CROWN PLACE VCT PLC 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 2023. This announcement was approved by the Board of Directors on 28 February 2024.
The full Half-yearly Financial Report for the period to 31 December 2023 will shortly be sent to shareholders and will be available on the Albion Capital Group LLP website by clicking www.albion.capital/funds/CRWN/31Dec23.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 will be held principally 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% 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 dividend | 8 March 2024 |
| Payment date of second dividend | 28 March 2024 |
| Financial year end | 30 June 2024 |
Financial summary
Movements in net asset value
| Six months ended | Six months ended | Year ended | |
| 31 December 2023 | 31 December 2022 | 30 June 2023 | |
| (pence per share) | (pence per share) | (pence per share) | |
| Opening net asset value | 33.13 | 33.70 | 33.70 |
| Capital (loss)/return | (1.39) | (1.20) | 0.92 |
| Revenue return | 0.10 | 0.06 | 0.13 |
| Total (loss)/return | (1.29) | (1.14) | 1.05 |
| Dividends paid | (0.83) | (0.84) | (1.63) |
| Impact from share capital movements | 0.02 | 0.07 | 0.01 |
| Closing net asset value | 31.03 | 31.79 | 33.13 |
| Total 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 2023 (period that Albion Capital has been investment manager): | |
| Total dividends paid | 44.08 |
| Decrease in net asset value | (12.37) |
| Total shareholder return from April 2005 to 31 December 2023 | 31.71 |
| Shareholder value since launch: | |
| Total dividends paid to 31 December 2023(i) | 69.01 |
| Net asset value as at 31 December 2023 | 31.03 |
| Total shareholder value as at 31 December 2023 | 100.04 |
Notes
(i) Prior to 6 April 1999, Venture Capital Trusts were able to add 20% 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 2024 of 0.78 pence per share to be paid on 28 March 2024 to shareholders on the register on 8 March 2024. 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
In the six-month period to 31 December 2023, your Company delivered a total loss of 1.29 pence per share, representing a 3.9% decrease on the opening net asset value. This is a result of the difficult macroeconomic and geopolitical backdrop currently being faced. Despite the ongoing uncertainty, the Board remains encouraged by the prospects of the portfolio.
Following the payment of the 0.83 pence per share dividend during the period, the net asset value as at 31 December 2023 was 31.03 pence per share (30 June 2023: 33.13 pence per share).
Portfolio review
The total net loss on investments for the six months to 31 December 2023 was £3.2 million (31 December 2022: loss of £2.4 million). Our two hydro renewable energy assets, Chonais River Hydro and Gharagain River Hydro saw their valuations decrease by £1.1 million and £0.3 million respectively after a reduction in the forecast annual energy generation based on historic production. The challenging economic environment and the general decline in comparable market prices across the technology sector has resulted in the valuations of some of the technology and healthcare companies in the portfolio falling, including: a £0.6 million decrease in Threadneedle Software Holding (T/A Solidatus); and a £0.4 million decrease in Healios. These were partially offset by uplifts of £0.3 million in Oviva and £0.3 million in Proveca.
During the period the Company made a partial disposal of its holding in Quantexa, delivering 9.4 times return on its weighted average cost on the shares sold. It also sold its investment in Ophelos, delivering a return of 2.1 times cost. Further information and other realisations in the period can be found in the realisations table below.
During the period, the Company deployed a total of £4.9 million into new and existing investments (31 December 2022: £7.5 million), with £1.7m representing investments into five new portfolio companies, as listed below:
• £0.7 million into OpenDialog AI, which allows organisations to create and deploy AI powered chatbots and virtual assistants in a no-code environment, to allow for conversational experiences with customers and employees across a variety of communication channels;
• £0.4 million into GridCog International, a SaaS platform which provides project modelling software to plan, track and optimise Distributed Energy Resources (DERs) across multiple sites and asset types integrated together;
• £0.4 million into Phasecraft, which develops new algorithms to make use of early quantum computers for materials science problems;
• £0.1 million into Kennek Solutions, a vertical end to end software for non-bank lenders that allows them to manage the full value chain of lending in a single platform; and
• £0.1 million into Mondra Global, a provider of a proprietary environmental digital twin to automate environmental product Lifecycle Assessments (LCA), allowing global retailers to measure, manage and reduce carbon emissions in their supply chains.
Further investments were made into a number of existing portfolio companies to support their continuing growth, most notably: £0.6 million into Panaseer, a provider of cyber security services; and £0.6 million into Gravitee TopCo (T/A Gravitee.io), an API management platform.
Further details of the portfolio of investments can be found below.
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 2023.
Change of Auditor
As announced on 30 October 2023, following a formal audit tender process, the Company appointed Johnston Carmichael LLP (“Johnston Carmichael”) as Auditor with immediate effect. Johnston Carmichael will conduct the audit of the Annual Report and Financial Statements for the year ended 30 June 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
On 22 November 2023, Penny Freer retired from the Board and I became Chairman. I would like to thank Penny for her invaluable contribution, guidance and leadership throughout her time as Director, and wish her well in her future endeavours.
As part of the Board’s succession planning, we were pleased to welcome Tony Ellingham as a Director on 1 September 2023 and with effect from 22 November 2023 Tony became the Audit & Risk Committee Chairman. Tony brings extensive finance experience with excellent knowledge of regulatory reporting, particularly with public companies.
Dividends
In line with the variable dividend policy targeting an annual dividend yield of 5% on the prevailing net asset value, the first dividend for the current financial year of 0.83 pence per share was paid on 30 November 2023. A second dividend of 0.78 pence per share will be paid on 28 March 2024 to shareholders on the register on 8 March 2024, being 2.5% of the 31 December 2023 net asset value.
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 low economic growth in the UK. Our investment portfolio, while concentrated principally in the technology and healthcare sectors, remains diversified in terms of both sub-sector and stage of maturity. As well as this, 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 30 June 2023. There remains high levels of uncertainty but this has not changed the nature of the principal risks. The Board considers that the present processes for mitigating those risks remain appropriate.
The principal risks faced by the Company are:
• Investment, performance, technology and valuation risk;
• VCT approval and regulatory change risk;
• Regulatory and compliance risk;
• Operational and internal control risk;
• Cyber and data security risk;
• Economic and political risk;
• Environmental, social and governance (“ESG”) risk; and
• Liquidity risk.
A detailed explanation of the principal risks facing the Company can be found in the Annual Report and Financial Statements for the year ended 30 June 2023 on pages 23 to 25, copies of which are available on the Company’s webpage on the Manager’s website at www.albion.capital/funds/CRWN under the ‘Financial Reports and Circulars’ section.
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 share 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 a total of 4,068,839 shares, of which 2,502,101 shares are held in treasury and 1,566,738 shares have been cancelled. This was at a total cost of £1,265,000.
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 Top Up Offers
Your Board, in conjunction with the Boards of four other VCTs managed by Albion Capital Group LLP, published a Prospectus Top Up Offer of new Ordinary Shares on 15 December 2023. The Offer launched to applications on 2 January 2024 and is expected to close no later than 30 September 2024 (unless fully subscribed by an earlier date or previously closed). The amount targeted to be raised by the Company is £7.5 million.
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.
Outlook and prospects
The Board remains encouraged by the longer-term prospects for our portfolio companies. The elevated interest rate environment and ongoing geopolitical tensions, and their impact on corporate investment, will likely continue to weigh on the performance of the portfolio in the short-term, however we also expect the continuing technological innovation to create attractive long-term investment opportunities. Indeed, we are seeing an encouraging increase in exciting young companies looking for funding. Our focus on technology and healthcare, thus minimising exposure to discretionary consumer expenditure, is designed to help the Company weather uncertain times.
James Agnew
Chairman
28 February 2024
Portfolio of investments
| As at 31 December 2023 | |||||
Portfolio company | % voting rights | Cost £'000 | Cumulative movement in value £'000 | Value £'000 | Change in value for the period* £'000 |
| Quantexa | 1.3 | 1,776 | 13,983 | 15,759 | - |
| Proveca | 5.6 | 1,643 | 3,371 | 5,014 | 269 |
| Radnor House School (TopCo) | 8.7 | 1,592 | 1,882 | 3,474 | (100) |
| Oviva | 1.9 | 1,766 | 1,107 | 2,873 | 309 |
| Runa Network | 2.7 | 2,152 | 588 | 2,740 | 109 |
| The Evewell Group | 5.1 | 1,240 | 1,141 | 2,381 | (91) |
| Chonais River Hydro | 14.0 | 1,549 | 827 | 2,376 | (1,062) |
| Gravitee TopCo (T/A Gravitee.io) | 3.1 | 1,724 | 292 | 2,016 | - |
| Healios | 5.0 | 1,877 | 10 | 1,887 | (382) |
| Cantab Research (T/A Speechmatics) | 1.8 | 1,521 | 150 | 1,671 | (117) |
| Gharagain River Hydro | 15.0 | 1,116 | 484 | 1,600 | (327) |
| Panaseer | 1.9 | 1,147 | 334 | 1,481 | 92 |
| Egress Software Technologies | 0.9 | 306 | 1,075 | 1,381 | 220 |
| Convertr Media | 4.3 | 680 | 636 | 1,316 | 10 |
| Elliptic Enterprises | 0.8 | 1,255 | 2 | 1,257 | 2 |
| Seldon Technologies | 3.5 | 1,193 | - | 1,193 | - |
| Peppy Health | 1.3 | 1,157 | - | 1,157 | - |
| Threadneedle Software Holdings (T/A Solidatus) | 2.0 | 1,239 | (105) | 1,134 | (605) |
| TransFICC | 2.4 | 1,066 | - | 1,066 | (209) |
| Beddlestead | 8.2 | 1,060 | (33) | 1,027 | 57 |
| Toqio FinTech Holdings | 2.0 | 1,017 | - | 1,017 | - |
| Accelex Technology | 2.3 | 655 | 311 | 966 | 78 |
| The Street by Street Solar Programme | 4.4 | 461 | 356 | 817 | 16 |
| NuvoAir Holdings | 1.7 | 707 | 59 | 766 | (231) |
| OpenDialog AI | 2.5 | 742 | - | 742 | - |
| uMedeor (T/A uMed) | 3.2 | 598 | 76 | 674 | - |
| GX Molecular (T/A CS Genetics) | 2.1 | 615 | - | 615 | - |
| InCrowd Sports | 2.4 | 374 | 157 | 531 | (96) |
| Regenerco Renewable Energy | 3.4 | 344 | 179 | 523 | 5 |
| OutThink | 2.0 | 505 | - | 505 | - |
| Aridhia Informatics | 2.3 | 442 | 44 | 486 | 10 |
| Locum’s Nest | 4.1 | 482 | (10) | 472 | 32 |
| MHS 1 | 6.9 | 481 | (17) | 464 | (47) |
| PerchPeek | 2.4 | 755 | (302) | 453 | (302) |
| Diffblue | 1.8 | 425 | - | 425 | - |
| GridCog International | 2.2 | 423 | - | 423 | - |
| PeakData | 1.5 | 685 | (271) | 414 | (311) |
| Alto Prodotto Wind | 4.1 | 248 | 163 | 411 | (15) |
| Phasecraft | 0.6 | 358 | - | 358 | - |
| PetsApp | 1.9 | 354 | - | 354 | - |
| 5Mins Al | 1.6 | 284 | - | 284 | - |
| Koru Kids | 1.4 | 434 | (200) | 234 | (82) |
| Imandra | 1.1 | 155 | 70 | 225 | - |
| Cisiv | 2.1 | 278 | (54) | 224 | (66) |
| Ramp Software | 1.5 | 217 | - | 217 | - |
| Tem-Energy | 1.5 | 193 | - | 193 | - |
| AVESI | 3.8 | 123 | 28 | 151 | 2 |
| Kennek Solutions | 0.5 | 147 | - | 147 | - |
| Mondra Global | 0.1 | 141 | - | 141 | - |
| Arecor Therapeutics PLC | 0.3 | 93 | 42 | 135 | (35) |
| Neurofenix | 2.1 | 432 | (303) | 129 | (59) |
| Regulatory Genome Development | 0.8 | 128 | (27) | 101 | (71) |
| Mirada Medical | 2.0 | 511 | (424) | 87 | - |
| Infact Systems | 1.4 | 75 | - | 75 | - |
| Greenenerco | 1.9 | 43 | 31 | 74 | (3) |
| Brytlyt | 2.3 | 499 | (438) | 61 | (320) |
| Symetrica | 0.2 | 57 | (3) | 54 | - |
| Kew Green VCT (Stansted) | 2.0 | 22 | 26 | 48 | (3) |
| Black Swan Data | 2.1 | 1,471 | (1,449) | 22 | (1) |
| DySIS Medical | 1.0 | 1,038 | (1,035) | 3 | (166) |
| Other holdings | 422 | 37 | 459 | - | |
| Total fixed asset investments | 44,493 | 22,790 | 67,283 | (3,490) |
* As adjusted for additions and disposals between the two accounting periods.
| Realisations in the period to 31 December 2023 | Cost £’000 | Opening carrying value £’000 | Disposal proceeds £’000 | Total realised gain/(loss) £’000 | (Loss)/gain on opening value £’000 |
| Disposals: | |||||
| Quantexa | 21 | 1,177 | 1,176 | 1,155 | (1) |
| Ophelos | 521 | 956 | 1,069 | 548 | 113 |
| Arecor Therapeutics PLC | 50 | 91 | 76 | 26 | (15) |
| uMotif | 1,022 | 1 | 1 | (1,021) | - |
| Limitless Technology | 412 | - | - | (412) | - |
| Loan stock repayments and other: | |||||
| Alto Prodotto Wind | 13 | 19 | 19 | 6 | - |
| Greenenerco | 2 | 3 | 3 | 1 | - |
| Escrow adjustments and other* | 292 | 302 | 330 | 38 | 28 |
| Total fixed asset investment realisations | 2,333 | 2,549 | 2,674 | 341 | 125 |
* These comprise loan stock investments converted to equity and 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 | (3,490) | ||||
| Movement in loan stock accrued interest | 38 | ||||
| Unrealised losses sub-total | (3,452) | ||||
| Realised gains in current period | 125 | ||||
| Finance income from the unwinding of discount on deferred consideration | 125 | ||||
| Total losses on investments as per condensed income statement | (3,202) |
Responsibility statement
The Directors, James Agnew, Tony Ellingham, 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 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”, 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
James Agnew
Chairman
28 February 2024
Condensed income statement
| Unaudited | Unaudited | Audited | ||||||||
| six months ended 31 December 2023 | six months ended 31 December 2022 | year ended 30 June 2023 | ||||||||
| Revenue | Capital | Total | Revenue | Capital | Total | Revenue | Capital | Total | ||
| Note | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | |
| (Losses)/gains on investments | 3 | - | (3,202) | (3,202) | - | (2,405) | (2,405) | - | 3,846 | 3,846 |
| Investment income | 4 | 640 | - | 640 | 448 | - | 448 | 936 | - | 936 |
| Investment Manager’s fees | 5 | (80) | (717) | (797) | (76) | (679) | (755) | (153) | (1,380) | (1,533) |
| Other expenses | (273) | - | (273) | (213) | - | (213) | (432) | - | (432) | |
| Profit/(loss) on ordinary activities before tax | 287 | (3,919) | (3,632) | 159 | (3,084) | (2,925) | 351 | 2,466 | 2,817 | |
| Tax on ordinary activities | - | - | - | - | - | - | - | - | - | |
| Profit/(loss) and total comprehensive income attributable to shareholders | 287 | (3,919) | (3,632) | 159 | (3,084) | (2,925) | 351 | 2,466 | 2,817 | |
| Basic and diluted earnings/(loss) per Ordinary share (pence)* | 7 | 0.10 | (1.39) | (1.29) | 0.06 | (1.20) | (1.14) | 0.13 | 0.92 | 1.05 |
* Adjusting for treasury shares.
Comparative figures have been extracted from the unaudited Half-yearly Financial Report for the six months ended 31 December 2022 and the audited statutory accounts for the year ended 30 June 2023.
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 2023 | 31 December 2022 | 30 June 2023 | ||
| Note | £’000 | £’000 | £’000 | |
| Fixed asset investments | 67,283 | 61,926 | 68,000 | |
| Current assets | ||||
| Trade and other receivables | 1,808 | 1,667 | 1,684 | |
| Cash and cash equivalents | 18,549 | 22,228 | 25,006 | |
| 20,357 | 23,895 | 26,690 | ||
| Payables: amounts falling due within one year | ||||
| Trade and other payables | (542) | (499) | (721) | |
| Net current assets | 19,815 | 23,396 | 25,969 | |
| Total assets less current liabilities | 87,098 | 85,322 | 93,969 | |
| Equity attributable to equity holders | ||||
| Called up share capital | 8 | 3,265 | 3,070 | 3,269 |
| Share premium | 47,414 | 40,782 | 47,067 | |
| Capital redemption reserve | 16 | - | - | |
| Unrealised capital reserve | 22,735 | 19,680 | 26,402 | |
| Realised capital reserve | 8,925 | 10,349 | 9,177 | |
| Other distributable reserve | 4,743 | 11,441 | 8,054 | |
| Total equity shareholders’ funds | 87,098 | 85,322 | 93,969 | |
| Basic and diluted net asset value per share (pence)* | 31.03 | 31.79 | 33.13 |
* Excluding treasury shares.
Comparative figures have been extracted from the unaudited Half-yearly Financial Report for the six months ended 31 December 2022 and the audited statutory accounts for the year ended 30 June 2023.
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 28 February 2024 and were signed on its behalf by:
James Agnew
Chairman
Company number: 03495287
Condensed statement of changes in equity
| Called up share capital £'000 | Share premium £'000 | Capital redemption reserve £'000 | Unrealised capital reserve £'000 | Realised capital reserve* £'000 | Other distributable reserve* £'000 | Total £'000 | |
| As at 1 July 2023 | 3,269 | 47,067 | - | 26,402 | 9,177 | 8,054 | 93,969 |
| (Loss)/profit and total comprehensive income | - | - | - | (3,452) | (467) | 287 | (3,632) |
| Transfer of previously unrealised gains on disposal of investments | - | - | - | (215) | 215 | - | - |
| Dividends paid | - | - | - | - | - | (2,333) | (2,333) |
| Purchase of shares for treasury (including costs) | - | - | - | - | - | (791) | (791) |
| Purchase of shares for cancellation (including costs) | (16) | - | 16 | - | - | (474) | (474) |
| Issue of equity | 12 | 367 | - | - | - | - | 379 |
| Cost of issue of equity | - | (20) | - | - | - | - | (20) |
| As at 31 December 2023 | 3,265 | 47,414 | 16 | 22,735 | 8,925 | 4,743 | 87,098 |
| As at 1 July 2022 | 2,905 | 35,522 | - | 20,384 | 12,729 | 14,299 | 85,839 |
| (Loss)/profit and total comprehensive income | - | - | - | (2,460) | (624) | 159 | (2,925) |
| Transfer of previously unrealised losses on disposal of investments | - | - | - | 1,756 | (1,756) | - | - |
| Dividends paid | - | - | - | - | - | (2,130) | (2,130) |
| Purchase of shares for treasury (including costs) | - | - | - | - | - | (887) | (887) |
| Issue of equity | 165 | 5,394 | - | - | - | - | 5,559 |
| Cost of issue of equity | - | (134) | - | - | - | - | (134) |
| As at 31 December 2022 | 3,070 | 40,782 | - | 19,680 | 10,349 | 11,441 | 85,322 |
| As at 1 July 2022 | 2,905 | 35,522 | - | 20,384 | 12,729 | 14,299 | 85,839 |
| Profit/(loss) and total comprehensive income | - | - | - | 3,803 | (1,337) | 351 | 2,817 |
| Transfer of previously unrealised losses on disposal of investments | - | - | - | 2,216 | (2,216) | - | - |
| Dividends paid | - | - | - | - | - | (4,237) | (4,237) |
| Purchase of shares for treasury (including costs) | - | - | - | - | - | (2,359) | (2,359) |
| Issue of equity | 364 | 11,854 | - | - | - | - | 12,218 |
| Cost of issue of equity | - | (309) | - | - | - | - | (309) |
| As at 30 June 2023 | 3,269 | 47,067 | - | 26,402 | 9,177 | 8,054 | 93,969 |
* Included within these reserves is an amount of £9,077,000 (31 December 2022: £21,176,000; 30 June 2023: £12,804,000) which is considered distributable.
Condensed statement of cash flows
| Unaudited six months ended 31 December 2023 £’000 | Unaudited six months ended 31 December 2022 £’000 | Audited year ended 30 June 2023 £’000 | ||
| Cash flow from operating activities | ||||
| Loan stock income received | 307 | 255 | 550 | |
| Income from fixed term funds received | 170 | 50 | 145 | |
| Deposit interest received | 171 | 29 | 138 | |
| Dividend income received | 54 | 10 | 39 | |
| Investment Manager’s fees paid | (823) | (1,337) | (2,081) | |
| Other cash payments | (234) | (217) | (425) | |
| Corporation tax paid | - | - | - | |
| Net cash flow from operating activities | (355) | (1,210) | (1,634) | |
| Cash flow from investing activities | ||||
| Purchase of fixed asset investments | (5,012) | (7,456) | (7,870) | |
| Proceeds from disposals of fixed asset investments | 2,324 | 547 | 1,139 | |
| Net cash flow from investing activities | (2,688) | (6,909) | (6,731) | |
| Cash flow from financing activities | ||||
| Issue of share capital | - | 5,075 | 11,226 | |
| Cost of issue of equity | (20) | - | (37) | |
| Equity dividends paid* | (1,941) | (1,722) | (3,517) | |
| Purchase of own shares for treasury or cancellation (including costs) | (1,442) | (1,030) | (2,325) | |
| Net cash flow from financing activities | (3,403) | 2,323 | 5,347 | |
| Decrease in cash and cash equivalents | (6,457) | (5,796) | (3,018) | |
| Cash and cash equivalents at the start of the period | 25,006 | 28,024 | 28,024 | |
| Cash and cash equivalents at the end of the period | 18,549 | 22,228 | 25,006 | |
*The equity dividend paid in the cash flow is different to the dividends disclosed in note 6 due to the non-cash effect of the Dividend Reinvestment Scheme.
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 2022 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 is shown on page 4 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% 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, other valuation techniques are employed to conclude on the fair value as of the measurement 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.
- the performance and/or prospects of the underlying business are significantly below the expectations on which the investment was based;
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 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.
Fixed term funds income
Income from fixed term funds is recognised on an accruals basis using the agreed rate of interest.
Bank deposit income
Interest income is recognised on an accruals basis using the rate of interest agreed with the bank.
Investment management fee, performance incentive fee and other expenses
All expenses have been accounted for on an accruals basis. Expenses are charged through the other distributable reserve except the following which are charged through the realised capital reserve:
- 90% of management fees and 100% of performance incentive fees, if any, are allocated to the realised capital reserve.
- expenses which are incidental to the purchase or disposal of an investment are charged through the realised capital reserve.
Taxation
Taxation is applied on a current basis in accordance with FRS 102. Current tax is tax payable (refundable) in respect of the taxable profit (tax loss) for the current period or past reporting periods using the tax rates and laws that have been enacted or substantively enacted at the financial reporting date. Taxation associated with capital expenses is applied in accordance with the SORP.
Deferred tax is provided in full on all timing differences at the reporting date. Timing differences are differences between taxable profits and total comprehensive income as stated in the Financial Statements that arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the Financial Statements. As a VCT the Company has an exemption from tax on capital gains. The Company intends to continue meeting the conditions required to obtain approval as a VCT in the foreseeable future. The Company therefore, should have no material deferred tax timing differences arising in respect of the revaluation or disposal of investments and the Company has not provided for any deferred tax.
Share capital and reserves
Called up share capital
This reserve accounts for the nominal value of the shares.
Share premium
This reserve accounts for the difference between the price paid for shares and the nominal value of the shares, less issue costs and transfers to the other distributable reserve.
Capital redemption reserve
This reserve accounts for amounts by which the issued share capital is diminished through the repurchase and cancellation of the Company’s own shares.
Unrealised capital reserve
Increases and decreases in the valuation of investments held at the period end against cost, are included in this reserve.
Realised capital reserve
The following are disclosed in this reserve:
- gains and losses compared to cost on the realisation of investments, or permanent diminution in value (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; 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 liability to make the payment has been established or approved at the Annual General Meeting.
Segmental reporting
The Directors are of the opinion that the Company is engaged in a single operating segment of business, being investment in smaller companies principally based in the UK.
3. (Losses)/gains on investments
| Unaudited six months ended 31 December 2023 £’000 | Unaudited six months ended 31 December 2022 £’000 | Audited year ended 30 June 2023 £’000 | |
| Unrealised (losses)/gains on fixed asset investments | (3,452) | (2,460) | 3,803 |
| Realised gains/(losses) on fixed asset investments | 125 | (51) | (178) |
| Unwinding of discount on deferred consideration | 125 | 106 | 221 |
| (3,202) | (2,405) | 3,846 |
4. Investment income
| Unaudited six months ended 31 December 2023 £’000 | Unaudited six months ended 31 December 2022 £’000 | Audited year ended 30 June 2023 £’000 | |
| Loan stock interest | 270 | 299 | 569 |
| Bank interest | 170 | 29 | 138 |
| Income from fixed term funds | 160 | 50 | 145 |
| Dividend income | 40 | 70 | 84 |
| 640 | 448 | 936 |
5. Investment management fees
| Unaudited six months ended 31 December 2023 | Unaudited six months ended 31 December 2022 | Audited year ended 30 June 2023 | |||||||
| Revenue £’000 | Capital £’000 | Total £’000 | Revenue £’000 | Capital £’000 | Total £’000 | Revenue £’000 | Capital £’000 | Total £’000 | |
| Investment management fee | 80 | 717 | 797 | 76 | 679 | 755 | 153 | 1,380 | 1,533 |
Further details of the management agreement under which the investment management fee is paid are given on page 18 of the Strategic report in the Annual Report and Financial Statements for the year ended 30 June 2023.
During the period, services of a total value of £822,000 (31 December 2022: £780,000; 30 June 2023: £1,583,000) were purchased by the Company from Albion Capital Group LLP; comprising £797,000 management fee and £25,000 administration fee. At the financial period end, the amount due to Albion Capital Group LLP disclosed as payable or accrued was £395,500 (administration fee: £12,500, management fee: £383,000) (31 December 2022: £388,500; 30 June 2023: £422,500).
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 2023, fees of £89,000 attributable to the investments of the Company were received pursuant to these arrangements (31 December 2022: £137,000; 30 June 2023: £299,000).
Albion Capital Group LLP, its partners and staff hold 2,413,255 Ordinary shares in the Company as at 31 December 2023.
6. Dividends
| Unaudited six months ended 31 December 2023 £’000 | Unaudited six months ended 31 December 2022 £’000 | Audited year ended 30 June 2023 £’000 | |
| First dividend of 0.83 pence per share paid on 30 November 2023 (30 November 2022: First dividend of 0.84 pence per share) | 2,333 | 2,130 | 2,130 |
| Second dividend of 0.79 pence per share paid on 31 March 2023 | - | - | 2,120 |
| Unclaimed dividends | - | - | (13) |
| 2,333 | 2,130 | 4,237 |
In addition, the Board has declared a second dividend of 0.78 pence per share for the year ending 30 June 2024. This will be paid on 28 March 2024 to shareholders on the register on 8 March 2024. This is expected to amount to approximately £2,190,000.
7. Basic and diluted (loss)/return per share
| Unaudited six months ended 31 December 2023 | Unaudited six months ended 31 December 2022 | Audited year ended 30 June 2023 | |||||||
| Revenue | Capital | Total | Revenue | Capital | Total | Revenue | Capital | Total | |
| (Loss)/return attributable to equity shares (£’000) | 287 | (3,919) | (3,632) | 159 | (3,084) | (2,925) | 351 | 2,466 | 2,817 |
| Weighted average shares in issue (adjusting for treasury shares) | 282,620,005 | 256,695,682 | 266,724,287 | ||||||
| (Loss)/return attributable per Ordinary share (pence) (basic and diluted) | 0.10 | (1.39) | (1.29) | 0.06 | (1.20) | (1.14) | 0.13 | 0.92 | 1.05 |
The (loss)/return per share has been calculated after adjusting for treasury shares of 45,787,992 (31 December 2022: 38,617,058; 30 June 2023: 43,285,891).
There are no convertible instruments, derivatives or contingent share agreements in issue, and therefore no dilution affecting the (loss)/return per share. The basic (loss)/return per share is therefore the same as the diluted (loss)/return per share.
8. Called up share capital
| Allotted, called up and fully paid Ordinary shares of 1 penny each | Unaudited 31 December 2023 | Unaudited 31 December 2022 | Audited 30 June 2023 |
| Number of shares | 326,515,116 | 307,032,867 | 326,884,706 |
| Nominal value of allotted shares (£’000) | 3,265 | 3,070 | 3,269 |
| Voting rights (number of shares net of treasury shares) | 280,727,124 | 268,415,809 | 283,598,815 |
During the period to 31 December 2023 the Company purchased 4,068,839 Ordinary shares (nominal value £41,000) at a cost of £1,265,000. From this, 2,502,101 shares were purchased for treasury and 1,566,738 shares have been cancelled. The total number of Ordinary shares held in treasury as at 31 December 2023 was 45,787,992 (31 December 2022: 38,617,058; 30 June 2023: 43,285,891) representing 14.0% of the Ordinary shares in issue as at 31 December 2023.
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 November 2023 | 1,197,148 | 12 | 31.64 | 359 | 30.10 |
9. Contingencies and guarantees
As at 31 December 2023 the Company had no financial commitments in respect of investments (31 December 2022: £nil; 30 June 2023: £nil).
There are no external contingencies or guarantees of the Company as at 31 December 2023 (31 December 2022: £nil; 30 June 2023: £nil).
10. Post balance sheet events
Since 31 December 2023 the Company has not made any material investment transactions.
The Company received £1.7 million of deferred consideration from the historic disposal of G.Network Communications that was included in trade and other receivables at 31 December 2023.
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 the current economic climate and a volatile geopolitical backdrop. The Board has revisited and updated their assessment of liquidity risk and concluded that it remains unchanged since the last Annual Report and Financial Statements. Further details can be found on pages 88 and 89 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 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 2023 and 31 December 2022 and is unaudited. The financial information for the year ended 30 June 2023 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.
14. Publication
This Half-yearly Financial Report is being sent to shareholders and copies will be made available to the public at the registered office of the Company, Companies House, the National Storage Mechanism and also electronically at www.albion.capital/funds/CRWN.
Attachment
- Investment portfolio by sector as at 31 December 2023
