Augmentum Fintech : Annual Report for the year ended 31 March 2024

Annual Report

For the year ended 31st March 2024

Investing in Fintech.

About Augmentum Fintech plc

Augmentum Fintech plc (the "Company") is the UK's only publicly listed investment company focusing on the fintech sector, having launched on the main market of the London Stock Exchange in 2018, giving businesses access to patient funding and support, unrestricted by conventional fund timelines.

We invest in early and later stage fast growing fintech businesses that are disrupting the banking, insurance, asset management and wider financial services

sectors.

We have invested in many great businesses and have secured six exits since IPO, the most significant of which, Dext, interactive investor, Cushon and Onfido, were strongly accretive.

Portfolio management is undertaken by Augmentum Fintech Management Limited ("AFML"). AFML is a wholly owned subsidiary of the Company, together referred to as the "Group".

Contents

Strategic Report and Business Review

• Chairman's Statement

• Investment Objective and Policy
  6 Portfolio Review
  7 Key Investments
  13 Other Investments
  15 Portfolio Manager's Review
  19 Strategic Report

Corporate Governance

1. Board of Directors
2. Management Team
3. Directors' Report

1. Corporate Governance Report

1. Directors' Remuneration Report

1. Directors' Remuneration Policy
2. Report of the Audit Committee

1. Statement of Directors' Responsibilities

ANNUAL REPORT AND FINANCIAL STATEMENTS 2024

1

Financial Statements

1. Consolidated Income Statement
2. Consolidated and Company Statements of Changes in Equity
3. Consolidated Balance Sheet
4. Company Balance Sheet
5. Consolidated Cash Flow Statement
6. Company Cash Flow Statement
7. Notes to the Financial Statements

69 Independent Auditor's Report to the Members of Augmentum Fintech plc

Further Information

1. Information for Shareholders
2. Glossary and Alternative Performance Measures

1. Contact Details

• AUGMENTUM FINTECH PLC

Chairman's Statement

Performance Highlights

	31 March	31 March
	2024	2023
1	167.4p	158.9p
NAV per Share after performance fee *
NAV per Share after performance fee Total Return*	5.4%	2.4%
Share price	100.5p	97.0p
Total Shareholder Return*	3.6%	(27.1%)
Discount to NAV per Share after performance fee*	(40.0%)	(39.0%)
Ongoing Charges Ratio*	2.0%	1.9%

• These are considered to be Alternative Performance Measures. Please see the Glossary and Alternative Per- formance Measures on page 78.

• The Board considers the NAV per share after any performance fees provision to be the most accurate way to reflect the underlying value of each share, whereas accounting standards require the Group's consolidated NAV per share to be presented before such fees are deducted as a consequence of our Portfolio Manager being within our Group structure and the fees therefore being eliminated on consolidation.

To read about our KPIs see page 23.

I am pleased to present our sixth annual report since the launch of the Company in March 2018. This report covers the year ended 31 March 2024.

Investment Policy

Your Company predominantly invests in early stage European fintech businesses which have technologies with the potential to transform 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 by offering them exposure to a focused portfolio of private fintech companies during what is often their period of rapid value accretion.

Performance

Your Company's NAV per share after performance fee at 31 March 2024 was 167.4p, up 5.4% from 31 March 2023, continuing our history of increases for every reporting period since the Company's IPO in 2018.

However, the price at which the shares traded continued to fail to represent the NAV throughout the period, ending at 100.5p per share, up 3.5p from the price at 31 March 2023 but still representing a discount to the NAV per share after performance fee of 40.0%.

The UK equity market, and investment companies in particular, has been largely out of favour and investment company discounts are running at historic highs in many cases. The initial negative reaction to increased interest rates has sustained but most commentators predict a rate reduction at some point; the question remains as to when. UK inflation numbers are improving which removes one of the barriers to lower rates. History suggests that growth companies such as Augmentum will be early beneficiaries of any rally inspired by declining rates.

Our underlying portfolio is performing well and the current discount is illogical. As at 31 March 2024, like at the half year, the valuation of our top three positions in Tide, Zopa Bank and Grover, plus cash, was almost equivalent to our £170 million market capitalisation, attributing virtually no value to our £119 million of other investments.

Portfolio

In the first half of the year, the Company benefitted from its fifth portfolio realisation since IPO. We received proceeds of £22.8 million from the completion of NatWest Group's acquisition of Cushon, appreciably ahead of its prior valuation and representing a 2.1x multiple on invested capital, and an IRR of 62%. Shortly after the year end, in April, we had our sixth exit. One of the leading global providers of online identity verification, Entrust, acquired Onfido, delivering an IRR of 5.8% and a multiple on capital invested of 1.3x, with the realised value representing a c.5% uplift on the holding value we reported in the Company's half year results. To date, all of the Company's investment exits have been at or above the last reported holding value, which should provide investors with comfort that our valuations process is rigorous and corroborates the discipline our Portfolio Manager has exercised when evaluating new investments and their reporting on the portfolio.

Deployments in the year included one new investment, £4.0 million in London-based insurtech Artificial, and a further £12.0 million of follow-on funding to support existing portfolio companies. These included Volt (£5.3 million), Tide (£4.2 million) and, Grover (£1.4 million).

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

Portfolio Management

Our investment team continues to evaluate a wide range of opportunities, reviewing financial and commercial metrics in order to identify those most likely to be successful. We are active investors and our Portfolio Manager works closely with the companies we invest in, often taking either a board or an observer seat, and working closely with management to guide strategy consistent with long-term value creation. Our portfolio is already diversified across different fintech sectors and maturity stages and we are keen to expand it further. We are committed to responsible investing. We integrate Environmental, Social and Governance ("ESG") factors in our analysis, due diligence and operating practices as we believe that these are key in mitigating risk and creating good investments.

ANNUAL REPORT AND FINANCIAL STATEMENTS 2024

3

Chairman's Statement continued

Valuations

Your Board considers its governance role in the valuations process to be of utmost importance. We operate with a Valuations Committee in addition to an Audit Committee, both playing a key role in assessing portfolio valuation. Your Board understands that shareholders are often sceptical of private equity valuations as they cannot be readily verified in the way that public equities can. We have always maintained a consistent, rigorous and disciplined approach to valuations and the results we are reporting reflect an in-depth process, supported by our advisers. We maintained our multiples in the bull market for fintech when listed fintech multiples became elevated and so we have not needed to make subsequent corrections, unlike some others. The six disposals made to date provide some retrospective validation of this process.

We have carefully reviewed both the status and the forecasts of all of the portfolio companies, used appropriate and consistent methodologies to determine the value of each investment and sense checked our conclusions. We also benefit from the majority of our investments occupying a senior position in the capital structures of the investee companies, offering an element of protection against downside risk.

Discount Control

The Company's shares traded at a discount to NAV for the whole of the year under review and up to the date of this report, notwithstanding the underlying value and strong prospects of the portfolio.

The Board has continued its programme of highly accretive buybacks, albeit more modestly in the second half, seeking to convey to the market our confidence in the value of the portfolio, while also balancing this with the need for capital to be available for new and follow-on investments. All the shares repurchased by the Company are being held in treasury to potentially reissue when the share price returns to

a premium.

4,687,567 shares were bought back into treasury during the year to

31 March 2024 (2023: 5,806,934 shares), at an average price of 97.7p per share, representing an average discount to the prevailing NAV per share after performance fee of 38.6% and adding 1.7p/1.1% to the NAV per share. A further 99,118 shares have been bought back since March, up to 24 June 2024, at an average price of 98.7p per share.

We will seek to renew shareholders' authorities to issue and buy back shares at the forthcoming AGM.

Potential Returns of Capital

As set out on page 25 of this annual report, the Company may, at the discretion of the Directors, return up to 50% of the gains realised during a year from the disposal of investments. Factors influencing decisions in this regard include the quantum of sale proceeds, the opportunities offered by the investment pipeline and the working capital requirements of the Company. To date the Board has applied a proportion of such gains to share buybacks, as this has been highly accretive to the Company's NAV per share. This notwithstanding, the Directors intend to consult with shareholders to determine whether other means of cash distribution would be preferred.

Dividend

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

Board

There have been no changes to the Board during the year but the three Directors at IPO in 2018 are all scheduled to retire from the Board at the same time, so it seems logical to stage these departures and commence Board refreshment now. After six years in the Chair, I have decided to retire first and will not be offering myself for re-election at the forthcoming AGM. We have an excellent mix of skills and experience on the Board already but intend to supplement our team with a new Director. We have engaged an independent search firm for this purpose.

It has been my pleasure to chair Augmentum Fintech PLC from its successful IPO in 2018 and to see it grow into a leading and highly respected player in European fintech. My grateful thanks to our shareholders for their support, to my Board colleagues for their diligence and hard work, and to Tim, Richard and the team at Augmentum Fintech Management Limited who have together built a much-admired Portfolio Manager.

AGM

Our AGM will be held on Thursday 19 September 2024 at 11.00 a.m. at the Augmentum Fintech Management Limited office at 4 Chiswell Street, London EC1Y 4UP. Your Board strongly encourages shareholders to register their votes in advance using the proxy form provided or by voting online, or if they are not held directly, by instructing the nominee company through which the shares are held. Registering votes in advance does not preclude shareholders from attending the meeting.

Details of all of the resolutions can be found in the Notice of AGM, which is published separately from this annual report and 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.

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

Outlook

Interest rates remain stubbornly high for now, but UK and global inflation numbers are improving which suggests a more positive medium-term outlook for growth companies. As I write, early-stage growth portfolios remain out of favour, but our Portfolio Manager has proved its model, well-illustrated by the returns produced by our six realisations to date. Additionally, our largest investments are performing very well.

The underlying need to digitalise and transform financial services remains. The opportunity is undiminished as the traditional operators continue to dominate, despite inroads made by some stellar fintech businesses with less costly, and in many cases more secure, business models. Penetration is still only c.5% across the industry although adoption of consumer focused fintech by younger demographics is markedly higher.

STRATEGIC AND BUSINESS REVIEW

• AUGMENTUM FINTECH PLC

Chairman's Statement continued

We maintained our investment discipline over the last year and, with our strong cash reserves (£44.8 million at 31 May 2024), we are well placed both to take advantage of new opportunities and to reinforce our appeal as a supportive investor. We have a healthy pipeline of opportunities under consideration.

Your Board believes that the Company will see a closing of the discount at which its shares trade in due course and, with the underlying growth of the portfolio generally being very strong, expects that our patient shareholders will be well rewarded in time.

Neil England

Chairman

24 June 2024

ANNUAL REPORT AND FINANCIAL STATEMENTS 2024

5

Investment Objective and Policy

STRATEGIC AND BUSINESS

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, but derivatives may be used for currency hedging purposes.

Borrowing policy

The Company may, from time to time, use borrowings to manage its working capital requirements but shall not borrow for investment purposes. Borrowings will not exceed 10 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.

REVIEW

• Please refer to the Glossary on page 78.

• AUGMENTUM FINTECH PLC

Portfolio Review

	Fair value of		Impact		Fair value of
	holding at	Net	of foreign		holding at	% of Net
	31 March	investments/	currency rate	Investment	31 March	assets after
	2023	(realisations)	changes	return	2024	performance
	£'000	£'000	£'000	£'000	£'000	fee
Tide	35,692	4,176	-	11,425	51,293	18.0%
Zopa Bank^	30,093	-	-	9,198	39,291	13.8%
Grover	43,150	1,368	(1,103)	(7,522)	35,893	12.6%
Volt	14,216	5,300	-	5,942	25,458	9.0%
BullionVault^	11,564	(799)	-	2,354	13,119	4.6%
Gemini	8,306	-	(308)	2,926	10,924	3.9%
Onfido	10,242	-	(51)	(43)	10,148	3.6%
Intellis	8,412	-	(79)	1,741	10,074	3.5%
AnyFin	9,304	-	(817)	928	9,415	3.3%
Iwoca	7,882	-	-	44	7,926	2.8%
Top 10 Investments	178,861	10,045	(2,358)	26,993	213,541	75.1%
Other Investments*	52,644	5,931	(564)	(6,469)	51,542	18.1%
Cushon	22,790	(22,790)	-	-	-	0.0%
Total Investments	254,295	(6,814)	(2,922)	20,524	265,083	93.2%
Cash & cash equivalents	40,015				38,505	13.5%
Net other current liabilities	(186)				(271)	-0.1%
Net Assets	294,124				303,317	106.7%
Performance Fee accrual	(16,819)				(18,980)	-6.7%
Net Assets after performance fee	277,305				284,337	100.0%

^ Held via Augmentum I LP

* There are fourteen other investments (31 March 2023: fifteen). See page13 for further details.

ANNUAL REPORT AND FINANCIAL STATEMENTS 2024

7

Key Investments

Portfolio valuation changes

Year ended 31 March 2024

Mar-23

Investment

Realisation1

Uplift

Reduction

Cash available & other2

Sep-23

Total

Other

£38.2m

£7.9m

£0.0m

£7.9m

£75.4m

£5.0m

-£22.8m

-£5.8m

£51.5m

£9.3m

£0.1m

£9.4m

£8.4m

£1.7m

£10.1m

£10.2m

-£0.1m

£10.1m

£10.9m

£43.2m

£1.4m

-£8.6m

£35.9m

£14.2m

£5.3m

£5.9m

£25.5m

£11.6m

-£0.8m

£2.4m

£13.1m

£8.3m

£2.6m

£265.1m

£303.3m

£30.1m

£0.0m

£9.3m

£39.3m

£35.7m

£4.2m

£11.4m

£51.3m

Gross NAV3

Portfolio

Value

Acquired post-year end

1. Cushon exited in June 2023
2. Consolidated cash position of £38.5m less net liabilities
3. NAV is shown before performance fee, NAV after performance fee is £284.3m
4. Onfido exited post period end

The Augmentum portfolio is well diversified across	the fintech	ecosystem
NAV1 by sub-sector, %
Proptech
						Cashand
15%
	othernet
Insurtech	assets2
		2%	13%		Digital Banking & Lending
2%
	Digital Asset Infrastructure		36%
7%
						NAV1
Infrastructure	£303.3m
8%
3%

10%

Payments

12%	Circular Economy
11%
Wealth & Asset Management

STRATEGIC AND BUSINESS REVIEW

Acquired post-year- end

1. NAV before performance fee, as at 31 March 2024, NAV after performance fee is £284.3m
2. £38.5m cash as at 31 March 2024

• AUGMENTUM FINTECH PLC

Key Investments continued

Tide's (www.tide.co) mission is to help small and mid-sized businesses ("SMEs") save time and money in the running of their businesses. Customers can be set up with an account number and sort code in less than 10 minutes, and the company is building a comprehensive suite of digital banking services for businesses, including automated accounting, instant access to credit, card control, instant card freezing and quick, mobile invoicing.Tide acquired Funding Options in 2022, giving Tide's customers access to a wider range of credit options and creating one of the UK's biggest digital marketplaces for SME credit. Tide continues to expand its product offering and launched Tide Accounting and Tide Acquiring in 2023, and recently joined the Current Account Switch Service. Tide is also expanding geographically.Tide launched in India in 2022 and it has recently announced plans to launch in Germany during 2024.Tide has 10% market share of small business accounts in the UK, with more than 575,000 customers, and more than 225,000 members in India.

Augmentum led Tide's £44.1 million 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. In October 2023 Augmentum invested a further £4.2 million through a combination of primary and secondary transactions.

Source: Tide	31 March	31 March
	2024	2023
	£'000	£'000
Cost	17,376	13,200
Value	51,293	35,692
Valuation Methodology^	Rev. Multiple	Rev. Multiple

As per last filed	audited accounts of the investee company for the year
to 31 December 2022:
	2022	2021
	£'000	£'000
Turnover	59,176	33,541
Pre tax loss	(40,781)	(32,719)
Net assets	34,990	66,297

Having been founded in 2005 as the world's first peer-to peer ("P2P") lending company, Zopa (www.zopa.com) launched Zopa Bank following a funding round in 2020. It was granted a full UK banking licence, allowing it to offer a wider product range to its customers. After 17 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 Bank is regulated by both the PRA and the FCA.

Zopa Bank is a multiple awards winner. In 2024, Zopa won three more awards from MoneyNet; Best Savings App, Best Fixed Rate Cash ISA Provider and Personal Savings Provider of the Year. These follow a string of previous awards, including being named the British Bank Awards' Best Personal Loan Provider for the sixth year in a row in 2023. 2023 marked a key milestone, with Zopa achieving its first full year of profitability.

Augmentum participated in a £20 million funding round led by Silverstripe in March 2021, in October 2021 participated with a further £10 million investment in a £220 million round led by SoftBank, and in February 2023 invested a further £4 million as part of a £75 million equity funding round alongside other existing investors. In September 2023 Zopa Bank raised £75 million in Tier 2 Capital to support further scaling.

Source: Zopa Bank	31 March	31 March
	2024	2023
	£'000	£'000
Cost	33,670	33,670
Value	39,291	30,093
Valuation Methodology^	Rev. Multiple	Rev. Multiple

As per last filed audited accounts of the investee company for the year to 31 December 2023:

	2023	2022
	£'000	£'000
Operating income	223,544	153,737
Pre tax profit/loss	10,828	(23,783)
Net assets	413,174	299,674

• See note 13(iii) on pages 62 to 64.