Interim Results for the six months ended
Financial highlights
•
NAV per share after performance fee
1
of 164.3p (
•
IRR of 14%
2
on invested capital since inception (
•
Available cash of £34.8 million
3
with no debt (
•
The asset value of the top four positions (Tide,
Portfolio and investment highlights
•
As at
• Seven exits since inception, realising an IRR of 38.4% 4 .
• The top 10 holdings represent 77.5% 5 of NAV, have aggregate revenue of £1.25 billion and year-on-year revenue growth of 52%.
• Of the top 10 holdings, four have reached profitability and the remaining six have an average of 16 months of cash runway.
•
The acquisition of portfolio company
Investment activity
• In June the Company made a £2.6 million investment in LoopFX, a new independent venue for large spot FX trades with a unique matching solution for market participants that enables traders to match, in real-time, with other asset managers and banks without information leakage and at a mid-market rate, reducing trading costs and improving best execution processes.
• The Company made follow-on investments into Tide (£2.0 million), Grover (£1.5 million), Anyfin (£0.8 million), Artificial (£0.8 million), Baobab (£0.6 million) and WeMatch (£0.4 million).
• The Company also invested £2.5 million to support the spin-out from Monese of XYB, the banking-as-a-service (“BaaS”) platform; the Company subsequently increasing its stake in XYB with a £1.0 million secondary transaction.
Post period end
•
In October, nCino, the NASDAQ listed US digital banking platform, agreed to acquire portfolio company FullCircl. The transaction valued the Company’s investment in FullCircle at £6.2 million, representing an 80% increase on the valuation as at
•
The proposed acquisition of portfolio company Farewill by Dignity (in which
•
The Company welcomed
•
The Company announced that it had led a
Notes
1. The Board considers NAV per share after performance fee to be the most appropriate measure of NAV per share attributable to shareholders.
2. Annualised IRR on invested capital and realisations since inception using valuations at the last reporting date before performance fee.
3.
As at
4.
Excludes Farewill as on completion of the transaction, expected in early 2025,
5. 77.5% of net assets after performance fee.
“Augmentum has proved its model through its successful realisations to date, which have generated an IRR before costs of 38% and 2.6x capital invested. We believe our portfolio, our people and the opportunities in front of us position us well for future growth.”
Enquiries
|
|
+44 (0)20 3961 5420 |
|
Quill PR
(Press and Media) |
+44 (0)7815 823412
|
|
(Investment Banking) |
+44 (0)20 7418 8900 |
|
(Investment Banking) |
+44 (0)20 7496 3000 |
|
|
+44 (0)20 3709 8733 |
About
.
---------------------------------------------------------------------------------------------------------------------------------------------
Half Year Report for the six months ended
.
Chairman’s Statement
Introduction
This report covers your Company’s progress in the six months to
Investment Strategy
Our objective is to provide long-term capital growth to shareholders by offering them exposure to a diversified portfolio of private fintech companies during their period of rapid growth and value creation. Our Manager aims, before costs, to generate a long term Internal Rate of Return (“IRR”) of 20% on invested capital and for cash invested to return on average 3x at exit. In practice, successful venture capital portfolios can expect to see a wide range of exit multiples, and rely for their strong returns on the outsized winners – which are usually rare.
Performance in the period
The top 10 holdings, which represent 77.5% of net assets after performance fee, have total annual revenue of £1.25 billion, and grew total revenue by 52% year-on-year. Four of these positions are cash generative and the other six have an average of 16 months of cash runway.
At
The half year saw a wide range of valuation movements. The majority of the portfolio’s positions made gains, the strongest being
Tide
, continuing its strong growth,
XYB
(which was spun out from
Monese
in
Your Board considers its governance role in the valuations process to be of utmost importance. Together with our advisers we consider and challenge all of the investment valuations used for the full and half year financial statements. We have carefully reviewed both the status and the forecasts for all of the portfolio companies. The valuations have been arrived at using appropriate and consistent methodologies, and we sense check and debate our conclusions on the assets themselves and their market context. Also, we benefit from some of our investments occupying a senior position in the capital structures of these companies, providing some protection against downside risk.
Our share price rose 1.5% to 102.0p at 30
* NAV per share after performance fee
Portfolio and Transactions
We have built a balanced portfolio diversified across different fintech sectors, European markets and maturity stages. As at
We are committed to a responsible investment approach, believing that the integration of environmental, social and governance factors helps to mitigate risk.
We are active investors with a team that works closely with the companies we invest in, typically taking either a board or an observer seat and working with management to guide strategy consistent with long-term value creation.
In the period, the Company received proceeds of £9.9 million from the sale of
Since 30 September, nCino, the NASDAQ listed US digital banking platform, agreed to acquire
FullCircl
. This transaction implied an enhanced valuation of the Company’s investment in
FullCircl
, of £6.2 million, which represents an 80% increase on the valuation as at
These realisations continue the Company’s record for investment exits all being at or above the last reported holding value, which should provide investors with further comfort that our valuations process is rigorous and corroborates the discipline our Portfolio Manager has exercised when evaluating new investments and their reporting on the portfolio.
Also since the year end funerals group Dignity (in
which Castelnau Group has a controlling stake) agreed (subject to regulatory approval) to acquire
Farewill
in exchange for shares in
There was one new investment in the period. In June the Company made a £2.6 million investment in LoopFX , a new independent venue for large spot FX trades with a unique matching solution for market participants. LoopFX enables traders to match, in real-time, with other asset managers and banks without information leakage and at a mid-market rate, reducing trading costs and improving best execution processes.
Since
During the period under review the Company also made follow-on investments to support several companies in the portfolio , including Tide (£2.0 million), Grover (£1.5 million), Anyfin (£0.8 million), Artificial (£0.8 million) and Baobab (£0.6 million). The Company also helped to fund (with £2.5 million) the spin out from Monese of XYB , the banking-as-a-service (“BaaS”) platform, and subsequently increased its stake in XYB with a £1.0 million secondary transaction.
The Portfolio Manager’s report, beginning on page 7, includes a detailed review of the portfolio, individual company performance and investment transactions in the period.
Investment Policy
The Farewill transaction mentioned above highlighted that the Company’s investment policy did not make specific provision for the circumstance of a portfolio company being acquired in a share for share transaction with a lock-in on the shares taken as consideration. Accordingly, the Board has made a non-material update to the investment policy to cover such events, which do happen from time to time in the world of private technology investing (see underlining on page 4).
Cash reserves
The use of our cash reserves is a matter of regular Board review. We aim to balance the benefits of highly accretive buybacks when discounts are high against ensuring that we hold appropriate reserves to fund follow on investments and capture the best of the new investment opportunities that we continue to see.
As reported above, the Company’s shares continued to trade at a discount to NAV during the period under review and up to the date of this report. Buybacks are one of several mechanisms your Board actively considers to help to reduce this discount.
We continued to buy back shares in the period under review. All shares purchased by the Company are being held in treasury and will potentially be reissued when the share price returns to a premium.
2,076,814 shares were bought back into treasury during the six months to
Outlook
Although early stage growth portfolios have been out of favour since 2022, the need to digitalise and transform last century’s infrastructure remains, as nearly all financial services sectors continue to be dominated by traditional businesses whose operations cannot ignore the rapid development of less costly, and in many cases more secure, business models and technology.
Chairman
.
Investment Objective and Policy
Investment objective
The Company’s investment objective is to generate capital growth over the long term through investment in a focused portfolio of fast growing and/or high potential private financial services technology (“fintech”) businesses based predominantly in the
Investment policy
In order to achieve its investment objective, the Company invests in early or later stage investments in unquoted fintech businesses. The Company intends to realise value through exiting these investments over time.
The Company seeks exposure to early stage businesses which are high growth, with scalable opportunities, and have disruptive technologies in the banking, insurance and wealth and asset management sectors as well as those that provide services to underpin the financial sector and other cross-industry propositions.
Investments are expected to be mainly in the form of equity and equity-related instruments issued by portfolio companies, although investments may be made by way of convertible debt instruments. The Company intends to invest in unquoted companies and will ensure that the Company has suitable investor protection rights where appropriate.
The Company may also invest in partnerships, limited liability partnerships and other legal forms of entity. The Company will not invest in publicly traded companies. However, portfolio companies may seek initial public offerings from time to time, in which case the Company may continue to hold such investments without restriction.
The Company may also hold securities in publicly traded companies, including non-fintech companies, that have been received as consideration for the Company's holding in a portfolio company ("
The Company may acquire investments directly or by way of holdings in special purpose vehicles or intermediate holding entities (such as the Partnership*).
The Management Team has historically taken a board or board observer position at investee companies and, where in the best interests of the Company, will do so in relation to future investee companies.
The Company’s portfolio is expected to be diversified across a number of geographical areas predominantly within the
The Management Team will actively manage the portfolio to maximise returns, including helping to scale the team, refining and driving key performance indicators, stimulating growth, and positively influencing future financing and exits.
Investment restrictions
The Company will invest and manage its assets with the object of spreading risk through the following investment restrictions:
• the value of no single investment (including related investments in group entities or related parties) will represent more than 15% of NAV, save that one investment in the portfolio may represent up to 20% of NAV;
• the aggregate value of seed stage investments will represent no more than 1% of NAV;
•
at least 80% of NAV will be invested in businesses which are headquartered in or have their main centre of business in the
•
the aggregate value of holdings of
In addition, the Company will itself not invest more than 15% of its gross assets in other investment companies or investment trusts which are listed on the Official List of the
Each of the restrictions above will be calculated at the time of investment and disregard the effect of the receipt of rights, bonuses, benefits in the nature of capital or by reason of any other action affecting every holder of that investment. The Company will not be required to dispose of any investment or to rebalance the portfolio as a result of a change in the respective valuations of its assets.
For the purposes of the investment policy, “NAV” means the consolidated assets of the Company and its consolidated subsidiaries (together “the Group”) less their consolidated liabilities, determined in accordance with the accounting principles adopted by the Group from time to time.
Hedging and derivatives
Save for investments made using equity-related instruments as described above, the Company will not employ derivatives of any kind for investment purposes, but derivatives may be used for currency hedging purposes.
Borrowing policy
The Company may, from time to time, use borrowings to manage its working capital requirements but shall not borrow for investment purposes. Borrowings will not exceed 10% of the Company’s NAV, calculated at the time of borrowing.
Cash management
The Company may hold cash on deposit and may invest in cash equivalent investments, which may include short-term investments in money market type funds and tradeable debt securities.
There is no restriction on the amount of cash or cash equivalent investments that the Company may hold or where it is held. The Board has agreed prudent cash management guidelines with the AIFM and the Portfolio Manager to ensure an appropriate risk/return profile is maintained. Cash and cash equivalents are held with approved counterparties.
It is expected that the Company will hold between 5% and 15% of its Gross Assets in cash or cash equivalent investments, for the purpose of making follow-on investments in accordance with the Company’s investment policy and to manage the working capital requirements of the Company.
Changes to the investment policy
No material change will be made to the investment policy without the approval of Shareholders by ordinary resolution. Non-material changes to the investment policy may be approved by the Board. In the event of a breach of the investment policy set out above or the investment and gearing restrictions set out therein, the Management Team shall inform the AIFM and the Board upon becoming aware of the same and if the AIFM and/or the Board considers the breach to be material, notification will be made to a
* Please refer to the Glossary on page 34.
.
Portfolio
|
as at |
Fair value of
|
|
|
|
Fair value of
|
|
|
Tide |
51,293 |
2,000 |
- |
6,422 |
59,715 |
21.7% |
|
|
39,291 |
- |
- |
55 |
39,346 |
14.3% |
|
Volt |
25,458 |
- |
- |
(164) |
25,294 |
9.2% |
|
Grover |
35,893 |
1,519 |
(1,026) |
(16,759) |
19,627 |
7.1% |
|
BullionVault^ |
13,119 |
- |
- |
1,805 |
14,924 |
5.4% |
|
XYB |
7,135 |
3,500 |
- |
3,994 |
14,629 |
5.3% |
|
Anyfin |
9,415 |
843 |
(273) |
1,081 |
11,066 |
4.0% |
|
Intellis |
10,074 |
- |
(280) |
219 |
10,013 |
3.6% |
|
|
7,926 |
- |
- |
1,690 |
9,616 |
3.5% |
|
Gemini |
10,924 |
- |
(610) |
(1,022) |
9,292 |
3.4% |
|
Top 10 Investments |
210,528 |
7,862 |
(2,189) |
(2,679) |
213,522 |
77.5% |
|
Other Investments* |
44,407 |
4,728 |
(1,175) |
(1,748) |
49,708 |
18.0% |
|
|
10,148 |
(9,930) |
- |
- |
218 |
0.1% |
|
Total Investments |
265,083 |
2,660 |
(3,364) |
(931) |
263,448 |
95.6% |
|
Cash & cash equivalents |
38,505 |
|
|
|
31,775 |
11.5% |
|
Net other current liabilities |
(271) |
|
|
|
(588) |
(0.2)% |
|
Net Assets |
303,317 |
|
|
|
294,635 |
106.9% |
|
Performance Fee accrual |
(18,980) |
|
|
|
(19,000) |
(6.9)% |
|
Net Assets after performance fee |
284,337 |
|
|
|
275,635 |
100.0% |
|
NAV per share (pence) |
178.6 |
|
|
|
|
175.6 |
|
NAV per share after performance fee (pence) |
167.4 |
|
|
|
|
164.3 |
^
Held via
*
There are sixteen other investments (
.
Portfolio Manager’s Review
Overview
In June, we shared an upbeat market outlook with the expectation that central banks were preparing to embark on a series of rate cuts. The first rate reductions made by the BoE and FED in Q3, and the earlier actions of the
While the second half of the year has been more subdued than anticipated, we remain optimistic. Greater clarity following election and budget outcomes has already helped to restore some investor confidence, particularly in US markets, and while central banks have signalled caution, the macroeconomic backdrop has markedly improved since this time last year. Assuming inflation can continue to be managed, we should see further cuts in 2025 and with this a fuller return of market confidence and demand.
Despite ongoing inertia in public markets, listed fintechs have navigated valuation recovery and stabilisation in 2024, although these are yet to be fully reflected across the sector. In response to market conditions, listed firms have prioritised profitability over growth, and a flight to quality dynamic has rewarded exceptional companies whose capital efficiency has seen them continue to deliver both. Listed fintech approaches 2025 on a surer footing than it did in 2024, with positive spillover effects in private markets, where investment activity has returned to the long-term trend. Across
Many exceptional European fintechs have completed long journeys to scale and profitability, but still today remain private, including a growing number of the Company’s portfolio companies. These firms collectively form a mature cohort with exciting exit prospects in the near to mid-term. Such cases have required patience from early investors but hold the promise of ample reward upon realisation. The focus now is on ensuring that exits are delivered at deserved market premiums. Many of these firms have taken 2024 as an opportunity to prepare for listing in 2025 and beyond. However, M&A remains the dominant exit route for fintech firms with 98% of all fintech exits since 2020 completed through this approach, of which 85% during 2023 and Q1 2024 were strategic acquisitions from incumbent financial services firms (source:
For policy makers across our key markets of focus, growth agendas are the order of the day. This bodes well for the fintech sector as a leading recipient of investment capital, and a driver of productivity growth and job creation. In the
We have adapted to the higher rate environment by focusing our investment strategy on high potential early stage prospects, while the Company’s existing portfolio continues to demonstrate underlying growth. The investment pipeline we have cultivated with a technology-led approach is of high quality, and our ability to win deals in competitive processes - supported by our reputation as one of Europe’s leading fintech investors - has only improved. With our recent exit of FullCircl we continue to deliver realisations to investors, and aim to secure market premiums when we do. Coupled with improving market conditions, albeit at a slower pace than we would like, the maturity in the portfolio today makes us confident that late 2025 and beyond will bring significant rewards for patient investors who have stayed with us through the course.
Portfolio Overview
The Company’s portfolio continues to demonstrate encouraging growth with our 26 companies advancing across a diverse mix of financial services verticals. Growth over the past 12 months across our Top 10 positions (which represents nearly 80% of NAV) has been 52%, while four of this group have reached profitability. At the time of writing, we again find ourselves in the position of having the asset value of the Top 4 positions, plus cash, exceeding the portfolio value implied by the Company’s market capitalisation. This underscores the untapped option value of 22 additional assets.
The portfolio approach continues to be important; within the Top 10 the robust performance of many companies balances the emergence of headwinds for a minority. It is a hallmark of high-growth assets, that the path to success is rarely linear. The likes of Zopa and iwoca , have experienced turbulent times in the past but have successfully navigated their way through to become scaled and profitable businesses today. The next generation of our portfolio also continues to develop, including through new investments and exit events. Outside of the Top 10, several earlier stage companies have the potential to reach scale independently, or to realise value at an earlier stage through acquisition. The latter was the case for two of the portfolio’s earlier stage companies, Farewill and FullCircl , which have entered agreements to be acquired just after the reporting period. These acquisition events complement our major exits, releasing capital and team time towards propositions with higher growth potential in our pipeline and the existing portfolio. These outcomes should reinforce investor confidence in the opportunity offered by the unpriced option value beyond the Top 10, even for those assets that ultimately do not deliver a venture style return.
Investment Activity
We have maintained a high bar for new investments and during the period, from a pipeline of over 740 companies, we reviewed over 240, conducted significant due diligence on 20 and made one new investment of £2.6 million into
LoopFX
, representing a 0.13% conversion rate.
LoopFX
is an independent venue for large spot FX trades with a unique matching solution for market participants.
LoopFX
enables traders to match, in real-time, with other asset managers and banks without information leakage and at a mid-market rate, reducing trading costs and improving best execution processes.
Post period end, in
Portfolio Update
Merchants of all sizes are using
Volt
to accept real-time payments, initiate payouts and manage funds, across 31 markets globally. In
We have materially reduced our valuation of
Grover
to reflect the period of adjustment that the business is currently going through, alongside our and the
Grover
board’s desire to see significant operational improvements. The company remains focused on navigating a path to profitability while it continues to redefine the way customers consume technology products through their part payment, part-financing subscription model. The company has undergone a leadership change, with the promotion of former COO
BullionVault
has continued to thrive in this volatile economic environment. Customer demand for a trusted platform that delivers low-cost access to vaulted gold and other precious metals shows little sign of slowing down, and client holdings have reached unprecedented levels of
XYB
, a Coreless Banking platform-as-a-service (“BaaS”) launched by
Monese
in
iwoca
announced £270 million of new funding lines from Barclays, Värde Partners, Citibank, and
The portfolio has 8% exposure to digital assets, with a strategic focus on companies providing ‘institutional-grade’ infrastructure to the crypto market. Following the outcome of the US election post period end, digital asset prices achieved new highs in anticipation of a more progressive regulatory regime. Regulatory clarity and renewed confidence in digital asset markets will provide opportunities for institutional propositions, including those in our portfolio; Gemini , ParaFi and Tesseract .
Since announcing our investment in
Artificial
, the company has continued to highlight its pivotal role in transforming the underwriting landscape. The
Post period end,
Farewill
and
Monese
were acquired (subject to regulatory approval).
Farewill
entered into an agreement to be acquired by funeral provider Dignity. Under the terms of the proposed acquisition,
In
Exits
2024 has been regarded by many as a difficult year for exits, with a limited number of IPOs in
Post-period end we announced the sale of
FullCircl
. We first invested in what was then DueDil in 2018, before supporting the business to restructure and complete a successful merger with Artesian to establish the more substantial and profitable
FullCircl
entity. Post period end
FullCircl
was acquired by nCino, the NASDAQ listed digital banking platform. The transaction valued the Company’s investment at £6.1 million subject to final adjustments, which represents an 80% increase on the valuation of £3.4 million as at
Performance
As at
Each position is valued objectively using the most appropriate methodology and 87% of the portfolio is valued using public market comparables. Robust governance is integral to the process, with all valuations signed off by the
As outlined in previous reports, downside protections, such as liquidation preference and anti-dilution provisions, are integral structures in our typical venture investments. These terms protect the value of Augmentum’s position in the event of a reduction in the equity value of a company.
Our seven exits to date demonstrate external validation of our valuations approach. All of these were realised at or above our last reported valuation.
Outlook
We often reference the ecosystem flywheel dynamic when explaining our confidence in the future of European fintech. This phenomenon of talent recycling, funding availability, and supportive policy environment is increasingly reflected in company formations statistics and a recent report coined the term ‘founder factories’ to describe the role of scaled fintechs in supporting the next generation of firms (source: Accel/Dealroom). It
found that alumni from the 98 venture-backed European fintech companies with valuations above
European fintech activity is concentrated within a number of key hubs, led by
The
Along with the flywheel dynamic, emerging technologies, led by AI, further expand the opportunity set in fintech. Along with generalised operational productivity improvements, AI creates opportunities for novel products and operating models in financial services. The power of this technology is in its breadth of applications, and this is why we have the confidence to call it a paradigm shift for fintech and financial services. Across businesses from all sectors, the adoption of AI in at least one business function has already surpassed 70% (source: McKinsey) and bold investment is being rewarded, with ‘AI leaders’ – i.e. those placing AI at the centre of their technology strategy - the first to be recognising real returns on investments (source: BCG).
As we have seen before with innovations such as digital banking and digital identity verification, it is technology-forward fintech firms who are best positioned to bring emerging technologies to market, both in competition with incumbent financial services firms and as their technology partners. Digital capabilities are a top priority of every incumbent financial services firm and close collaboration with fintech firms - through buy, build and partnership strategies - has become a competitive imperative. Fintech’s market share of financial services remains just 3% but, with growth at close to four times the rate of incumbent financial services firms, the sector continues to make inroads into huge addressable headroom (source: BCG). Fintech’s market share is projected to more than double in the next decade, positioning
Our own operations are increasingly technology and data driven, having continuously developed our proprietary deal origination engine “ADA’ over the last six years.
Building on multiple generations of start-up success, and bolstered by new technologies such as AI, the investment opportunity in European fintech remains highly compelling. Since IPO, we have built a diversified portfolio which has consistently delivered growth despite the challenging market conditions of the last two years. Building on our seven exits to date, the portfolio is positioned to deliver realisations in the years ahead. Outside of its mature positions the portfolio contains value that is unpriced by the market today, with earlier-stage companies having the potential to scale or to realise their strategic value at earlier stages. As our sector has developed so too has our multinational team and today we combine our established reputation as a leading fintech investor with an increasingly technology driven approach. We believe this is the best strategy to continue to deliver access to a strong and diversified portfolio of private fintech companies which can deliver exceptional returns.
CEO
.
Investments
Tide
Tide’s (www.tide.co) mission is to help small and mid-sized businesses (“SMEs”) save time and money in the running of their businesses. Customers can be set up with an account number and sort code in less than 10 minutes, and the company is building a comprehensive suite of digital banking services for businesses, including automated accounting, instant access to credit, card control, instant card freezing and quick, mobile invoicing. Tide has continued to expand its product offering with the launch of Tide Accounting and Tide Acquiring in 2023 and also completed its acquisition of Funding Options in 2023, a leading
Source: Tide
|
|
30 Sept
|
31 March
|
|
Cost |
19,376 |
17,376 |
|
Value |
59,715 |
51,293 |
|
Valuation Methodology^ |
Rev. Multiple |
Rev. Multiple |
As per last filed audited accounts of the investee company for the year to
|
|
2023
|
2022
|
|
Turnover |
119,351 |
59,176 |
|
Pre tax loss |
(43,714) |
(39,795) |
|
Net assets |
19,372 |
32,444 |
Zopa
Having been founded in 2005 as the world’s first peer-to peer (“P2P”) lending company, Zopa (www.zopa.com) launched
Current products include fixed term and smart savings, wedding and home improvement loans, debt consolidation loans, a credit card and motor finance.
Source:
|
|
30 Sept
|
31 March
|
|
Cost |
33,670 |
33,670 |
|
Value |
39,346 |
39,291 |
|
Valuation Methodology |
Rev. Multiple |
Rev. Multiple |
As per last filed audited accounts of the investee company for the year to
|
|
2023
|
2022
|
|
Operating income |
223,544 |
153,737 |
|
Pre tax profi/(loss) |
10,828 |
(23,783) |
|
Net assets |
413,174 |
299,674 |
Volt
Volt (www.volt.io) is a provider of account-to-account payments connectivity for international merchants and payment service providers (PSPs). An application of Open Banking, account-to-account payments – where funds are moved directly from one bank account to another rather than via payment rails – delivering benefits to both consumers and merchants. This helps merchants shorten their cash cycle, increase conversion and lower their costs. Volt offers coverage in 31 markets and counting, including
Source: Volt
|
|
30 Sept
|
31 March
|
|
Cost |
9,800 |
9,800 |
|
Value |
25,294 |
25,459 |
|
Valuation Methodology |
Rev. Multiple |
Rev. Multiple |
Volt is not required to publicly file audited accounts.
Grover
In
Source: Grover
|
|
30 Sept
|
31 March
|
|
Cost |
10,813 |
9,295 |
|
Value |
19,627 |
35,893 |
|
Valuation Methodology |
Rev. Multiple |
Rev. Multiple |
As an unquoted German company, Grover is not required to publicly file audited accounts.
BullionVault
BullionVault (www.bullionvault.co.uk) is a physical gold and silver market for private investors online. It enables people across 175 countries to buy and sell professional-grade bullion at competitive prices online, with £5.2 billion of assets under administration, over £75 million worth of gold and silver traded monthly, and over 100,000 clients.
Each user’s property is stored in secure, specialist vaults in
The company generates monthly profits from trading, commission and interest. It is cash generative, dividend paying, and well-placed for any cracks in the wider financial markets.
Source: BullionVault
|
|
30 Sept
|
31 March
|
|
Cost |
8,424 |
8,424 |
|
Value |
14,924 |
13,119 |
|
Valuation Methodology |
Earnings Multiple |
Earnings Multiple |
|
Dividends paid |
- |
799 |
As per last filed audited accounts of the investee company for the year to
|
|
2023
|
2022
|
|
Gross profit |
13,311 |
13,071 |
|
Pre tax profit |
13,023 |
8,364 |
|
Net assets |
46,323 |
41,294 |
XYB
XYB (www.xyb.co) is a banking-as-a-service (“BaaS”) platform that was launched by Monese in
Source: XYB
|
|
30 Sept
|
31 March
|
|
Cost |
14,967 |
n/a |
|
Value |
14,629 |
n/a |
|
Valuation Methodology |
Rev. Multiple |
n/a |
XYB is a new company and no accounts have been filed.
Anyfin
Anyfin (www.anyfin.com) was founded in 2017 by former executives of
Source: Anyfin
|
|
30 Sept
|
31 March
|
|
Cost |
10,768 |
9,924 |
|
Value |
11,066 |
9,416 |
|
Valuation Methodology |
Rev. Multiple |
Rev. Multiple |
As an unquoted Swedish company, Anyfin is not required to publicly file audited accounts.
Intellis
Intellis, based in
Following an initial investment of €1 million In 2019,
Source: Intellis
|
|
30 Sept
|
31 March
|
|
Cost |
2,696 |
2,696 |
|
Value |
10,013 |
10,074 |
|
Valuation Methodology |
P/E Multiple |
P/E Multiple |
As an unquoted Swiss company, Intellis is not required to publicly file audited accounts.
Founded in 2011, iwoca (www.iwoca.co.uk) uses award-winning technology to disrupt small business lending across
Source:
|
|
30 Sept
|
31 March
|
|
Cost |
7,852 |
7,852 |
|
Value |
9,616 |
7,926 |
|
Valuation Methodology |
Earnings Multiple* |
Earnings Multiple |
As per last filed audited accounts of the investee company for the year to
|
|
2023
|
2022
|
|
Turnover |
142,584 |
78,260 |
|
Pre tax profit/(loss) |
21,784 |
(11,177) |
|
Net assets |
54,976 |
28,224 |
Gemini
Gemini (www.gemini.com) enables individuals and institutions to safely and securely buy, sell and store cryptocurrencies. Gemini was founded in 2014 by Cameron and
Gemini announced acquisitions of portfolio management services company BITRIA and trading platform Omniex in
Source: Gemini
|
|
30 Sept
|
31 March
|
|
Cost |
10,150 |
10,150 |
|
Value |
9,292 |
8,306 |
|
Valuation Methodology |
Rev. Multiple |
Rev. Multiple |
Gemini is not required to publicly file audited accounts.
FullCircl
FullCircl (www.fullcircl.com) was formed from the combination of Artesian and Duedil. Artesian was founded with a goal to change the way B2B sellers communicate with their customers. They built a powerful sales intelligence service using the latest in Artificial Intelligence and Natural Language Processing to automate many of the time consuming, repetitive tasks that cause the most pain for commercial people.
In
Artificial
Artificial (www.artificial.io) is an established underwriting technology provider for the London Insurance Market. This
Wematch
Wematch (www.wematch.live) is a capital markets trading platform that helps financial institutions transition liquidity to an orderly electronic service, improving productivity and de-risking the process of voice broking. Their solution helps traders find liquidity, negotiate, trade, optimise and manage the lifecycle of their portfolios of assets and trade structures. Wematch is focused on structured products such as securities financing, OTC equity derivatives and OTC cleared interest rates derivatives.
Created in 2017, Wematch is headquartered in
Wayhome
Wayhome (www.wayhome.co.uk) offers a unique part-own part-rent model of home ownership, requiring as little as 5% deposit with customers paying a market rent on the portion of the home that Wayhome owns, with the ability to increase the equity in the property as their financial circumstances allow. It launched to the public in
Wayhome opens up owner-occupied residential property as an asset class for pension funds, who will earn inflation-linked rent on the portion not owned by the occupier.
Tesseract
Tesseract (www.tesseractinvestment.com) is a forerunner in the dynamic digital asset sector, providing digital lending solutions to market makers and other institutional market participants via regulated custody and exchange platforms. Tesseract was founded in 2017, is regulated by the
Tesseract provides an enabling crypto infrastructure to connect digital asset lenders with digital asset borrowers. This brings enhanced capital efficiency with commensurate cost reduction to trading, in a space that is currently significantly under-leveraged relative to traditional capital markets.
Baobab
LoopFX
LoopFX (www.theloopfx.com) is an independent venue for large spot FX trades with a unique matching solution for market participants. LoopFX enables traders to match, in real-time, with other asset managers and banks without information leakage and at a mid-market rate, reducing trading costs and improving best execution processes. LoopFX’s ‘Peer-To-Bank’ matching technology has been integrated into leading forex platforms - State Street’s FX Connect and FactSet’s Portware.
Sfermion
Sfermion (www.sfermion.io) is an investment fund focused on the non-fungible token (NFT) ecosystem. Their goal is to accelerate the emergence of the open metaverse by investing in the founders, companies, and entities creating the infrastructure and environments forming the foundations of our digital future.
Epsor
Epsor (www.epsor.fr) is a
Farewill
In the next 10 years, £1 trillion of inheritance will pass between generations in the
Since its launch in 2015 Farewill’s customers have pledged over £1.03 billion to charities through their wills.
Founded in 2015,
The business seeks to change the way some of the three billion litres of maturing Scottish whisky is owned, stored and financed, giving self-directed investors an opportunity to profit from whisky ownership, with the ability to trade 24/7. At its
Augmentum’s holding derives from WhiskeyInvestDirect being spun out of BullionVault in 2020.
Previse
Previse (www.previ.se) allows suppliers to be paid instantly. Previse’s artificial intelligence (“AI”) analyses the data from the invoices that sellers send to their large corporate customers. Predictive analytics identify the few problematic invoices, enabling the rest to be paid instantly. Previse charges the suppliers a small fee for the convenience, and shares the profit with the corporate buyer and the funder. Previse precisely quantifies dilution risk so that funders can underwrite pre-approval payables at scale. In
Habito
Habito (www.habito.com) is transforming the United Kingdom’s £1.3 trillion mortgage market by taking the stress, arduous paperwork, hidden costs and confusing process out of financing a home. Since launching in
In
.
Condensed Consolidated Statement of Comprehensive Income
For the six months ended
|
|
|
Six months ended
|
Six months ended
|
||||
|
|
Notes |
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
Gains on investments held at fair value |
|
- |
(4,295) |
(4,295) |
- |
2,952 |
2,952 |
|
Investment income |
|
894 |
- |
894 |
702 |
- |
702 |
|
AIFM and Performance Fees |
2 |
(303) |
- |
(303) |
(292) |
- |
(292) |
|
Other expenses |
|
(2,630) |
(138) |
(2,768) |
(2,453) |
(16) |
(2,469) |
|
(Loss)/return before taxation |
|
(2,039) |
(4,433) |
(6,472) |
(2,043) |
2,936 |
893 |
|
Taxation |
|
- |
- |
- |
- |
- |
- |
|
(Loss)/return attributable to equity shareholders of the parent company |
|
(2,039) |
(4,433) |
(6,472) |
(2,043) |
2,936 |
893 |
|
(Loss)/return per share (pence) |
3 |
(1.2) |
(2.6) |
(3.8) |
(1.2) |
1.7 |
0.5 |
The total column of this statement represents the Group’s Consolidated Income Statement, prepared in accordance with IFRS as adopted by the UK.
The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the
The Group does not have any other comprehensive income and hence the total return, as disclosed above, is the same as the Group’s total comprehensive income.
All items in the above statement derive from continuing operations.
All returns are attributable to the equity holders of
.
Condensed Consolidated Statement of Changes in Equity
For the six months ended
|
|
|
Six months ended |
|
|||
|
Group |
Ordinary
|
Share
|
|
Other
|
|
|
|
Opening shareholders’ funds |
1,810 |
105,383 |
80,609 |
135,293 |
(19,778) |
303,317 |
|
Purchase of own shares into treasury |
- |
- |
(2,210) |
- |
- |
(2,210) |
|
(Loss)/return for the period |
- |
- |
- |
(4,433) |
(2,039) |
(6,472) |
|
At |
1,810 |
105,383 |
78,399 |
130,860 |
(21,817) |
294,635 |
|
|
|
Six months ended |
|
|||
|
Group |
Ordinary
|
Share
|
|
Other
|
|
|
|
Opening shareholders’ funds |
1,810 |
105,383 |
85,218 |
117,740 |
(16,027) |
294,124 |
|
Purchase of own shares into treasury |
- |
- |
(3,888) |
- |
- |
(3,888) |
|
Return/(loss) for the period |
- |
- |
- |
2,936 |
(2,043) |
893 |
|
At |
1,810 |
105,383 |
81,330 |
120,676 |
(18,070) |
291,129 |
.
Condensed Consolidated and Company Statement of Financial Position
as at
|
|
Note |
30 September
|
31 March
|
|
Non current assets |
|
|
|
|
Investments held at fair value |
7 |
263,448 |
265,083 |
|
Property, plant & equipment |
|
187 |
219 |
|
Current assets |
|
|
|
|
Right of use asset |
|
363 |
438 |
|
Other receivables |
|
166 |
245 |
|
Cash and cash equivalents |
|
31,775 |
38,505 |
|
Total assets |
|
295,939 |
304,490 |
|
Current liabilities |
|
|
|
|
Other payables |
|
(936) |
(699) |
|
Lease liability |
|
(368) |
(474) |
|
Total assets less current liabilities |
|
294,635 |
303,317 |
|
Net assets |
|
294,635 |
303,317 |
|
Capital and reserves |
|
|
|
|
Called up share capital |
4 |
1,810 |
1,810 |
|
Share premium account |
4 |
105,383 |
105,383 |
|
Special reserve |
|
78,399 |
80,609 |
|
Retained earnings: |
|
|
|
|
Capital reserves |
|
130,860 |
135,293 |
|
Revenue reserve |
|
(21,817) |
(19,778) |
|
Total equity |
|
294,635 |
303,317 |
|
NAV per share (pence) |
5 |
175.6 |
178.6 |
|
NAV per share after performance fee (pence) |
5 |
164.3 |
167.4 |
.
Condensed Consolidated Statement of Cash Flows
For the six months ended
|
|
Six months
|
Six months
|
|
Cash flows from operating activities |
|
|
|
Purchases of investments |
(12,590) |
(5,511) |
|
Sales of investments |
9,930 |
22,790 |
|
Acquisition of property, plant and equipment |
(7) |
(4) |
|
Interest received |
945 |
680 |
|
Operating expenses paid |
(2,681) |
(1,769) |
|
Net cash (outflow)/inflow from operating activities |
(4,403) |
16,186 |
|
Cash flow from financing activities |
|
|
|
Purchase of own shares into Treasury |
(2,327) |
(4,429) |
|
Net cash (outflow) from financing |
(2,327) |
(4,429) |
|
(Decrease)/increase in cash and cash equivalents |
(6,730) |
11,757 |
|
Cash and cash equivalents at the beginning of the period |
38,505 |
40,015 |
|
Cash and cash equivalents at the end of the period |
31,775 |
51,772 |
.
Notes to the Financial Statements
For the six months ended
1.a General information
These condensed interim financial statements were approved for issue on
The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.
The financial statements have been reviewed, not audited.
1.b Basis of preparation
This condensed consolidated interim financial report for the half-year reporting period ended 30
The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except for the adoption of new and amended standards as set out below.
1.c New and amended standards adopted by the Group
No new or amended standards became applicable for the current reporting period that have an impact on the Group or Company.
1.d Going Concern
The Directors believe that it is appropriate to adopt the going concern basis in preparing these condensed consolidated financial statements, as the Board considers the Group has sufficient financial resources to continue in operation for at least the next 12 months from the date of signing of these financial statements.
1.e Segmental Analysis
The Group operates a single business segment for reporting purposes and is managed as a single investment company. Reporting is provided to the Board of Directors on an aggregated basis. The investments are all located in the UK, continental Europe, the Middle East and the US.
1.f Related Party Transactions
There have been no changes to the nature of the related party arrangements or transactions during the period to those reported in the Annual Report for the year ended
1.g Events after the reporting period
There have been no significant events since the end of the reporting period requiring disclosure.
2 AIFM and Performance Fees
|
|
|
|
Six months
|
|
|
Six months
|
|
AIFM fees |
303 |
- |
303 |
292 |
- |
292 |
|
Performance fee |
- |
- |
- |
- |
- |
- |
|
|
303 |
- |
303 |
292 |
- |
292 |
A performance fee is payable by the Company to AFML when the Company has realised an aggregate annualised 10% return on investments (the ‘hurdle’) in each basket of investments. Based on the investment valuations and the hurdle level as at
The performance fee is only payable to AFML if the hurdle is met on a realised basis. See page 25 and Note 19.9 of the 2024 Annual Report for further details. Any allocation of the performance fee by AFML to its employees is made on a discretionary basis.
3 (Loss)/return per share
The (loss)/return per share figures are based on the following figures:
|
|
Six months
|
Six months
|
|
Net revenue loss |
(2,039) |
(2,043) |
|
Net capital return |
4,433 |
2,936 |
|
Net total (loss)/return |
(6,472) |
893 |
|
|
|
|
|
Weighted average number of ordinary shares in issue |
169,352,855 |
171,507,993 |
|
|
Pence |
Pence |
|
Revenue loss per share |
(1.2) |
(1.2) |
|
Capital (loss)/return per share |
(2.6) |
1.7 |
|
Total (loss)/return per share |
(3.8) |
(0.5) |
4 Share capital
As at
During the year to
From
5 Net asset value (“NAV”) per share
The NAV per share is based on the Group net assets attributable to the equity shareholders of £294,635,000 (31
The NAV per share after performance fee* is based on the Group net assets attributable to the equity shareholders, less the performance fee accrual made by the Company of £19,000,000 (31
* Alternative Performance Measure
6 Subsidiary undertakings
The Company has an investment in the issued ordinary share capital of its wholly owned subsidiary undertaking,
7 Financial Instruments
The principal risks the Company faces from its financial instruments are:
• Market Price Risk
• Liquidity Risk; and
• Credit Risk
Market Price Risk
Market price risk arises mainly from uncertainty about future prices of financial instruments in the Group’s portfolio. It represents the potential loss the Group might suffer through holding market positions in the face of price movements, mitigated by stock diversification.
The Group is exposed to the risk of the change in value of its unlisted equity and non-equity investments. For unlisted equity and non-equity investments the market risk is principally deemed to be represented by the assumptions used in the valuation methodology as set out in the accounting policy.
Liquidity Risk
The Group’s assets comprise unlisted equity and non-equity investments. Whilst unlisted equity is illiquid, short-term flexibility is achieved through cash and cash equivalents.
Credit Risk
The Group’s exposure to credit risk principally arises from cash and cash equivalents. Only highly rated banks (with credit ratings above A3, based on Moodys ratings or the equivalent from another ratings agency) are used for cash deposits and the level of cash is reviewed on a regular basis.
Further details of the Company’s management of these risks can be found in note 13 of the Company’s 2024 Annual Report.
There have been no changes to the management of or the exposure to credit risk since the date of the Annual Report.
Fair Value Hierarchy
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm’s length
transaction.
The Group complies with IFRS 13 in respect of disclosures about the degree of reliability of fair value measurements. This requires the Group to
classify, for disclosure purposes, fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the
measurements.
The levels of fair value measurement bases are defined as follows:
Level 1: fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: fair values measured using valuation techniques for all inputs significant to the measurement other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: fair values measured using valuation techniques for which any significant input to the valuation is not based on observable market data (unobservable inputs).
All investments were classified as Level 3 investments as at, and throughout the period to,
When using the price of a recent transaction in the valuations, the Company looks to ‘re-calibrate’ this price at each valuation point by reviewing progress within the investment, comparing against the initial investment thesis, assessing if there are any significant events or milestones that would indicate the value of the investment has changed and considering whether a market-based methodology (ie. using multiples from comparable public companies) or a discounted cashflow forecast would be more appropriate.
The main inputs into the calibration exercise, and for the valuation models using multiples, are revenue, EBITDA, AuM, and P/E multiples (based on the most recent revenue, EBITDA, AuM, or earnings achieved and equivalent corresponding revenue, EBITDA, AuM, or earnings multiples of comparable public companies), quality of earnings assessments and comparability difference adjustments. Revenue multiples are often used, rather than EBITDA or earnings, due to the nature of the Group’s investments, being in fast-growing, small financial services companies which are not normally expected to achieve profitability or scale for a number of years. Where an investment has achieved scale and profitability the Group would normally then expect to switch to using an EBITDA or earnings multiple methodology.
The main input into the PWERM (‘Probability Weighed Expected Return Methodology’) is the probability of conversion. This method is used for the convertible loan notes held by the Company.
The fair valuation of private company investments is influenced by the estimates, assumptions and judgements made in the fair valuation process.
A sensitivity analysis is provided below which recognises that the valuation methodologies employed involve subjectivity in their significant unobservable inputs and illustrates the sensitivity of the valuations to these inputs. The inputs have been flexed with the exception of the Sales Price valuation approach as it does not involve significant subjectivity. The table also provides the range of values for the key unobservable inputs.
As at
|
|
|
|
|
|
Weighted
|
|
|
|
Market approach using |
|
Revenue Multiple |
a, b, c, g |
10x-35.4x |
6.9 |
10% |
16,883/
|
|
comparable traded multiples |
|
Earnings Multiple |
a, b, c, g |
8.3x-15.0x |
12.0 |
10% |
3,319/
|
|
|
|
AUM Multiple |
a, b, c, g |
0.1x |
0.1 |
10% |
264/- |
|
|
|
Illiquidity discount |
d, g |
0%-80% |
25.6% |
30% |
26,080/
|
|
|
|
Transaction implied premiums and discounts |
e, g |
33%-738% |
142.2% |
30% |
7,209/
|
|
Net Asset Value** |
|
Discount to NAV |
a |
n/a |
n/a |
10% |
(762) |
|
PWERM |
|
Probability of conversion |
a |
n/a |
n/a |
25% |
315/(315) |
|
CPORT^ |
|
Transaction price |
a, e, g |
n/a |
n/a |
10% |
802/(802) |
|
Sales Price |
|
n/a |
n/a |
n/a |
n/a |
n/a |
n/a |
# Weighted average is calculated by reference to the fair value of holdings as at the respective year-end. This therefore gives a clearer indication of the typical multiple or adjustment being applied across the portfolio.
** LP (‘Limited Partnership’) investments are held at net asset values provided by the relevant LP fund administrators. These are adjusted by benchmark movements as appropriate.
^ Whilst a recent or expected transaction price may be the most appropriate basis for a valuation, it will be corroborated by other techniques which factor in the unobservable inputs noted below.
As at
|
|
|
|
|
|
Weighted
|
|
|
|
Market approach using |
217,054 |
Revenue Multiple |
a, b, c, g |
2.3x - 28.0x |
6.0x |
10% |
17,564/ (17,554) |
|
comparable traded multiples |
|
Earnings Multiple |
a, b, c, g |
6.3x - 18.6x |
11.0x |
10% |
3,146/
|
|
|
|
AUM Multiple |
a, b, c, g |
0.1x |
0.1x |
10% |
264/- |
|
|
|
Illiquidity discount |
d, g |
0% - 50% |
32.3% |
30% |
12,558/ (10,920) |
|
|
|
Transaction implied premiums and discounts |
e, g |
0% - 630% |
109.3% |
30% |
17,063/ (18,023) |
|
Net Asset Value** |
8,264 |
Discount to NAV |
a |
n/a |
n/a |
10% |
(826) |
|
PWERM |
6,068 |
Probability of conversion |
a |
n/a |
n/a |
25% |
248/(248) |
|
Expected transaction price |
7,135 |
Execution risk discount |
a,f |
n/a |
n/a |
10% |
713/(713) |
|
CPORT^ |
16,414 |
Transaction price |
a, e, g |
n/a |
n/a |
10% |
1,641/ (1,641) |
|
Sales Price |
10,148 |
n/a |
n/a |
n/a |
n/a |
n/a |
n/a |
*Significant unobservable inputs
The variable inputs applicable to each broad category of valuation basis will vary dependent on the particular circumstances of each private company valuation. An explanation of each of the key variable inputs is provided below. The assumptions and decisions process in relation to the inputs is described in note 19.12 within the Annual Report.
(a) Application of valuation basis
Each investment is assessed independently, and the valuation basis applied will vary depending on the circumstances of each investment. When an investment is pre-revenue, the focus of the valuation will be on assessing the recent transaction and the achievement of key milestones since investment. Adjustments may also be made depending on the performance of comparable benchmarks and companies. For those investments where a trading multiples approach can be taken, the methodology will factor in revenue, earnings or assets under management as appropriate for the investment.
(b) Selection of comparable companies
The selection of comparable companies is assessed individually for each investment and the relevance of the comparable companies is continually evaluated at each valuation date. Key criteria used in selecting appropriate comparable companies are the industry sector in which they operate, the geography of the company’s operations, the respective revenue and earnings growth rates, operating margins, company size and development stage. Typically, between 4 and 10 comparable companies will be selected for each investment, but this can vary depending on how many relevant comparable companies are identified. The resultant revenue or earnings multiples or share price movements derived will vary depending on the companies selected and the industries they operate in. Given the nature of the investments the Company makes there are not always directly comparable listed companies, in such cases comparables will be selected whose businesses bear similarity to the relevant investment, in such cases the need for an additional discount / premium to the comparables will be assessed at each valuation date.
(c) Estimated sustainable revenue or earnings
The selection of sustainable revenue or earnings will depend on whether the company is sustainably profitable or not, and where it is not then revenues will be used in the valuation. The valuation approach will typically assess companies based on the last twelve months of revenue or earnings, as they are the most recent available and therefore viewed as the most reliable. Where a business has volatile earnings on a year-on-year basis, revenue or earnings may be assessed over a longer period. Where a company has reliably forecasted earnings previously or there is a change in circumstance at the business which will impact earnings going forward, then forward estimated revenue or earnings may be used instead.
(d) Application of illiquidity discount
An illiquidity discount may be applied either through the calibration of a valuation against the most recent transaction, or by application of a specific discount. The discount applied where a calibration (see (e) below) is not appropriate is dependent on factors specific to each investment, such as quality of earnings or revenues and potential exit scenarios.
(e) Transaction implied premium and discount
Where there is an implied company valuation available as a result of an external arm's length transaction, the ongoing valuation will be calibrated to this by deriving a company valuation with reference to the average multiple from a set of comparable companies and comparing this to a transaction implied valuation. This can result in an implied premium or discount compared to comparable companies at the point of transaction. This discount or premium will be considered in future valuations and may be reduced due to factors such as the time since the transaction and company performance. Where a calibrated approach is not appropriate, a discount for illiquidity may be applied as noted in (d) above.
(f) Execution risk
An execution risk discount is applied to all investments where an arm’s-length transaction is due to take place but hasn’t closed prior to the reporting period end. The discount applied is dependent on the progress of the negotiations and outstanding matters that may impact on the expected price. When valuing in line with an expected transaction the arm’s-length nature of the deal will be assessed, and term sheets will have been received.
(g) Liquidity preference
The company’s investments are typically venture investments with downside protections such as liquidation preference and anti-dilution provisions. Unlike ordinary share structures typically seen in the public or private markets, these structures protect the value of the Company’s position in the event of a reduction in the enterprise value of an investee company from the price paid. Where a valuation indicates the enterprise value of an investment has fallen the enterprise value will be fed into the investee companies’ ‘waterfall’ (which ranks shares by seniority/preference in the event of a liquidation event) to calculate the value of the Company’s position.
The following table presents the movement of investments measured at fair value, based on fair value measurement levels.
|
|
|
Level 3 |
|
|
Six months to
|
Year to
|
|
Opening balance |
265,083 |
254,295 |
|
Purchases at cost |
12,590 |
15,976 |
|
Realisation proceeds |
(9,930) |
(22,790) |
|
Gains on investments held at fair value |
4,295 |
17,602 |
|
Closing balance as at 30 September |
263,448 |
266,083 |
.
Independent Review Report to
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended
Basis for conclusion
We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” (“ISRE (UK) 2410”(Revised)). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with UK adopted international accounting standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with UK adopted International Accounting Standard 34, “Interim Financial Reporting”.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410 (Revised), however future events or conditions may cause the group to cease to continue as a going concern.
Responsibilities of Directors
The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom’s
In preparing the half-yearly financial report, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statements in the half - yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure Guidance and Transparency Rules of the United Kingdom’s
Chartered Accountants
London, UK
.
Interim Management Report
Principal Risks and Uncertainties
A review of the half year and the outlook for the Company can be found in the Chairman’s Statement and in the Portfolio Manager’s Review. The principal risks and uncertainties faced by the Company fall into the following broad categories: investment risks; portfolio diversification risk; cash risk; credit risk; valuation risk; operational risk; and key person risk. Information on these risks is given in the Annual Report for the year ended 31
The Board believes that the Company’s principal risks and uncertainties have not changed materially since the date of that report and are not expected to change materially for the remaining six months of the Company’s financial year.
Related Party Transactions
During the first six months of the current financial year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Group.
Going Concern
The Directors believe, having considered the Company’s investment objective, risk management policies, capital management policies and procedures, and the nature of the portfolio and the expenditure projections, that the Group has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future.
Directors’ Responsibilities
The Board of Directors confirms that, to the best of its knowledge:
(i) the condensed set of financial statements contained within this Half Year Report has been prepared in accordance with Accounting Standard IAS 34, ‘Interim Financial Reporting’, as adopted in the UK;
(ii) the condensed set of financial statements give a true and fair view of the assets, liabilities, financial position and return of the issuer and the undertakings included in the consolidation; and
(iii) the Half Year Report includes a fair review of the information required by 4.2.7R and 4.2.8R of the UK Listing Authority Disclosure Guidance and Transparency Rules.
In order to provide these confirmations, and in preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether applicable IFRS have been followed, subject to any material departures disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business;
and the Directors confirm that they have done so.
On behalf of the Board of Directors
William Reeve
Chairman
.
Glossary and Alternative Performance Measures
Alternative Investment Fund Managers Directive (“AIFMD”)
Agreed by the European Parliament and the
Alternative Performance Measures (“APMs”)
The measures the Board of Directors uses to assess the Company’s performance that are not defined under the International Financial Reporting Standards but which are viewed as particularly relevant for investment trusts. Definitions of the terms used and the basis of calculation are set out in this Glossary and the APMs are indicated with an asterisk (*).
Convertible Loan Note
A convertible loan note is a loan which bears interest and is repayable but may convert into shares under certain circumstances.
Discount or Premium
A description of the difference between the share price and the net asset value per share. The size of the discount or premium is calculated by subtracting the share price from the net asset value per share and is usually expressed as a percentage (%) of the net asset value per share. If the share price is higher than the net asset value per share the result is a premium. If the share price is lower than the net asset value per share, the shares are trading at a discount.
Gross IRR on Capital Deployed
Is the annualised return arising on investment related cash flows taking account of the timing of each cash flow, and assuming all investments are realised at their carrying value at the period end. It does not take account of the Group's expenses or transactions with shareholders. It is derived by computing the discount rate at which the present value of all investment related cash flows are equal to the original amounts invested.
Initial Public Offering (“IPO”)
An IPO is a type of public offering in which shares of a company are sold to institutional investors and usually also retail (individual) investors. Through this process, colloquially known as floating, or going public, a privately held company is transformed into a public company.
Internal Rate of Return (“IRR”)
Is the annualised return on an investment calculated from the cash flows arising from that investment taking account of the timing of each cash flow. It is derived by computing the discount rate at which the present value of all subsequent cash flows arising from an investment are equal to the original amount invested.
Performance fee – Company
AFML is entitled to a performance fee (previously referred to as carried interest) in respect of the performance of the Company's investments. Each performance fee operates in respect of investments made during a 24 month period and related follow-on investments made for a further 36 month period, save that the first performance fee shall be in respect of investments acquired using 80% of the net proceeds of the Company’s IPO in
Subject to certain exceptions, AFML will receive, in aggregate, 15% of the net realised cash profits from the sale of investments made over the relevant period once the Company has received an aggregate annualised 10% realised return on investments (the ‘hurdle’) made during the relevant period. AFML's return is subject to a ‘’catch-up’’ provision in its favour.
The performance fee is paid in cash as soon as practicable after the end of each relevant period, save that at the discretion of the Board payments of the performance fee may be made in circumstances where the relevant basket of investments has been realised in part, subject to claw-back arrangements in the event that payments have been made in excess of AFML’s entitlement to any performance fees as calculated following the relevant period.
The performance fee payable by the Company to AFML is accrued in the Company's financial statements and eliminated on consolidation in the Group financial statements.
Performance Fee – AFML
The performance fee arrangements within AFML were set up with the aim of incentivising employees of AFML and aligning them with shareholders through participation in the realised investment profits of the Group.
Any performance fee received by AFML will be allocated to its employees on a discretionary basis by the
NAV per share Total Return*
The theoretical total return on the NAV per share, reflecting the change in NAV during the period assuming that any dividends paid to shareholders were reinvested at NAV at the time the shares were quoted ex-dividend. This is a way of measuring investment management performance of investment trusts which is not affected by movements in the share price discount/premium.
Net Asset Value (“NAV”)
The value of the Group’s assets, principally investments made in other companies and cash being held, minus any liabilities. The NAV per share is also described as ‘shareholders’ funds’ per share. The NAV is often expressed in pence per share after being divided by the number of shares in issue. The NAV per share is unlikely to be the same as the share price, which is the price at which the Company’s shares can be bought or sold by an investor. The share price is determined by the relationship between the demand and supply of the shares.
Net Asset Value (“NAV”) per share after performance fee*
The NAV of the Group as calculated above less the performance fee accrual made by the Company divided by the number of issued shares.
Net Asset Value (“NAV”) per share after performance fee total return*
The Directors regard the Group’s NAV per share after performance fee total return as being the critical measure of value delivered to shareholders over the long term. The Board considers that the NAV per share after performance fee better reflects the current value of each share than the consolidated NAV per share figure, the calculation of which eliminates the performance fee.
Partnership
Total Shareholder Return*
The theoretical total return per share reflecting the change in share price during the period and assuming that any dividends paid were reinvested at the share price at the time the shares were quoted ex-dividend.
Unquoted investment
Investments in unquoted securities such as shares and debentures which are not quoted or traded on a stock market.
.
The half year report will shortly be available for inspection on the Company's website (https://augmentum.vc) and the National Storage Mechanism website ( https://data.fca.org.uk/#/nsm/nationalstoragemechanism ).
- END -