invested in VCT qualifying investments. The VCT regulations also have an impact on the type of investments and qualifying sectors in which the Company can make investment.

Funds held prior to investing in VCT qualifying assets or for liquidity purposes will be held as cash on deposit, invested in floating rate notes or similar instruments with banks or other financial institutions with high credit ratings or invested in liquid open-ended equity funds providing income and capital equity exposure (where it is considered economic to do so). Investment in such open-ended equity funds will not exceed 10 per cent. of the Company’s assets at the time of investment.

Risk diversification and maximum exposures

Risk is spread by investing in a number of different businesses within Venture Capital Trust qualifying industry sectors using a mixture of securities. The maximum amount which the Company will invest in a single 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 its adjusted share capital and reserves.

Financial calendar

2 February 2024	Record date for second dividend
29 February 2024	Payment of second dividend
31 March	Financial year end

Financial summary

	Unaudited six months ended 30 September 2023	Unaudited six months ended 30 September 2022	Auditedyear ended 31 March 2023
	(pence per share)	(pence per share)	(pence per share)
Opening net asset value	128.60	132.28	132.28
Capital (loss)/return	(3.22)	(2.13)	2.64
Revenue return	0.35	0.15	0.39
Total (loss)/return	(2.87)	(1.98)	3.03
Dividends paid	(3.22)	(3.31)	(6.49)
Impact of share capital movements	0.02	0.01	(0.22)
Net asset value	122.53	127.00	128.60

Total shareholder value	Pence per share
Net asset value on 30 September 2023	122.53
Total dividends paid to 30 September 2023	72.09
Total shareholder value to 30 September 2023	194.62

A more detailed breakdown of the dividends paid per year can be found at www.albion.capital/funds/AAEV under the ‘Dividend History’ section.

In addition to the dividends summarised above, the Board has declared a second dividend for the year ending 31 March 2024, of 3.06 pence per share to be paid on 29 February 2024 to shareholders on the register on 2 February 2024.

Interim management report

Introduction

In the six months to 30 September 2023, the Company generated a total loss of 2.87 pence per share, representing a 2.2% decrease on the opening net asset value (“NAV”). Whilst disappointing, this reduction in valuations is not too surprising given the current difficult macroeconomic and geopolitical backdrop, the Board is encouraged by the resilience of the portfolio with many of our portfolio companies growing their revenues.

Results and dividends

The total loss for the six months to 30 September 2023 was £2.9 million (30 September 2022: loss of £0.9 million; year ended 31 March 2023: gain of £2.8 million). The Company paid a first dividend of 3.22 pence per share during the period to 30 September 2023 (30 September 2022: 3.31 pence per share). As a result, the NAV has decreased to 122.53 pence per share on 30 September 2023 (31 March 2023: 128.60 pence per share).

In line with our variable dividend policy targeting a dividend around 5% of NAV per annum, the Company will pay a second interim dividend for the financial year ending 31 March 2024 of 3.06 pence per share on 29 February 2024 to shareholders on the register on 2 February 2024, being 2.5% of the 30 September 2023 NAV.

This will bring the total dividends paid for the year ending 31 March 2024 to 6.28 pence per share, which equates to a 4.9% yield on the opening NAV of 128.60 pence per share.

Investment performance and progress

The total loss on investments for the six months to 30 September 2023 was £2.1 million (30 September 2022: loss of £0.9 million; year ended 31 March 2023: gain of £4.5 million). The key upward movements in the period resulting from strong trading include: a £0.7 million increase in the valuation of Proveca and a £0.5 million increase in the valuation of Oviva. Ophelos, an investment that was held for only one year, was sold after the period end for 2 times cost, an uplift of £0.5 million during the period.

The challenging economic environment has resulted in falling valuations in some technology and healthcare companies which has consequently led to several write-downs in our portfolio. The largest of these has been Healios (loss of £0.8 million) and Threadneedle Software Holdings (T/A Solidatus) (loss of £0.7 million).

Our top 3 portfolio companies (Quantexa, Proveca and Egress) now account for 36.1% of the Company’s NAV (30 September 2022: 29.3%; 31 March 2023: 33.8%).

Given the macroeconomic uncertainty resulting from high inflation and rising interest rates, the period to 30 September 2023 has been subdued in terms of new investment activity. During the period, the Company has invested £0.6 million into two new portfolio companies (Phasecraft and Kennek Solutions) and £1.3 million into existing portfolio companies to help support them as they continue to grow, including £0.7 million into Gravitee and £0.4 million into uMed.

Investment activity has seen a recovery after the period end, with £3.2 million invested into new and follow on investments since 30 September 2023.

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

Investment portfolio by sector

The pie chart at the end of this announcement shows the different sectors in which the Company’s assets, at carrying value, were invested on 30 September 2023.

Change of Auditor

As announced on 30 October 2023, following a formal audit tender process, the Company announced the appointment of Johnston Carmichael LLP (“Johnston Carmichael”) as the Company’s Auditor with immediate effect. Johnston Carmichael will conduct the audit of the Annual Report and Financial Statements for the year ended 31 March 2024.

The Company and the Manager would like to express their appreciation and gratitude to BDO for its diligent service over the last 16 years.

Board composition and succession planning

After 17 years on the Board of Albion Enterprise VCT PLC, I will retire from the Board and my position as Chairman on 31 August 2024 after the AGM. Christopher Burrows, who has been a member of the Board since 2018, will succeed me as Chairman.

The Nomination Committee continually reviews and evaluates the membership of the Board based on the spread of skills and contributions of its members, as well as actively planning and reviewing Board succession.

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. This includes the maintenance of sufficient cash resources for investment in new and existing portfolio companies and the continued payment of dividends to shareholders.

It is the Board’s intention that such buy-backs should be at around a 5% discount to net asset value, in so far as market conditions and liquidity permit.

Risks and uncertainties

The Company faces a number of significant risks including high interest rates, high levels of inflation, the ongoing impact of geopolitical tensions and an expected period of economic stagnation or even recession in the UK. The Company’s focus on technology investments may result in greater valuation volatility in the current economic climate. Overall investment risk is mitigated in a number of ways. In particular, the Manager is continually assessing the exposure to these risks for each portfolio company and mitigating actions, where possible, are being implemented.

In accordance with the Disclosure Guidance and Transparency Rules (“DTR”) 4.2.7, the Board confirms that the principal 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 2023. There is heightened uncertainty, but this has not changed the nature of the principal risks. The Board considers that the present actions to mitigate those risks remain appropriate.

The principal risks faced by the Company are:

• Investment, performance, technology and valuation risk;

• VCT approval risk;

• Regulatory and compliance risk;

• Operational and internal control risk;

• Cyber and data security risk;

• Economic, political and social risk;

• Environmental, social and governance (“ESG”) risk; and

• Liquidity risk.

A detailed analysis of the principal risks and uncertainties facing the business can be found in the Annual Report and Financial Statements for the year ended 31 March 2023 on pages 23 to 26, copies of which are available on the Company’s webpage on the Manager’s website at www.albion.capital/funds/AAEV under the ‘Financial Reports and Circulars’ section.

Transactions with the Manager

Details of transactions with the Manager for the reporting period can be found in note 5. Details of related party transactions can be found in note 11.

Albion VCTs Top Up Offers

Your Board, in conjunction with the boards of four of the other VCTs managed by Albion Capital Group LLP, intends to launch a prospectus top up offer of new Ordinary shares for subscription in the 2023/24 and 2024/25 tax years. Full details of the Offer will be contained in a prospectus that is expected to be published prior to launch in early January 2024 and will be made available at www.albion.capital/vct-hub/current-offers.

The proceeds will be used to provide support to our existing portfolio companies and to enable us to take advantage of new investment opportunities.

Move to electronic communications

The Board wishes to minimise the environmental impact of how the Company communicates with its shareholders. With this in mind, those shareholders that continue to receive physical copies of the Annual Report and other documentation, will receive a letter alongside this Half-Yearly Financial Report explaining the forthcoming move to electronic communications.

Prospects

Although there remain many uncertainties facing the Company, with high levels of inflation, elevated interest rates and ongoing geopolitical tensions, the portfolio remains encouragingly resilient during these challenging times. The portfolio remains well diversified with companies at different stages of maturity and targeted at growth sectors such as healthcare, data analytics and FinTech. We believe these sectors can provide opportunities for positive results for the Company and its shareholders over the longer-term.

Maxwell PackeChairman7 December 2023

Portfolio of investments

		On 30 September 2023
Fixed asset investments	% voting rights	Cost£’000	Cumulative movementin value£’000	Value£’000		Change in value for the period*£’000
Quantexa	2.1	2,108	22,211	24,319		-
Egress Software Technologies	9.9	3,365	9,460	12,825		68
Proveca	9.6	1,850	5,613	7,463		739
Oviva	2.8	2,601	1,823	4,424		482
Radnor House School (TopCo)	9.4	1,729	2,207	3,936		80
The Evewell Group	6.1	1,477	1,202	2,679		(575)
Gravitee TopCo (T/A Gravitee.io)	3.8	2,168	367	2,535		-
Healios	4.0	2,500	(325)	2,175		(847)
Regenerco Renewable Energy	12.5	1,261	628	1,889		(10)
Convertr Media	6.2	992	880	1,872		(201)
Runa Network	1.9	1,396	414	1,810		88
Cantab Research (T/A Speechmatics)	1.6	1,359	239	1,598		-
The Street by Street Solar Programme	8.6	891	629	1,520		(75)
Threadneedle Software Holdings (T/A Solidatus)	2.2	1,360	156	1,516		(654)
Aridhia Informatics	6.4	1,244	158	1,402		87
Peppy Health	1.5	1,372	-	1,372		-
Toqio FinTech Holdings	1.8	1,279	-	1,279		-
Panaseer	2.3	816	437	1,253		51
Elliptic Enterprises	0.9	1,219	-	1,219		-
TransFICC	1.9	938	223	1,161		-
Alto Prodotto Wind	11.1	687	386	1,073		(84)
Seldon Technologies	3.1	1,046	-	1,046		(133)
Ophelos	2.0	526	513	1,039		513
Greenenerco	28.6	604	418	1,022		(83)
InCrowd Sports	3.8	589	390	979		144
NuvoAir Holdings	2.0	826	108	934		(264)
Accelex Technology	2.9	644	250	894		250
Beddlestead	8.1	966	(75)	891		44
Cisiv	6.1	799	33	832		66
GX Molecular (T/A CS Genetics)	2.7	786	-	786		-
uMedeor (T/A uMed)	2.2	603	66	669		-
OutThink	2.6	644	-	644		-
Locum's Nest	5.1	602	(12)	590		39
Diffblue	2.3	541	-	541		-
PeakData	1.9	862	(330)	532		(387)
Phasecraft	0.8	455	-	455		-
PetsApp	2.4	450	-	450		-
Perchpeek	1.9	591	(146)	445		(146)
Koru Kids	2.1	674	(311)	363		(204)
5Mins AI	2.0	360	-	360		-
Arecor Therapeutics PLC	0.4	145	119	264		(32)
Imandra	1.3	173	90	263		2
Ramp Software	1.7	257	-	257		-
AVESI	5.5	179	38	217		(2)
Tem Energy	1.7	213	-	213		-
Mirada Medical	5.0	1,487	(1,279)	208		-
Kennek Solutions	0.6	186	-	186		-
Regulatory Genome Development	0.8	126	43	169		43
Neurofenix	2.7	552	(388)	164		(223)
Brytlyt	1.8	390	(274)	116		(274)
Infact Systems	1.7	88	-	88		-
MHS 1	1.2	83	5	88		1
Symetrica	0.2	63	(4)	59		(1)
Black Swan Data	3.5	2,237	(2,202)	35		(238)
DySIS Medical	2.7	2,742	(2,735)	7		(439)
Limitless Technology	1.8	471	(471)	-		(113)
Total fixed asset investments		54,572	40,554	95,126		(2,288)

T/A = trading as

* As adjusted for additions and disposals during the period.

Investment realisations in the period to 30 September 2023	Cost£’000	Openingcarryingvalue£’000	Disposalproceeds£’000	Totalrealisedgain/(loss)£’000	Gain/(loss) onopeningvalue£’000
Disposals:
Arecor Therapeutics PLC	65	133	106	41	(27)
uMotif	1,109	66	1	(1,108)	(65)
Loan stock repayments, conversions and other:
uMedeor (T/A uMed)	67	70	71	4	1
Greenenerco	33	50	50	17	-
Alto Prodotto Wind	36	51	51	15	-
Escrow adjustments*	-	-	36	36	36
Total fixed asset realisations	1,310	370	315	(995)	(55)

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

						£’000
Total change in value of investments for the period						(2,288)
Movement in loan stock accrued interest						46
Unrealised losses on fixed asset investments sub-total						(2,242)
Realised losses in the current period						(55)
Unwind of discount on deferred consideration						175
Total losses on investments as per Income statement						(2,122)

Responsibility statement

The Directors, Maxwell Packe, Christopher Burrows, Pippa Latham, Patrick Reeve and Rhodri Whitlock, are responsible for preparing the Half-yearly Financial Report. In preparing these condensed Financial Statements for the period to 30 September 2023 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

Maxwell Packe

Chairman7 December 2023

Condensed income statement

		Unaudited six months ended 30 September 2023			Unaudited six months ended 30 September 2022			Audited year ended 31 March 2023
	Note	Revenue £’000	Capital £’000	Total £’000	Revenue £’000	Capital £’000	Total £’000	Revenue £’000	Capital £’000	Total £’000
(Losses)/gains on investments	3	-	(2,122)	(2,122)	-	(872)	(872)	-	4,535	4,535
Investment income	4	818	-	818	553	-	553	1,206	-	1,206
Investment Manager’s fees	5	(125)	(1,129)	(1,254)	(116)	(1,044)	(1,160)	(236)	(2,121)	(2,357)
Other expenses		(342)	-	(342)	(301)	-	(301)	(618)	-	(618)
Profit/(loss) on ordinary activities before taxation		351	(3,251)	(2,900)	136	(1,916)	(1,780)	352	2,414	2,766
Tax charge on ordinary activities		-	-	-	-	-	-	-	-	-
Profit/(loss) and total comprehensive income attributable to shareholders		351	(3,251)	(2,900)	136	(1,916)	(1,780)	352	2,414	2,766
Basic and diluted profit/(loss) per share (pence)*	7	0.35	(3.22)	(2.87)	0.15	(2.13)	(1.98)	0.39	2.64	3.03

* adjusted for treasury shares

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

Comparative figures have been extracted from the unaudited Half-yearly Financial Report for the six months ended 30 September 2022 and the audited statutory accounts for the year ended 31 March 2023.

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

	Note	Unaudited 30 September 2023£’000	Unaudited 30 September 2022£’000	Audited 31 March 2023£’000
Fixed asset investments		95,126	86,182	95,798
Current assets
Trade and other receivables		3,377	2,679	2,561
Cash in bank and at hand		26,317	26,008	32,860
		29,694	28,687	35,421
Payables: amounts falling due within one year
Trade and other payables		(1,217)	(828)	(1,489)
Net current assets		28,477	27,859	33,932
Total assets less current liabilities		123,603	114,041	129,730
Equity attributable to equity holders
Called-up share capital	8	1,163	1,028	1,154
Share premium		26,542	9,606	25,520
Unrealised capital reserve		40,432	34,037	41,735
Realised capital reserve		8,937	14,253	10,885
Other distributable reserve		46,529	55,117	50,436
Total equity shareholders’ funds		123,603	114,041	129,730
Basic and diluted net asset value per share (pence)*		122.53	127.00	128.60

* excluding treasury shares

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

Comparative figures have been extracted from the unaudited Half-yearly Financial Report for the six months ended 30 September 2022 and the audited statutory accounts for the year ended 31 March 2023.

These Financial Statements were approved by the Board of Directors, and authorised for issue on 7 December 2023 and were signed on its behalf by

Maxwell Packe

Chairman

Company number: 05990732

Condensed statement of changes in equity

	Called-upsharecapital£’000	Sharepremium£’000	Unrealisedcapitalreserve £’000	Realisedcapitalreserve*£’000	Other distributablereserve*£’000	Total£’000
As at 1 April 2023	1,154	25,520	41,735	10,885	50,436	129,730
Profit/(loss) and total comprehensive income for the period	-	-	(2,242)	(1,009)	351	(2,900)
Transfer of previously unrealised losses on disposal of investments	-	-	939	(939)	-	-
Issue of equity	9	1,054	-	-	-	1,063
Cost of issue of equity	-	(32)	-	-	-	(32)
Purchase of shares for treasury	-	-	-	-	(1,011)	(1,011)
Dividends paid	-	-	-	-	(3,247)	(3,247)
As at 30 September 2023	1,163	26,542	40,432	8,937	46,529	123,603
As at 1 April 2022	1,017	8,278	32,790	17,416	58,914	118,415
Profit/(loss) and total comprehensive income for the period	-	-	(1,351)	(565)	136	(1,780)
Transfer of previously unrealised losses on disposal of investments	-	-	2,598	(2,598)	-	-
Issue of equity	11	1,366	-	-	-	1,377
Cost of issue of equity	-	(38)	-	-	-	(38)
Purchase of shares for treasury	-	-	-	-	(964)	(964)
Dividends paid	-	-	-	-	(2,969)	(2,969)
As at 30 September 2022	1,028	9,606	34,037	14,253	55,117	114,041
As at 1 April 2022	1,017	8,278	32,790	17,416	58,914	118,415
Profit/(loss) and total comprehensive income for the year
	-	-	4,805	(2,391)	352	2,766
Transfer of previously unrealised losses on disposal of investments	-	-	4,140	(4,140)	-	-
Issue of equity	137	17,680	-	-	-	17,817
Cost of issue of equity	-	(438)	-	-	-	(438)
Purchase of shares for treasury	-	-	-	-	(2,879)	(2,879)
Dividends paid	-	-	-	-	(5,951)	(5,951)
As at 31 March 2023	1,154	25,520	41,735	10,885	50,436	129,730

* Included within these reserves is an amount of £25,812,000 (30 September 2022: £30,514,000; 31 March 2023: £22,964,000) which is considered distributable. Over the next two years an additional £21,891,000 will become distributable. This is due to the HMRC requirement that the Company cannot use capital raised in the past three years to make a payment or distribution to shareholders.

Condensed statement of cash flows

	Unaudited six months ended 30 September 2023£’000	Unaudited six months ended 30 September 2022£’000	Audited year ended 31 March 2023£’000
Cash flow from operating activities
Loan stock income received	377	304	641
Dividend income received	227	117	152
Income from fixed term funds received	115	26	102
Deposit interest received	266	19	82
Investment management fee paid	(1,267)	(3,095)	(4,233)
Other cash payments	(379)	(362)	(626)
Net cash flow generated from operating activities	(661)	(2,991)	(3,882)
Cash flow from investing activities
Purchase of fixed asset investments	(2,865)	(7,377)	(12,455)
Proceeds from disposals of fixed asset investments	439	964	2,088
Net cash flow generated from investing activities	(2,426)	(6,413)	(10,367)
Cash flow from financing activities
Issue of share capital	528	9,178	24,753
Cost of issue of equity	(19)	(18)	(53)
Dividends paid*	(2,725)	(2,446)	(4,945)
Purchase of own shares (including costs)	(1,240)	(854)	(2,198)
Net cash flow generated from financing activities	(3,456)	5,860	17,557
(Decrease)/increase in cash in bank and at hand	(6,543)	(3,544)	3,308
Cash in bank and at hand at start of period	32,860	29,552	29,552
Cash in bank and at hand at end of period	26,317	26,008	32,860

\* The dividends paid shown in the cash flow are different to the dividends disclosed in note 6 as a result of the non-cash effect of the Dividend Reinvestment Scheme.

Notes to the condensed Financial Statements

1. Basis of accounting

The Financial Statements have been prepared in accordance with applicable United Kingdom law and accounting standards, including Financial Reporting Standard 102 (“FRS 102”), 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.

Company information can be found on page 4 of the full 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, 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; ormarket 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 (including debtors due after more than one year), payables and cash are carried at amortised cost, in accordance with FRS 102. Debtors due after more than one year meet the definition of a financing transaction held at amortised cost, and interest will be recognised through capital over the credit period using the effective interest method. There are no financial liabilities other than payables.

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

Unquoted loan stockFixed 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.

Fixed term funds incomeFunds income is recognised on an accruals basis using the agreed rate of interest.

Bank deposit incomeInterest income is recognised on an accruals basis using the rate of interest agreed with the bank.

Investment management fee, performance incentive fee and 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:

90% of management fees and 100% of performance incentive fees, if any, are allocated to the realised capital reserve; and expenses 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.

Share capital and reservesCalled-up share capitalThis accounts for the nominal value of the Company’s shares.

Share premiumThis accounts for the difference between the price paid for the Company’s shares and the nominal value of those shares, less issue costs and transfers to the other distributable reserve.

Capital redemption reserveThis 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 year 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, or permanent diminutions in value (including gains recognised on the realisation of investment where consideration is deferred that are not distributable as a matter of law);finance income in respect of the unwinding of the discount on deferred consideration that is not distributable as a matter of law;expenses, together with the related taxation effect, charged in accordance with the above policies; anddividends paid to equity holders where paid out by capital.

Other distributable reserveThe special reserve, treasury share reserve and the revenue reserve were combined in 2013 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 when the liability to make the payment (record date) has been established.

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. (Losses)/gains on investments

	Unaudited six months ended 30 September 2023£’000	Unaudited six months ended 30 September 2022£’000	Auditedyear ended 31 March 2023£’000
Unrealised (losses)/gains on fixed asset investments	(2,242)	(1,351)	4,805
Realised(losses)/gains on fixed asset investments	(55)	329	(582)
Unwinding of discount on deferred consideration	175	150	312
	(2,122)	(872)	4,535

4. Investment income

	Unaudited six months ended 30 September 2023£’000	Unaudited six months ended 30 September 2022£’000	Auditedyear ended 31 March 2023£’000
Loan stock interest	331	391	750
Bank deposit interest	266	19	82
Income from fixed term funds	115	26	102
Dividend income	106	117	272
	818	553	1,206

5. Investment Manager’s fees

	Unaudited six months ended 30 September 2023£’000		Unaudited six months ended 30 September 2022£’000	Auditedyear ended 31 March 2023£’000
Investment management fee charged to revenue	125		116	236
Investment management fee charged to capital	1,129		1,044	2,121
	1,254	1,160		2,357

Further details of the Management agreement under which the investment management fee and performance incentive fee are paid is given in the Strategic report on page 18 of the Annual Report and Financial Statements for the year ended 31 March 2023.

During the period, services of a total value of £1,381,000 (30 September 2022: £1,276,000; 31 March 2023: £2,595,000) were purchased by the Company from Albion Capital Group LLP; this includes £1,254,000 (30 September 2022: £1,160,000; 31 March 2023: £2,357,000) of management fee and £127,000 (30 September 2022: £116,000; 31 March 2023: £238,000) of administration fee. At the financial period end, the amount due to Albion Capital Group LLP in respect of these services disclosed within payables was £676,000 (30 September 2022: £625,000; 31 March 2023: £692,000).

During the period, the Company was not charged by Albion Capital Group LLP in respect of Patrick Reeve’s services as a Director (30 September 2022: £nil; 31 March 2023: £nil).

Albion Capital Group LLP, its partners and staff (including Patrick Reeve) held a total of 807,494 shares in the Company on 30 September 2023.

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 2023, fees of £57,000 attributable to the investments of the Company were received pursuant to these arrangements (30 September 2022: £139,000; 31 March 2023: £252,000).

6. Dividends

	Unauditedsix months ended30 September 2023£’000	Unauditedsix months ended30 September 2022£’000	Auditedyear ended31 March 2023£’000
First dividend of 3.22p per share paid on 31 August 2023 (31 August 2022: 3.31p per share)	3,247	2,969	2,969
Second dividend of 3.18p per share paid on 28 February 2023	-	-	2,985
Unclaimed dividends	-	-	(3)
	3,247	2,969	5,951

In addition to the dividends summarised above, the Board has declared a second dividend for the year ending 31 March 2024 of 3.06 pence per share (total approximately £3,087,000), which will be paid on 29 February 2024 to shareholders on the register on 2 February 2024.

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

	Unauditedsix months ended 30 September 2023		Unauditedsix months ended 30 September 2022		Auditedyear ended 31 March 2023
	Revenue	Capital	Revenue	Capital	Revenue	Capital
Return/(loss) attributable to equity shares (£’000)	351	(3,251)	136	(1,916)	352	2,414
Weighted average shares in issue	101,120,220		89,944,537		91,226,939
Return/(loss) per Ordinary share (pence)	0.35	(3.22)	0.15	(2.13)	0.39	2.64

The weighted average number of shares is calculated after adjusting for treasury shares of 15,395,005 (30 September 2022: 12,967,934; 31 March 2023: 14,558,366).

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 each	Unaudited30 September 2023	Unaudited30 September 2022	Audited31 March 2023
Number of shares	116,271,342	102,766,464	115,435,416
Nominal value of allotted shares (£’000)	1,163	1,028	1,154
Voting rights (number of shares net of treasury shares)	100,876,337	89,798,530	100,877,050

During the period to 30 September 2023, the Company purchased 836,639 shares (30 September 2022: 772,366; 31 March 2023: 2,362,798) to be held in treasury at a nominal value of £8,366 and at a cost of £1,011,000. The total number of shares held in treasury on 30 September 2023 was 15,395,005 (30 September 2022: 12,967,934; 31 March 2023: 14,558,366) representing 13.2% of the shares in issue on 30 September 2023.

Under the terms of the Dividend Reinvestment Scheme Circular (dated 26 November 2009), the following new shares of nominal value 1 penny each were allotted during the period to 30 September 2023:

Date of allotment	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)
31 August 2023	420,051	4		124.21	503	118.50

Under the terms of the Albion VCTs Prospectus Top Up Offers 2022/23, the following new shares of nominal value 1 penny each were allotted during the period to 30 September 2023:

Date of allotment	Number of shares allotted	Aggregate nominal value of shares £’000	Issue price (pence per share)	Net consideration received £’000	Opening market price on allotment date (pence per share)
14 April 2023	66,837	1	128.90	85	120.50
14 April 2023	37,836	-	129.50	48	120.50
14 April 2023	311,202	3	130.20	395	120.50
	415,875			528

9. Commitments and contingenciesOn 30 September 2023, the Company had no financial commitments (30 September 2022: £nil; 31 March 2023: £nil).

There were no contingencies or guarantees of the Company as at 30 September 2023 (30 September 2022: £nil; 31 March 2023: £nil).

10. Post balance sheet eventsSince 30 September 2023, the company has completed the following material investment transactions:

As announced on 6 October 2023, the Company sold a proportion of its holding in Quantexa at its current holding value returning proceeds of £2.2 million;Disposal of Ophelos for proceeds of £1.1 million; andInvestments totalling £3.2 million in one new and six existing portfolio companies.

As announced on 30 October 2023, following a formal tender process, Johnston Carmichael LLP were appointed as the Company's Auditor.

11. Related party transactionsOther than transactions with the Manager as disclosed in note 5, there are no other related party transactions or balances requiring disclosure.

12. Going concernThe 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 the current economic climate and increasingly volatile geopolitical backdrop. 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 88 of those accounts.

The portfolio of investments is diversified in terms of sector and the major cash outflows of the Company (namely investments, dividends and share buy-backs) are within the Company’s control. Accordingly, after making diligent enquiries, the Directors have a reasonable expectation that the Company has adequate cash and liquid resources to continue in operational existence for the foreseeable future. For this reason, the Directors have adopted the going concern basis in preparing this Half-yearly Financial Report and this is in accordance with the Guidance on Risk Management, Internal Control and Related Financial and Business Reporting issued by the Financial Reporting Council in September 2014, and the subsequent updated Going concern, risk and viability guidance issued by the FRC in 2021.

13. Other informationThe 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 2023 and 30 September 2022, and is unaudited. The information for the year ended 31 March 2023 does not constitute statutory accounts within the terms of section 434 of the Companies Act 2006 but is derived from the statutory accounts for the financial year, which have been delivered to the Registrar of Companies. BDO LLP, as Auditor, reported on those accounts; their report was unqualified and did not contain statements under s498 (2) or (3) of the Companies Act 2006.

14. PublicationThis 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/AAEV, where the Report can be accessed from the ‘Financial Reports and Circulars’ section.

Attachment

AAEV pie chart 30 September 2023