Hargreave Hale AIM VCT 1 plc : Final Results
Hargreave Hale AIM VCT1 plc
Preliminary Announcement of Final Results for the year ending 30 September 2011.
FINANCIAL HIGHLIGHTS
| Ordinary Shares (as at 30 September): | 2011 | 2010 |
| Net asset value per share | 61.14p | 62.67p |
| Cumulative distributions paid per share since launch | 23.0p | 19.00p |
| Total return | 84.14p | 81.67p |
| Discount to Net Asset Value (based on bid-market price at balance sheet date) | 13.3% | 15.0% |
| Annual Returns per share: | ||
| Revenue return | (0.25)p | 0.07p |
| Capital return | 2.31p | 0.21p |
| Combined Return | 2.06p | 0.28p |
| Dividends per share: | ||
| Interim paid | 2.0p | 2.0p |
| Final proposed | 2.0p | 2.0p |
| Total dividend for year | 4.0p | 4.0p |
| Performance Benchmark: | ||
| Total Return | 88.6% | 86.0% |
| FTSE AIM All-share Index | 72.7% | 81.2% |
| (results rebased to 100 at 29 October 2004) |
CHAIRMAN'S STATEMENT
Introduction
At 30 September 2011 the NAV was 61.14 pence which after adding back the dividends paid gives a total return since inception of 84.14 pence. The gain per ordinary share for the year was 2.06 pence per share (comprising revenue loss of (0.25) pence and capital gains of 2.31 pence).
Investments
The Investment Manager, Hargreave Hale Limited, invested a further £2.15 million in 12 qualifying companies during the year and 1 company went into administration realising a net loss of £0.3 million. The Fair Value of qualifying investments at 30 September 2011 was £11.3 million invested in 40 AIM companies and 3 unquoted companies. £5.05 million was held in a mix of cash, fixed income and other non-qualifying equities; more detail can be found in the Investment Manager's Report.
Dividend
An interim dividend of 2 pence was paid on 14 July 2011 (2010 - 2 pence).
A final dividend of 2 pence is proposed (2010 - 2 pence) which, subject to shareholder approval at the AGM will be paid on 23 January 2012, to ordinary shareholders on the register on 30 December 2011.
The directors have maintained a dividend policy of at least 5 per cent. of the year end NAV. Subject to market conditions they expect that this will continue.
Buybacks
We were pleased that we were able to maintain our policy of offering our shareholders an efficient exit route through the buyback scheme. In total, 1,256,460 Shares were purchased during the year at an average price of 60.19 pence per share.
Continuation Vote
At the forthcoming General Meeting a vote will be put to shareholders to decide whether or not to continue as a VCT. As referred to above we have been able to honour our intention at the outset to buy back shares from shareholders at a 10 per cent. discount. I believe all shareholders who so wished have been able to exit. If we wound up the fund it is unlikely that after all of the costs involved we would achieve a better result than this. Furthermore, in the current market the shares in our portfolio companies are significantly depressed and in most cases very illiquid. Therefore your board recommends that you vote in favour of the Continuation as they will be doing with their own shares (114,163 representing 0.43 per cent. of the Company)
New Joint Offer for Subscription of Ordinary Shares
On the 9 March 2011 a new joint offer for subscription of Ordinary Shares was opened to raise up to approximately £2.65 million, in aggregate, in New Ordinary Shares for Hargreave Hale AIM VCT 1 plc and Hargreave Hale AIM VCT 2 plc. The Offer has resulted in funds being received of £0.37 million and 0.54 million shares have been issued in respect of Hargreave Hale AIM VCT 1 plc. The offer closed on the 29 July 2011.
VCT Status
To maintain its VCT qualifying status we must invest at least 70 per cent. of the net funds raised in any one accounting period in qualifying investments within three years. At the yearend we have achieved 86.34 per cent. and have satisfied all the relevant tests.
Outlook
The major contributor to the recession of the 1930's was the collapse of banks which had a domino effect on other banks and the reduced supply of money massively slowed up the economy. If a major bank in Europe which are today considerably larger and have a much greater market share were allowed to default the knock on effect around the globe is too awful to contemplate.
It is clear in that certain countries, of which Greece is the prime example, are insolvent. Whilst strenuous efforts are being made to stop Greece defaulting there are good reasons to believe that at least in the medium term this will not succeed. However a great number of banks have massive exposure to sovereign debt and will need to be supported by their governments, always assuming they are able to raise money. In the face of this prospect almost all banks are trying to reduce their levels of gearing either by raising more money which few are able to achieve or by reducing the size of their loan books. The effect of this is a slowing of economic growth.
The longer the European Union takes to make strong and effective action the closer Europe moves towards financial meltdown. Stock Markets reflect investor confidence which is affected by many influences. At the present time there are some huge uncertainties about sovereign and bank debt in Europe and the effect that that this will have on the Euro and this is causing a lack of investor confidence and a flight to perceived quality which hits the AIM market hardest.
Despite the extreme negative economic outlook, we believe that we have a well balanced mature portfolio of well funded companies which are well positioned to weather any further economic disruption. The Company maintains 25 per cent of its NAV in cash or fixed income which may be used to exploit interesting investment opportunities which may arise out of economic adversity.
Sir Aubrey Brocklebank
Chairman
Date: 21 November 2011
The Directors each confirm to the best of their knowledge that:
a) the financial statements have been prepared in accordance with UK Generally Accepted Accounting Practice and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
b) the Annual Report, to be published shortly, includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.
INCOME STATEMENT
For the year ended 30 September 2011
| Revenue | Capital | Total | ||
| £000 | £000 | £000 | ||
| Net gain on investments held at fair value through profit or loss | - | 809 | 809 | |
| Income | 279 | - | 279 | |
| -------- | -------- | -------- | ||
| 279 | 809 | 1,088 | ||
| -------- | -------- | -------- | ||
| Management fee | (65) | (196) | (261) | |
| Other expenses | (280) | - | (280) | |
| -------- | -------- | -------- | ||
| (345) | (196) | (541) | ||
| -------- | -------- | -------- | ||
| (Loss)/Profit on ordinary activities before taxation | (66) | 613 | 547 | |
| Taxation | - | - | - | |
| -------- | -------- | -------- | ||
| (Loss)/Profit after taxation | (66) | 613 | 547 | |
| -------- | -------- | -------- | ||
| (Loss)/Profit per share (pence) | (0.25) | 2.31 | 2.06 | |
| -------- | -------- | -------- | ||
INCOME STATEMENT
For the year ended 30 September 2010
| Revenue | Capital | Total | ||
| £000 | £000 | £000 | ||
| Net gain on investments held at fair value through profit or loss | - | 165 | 165 | |
| Income | 296 | - | 296 | |
| -------- | -------- | -------- | ||
| 296 | 165 | 461 | ||
| -------- | -------- | -------- | ||
| Management fee | (36) | (110) | (146) | |
| Other expenses | (242) | - | (242) | |
| -------- | -------- | ------- | ||
| (278) | (110) | (388) | ||
| -------- | -------- | ------- | ||
| (Loss)/Profit on ordinary activities before taxation | 18 | 55 | 73 | |
| Taxation | - | - | - | |
| -------- | -------- | -------- | ||
| (Loss)/Profit after taxation | 18 | 55 | 73 | |
| -------- | -------- | -------- | ||
| (Loss)/Profit per share (pence) | 0.07 | 0.21 | 0.28 | |
The total column of these statements is the income statement of the Company. All revenue and capital items in the above statement derive from continuing operations. There are no recognised gains or losses other than the profit for the year.
The accompanying notes are an integral part of these financial statements.
| BALANCE SHEET | Company registration number: 5206425 |
| As at 30 September 2011 | (in England and Wales) |
| 2011 | 2010 | ||||
| £000 | £000 | ||||
| Fixed assets | |||||
| Investments at fair value through profit or loss | 15,141 | 15,530 | |||
| -------- | -------- | ||||
| Current assets | |||||
| Debtors | 52 | 94 | |||
| Cash at bank | 1,202 | 1,088 | |||
| -------- | -------- | ||||
| 1,254 | 1,182 | ||||
| Creditors: amounts falling due within one year | (161) | (160) | |||
| -------- | -------- | ||||
| Net current assets | 1,093 | 1,022 | |||
| -------- | -------- | ||||
| Net assets | 16,234 | 16,552 | |||
| -------- | -------- | ||||
| Capital and Reserves | |||||
| Called up share capital | 292 | 291 | |||
| Special reserve | 18,632 | 21,263 | |||
| Capital reserve - realised | (4,882) | (3,637) | |||
| Capital reserve - unrealised | (454) | (2,312) | |||
| Revenue reserve | 119 | 185 | |||
| Share Premium | 1,752 | - | |||
| Capital redemption reserve | 775 | 762 | |||
| -------- | -------- | ||||
| Equity shareholders' funds | 16,234 | 16,552 | |||
| -------- | -------- | ||||
| Net asset value per share | 61.14p | 62.67p | |||
These financial statements were approved and authorised for issue by the Board of Directors on 21 November 2011 and signed on its behalf by
Sir Aubrey Brocklebank Bt
Chairman
The accompanying notes are an integral part of these financial statements.
CASH FLOW STATEMENT
For the year ending 30 September 2011
| 2011 | 2010 | ||||
| £000 | £000 | ||||
| Net cash (outflow)/inflow from operating activities | (219) | (60) | |||
| Net financial investment | 1,198 | 714 | |||
| Dividends paid | (1,063) | (537) | |||
| --------- | --------- | ||||
| Cash (outflow)/inflow before management of liquid resources | (84) | 117 | |||
| Financing | 198 | (88) | |||
| --------- | --------- | ||||
| Increase/(Decrease) in cash | 114 | 29 | |||
| --------- | --------- | ||||
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
For the year ending 30 September 2011
| Share Capital | Capital Redemption Reserve | Capital Reserve Realised | Capital Reserve Unrealised | Special Reserve | Share Premium | Revenue Reserve | Total | |
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | |
| At 1 October 2010 | 291 | 762 | (3,637) | (2,312) | 21,263 | - | 185 | 16,552 |
| Transfer for Share Subscriptions** | - | - | - | - | (812) | 812 | - | - |
| Share buybacks | (13) | 13 | - | - | (756) | - | - | (756) |
| Subscriptions | 14 | - | - | - | - | 940 | - | 954 |
| Equity dividends paid (Note 18) | - | - | - | - | (1,063) | - | - | (1,063) |
| Realised losses on investments | - | - | (1,049) | - | - | - | - | (1,049) |
| Unrealised gains on investments | - | - | - | 1,858 | - | - | - | 1,858 |
| Management fee charged to capital | - | - | (196) | - | - | - | - | (196) |
| Revenue loss after taxation for the year | - | - | - | - | - | - | (66) | (66) |
| Total profit after taxation | - | - | (1,245) | 1,858 | - | - | (66) | 547 |
| ------ | ------ | --------- | --------- | --------- | --------- | ------ | --------- | |
| At 30 September 2011 | 292 | 775 | (4,882) | (454) | 18,632 | 1,752 | 119 | 16,234 |
| ------ | ------ | --------- | --------- | --------- | --------- | ------ | --------- |
Reserves available for distribution are capital reserve realised, special reserve and revenue reserve.
**The transfer represents the premium of subscriptions made in 2010 that were originally recorded in the special reserve.
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
For the year ending 30 September 2010
| Share Capital | Capital Redemption Reserve | Capital Reserve Realised | Capital Reserve Unrealised | Special Reserve | Revenue Reserve | Total | |
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | |
| At 1 October 2009 | 294 | 746 | (2,871) | (3,133) | 21,901 | 167 | 17,104 |
| Share buybacks | (16) | 16 | - | - | (913) | - | (913) |
| Subscriptions | 13 | - | - | - | 812 | - | 825 |
| Equity dividends paid (Note 18) | - | - | - | - | (537) | - | (537) |
| Realised losses on investments | - | - | (656) | - | - | - | (656) |
| Unrealised gains on investments | - | - | - | 821 | - | - | 821 |
| Management fee charged to capital | - | - | (110) | - | - | - | (110) |
| Revenue gain after taxation for the year | - | - | - | - | - | 18 | 18 |
| Total profit after taxation | - | - | (766) | 821 | - | 18 | 73 |
| -------- | -------- | -------- | -------- | -------- | -------- | -------- | |
| At 30 September 2010 | 291 | 762 | (3,637) | (2,312) | 21,263 | 185 | 16,552 |
| -------- | -------- | -------- | -------- | -------- | -------- | -------- |
Notes to the preliminary announcement
The financial information set out in this preliminary announcement does not constitute the Company's statutory accounts for the years ended 30 September 2011 or 30 September 2010. Statutory accounts for the year ended 30 September 2010 have been filed with the Registrar of Companies and those of the year ended 30 September 2011 will be delivered to the Registrar in due course; both have been reported on by the Independent Auditors. The independent auditors' reports on the Statutory accounts for the years ended 30 September 2010 and 30 September 2011 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.. The financial information in this preliminary announcement has been prepared under the historical cost convention, except for the revaluation of certain financial instruments, and in accordance with UK GAAP and with the Statement of Recommended Practice (SORP) for Financial Statements of Investment Trust Companies issued in January 2009. The accounting policies adopted in these preliminary results have been consistently applied to all the years presented and are consistent with the policies used in the preparation of the statutory accounts for the year ended 30 September 2011. The full statutory annual accounts will be published in November 2011. Copies may in due course be obtained during normal business hours from Hargreave Hale Limited, 9-11 Neptune Court, Hallam Way, Blackpool, FY4 5LZ.
The Annual general meeting of the company will be held at the Company's registered office on 20 December 2011 at 11.00am.
Revenue return per ordinary share is based on a net revenue loss on ordinary activities after tax of £66,000 (2010 £18,000 gain) and on 26,527,597 (2010 26,416,692) ordinary shares, being the weighted average number of ordinary shares in issue during the year. Capital return per ordinary share is based on a net capital profit on ordinary activities after tax of £613,000 (2010 £55,000) and on 26,527,597 (2010 26,416,692) ordinary shares, being the weighted average number of ordinary shares in issue during the year.
The net asset value per ordinary share at 30 September 2011 of 61.14p (2010 62.67p) is based on net assets of £16,234,000 (2010 £16,552,000) and on 26,551,918 shares, being the number of ordinary shares in issue as at 30 September 2011 (2010 26,410,352).
INVESTMENT PORTFOLIO SUMMARY
Ordinary Share Fund
As at 30 September 2011
| Book Cost | Valuation | Valuation | |
| Qualifying investments | £000 | £000 | % |
| Abcam | 100 | 1,088 | 7.18 |
| Advanced Computer Software | 400 | 953 | 6.29 |
| Intercede | 518 | 941 | 6.22 |
| Animalcare Group plc | 300 | 873 | 5.76 |
| Craneware | 150 | 692 | 4.57 |
| Cohort | 800 | 540 | 3.57 |
| EKF | 300 | 500 | 3.30 |
| K3 | 270 | 480 | 3.17 |
| Idox | 150 | 440 | 2.91 |
| Instem Life | 297 | 374 | 2.47 |
| Pressure Technologies | 340 | 308 | 2.04 |
| MyCelx | 300 | 300 | 1.98 |
| Brulines | 387 | 292 | 1.93 |
| Sinclair IS Pharma | 350 | 288 | 1.90 |
| In-Deed | 234 | 246 | 1.62 |
| Vertu | 600 | 245 | 1.62 |
| Microsaic | 246 | 215 | 1.42 |
| TMO | 200 | 200 | 1.32 |
| Egdon Resources | 158 | 196 | 1.29 |
| Mexican Grill A Prefs | 185 | 185 | 1.22 |
| Plastics Capital | 250 | 175 | 1.16 |
| Chime | 220 | 167 | 1.10 |
| Omega Diagnostics | 150 | 156 | 1.03 |
| Tasty | 288 | 143 | 0.94 |
| Richoux | 365 | 139 | 0.92 |
| Reneuron | 298 | 119 | 0.79 |
| Tangent Comms | 300 | 115 | 0.76 |
| Keycom | 300 | 113 | 0.74 |
| Jelf | 174 | 107 | 0.71 |
| Corac | 150 | 100 | 0.66 |
| Universe | 385 | 82 | 0.55 |
| Advanced Power | 148 | 80 | 0.53 |
| Feedback | 201 | 67 | 0.44 |
| Progressive Digital | 173 | 62 | 0.41 |
| BGlobal | 258 | 61 | 0.40 |
| IS E&P/IS NV | 100 | 100 | 0.66 |
| Autoclenz | 131 | 40 | 0.26 |
| Maxima | 251 | 36 | 0.24 |
| Mexican Grill Ordinary | 20 | 21 | 0.14 |
| Infrastrata | 46 | 15 | 0.10 |
| Hardide | 396 | 14 | 0.10 |
| Invocas | 169 | 12 | 0.08 |
| Expansys | 331 | 12 | 0.08 |
| Infoserve | 200 | 1 | 0.01 |
| -------- | --------- | ------- | |
| Total qualifying investments | 11,589 | 11,293 | 74.59 |
INVESTMENT PORTFOLIO SUMMARY (continued)
| Book Cost | Valuation | Valuation | |
| Non-Qualifying investments | £000 | £000 | % |
| UK Treasury 2.25% 2014 | 978 | 1,038 | 6.86 |
| UK Treasury 2.5% 2.16 | 504 | 593 | 3.91 |
| -------- | --------- | ------- | |
| Total - UK gilts | 1,482 | 1,631 | 10.77 |
| Nationwide 3.75% 2011 | 1,018 | 1,004 | 6.63 |
| Scot Amicable 8.5% 2049 | 256 | 248 | 1.64 |
| Nationwide 7.971% 2049 | 242 | 234 | 1.55 |
| -------- | --------- | ------- | |
| Total - UK corporate bonds | 1,516 | 1,486 | 9.82 |
| Brady | 106 | 126 | 0.83 |
| Prophotonix | 110 | 118 | 0.78 |
| Anglo Pacific | 134 | 99 | 0.66 |
| Skill P&L | 100 | 59 | 0.39 |
| Spectra System | 58 | 54 | 0.36 |
| Encore Oil | 59 | 43 | 0.29 |
| XP Power | 60 | 42 | 0.28 |
| OMG | 61 | 37 | 0.25 |
| In-Deed | 34 | 35 | 0.23 |
| Optare | 103 | 34 | 0.22 |
| OPG Power | 51 | 32 | 0.21 |
| Cap-XX | 30 | 18 | 0.12 |
| Acta Spa | 94 | 12 | 0.08 |
| Abcam | 9 | 7 | 0.05 |
| K3 | 4 | 3 | 0.02 |
| Instem Life | 2 | 2 | 0.01 |
| Animalcare Group plc | 2 | 2 | 0.01 |
| Sinclair IS Pharma | 2 | 1 | 0.01 |
| Intercede | 2 | 1 | 0.01 |
| Idox | 1 | 1 | 0.01 |
| Egdon Resources | 1 | 1 | 0.00 |
| Microsaic | 1 | 1 | 0.00 |
| Corac | 1 | 1 | 0.00 |
| Tasty | 2 | 1 | 0.00 |
| Richoux | 1 | 1 | 0.00 |
| EKF** | 0 | 0 | 0.00 |
| -------- | --------- | ------- | |
| Total - non-qualifying equities | 1,028 | 731 | 4.82 |
| -------- | --------- | ------- | |
| Total - non-qualifying investments | 4,026 | 3,848 | 25.41 |
| --------- | --------- | ------- | |
| Total investments | 15,615 | 15,141 | 100.00 |
| --------- | --------- | ------- | |
| ** These are actual holdings of less than £500. |
Date 22 November 2011
For further information please contact:
Stuart Brookes
Company Secretary
Hargreave Hale AIM VCT1 plc
0207 009 4900
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.
Source: Hargreave Hale AIM VCT 1 plc via Thomson Reuters ONE
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