Albion Technology & General VCT PLCThe Company will invest in a broad portfolio of unquoted growth and technology businesses. Allocation of assets will be determined by the investment opportunities which become available, but efforts will be made to ensure that the portfolio is diversified in terms of sectors and stages of maturity of portfolio companies.†(pence per share)During the year, I assumed the Chair following the retirement of Robin Archibald. On the retirement of Mary Anne Cordeiro, Margaret Payn, the Chair of the Audit and Risk Committee, became the Senior Independent Director and also continues to be the Chair of the Audit and Risk Committee. Following a formal selection process, the Board welcomed David Benda and Peter Moorhouse, who joined as non-executive Directors.The Annual General Meeting (“AGM”) will be held virtually at noon on 5 June 2024 via the Lumi platform. Information on how to participate in the live webcast can be found on the Manager’s website at www.albion.capital/vct-hub/agms-eventsFollowing a formal and rigorous audit tender process, the Board appointed Johnston Carmichael LLP (“Johnston Carmichael”) as the new Auditor of the Company in October 2023. Johnston Carmichael has conducted the audit of the Annual Report and Financial Statements for the year ended 31 December 2023. Shareholders will be asked to confirm the appointment of Johnston Carmichael at the forthcoming AGM. During the audit tender process, prospective auditors were evaluated using guidance issued by the Financial Reporting Council in February 2017 and the Board completed a two-stage process which considered and evaluated relevant expertise, audit firm quality, audit firm resilience and value for money.Chairman
18 April 2024The pie charts at the end of this announcement show the split of the portfolio valuation as at 31 December 2023 by sector, stage of investment and number of employees. This is a useful way of assessing how the Company and its portfolio are diversified across sector, portfolio companies’ maturity measured by revenues and their size measured by the number of employees. Details of the principal investments made by the Company are shown in the Portfolio of investments on pages 28 to 30 of the full Annual Report and Financial Statements.A review of the Company’s business during the year and its future prospects is contained in the Chairman’s statement above and in this Strategic report.The Company has delegated the investment management of the portfolio to the Manager, Albion Capital Group LLP, which is authorised and regulated by the Financial Conduct Authority. The Manager also provides company secretarial and other accounting and administrative support to the Company.Under the Management Agreement, the Manager provides investment management, secretarial and administrative services to the Company. The Management Agreement can be terminated by either party on 12 months’ notice and is subject to earlier termination in the event of certain breaches or on the insolvency of either party. The Manager is paid an annual management fee equal to 2.0% of the net asset value of the Company and a separate annual administration fee of 0.2% of the net assets of the Company, subject to a maximum of £200,000 per annum and a minimum of £50,000 per annum, with Board review every three years to consider inflation. Both the Management fee and Administration fee are payable quarterly in arrears. The total annual running costs of the Company, including management fees payable to Albion Capital Group LLP, Directors’ fees, professional fees and the costs incurred by the Company in the ordinary course of business (but excluding any exceptional items and performance fees payable to Albion Capital Group LLP) are capped at an amount equal to 2.75% of the Company’s net assets, with any excess being met by Albion Capital Group LLP by way of a reduction in management fees.Under the performance incentive arrangement, the Manager will receive an incentive fee calculated annually on a five year average rolling basis, equal to 15% of the performance over a 5% hurdle (applied to the opening net asset value each year in line with the current dividend target). This fee will only become payable when average returns to shareholders are in excess of 5% per annum over a five year period. The first payment of a performance fee of £155,000 will be payable to the Manager after the adoption of the accounts at the 2024 AGM and is based on the audited results for the five year period ended 31 December 2023.The Board, through the Management Engagement Committee, has evaluated the performance of the Manager based on:The Board appointed the Manager as the Company’s AIFM in 2014 as required by the AIFMD. The Manager is a full-scope Alternative Investment Fund Manager under the AIFMD. Ocorian Depositary (UK) Limited is the appointed Depositary and oversees the custody and cash arrangements and provides other AIFMD duties with respect to the Company.The FCA’s Consumer Duty came into effect from 31 July 2023. These rules set a higher standard of consumer protection in financial services. The Manager as AIFM is within scope of the FCA’s Consumer Duty, but the Company itself is not.Under Section 172 of the Companies Act 2006 (the “Act”), the Board has a duty to promote the success of the Company for the benefit of its members as a whole in both the long and short term, having regard to the interests of other stakeholders in the Company, such as suppliers, and to do so with an understanding of the impact on the community and environment and with high standards of business conduct, which includes acting fairly between members of the Company.The Company has adopted a number of further policies relating to:Earlier stage technology companies have suffered from a particularly significant de-rating in the past year, and volatility continues to be seen in valuations for these types of assets.The Company and its operations are subject to a series of rigorous internal controls and review procedures exercised throughout the year. The Board receives reports from the Manager on its internal controls and risk management, including on matters relating to cyber security.
The Audit and Risk Committee reviews the Internal Audit Reports prepared by the Manager’s internal auditors, Azets, and has access to their internal audit partner to whom it can ask specific detailed questions in order to satisfy itself that the Manager has sufficient systems and controls in place including those in relation to business continuity and cyber security.
The Manager also has a formal risk committee in place which meets every six months, with cyber risk being discussed at Board meetings.In addition, the Board annually reviews the performance of its key service providers, particularly the Manager, to ensure they continue to have the necessary expertise and resources to deliver the Company’s investment objective and policy. The Manager and other service providers have also demonstrated to the Board that there is no undue reliance placed upon any one individual.This Strategic report of the Company for the year ended 31 December 2023 has been prepared in accordance with the requirements of section 414A of the Companies Act 2006 (the “Act”). The purpose of this report is to provide Shareholders with sufficient information to enable them to assess the extent to which the Directors have performed their duty to promote the success of the Company in accordance with Section 172 of the Act.Chairman
18 April 2024Chairman                                                                                          
18 April 2024        *Excluding treasury sharesChairman
Company number: 04114310capital(3,292)2,14331 December 2031 December 2022The Financial Statements have been prepared in accordance with applicable United Kingdom law and accounting standards, including Financial Reporting Standard 102 (“FRS 102”), and with the Statement of Recommended Practice “Financial Statements of Investment Trust Companies and Venture Capital Trusts” (“SORP”) issued by The Association of Investment Companies (“AIC”). The Financial Statements have been prepared on a going concern basis and further details can be found in the Directors’ report on page 47 of the full Annual Report and Financial Statements.Fixed asset investmentsThe Company’s business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. This portfolio of financial assets is managed, and its performance evaluated on a fair value basis, in accordance with a documented investment policy, and information about the portfolio is provided internally on that basis to the Board.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 and are 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.Provisions falling due after one year relate to the performance incentive fee payable to the Manager. The provision requires management to make judgements and estimates under the Basis of Preparation. The performance incentive fee provision is the best estimate of the probable amounts payable in respect of the five year performance measurement period for the performance incentive fee. The most significant assumption when calculating this amount, is that of future performance. This has been calculated by reference to the Company’s five year rolling historic returns and has been corroborated by a portfolio return analysis using appropriate benchmarks.DividendDividend income is included in revenue when the investment is quoted ex-dividend.Fixed returns on non-equity shares and debt securities are recognised when the Company’s right to receive payment and expected 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.Interest income is recognised on an accruals basis using the rate of interest agreed with the bank.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: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.CalledThis accounts for the nominal value of the shares.This accounts for the difference between the price paid for the Company’s shares and the nominal value of those shares, less issue costs.This reserve accounts for amounts by which the issued share capital is diminished through the repurchase and cancellation of the Company’s own shares.Increases and decreases in the valuation of investments held at the year end against cost are included in this reserve.The following are disclosed in this reserve:The special reserve, treasury share reserve and the revenue reserve were combined in 2012 to form a single reserve named “other distributable reserve”.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.The Directors are of the opinion that the Company is engaged in a single operating segment of business, being investment in smaller early stage companies principally based in the UK.31£’00031 December 2022
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£’000(ii)         Tax relief on expenses charged to capital has been determined by allocating tax relief to expenses by reference to the applicable corporation tax rate and allocating the relief between revenue and capital in accordance with the SORP.(iv)      There is no expiry date on timing differences, unused tax losses or tax credits.31 December 20£’00031 December 2022
£’000£’000£’000£’000£’000£’000£’000on the most recent revenue, EBITDA or earnings achieved and equivalent corresponding revenue, EBITDA or earnings multiples of comparable 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 Company’s investments, being in growth and technology 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 Company would normally then expect to switch to using an EBITDA or earnings multiple methodology.31 December£’000£’000liabilities£’000£’000£’000valueof shares(£’000)The Company’s capital comprises Ordinary shares as described in note 16. The Company is permitted to buy back its own shares for cancellation or treasury purposes.As a Venture Capital Trust, it is the Company’s specific nature to evaluate and control the investment risk of its portfolio in quoted and unquoted investments, details of which are shown on pages 28 to 30 of the full Annual Report and Financial Statements. Investment risk is the exposure of the Company to the revaluation and devaluation of investments. The main driver of investment risk is the operational and financial performance of the portfolio company and the dynamics of market quoted comparators. The Manager receives management accounts from portfolio companies, and members of the investment management team often sit on the boards of unquoted portfolio companies; this enables the close identification, monitoring and management of investment risk.Investment price risk is the risk that the fair value of future investment cash flows will fluctuate due to factors specific to an investment instrument or to a market in similar instruments. As a Venture Capital Trust, the Company invests in accordance with the investment policy set out above. The management of risk within the venture capital portfolio is addressed through careful investment selection, by diversification across different industry segments, by maintaining a wide spread of holdings in terms of financing stage and by limitation of the size of individual holdings. The Directors monitor the Manager’s compliance with the investment policy, review and agree policies for managing this risk and monitor the overall level of risk on the investment portfolio on a regular basis.The Company is exposed to fixed and floating rate interest rate risk on its financial assets. On the basis of the Company’s analysis, it was estimated that a rise of 1% in all interest rates would have increased the investment income for the year by approximately £261,000 (2022: £205,000). Furthermore, it was considered that a fall of interest rates below current levels during the year would have been very unlikely.£’000£’000£’000£’000£’000£’000Credit risk is the risk that the counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The Company is exposed to credit risk through its receivables, investment in unquoted loan stock, and through the holding of cash on deposit with banks.Liquid assets are held as cash on current account, on deposit, in bonds or short term money market account. Under the terms of its Articles, the Company has the ability to borrow up to 10% of its adjusted capital and reserves of the latest published audited Balance sheet, which amounts to £12,386,000 as at 31 December 2023 (2022: £11,800,000).£’000£’000£’000£’000£’000£’000£’000£’000All the Company’s financial assets and liabilities as at 31 December 2023 are stated at fair value as determined by the Directors, with the exception of receivables (including debtors due after more than one year), payables and cash which are carried at amortised cost, in accordance with FRS 102. There are no financial liabilities other than payables. The Company’s financial liabilities are all non-interest bearing. It is the Directors’ opinion that the book value of the financial liabilities is not materially different to the fair value and all are payable within one year.The Company had no financial commitments in respect of investments as at 31 December 2023 (2022: nil).Since the year end, the Company has had the following material post balance sheet events:Other than transactions with the Manager as disclosed in note 5 and the Directors’ remuneration disclosed in the Directors’ remuneration report on pages 61 to 64 of the full Annual Report and Financial Statements, there are no other related party transactions requiring disclosure.The information set out in this announcement does not constitute the Company’s statutory accounts within the terms of Section 434 of the Companies Act 2006 for the years ended 31 December 2023 and 31 December 2022, and is derived from the statutory accounts for those financial years, which have been, or in the case of the accounts for the year ended 31 December 2023, which will be, delivered to the Registrar of Companies. The Auditor reported on those accounts; the reports were unqualified and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.The full audited Annual Report and Financial Statements are 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/AATG/31Dec2023.pdf
(GlobeNewsWire)