Annual Financial Report

4 July 2022

Augmentum Fintech plc

Annual Financial Report for the year ended 31 March 2022

Augmentum Fintech plc (LSE: AUGM) (the “Company” or “Augmentum”), the UK’s only publicly listed investment company solely focused on the fintech sector, announces its audited Annual Results for the year ended 31 March 2022.

Financial highlights 

• NAV per share after performance fee increased by 19.0% to 155.2p¹ (31 March 2021: 130.4p).

• IRR of 22.6% on invested capital since inception (31 March 2021: 19%).

• Available cash at year end of £31.3 million, which has increased to £60.6 million as of today following the exit from interactive investor.

• Raised net proceeds of £53.6 million through an oversubscribed fundraising in July 2021.

• Unrealised gains of £56.7 million (2021: £26.7 million) across the portfolio.

Portfolio highlights

• £60.8 million² invested in 7 new companies and 7 existing portfolio companies (2021: £15.4 million² invested in 2 new companies and 11 existing portfolio companies).

• Total of £1.3 billion equity raised by portfolio companies in the year (2021: £185 million).

• interactive investor acquired by abrdn for £1.5 billion which completed post year end, and returned £42.8 million to the Company, representing an 11 times return on money invested.

• Grover completed a €113.0 million Series C funding round.

• Tide has grown market share of UK SME banking to 7%.

• Onfido grew revenue 90% in 2021 to over $100.0 million and reported 134% year-on-year growth in the US.

• Top 10 holdings growing at an average of 96% YoY and have an average of 17 months cash runway or are profitable.

Neil England, Chairman of Augmentum Fintech plc commented: 

“I am pleased to present our fourth set of positive annual results since the launch of Augmentum Fintech plc in 2018.

The Company’s portfolio of investments has again performed very well with an increase in Net Asset Value (NAV) per share after performance fee of 19.0%. However, the share price and total shareholder return do not reflect the strong performance of the portfolio and have been influenced by the global mark down of listed technology stocks and associated market sentiment.

In July 2021 we raised gross proceeds of £55.0 million through a significantly oversubscribed fundraising. This provided the resources for our Portfolio Manager to continue to add new exciting fintech companies to the portfolio and to make further investments in existing portfolio companies. However, the second half of the year has seen a slower rate of deployment from the Company reflecting the disciplined approach to investment decisions which has often seen our Portfolio Manager decline to participate in investments at prices that others have been prepared to pay.

Following the exit from Dext early in the first half of the year we made three further exits from SRL Global, Seedrs and interactive investor. The latter has been acquired by abrdn for £1.5 billion which completed after the year end giving the Company an 11 times return on money invested.

The portfolio companies continue to benefit from the active engagement of the Portfolio Manager, and most of these have cash runways that exceed 12 months of current requirements, with our top five investments all in that position.

Over the reporting period we have welcomed Conny Dorrestijn and Sir William Russell to the Board. We now consider the Board to be the right size for the Company’s market capitalisation and stage of development, with an appropriate and diverse balance of skills, knowledge and experience.

The investment pipeline remains strong and the Portfolio Manager continues to have visibility over the bulk of the opportunities in European fintech. The Board believe that, despite market headwinds affecting the current share price, the Company will generate rewarding returns to shareholders.”

Tim Levene, CEO of Augmentum Fintech Management Limited commented:

“We began the year coming out of Covid and ended it with further economic uncertainty caused by higher inflation and the prospect of increasing interest rates which post year end we now are experiencing, all compounded by a rapidly changing geopolitical situation in Europe.

But, uncertain times drive innovation and activity in fintech continues to grow and so do the opportunities. Over the last 12 months our challenge has been finding opportunities where the entry price ultimately rewards us in time for the risk we are willing to take. There has been a slew of new investors in the fintech space, many of whom were prepared to pay any price to build exposure. We are starting to see some of this money leave the sector which will continue to lead to a healthy correction in entry prices later this year and beyond. We must remain disciplined on price while continuing to deliver advantaged deal access for our shareholders. Our dictum holds that not every good business is a good investment.

Therefore, our pace of investment slowed over the course of the year. In the second half of the year we invested £16.4 million, compared to £44.4 million in the first six months.

The quality of opportunities in our pipeline remains high with more and more talent drawn to the sector. Our belief in the potential of the sector remains as strong as ever, yet our investment bar must remain high. Our central thesis of investing only in areas of high conviction and/or secular trends in consumer behaviour will continue to dominate our decision making.

We are experienced managers who have worked through similar challenging economic cycles and continue to be hands on managers actively engaged in our portfolio companies. Our core holdings in the portfolio are well-placed, well-funded and with sufficient liquidity to benefit from continuing market opportunities as they evolve.”

Notes

¹ This is considered to be an Alternative Performance Measure. The financial statements in the Annual Report set out the required statutory reporting measures of the Company’s financial performance. In addition, the Board assesses the Company’s performance against a range of criteria which are viewed as particularly relevant for investment trusts, which are summarised in the key performance indicators in the Annual Report. Definitions of the terms used are set out in the Annual Report.

² Net investments of £48.0 million (2021: £14.3 million).

Enquiries:

Augmentum Fintech Tim Levene, Portfolio Manager Nigel Szembel, Investor Relations	[phone] [phone] [e-mail]
Peel Hunt LLP Liz Yong, Luke Simpson, Huw Jeremy (Investment Banking)	[phone]
Singer Capital Markets Harry Gooden, Robert Peel, Alaina Wong (Investment Banking)	[phone]
Frostrow Capital LLP Paul Griggs, Company Secretary	[phone]

About Augmentum Fintech

Augmentum invests in fast growing fintech businesses that are disrupting the financial services sector. Augmentum is the UK’s only publicly listed investment company focusing on the fintech sector in the UK and wider Europe, having launched on the main market of the London Stock Exchange in 2018, giving businesses access to patient capital and support, unrestricted by conventional fund timelines and giving public markets investors access to a largely privately held investment sector during its main period of growth.

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Augmentum Fintech plc

Annual Report and Financial Statements
for the year ended 31st March 2022

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CHAIRMAN’S STATEMENT

Financial Highlights

	31 March 2022	31 March 2021
NAV per Share after performance fee*	155.2p	130.4p
NAV per Share after performance fee Total Return*	19.0%	12.3%
Total Shareholder Return*	(16.4%)	128.8%
(Discount)/Premium to NAV per Share after performance fee*	(14.3%)	21.9%
Ongoing Charges Ratio*	1.7%	1.9%

*  These are considered to be Alternative Performance Measures. Please see the Glossary and Alternative Performance Measures on page 78.

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I am pleased to present our fourth annual report since the launch of the Company in March 2018. This report covers the year ended 31 March 2022.

Investment Policy

Your Company invests in early stage European fintech businesses which have technologies that are disruptive to the traditional financial services sectors and/or support the trend to digitalisation and market efficiency. A typical investment will offer the prospect of high growth and the potential to scale. Our objective is to provide long-term capital growth to shareholders.

Performance

Your Company’s portfolio of investments has yet again performed very well with an increase in the Company’s Net Asset Value (NAV) per share (after performance fee) of 19.0%. Performance remains ahead of our stated target returns. As you will read in the Portfolio Manager’s Review on page 15 a number of milestones have been achieved within the portfolio which give us confidence in its current value and future prospects.

However, the share price, and hence the total shareholder return, has not kept pace. The global mark down of listed technology stocks and the group-think of market sentiment has had its effect, even though the Company has had a period of strong performance. The disconnect between sentiment and fact is extremely frustrating.

Portfolio

Most portfolio changes in the year took place in the first half of the period under review, leading up to the July fundraise, and were summarised in the half year report. The latter half of the year was characterised by a lot of new capital chasing fintech assets, valuations reflecting that and a slower rate of deployment from the Company consistent with its measured approach. Fundraise valuations have had large multiples paid in some cases, with 20 times revenue a regular occurrence. By contrast, the average forward revenue multiple of the Company’s top ten investments at 31 March 2022 was approximately 5.3 times.

It follows that, although we have continued to see lots of interesting opportunities, we have declined to participate on terms that others have been prepared to pay. We have a disciplined approach to our investment decisions and a proven investment model. Good companies do not make good investments if pricing does not appropriately reflect the risk. We do not expect these high investment multiples to sustain and, indeed, market corrections since the year end have already brought multiples to more sensible levels.

As you will read in the Portfolio Manager’s Review, we made follow on investments in Zopa and Cushon to support their growth plans.

Shareholders will be aware that one of our largest, later stage investments, interactive investor, has been sold to abrdn in a £1.5 billion deal, which completed after the year end. The Company received proceeds of £42.8 million, representing an 11 times return on money invested.

In current markets, one of the concerns that investors may have is around the ability of the portfolio companies to raise new capital to fund their growth. I am pleased to report that the bulk of our investments have cash runways that exceed 12 months current requirements and all of our top 5 investments are in this position. Additionally, your Company has cash reserves available to support any new funding rounds if required to do so.

There is a full review of the portfolio and investment transactions in the year in the Portfolio Manager’s Review beginning on page 15.

Valuations

Together with our advisers, we have carefully reviewed both the status and the forecasts of all of the portfolio companies. We have used appropriate methodologies to determine the value of each investment and to sense check our conclusions. The outcome of this is reflected in the valuations in this report. We also benefit from some of our investments occupying a senior position in the capital structures of the investee companies, protecting against downside risk.

Discount Control

After a prolonged period of trading at a premium to NAV, reflecting the opportunity of exposure to private fintech businesses via Europe’s only specialist publicly listed vehicle, the shares have traded at a discount for much of 2022. We therefore undertook a modest programme of accretive buybacks to the benefit of shareholders during the year and have continued to do so after the year end. 687,911 shares were bought back into treasury during the Company’s financial year, at an average price of 131.1p per share, representing an average discount to the 31 March 2022 NAV after performance fee of 15.5%. Subsequent to the year end a further 1,104,361 shares have been bought back, at an average price of 121.1p per share, representing an average discount to the 31 March 2022 NAV after performance fee of 22.0%.

The Board has sought to convey to the market our confidence in the value of the underlying portfolio.

All shares purchased are being held in treasury and will potentially be reissued when the share price returns to a premium to NAV per share after performance fee.

We will seek to renew shareholders’ authorities to issue and buy back shares at the forthcoming AGM. As we have highlighted previously, the Board considers the NAV per share after performance fee to be the most appropriate metric of NAV and to best reflect the value of each share. Accordingly, the Company is seeking shareholder authority to issue shares by reference to the NAV per share after performance fee. Further details can be found in the Notice of the AGM.

Dividend

No dividend has been declared or recommended for the year. Your Company is focused on providing capital growth and has a policy to only pay dividends to the extent that it is necessary to maintain the Company’s investment trust status.

2021 Fundraise

As set out in my half year statement, the Company’s fundraise in July 2021 raised gross proceeds of £55 million and was significantly oversubscribed. 40,590,406 new ordinary shares were issued at 135.5p per share by way of the initial placing, open offer, offer for subscription and intermediaries offer. The issue price represented a premium of 3.9% to the NAV per ordinary share as at 31 March 2021 and a discount of 6.1% to the closing price per ordinary share on 11 June 2021 (this being the last business day prior to the announcement of the issue price). Notwithstanding an attractive pipeline of prospective new investments that offer the potential to grow the fund further, plans for further fundraises are on hold given market conditions.

Potential Returns of Capital

As set out on page 23 of this annual report, the Company may, at the discretion of the Directors, return a proportion of the gains realised during a year from the disposal of investments. Factors influencing this will include the quantum of any sale proceeds, the opportunities offered by the current investment pipeline and the working capital requirements of the Company. Following the sale of interactive investor we have considered whether some of the proceeds should be returned to shareholders or retained to facilitate future investment opportunities.

The Company is growing in value but has not reached the scale we aspire to and the current share price discount will probably frustrate our ability to raise new capital for the foreseeable future, given macro-economic events. Our pipeline suggests a number of compelling propositions will become available. After consultation with major shareholders, we have therefore decided to retain the bulk of these proceeds for reinvestment to support our capital growth objective and utilise the balance to support a limited accretive share buyback programme. In the event that our pipeline does not deliver the investment opportunities we expect in the coming year then the Board will reconsider this decision.

Portfolio Management

Our investment team continues to work hard evaluating a wide range of investment opportunities, reviewing and challenging financial and commercial metrics in order to identify those most likely to be successful. 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. We have built a balanced portfolio across different fintech sectors and maturity stages and are focused on managing these investments and carefully growing the portfolio further. The investment team is also committed to a responsible investment approach through the lifecycle of the investments, from pre-screening to exit, believing that the integration of Environmental, Social and Governance (“ESG”) factors within the investment analysis, diligence and operating practices is pivotal in mitigating risk and creating sustainable, profitable investments.

I would like to take this opportunity to thank the team for maintaining their energy and diligence during some long hours.

Board

I am delighted to welcome two new non-executive colleagues to our Board. Conny Dorrestijn joined on 1 November 2021 and Sir William Russell on 1 April 2022. Conny has been an active and high profile part of the European fintech scene for many years and she has worked with a number of early stage fintech businesses. We hope her network will help us improve our reach on the continent. William brings extensive fintech and financial services experience, most recently as Lord Mayor of London, and has an understanding of our own investor base. They have both joined the Audit, Valuations, Nominations and Management Engagement & Remuneration committees. Conny and William will offer themselves for election by shareholders at the forthcoming AGM.

We now consider the Board to be the right size for the Company’s market capitalisation and stage of development, with an appropriate balance of skills, knowledge and experience.

AGM

The fourth AGM of the Company will be held on Wednesday, 14 September 2022 at 11.00 a.m. at the offices of Augmentum Fintech Management Limited, 5^th floor, 4 Chiswell Street EC1Y 4UP. We fully expect the AGM to be held in normal physical format again this year. Nonetheless, the Board strongly encourages shareholders to register their votes in advance by voting online using the Registrar’s portal, www.signalshares.com or, if they are not held directly, by instructing the nominee company through which the shares are held. Registering votes online does not preclude shareholders from physically attending the meeting.

The Notice of the AGM will be sent to shareholders when the annual report is published. Both documents will also be available to view on or download from the Company’s website at www.augmentum.vc.

The Directors consider that all the resolutions listed are in the best interests of the Company and its shareholders and recommend voting in favour them, as the Directors intend to do in respect of their own holdings.

Outlook

High inflation and rising interest rates, and the debate about their effect on companies and the people they serve, will dominate sentiment for the coming months. Experience tells us that growth companies will be out of favour, often with no correlation to their own underlying performance. Your Company has little influence on this.

We continue to be pleased with the performance of our portfolio and in particular its five largest investments, all of which are growing strongly and have dynamic growth plans, good funding runways and a clear path to profitability if they are not already there. We maintained our investment discipline and we expect our shareholders to reap the benefits of this in the future. The underlying need to digitise and transform last century’s infrastructure remains, as does our appeal as a supportive investor. Our pipeline remains strong and we continue to have visibility over the bulk of the opportunities in European fintech.

All this leads your Board to believe that, despite market headwinds affecting our current share price, the Company will generate rewarding returns to the patient shareholder. 

Neil England
Chairman

1 July 2022

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PORTFOLIO MANAGER’S REVIEW

Overview

Despite a backdrop of continued economic uncertainty fuelled by the current geopolitical and macroeconomic challenges, the financial services industry continues to go through a major digital transformation. The industry has seen record levels of investment over the past 12 months, and it is important to distinguish between the opportunity that is still ahead of us alongside the ongoing and much welcomed moderation in fintech valuation multiples both in the private and public markets.

Markets are understandably volatile, and the tech sector has perhaps been the hardest hit. Many high profile public fintech businesses have been hit hard. Market volatility has foiled many IPO plans and many of the SPACs (special purpose acquisition companies) that were crowding the headlines in 2021. We have also seen a contraction in the digital asset (crypto) sector. This shake-out has shone a light on some of the obstacles and shortfalls the sector still needs to overcome as it becomes more mainstream, but this doesn’t diminish the fundamental disruptive potential of blockchain technologies.

But uncertain times drive increasing innovation, and activity continues unabated in high potential earlier stage fintech companies. With significant volumes of “dry powder” (fund commitments raised over the last couple of years and not yet deployed) in the European venture market, and a finite number of high quality companies, valuations at the early stage remain relatively cushioned from broader public market uncertainty. Maintaining price discipline and delivering advantaged deal access therefore remain critical to the work that we do in securing long-term returns for our shareholders.

Investments

Activity in the period since I last wrote to you in the half year report has reflected our continued discipline and need for high conviction. Despite writing several investment term sheets over the past 12 months, we saw a significant reduction in our conversion rate following the increasingly aggressive activity of new investors in the fintech space - we issued 14 term sheets in the year and six of the seven that did not progress to investment failed on valuation grounds. The desire of these investors to build a beta portfolio at unprecedented forward revenue multiples ran contrary to our philosophy of finding companies with great potential that can also deliver a great return. As such our deployment slowed down considerably and we invested £16.4 million over the last six months of the year compared to £44.4 million over the first six months. The portfolio has also seen its second significant exit with abrdn agreeing the acquisition of interactiveinvestor for £1.5 billion in a transaction which returned £42.8 million to the Company post year-end.

New Investments

Infrastructure has been a central pillar of our active investment thesis now for some time. As fintech has entered the mainstream, institutions have been keener to adopt technologies that facilitate their core mission improving accuracy and/or reducing operational overheads.

As mentioned in the half year report we invested in Tesseract, WeMatch and Gemini, all playing into an infrastructure thesis in both traditional and digital sectors.

Earlier in the year, and also announced in the half year report, we made investments in Cushon and Epsor, giving us exposure to the workplace pension and savings markets across the UK and France. These are markets yet to be widely disrupted by technology and are often overlooked by generalist venture capital funds. However, they hold great potential as employers recognise their responsibility to ensure their employees have a better sense and understanding of their pension and savings pots.

Finally, again as announced in the half year report, we welcomed Anyfin to the portfolio in June. European consumer credit markets lag the UK and US in terms of sophistication; low risk borrowers are overpaying for credit, including new high-interest products such as Buy Now, Pay Later (“BNPL”). We saw the opportunity early last year for data driven lenders to identify and capture high value customer segments by offering improved terms based on a more sophisticated understanding of risk. Anyfin are becoming the leading digital refinancing player in Europe, already active across Germany, Sweden, Finland and Norway.

The Existing Portfolio 

Follow on investments continue to be a focus for the portfolio as we back our winners through their growth cycle. In the half year since the last report, we have made three follow on investments, with another falling just outside the reporting period. In total these investments amount to £16.4 million of capital.

In October we took the opportunity to invest a further £10 million into our later stage portfolio company Zopa in a £220 million round led by SoftBank Vision Fund 2 alongside existing investors Silverstripe and Northzone. Zopa was awarded a banking licence in 2020 allowing it to offer a wider product range including fixed term savings backed by FSCS protection. The funding was required to meet the capital requirements of the rapidly growing bank, at the time already having attracted £675 million in deposits and issuing 150,000 credit cards. The round will enable Zopa to continue their accelerated path and further evolve the product set. Their performance continues to impress, with record revenues in the first quarter of 2022 and achieving profitability in March.

We first welcomed Cushon into the portfolio in May 2021 when their assets under management stood at circa £375 million. In December we increased our commitment with a further £5 million for equity in a £35 million round of financing comprising equity and debt led by Ashgrove Capital. The new capital was required to scale operations and to fund the acquisition of Creative, an auto-enrolment scheme. Creative is Cushon’s third Master Trust acquisition in two years which has helped grow assets under management to circa £1.7 billion on behalf of 400,000 customers. The workplace pensions industry is under pressure from the UK government to consolidate and deliver better value. Cushon is riding these secular winds to grow at a rapid rate.

During the period, Grover successfully completed its Series C funding round of €113 million following the €60 million Series B it closed in the first quarter of 2021. Grover has delivered continuous growth since our first investment in 2019, topping €160 million of annualised subscription value by the end of the first quarter of 2022 and making rapid early progress with its US entry strategy. Grover is benefiting from secular trends away from ownership and towards utilisation, together with a circular economy benefit that is central to its mission.

After the period end, Previse successfully completed its Series B investment round comprising US$18 million at first close, led by the Asian headquartered investment arm of Tencent. Previse have continued to pursue an embedded finance approach, integrating working capital and inventory finance into core accounting and workflow platforms and banking entities with significant untapped opportunities across multiple product lines.

Additionally, notable performance commentaries from our larger existing portfolio positions include:

Tide now has over 7% UK market penetration with nearly 430,000 members and is, together with Starling, the leading SME challenger banking platform with only the “Big 5” incumbents now serving more SMEs in the UK. Revenue growth has been robust, driven by continued growth in payment services and membership subscriptions. Tide continues to deliver on an open field opportunity to better serve smaller business customers with a cost structure unencumbered by traditional legacy branch structures and technology stacks.

Onfido continue to consolidate their US and global market position with nearly 1,000 active customers. The company grew revenue 90% in 2021 to over US$100 million and achieved 134% year on year growth in the US. Onfido’s digital identity checks surpassed 100 million in September last year and increased 50% in the subsequent five months to hit 150 million in the first quarter of this year. Goode Intelligence recently predicted that identity verification checks will grow from 1.1 billion last year to 3.8 billion in 2026. Onfido is another portfolio company that is clearly advancing within strong secular trends.

As we have signposted in previous reviews, making early-stage investments does not always pay off and we do not expect to get it right all of the time. Elsewhere in the portfolio, outside the top 10 investments, we have reduced valuations by £4 million in aggregate, driven largely by the slowdown in the mortgage market affecting Habito and a delay experienced by Farewill in regulatory approval from the FCA in relation to their funeral plans launch.

Exits

interactive investor (ii) was successfully sold to abrdn in a transaction that completed in May 2022. The Company benefited from a realisation of £42.8 million. This is the fourth exit from our portfolio and the most significant exit in just four years since inception. The 84% IRR (11 times gross multiple of money invested (“MoM”)) generated validates the core Augmentum thesis of pursuing disruptive propositions developing against secular trends in consumer and business behaviour.

This followed exits of our holdings in Dext (30.5% IRR, 1.4 times MoM) and Seedrs (0% IRR, 1 times MoM) earlier in the year.

Performance

For the year to 31 March 2022 we are reporting gains on investments of £56.7 million (2021 £26.7 million). Since IPO this represents an IRR of 22.6% on the capital that we have deployed.

It is in periods of market volatility like these that the structure we negotiate into investments shows its value. Liquidation preferences, a common feature of early stage investing, provide downside protection in that the value of the investment would have to fall below the value of the funds invested before our capital would suffer any impairment. Anti-dilution provisions can also provide for additional shares being awarded if the company raises future rounds at lower valuations.

These mechanisms and other rights we build into investment agreements shield us from much of the downside ordinary shares suffer in publicly listed companies and are key to our style of investing, in particular at the early stage. Within the current portfolio, 19 of the 24 investments have the benefit of liquidation preferences.

Outlook

We have evolved in just six short months from a risk on market that had developed over a number of years to a risk off environment. The shift in sentiment has not taken us by surprise and we have built up a healthy cash buffer of, at the date of this report, £61.0 million to ensure we can both support our existing portfolio and also capitalise on compelling opportunities in the fintech market over the coming 12 months and beyond.

The volume of venture capital raised over the last two years leaves significant “dry powder” commitments across Europe, with estimates suggesting more than two and a half years of capital in place at deployment rates matching the last two years. Such volume of capital seeking a finite number of quality investments is likely to serve to continue to maintain momentum for the fintech sector. In addition there has consistently been a trend, particularly in fintech, for companies to stay private for longer, something that the external market conditions is likely to reinforce.

Seeing potential squeezes at both entry and exit therefore means that discipline is vital. The quality of opportunities in our pipeline remains high with more and more talent drawn to the sector. Not every good business is a good investment though and our conversion rate of meeting companies and ultimately investing is currently at 0.4%. The bar must remain exceptionally high, and our central thesis of investing only in areas of high conviction and/or secular trends in consumer behaviour, will continue to dominate our decision making.

Our belief in the potential of the sector remains as strong as ever. Our core holdings in the portfolio are well placed, well funded and with sufficient liquidity to benefit from continuing market opportunities as they evolve.

Tim Levene CEO
Augmentum Fintech Management Ltd

1 July 2022

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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 UK and wider Europe.

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 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 UK and wider Europe, and the Company will at all times invest and manage the portfolio in a manner consistent with spreading investment risk.

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 per cent. of Net Asset Value;

• the aggregate value of seed stage investments will represent no more than 1 per cent. of Net Asset Value; and

• at least 80 per cent. of Net Asset Value will be invested in businesses which are headquartered in or have their main centre of business in the UK or wider Europe.

In addition, the Company will itself not invest more than 15 per cent. of its gross assets in other investment companies or investment trusts which are listed on the Official List of the FCA.

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.

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. 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 per cent. of the Company’s Net Asset Value, 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 per cent. 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 Regulatory Information Service.

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PORTFOLIO REVIEW

	Fair value of holding at 31 March 2021 £000	Net investments/ (realisations) £000	Investment return £000	Fair value of holding at 31 March 2022 £000	% of portfolio
interactive investor^	32,631	-	10,166	42,797	15.9%
Grover	12,938	-	29,477	42,415	15.8%
Tide	18,963	2,200	7,058	28,221	10.5%
Zopa^	9,501	10,000	6,076	25,577	9.5%
Onfido	14,850	-	543	15,393	5.7%
Cushon	-	10,000	3,584	13,584	5.1%
Monese	10,340	1,166	1,719	13,225	4.9%
Gemini†	-	10,150	358	10,508	3.9%
BullionVault^	11,466	(520)	(923)	10,023	3.7%
AnyFin	-	7,248	2,622	9,870	3.7%
Top 10 Investments	110,689	40,244	60,680	211,613	78.7%
Other Investments*	53,438	7,755	(3,999)	57,194	21.3%
Total Investments	164,127	47,999	56,681	268,807	100.0%

^  Held via Augmentum I LP

^†   Held through Augmentum Gemini Ltd

*  There are 14 other investments (31 March 2021: 13). See pages 13 and 14 for further details.

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KEY INVESTMENTS

interactive investor

interactive investor is the No.1 UK direct-to-consumer fixed fee investment platform, with almost £55 billion of assets under administration and over 400,000 customers across its general trading, ISA and SIPP accounts. It accounts for a fifth of UK retail equity trading. The company offers execution-only trading and investing services in shares, funds, ETFs and investment trusts, all for a market-leading monthly subscription fee.

interactive investor completed a £40 million acquisition of Alliance Trust Savings in 2019, bringing together the two largest UK fixed price platforms. In 2020 it completed the acquisition of Share plc, adding a further 61,000 customers and in 2021 it acquired the D2C investment platform EQi from Equinti, adding another 59,000 customers.

In December 2021 abrdn, the FTSE 100 asset manager, announced that it had agreed to acquire interactive investor, subject, inter alia, to the receipt of the necessary shareholder and regulatory approvals. The transaction completed in May 2022.

The Company acquired its interest in interactive investor in March 2018 as part of the seed portfolio at IPO, at a valuation of approximately £3.8 million; and the realisation represents a multiple of 11 times cost and an IRR of 84%.

Source: ii	31 March 2022 £000	31 March 2021 £000
Cost:	3,843	3,843
Value:	42,797	32,631
% ownership (fully diluted)	3.8%	3.8%

As per last filed audited accounts of the investee company for the year to 31 December 2020:

	2020 £000	2019 £000
Turnover	133,153	90,170
Pre tax profit	41,692	13,933
Net assets	205,278	128,005

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Grover

Berlin-based Grover (www.grover.com) is the leading consumer-tech subscription platform, bringing the access economy to the consumer electronics market by offering a simple, monthly subscription model for technology products. Private and business customers have access to over 3,000 products including smartphones, laptops, virtual reality technology, wearables and smart home appliances. The Grover service allows users to keep, switch, buy, or return products depending on their individual needs. Rentals are available in Germany, Austria, the Netherlands, Spain and the US. Grover is a pioneer in the advancement of the circular economy, with products being returned, refurbished and recirculated until the end of their usable life.

In September 2019 Augmentum led a €11 million funding round with a €6 million convertible loan note (“CLN”) investment. This coincided with Grover signing a new €30 million debt facility with Varengold Bank, one of Germany’s major fintech banking partners. In March 2021 Grover completed a €60 million Series B funding round, with Augmentum participating and converting its CLN. The round was made up of €45 million from equity investors and €15 million in venture debt financing. With its Series C funding round in April 2022 Grover raised US$330 million in equity and debt funding, bringing the company’s valuation to over one billion US dollars.

Source: Grover	31 March 2022 £000	31 March 2021 £000
Cost:	7,927	7,927
Value:	42,415	12,937
% ownership (fully diluted):	6.4%	8.3%

As an unquoted German company, Grover is not required to publicly file audited accounts.

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Tide

Tide’s (www.tide.co) mission is to help SMEs save time and money in the running of their businesses. Customers are set up with an account number and sort code in as little as 5 minutes, and the company is building a comprehensive suite of digital banking services for businesses, including automated accounting, instant access to credit, card control and quick, mobile invoicing. Tide has passed 7% market share of business accounts in the UK, serving over 400,000 SMEs.

Tide appointed Sir Donald Brydon as its first independent Non-Executive Chair in September 2020; Sir Donald brings extensive experience to the Board, previously chairing the London Stock Exchange, the Royal Mail and Sage.

Augmentum led Tide’s £44.1m first round of Series B funding in September 2019, alongside Japanese investment firm The SBI Group.  In July 2021 Tide completed an £80 million Series C funding round led by Apax Digital, in which Augmentum invested an additional £2.2 million and into which the £2.5 million loan note converted.

Source: Tide	31 March 2022 £000	31 March 2021 £000
Cost:	13,200	11,000
Value:	28,221	18,962
% ownership (fully diluted)*:	5.4%	5.9%

*  2021: £2.5m in a convertible loan note.

As per last filed audited accounts of the investee company for the year to 31 December 2020:

	2020 £000	2019 £000
Turnover	14,442	4,860
Pre tax loss	(23,208)	(20,821)
Net assets	17,761	26,021

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Zopa

Zopa (www.zopa.com) was founded in 2005 as the world’s first peer-to-peer (P2P) lending company, aiming to give people access to simpler, better-value loans and investments. Following a funding round in 2020 Zopa launched Zopa Bank and was granted a full UK banking licence, which allowed it to offer a wider product range. It is regulated by both the PRA and the FCA.

After 16 years of delivering positive returns for investors, Zopa closed the P2P lending side of its business in 2021 to fully focus on Zopa Bank. Current products include fixed term and smart savings, wedding and home improvement loans, debt consolidation loans, a credit card and motor finance.

Zopa is a multiple awards winner. In 2021 Zopa was awarded Best Personal Loan Provider and Best Credit Card Provider by the British Bank Awards, Best Online Savings Provider by Moneynet Personal Finance, Best use of IT in Consumer Finance in the FStech Awards and won the Personal Credit Cards Innovation award in the Finder Lending Innovation Awards. In 2022 it has won Best Short Term Fixed Rate Bond Provider, Best Fixed Rate Bond Provider and Best New Savings Provider in the Savings Champion Awards and been awarded Banking Brand of the Year 2022 in the MoneyNet Awards 2022.

Augmentum participated in a £20 million funding round led by Silverstripe in March 2021 and in October 2021 participated with a further £10 million investment in a £220 million round led by SoftBank.

Source: Zopa	31 March 2022 £000	31 March 2021 £000
Cost:	29,670	19,670
Value:	25,577	9,501
% ownership (fully diluted):	3.3%	3.0%

As per last filed audited accounts of the investee company for the year to 31 December 2020:

	2020 £000	2019 £000
Operating income	21,252	33,464
Pre tax loss	(41,481)	(18,136)
Net assets	134,072	36,535

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Onfido

Onfido (www.onfido.com) is building the new identity standard for the internet. Its AI-based technology assesses whether a user’s government-issued ID is genuine or fraudulent, and then compares it against their facial biometrics. Using computer vision and a number of other AI technologies, Onfido can verify against 4,500 different types of identity documents across 195 countries, using techniques like “facial liveness’ to see patterns invisible to the human eye.

Onfido was founded in 2012 and has offices in London, San Francisco, New York, Lisbon, Paris, Amsterdam, New Delhi and Singapore and helps over 800 companies, including industry leaders such as Revolut, bung and Bitstamp. These customers are choosing Onfido over others because of its ability to scale, speed in on-boarding new customers (15 seconds for flash verification), preventing fraud, and its advanced biometric technology. In October 2021 the company announced its acquisition of biometric innovator, EYN, and in November 2021 its partnership with Italian bank Banca Profilo via fintech partner Tinaba.Augmentum invested an additional £3.7 million in a convertible loan note in December 2019 as part of a £4.7 million round. This converted into equity when Onfido raised an additional £64.7 million in April 2020.

Source: Onfido	31 March 2022 £000	31 March 2021 £000
Cost:	7,750	7,722
Value:	15,393	14,851
% ownership (fully diluted):	2.3%	2.6%

As per last filed audited accounts of the investee company for the year to 31 December 2020:

	2020 £000	2019 £000
Turnover	45,408	27,561
Pre tax loss	(34,712)	(26,488)
Net (liabilities)/assets	68,508	(9,494)

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Cushon

Cushon (www.cushon.co.uk) provides workplace pensions and payroll-linked ISAs to more than 200,000 members across 8,000 UK employers. Cushon has overall assets under management of £740 million and is authorised by The Pensions Regulator to operate a master trust pension scheme. In January 2021, Cushon became the first UK pension provider to launch a fully carbon neutral ‘Net Zero Now’ pension product. In April 2022 it finalised the acquisition of Creative Benefits, manager of Creative Pension Trust, making it the fifth largest master trust pension provider in the UK and doubling its assets under management to £1.7 billion.

Augmentum invested £5 million in Cushon in June 2021 and followed up with a further £5 million in March 2022.

Source: Cushon	31 March 2022 £000	31 March 2021 £000
Cost:	10,000	-
Value:	13,584	-
% ownership (fully diluted)*:	13.9%	-

As per last filed audited accounts of the investee company for the year to 31 March 2021:

	2021 £000	2020 £000
Turnover	1,632	2
Pre tax (loss)/profit	(3,742)	(2,036)
Net assets	5,407	1,699

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Monese

With Monese (www.monese.com) you can open a UK or European current account in minutes from your mobile, with a photo ID and a video selfie. Their core customers are amongst the hundreds of millions of people who live some part of their life in another country - whether it’s for travel, work, business, study, family, or retirement.

With its mobile-only dual UK and Euro IBAN current account, its portability across 31 countries, and both the app and its customer service available in 14 languages, Monese allows people and businesses to bank like a local across the UK and Europe. Launched in 2015 Monese now has more than 2 million registered users. 70% of incoming funds are from salary payments, indicating that customers are using Monese as their primary account. In October 2020 Mastercard and Monese announced a multi-year strategic partnership, with Monese becoming a principal Mastercard issuer. Monese’s new Banking as a Service (“BaaS”) platform, which arrived following deals by Monese with Mastercard and core banking provider Thought Machine, will be used by Investec for its private client transactional banking service and in the launch of a new business current account offering for private companies. Over time, Investec also expects BaaS will allow the bank to consolidate its retail savings products. In December 2021 the company expanded its credit and lending capabilities through the acquisition of financial services provider Trezeo.

Augmentum is invested alongside Kinnevik, PayPal and International Airlines Group.

Source: Monese	31 March 2022 £000	31 March 2021 £000
Cost:	11,428	10,261
Value:	13,225	10,341
% ownership (fully diluted)*:	7.5%	7.5%

*£0.9m (2021: £0.9m) of investment in a convertible loan note.

As per last filed audited accounts of the investee company for the year to 31 December 2020:

	2020 £000	2019 £000
Turnover	16,282	10,273
Pre tax loss	(31,130)	(38,061)
Net (liabilities)	(18,044)	(17,398)

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Gemini

Gemini enables individuals and institutions to safely and securely buy, sell and store cryptocurrencies. Gemini was founded in 2014 by Cameron and Tyler Winklevoss and has been built with a security and regulation first approach. Gemini operates as a New York trust company regulated by the New York State Department of Financial Services (NYSDFS) and was the first cryptocurrency exchange and custodian to secure SOC 1 Type 2 and SOC 2 Type 2 certification. Gemini entered the UK market in 2020 with an FCA Electronic Money Institution licence and is one of only ten companies to have achieved FCA Cryptoasset Firm Registration. Gemini announced acquisitions of portfolio management services company BITRIA and trading platform Omniex in January 2022.

Augmentum participated in Gemini’s first ever funding round in November 2021 with an investment of £10.2 million.

Source: Gemini	31 March 2022 £000	31 March 2021 £000
Cost:	10,150	-
Value:	10,508	-
% ownership (fully diluted)*:	0.2%	-

No audited accounts have been filed for Gemini.

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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 the very best prices online, with US$3.8 billion of assets under administration, over US$100 million worth of gold and silver traded monthly, and over 100,000 clients.

Each user’s property is stored at an unbeaten low cost in secure, specialist vaults in London, New York, Toronto, Singapore and Zurich. BullionVault’s unique Daily Audit then proves the full allocation of client property every day.

The company generates solid 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	31 March 2022 £000	31 March 2021 £000
Cost:	8,424	8,400
Value:	10,023	11,466
% ownership (fully diluted):	11.1%	11.1%
Dividends paid:	520	622

As per last filed audited accounts of the investee company for the year to 31 October 2021:

	2021 £000	2020 £000
Gross profit	12,086	15,707
Pre tax profit	7,741	10,703
Net assets	39,148	34,851

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Anyfin

Anyfin (www.anyfin.com) was founded in 2017 by former executives of Klarna, Spotify and iZettle, and leverages technology to allow credit-worthy consumers the opportunity to improve their financial wellbeing by consolidating and refinancing existing credit agreements with improved interest rates, as well as offering smart budgeting tools. Anyfin is currently available in Sweden, Finland and Germany.

Augmentum invested £7.2 million in Anyfin in September 2021 as part of a $52 million funding round.

Source: Anyfin	31 March 2022 £000	31 March 2021 £000
Cost:	7,248	-
Value:	9,870	-
% ownership (fully diluted):	2.7%	-

Audited financial statements are not available for Anyfin.

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OTHER INVESTMENTS

Farewill
In the next 10 years, £1 trillion of inheritance will pass between generations in the UK. Farewill (www.farewill.com) is a digital, all-in-one financial and legal services platform for dealing with death and after-death services, including wills, probate and cremation. In 2021 Farewill won National Will Writing Firm of the Year for the third year in a row and Probate Provider of the Year for the second consecutive year at the British Wills and Probate Awards. Farewill also won Best Funeral Information Provider and  Low-cost Funeral Provider of the Year at the Good Funeral Awards 2021.  The organisation has also been voted the UK’s best-rated death experts on Trustpilot, scoring an average customer approval rating of 4.9/5  from over 10,000 reviews. It is now the largest will writer in the UK.

Since its launch in 2015 Farewill’s customers have pledged over £450 million in legacy gifts written into their wills.

In January 2019 Augmentum led Farewill’s £7.5 million Series A fundraise, with a £4 million investment. Augmentum participated in Farewill’s £20 million Series B, led by Highland Europe in July 2020.

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iwoca
Founded in 2011, iwoca (www.iwoca.co.uk) uses award-winning technology to disrupt small business lending across Europe. They offer short-term loans of up to £200,000 to SMEs across the UK, Germany and Poland. iwoca leverages online integrations with high-street banks, payment processors and sector-specific providers to look at thousands of data points for each business. These feed into a risk engine that enables the company to make a fair assessment of any business – from a retailer to a restaurant, a factory to a farm – and approve a credit facility within hours. The company has issued over £1 billion in funding to over 50,000 SMEs in total and has surpassed £100 million worth of lending through the Coronavirus Business Interruption Loan Scheme to businesses grappling with the fallout of the economic crisis caused by the coronavirus. Iwoca launched iwocaPay in June 2020, an innovative business-to-business (B2B) ‘buy now pay later’ product to provide flexible payment terms to buyers while giving peace of mind to sellers.

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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 Finnish Financial Supervisory Authority (“FIN-FSA”), and was one of the first companies in the EU to obtain a 5AMLD (Fifth Anti-Money Laundering Directive) virtual asset service provider (“VASP”) licence. It is the only VASP with an express authorisation from the FIN-FSA to deploy client assets into decentralized finance or “DeFi”.

Taking no principal position, 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.

Augmentum led Tesseract’s Series A funding round in June 2021 with an investment of £7.3 million.

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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 – deliver benefits to both consumers and merchants. This helps merchants shorten their cash cycle, increase conversion and lower their costs. In October Volt announced their partnership with Worldline, the European leader in payments and transactional services, giving over 600 enterprise-level merchants globally access to Volt’s open payments infrastructure. It also announced its expansion into Brazil in November to integrate Brazil’s domestic instant payments network, Pix, and established its physical presence in São Paolo. More recently, in April 2022, it partnered with Mercuryo to help the crypto payments company offer open banking payments to their two million global customers. The real-time account-to-account payments (A2A) will provide Mercuryo wallet users, alongside their business partners, with single-click payment solutions via fiat currency.

Augmentum invested in £0.5 million Volt in December 2020 and a further £4 million in June 2021.

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ParaFi Capital
ParaFi Capital (www.parafi.com) is an investor in decentralised finance protocols that address tangible use cases of the technology and demonstrate signs of product-market fit. The ParaFi investment has drawn on their domain expertise developed in both traditional finance and crypto to identify and invest in leading protocols such as Compound (lending and interest accrual), Aave (asset borrowing), Uniswap (automated liquidity provision), and Synthetix (synthetic asset trading), MakerDAO (stablecoins). ParaFi also supports its protocols as a liquidity provider and governance participant.

Augmentum invested £2.8 million in ParaFi in January 2021. Co-investors include Bain Capital Ventures and Galaxy Digital.

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Intellis
Intellis, based in Switzerland, is an automated forex trading platform governed by AI.

Augmentum exercised its option to invest a further €1 million in March 2020 and a further €1 million in March 2021.

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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. The company processes over 100,000 invoices a day. In January 2022 Mastercard unveiled that its next-generation virtual card solution for instant B2B payments would use Previse’s machine learning capabilities. The solution combines Previse’s machine learning, with Mastercard’s core commercial solutions and global payment network, to transform how businesses send and receive payments.

Augmentum invested £250,000 in a convertible loan note in August 2019. This converted into equity as part of the company’s US$11 million funding round in March 2020, alongside Reefknot Investments and Mastercard, as well as existing investors Bessemer Venture Partners and Hambro Perks. Previse was awarded a £2.5 million Banking Competition Remedies’ Capability and Innovation Fund grant in August 2020.

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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.

Wematch is headquartered in Tel Aviv and has offices in London and Paris. In 2021 WeMatch managed more than 12,000 matching and lifecycle events, saving more than 500,000 trader to trader contacts, saved over 5,000 working hours for their premium users with their workflow solutions, launched a new securities lending platform and a new  ETF synthetic portfolio management product. 

Augmentum invested £3.7 million in September 2021.

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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 September 2021, following closure of the initial phase of a £500 million pension fund investment.

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.

Augmentum invested £1 million in 2021, adding to its previous £2.5 million investment from 2019.

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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 April 2016, Habito has helped nearly 400,000 better understand their mortgage needs and submitted almost £6 billion of mortgages. Habito launched its own buy-to-let mortgages in July 2019 and in March 2021 launched a 40-year fixed-rate mortgage ‘Habito One’, the UK’s longest-ever fixed rate mortgage.

In August 2019, Augmentum led Habito’s £35 million Series C funding round with a £5 million investment.

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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 have 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.

Augmentum originally invested in DueDil, which merged with Artesian in July 2021. Combining DueDil’s Business Information Graph (B.I.G.)™ and Premium APIs, and Artesian’s powerful web application and advanced rules engine delivers an easy to deploy solution for banks, insurers and FinTechs to engage, onboard and grow the right business customers.

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Epsor

Epsor (https://epsor.fr) is a Paris based provider of employee and retirement savings plans delivered through an open ecosystem, giving access to a broad range of asset management products accessible through its intuitive digital platform. Epsor serves more than 40,000 savers and over 400 companies in France.

Augmentum invested £2.2 million in Epsor in June 2021.

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Sfermion:

Sfermion 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.

Augmentum committed US$3 million in October 2021, to be drawn down in tranches.

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WhiskyInvestDirect
Founded in 2015, WhiskyInvestDirect was a subsidiary of BullionVault and is the online market for buying and selling Scotch whisky as it matures in barrel. This is an asset class that has a long track record of growth, yet has previously been opaque and inaccessible.

The Company has over 3,500 bulk-stockholding clients holding the equivalent of 29 million bottles of whisky stored in barrels. 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.

Augmentum’s holding derives from WhiskeyInvestDirect being spun out of BullionVault.

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STRATEGIC REPORT

Business Review

The Strategic Report, set out on pages 17 to 28, provides a review of the Company’s business, the performance during the year and its strategy going forward. It also considers the principal risks and uncertainties facing the Company.

The Strategic Report has been prepared to provide information to shareholders to assess how the Directors have performed their duty to promote the success of the Company. Further information on how the Directors have discharged their duty under Section 172 of the Companies Act 2006 can be found on pages 25 and 26.

The Strategic Report contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the date of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

Strategy and Strategic Review

Throughout the year under review, the Company continued to operate as an approved investment trust, following its investment objectives and policy which 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 UK and wider Europe.

The Company is an alternative investment fund (“AIF”) under the Alternative Investment Fund Managers Regulations (“UK AIFMD”) and has appointed Frostrow Capital LLP as its alternative investment fund manager (“AIFM”).

During the year, the Board, Frostrow Capital LLP, as AIFM, and the Portfolio Manager undertook all strategic and administrative activities.

Principal Risks and Risk Management

The Board considers that the risks detailed below are the principal risks currently facing the Company. These are the risks that could affect the ability of the Company to deliver its strategy.

The Board is responsible for the ongoing identification, evaluation and management of the principal risks faced by the Company and has established a process for the regular review of these risks and their mitigation. This process accords with the UK Corporate Governance Code and the FRC’s Guidance on Risk Management, Internal Control and Related Financial and Business Reporting.

The Board has carried out a robust assessment of the emerging and principal risks facing the Company, including those that would threaten its business model, future performance, solvency and liquidity. Further details of the risk management processes that are in place can be found in the Corporate Governance Statement.

The Board’s policy on risk management has not materially changed during the course of the reporting period and up to the date of this report.

The Company maintains a framework of the key risks, with the policies and processes devised to monitor, manage and mitigate them where possible. This risk map is reviewed regularly by the Audit Committee.

Further details on the financial risks are included in Note 13 starting on page 61.

The Company’s key risks fall broadly under the following categories:

Principal Risks and Uncertainties	Mitigation
Macroeconomic Risks The performance of the Group’s investment portfolio is materially influenced by economic conditions. These may affect demand for services supplied by investee companies, foreign exchange rates, input costs, interest rates, debt and equity capital markets and the number of active trade and financial buyers. All of these factors could have an impact on the Group’s ability to realise a return from its investments and cannot be directly controlled by the Group. Particular current factors include increasing inflation and sanctions related to the situation in Ukraine.	Within the constraints dictated by its objective, the Company’s portfolio is diversified across a range of sectors, has no leverage, a net cash balance and as set out below the Portfolio Manager structures investments to provide downside protection, where possible. The Board, AIFM and Portfolio Manager monitor the macroeconomic environment and this is discussed at each Board meeting, along with the potential impact. The Portfolio Manager also provides a detailed update on the investments at each meeting, including, inter alia, developments in relation to the macro environment and trends.
Strategy Implementation Risks The Group is subject to the risk that its long-term strategy and its level of performance fail to meet the expectations of its shareholders.	A robust and sustainable corporate governance structure has been implemented with the Board responsible for continuing to act in the best interests of shareholders. An experienced fintech Portfolio Manager has been retained in order to deliver the strategy.

Investment Risks The performance of the Group’s portfolio is influenced by a number of factors. These include, but are not limited to: (i)  the quality of the initial investment decision; (ii)  reliance on co-investment parties; (iii)  the quality of the management team of each underlying portfolio company and the ability of that team to successfully implement its business strategy; (iv)  the success of the Portfolio Manager in building an effective working relationship with each team in order to agree and implement value-creation strategies; (v)  changes in the market or competitive environment in which each portfolio company operates; (vi)  the macroeconomic risks described above; and (vii)  environmental, social and governance (“ESG”) factors. Any of these factors could have an impact on the valuation of an investment and on the Group’s ability to realise the investment in a profitable and timely manner. The Company also invests in early-stage companies which, by their nature, may be smaller capitalisation companies. Such companies may not have the financial strength, diversity and the resources of larger and more established companies, and may find it more difficult to operate, especially in periods of low economic growth.	The Portfolio Manager has put in place a rigorous investment process which ensures disciplined investment selection and portfolio management. This includes detailed due diligence, regular portfolio reviews and in many cases active engagement with portfolio companies by way of board representation or observer status. Investing in young businesses that may be cash consuming for a number of years is inherently risky. In order to reduce the risks of permanent capital loss the Portfolio Manager will, where possible, structure investments to afford a degree of downside protection through mechanisms such as a liquidation preference and/or anti-dilution provisions. As noted above the Portfolio Manager provides a detailed update at each Board meeting, including, inter alia, investee company developments, funding requirements and the pipeline of potential new investments.
Portfolio Diversification Risk The Group is subject to the risk that its portfolio may not be diversified, being heavily concentrated in the fintech sector and the portfolio value may be dominated by a single or limited number of companies.	The Group attempts to mitigate this risk by making investments across a range of companies in a range of fintech company subsectors and in companies at different stages of their lifecycle in accordance with the Investment Objective and Investment Policy. There is also geographic diversification with 68% of the portfolio being based in the UK and 32% in continental Europe, Israel and the US. Given the nature of the Company’s Investment Objective this remains a significant risk.
Cash Risk Returns to the Company through holding cash and cash equivalents are currently low. The Company may hold significant cash balances, particularly when a fundraising has taken place, and this may have a drag on the Company’s performance. The Company may require cash to fund potential follow-on investments in existing investee companies. If the Company does not hold sufficient cash to participate in subsequent funding rounds carried out by portfolio companies, this could result in the interest the Company holds in such businesses being diluted. This may have a material adverse effect on the Company’s financial position and returns for shareholders.	To mitigate this risk the Board has agreed prudent cash management guidelines with the AIFM and Portfolio Manager. The Group maintains sufficient cash resources to manage its ongoing operational and investment commitments. Regular discussions are held to consider the future cash requirements of the Company and its investments to ensure that sufficient cash is maintained.

Credit Risk As noted the Company may hold significant cash balances. There is a risk that the banks with which the cash is deposited fail and the Company could be adversely affected through either delay in accessing the cash deposits or the loss of the cash deposit. When evaluating counterparties there can be no assurance that the review will reveal or highlight all relevant facts and circumstances that may be necessary or helpful in evaluating the creditworthiness of the counterparty.	The Board has agreed prudent cash management guidelines with the AIFM to ensure an appropriate risk/return profile is maintained. Cash and cash equivalents are held with approved counterparties, who are required to have a high credit rating and financial strength. Compliance with these guidelines is monitored regularly and reported to the Board on a quarterly basis.
Valuation Risk The valuation of investments in accordance with IFRS 13 and International Private Equity and Venture Capital (IPEV) Valuation Guidelines requires considerable judgement and is explained in Note 19.17. The Company’s investments may be illiquid and a sale may require consent of other interested parties. Such investments may therefore be difficult to value and realise. Such realisations may involve significant time and cost and/or result in realisations at levels below the value of such investments as estimated by the Company.	The Company has a rigorous valuation policy and process as set out in Notes 19.4 and 19.17. This process is led by the Board and includes benchmarking valuations against actual prices received when a sale of shares is made, as well as taking account of liquidity issues and/or any restrictions over investments.
Operational Risk The Board is reliant on the systems of the Group and Company’s service providers and as such disruption to, or a failure of, those systems could lead to a failure to comply with law and regulations leading to reputational damage and/or financial loss to the Group and/or Company.	To manage these risks the Board: • receives a quarterly compliance report from the AIFM and the Portfolio Manager, which includes, inter alia, details of compliance with applicable laws and regulations; • reviews internal control reports, where available, key policies, including measures taken to combat cybersecurity issues, and also the disaster recovery procedures of its service providers; • maintains a risk matrix with details of risks to which the Group and Company are exposed, the controls relied on to manage those risks and the frequency of operation of the controls; and • receives updates on pending changes to the regulatory and legal environment and progress towards the Group and Company’s compliance with these.

Key person risk There is a risk that the individuals responsible for managing the portfolio may leave their employment or may be prevented from undertaking their duties.

The Board manages this risk by: • receiving reports from AFML at each Board meeting, such reports include any significant changes in the make-up of the team supporting the Company; • putting in place a compensation structure designed to retain key staff and encourage alignment with shareholders; • meeting the wider team, outside the designated lead managers, at the Portfolio Manager’s offices and by video conference, and encouraging the participation of the wider AFML team in investor updates; and • delegating to the Management Engagement & Remuneration Committee responsibility to perform an annual review of the service received from AFML, including, inter alia, the team supporting the lead managers and succession planning.

Emerging Risks

The Company has carried out a robust assessment of the Company’s emerging and principal risks and the procedures in place to identify emerging risks are described below. The International Risk Governance Council definition of an ‘emerging’ risk is one that is new, or is a familiar risk in a new or unfamiliar context or under new context conditions (re-emerging). Failure to identify emerging risks may cause mitigating actions to be reactive rather than being proactive and, in the worst case, could cause the Company to become unviable or otherwise fail or force the Company to change its structure, objective or strategy.

The Audit Committee reviews the risk map at least half-yearly. Emerging risks are discussed in detail as part of this process and also throughout the year to try to ensure that emerging (as well as known) risks are identified and, so far as practicable, mitigated.

The experience and knowledge of the Directors are useful in these discussions, as are update papers and advice received from the Board’s key service providers such as the Portfolio Manager, the AIFM and the Company’s Brokers. In addition, the Company is a member of the AIC, which provides regular technical updates as well as drawing members’ attention to forthcoming industry and/or regulatory issues and advising on compliance obligations.

COVID-19

The Board has continued to monitor developments with respect to COVID-19. Restrictions imposed because of the pandemic challenged operations, but they proved to be resilient. All of the Company’s service providers continued to provide as-normal services throughout, notwithstanding adopting remote working during the lockdowns. The Company’s Portfolio Manager provided regular updates to the Board on the financial impacts of the pandemic on portfolio performance and investee companies as well as the effect on the fintech sector.

Ukraine

The Board is monitoring the events in Ukraine and related sanctions. The Board is confident that the situation should have no direct impact on the Company and has not identified any Russian shareholders in the Company. The portfolio companies have no Russian operations.

Performance and Prospects

Performance

The Board assesses the Company’s performance in meeting its objective against the following Key Performance Indicators (“KPIs”). Due to the unique nature and investment policy of the Company, with no direct listed competitors or comparable indices, the Board considers that there is no relevant external comparison against which to assess the KPIs and as such performance against the KPIs is considered on an absolute basis. Information on the Company’s performance is provided in the Chairman’s Statement and the Portfolio Manager’s Review. The KPIs have not changed from the prior year:

• The Net Asset Value (“NAV”) per share after performance fee total return*

The Directors regard the Company’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.

This is an Alternative Performance Measure (“APM”) and its calculation is explained in the Glossary on page 78 and in Note 16 on page 64. Essentially, it adds back distributions made in the period to the change in the NAV after performance fee to arrive at a total return.

The Group’s NAV per share after performance fee total return for the year was 19.0% (2021: 12.3%). This strong result is discussed in the Chairman’s Statement on page 2.

• The Total Shareholder Return (“TSR”)*
The Directors also regard the Company’s TSR as a key indicator of performance. Like the NAV per share after performance fee total return discussed above, this is an APM and its calculation is explained in the Glossary on page 78. The TSR is similar in nature to the NAV per share after performance fee total return, except that it adds back distributions made in the period to the change in the share price, to reflect more closely the return in the hands of shareholders. Share price performance is monitored closely by the Board.

The Company’s TSR for the year was (16.4%) (2021: 128.8%) reflecting the swing in market sentiment against listed growth and tech stocks at the beginning of 2022.

• Ongoing Charges Ratio (“OCR”)*
Ongoing charges represent the costs that shareholders can reasonably expect to pay from one year to the next, under normal circumstances.

The Board is cognisant of costs and reviews the level of expenses at each Board meeting. It works hard to maintain a sensible balance between strong service and keeping costs down.

The terms of appointment of the Company’s AIFM and the Portfolio Manager set out on pages 22 and 23. In reviewing their continued appointment, the Board took into account the ongoing charges ratio of other investment companies with specialist mandates.

The Group’s OCR for the year was 1.7% (2021: 1.9%). The Board aims for this ratio to reduce over time.

Discount/Premium*

The Board monitors the price of the Company’s shares in relation to their net asset value after performance fee and the premium/discount at which the shares trade. Powers are taken each year to issue and buy back shares, which can assist short term volatility management, however the level of discount or premium is mostly a function of investor sentiment and demand for the shares, over which the Board has little influence.

After an extended period during which the shares traded at a premium to NAV the share price moved to a discount in the current financial year as market sentiment turned against growth stocks, with the Company’s shares being affected notwithstanding the strength of the portfolio’s fundamental disruptive potential.

The Board has taken advantage of the situation by undertaking a modest programme of accretive buybacks to the benefit of remaining shareholders. All shares purchased are being held in treasury and will potentially be reissued when the share price returns to a premium to NAV after performance fee. Shareholder authorities to issue and buy back shares are being sought at the forthcoming AGM.

Prospects
The Company’s current position and prospects are described in the Chairman’s Statement and Portfolio Manager’s Review sections of this annual report.

Performance and Future developments
The Board’s primary focus is on the Portfolio Manager’s investment approach and performance. The subject is thoroughly discussed at every Board meeting.

In addition, the AIFM updates the Board on company communications, promotions and investor feedback, as well as wider investment issues.

An outline of performance, investment activity and strategy, market background during the year, and the outlook is provided in the Chairman’s Statement on pages 2 to 4 and the Portfolio Manager’s Review on pages 15 and 16.

Viability Statement
The Board has considered the Company’s financial position, including its ability to liquidate portfolio assets and meet its expenses as they fall due, and notes the following:

The Board has considered the viability of the Company under various scenarios, including periods of acute stock market and economic volatility such as that experienced in 2020.

The expenses of the Company are predictable and modest in comparison with the assets and there are no capital commitments currently foreseen which would alter that position.

In considering the Company’s longer-term viability, as well as considering the principal risks on pages 17 to 20 and the financial position of the Company, the Board considered the following factors and assumptions:

• The Company is and will continue to be invested primarily in long-term illiquid investments which are not publicly traded;

• The Board reviews the liquidity of the Company, regularly considers any commitments it has and cash flow projections;

• The Board, AIFM and Portfolio Manager will continue to adopt a long-term view when making investments and anticipated holding periods will be at least five years;

• As detailed in the Directors’ Report, the Valuations Committee oversees the valuation process;

• There will continue to be demand for investment trusts;

• Regulation will not increase to a level that makes running the Company uneconomical; and

• The performance of the Company will continue to be satisfactory.

Whilst acknowledging that market and economic uncertainty remain heightened in view of rising inflation and the Ukraine conflict, based on the results of its review, and taking into account the long-term nature of the Company, the Board has a reasonable expectation that the Company will be able to continue its operations and meet its expenses and liabilities as they fall due for the foreseeable future, taken to mean at least the next five years. The Board has chosen this period because, whilst it has no information to suggest this judgement will need to change in the coming five years, forecasting over longer periods is imprecise. The Board’s long-term view of viability will, of course, be updated each year in the annual report.

Going Concern
In light of the conclusions drawn in the foregoing Viability Statement and as set out in note 19.1 to the financial statements on page 65, the Company has adequate financial resources to continue in operational existence for at least the next 12 months.

Therefore, the directors believe that it is appropriate to continue to adopt the going concern basis in preparing the financial statements. In reviewing the position as at the date of this report, the Board has considered the guidance on this matter issued by the Financial Reporting Council.

Management Arrangements

Principal Service Providers
The Company is structured as an internally managed closed-ended investment company. Augmentum Fintech Management Limited (“AFML” or the “Portfolio Manager”) is the wholly owned operating subsidiary of the Company that manages the investment portfolio of the Company as a delegate of the AIFM.

The other principal service providers to the Company are Frostrow Capital LLP (“Frostrow” or the “AIFM”) and IQ EQ Depositary Company (UK) Limited (the “Depositary”). Details of their key responsibilities and their contractual arrangements with the Company follow.

Alternative Investment Fund Manager (“AIFM”)

Frostrow under the terms of its AIFM agreement with the Company provides, inter alia, the following services:

• oversight of the portfolio management function delegated to Augmentum Fintech Management Limited;

• promotion of the Company’s shares;

• investment portfolio administration and valuation;

• risk management services;

• share price discount and premium monitoring;

• administrative and company secretarial services;

• advice and guidance in respect of corporate governance requirements;

• maintenance of the Company’s accounting records;

• review of the Company’s website;

• preparation and publication of annual and half year reports; and

• ensuring compliance with applicable legal and regulatory requirements.

AIFM Fees

Under the terms of the AIFM Agreement Frostrow is entitled to an annual fee of:

• on NAV up to £150 million: 0.225% per annum;

• on that part of NAV in excess of £150 million and up to £500 million: 0.2% per annum; and

• on that part of NAV in excess of £500 million: 0.175% per annum,

calculated on the last working day of each month and payable monthly in arrears.

The AIFM Agreement may be terminated by either party on giving notice of not less than 12 months.

Portfolio Manager

Augmentum Fintech Management Limited, as delegate of the AIFM, is responsible for the management of the Company’s portfolio of investments under an agreement between it, the Company and Frostrow (the “Portfolio Management Agreement”).

Under the terms of its Portfolio Management Agreement, Augmentum Fintech Management Limited provides, inter alia, the following services:

• seeking out and evaluating investment opportunities;

• recommending the manner by which monies should be invested, disinvested, retained or realised;

• advising on how rights conferred by the investments should be exercised;

• analysing the performance of investments made; and

• advising the Company in relation to trends, market movements and other matters which may affect the investment objective and policy of the Company.

Portfolio Manager Fees

Portfolio Management Fee

Under the terms of the Portfolio Management Agreement Augmentum Fintech Management Limited (the “Portfolio Manager”) receives an annual fee of 1.5% of the NAV per annum, falling to 1.0% of any NAV in excess of £250 million.

The Portfolio Manager is entitled to a performance fee in respect of the performance of any investments and follow-on 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 would be in respect of investments acquired using 80% of the net proceeds of the Company’s IPO* in March 2018 (including the Initial Portfolio), and related follow-on investments.

Performance Fee

Subject to certain exceptions, the Portfolio Manager receives, in aggregate, 15% of the net realised cash profits from the investments and follow-on investments made over the relevant period once the Company has received an aggregate annualised 10% realised return on investments (the “hurdle”) and follow-on investments made during the relevant period. The Portfolio Manager’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 the Portfolio Manager’s entitlement to any performance fees as calculated following the relevant period.

Based on the investment valuations as at 31 March 2022 the hurdle has been met, on an unrealised basis, and as such a performance fee has been provided for as set out in Notes 2 and 12. This will only be payable if the hurdle is met on a realised basis.

The Portfolio Management Agreement may be terminated by either party giving notice of not less than 12 months.

AIFM and Portfolio Manager Evaluation and Re-Appointment
The performance of Frostrow as AIFM and Augmentum Fintech Management Limited as Portfolio Manager is regularly monitored by the Board with a formal evaluation being undertaken each year. As part of this process the Board monitors the services provided by the AIFM and the Portfolio Manager and receives regular reports and views from them.

Following a review at a Management Engagement & Remuneration Committee meeting in March 2022 the Board believes that the continuing appointment of the AIFM and the Portfolio Manager, under the terms described within this Strategic Report, is in the best interests of the Company’s shareholders. In coming to this decision it took into consideration the following additional reasons:

• the quality and depth of experience of the management, company secretarial, administrative and marketing team that the AIFM brought to the management of the Company; and

• the quality and depth of experience allocated by the Portfolio Manager to the management of the portfolio, together with the clarity and rigour of the investment process.

Depositary

The Company has appointed IQ EQ Depositary (UK) Limited as its Depositary in accordance with the UK AIFMD on the terms and subject to the conditions of an agreement between the Company, Frostrow and the Depositary (the “Depositary Agreement”).

The Depositary provides the following services, inter alia, under its agreement with the Company:

• verification of non-custodial investments;

• cash monitoring;

• processing of transactions; and

• foreign exchange services.

The Depositary must take reasonable care to ensure that the Company is managed in accordance with the Financial Conduct Authority’s Investment Funds Sourcebook, the UK AIFMD and the Company’s Articles of Association.

Under the terms of the Depositary Agreement, the Depositary is entitled to receive an annual fee of £25,000 plus certain event driven fees.

The notice period on the Depositary Agreement is not less than six months.

Dividend Policy
The Company invests with the objective of achieving capital growth over the long term and it is not expected that a revenue dividend will be paid in the foreseeable future. The Board intends only to pay dividends out of revenue to the extent required in order to maintain the Company’s investment trust status.

Potential returns of capital
It is expected that the Company will realise investments from time to time. The proceeds of these disposals may be re-invested, used for working capital purposes or, at the discretion of the Board, returned to shareholders.

The Company has committed to return to Shareholders up to 50 per cent. of the gains realised by the disposal of investments in each financial year, with such returns of capital expected to be made on an annual basis. The Company may also seek to make returns of capital to Shareholders where available cash is not expected to be substantially deployed within the following 12-18 months. The options for effecting any return of capital to shareholders may include the Company making tender offers to purchase Shares, paying special dividends or any alternative method or a combination of methods. Certain methods intended to effect a return of capital may be subject to, amongst other things, shareholder approval. Shareholders should note that the return of capital by the Company is at the discretion of the Directors and is subject to, amongst other things, the working capital requirements of the Company. As described in the Chairman’s Statement the Board has decided, following a consultation, that the Company will retain the bulk of the proceeds of the investment realisations to date for reinvestment to support its capital growth objective and utilise the balance to support a limited accretive share buyback programme.

Company Promotion

The Company has appointed Peel Hunt LLP and Singer Capital Markets Advisory LLP as joint corporate brokers, to work alongside one another to encourage demand for the Company’s shares.

In addition to AIFM services, Frostrow also provides marketing and distribution services.

Engaging regularly with investors:
The Company’s brokers and Frostrow meet with institutional investors, discretionary wealth managers and execution-only platform providers around the UK and hold regular seminars and other investor events;

Making Company information more accessible:
Frostrow manages the investor database and produces all key corporate documents, distributes monthly factsheets, annual reports and updates from the Portfolio Manager on portfolio and market developments; and

Monitoring market activity, acting as a link between the Company, shareholders and other stakeholders:
The Company’s brokers and Frostrow maintain regular contact with sector broker analysts and other research and data providers, and provide the Board with up-to-date information on the latest shareholder and market developments.

Community, Social, Employee, Human Rights, Environmental Issues, Anti-bribery and Anti-corruption
The Company is committed to carrying out business in an honest and fair manner with a zero-tolerance approach to bribery, tax evasion and corruption. As such, policies and procedures are in place to prevent bribery and corruption. In carrying out its activities, the Company aims to conduct itself responsibly, ethically and fairly, including in relation to social and human rights issues.

As an investment trust with limited internal resource, the Company has little impact on the environment. The Company believes that high ESG (Environmental, Social and Governance) standards within both the Company and its portfolio companies make good business sense and have the potential to protect and enhance investment returns. Consequently, the Group’s investment process ensures that ESG issues are taken into account and best practice is encouraged.

Diversity
There are currently three male and two female Directors (being 40% female representation) on the Board, and these Directors come from a number of nationalities and educational backgrounds. The Company aims to have a balance of relevant skills, experience and background amongst the Directors on the Board and believes that all Board appointments should be made on merit and with due regard to the benefits of diversity. The Company’s diversity policy is set out on pages 40 and 41. The Board also encourages diversity in the management team at AFML and the promotion of the benefits of diversity in portfolio companies.

Engaging with our stakeholders
The following ‘Section 172’ disclosure describes how the Directors have had regard to the views of the Company’s stakeholders in their decision-making.

Who? Stakeholder group	Why? The benefits of engagement with our stakeholders	How? How the Board the AIFM and the Portfolio Manager has engaged with our stakeholders
Investors	Clear communication of the Company’s strategy and the performance against its objective can help the share price trade at a narrower discount or a wider premium to its net asset value which benefits shareholders. New shares may be issued to meet demand without diluting the NAV per share of existing shareholders. Increasing the size of the Company can benefit liquidity as well as spread costs.	Frostrow as AIFM, the Portfolio Manager and the Company's joint brokers on behalf of the Board complete a programme of investor relations throughout the year. In addition the Chairman has continued to engage regularly with the Company’s larger shareholders. Key mechanisms of engagement included: • The Annual General Meeting • The Company’s website which hosts reports, video interviews with the managers and regular market commentary • Online newsletters • One-on-one investor meetings • Investor meetings with the Portfolio Manager and AIFM.
Portfolio Manager	Engagement with our Portfolio Manager is necessary to evaluate performance against the stated strategy and to understand any risks or opportunities this may present to the Company. It also provides clarity on the Board’s expectations and helps ensure that portfolio management costs are closely monitored and remain competitive.	The Board meets regularly with the Company’s Portfolio Manager throughout the year both formally at the quarterly Board meetings and more regularly on an informal basis. The Board also receives quarterly performance and compliance reporting at each Board meeting. The Portfolio Manager’s attendance at each Board meeting provides the opportunity for the Portfolio Manager and Board to further reinforce their mutual understanding of what is expected from all parties.
Service Providers	The Company contracts with third parties for other services including: depositary, investment accounting & administration, company secretarial and share registration. It is necessary for the Company’s success to ensure the third parties to whom we have outsourced services complete their roles diligently and correctly. The Company ensures all service providers are paid in accordance with their terms of business. The Board closely monitors the Company’s Ongoing Charges Ratio.	The Board and Frostrow engage regularly with all service providers both in one-to-one meetings and via regular written reporting. This regular interaction provides an environment where topics, issues and business development needs can be dealt with efficiently and collegiately.

Employees of AFML	In order to attract and retain talent to ensure the Group has the resources to successfully implement its strategy and manage third-party relationships.	In normal times all employees of AFML sit in one open plan office, facilitating interaction and engagement. Notwithstanding remote working, interaction continued during lockdown conditions. Senior team members report to the Board at each meeting. Given the small number of employees, engagement is at an individual level rather than as a group.
Portfolio companies	Incorporating consideration of ESG factors into the investment process assists in understanding and mitigating risks of an investment and potentially identifying future opportunities.	The Board encourages the Company’s Portfolio Manager to engage with companies and in doing so expects ESG issues to be a key consideration. The Portfolio Manager seeks to take a board seat, or have board observer status, on all investments. See pages 27 and 28 for further detail on AFML’s ESG approach to investing.

What? What were the key topics of engagement?	Outcomes and actions What actions were taken, including principal decisions?
Key topics of engagement with investors Ongoing dialogue with shareholders concerning the strategy of the Company, performance and the portfolio.	• The Portfolio Manager, Frostrow and the joint brokers meet regularly with shareholders and potential investors to discuss the Company’s strategy, performance and portfolio. These meetings take place with and without the Portfolio Manager. This interaction informed the Board's deliberations on various matters, including in relation to the distribution of investment realisation proceeds where it contributed to the Board’s decision to restrict distributions to a limited share buyback programme, it being considered that shareholders were better served by realisation proceeds principally being used for further investment.
Key topics of engagement with the external Portfolio Manager on an ongoing basis are portfolio composition, performance, outlook and business updates. Additional topics included • The impact of COVID-19 upon their business and the portfolio. • The impact of the Ukraine conflict upon their business and the portfolio. • The integration of environmental, social and governance (‘ESG’) into the Portfolio Manager’s investment processes. • Performance and compensation of Group employees is decided by the Management Engagement & Remuneration Committee with the Directors of AFML.	• The prospects for the portfolio and the pipeline of potential investment opportunities were of particular interest to the Board in connection with the fundraise decision making. • All of the Company's service providers successfully implemented remote working when it was necessary. Whilst this created challenges at times there was no adverse impact on service delivery. • Russian sanctions have no direct impact on the Company and extremely limited impact on portfolio companies. • The portfolio manager reports regularly any ESG issues in the portfolio companies to the Board. Please see pages 27 and 28 for further details of AFML’s ESG policies. • The Management Engagement & Remuneration Committee engaged with respect to AFML’s long-term incentive arrangements and the revision of the Directors’ Remuneration policy, which is set out on pages 46 and 47.

Approach to Responsible Investing

Augmentum Fintech Management Limited (“AFML”) continues to be committed to a responsible investment approach through the lifecycle of its investments, from pre-screening to exit. AFML believes that the integration of Environmental, Social and Governance (“ESG”) factors within the investment analysis, diligence and operating practices is pivotal in mitigating risk and creating sustainable, profitable investments.

Five-Stage Approach to Future-Proofing the Portfolio

ESG principles adapted from the UN PRI (Principles of Responsible Investment) are integrated throughout business operations; in investment decisions, at the screening stage through an exclusion list and due diligence, ongoing monitoring and engaging with portfolio companies post-investment and when making follow-on investment decisions, as well as within fund operations.

1.  Screening

An Exclusion List is used to screen out companies incompatible with AFML’s corporate values (sub-sectors and types of business). AFML also commits to being satisfied that the investors they invest alongside are of good standing.

2.  Due Diligence

An ESG Due Diligence (DD) survey is completed on behalf of all companies in the later stages of the investment process. An ESG scorecard is completed for each potential investment, in which potential ESG risks and opportunities are identified, and discussed with the investment committee. Where necessary, an action plan is agreed with the management team on areas for improvement and commitments are incorporated into the Term Sheet.

3.  Post-Investment Monitoring and Engagement

An annual survey is completed by portfolio companies and areas for improvement are discussed with management teams, with commitments agreed and revisited as appropriate.

4.  Follow On Investments

ESG risks and opportunities are assessed when making follow-on investment decisions, with an ESG scorecard completed and co-investors taken into consideration. Follow on investments are only made into companies that continue to meet AFML’s ESG criteria.

5.  Internally at Augmentum

AFML have continued to identify priority areas in which to make suitable ESG-related advancements across fund operations. Key progress areas include:

• AFML went fully carbon neutral in 2021. Working in partnership with Minimum, they are now monitoring their Scope 1, 2 and 3 emissions and will continue to track and reduce emissions towards Net Zero. AFML has opted to neutralise unavoidable emissions through a robust portfolio of carbon removal and prevention projects;

• Incorporating environmental considerations into operating decisions, from partnering with Cushon for Net Zero pensions to design and materials in the new office and encouraging recycling in the office to a Bike2Work scheme for staff and using a sustainable clothing company for branded merchandise;

• Continuing to maintain the highest levels of governance and ethical integrity in accordance with the regulatory standards to which we are subject, including the Financial Conduct Authority and the London Stock Exchange; and

• Continuing to embrace diversity and inclusion through inclusive hiring and professional development practices, an events programme including Female Founder Office Hours, as well as charity partnerships including with Crisis Venture Studio..

ESG Focus Areas

AFML have identified eight key areas for consideration, across the three ESG categories, which best align with their values and are most relevant for companies operating in the fintech industry.

The key environmental consideration as identified by AFML is the potential impact of business operations on the global issue of climate change. Social factors include the risks and opportunities associated with data security, privacy and ethical use, consumer protection, diversity and financial inclusion. Governance considerations include anti-bribery and corruption, board structure and independence and compliance.

AFML is committed to:

• Incorporating ESG and sustainability considerations into its investment analysis, diligence, and operating practices.

• Providing ESG training and support to the AFML employees involved in the investment process, so that they may perform their work in accordance with AFML’s policy.

• Actively engaging with portfolio companies to encourage improvement in key ESG areas.

• Annual reporting on progress to stakeholders.

ESG in Action

Advancements continue to be seen in ESG practices across the portfolio, both in business models and operating procedures. However, it should be noted that the portfolio comprises early stage companies and quantitative data may not be available. Below we highlight some examples, as stated by the companies referenced.

Anyfin

Stockholm-headquartered consumer credit refinancing company Anyfin believes that everyone should have healthy personal finances and are developing services that make managing personal finances fun and easy. The company leverages open banking capabilities to help users improve their overall financial wellbeing. They also launched a budgeting tool to give users a complete overview of their finances by displaying all their bank accounts in one place.

Cushon

In June 2021, Augmentum invested in Cushon, creator of the world’s first Net Zero pension product. Net Zero is achieved through a unique mix of fund allocation and carbon offsetting through projects around the world, achieving positive impact without compromising returns. In another industry first, Cushon have also launched in-app ESG voting features which allow savers to vote on governance issues from companies within their savings portfolios.

Onfido
In June 2021 identity verification company Onfido joined the Tech Zero taskforce, a cohort including other leading tech companies led by industry body Tech Nation, London & Partners and Level39. The taskforce exists to accelerate progress to net zero, support tech companies in making a climate action plan and use technology to help the 100 million customers they serve to live more sustainably.

Grover

With over 50 million tons of e-waste piling up from unused personal electronics globally each year, circular economy tech rental company Grover’s mission is to sustainably improve access to technology. Renting can save up to 80% of C02 emissions compared to buying new products and also ensures devices stay out of landfills and in circulation longer. The company also partnered with edtech StartSteps to provide students with laptops to begin their careers in tech and participated in several hiring events for refugees in Berlin.

Encouraging a Diverse Fintech Industry: Progress highlights

AFML has continued to show its support for a diverse, inclusive fintech industry through involvement in various diversity-focused initiatives and events, and has been recognised for its industry-leading approach. Learn more below.

Diverse Dealflow and Events Programme
AFML has hosted numerous diversity-focused events over the last twelve months, most notably its Female Fintech Founder pitch events, in collaboration with Outward VC, where they brought together several dozen female founders across a number of events, provided pitch coaching and assembled engaged audiences of venture capital and angel investors. They have also supported initiatives including The 200Bn Club, a new 12 week programme designed to accelerate financing directed to female founders and connect them with the skills, mentorship, and network they need to raise a seed or Series A investment.

Crisis Venture Studio Partnership
AFML has partnered with the recently launched venture studio from homeless charity Crisis. The team supported the charity through advice, pitch feedback and mentoring sessions with fintech founders as well as charitable donations.

Community Development
Head of Engagement Georgie Hazell joined the Women in VC community leadership team as UK Co-Lead. They recently launched a mentoring and monthly events programme focused on boosting diversity and inclusion within decision-making roles in venture capital and entrepreneurship, and increasing access to high quality dealflow.

This strategic report was approved by the Board of Directors and signed on its behalf by:

Neil England

Chairman

1 July 2022

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STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT, THE DIRECTORS’ REMUNERATION REPORT AND THE FINANCIAL STATEMENTS

The directors are responsible for preparing the annual report and financial statements in accordance with UK-adopted international accounting standards.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the Group and Company financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. Under Company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the return or loss for the Group and Company for that period.

In preparing these group 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 they have been prepared in accordance with UK-adopted international accounting standards, subject to any material departures disclosed and explained in the financial statements;

• Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and

• Prepare a directors’ report, a strategic report and directors’ remuneration report which comply with the requirements of the Companies Act 2006.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.

They are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Responsibility Statement

The Directors consider that this annual report and financial statements, taken as a whole, is fair, balanced, and understandable and provides the information necessary for shareholders to assess the Group and Company’s position and performance, business model and strategy.

Each of the Directors, whose names and functions are listed under the ‘Board of Directors’ on pages 29 and 30 confirm that, to the best of their knowledge:

• The financial statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Group and Company;

• The annual report includes a fair review of the development and performance of the business and the financial position of the Group and Company, together with a description of the principal risks and uncertainties that they face.

Neil England

Chairman

1 July 2022

.

CONSOLIDATED INCOME STATEMENT

		Year ended 31 March 2022			Year ended 31 March 2021
	Notes	Revenue £000	Capital £000	Total £000	Revenue £000	Capital £000	Total £000
Gains on Investments	8	-	56,681	56,681	–	26,727	26,727
Interest Income		3	-	3	7	–	7
Expenses	2	(3,801)	6,432	(2,631)	(2,879)	(4,179)	(7,058)
(Loss)/Return before Taxation		(3,798)	63,113	59,315	(2,872)	22,548	19,676
Taxation	6	-	-	-	–	–	–
(Loss)/Return for the year		(3,798)	63,113	59,315	(2,872)	22,548	19,676
(Loss)/Return per Share (pence)	7	(2.2)p	37.1p	34.9p	(2.3)p	18.2p	15.9p

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 and capital columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.

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 Augmentum Fintech plc, the parent company.

The notes on pages 58 to 68 are integral to and form part of these Financial Statements.

.

CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY

			Year ended 31 March 2022
Group	Ordinary share capital £000	Share premium account £000	Special reserve £000	Other capital reserve £000	Revenue reserve £000	Total £000
Opening Shareholders’ funds	1,405	52,151	92,101	44,876	(7,371)	183,162
Issue of shares following placing and offer for subscription	405	54,595	-	-	-	55,000
Costs of placing and offer for subscription	-	(1,363)	-	-	-	(1,363)
Purchase of own shares into treasury	-	-	(910)	-	-	(910)
Return/(loss) for the year	-	-	-	63,113	(3,798)	59,315
At 31 March 2022	1,810	105,383	91,191	107,989	(11,169)	295,204
			Year ended 31 March 2021
Group	Ordinary share capital £000	Share premium account £000	Special reserve £000	Other capital reserve £000	Revenue reserve £000	Total £000
Opening Shareholders’ funds	1,171	24,760	92,033	22,328	(4,499)	135,793
Issue of shares following placing and offer for subscription	234	27,812	–	–	–	28,046
Costs of placing and offer for subscription	–	(546)	–	–	–	(546)
Issue of shares from treasury	–	125	119	–	–	244
Purchase of own shares into treasury	–	–	(51)	–	–	(51)
Return/(loss) for the year	–	–	–	22,548	(2,872)	19,676
At 31 March 2021	1,405	52,151	92,101	44,876	(7,371)	183,162
			Year ended 31 March 2022
Company	Ordinary share capital £000	Share premium account £000	Special reserve £000	Other capital reserve £000	Revenue reserve £000	Total £000
Opening Shareholders’ funds	1,405	52,151	92,101	44,876	(7,774)	183,759
Issue of shares following placing and offer for subscription	405	54,595	-	-	-	55,000
Costs of placing and offer for subscription	-	(1,363)	-	-	-	(1,363)
Purchase of own shares into treasury	-	-	(910)	-	-	(910)
Return/(loss) for the year	-	-	-	47,848	(4,782)	43,066
At 31 March 2022	1,810	105,383	91,191	92,724	(12,556)	278,552
			Year ended 31 March 2021
Company	Ordinary share capital £000	Share premium account £000	Special reserve £000	Other capital reserve £000	Revenue reserve £000	Total £000
Opening Shareholders’ funds	1,171	24,760	92,033	22,328	(4,690)	135,602
Issue of shares following placing and offer for subscription	234	27,812	–	–	–	28,046
Costs of placing and offer for subscription	–	(546)	–	–	–	(546)
Issue of shares from treasury	–	125	119	–	–	244
Purchase of own shares into treasury	–	–	(51)	–	–	(51)
Return/(loss) for the year	–	–	–	22,548	(3,084)	19,464
At 31 March 2021	1,405	52,151	92,101	44,876	(7,774)	182,759

The notes on pages 58 to 68 are integral to and form part of these Financial Statements.

.

CONSOLIDATED BALANCE SHEET

as at 31 March 2022

	Note	2022 £000	2021 £000
Non-Current Assets
Investments held at fair value	8	268,807	164,127
Property, plant & equipment		9	6
Current Assets
Right of use asset	5	750	145
Other receivables	10	391	47
Cash and cash equivalents		31,326	27,433
Total Assets		301,283	191,758
Current Liabilities
Other payables	11	(5,296)	(1,940)
Lease liability	5	(783)	(148)
Provisions	12	-	(6,508)
Total Assets less Current Liabilities		295,204	183,162
Net Assets		295,204	183,162
Capital and Reserves
Called up share capital	15	1,810	1,405
Share premium		105,383	52,151
Special reserve		91,191	92,101
Retained earnings:
Capital reserves		107,989	44,876
Revenue reserve		(11,169)	(7,371)
Total Equity		295,204	183,162
Net Asset Value per share (pence)	16	163.7p	130.4p
Net Asset Value per share after performance fee (pence)	16	155.2p	130.4p

The Financial Statements on pages 52 to 68 were approved by the Board of Directors on 1 July 2022 and signed on its behalf by:

Neil England

Chairman

The notes on pages 58 to 68 are integral to and form part of these Financial Statements.

Augmentum Fintech plc

Company Registration Number: 11118262

.

COMPANY BALANCE SHEET

as at 31 March 2022

	Note	2022 £000	2021 £000
Non-Current Assets
Investments held at fair value	8	268,807	164,127
Investment in subsidiary undertakings	9	500	500
Current Assets
Other receivables	10	39	17
Cash and cash equivalents		29,694	26,533
Total Assets		299,040	191,177
Current Liabilities
Other payables	11	(5,223)	(1,910)
Provisions	12	(15,265)	(6,508)
Total Assets less Current Liabilities		278,552	182,759
Net Assets		278,552	182,759
Capital and Reserves
Called up share capital	15	1,810	1,405
Share premium		105,383	52,151
Special reserve		91,191	92,101
Retained earnings:
Capital reserves		92,724	44,876
Revenue reserve		(12,556)	(7,774)
Total Equity		278,552	182,759

The accompanying notes are an integral part of these Financial Statements.

The Company return for the year was £43,066,000 (2021: £19,464,000). The Directors have taken advantage of the exemption under s408 of the Companies Act and not presented an income statement or a statement of comprehensive income for the Company alone.

The Financial Statements on pages 52 to 68 were approved by the Board of Directors on 1 July 2022 and signed on its behalf by:

Neil England

Chairman

The notes on pages 58 to 68 are integral to and form part of these Financial Statements.

Augmentum Fintech plc

Company Registration Number: 11118262

.

CONSOLIDATED CASH FLOW STATEMENT

	Year ended 31 March 2022 £000	Year ended 31 March 2021 £000
Operating activities
Sales of investments	11,263	-
Purchases of investments	(55,992)	(12,538)
Acquisition of property, plant and equipment	(9)	(2)
Interest income received	1	68
Expenses paid	(3,958)	(2,758)
Lease payments	(139)	(141)
Net cash outflow from operating activities	(48,834)	(15,371)
Issue of shares following placing and offer for subscription	55,000	28,046
Costs of placing and offer for subscription	(1,363)	(546)
Purchase of own shares into treasury	(910)	(51)
Issue of shares from treasury	-	244
Net cash generated from financing activities	52,727	27,693
Net increase in cash and cash equivalents	3,893	12,322
Cash and cash equivalents at start of year	27,433	15,111
Cash and cash equivalents at end of year	31,326	27,433

The notes on pages 58 to 68 are integral to and form part of these Financial Statements.

.

COMPANY CASH FLOW STATEMENT

	Year ended 31 March 2022 £000	Year ended 31 March 2021 £000
Operating activities
Sales of investments	11,263	-
Purchases of investments	(55,992)	(12,538)
Interest income received	-	66
Expenses paid	(4,837)	(3,075)
Net cash outflow from operating activities	(49,566)	(15,547)
Issue of shares following placing and offer for subscription	55,000	28,046
Costs of placing and offer for subscription	(1,363)	(546)
Purchase of own shares into treasury	(910)	(51)
Issue of shares from treasury	-	244
Net cash generated from financing activities	52,727	27,693
Net increase in cash and cash equivalents	3,161	12,146
Cash and cash equivalents at start of year	26,533	14,387
Cash and cash equivalents at end of year	29,694	26,533

The notes on pages 58 to 68 are integral to and form part of these Financial Statements.

.

NOTES TO THE FINANCIAL STATEMENTS

1  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 located in the UK, continental Europe, Israel and the US.

2  Expenses

	2022			2021
	Revenue £000	Capital £000	Total £000	Revenue £000	Capital £000	Total £000
AIFM fees	507	-	507	334	–	334
Administrative expenses	1,141	76	1,217	817	39	856
Directors fees*	126	-	126	95	–	95
Performance fee (see Note 4)^	-	(6508)	(6,508)	–	4,140	4,140
Staff costs (see Note 4)	1,877	-	1,877	1,535	–	1,535
Auditors’ remuneration	150	-	150	98	–	98
Total expenses	3,801	(6,432)	(2,631)	2,879	4,179	7,058

£153,000 of interest and depreciation relating to a lease (2021: £197,000) were included in administrative expenses. See Note 5 for further details.

*  Details of the amounts paid to Directors are included in the Directors Remuneration Report on page 44.

^  See Note 4 for further details of the performance fee arrangements. Non-executive Directors of the Company are not eligible to participate in any allocation of the performance fee.

Auditors’ Remuneration

	2022		2021
	Group £000	Company £000	Group £000	Company £000
Audit of Group accounts pursuant to legislation*	83	83	66	66
Audit of subsidiaries accounts pursuant to legislation*	14	-	14	–
Audit related assurance services*	18	15	18	15
Reporting accountant services	35	35	-	-
Total auditors’ remuneration	150	133	98	81

Non-audit services

It is the Group’s practice to employ BDO LLP on assignments additional to their statutory audit duties only when their expertise and experience with the Group are important. Details of the Group’s process for safeguarding and supporting the independence and objectivity of the external auditors are given in the Report of the Audit Committee beginning on page 48. In addition to the above BDO LLP was also paid £50,000 (2021: £nil) for reporting accountant services, which is included within the costs of placing and offer for subscription in the Statement of Changes in Equity.

3  Key Management Personnel Remuneration

The Directors of the Company are considered to be the Key Management Personnel (KMP) along with the directors of the Company’s subsidiary.

	2022			2021
	Salary /Fees £000	Other benefits £000	Total £000	Salary /Fees £000	Other benefits £000	Total £000
Key management personnel remuneration	799	79	878	755	78	833
Performance fee allocation*	(4,296)	-	(4,296)	2,640	–	2,640
	(3,497)	79	(3,418)	3,395	78	3,473

Other benefits include pension contributions relating to the directors of the Company’s subsidiary.

*  Allocation of the performance fee to the directors of the Company’s subsidiary. See Note 4 for further details of the performance fee arrangements.

4  Staff Costs

The monthly average number of employees for the Group during the year was ten (2021: eight). All employees are within the investment and administration function and employed by the Company’s subsidiary.

	2022 £000	2021 £000
Wages and salaries	1,551	1,254
Social security costs	211	179
Other pension costs	84	78
Other staff benefits	31	24
Staff costs	1,877	1,535
Performance fee (charged to capital)*	(6,508)	4,140
Total	(4,631)	5,675

*  The performance fee arrangements were set up to provide a long-term employee benefit plan to incentivise employees of AFML and align them with shareholders through participation in the realised investment profits of the Group. During the year to 31 March 2022 the existing plan for AFML staff was terminated and the performance fee liability to AFML employees accrued as at 31 March 2021 of £6,508,000 was reversed. AFML continues to be entitled to a performance fee as before, but any performance fee paid by the Company to AFML will now be allocated to employees of AFML on a discretionary basis by the Management Engagement & Remuneration Committee of the Company.

The 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 31 March 2022 the hurdle has been met, on an unrealised basis, and as such a performance fee of £15,265,000 has been provided for by the Company, equivalent to 8.5 pence per share. This accrual is reversed on consolidation and not included in the Group Statement of Financial Position. The performance fee is only payable to AFML if the hurdle is met on a realised basis and the actual amount payable will depend on the amount and timing of investment realisations. See page 23 and Note 19.9 for further details.

5  Leases

Leasing activities

The Group, through its subsidiary AFML, has leased an office in the UK from which it operates for a fixed fee. When measuring lease liabilities for leases that were classified as operating leases, the Group discounts lease payments at a rate of 5.9% (2021: 5.0%).

Right of Use Asset

	2022 Group Office Premises £000	2021 Group Office Premises £000
As at 1 April	145	333
Addition	752	–
Depreciation	(147)	(188)
At 31 March	750	145

Lease Liability

	2022 Group Office Premises £000	2021 Group Office Premises £000
As at 1 April	148	333
Addition	769	–
Interest Expense	6	9
Lease Payments	(140)	(194)
At 31 March	783	148

Maturity Analysis

	Group
At 31 March 2022	Up to 3 months £000	3 – 12 months £000	Between 1 – 2 years £000	Between 2 – 5 years £000
Lease payments	12	120	241	543

6  Taxation Expense

	2022			2021
For the year ended 31 March	Revenue £000	Capital £000	Total £000	Revenue £000	Capital £000	Total £000
Current tax:
UK corporate tax on profits for the year	–	–	–	–	–	–

The difference between the income tax expense shown above and the amount calculated by applying the effective rate of UK corporation tax of 19% (2021: 19%) to the (loss)/return before tax is as follows:

		2022			2021
For the year ended 31 March	Revenue £000	Capital £000	Total £000	Revenue £000	Capital £000	Total £000
(Loss)/return before taxation	(3,798	63,113	59,315	(2,872)	22,548	19,676
(Loss)/return before tax multiplied by the effective rate of
UK corporation tax of 19% (2021: 19%)	(722)	11,991	11,269	(546)	4,284	3,738
Effects of:
Non-taxable capital returns	-	(10,770)	(10,770)	–	(5,078)	(5,078)
Excess management expenses	722	(1,221)	(499)	546	794	1,340
Total tax expense	-	-	-	–	–	–

No provision for deferred taxation has been made in the current year. The Group has not provided for deferred tax on capital profits arising on the revaluation of investments, as it is exempt from tax on these items because of its status as an investment trust company.

The Company has not recognised a deferred tax asset on the excess management expenses of £13,878,000 (2021: £9,998,000). It is not anticipated that these excess expenses will be utilised in the foreseeable future.

7  (Loss)/Return per Share

The (loss)/return per share figures are based on the following figures:

	2022 £000	2021 £000
Net revenue loss	(3,798)	(2,872)
Net capital return	63,113	22,548
Net total return	59,315	19,676
Weighted average number of ordinary shares in issue	169,923,583	123,553,057
	Pence	Pence
Revenue loss per share	(2.2)	(2.3)
Capital return per share	37.1	18.2
Total return per share	34.9	15.9

8  Investments Held at Fair Value

Non-current Investments Held at Fair Value

As at 31 March	2022 Group and Company £000	2021 Group and Company £000
Unlisted at fair value	268,807	164,127

Reconciliation of movements on investments held at fair value are as follows:

	Group and Company £000	Group and Company £000
As at 1 April	164,127	123,132
Purchases at cost	59,262	14,268
Realisation proceeds	(11,263)	-
Gains on investments	56,681	26,727
As at 31 March	268,807	164,127

The Group and Company received £11,263,000 (2021: nil) from investments sold in the year. The book cost of these investments when they were purchased was £8,227,000 (2021: nil). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments. In addition, Augmentum I LP, the Company's unconsolidated subsidiary (See Note19.2), received proceeds of £2,673,000 from investments sold during the year, which had a book cost of £3,173,000.

9  Subsidiary undertakings

The Company has an investment of £500,000 (2021: £500,000) in the issued ordinary share capital of its wholly owned subsidiary undertaking, Augmentum Fintech Management Limited (“AFML”), which is registered in England and Wales, operates in the United Kingdom and is regulated by the Financial Conduct Authority. AFML’s principal activity is the provision of portfolio management services to the Company. AFML’s registered office is 4 Chiswell Street, London EC1Y 4UP.

10  Other Receivables

As at 31 March	2022 Group £000	2022 Company £000	2021 Group £000	2021 Company £000
Other receivables*	391	39	47	17

*Includes £73,000 due back from the portfolio managers due to an inadvertent overpayment that was repaid after the year end.

11  Other Payables

As at 31 March	2022 Group £000	2022 Company £000	2021 Group £000	2021 Company £000
Purchases payable	5,000	5,000	1,730	1,730
Other payables	296	223	210	180
	5,296	5,223	1,940	1,910

12  Provisions

As at 31 March	2022 Group and Company £000	2021 Group and Company £000
Performance fee provision*	15,265	6,508

*See page 23 and Notes 4 and 19.9 for further details.

13  Financial Instruments

(i)  Management of Risk

As an investment trust, the Group’s investment objective is to seek capital growth from a portfolio of securities. The holding of these financial instruments to meet this objective results in certain risks.

The Group’s financial instruments comprise securities in unlisted companies, partnership interests, trade receivables, trade payables, and cash and cash equivalents.

The main risks arising from the Group’s financial instruments are fluctuations in market price, and credit and liquidity risk. The policies for managing each of these risks are summarised below. These policies have remained constant throughout the year under review. The financial risks of the Company are aligned to the Group’s financial risks.

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 the assumptions used in the valuation methodology as set out in the accounting policies.

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 or liquidity funds (with credit ratings above A3, based on S&P’s ratings or the equivalent from another ratings agency) are used for cash deposits and the level of cash is reviewed on a regular basis. The Company held cash or cash equivalents with the following bank and liquidity fund.

Bank Credit Ratings at 31 March 2022	2022 £000	2021 £000	Moody’s
Barclays Bank plc	24,326	27,433	A+
JPM GBP Liquidity LVNAV	7,000	–	AAAm
	31,326	27,433

(ii)  Financial Assets and Liabilities

As at 31 March	Group Fair value 2022 £000	Company Fair value 2022 £000	Group Fair value 2021 £000	Company Fair value 2021 £000
Financial Assets
Unlisted equity shares	266,720	266,720	157,719	157,719
Unlisted convertible loan notes	2,087	2,087	6,408	6,408
Cash and cash equivalents	31,326	29,694	27,433	26,533
Other assets	1,141	39	47	17
Financial Liabilities
Other payables	6,079	5,223	(1,940)	(1,910)

Cash and other receivables and payables are measured at amortised cost and the rest of the financial assets in the table above are held at approximate to fair value. The carrying values of the financial assets and liabilities measured at amortised cost are equal to the fair value.

The unlisted financial assets held at fair value are valued in accordance with the IPEV Guidelines as detailed within Note 19.4.

(iii)  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).

The determination of what constitutes ‘observable’ requires significant judgement by the Directors.

The Group considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary and provided by independent sources that are actively involved in the relevant market.

All investments were classified as Level 3 investments as at, and throughout the year to, 31 March 2022. Note 8 on page 61 presents the movements on investments measured at fair value.

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 and P/E multiples (based on the most recent revenue, EBITDA or earnings achieved and equivalent corresponding revenue, EBITDA 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.

In the calibration exercise and in determining the valuation for the Group’s equity instruments, comparable trading multiples are used. In accordance with the Group’s policy, appropriate comparable public companies based on industry, size, developmental stage, revenue generation and strategy are determined and a trading multiple for each comparable company identified is then calculated. The multiple is calculated by dividing the enterprise value of the comparable group by its revenue, EBITDA or earnings. The trading multiple is then adjusted for considerations such as illiquidity, marketability and other differences, advantages and disadvantages between the Group’s portfolio company and the comparable public companies based on company specific facts and circumstances.

The main input into the PWERM (‘Probability Weighed Expected Return Methodology’) was the probability of conversion. This method was used for the convertible loan notes held by the Company.

Total gains and losses on assets measured at Level 3 are recognised as part of Gains on Investments in the Consolidated Income Statement, and no other comprehensive income has been recognised on these assets. The total unrealised return for the year was £53,645,000 (2021: £26,727,000).

The table below presents those investments in portfolio companies whose fair values are recognised in whole or in part using valuation techniques based on assumptions that are not supported by prices or other inputs from observable current market transactions in the same instrument and the effect of changing one or more of those assumptions behind the valuation techniques adopted based on reasonable possible alternative assumptions.

Valuation Technique	Fair Value 2022 £000	Fair Value 2021 £000	Unobservable Inputs	Reasonably possible shift in input +/-	Change in valuation +/(-) £000
Multiple methodology	35,888	75,461	Multiple Illiquidity adjustment	10% 30%	6,543 (6,452) / 1,587
CPORT*	180,359	69,536	Transaction price	10%	19,111 / (19,111)
PWERM**	1,752	4,503	Probability of conversion	25%	127 / (127)
NAV	7,677	4,091	Discount to NAV	30%	(2,303)
Sales Price	42,796	10,536	N/A

*  Calibrated price of recent transaction.

**  Probability weighted expected return methodology.

14  Substantial holdings in Investments

The table below shows substantial holdings in investments where the Company owns more than 3% of the fully diluted capital of the investee company, and the investment value is more than 5% of the Company’s non-current investments.

	2022		2021
	% ownership (fully diluted)	% of portfolio	% ownership (fully diluted)	% of portfolio f
interactive investor*	3.6	15.9	3.8	19.9
Zopa*	3.3	9.5	3.0	5.8
Augmentum I LP **	100.0	30.3	100.0	34.8
Tide	5.4	10.5	5.9	11.6
Grover	6.4	15.8	8.3	7.9
Cushon	13.9	5.1	-	-

*  indirect ownership via Augmentum I LP.

**  Augmentum I LP’s registered office is IFC 5, St Helier, Jersey JE1 1ST and it is registered in Jersey.

15  Called up Share Capital

	2022		2021
	Ordinary Shares		Ordinary Shares
	No.	£000	No.	£000
Opening issued and fully paid ordinary shares of 1p each	140,423,291	1,405	116,931,911	1,171
Issue of shares	40,590,406	405	23,371,380	234
Ordinary shares purchased into treasury	(687,911)	-	(75,000)	–
Shares sold from treasury	-	-	195,000	–
Closing issued and fully paid ordinary shares of 1p each	180,325,786	1,810	140,423,291	1,405

On 8 July 2021 40,590,406 ordinary shares were issued. The nominal value of the shares issued was £405,000 and the total gross cash consideration received was £55,000,000. This consideration has been offset against costs of issue, which totalled £1,362,000.

On 1 November 2020 23,371,380 ordinary shares were issued. The nominal value of the shares issued was £234,000 and the total gross cash consideration received was £28,046,000. This consideration has been offset against costs of issue, which totalled £546,000.

687,911 shares were bought back into treasury during the year at an average price of 131.1p per share. At 31 March 2022 there were 687,911 shares held in treasury (2021: nil).

16  Net Asset Value per Share

The net asset value per share is based on the Group net assets attributable to the equity shareholders of £295,204,000 and 180,325,786 shares being the number of shares in issue at the year end.

The net asset value per share after performance fee* is based on the Group net assets attributable to the equity shareholders of £295,204,000, less the performance fee accrual made by the Company of £15,265,000, and 180,325,786 shares being the number of shares in issue at the year end.

* Alternative Performance Measure.

17  Related Party Transactions

Balances and transactions between the Company and its subsidiaries are eliminated on consolidation. Details of transactions between the Group and Company and other related parties are disclosed below.

The following are considered to be related parties:

• Frostrow Capital LLP (under the Listing Rules only)
• The Directors of the Company and the Company’s subsidiary, Augmentum Fintech Management Limited
• Augmentum Fintech Management Limited

Details of the relationship between the Company and Frostrow Capital LLP, the Company’s AIFM, are disclosed on page 22. Details of fees paid to Frostrow by the Company and Group can be found in Note 2 on page 58.

Details of the remuneration of all Directors can be found on page 44. Details of the Directors’ interests in the capital of the Company can be found on page 45.

Augmentum Fintech Management Limited is appointed as the Company’s delegated Portfolio Manager. The Portfolio Manager earns a portfolio management fee of 1.5% of NAV up to £250 million and 1.0% of NAV for any excess over £250 million and is entitled to a performance fee of 15% of net realised cash profits once the Company has received an annual compounded 10% realised return on its investments. Further details of this arrangement are set out on page 23 in the Strategic Report. During the year the Portfolio Manager received a portfolio management fee of £3,510,000 (2021: 2,235,000), which has been eliminated on consolidation and therefore does not appear in these accounts. A performance fee provision of £15,265,000 (2021: £6,508,000) has been accrued in the Company’s accounts, which is eliminated on consolidation in the Group accounts. No performance fee is payable or has been paid during the year. There were no outstanding balances due to the Portfolio Manager at the year end (2021: nil).

18  Capital Risk Management

	Group 2022 £000	Group 2021 £000
Equity
Equity share capital	1,810	1,405
Retained earnings and other reserves	293,394	181,757
Total capital and reserves	295,204	183,162

The Group’s objective in the management of capital risk is to safeguard its liquidity in order to provide returns for shareholders and to maintain an optimal capital structure. In doing so the Group may adjust the amount of dividends paid to shareholders or issue new shares or debt.

The Group manages the levels of cash deposits held whilst maintaining sufficient liquidity for investments and operating expenses.

There are no externally imposed restrictions on the Company’s capital.

19  Basis of Accounting and Significant Accounting Policies

19.1 Basis of preparation

The Group and Company Financial Statements for the year ended 31 March 2022 have been prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards.

The Financial Statements have been prepared on a going concern basis and under the historical cost basis of accounting, modified to include the revaluation of certain assets at fair value, as disclosed in Note 19.4. The Board has considered a detailed assessment of the Group and Company’s ability to meet their liabilities as they fall due, including stress tests which modelled the effects of a fall in portfolio valuations and liquidity constraints on the Group and Company’s financial position and cash flows. Further information on the stress tests are provided in the Report of the Audit Committee on page 49. The results of the tests showed that the Group and Company would have sufficient cash to meet their liabilities as they fall due. Based on the information available to the Directors at the time of this report, including the results of the stress tests, and the Group and Company’s cash balances, the Directors are satisfied that the Group and Company have adequate financial resources to continue in operation for at least the next 12 months and that, accordingly, it is appropriate to adopt the going concern basis in preparing these financial statements.

In order to reflect the activities of an investment trust company, supplementary information which analyses the Consolidated Income Statement between items of a revenue and capital nature has been presented alongside the Consolidated Income Statement. In analysing total income between capital and revenue returns, the Directors have followed the guidance contained in the Statement of Recommended Practice for investment companies issued by the Association of Investment Companies issued in February 2021 (the “SORP”).

The recommendations of the SORP which have been followed include:

• Realised and unrealised profits or losses arising on the revaluation or disposal of investments classified as held at fair value through profit or loss should be shown in the capital column of the Consolidated Income Statement. Realised gains are taken to the realised reserves in equity and unrealised gains are transferred to the unrealised reserves in equity.
• Other returns on any investment (whether in respect of dividends, interest or otherwise) should be shown in the revenue column of the Consolidated Income Statement. The total of the revenue column of the Consolidated Income Statement is taken to the revenue reserve in equity.
• The Board should determine whether the indirect costs of generating capital returns should be allocated to capital as well as the direct costs incurred in generating capital profits. In this regard the Board has decided to follow a non-allocation approach to indirect costs, which will therefore be charged in full to the revenue column of the Consolidated Income Statement.

19.2  Basis of Consolidation

The Consolidated Financial Statements include the Company and certain subsidiary undertakings.

IFRS 10 and IFRS 12 define an investment entity and include an exemption from the consolidation requirements for investment entities. The Company has been deemed to meet the definition of an investment entity per IFRS 10 as the following conditions exist:

• The Company has multiple unrelated investors which are not related parties, and holds multiple investments
• Ownership interests in the Company are exposed to variable returns from changes in the fair value of the Company’s net assets
• The Company has obtained funds for the purpose of providing investors with investment management services
• The Company’s business purpose is investing solely for returns from capital appreciation and investment income
• The performance of investments is measured and evaluated on a fair value basis.

The Company will not consolidate the portfolio companies or other investment entities it controls. The principal subsidiary Augmentum Fintech Management Limited as set out in Note 9 is wholly owned. It provides investment related services through the provision of investment management. As the primary purpose of this subsidiary is to provide investment related services that relate to the Company’s investment activities it is not held for investment purposes. This subsidiary has been consolidated.

The Company also owns 100% of the interests in Augmentum I LP (the ‘LP’). As this LP is itself an investment entity and is held as part of the Company’s investment portfolio it has not been consolidated.

19.3 Application of New Standards

(i)  New standards, interpretations and amendments effective from 1 April 2021
There were no new standards or interpretations effective for the first time for periods beginning on or after 1 April 2021 that had a significant effect on the Group’s financial statements.

(ii)  New standards, interpretations and amendments not yet effective
There are a number of standards and interpretations which have been issued by the International Accounting Standards Board (‘IASB’) that are effective in future accounting periods. The Group does not expect any of the standards issued by the IASB, but not yet effective, to have a material impact on the Group or Company.

19.4  Investments

All investments are defined by IFRS as fair value through profit or loss (described in the Financial Statements as Investments held at fair value) and are subsequently measured at reporting dates at fair value. The fair value of direct unquoted investments is calculated in accordance with the Principles of Valuation of Investments below. Purchases and sales of unlisted investments are recognised when the contract for acquisition or sale becomes unconditional.

Increases or decreases in valuation are recognised as part of gains on investments at fair value in the Consolidated Income Statement.

Principles of Valuation of Investments
(i)  General

The Group estimates the fair value of each investment at the reporting date in accordance with IFRS 13 and the International Private Equity and Venture Capital Valuation (“IPEV”) Guidelines.

Fair value is the price for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction. In estimating fair value, the AIFM and Board apply valuation techniques which are appropriate in light of the nature, facts and circumstances of the investment and use reasonable current market data and inputs combined with judgement and assumptions. Valuation techniques are applied consistently from one reporting date to another except where a change in technique results in a better estimate of fair value.

In general, the enterprise value of the investee company in question will be determined using one of a range of valuation techniques. The enterprise value is adjusted for factors such as surplus assets, excess liabilities or other contingencies or relevant factors; the resulting amount is apportioned between the investee company’s relevant financial instruments according to their ranking and the effect of any instrument that may dilute economic entitlements.

(ii)  Unlisted Equity Investments
In respect of each unlisted investment one or more of the following valuation techniques is used:

• A market approach, based on the price of the recent investment, market multiples or industry valuation benchmarks.
• A probability-weighted expected returns methodology. Under the PWERM fair value is based on consideration of values for the investment under different scenarios. This will primarily be used where there is a convertible element to the investment
• A net assets based approach based on the value of the underlying assets of the investment.

In assessing whether a methodology is appropriate techniques that use observable market data are preferred.

Price of Recent Investment/Transaction
Where the investment being valued was itself made recently, or there has been a third party transaction in the investment, the price of the transaction may provide a good indication of fair value. Using the Price of Recent Investment technique is not a default and at each reporting date the fair value of investments is estimated to assess whether changes or events subsequent to the relevant transaction would imply a material change in the investment’s fair value.

Multiple
Under the multiple methodology an earnings or revenue multiple technique is used. This involves the application of an appropriate and reasonable multiple to the maintainable earnings or revenue of an investee company.

Multiples used are usually taken from current market-based multiples, reflected in the market valuations of quoted comparable companies or the price at which comparable companies have changed ownership. Differences between these market-based multiples and the investee company being valued are reflected by adjusting the multiple for points of difference which might affect the risk and growth prospects which underpin the multiple. Such points of difference might include the relative size and diversity of the entities, rate of revenue/earnings growth, reliance on a small number of key employees, diversity of product ranges, diversity and quality of customer base, level of borrowing, and any other reason the quality of revenue or earnings may differ.

In respect of maintainable revenue/earnings, the most recent 12 month period, adjusted if necessary to represent a reasonable estimate of the maintainable amount, is used. Such adjustments might include exceptional or non-recurring items, the impact of discontinued activities and acquisitions, or forecast material changes.

PWERM ('Probability-Weighted Expected Returns Methodology')
Under the PWERM potential scenarios are identified. Under each scenario the value of the investment is estimated and a probability for each scenario was selected. The fair value is then calculated as the sum of the value under each scenario multiplied by its probability.

Net Assets
For the net asset approach the fair value estimate is based on the attributable proportion of the reported net asset value of the investment derived from the fair value of underlying assets / investments. Valuation reports provided by the manager or general partner of the investments are used to calculate fair value where there is evidence that the valuation is derived using fair value principles that are consistent with the Company’s accounting policies and valuation methods. Such valuation reports may be adjusted to take account of changes or events to the reporting date, or other facts and circumstances which might impact the underlying value.

19.5  Cash and Cash Equivalents
Cash comprises cash at bank and short-term deposits with an original maturity of less than 3 months and subject to minimal risk of changes in value.

19.6  Presentation and Functional Currency
The Group’s and Company’s presentation and functional currency is Pounds Sterling (“Sterling”), since that is the currency of the primary economic environment in which the Group operates.

19.7  Other income
Interest income received from cash equivalents is accounted for on an accruals basis.

19.8  Expenses
Expenses are accounted for on an accruals basis, and are charged through the revenue column of the Consolidated Income Statement except for transaction costs and the carried interest fee as noted below.

Transaction costs are legal and professional fees incurred when undertaking due diligence on investment transactions. Transaction costs, when incurred, are recognised in the Income Statement. If a transaction successfully completes, as a direct cost of an investment, the related transaction cost is charged to the capital column of the Income Statement. If the transaction does not complete the related cost is charged to the revenue column of the Income Statement.

19.9  Performance Fee
As set out in prior annual reports the performance fee arrangements were set up to provide a long-term employee benefit plan to incentivise employees of AFML and align them with shareholders through participation in the realised investment profits of the Group. During the year to 31 March 2022 the existing plan for AFML staff was terminated and the performance fee liability to AFML employees accrued as at 31 March 2021 of £6,805,000 was reversed. AFML continues to be entitled to a performance fee as before, but any performance fee paid by the Company to AFML will now be allocated to employees of AFML on a discretionary basis by the Management Engagement & Remuneration Committee of the Company. Non-executive Directors of the Company are not eligible to participate in any allocation of the performance fee.

The Company provides for the performance fee in full. A performance fee is provided for if its performance conditions would be achieved if the remaining assets in that basket were realised at fair value, at the Statement of Financial Position date. The performance fee is equal to the share of profits in excess of the performance conditions in the basket. On consolidation the performance fee is eliminated since it is payable to the Company’s subsidiary, AFML.

Performance fees will be charged to the capital column of the Income Statement and taken to the Capital Reserve.

19.10  Leases
All leases are accounted for by recognising a right-of-use asset and a lease liability.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the Group's incremental borrowing rate. Right-of-use assets are measured at the amount of the lease liability less provisions for dilapidations, where applicable.

Subsequent to initial measurement, lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease.

19.11  Taxation
The tax effect of different items of income/gain and expense/loss is allocated between capital and revenue on the same basis as the particular item to which it relates.

19.12  Deferred Tax
Deferred taxation is provided on all timing differences other than those differences regarded as permanent. Deferred tax assets are only recognised to the extent that it is probable that taxable profits will be available from which the reversal of timing differences can be utilised. Deferred tax is not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax is provided at the tax rates that are expected to apply in the year when the liability is settled or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the Statement of Financial Position date.

19.13  Receivables and Payables
Receivables and payables are typically settled in a short time frame and are carried at amortised cost. As a result, the fair value of these balances is considered to be materially equal to the carrying value, after taking into account potential impairment losses.

19.14  Share Capital
Ordinary shares issued by the Group are recognised at the proceeds or fair value received with the excess of the amount received over nominal value being credited to the share premium account. Direct issue costs are deducted from equity.

19.15  Share Premium and Special Reserve
The share premium account arose following the Company’s admission to listing and represented the difference between the proceeds raised and the par value of the shares issued. Costs of the share issuance were offset against the proceeds of the relevant share issue and also taken to the share premium account.

Subsequent to admission and following the approval of the Court, the initial share premium account was cancelled and the balance of the account was transferred to the Special Reserve. The purpose of this was to enable the Company to increase the distributable reserves available to facilitate the payment of future dividends or with which to make share repurchases.

19.16 Revenue and Capital Reserves
Net capital return is added to the Capital Reserve in the Consolidated Statement of Financial Position, while the net revenue return is added to the Revenue Reserve. When positive, the revenue reserve is distributable by way of dividend, as is any realised portion of the capital reserve. The realised portion of the capital reserve is £2,750,000 (2021: £(208,000)) representing realised capital profits less costs charged to capital.

19.17 Critical Accounting Judgements and Key Sources of Estimation Uncertainty
Critical accounting judgements and key sources of estimation uncertainty used in preparing the financial information are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable. The resulting judgements and estimates will, by definition, seldom equal the related actual results.

There is one significant judgement included in the presentation of the Consolidated Financial Statements, that the Company has determined it is an investment company as set out in Note 19.2.

Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty in the reporting year, that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Fair value measurements and valuation processes
Unquoted assets are measured at fair value in accordance with IFRS 13 and the IPEV Valuation Guidelines. Decisions are required in order to determine the appropriate valuation methodology and subsequently in determining the inputs into the valuation model used. These decisions include selecting appropriate quoted company comparables, appropriate multiples to apply, adjustments to comparable multiples and estimating future cash flows of investee companies. In estimating the fair value of an asset, market-observable data is used, to the extent it is available.

The Valuations Committee, which is chaired by a Director, determines the appropriate valuation techniques and inputs for the model. The Audit Committee considers the work of the Valuations Committee and the results of their discussion with the AIFM, Portfolio Manager and the external auditor and works closely with the AIFM and Portfolio Manager to review the appropriate valuation techniques and inputs to the model. The Chairman of the Audit Committee reports its findings to the Board of Directors of the Group every six months to explain the cause of fluctuations in the fair value of the investments.

Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in Note 19.4. As set out in Note 19.9 carried interest is calculated based on the valuation of the investments and as such is considered a significant accounting estimate.

20 Post Balance Sheet Events
At the year end regulatory approval remained outstanding for a deal announced in December 2021 in which the Company’s holding in interactive investor would be realised as part of its acquisition by abrdn. This transaction completed in May 2022, with the Company receiving proceeds of £42.8 million. There are no other significant events after the end of the reporting period requiring disclosure.

.

2022 Accounts

The figures and financial information for 2022 are extracted from the annual report and financial statements for the year ended 31 March 2022 and do not constitute the statutory accounts for the year. The annual report and financial statements include the Report of the Independent Auditor which is unqualified and does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The annual report and financial statements have not yet been delivered to the Registrar of Companies.

2021 Accounts

The figures and financial information for 2021 are extracted from the published annual report and financial statements for the year ended 31 March 2021 and do not constitute the statutory accounts for that year. The annual report and financial statements have been delivered to the Registrar of Companies and included the Report of the Independent Auditor which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

Annual report and financial statements

Copies of the annual report and financial statements will be posted to shareholders shortly and will be available on the Company’s website (www.augmentum.vc) or in hard copy format from the Company Secretary.

The Company's annual report for the year ended 31 March 2022 will shortly be available for inspection on the National Storage Mechanism (NSM) via https://data.fca.org.uk/#/nsm/nationalstoragemechanism. 

The Annual General Meeting will be held on Wednesday, 14 September 2022 at 11.00 a.m. The Notice of the Annual General Meeting will be posted to shareholders with the annual report and will be available on the Company’s website and NSM as per the above with respect to the annual report.

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.