Hargreave Hale AIM VCT 1 Plc
Unaudited Interim Results for the six month period ending 31 March 2018
FINANCIAL HIGHLIGHTS
| Ordinary Shares (as at 31 March): | 31 March 2018 | 31 March 2017 | 30 September 20171 |
| Net asset value per share | 81.74p | 78.12p | 80.82p |
| Cumulative distributions paid per share since launch | 48.25p | 44.25p | 46.00p |
| Total return per share | 129.99p | 122.37p | 126.82p |
| Earnings per share (basic and diluted): | |||
| Revenue return | (0.43)p | (0.14)p | (0.13)p |
| Capital return | 2.71p | 4.12p | 8.99p |
| Combined return | 2.28p | 3.98p | 8.86p |
| Dividends per share: | |||
| Interim proposed/paid | 1.75p | 1.75p | 1.75p |
| Final paid | - | - | 2.25p |
| Ongoing Expense Ratio | 1.98%3 | 1.83%2 | 1.86%2 |
| 1.84%4 | |||
Performance Benchmark: | |||
| FTSE AIM All-share Index (rebased to 100 at 29 October 2004) | 105.23 | 96.42 | 104.19 |
1 30 September 2017 financial highlights represent annual results
2 Calculated as total expenses (annualised for half yearly results) minus ad hoc legal costs, adjusted for trail commission written off, divided by period end net assets
3 Calculated following the AIC’s recommended methodology. The ratio excludes ad hoc legal costs, merger costs and additional listing fees, it includes a proportion of the Marlborough Special Situations fund ongoing charges and is adjusted for trail commission written off, divided by average net assets. (Initial investment of new capital into the Marlborough Special Situations Fund is a temporary home pending investment in suitable qualifying companies)
4 Calculated following the AIC’s recommended methodology however excludes the Marlborough Special Situations ongoing charges.
INVESTMENT OBJECTIVE
The objective of the VCT is to achieve long term capital growth and to maximise tax free distributions to shareholders by investing in a diversified portfolio of small UK companies primarily traded on AIM. At least 70% of the Company’s funds must be invested in qualifying holdings within three years of raising the funds (this increases to 80% from 1 October 2019). The balance of the Company’s funds will be invested in liquid assets (such as fixed income securities and bank deposits) and non-qualifying equity investments on an opportunistic basis. The Company is managed as a Venture Capital Trust in order that shareholders in the Company may benefit from the tax relief available.
CHAIRMAN’S STATEMENT
INTRODUCTION
Following the merger of Hargreave Hale AIM VCT 1 and 2 and the success of the recent fundraising which now exceeds £22 million, I would like to welcome a large number of new shareholders.
RESULTS
In the first half of the financial year the Net Asset Value (“NAV”) per share increased from 80.82 pence to 81.74 pence equivalent to an increase of 3.9% after adding back the 2.25 pence dividend distributed in January 2018. During the same period the FTSE 100 Total Return Index fell 2.5% and the FTSE AIM All Share Total Return Index rose 1.6%.
The gain per share for the six month period was 2.28 pence per share (comprising revenue losses of 0.43 pence and capital gains of 2.71 pence). At 31 March 2018 the total return since inception of the fund was 129.99 pence.
INVESTMENTS
The investment manager, Hargreave Hale Limited, invested a further £2.91 million in 9 qualifying companies during the period all of which were AIM companies. The fair value of qualifying investments at 31 March 2018 was £71.61 million invested in 74 AIM companies and 9 unquoted companies. The balance of the fund was held in a mix of cash and non-qualifying equities.
At 31 March 2018 the VCT was 90.71% invested as measured by HMRC.
DIVIDEND
A final dividend for the year ended 30 September 2017 of 2.25 pence was paid on 30 January 2018.
The directors continue to maintain a policy of distributing at least 5% of the year end NAV to shareholders. An interim dividend of 1.75 pence (2017: 1.75p) will be paid on 31 July 2018, with an ex-dividend date of 5 July 2018 and a record date of 6 July 2018.
BUYBACKS
We have been able to maintain our policy of offering our shareholders an efficient exit route through the buyback scheme. In total, 1,350,039 shares were repurchased during the six month period ending 31 March 2018 at a weighted average price of 78.78 pence per share. Since the period end a further 709,279 shares have been repurchased at a weighted average price of 80.06 pence.
The Board continues to target a share price discount of 5% of the NAV per share (as measured against the mid-price) for market purchases. It should be emphasised that this target is non-binding and dependent on circumstances, including the Company’s liquidity and market conditions.
MERGER OF HARGREAVE HALE AIM VCT 1 AND 2 PLC AND OFFER FOR SUBSCRIPTION
On 27 December 2017, the Company and Hargreave Hale AIM VCT 2 announced that they had entered into discussions to merge the Companies into one company. Hargreave Hale AIM VCT 1 also announced their intention to raise further funds into the Company through an offer for subscription.
On 12 February 2018, the Company announced the publication of a prospectus and circulars in connection with the recommended proposals to merge the companies and an offer for subscription of ordinary shares to raise up to £20 million in the Company with a £10 million over-allotment facility.
The Offer
The offer was approved by shareholders at a general meeting on 16 March 2018 and was opened to both new and existing shareholders. On 8 May 2018, the Company announced it had received applications in excess of £19 million and, accordingly, £5 million of the available £10 million over-allotment facility was to be utilised. Since its launch, the offer has resulted in gross funds being received of £22.6 million and the issue of 26.7 million new shares in the Company.
The Merger
On 23 March 2018, the Company announced the approval of the merger. To preserve its VCT status, this was done by placing Hargreave Hale AIM VCT 2 into members’ voluntary liquidation pursuant to a scheme of reconstruction under section 110 Insolvency Act 1986. The assets and liabilities of Hargreave Hale AIM VCT 2 were transferred to Hargreave Hale AIM VCT 1 in consideration for the issue of 68,680,227 ordinary shares of 1p each in the capital of the Company to Hargreave Hale AIM VCT 2 shareholders. The scheme shares were issued at a ratio of 1.458754 scheme shares for each Hargreave Hale AIM VCT 2 share held.
The merger was implemented on a relative unaudited NAV basis, adjusted for the anticipated costs of the scheme. The merger and roll-over values were based on the latest unaudited valuations of the Company’s investments. The effect of the scheme was that Hargreave Hale AIM VCT 2 shareholders received Hargreave Hale AIM VCT 1 shares with the same total market value as at the scheme calculation date as their Hargreave Hale AIM VCT 2 shares. The total cost of undertaking the merger was £0.40 million and Hargreave Hale made a significant contribution of £0.16 million.
Following the merger, the net assets of the Company were £127,977,633, with 155,936,403 ordinary shares of 1p each in issue.
I would like to take this opportunity to thank David Hurst-Brown and Philip Cammerman for all their hard work on the Board of Hargreave Hale AIM VCT 2.
CANCELLATION OF SHARE PREMIUM AND CAPITAL REDEMPTION RESERVE
At the Annual General Meeting of the Company held on 16 March 2018, a special resolution was passed approving the cancellation of the Company's share premium account and capital redemption reserve. The Company intends to carry out the cancellation before the end of the financial year and will update shareholders when the cancellation has become effective.
REGULATORY UPDATE
Through the budget delivered on 22 November 2017, the government announced substantial changes to the legislation governing the management of Venture Capital Trusts. Broadly speaking, the proposed changes are designed to bring greater focus to the scheme and encourage more investment into small British companies. These changes will come into effect in stages and will start to apply to the Company from the beginning of the next financial year.
Some of these changes will have little or no impact on the management of your Company. The most significant and important of the proposed changes will be the increase in the investment test with the minimum percentage of the Company that must be invested into Qualifying Companies increasing from 70% to 80% for accounting periods beginning on or after 6 April 2019. This becomes applicable for Hargreave Hale AIM VCT 1 plc from 1 October 2019. To assist with this change, the period of disregard for the disposal of Qualifying Investments will be increased from 6 months to 12 months.
As described above, Venture Capital Trusts have up to three years to invest new funds into Qualifying Companies before those new funds are included within the investment test. The legislation includes an additional condition to encourage early investment into Qualifying Companies. The new condition will apply to all new funds raised by the Company on or after 1 October 2018, with 30% of the new funds to be invested into Qualifying Companies within 12 months of the end of the accounting period in which the VCT issues the new shares.
The budget did not propose any changes to the tax reliefs available to new or existing shareholders, nor did it propose a
change to the 5-year minimum holding period required by those claiming the 30% income tax relief.
VCT STATUS
For now, to maintain its status as a Venture Capital Trust, the Company is required to invest at least 70% of the net funds raised in any one accounting period, into Qualifying Companies by the start of the accounting period containing the third anniversary of the date on which the funds were raised, often referred to as the ‘investment test’. I am pleased to report that we continue to perform well against this test and, at the period end, the investment test was 90.71% when measured using HMRC’s methodology. The Company satisfied all other tests relevant to its status as a Venture Capital Trust.
BOARD APPOINTMENT
I am pleased to announce the appointment of Ashton Charles Bradbury to the Board. Ashton started his career at Charterhouse Tilney stockbrokers in 1988 before moving to join Hill Samuel Investment Management and specialise in small company investment. After periods with Hill Samuel and HSBC Asset Management, Ashton joined Old Mutual Asset Management UK Ltd (now Old Mutual Global Investors) in 2000 and set up the Old Mutual UK Small and Mid-Cap team, subsequently becoming Head of Equities.
HARGREAVE HALE LIMITED TAKEOVER AND TRADING NAME
In July 2017, it was announced that Canaccord Genuity Group Inc. through its UK and Europe based wealth management business Canaccord Genuity Wealth Management agreed to acquire Hargreave Hale Limited and the transaction was completed in September 2017. The fund management division of Hargreave Hale Limited is now known as ‘Canaccord Genuity Fund Management’ which is a trading name of Hargreave Hale Limited.
INVESTMENT MANAGEMENT FEE
The Company and Hargreave Hale Limited, the Company's investment manager, have agreed to increase the investment management fee payable from an amount equal to 1.5% of the Company's net assets to an amount equal to 1.7% of the Company's net assets, with effect from 1 April 2019.
GENERAL DATA PROTECTION REGULATION
The General Data Protection Regulation (GDPR) is a regulation in EU law on data protection that became enforceable on 25 May 2018. GDPR aims primarily to give control to citizens over their personal data and to simplify the regulatory environment for international business. We have published a comprehensive privacy policy that sets out in detail how we process, store and use your personal data. A copy can be found on the Company website at www.hargreaveaimvcts.co.uk/document-library.
In practice, the introduction of GDPR will not change how we collect, process and store your personal data. It does, however, mean that we will need your express permission to share your personal data beyond our legitimate interest, contractual, legal and regulatory requirements. For example, you will need to give us your permission to share information about your shareholding with your financial adviser or accountant.
We have only ever used your data to fulfil our obligations in relation to the VCT. This will not change. We do not and will not sell your data to third parties. Third parties such as our printers and registrars are only allowed to use your data for matters relating to your investment. This is all set out in more detail in the privacy notice.
OUTLOOK
After a few quiet months, we have seen a welcome increase in the number of qualifying investment opportunities through new issues on AIM. We continue to see a steady flow of interesting private companies in which to invest. This allows us to expand the investment universe and the opportunity to back innovative and rapidly growing companies, whilst also helping to improve access to deal flow in periods of market stress.
Whilst UK and US political risk remains elevated, we are relieved to see that some of the more negative post-Brexit scenario analysis has not played out as predicted. Trump’s tax cut was helpful in that it supported risk assets whilst the UK and US continue the gradual process of normalising monetary policy. Employment is at its highest level since the war and equity markets hit record highs in the period under review.
Equity markets have responded well to the positive outlook with strong economic growth and benign monetary policy, albeit with a developing trend towards higher interest rates. Notwithstanding the challenges within UK retail, corporate profitability is generally healthy. Quality companies are commanding premium valuations and we are mindful of the potential downside were those to unwind in a meaningful way through a repricing of risk, be it political, economic or interest rate. Whilst this could pull markets lower, I believe we have a portfolio of good companies which in aggregate are well placed to deliver good returns over the long term. In summary, we were for the most part able to operate against a positive backdrop and I am pleased to report that your Company is in good health.
SIR AUBREY BROCKLEBANK BT.
Chairman
Date: 26 June 2018
INVESTMENT MANAGER’S REPORT
INTRODUCTION
This report covers the first half of the 2017/18 financial year, 1 October 2017 to 31 March 2018. The manager’s report contains references to movements in the NAV per share and Total Return per share (NAV per share plus distributed earnings per share). Movements in the NAV per share do not necessarily mirror the earnings per share (“EPS”) reported in the accounts and elsewhere, which convey the profit after tax for the company within the reported period as a function of the weighted average number of shares in issue for the period.
INVESTMENT REPORT
The period under review was mixed with equity markets first reacting positively to cuts in US corporation tax before entering a period of consolidation following escalating concerns that the fiscal stimulus was poorly timed given the strength of the US economy, strong labour markets and the outlook for inflation. The markets adjusted for further increases in the Fed Funds rate. A similar dynamic played out in the UK markets, although more recent data has suggested a weakening within the UK economy and a more benign outlook for interest rates.
By and large, the companies that we meet seem content enough with their end markets. There are, of course exceptions: casual dining remains challenging, as does retail and housing. But it is not across the board and even within the more challenging sectors, those with well managed, properly differentiated and keenly priced offerings continue to do well. We continue to see enough opportunity to deploy capital into interesting companies with attractive growth dynamics.
PERFORMANCE
In the six months to 31 March 2018, the NAV increased from 80.82 pence to 81.74 pence. A total of 2.25 pence per share was paid in dividends, giving investors a total return of 3.17 pence per share, which translates to a gain of 3.9%. During the same period the FTSE AIM All-Share Total Return gained 1.6%, whilst the FTSE 100 Total Return declined 2.5%.
The qualifying investments made a net contribution of 2.04 pence per share. The adjusting balance was the net of non-qualifying portfolio gains, running costs and investment income.
Zoo Digital was the biggest positive contributor to NAV performance (+159.5%, +2.54 pence per share) with updates confirming strong trading within its last financial year, driven by the migration towards digitally delivered (over the top) film and television programming. Although revenue growth is dominated by demand for their subtitling solution, we were encouraged to see good early demand for their new dubbing platform. Learning Technologies Group also performed well (+64.5%, +1.31 pence per share) with strong organic revenue growth supported by margin growth within Net Dimensions, acquired in April 2017. More recently, the company announced its largest acquisition to date, the $150m purchase of PPL. Craneware (+32.7%, +0.63 pence per share) has been a feature of the portfolio since 2007. Recent results and a number of material contract wins have added impetus to the share price. We marked SCA Investments/Gousto (+48.4%, +0.60 pence per share) higher following the close of a significant funding round at a premium to our entry price. Ideagen (+41.3%, +0.48 pence per share) was another to post a material increase in valuation following another period of strong organic growth supported by disciplined mergers and acquisitions.
The biggest (unrealised) losses within the period came from Idox (-54.3%, -0.76 pence per share) and Gfinity (-60.7%, -0.60 pence per share). Idox announced a material profit warning and the departure of its CEO. The reduction in profitability, has left the balance sheet exposed, but the company remains comfortably profitable and continues to be a market leader within its niche. Other losses came from Portr (-46.0%, -0.57 pence per share), which we marked to the lower price of its most recent round and Laundrapp (-50.6%, -0.56 pence per share), which we also marked lower following a reduction in their guidance for this year. A new leadership team is now in place. Eagle Eye Solutions (-32.8%, -0.47 pence per share) has drifted lower despite a sequence of upbeat announcements on current trading, new client wins and the launch of their solution with Loblaw.
We invested £2.91m into 9 qualifying companies over the period, including 5 further investments into existing qualifying companies; 3 IPOs and 1 placing. A further £2.61m was invested into qualifying companies through Hargreave Hale AIM VCT 2 plc over the same period.
Within the qualifying portfolio, we made a series of small disposals in Zoo Digital to manage the increased portfolio weighting that followed the substantial gains in the company’s share price. We also made a complete exit in TP Group and wrote Fusionex down to nil value and realised the loss in full following the company’s decision to delist from AIM. In time, this may prove to be excessively prudent but we are yet to receive disclosure on the company’s trading and solvency, although we note the company continues to release positive news flow.
PORTFOLIO STRUCTURE
The VCT is comfortably through the HMRC defined investment test and ended the period at 90.71% invested as measured by the HMRC investment test. By market value, the VCT had a 54.0% weighting to qualifying investments.
The allocation to non-qualifying equity investments decreased marginally from 19.6% to 18.0%. We continued to make use of the Marlborough Special Situations Fund as a temporary home for proceeds from fundraising, reducing the allocation from 10.9% to 9.6%. The non-qualifying investments contributed +1.54 pence per share to the overall gains. Fixed income increased from 0.0% to 0.1% and cash increased from 12.1% to 18.5%, largely due to the fundraising.
The HMRC investment tests are set out in Chapter 3 of Part 6 Income Tax Act 2007, which should be read in conjunction with this section of the investment manager’s report. Funds raised by VCTs are first included in the investment tests from the start of the accounting period containing the third anniversary of the date on which the funds were raised. Therefore, the allocation of qualifying investments as defined by the legislation can be different to the portfolio weighting as measured by market value relative to the net assets of the VCT.
MERGER OF HARGREAVE HALE AIM VCT 1 PLC AND HARGREAVE HALE AIM VCT 2 PLC
The merger of the Company and Hargreave Hale AIM VCT 2 was completed on 23 March 2018 and should allow for more cost effective and efficient management and administration. Changes made to the VCT legislation in the last five years led to significant overlaps of the companies’ portfolios, which was reflected in their closely aligned five year rolling returns. Given the significant overlap in their portfolios, the common investment policy, and the shared operational and support functions the boards could see little merit in continuing to operate the companies as two separate entities.
The assets and liabilities of Hargreave Hale AIM VCT 2 comprising fixed asset investments, cash, debtors and creditors were transferred to the Company. Investments were acquired at the closing market value on the scheme calculation date.
POST HALF YEAR UPDATE
Deal flow has been good since period end with 5 new qualifying investments made, 2 as follow-on investments into existing qualifying holdings and 3 into new qualifying companies. We also have several deals in the pipeline which we expect to complete in the coming weeks.
NAV performance has also been good post period end, with the net asset per share gaining 6.8% to 87.27 pence.
| STUART BROOKES |
| Company Secretary |
| Hargreave Hale AIM VCT 1 plc |
| 01253 754740 |
Date: 26 June 2018
INVESTMENT PORTFOLIO
As at 31 March 2018
| Qualifying Investments | Cost £000 | Valuation £000 | Valuation % | Net Assets % | Sector | ||
| Zoo Digital Group plc | 2,672 | 5,227 | 4.82 | 3.94 | Information Technology | ||
| Learning Technologies Group plc | 2,835 | 4,993 | 4.61 | 3.77 | Information Technology | ||
| SCA Investments Ltd (Gousto)** | 2,486 | 2,968 | 2.74 | 2.24 | Consumer Discretionary | ||
| Ideagen plc | 1,992 | 2,917 | 2.69 | 2.20 | Information Technology | ||
| Faron Pharmaceuticals Oy | 2,220 | 2,616 | 2.41 | 1.97 | Health Care | ||
| Quixant plc | 1,209 | 2,447 | 2.26 | 1.85 | Consumer Discretionary | ||
| Abcam plc | 55 | 2,043 | 1.89 | 1.54 | Health Care | ||
| Loopup Group plc | 1,204 | 1,982 | 1.83 | 1.50 | Information Technology | ||
| Science in Sport plc | 1,480 | 1,779 | 1.64 | 1.34 | Consumer Staples | ||
| Creo Medical Group plc | 1,429 | 1,775 | 1.64 | 1.34 | Health Care | ||
| Craneware plc | 125 | 1,691 | 1.56 | 1.28 | Health Care | ||
| Cohort plc | 619 | 1,639 | 1.51 | 1.24 | Industrials | ||
| Zappar Ltd** | 1,602 | 1,600 | 1.48 | 1.21 | Information Technology | ||
| AnimalCare Group plc | 720 | 1,571 | 1.45 | 1.19 | Health Care | ||
| Hardide plc | 1,637 | 1,518 | 1.40 | 1.15 | Materials | ||
| Eagle Eye Solutions Group plc | 1,643 | 1,472 | 1.36 | 1.11 | Information Technology | ||
| DP Poland plc | 1,391 | 1,413 | 1.30 | 1.07 | Consumer Discretionary | ||
| ULS Technology plc | 770 | 1,395 | 1.29 | 1.05 | Information Technology | ||
| Mexican Grill Ltd (A Preference Shares)** | 1,013 | 1,380 | 1.27 | 1.04 | Consumer Discretionary | ||
| Cloudcall Group plc | 1,138 | 1,217 | 1.12 | 0.92 | Telecommunication Services | ||
| Maxcyte Inc Com Stk USD0.01 (DI) | 668 | 1,096 | 1.01 | 0.83 | Health Care | ||
| Beeks Financial Cloud Group plc | 1,039 | 1,076 | 0.99 | 0.81 | Information Technology | ||
| Escape Hunt plc | 1,130 | 1,024 | 0.95 | 0.77 | Consumer Discretionary | ||
| Honest Brew Ltd** | 1,001 | 1,000 | 0.92 | 0.75 | Consumer Discretionary | ||
| Infinity Reliance Ltd (My 1st Years)** | 1,001 | 1,000 | 0.92 | 0.75 | Consumer Discretionary | ||
| Everyman Media Group plc | 600 | 973 | 0.90 | 0.73 | Consumer Discretionary | ||
| Portr Ltd** | 1,289 | 954 | 0.88 | 0.72 | Information Technology | ||
| FairFX Group plc | 751 | 902 | 0.83 | 0.68 | Information Technology | ||
| Laundrapp Ltd** | 1,238 | 873 | 0.81 | 0.66 | Information Technology | ||
| TrakM8 Holdings plc | 486 | 822 | 0.76 | 0.62 | Information Technology | ||
| Osirium Technologies plc | 859 | 815 | 0.75 | 0.62 | Information Technology | ||
| EKF Diagnostics Holdings plc | 565 | 810 | 0.75 | 0.61 | Health Care | ||
| Aquis Exchange Ltd** | 801 | 800 | 0.74 | 0.60 | Information Technology | ||
| PCI-PAL plc | 811 | 720 | 0.66 | 0.54 | Information Technology | ||
| CentralNic Group plc | 588 | 713 | 0.66 | 0.54 | Information Technology | ||
| Angle plc | 758 | 687 | 0.63 | 0.52 | Health Care | ||
| WANDisco plc | 347 | 664 | 0.61 | 0.50 | Information Technology | ||
| Belvoir Lettings plc | 762 | 617 | 0.57 | 0.47 | Real Estate | ||
| Gfinity plc | 772 | 614 | 0.57 | 0.46 | Information Technology | ||
| Clearstar Inc | 720 | 610 | 0.56 | 0.46 | Industrials | ||
| Fulcrum Utility Services Ltd | 580 | 606 | 0.56 | 0.46 | Utilities | ||
| Surface Transforms plc | 639 | 594 | 0.55 | 0.45 | Industrials | ||
| Velocity Composites plc | 624 | 546 | 0.50 | 0.41 | Industrials | ||
| Idox plc | 135 | 531 | 0.49 | 0.40 | Information Technology | ||
| Tristel plc | 543 | 524 | 0.48 | 0.40 | Health Care | ||
| Mirriad Advertising plc | 610 | 519 | 0.48 | 0.39 | Media | ||
| K3 Business Technology Group plc | 270 | 510 | 0.47 | 0.38 | Information Technology | ||
| Satellite Solutions Worldwide Group plc | 347 | 492 | 0.45 | 0.37 | Telecommunication Services | ||
| Plastics Capital plc | 478 | 488 | 0.45 | 0.37 | Materials | ||
| The Property Franchise Group plc | 377 | 449 | 0.41 | 0.34 | Real Estate | ||
| Fusion Antibodies plc | 415 | 442 | 0.41 | 0.33 | Health Care | ||
| Vertu Motors plc | 600 | 435 | 0.40 | 0.33 | Consumer Discretionary | ||
| TLA Worldwide plc | 439 | 416 | 0.38 | 0.31 | Consumer Discretionary | ||
| Instem plc | 297 | 411 | 0.38 | 0.31 | Health Care | ||
| Globaldata plc | 173 | 329 | 0.30 | 0.25 | Information Technology | ||
| APC Technology Group plc | 634 | 328 | 0.30 | 0.25 | Information Technology | ||
| Verona Pharma plc | 221 | 324 | 0.30 | 0.24 | Health Care | ||
| Sanderson Group plc | 298 | 273 | 0.25 | 0.21 | Information Technology | ||
| Maxcyte Inc Com Stk USD0.01 (DI/REG S) | 264 | 246 | 0.23 | 0.19 | Health Care | ||
| Intercede Group plc | 305 | 236 | 0.22 | 0.18 | Information Technology | ||
| Premaitha Health plc | 521 | 216 | 0.20 | 0.16 | Health Care | ||
| Imaginatik plc | 422 | 213 | 0.20 | 0.16 | Information Technology | ||
| Lidco Group plc | 307 | 193 | 0.18 | 0.15 | Health Care | ||
| Mycelx Technologies Corporation plc | 361 | 182 | 0.17 | 0.14 | Industrials | ||
| Universe Group plc | 210 | 180 | 0.17 | 0.14 | Information Technology | ||
| Ilika plc | 307 | 160 | 0.15 | 0.12 | Industrials | ||
| Mexican Grill Ltd (Ordinary Shares)** | 113 | 153 | 0.14 | 0.12 | Consumer Discretionary | ||
| Pressure Technologies plc | 170 | 153 | 0.14 | 0.12 | Energy | ||
| Reneuron Group plc | 606 | 153 | 0.14 | 0.12 | Health Care | ||
| Genedrive plc | 203 | 130 | 0.12 | 0.10 | Health Care | ||
| Porta Communications plc | 549 | 127 | 0.12 | 0.10 | Consumer Discretionary | ||
| Omega Diagnostics Group plc | 129 | 125 | 0.11 | 0.09 | Health Care | ||
| Medaphor Group plc | 300 | 100 | 0.09 | 0.08 | Consumer Discretionary | ||
| Paragon Entertainment Ltd | 87 | 82 | 0.08 | 0.06 | Industrials | ||
| Egdon Resources plc | 158 | 80 | 0.07 | 0.06 | Energy | ||
| Mirada plc | 96 | 75 | 0.07 | 0.06 | Information Technology | ||
| Redcentric plc | 42 | 41 | 0.04 | 0.03 | Information Technology | ||
| Tasty plc | 288 | 37 | 0.03 | 0.03 | Consumer Discretionary | ||
| Microsaic Systems plc | 26 | 35 | 0.03 | 0.03 | Information Technology | ||
| Midatech Pharma plc | 53 | 34 | 0.03 | 0.03 | Health Care | ||
| Mporium Group plc | 33 | 30 | 0.03 | 0.02 | Information Technology | ||
| Flowgroup plc | 26 | 3 | - | - | Industrials | ||
| Fusionex International plc* | - | - | - | - | Information Technology | ||
| Total Qualifying Investments | 57,682 | 71,614 | 66.06 | 54.08 | |||
| Non-Qualifying Investments | Cost £000 | Valuation £000 | Valuation % | Net Assets % | Sector | ||
| Scottish Amicable 7.5% 2049 | 152 | 152 | 0.14 | 0.11 | |||
| Total – Corporate bonds | 152 | 152 | 0.14 | 0.11 | |||
| MFM Special Situations Fund** | 11,917 | 12,712 | 11.73 | 9.59 | |||
| Total – Unit Trusts | 11,917 | 12,712 | 11.73 | 9.59 | |||
| Dechra Pharmaceuticals plc | 1,402 | 1,740 | 1.61 | 1.31 | Health Care | ||
| NMC Health plc | 1,268 | 1,700 | 1.57 | 1.28 | Health Care | ||
| Melrose Industries plc | 1,455 | 1,502 | 1.39 | 1.13 | Industrials | ||
| On the Beach Group plc | 1,137 | 1,437 | 1.33 | 1.08 | Consumer Discretionary | ||
| Royal Dutch Shell plc | 1,327 | 1,366 | 1.26 | 1.03 | Energy | ||
| BP plc | 1,203 | 1,246 | 1.15 | 0.94 | Energy | ||
| Fulcrum Utility Services Ltd | 408 | 1,121 | 1.03 | 0.85 | Utilities | ||
| Anglo American plc | 931 | 1,063 | 0.98 | 0.80 | Materials | ||
| Hilton Food Group plc | 907 | 1,014 | 0.94 | 0.77 | Consumer Discretionary | ||
| Sanne Group plc | 887 | 914 | 0.84 | 0.69 | Financials | ||
| Ascential plc | 768 | 898 | 0.83 | 0.68 | Consumer Discretionary | ||
| JD Sports Fashion plc | 855 | 818 | 0.76 | 0.62 | Consumer Discretionary | ||
| Charter Court Financial Services Group plc | 732 | 798 | 0.74 | 0.60 | Financials | ||
| Learning Technologies Group plc | 453 | 759 | 0.70 | 0.57 | Information Technology | ||
| XP Power Ltd | 660 | 691 | 0.64 | 0.52 | Industrials | ||
| Wizz Air Holdings plc | 622 | 667 | 0.62 | 0.50 | Consumer Discretionary | ||
| Prudential plc | 561 | 534 | 0.49 | 0.40 | Financials | ||
| Lloyds Banking Group plc | 549 | 517 | 0.48 | 0.39 | Financials | ||
| FDM Group (Holdings) plc | 489 | 505 | 0.47 | 0.38 | Information Technology | ||
| Bakkavor Group plc | 518 | 496 | 0.46 | 0.37 | Consumer Discretionary | ||
| Everyman Media Group plc | 293 | 472 | 0.44 | 0.36 | Consumer Discretionary | ||
| Clipper Logistics plc | 482 | 463 | 0.43 | 0.35 | Consumer Discretionary | ||
| Quixant plc | 159 | 452 | 0.42 | 0.34 | Consumer Discretionary | ||
| Just Eat plc | 409 | 419 | 0.39 | 0.32 | Information Technology | ||
| Renishaw plc | 415 | 405 | 0.37 | 0.31 | Information Technology | ||
| Cohort plc | 368 | 362 | 0.33 | 0.27 | Industrials | ||
| Horizon Discovery Group plc | 374 | 330 | 0.30 | 0.25 | Health Care | ||
| IntegraFin Holdings plc | 279 | 327 | 0.30 | 0.25 | Financials | ||
| Mycelx Technologies Corporation plc | 298 | 211 | 0.20 | 0.16 | Industrials | ||
| Mexican Grill Ltd (A Preference Shares)** | 135 | 148 | 0.14 | 0.11 | Consumer Discretionary | ||
| Regent Pacific Group Ltd | 201 | 124 | 0.11 | 0.09 | Health Care | ||
| Amerisur Resources plc | 212 | 92 | 0.09 | 0.07 | Energy | ||
| Eagle Eye Solutions Group plc | 87 | 85 | 0.08 | 0.06 | Information Technology | ||
| The Fulham Shore plc | 69 | 65 | 0.06 | 0.05 | Consumer Discretionary | ||
| Egdon Resources plc | 47 | 45 | 0.04 | 0.03 | Energy | ||
| Reneuron Group plc | 119 | 45 | 0.04 | 0.03 | Health Care | ||
| Midatech Pharma plc | 39 | 26 | 0.02 | 0.02 | Health Care | ||
| Mexican Grill Ltd (Ordinary Shares)** | 26 | 19 | 0.02 | 0.01 | Consumer Discretionary | ||
| Genagro Ltd** | 2 | 2 | - | - | Industrials | ||
| Total – Non-Qualifying equities | 21,146 | 23,878 | 22.07 | 17.99 | |||
| Total –Non-Qualifying Investments | 33,215 | 36,742 | 33.94 | 27.69 | |||
| Total investments | 90,897 | 108,356 | 100.00 | 81.77 | |||
| Cash at bank | 24,505 | 18.49 | |||||
| Prepayments & Accruals | (338 | ) | (0.26 | ) | |||
| Net Assets | 132,523 | 100.00 | |||||
| * Unquoted Company holding of less than £500 | |||||||
| **Unquoted Companies | |||||||
The majority of listed investments held within the portfolio are listed, headquartered and registered in the UK with the exception of the following:
| Listed | Headquartered | Registered | |
| AIM listed Investments: | |||
| Clearstar Inc | UK | Cayman Islands | Cayman Islands |
| DP Poland plc | UK | Poland | UK |
| Faron Pharmaceuticals Oy | UK | Finland | Finland |
| Fulcrum Utility Services Ltd | UK | UK | Cayman Islands |
| Maxcyte Inc | UK | USA | USA |
| Mycelx Technologies Corporation plc | UK | USA | USA |
| Paragon Entertainment Ltd | UK | UK | Cayman Islands |
| Regent Pacific Group Ltd | Hong Kong | Hong Kong | Cayman Islands |
| Royal Dutch Shell plc | UK | Netherlands | UK |
| Sanne Group plc | UK | Jersey | Jersey |
| WANDisco plc | UK | UK and USA | Jersey |
| Wizz Air Holdings plc | UK | Switzerland | Jersey |
| XP Power Ltd | UK | Singapore | Singapore |
| Unlisted private companies: | |||
| Aquis Exchange Ltd | - | UK | UK |
| Brigantes Energy Ltd | - | UK | UK |
| Fusionex International plc | - | UK | Jersey |
| Genagro Ltd | - | Jersey | Jersey |
| Honest Brew Ltd | - | UK | UK |
| Infinity Reliance Ltd (My 1st Years) | - | UK | UK |
| Infoserve Group plc | - | UK | UK |
| Invocas Group plc | - | UK | UK |
| Laundrapp Ltd | - | UK | UK |
| Mexican Grill Ltd | - | UK | UK |
| Portr Ltd | - | UK | UK |
| SCA Investments Ltd (Gousto) | - | UK | UK |
| Zappar Ltd | - | UK | UK |
| Co-Investment | |||
| As at 31 March 2018, other funds managed by Hargreave Hale Ltd were also invested in all of the investments held within the Company’s portfolio with the exception of the following: | |||
| Angle plc | Anglo American plc | Aquis Exchange Ltd | Ascential plc |
| Brigantes Energy Ltd | FairFX Group plc | Fusionex International plc | Genedrive plc |
| Honest Brew Ltd | Infoserve Group plc | Intercede Group plc | Just Eat plc |
| Laundrapp Ltd | Lidco Group plc | Medaphor Group plc | Mexican Grill Ltd |
| Microsaic Systems plc | Mirada plc | Mirriad Advertising plc | Mporium Group plc |
| Omega Diagnostics Group plc | Paragon Entertainment Ltd | Plastics Capital plc | Porta Communications plc |
| Portr Ltd | Premaitha Health plc | Regent Pacific Group Ltd | Reneuron Group plc |
| Renishaw plc | Satellite Solutions Worldwide Group plc | Scot Ami 8.5% 2049 | Tasty plc |
| TrakM8 Holdings plc | Tristel plc | Universe Group plc | Vertu Motors plc |
| WANDisco plc | Wizz Air Holdings plc | Zappar Ltd | |
TOP TEN INVESTMENTS
As at 31 March 2018 (By Market Value)
The top 10 equity investments are shown below; each is valued by reference to the bid price, or, in the case of unquoted companies, values are either based on the last arm’s length transaction or valuation techniques, such as earnings multiples. Forecasts, where given, are drawn from a combination of broker research and/or Bloomberg consensus forecasts and exclude amortisation, share based payments and exceptional items. Forecasts are in relation to a period end for which the company results are yet to be released. The net cash values are drawn from published accounts in most cases.
The costs as shown below reflect the book cost to Hargreave Hale AIM VCT 1 plus the transfer value of the equivalent holding in Hargreave Hale AIM VCT 2. As such, the values shown below may not reflect the cash investment into each of the holdings, and in some cases may be materially higher than the actual sum invested.
| Learning Technologies Group plc | 87.6p | |||
| Investment date | November 2014 | Forecasts for the year to | December 2018 | |
| Equity held | 1.14% | Turnover (£’000) | 97,800 | |
| Av. Purchase Price | 50.1p | Profit/(loss) before tax (£’000) | 19,300 | |
| Cost (£’000) | 3,288 | Net Cash/(Debt) December 2017 (£'000) | 1,048 | |
| Valuation (£’000) | 5,752 | Net Assets December 2017 (£'000) | 76,841 | |
| COMPANY DESCRIPTION | ||||
| Learning Technologies Group provides a comprehensive and integrated range of e-learning services and technologies to corporate and government clients. LTG is making good progress towards its goal of establishing a substantial global organisation of specialist digital learning businesses from Europe, US, Latin America and Asia to form a market-leading technologies agency. | ||||
| Zoo Digital Group plc | 96.0p | ||||
| Investment date | April 2017 | Forecasts for the year to | March 2018 | ||
| Equity held | 7.38% | Turnover ($’000) | 27,900 | ||
| Av. Purchase Price | 49.1p | Profit/(loss) before tax ($’000) | 500 | ||
| Cost (£’000) | 2,672 | Net Cash/(Debt) September 2017 ($'000) | (3,924) | ||
| Valuation (£’000) | 5,227 | Net Assets September 2017 ($'000) | 7,390 | ||
| COMPANY DESCRIPTION | |||||
| Zoo Digital is a provider of subtitling, dubbing and digital distribution services for the global entertainment industry. Zoo Digital combine their own technology with talented client teams across the globe to translate original video programmes into more than 50 foreign languages. Their technology helps process the edited digital materials to meet the technical delivery requirements of a growing number of online video services. | |||||
| SCA Investments Ltd (Gousto) | 4,434.0p | ||||
| Investment date | July 2017 | Results for the year to | December 2016 | ||
| Equity held | 2.41% | Turnover (£’000) | 12,755 | ||
| Av. Purchase Price | 3,714.1p | Profit/(loss) before tax (£’000) | (6,739) | ||
| Cost (£’000) | 2,486 | Net Cash/(Debt) December 2016 (£’000) | 5,407 | ||
| Valuation (£’000) | 2,968 | Net Assets December 2016 (£’000) | 6,512 | ||
| Income recognised in period (£) | 0 | ||||
| COMPANY DESCRIPTION | |||||
| Founded in February 2012, Gousto is an e-commerce company offering recipe kit boxes which include fresh ingredients for step-by-step chef designed recipes to be made at home. Shoppers select meals from a variety of options on Gousto’s e-commerce platform. Gousto then delivers the pre-proportioned ingredients to the doorstep, along with instructions on how to prepare the meal. | |||||
| Ideagen plc | 113.0p | ||||
| Investment date | December 2014 | Forecasts for the year to | April 2018 | ||
| Equity held | 1.29% | Turnover (£’000) | 36,100 | ||
| Av. Purchase Price | 77.2p | Profit/(loss) before tax (£’000) | 9,700 | ||
| Cost (£’000) | 1,992 | Net Cash/(Debt) April 2017 (£'000) | 4,205 | ||
| Valuation (£’000) | 2,917 | Net Assets April 2017 (£'000) | 46,419 | ||
| COMPANY DESCRIPTION | |||||
| Ideagen is a supplier of compliance based information management software with operations in the UK and the United States. The company specialises in enterprise governance, risk and compliance and healthcare solutions for organisations operating within highly regulated industries. Ideagen provides complete content lifecycle solutions that enable organisations to meet their regulatory and quality compliance standards, helping them to reduce costs and improve efficiency. | |||||
| Quixant plc | 402.0p | ||||
| Investment date | May 2013 | Forecasts for the year to | December 2018 | ||
| Equity held | 1.09% | Turnover ($’000) | 120,000 | ||
| Av. Purchase Price | 189.7p | Profit/(loss) before tax ($’000) | 19,400 | ||
| Cost (£’000) | 1,368 | Net Cash/(Debt) December 2017 ($'000) | 4,459 | ||
| Valuation (£’000) | 2,899 | Net Assets December 2017 ($'000) | 47,260 | ||
| COMPANY DESCRIPTION | |||||
| Quixant designs and manufactures complete advanced hardware and software solutions for the pay-for-play gaming and slot machine industry. Quixant's specialised products provide an all-in-one solution, based on PC technology but with additional hardware features and operating software developed specifically to address the requirements of the gaming industry. | |||||
| Faron Pharmaceuticals Oy | 810.0p | |||||
| Investment date | September 2016 | Forecasts for the year to | December 2018 | |||
| Equity held | 1.04% | Turnover (€’000) | 1,300 | |||
| Av. Purchase Price | 687.3p | Profit/(loss) before tax (€’000) | (25,100) | |||
| Cost (£’000) | 2,220 | Net Cash/(Debt) December 2017 (€'000) | 6,884 | |||
| Valuation (£’000) | 2,616 | Net Assets December 2017 (€'000) | 4,743 | |||
| COMPANY DESCRIPTION | ||||||
| Faron Pharmaceuticals is a clinical stage biopharmaceutical company developing novel treatments for medical conditions with significant unmet needs. The company currently has a pipeline focusing on acute organ traumas, vascular damage and cancer immunotherapy. | ||||||
| Abcam plc | 1,238.0p | |||
| Investment date | October 2005 | Forecasts for the year to | June 2018 | |
| Equity held | 0.08% | Turnover (£’000) | 233,000 | |
| Av. Purchase Price | 33.3p | Profit/(loss) before tax (£’000) | 84,000 | |
| Cost (£’000) | 55 | Net Cash/(Debt) June 2017 (£'000) | 84,752 | |
| Valuation (£’000) | 2,043 | Net Assets June 2017 (£'000) | 307,119 | |
| COMPANY DESCRIPTION | ||||
| Abcam is a global life sciences company providing highly validated antibodies and other binders and assays to the research and clinical communities to help advance the understanding of biology and cause of disease. The company’s customers include universities, research institutes, and pharmaceutical and biotechnology companies in countries around the world. | ||||
| Cohort plc | 345.0p | |||
| Investment date | February 2006 | Forecasts for the year to | April 2018 | |
| Equity held | 1.16% | Turnover (£’000) | 120,000 | |
| Av. Purchase Price | 207.8p | Profit/(loss) before tax (£’000) | 15,500 | |
| Cost (£’000) | 987 | Net Cash/(Debt) April 2017 (£'000) | 8,472 | |
| Valuation (£’000) | 2,001 | Net Assets April 2017 (£'000) | 73,988 | |
| COMPANY DESCRIPTION | ||||
| Cohort, through its subsidiary, provides a range of technical services to clients in the defence and security sectors. | ||||
| Loopup Group plc | 420.0p | |||
| Investment date | August 2016 | Forecasts for the year to | December 2018 | |
| Equity held | 1.12% | Turnover (£’000) | 34,600 | |
| Av. Purchase Price | 255.1p | Profit/(loss) before tax (£’000) | 3,700 | |
| Cost (£’000) | 1,204 | Net Cash/(Debt) December 2017 (£'000) | 2,902 | |
| Valuation (£’000) | 1,982 | Net Assets December 2017 (£'000) | 10,455 | |
| COMPANY DESCRIPTION | ||||
| LoopUp Group is a global software-as-a-service provider of remote meetings. | ||||
| Science in Sport plc | 74.0p | ||||
| Investment date | April 2014 | Forecasts for the year to | December 2018 | ||
| Equity held | 3.57% | Turnover (£’000) | 19,800 | ||
| Av. Purchase Price | 61.5p | Profit/(loss) before tax (£’000) | (4,400) | ||
| Cost (£’000) | 1,480 | Net Cash/(Debt) December 2017 (£'000) | 16,570 | ||
| Valuation (£’000) | 1,779 | Net Assets December 2017 (£'000) | 22,808 | ||
| COMPANY DESCRIPTION | |||||
| Science in Sport manufactures and sells sports nutrition products. The company develops and distributes food, nutritional supplements, and beverages formulated to hydrate, energise, recover, and enhance sports performance. | |||||
For further information please contact:
STUART BROOKES
Company Secretary
Hargreave Hale AIM VCT 1 plc
01253 754740
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
in respect of the half-yearly financial report
In accordance with Disclosure Transparency Rule (DTR) 4.2.10, Aubrey Brocklebank Bt (Chairman), David Brock, Oliver Bedford and Ashton Bradbury, the Directors, confirm that to the best of their knowledge:
- The half yearly financial results have been prepared in accordance with UK GAAP and give a true and fair review of the assets, liabilities, financial position and profit of the Company as at 31 March 2018 as required by DTR 4.2.4;
- The interim management report included within the chairman’s statement, investment manager’s report, investment portfolio and notes to the half yearly report includes a fair review of the information required by the Financial Conduct Authority Disclosure and Transparency Rules, being;
- an indication of the important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements;
- a description of the principal risks and uncertainties for the remaining six months of the year; and
- a description of related party transactions that have taken place in the first six months of the current financial year, that may have materially affected the financial position or performance of the Company during that period and any changes in the related party transactions described in the last annual report that could do so.
- an indication of the important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements;
On behalf of the Board of Directors.
SIR AUBREY BROCKLEBANK BT.
Chairman
Date: 26 June 2018
CONDENSED INCOME STATEMENT
for the six month period to 31 March 2018 (unaudited)
| For the six month period to | For the six month period to | |||||||||||||||||
| 31 March 2018 (unaudited) | 31 March 2017 (unaudited) | |||||||||||||||||
| Revenue | Capital | Total | Revenue | Capital | Total | |||||||||||||
| £ | 000 | £ | 000 | £ | 000 | £ | 000 | £ | 000 | £ | 000 | |||||||
| Realised gains on investments held at fair value through profit or loss | - | 2,090 | 2,090 | - | 757 | 757 | ||||||||||||
| Unrealised gains on investments held at fair value through profit or loss | - | 564 | 564 | - | 2,590 | 2,590 | ||||||||||||
| Income | 271 | - | 271 | 175 | 15 | 190 | ||||||||||||
| ----------- | ----------- | ----------- | ----------- | ----------- | ----------- | |||||||||||||
| 271 | 2,654 | 2,925 | 175 | 3,362 | 3,537 | |||||||||||||
| Management fee | (138 | ) | (414 | ) | (552 | ) | (94 | ) | (282 | ) | (376 | ) | ||||||
| Other expenses | (485 | ) | - | (485 | ) | (187 | ) | (32 | ) | (219 | ) | |||||||
| ----------- | ----------- | ----------- | ----------- | ----------- | ----------- | |||||||||||||
| (623 | ) | (414 | ) | (1,037 | ) | (281 | ) | (314 | ) | (595 | ) | |||||||
| ----------- | ----------- | ----------- | ----------- | ----------- | ----------- | |||||||||||||
| (Loss)/gain on ordinary activities before taxation | (352 | ) | 2,240 | 1,888 | (106 | ) | 3,048 | 2,942 | ||||||||||
| Taxation | - | - | - | - | - | - | ||||||||||||
| ----------- | ----------- | ----------- | ----------- | ----------- | ----------- | |||||||||||||
| (Loss)/gain on ordinary activities after taxation | (352 | ) | 2,240 | 1,888 | (106 | ) | 3,048 | 2,942 | ||||||||||
| ----------- | ---------- | ---------- | ----------- | ---------- | ---------- | |||||||||||||
| (Loss)/gain per share basic and diluted (Note 2) | (0.43)p | 2.71p | 2.28p | (0.14)p | 4.12p | 3.98p | ||||||||||||
The total column of this statement is the income statement of the Company. All revenue and capital items in the above statement derive from continuing operations. The Company has no other comprehensive income other than the results for the six month period as set out above. The accompanying notes are an integral part of these financial statements.
CONDENSED INCOME STATEMENT
for the year ended 30 September 2017 (audited)
| For the year to | |||||||||
| 30 September 2017 (audited) | |||||||||
| Revenue | Capital | Total | |||||||
| £ | 000 | £ | 000 | £ | 000 | ||||
| Realised losses on investments held at fair value through profit or loss | - | (237 | ) | (237 | ) | ||||
| Unrealised gains on investments held at fair value through profit or loss | - | 7,586 | 7,586 | ||||||
| Income | 446 | 15 | 461 | ||||||
| ----------- | ----------- | ----------- | |||||||
| 446 | 7,364 | 7,810 | |||||||
| Management fee | (216 | ) | (648 | ) | (864 | ) | |||
| Other expenses | (325 | ) | (49 | ) | (374 | ) | |||
| ----------- | ----------- | ----------- | |||||||
| (541 | ) | (697 | ) | (1,238 | ) | ||||
| ----------- | ----------- | ----------- | |||||||
| (Loss)/gain on ordinary activities before taxation | (95 | ) | 6,667 | 6,572 | |||||
| Taxation | - | - | - | ||||||
| ----------- | ----------- | ----------- | |||||||
| (Loss)/gain after taxation | (95 | ) | 6,667 | 6,572 | |||||
| ----------- | ----------- | ----------- | |||||||
| (Loss)/gain per share basic and diluted (Note 2) | (0.13)p | 8.99p | 8.86p | ||||||
The total column of this statement is the income statement of the Company. All revenue and capital items in the above statement derive from continuing operations. The Company has no other comprehensive income other than the results for the year as set out above. The accompanying notes are an integral part of these financial statements.
CONDENSED BALANCE SHEET
as at 31 March 2018 (unaudited)
| 31 March | 31 March | 30 September | |||||||
| 2018 | 2017 | 2017 | |||||||
| (unaudited) | (unaudited) | (audited) | |||||||
| £ | 000 | £ | 000 | £ | 000 | ||||
| Fixed assets | |||||||||
| Investments at fair value through profit or loss | 108,355 | 51,795 | 58,125 | ||||||
| ----------- | ----------- | ----------- | |||||||
| Current assets | |||||||||
| Prepayments and accrued income | 290 | 40 | 63 | ||||||
| Cash at bank | 24,506 | 11,930 | 8,007 | ||||||
| ----------- | ----------- | ----------- | |||||||
| 24,796 | 11,970 | 8,070 | |||||||
| Creditors: amounts falling due within one year | |||||||||
| Accruals and deferred income | (628) | (202) | (206) | ||||||
| ----------- | ----------- | ----------- | |||||||
| Net current assets | 24,168 | 11,768 | 7,864 | ||||||
| ----------- | ----------- | ----------- | |||||||
| Net assets | 132,523 | 63,563 | 65,989 | ||||||
| ----------- | ----------- | ----------- | |||||||
| Capital and Reserves | |||||||||
| Called up share capital | 1,621 | 814 | 816 | ||||||
| Share premium | 104,229 | 36,863 | 37,515 | ||||||
| Capital redemption reserve | 50 | 31 | 37 | ||||||
| Special reserve | 12,636 | 17,386 | 15,522 | ||||||
| Capital reserve - realised | (2,968) | (3,267) | (4,644) | ||||||
| Capital reserve - unrealised | 17,801 | 12,241 | 17,237 | ||||||
| Revenue reserve | (846) | (505) | (494) | ||||||
| ----------- | ----------- | ----------- | |||||||
| Total shareholders' funds | 132,523 | 63,563 | 65,989 | ||||||
| ----------- | ----------- | ----------- | |||||||
| Net asset value per share basic and diluted (Note 4) | 81.74p | 78.12p | 80.82p | ||||||
The accompanying notes are an integral part of these financial statements.
CONDENSED STATEMENT OF CHANGES IN EQUITY
for the six month period to 31 March 2018 (unaudited)
| Ordinary Shares | Share | Share | Capital | Special | Capital | Capital | Revenue | Total | ||||||||||||||
| capital | premium | redemption | reserve | reserve | reserve | reserve | ||||||||||||||||
| reserve | realised | unrealised | ||||||||||||||||||||
| £ | 000 | £ | 000 | £ | 000 | £ | 000 | £ | 000 | £ | 000 | £ | 000 | £ | 000 | |||||||
| At 1 October 2017 | 816 | 37,515 | 37 | 15,522 | (4,644 | ) | 17,237 | (494 | ) | 65,989 | ||||||||||||
| Share buybacks | (13 | ) | 13 | (1,071 | ) | (1,071 | ) | |||||||||||||||
| Share issues | 818 | 66,902 | 67,720 | |||||||||||||||||||
| Issue costs | (188 | ) | (188 | ) | ||||||||||||||||||
| Equity dividends paid | (1,815 | ) | (1,815 | ) | ||||||||||||||||||
| Realised gain on investments | 2,090 | 2,090 | ||||||||||||||||||||
| Unrealised gain on investments | 564 | 564 | ||||||||||||||||||||
| Management fee charged to capital | (414 | ) | (414 | ) | ||||||||||||||||||
| Revenue (loss) after taxation for the period | (352 | ) | (352 | ) | ||||||||||||||||||
| Total gain/(loss) after taxation | 1,676 | 564 | (352 | ) | 1,888 | |||||||||||||||||
| ---------- | ----------- | ----------- | ----------- | ---------- | ----------- | ----------- | ---------- | |||||||||||||||
| At 31 March 2018 | 1,621 | 104,229 | 50 | 12,636 | (2,968 | ) | 17,801 | (846 | ) | 132,523 | ||||||||||||
| ---------- | ----------- | ----------- | ----------- | ---------- | ----------- | ----------- | ---------- | |||||||||||||||
Reserves available for distribution are capital reserve realised, special reserve and revenue reserve. Total distributable reserves at 31 March 2018 were £8.82 million. The accompanying notes are an integral part of these financial statements.
CONDENSED STATEMENT OF CHANGES IN EQUITY
for the six month period to 31 March 2017 (unaudited)
| Ordinary Shares | Share | Share | Capital | Special | Capital | Capital | Revenue | Total | ||||||||||||||
| capital | premium | redemption | reserve | reserve | reserve | reserve | ||||||||||||||||
| reserve | realised | unrealised | ||||||||||||||||||||
| £ | 000 | £ | 000 | £ | 000 | £ | 000 | £ | 000 | £ | 000 | £ | 000 | £ | 000 | |||||||
| At 1 October 2016 | 620 | 21,845 | 28 | 19,052 | (3,725 | ) | 9,651 | (399 | ) | 47,072 | ||||||||||||
| Share buybacks | (3 | ) | 3 | (236 | ) | (236 | ) | |||||||||||||||
| Share issues | 197 | 15,361 | 15,558 | |||||||||||||||||||
| Issue costs | (343 | ) | (343 | ) | ||||||||||||||||||
| Equity dividends paid | (1,430 | ) | (1,430 | ) | ||||||||||||||||||
| Realised gain on investments | 757 | 757 | ||||||||||||||||||||
| Unrealised gain on investments | 2,590 | 2,590 | ||||||||||||||||||||
| Management fee charged to capital | (282 | ) | (282 | ) | ||||||||||||||||||
| Arrangement fee income | 15 | 15 | ||||||||||||||||||||
| Due diligence investment costs | (32 | ) | (32 | ) | ||||||||||||||||||
| Revenue (loss) after taxation for the period | (106 | ) | (106 | ) | ||||||||||||||||||
| Total gain/(loss) after taxation | 458 | 2,590 | (106 | ) | 2,942 | |||||||||||||||||
| ---------- | ----------- | ----------- | ----------- | ---------- | ----------- | ----------- | ---------- | |||||||||||||||
| At 31 March 2017 | 814 | 36,863 | 31 | 17,386 | (3,267 | ) | 12,241 | (505 | ) | 63,563 | ||||||||||||
| ---------- | ----------- | ----------- | ----------- | ---------- | ----------- | ----------- | ---------- | |||||||||||||||
Reserves available for distribution are capital reserve realised, special reserve and revenue reserve. Total distributable reserves at 31 March 2017 were £13.61 million. The accompanying notes are an integral part of these financial statements.
CONDENSED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September 2017 (audited)
| Ordinary Shares | Share | Share | Capital | Special | Capital | Capital | Revenue | Total | ||||||||||||||
| capital | premium | redemption | reserve | reserve | reserve | reserve | ||||||||||||||||
| reserve | realised | unrealised | ||||||||||||||||||||
| £ | 000 | £ | 000 | £ | 000 | £ | 000 | £ | 000 | £ | 000 | £ | 000 | £ | 000 | |||||||
| At 1 October 2016 | 620 | 21,845 | 28 | 19,052 | (3,725 | ) | 9,651 | (339 | ) | 47,072 | ||||||||||||
| Share buybacks | (9 | ) | 9 | (668 | ) | (668 | ) | |||||||||||||||
| Share issues | 205 | 16,013 | 16,218 | |||||||||||||||||||
| Issue costs | (343 | ) | (343 | ) | ||||||||||||||||||
| Equity dividends paid | (2,862 | ) | (2,862 | ) | ||||||||||||||||||
| Realised loss on investments | (237 | ) | (237 | ) | ||||||||||||||||||
| Unrealised gain on investments | 7,586 | 7,586 | ||||||||||||||||||||
| Management fee charged to capital | (648 | ) | (648 | ) | ||||||||||||||||||
| Arrangement fee income | 15 | 15 | ||||||||||||||||||||
| Due diligence investment costs | (49 | ) | (49 | ) | ||||||||||||||||||
| Revenue (loss) after taxation for the period | (95 | ) | (95 | ) | ||||||||||||||||||
| Total (loss)/gain after taxation | (919 | ) | 7,586 | (95 | ) | 6,572 | ||||||||||||||||
| ---------- | ----------- | ----------- | ----------- | ---------- | ----------- | ----------- | ---------- | |||||||||||||||
| At 30 September 2017 | 816 | 37,515 | 37 | 15,522 | (4,644 | ) | 17,237 | (494 | ) | 65,989 | ||||||||||||
| ---------- | ----------- | ----------- | ----------- | ---------- | ----------- | ----------- | ---------- | |||||||||||||||
Reserves available for distribution are capital reserve realised, special reserve and revenue reserve. Total distributable reserves at 30 September 2017 were £10.4 million. The accompanying notes are an integral part of these financial statements.
CONDENSED STATEMENT OF CASH FLOWS
for the six month period to 31 March 2018 (unaudited)
| 31 March 2018 | 31 March 2017 | 30 September 2017* | |||||||
| (unaudited) | (unaudited) | (audited) | |||||||
| £ | 000 | £ | 000 | £ | 000 | ||||
| Total gain on ordinary activities after taxation | 1,888 | 2,942 | 6,572 | ||||||
| Realised (gain)/loss on investments | (2,090 | ) | (757 | ) | 237 | ||||
| Unrealised (gain) on investments | (564 | ) | (2,590 | ) | (7,586 | ) | |||
| (Increase)/Decrease in debtors | (227 | ) | 4 | (19 | ) | ||||
| Increase in creditors | 422 | 11 | 15 | ||||||
| ----------- | ----------- | ----------- | |||||||
| Net cash (outflow) from operating activities | (571 | ) | (390 | ) | (781 | ) | |||
| Cash flows from investing activities | |||||||||
| Purchase of investments | (54,589 | ) | (14,270 | ) | (22,657 | ) | |||
| Sale of investments | 7,013 | 4,394 | 10,453 | ||||||
| ----------- | ----------- | ----------- | |||||||
| Net cash (outflow) from investing activities | (47,576 | ) | (9,876 | ) | (12,204 | ) | |||
| Cash flows from financing activities | |||||||||
| Proceeds from share issues | 11,114 | 15,558 | 16,218 | ||||||
| Proceeds from merger | 56,606 | - | - | ||||||
| Share issue costs | (188 | ) | (343 | ) | (343 | ) | |||
| Share buybacks | (1,071 | ) | (236 | ) | (668 | ) | |||
| Dividends paid | (1,815 | ) | (1,430 | ) | (2,862 | ) | |||
| ----------- | ----------- | ----------- | |||||||
| Net cash from financing activities | 64,646 | 13,549 | 12,345 | ||||||
| ----------- | ----------- | ----------- | |||||||
| Increase in cash | 16,500 | 3,283 | (640 | ) | |||||
| ----------- | ----------- | ----------- | |||||||
| Analysis of net funds | |||||||||
| Opening cash | 8,007 | 8,647 | 8,647 | ||||||
| Cash movement | 16,499 | 3,283 | (640 | ) | |||||
| Closing cash | 24,506 | 11,930 | 8,007 | ||||||
* 30 September 2017 cash flow represents annual results
The accompanying notes are an integral part of these financial statements.
EXPLANATORY NOTES
for the six month period to 31 March 2018 (unaudited)
- ACCOUNTING POLICIES
A summary of the principal accounting policies, all of which have been applied consistently throughout the period, is set out below:
Basis of preparation
The Company has prepared its half-yearly financial results for the six month period ending 31 March 2018 in accordance with Financial Reporting Standard 104 (FRS104) and the Statement of Recommended Practice for “Financial Statements of Investment Trust Companies and Venture Capital Trusts” (the SORP).
The same accounting policies and methods of computation are followed in the half-yearly financial results as compared with the most recent annual financial statements.
Investments
All investments are classified as fair value through profit or loss. Investments are measured initially and subsequently at fair value which is deemed to be bid market prices for listed investments and investments traded on AIM. Unquoted investments are valued using the most appropriate methodology recommended by the International Private Equity Venture Capital (“IPEV”) guidelines.
Where the classification of a financial instrument requires it to be stated at fair value, this is determined by reference to the quoted bid price in an active market wherever possible. Where no such active market exists for the particular asset or liability the Company holds the investment at cost for a period where there is considered to be no change in fair value.
Valuations of unquoted investments are reviewed on a six monthly basis and more frequently if events occur that could have a material impact on the investment. Where cost is no longer considered appropriate the Company will use a value indicated by a material arms-length transaction by an independent third party in the shares of a company. Where no such transaction exists the Company will use the most appropriate valuation technique including discounted cash flow analysis, earnings multiples, net assets and industry valuation benchmarks. All inputs are market observable with the exception of level 3 financial instruments.
Investments are recognised and derecognised at trade date where a purchase or sale is under a contract whose terms require delivery within the time frame established by the market concerned. Purchases and sales of unlisted investments are recognised when the contract for acquisition or sale becomes unconditional. Transaction costs are included in the initial book cost or deducted from the disposal proceeds as appropriate.
These investments will be managed and their performance evaluated on a fair value basis in accordance with a documented investment strategy and information about them is provided internally on that basis to the Board.
Gains and losses arising from changes in fair value (realised and unrealised) are included in the net profit or loss for the period as a capital item in the income statement and are taken to the unrealised capital reserve or realised capital reserve as appropriate.
If an investment has been impaired such that there is no realistic expectation that there will be a full return from the investment, the loss is treated as a permanent impairment and transferred to the capital reserve realised.
Financial Instruments – fair value measurement hierarchy
FRS 102 requires certain disclosures which require the classification of financial assets and financial liabilities measured at fair value using a fair value hierarchy that reflects the significance of the inputs used in making the fair value measurement.
The fair value hierarchy has the following levels:
| Level | Methodology |
| 1 | The best evidence of fair value is a quoted price for an identical asset in an active market. Quoted in an active market in this context means quoted prices are readily and regularly available and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted price is usually the current bid price. |
| 2 | When quoted prices are unavailable, the price of a recent transaction for an identical asset provides evidence of fair value as long as there has not been a significant change in economic circumstances or a significant lapse of time since the transaction took place. If the entity can demonstrate that the last transaction price is not a good estimate of fair value (e.g. because it reflects the amount that an entity would receive or pay in a forced transaction, involuntary liquidation or distress sale), that price is adjusted. |
| 3 | If the market for the asset is not active and recent transactions of an identical asset on their own are not a good estimate of fair value, an entity estimates the fair value by using a valuation technique. The objective of using a valuation technique is to estimate what the transaction price would have been on the measurement date in an arm’s length exchange motivated by normal business considerations. |
| Level 1 Investments £’000 | Level 2 Investments £’000 | Level 3 Investments £’000 | Total Investments £’000 | |
| Six months ended 31 March 2018 (unaudited) | 84,745 | 12,712 | 10,898 | 108,355 |
| Year ended 30 September 2017 (audited) | 44,287 | 7,173 | 6,665 | 58,125 |
| Six months ended 31 March 2017 (unaudited) | 40,169 | 6,459 | 5,167 | 51,795 |
Merger and Conversion
With effect from 23 March 2018, the Company acquired the assets and liabilities of Hargreave Hale AIM VCT 2 plc in exchange for new ordinary shares in the Company. Hargreave Hale AIM VCT 2 was placed into members’ voluntary liquidation pursuant to a scheme of reconstruction under Section 110 of the Insolvency Act 1986.
The merger was implemented on a relative unaudited NAV basis, adjusted for the anticipated costs of the scheme. The merger and roll-over values were based on the latest unaudited valuations of the companies investments on the scheme calculation date.
All of the assets and liabilities of Hargreave Hale AIM VCT 2 totalling £56,535,285 were transferred to the Company in exchange for the issue of 68,680,227 new ordinary shares in the Company at an issue price of 82.07p per share. Each Hargreave Hale AIM VCT 2 shareholder received 1.458754 shares in the Company for each Hargreave Hale AIM VCT 2 share held on 23 March 2018. Fixed asset investments were acquired at closing market value on the scheme calculation date. The nominal value of shares issued was allocated to share capital and the remaining consideration (adjusted for prepayments and accruals) was posted to the share premium account.
The assets and liabilities acquired by the Company were as follows:
| 23 March 2018 | £’000 | |
| Fixed asset investments | 49,840 | |
| Cash at Bank | 6,766 | |
| Debtors | 61 | |
| Creditors | (132) | |
| Total Consideration | 56,535 | |
| | ||
Key judgements and estimates
The preparation of the financial statements requires the Board to make judgements and estimates that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Key estimation uncertainties mainly relate to the fair valuation of unquoted investments, which are based on historical experience and other factors that are considered reasonable including the transfer price of the most recent transaction on an arm’s length basis. The estimates are under continuous review with particular attention paid to the carrying value of the investments. The process of estimation is also affected by the determination of the fair value hierarchy.
Income
Equity dividends are taken into account on the ex-dividend date, net of any associated tax credit. Fixed returns on non-equity shares and debt securities are recognised on a time apportionment basis so as to reflect the effective yield, provided there is no reasonable doubt that payment will be received in due course. All other income, including deposit interest receivable, is recognised on an accruals basis. All revenue and capital items in the unaudited income statement derive from continuing operations. There are no other items of comprehensive income other than those disclosed in the unaudited income statement.
Expenditure
All expenditure is accounted for on an accruals basis. 75% of management fees are allocated to the capital reserve realised and 25% to the revenue account in line with the Board’s expected long term split of investment returns in the form of capital gains to the capital column of the income statement. All other expenditure is charged to the revenue account.
Trail commission
Trail commission previously due is held as a creditor until such time as claims are made by the relevant intermediary and supporting documentation provided. If claims are not received these amounts are written off after a period of six years.
Capital reserves
Realised profits and losses on the disposal of investments, due diligence costs and income in relation to private company investments, losses realised on investments considered to be permanently impaired and 75% of investment management fees are accounted for in the capital reserve realised.
Increases and decreases in the valuation of investments held at the year end are accounted for in the capital reserve unrealised.
Operating segments
There is considered to be one operating segment as reported to the chief operating decision maker being investment in equity and debt securities.
Taxation
Deferred tax is recognised in respect of all timing differences that have originated but not yet reversed at the balance sheet date. Deferred tax assets are only recognised to the extent that recovery is probable in the foreseeable future.
Current tax is expected tax payable on the taxable revenue for the period using the current tax rate. The tax effect of different items of income and expenditure is allocated between capital and revenue on the same basis as the particular item to which it relates.
Approved VCTs are exempt from tax on capital gains from the sale of fixed asset investments. The Directors intend that the Company will continue to conduct its affairs to maintain its VCT status, no deferred tax has been provided in respect of any capital gains or losses arising from the revaluation or disposal of investments.
Dividends
Only dividends recognised during the year are deducted from revenue or capital reserves. Final and interim dividends are recognised in the accounts when the Company’s liability to pay them has been established.
Summary of dividends paid in the six months to 31 March 2018 and the financial year ending 30 September 2017 are detailed below:
| Six months ended 31 March 2018 (unaudited) £’000 | Year ended 30 September 2017 (audited) £’000 | |
| Final capital dividend of 2.25 pence per share for the year ended 30 September 2016 paid on 17 January 2017 | - | 1,430 |
| Interim capital dividend of 1.75 pence per share for the half year ended 31 March 2017 paid on 30 June 2017 | - | 1,432 |
| Final capital dividend of 2.25 pence per share for the year ended 30 September 2017 paid on 30 January 2018 | 1,815 | - |
| Total | 1,815 | 2,862 |
Functional currency
In accordance with FRS 102 s.30, the Company is required to nominate a functional currency, being the currency in which the Company predominantly operates. The Board has determined that sterling is the Company’s functional currency. Sterling is also the currency in which these accounts are presented.
Repurchase of shares to hold in treasury
The cost of repurchasing shares into treasury, including the related stamp duty and transaction costs is charged to special reserve and dealt with in the statement of changes in equity. Share repurchase transactions are accounted for on a trade date basis. Where shares held in treasury are subsequently cancelled, the nominal value of those shares is transferred out of share capital and into capital redemption reserve.
Should shares held in treasury be reissued, the sale proceeds will be treated as a realised profit up to the amount of the purchase price of those shares and will be transferred to capital reserves. The excess of the sale proceeds over the purchase price will be transferred to share premium.
Contingencies, guarantees and financial commitments
There were no contingencies, guarantees or financial commitments of the Company at 31 March 2018.
Legal form and principal activities
The Company was incorporated and registered in England and Wales on 16 August 2004 under the Companies Act 1985, registered number 5206425.
The Company has been approved as a Venture Capital Trust by HMRC under section 259 of the Income Taxes Act 2007. The shares of the Company were first admitted to the Official List of the UK Listing Authority and trading on the London Stock Exchange on 29 October 2004 and can be found under the TIDM code “HHV”. The Company is premium listed.
The Company’s principal activity is to invest in a diversified portfolio of qualifying small UK based companies, primarily trading on AIM, with a view to maximising tax free dividend distributions to shareholders.
The Company is an externally managed fund with a Board comprising of four non-executive directors. Hargreave Hale Limited acts as investment manager, administrator and custodian to the Company and provide the company secretary.
The Board has overall responsibility for the Company’s affairs including the determination of its investment policy, however, the Board may exercise these responsibilities through delegation to Hargreave Hale as it considers appropriate.
The Directors have managed and continue to manage the Company’s affairs in such a manner as to comply with Section 259 of the Income Taxes Act 2007.
The Company’s registered office is 41 Lothbury, London, EC2R 7AE.
CAPITAL STRUCTURE
Share capital
Ordinary shares are classed as equity. The ordinary shares in issue have a nominal value of one pence and carry one vote each.
Reserves
A description of each of the reserves follows:
Share premium
This reserve represents the difference between the issue price of shares and the nominal value of shares at the date of issue, net of related issue costs.
Capital redemption reserve
This reserve is used for the cancellation of shares bought back under the buyback facility.
Special reserve
Distributable reserve used to pay dividends and re-purchase shares under the buyback facility.
Capital reserve realised
Gains/losses on disposal of investments, due diligence costs and income from private company investments, permanent impairment of financial assets and 75% of the investment management fee are accounted for in the capital reserve realised.
Capital reserve unrealised
Unrealised gains and losses on investments held at the year-end arising from movements in fair value are taken to the capital reserve unrealised.
Revenue reserve
Net revenue returns and losses of the Company.
- EARNINGS PER SHARE (BASIC AND DILUTED)
The gain per ordinary share of 2.28 pence at 31 March 2018 (31 March 2017: gain 3.98 pence and 30 September 2017: gain 8.86 pence) is based on a net gain for the period of £1,888,431 (31 March 2017: gain £2,942,172 and 30 September 2017: gain £6,572,097) and the weighted average number of ordinary shares in issue over the period of 82,641,439 (31 March 2017: 73,942,080 and 30 September 2017: 74,161,478).
- CAUTIONARY STATEMENT
The results should not be taken as a guide to the results for the financial period ending 30 September 2018. This report may contain forward looking statements with regards to the financial condition and results of the Company, which are made in the light of current economic and business circumstances. Nothing in this report should be considered as a profit forecast.
- NET ASSET VALUE PER SHARE
The net asset value per ordinary share at 31 March 2018 of 81.74 pence (31 March 2017: 78.12 pence and 30 September 2017: 80.82 pence) after deducting the 2.25 pence dividend paid in January 2018 is based on net assets of £132,522,812 (31 March 2017: £63,562,650 and 30 September 2017: £65,988,872) and on 162,125,608 shares (31 March 2017: 81,370,569 shares and 30 September 2017: 81,653,218 shares), being the number of ordinary shares in issue as at 31 March 2018.
- PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information contained in the 31 March 2018 income statement, balance sheet, statement of cash flows and statement of changes in equity does not constitute full financial statements and has not been audited.
- PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks facing the Company relate to the Company’s investment activities and include venture capital trust approval, investment, discount volatility, compliance, economic, fraud, operational, reputational, liquidity and outsourcing risk. Other risks faced by the Company include market risk, currency risk, interest rate risk and credit risk. These risks and the way in which they are managed are described in more detail in the Company’s annual report and accounts for the year ended 30 September 2017. The Company’s principal risks and uncertainties have not changed materially since the date of that report.
- TRANSACTIONS IN SHARES
Buybacks
In total, the Company repurchased 1,350,039 shares during the six month period ending 31 March 2018 at a total cost of £1,071,199. The repurchased shares represent 1.65% of ordinary shares in issue on 1 October 2017. The acquired shares have been cancelled.
Share issues
In total, the Company issued 13,142,202 new shares (nominal value £131,422) through an offer for subscription during the six month period ending 31 March 2018 raising net proceeds of £10,926,076. A further 68,680,227 new shares (nominal value £686,802) were issued through a scheme of reconstruction to acquire the assets and liabilities of Hargreave Hale AIM VCT 2 and merge it with the Company.
- RELATED PARTY TRANSACTIONS
Hargreave Hale Limited is considered to be a related party to the Company. Oliver Bedford, a non-executive director of the Company and a member of its key management personnel, is an employee of Hargreave Hale Limited. In addition, Hargreave Hale Limited acts as investment manager, administrator and custodian to the Company and it provides the company secretary. All of the support functions performed by Hargreave Hale Limited are segregated by department and location and are independent of each other.
Hargreave Hale Limited in its capacity as investment manager of the fund receives annual fees of 1.5% per annum of the net assets of the Company, calculated and payable quarterly in arrears. Fees for the half-year are £552,245 (2017: £376,830). In relation to the other support functions described above, Hargreave Hale Limited also provides administration services, custody services, company secretarial services and one non-executive director and received fees of £74,237 in the period (2017: £50,000) in relation to these services. Of those fees, £196,379 (2017: £90,032) was still owed at the half-year end.
Hargreave Hale Limited has agreed to indemnify the Company against annual running costs (such costs excluding VAT, any performance incentive fee and any trail commissions the payment of which is the responsibility of the Company) exceeding 3.5% of its net assets. No fees were waved by Hargreave Hale in the first half of the financial year under the indemnity.
During the half year, the Company issued 13,142,202 ordinary shares (nominal value £131,422) in an offer for subscription which resulted in gross funds being received of £11,114,494. As marketing adviser and receiving agent to the Company, and in return for covering the costs of the offer, Hargreave Hale Limited was entitled to 3.5% of the gross proceeds (£389,007), often referred to as the ‘premium’. From this, Hargreave Hale Limited paid for the allotment of additional shares to investors with a value of £198,287 and introductory commission of £4,000, resulting in net fees payable to Hargreave Hale Limited of £186,720.
The Company and Hargreave Hale Limited, the Company's investment manager, have agreed to increase the investment management fee payable to Hargreave Hale from an amount equal to 1.5% of the Company's net assets to an amount equal to 1.7% of the Company's net assets, with effect from 1 April 2019.
- GOING CONCERN
After making enquires, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.
- POST BALANCE SHEET EVENTS
Issue of equity
Following the period end, the offer for subscription resulted in an additional 13,552,414 ordinary shares being issued, raising gross proceeds of £11,547,093.
Buybacks
Since the period end, a further 709,279 ordinary shares have been repurchased at a total value of £567,848.
Directors
The Company announced on 14 May 2018 that Ashton Bradbury had been appointed as a non-executive director.
New investments
The Company has invested in the following new companies since the period end:
Qualifying companies
Forbidden Technologies £852k, I-Nexus £701k and KRM22 £621k.
Non-Qualifying
Countryside Properties £376k, Fisher James £355k, Future £393k, Go Compare £324k, GVC Holdings £459k, Halma £472k, Ricardo £472k, Sophos £499k, Vesuvius £517k, Zotefoams £323k and ZPG £493k
The Company has further invested in the following companies since the period end:
Qualifying companies
Infinity Reliance (My 1st Years) £1,503k and Portr £501k.
Non-Qualifying
Sanne Group £132k.
SHAREHOLDER INFORMATION
The Company’s ordinary shares (Code: HHV) are listed on the London Stock Exchange. Shareholders can visit the London Stock Exchange website, www.londonstockexchange.com, for the latest news and share prices of the Company. Further information for the Company can be found on its website at www.hargreaveaimvcts.co.uk.
NET ASSET VALUE PER SHARE
The Company’s NAV per share as at 15 June 2018 was 87.27 pence per share. The Company publishes its unaudited NAV per share on a weekly basis.
DIVIDENDS
The board has approved the payment of an interim dividend of 1.75 pence in respect of the six months ended 31 March 2018.
Shareholders who wish to have future dividends paid directly into their bank account rather than sent by cheque to their registered address can complete a mandate for this purpose. Mandates can be obtained by contacting the Company’s Registrar, Equiniti.
SELLING YOUR SHARES
Hargreave Hale AIM VCT 1 plc operates a share buy-back policy to improve the liquidity in its ordinary shares. Share buy-back policies are subject to the Act, the Listing Rules and tax legislation, which may restrict the VCTs’ ability to buy shares back in. The policy is non-binding and is at the discretion of the Board.
The buy-back policy targets a 5% discount to the last published NAV per share as announced on the London Stock Exchange through a regulatory news service provider. The discount is measured against the mid-price per share as listed on the London Stock Exchange and reflects the price at which the Company buys its shares off the market makers. The Company publishes its unaudited NAV per share on a weekly basis.
VCT share disposals settle two business days post trade if the shares are already dematerialised or placed into CREST ahead of the trade, or ten days post trade if the stock is held in certificated form.
VCT share disposals are exempt of capital gains tax when the disposal is made at arms’ length, which means a shareholder must sell their shares to a market maker through a stockbroker or another share dealing service. Hargreave Hale has particular expertise in the sale of VCT shares and is able to act for VCT shareholders who wish to sell their shares. However, you are free to nominate any stockbroker or share dealing service to act for you. If you would like Hargreave Hale to act for you as their client (as opposed to a shareholder in the Company) then please contact Andrew Pang for further information (020 7009 4900, andrew.pang@canaccord.com).
Please note that Hargreave Hale will need to be in possession of the share certificate and a completed CREST transfer form before executing the sale. If you have lost your share certificate, then you can request a replacement certificate from the Company’s registrar Equiniti. The registrar will send out an indemnity form, which you will need to sign. The indemnity form will also need to be countersigned by a UK insurance company or bank that is a member of the Association of British Insurers. Since indemnification is a form of insurance, the indemnifying body will ask for a payment to reflect their risk. Fees will reflect the value of the potential liability.
SHAREHOLDER ENQUIRIES:
For general Shareholder enquiries, please contact Hargreave Hale Limited on 01253 754700 or by e-mail to aimvct@canaccord.com.
For enquiries concerning the performance of the Company, please contact the investment manager on 0207 009 4937 or by e-mail to aimvct@canaccord.com.
Electronic copies of this report and other published information can be found on the Company’s website at www.hargreaveaimvcts.co.uk.
CHANGE OF ADDRESS
To notify the Company of a change of address please contact the Company’s Registrar at the address.
COMPANY INFORMATION
| SECRETARY AND REGISTERED OFFICE Stuart Brookes 41 Lothbury London EC2R 7AE | DIRECTORS Sir Aubrey Brocklebank David Brock Oliver Bedford Ashton Bradbury |
| MANAGER Hargreave Hale Limited 41 Lothbury London EC2R 7AE | AUDITORS BDO LLP 55 Baker Street London W1U 7EU |
| REGISTRARS Equiniti Aspect House Spencer Road Lancing West Sussex BN99 6DA | VCT STATUS ADVISER Philip Hare & Associates LLP 4-6 Staple Inn High Holborn London WC1V 7QH |
| SOLICITORS Howard Kennedy No. 1 London Bridge London SE1 9BG | BROKERS Singer Capital Markets Limited One Hanover Street London W1S 1YZ COMPANY REGISTRATION NUMBER 05206425 in England and Wales |