Half-year report
Hargreave Hale AIM VCT Plc
Unaudited Interim Results for the six month period ending 31 March 2019
FINANCIAL HIGHLIGHTS
| Ordinary Shares (as at 31 March): | 31 March 2019 | 31 March 2018 | 30 September 2018(1) |
| Net asset value per share | 70.67p | 81.74p | 87.59p |
| Cumulative distributions paid per share since launch | 53.65p | 48.25p | 50.00p |
| Total return per share | 124.32p | 129.99p | 137.59p |
| Earnings per share (basic and diluted): | |||
| Revenue return | (0.08)p | (0.43)p | (0.19)p |
| Capital return | (13.34)p | 2.71p | 11.81p |
| Combined return | (13.42)p | 2.28p | 11.62p |
| Dividends per share: | |||
| Interim proposed/paid | 1.50p | 1.75p | 1.75p |
| Special dividend | - | - | 1.00p |
| Final paid | - | - | 2.65p |
| Ongoing Expense Ratio(2) | 1.90% | 1.98% | 1.87% |
(1) 30 September 2018 financial highlights represent annual results
(2) Calculated following the AIC’s recommended methodology.
The Company's investment objectives are:
- to invest in a diversified portfolio of small UK based qualifying companies on a high risk, medium term capital growth basis, primarily being companies which are traded on AIM and which have the opportunity for significant value appreciation;
- to invest in smaller companies which may not be readily accessible to private individuals and which also tend to be more risky;
- to maximise distributions to shareholders from capital gains and income generated from the Company's funds;
- targeted investment in equities which are non-qualifying investments on an opportunistic basis; and
- to maintain the Company’s exposure to small companies through an initial investment of new capital into the Marlborough Special Situations Fund pending investment into qualifying companies.
Chairman’s statement
Introduction
Following the success of our offer for subscription which raised £25 million, I would like to welcome a large number of new shareholders.
Performance
At 31 March 2019, the Net Asset Value (NAV) was 70.67 pence which after adjusting for the dividends paid gives a Total Return (NAV per share plus distributed earnings per share) since inception of 124.32 pence. The earnings per share combined return for the period was a loss of 13.42 pence per share (comprising revenue losses of 0.08 pence and capital losses of 13.34 pence).
The NAV Total Return (NAV plus dividends paid) for the period was a loss of 15.2% compared to a fall of 16.0% in the FTSE AIM All Share Total Return Index.
Investments
The investment manager, Hargreave Hale Limited, invested a further £9.23 million in 10 qualifying companies during the period. The fair value of qualifying investments at 31 March 2019 was £76.20 million invested in 81 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 2019 the VCT was 92.03% invested as measured by HMRC.
Dividend
A final dividend for the year ended 30 September 2018 of 2.65 pence was paid on 8 February 2019. A special dividend of 1 penny was paid on 24 October 2018.
An interim dividend of 1.50 pence (2018: 1.75 pence) will be paid on 26 July 2019, with an ex-dividend date of 4 July 2019 and a record date of 5 July 2019.
The Directors continue to maintain their policy of targeting a tax free dividend yield equivalent to 5% of the year end NAV. The ability to pay dividends is also dependent on the Company’s available reserves and cash resources, the Companies Act and the Listing Rules. The policy is non binding and at the discretion of the Board. Dividend payments may vary from year to year in both quantum and timing. Dividends will vary with investment performance; in good years, the Directors may consider a higher dividend payment; in poor years, the Directors may reduce or even pay no dividend.
Buybacks
We have been able to maintain our policy of offering our shareholders an efficient exit route through the buyback scheme. In total, 2,204,772 shares were repurchased during the six month period ending 31 March 2019 at an average price of 73.68 pence per share. Since the period end a further 921,507 shares have been repurchased at an average price of 68.84 pence.
The Board continues to target a share price discount of 5% to the NAV per share (as measured against the mid-price) for market purchases. It should be emphasised that this target is non-binding and depends upon a range of factors, including the Company’s liquidity, its shareholder permissions and market conditions. The Company has a 5 year average share price discount on buybacks of 5.24%.
Offer for subscription
The Directors of the Company announced on 19 September 2018 the launch of a new offer for subscription for shares to raise up to £20 million, together with an over-allotment facility of up to a further £10 million. The offer was approved by shareholders of the Company at a general meeting on 19 October 2018 and was open to both new and existing shareholders. On 28 November 2018, the Company announced it had received valid applications in excess of £20 million and, accordingly, the Directors confirmed they were releasing £5 million of the available £10 million over-allotment facility. On 24 January 2019, the Company announced it had received valid applications in respect of the full £5 million over-allotment facility and closed the offer for further applications at that time. On 11 April 2019, the Directors announced the offer was closed.
The offer has resulted in gross funds being received of £25.0 million and the issue of 31.4 million new shares in the Company.
Cost efficiency
Your Board reviews costs incurred by the Company on a regular basis and are focused on maintaining a competitively low ongoing expense ratio. I am pleased to report that the period end ongoing expense ratio was 1.90% when calculated in accordance with the AIC’s “Ongoing Charges” methodology, which includes any indirect costs incurred by underlying investment funds such as the Marlborough Special Situations Fund. The ongoing expense ratio will rise in the second half of the year due to the increased investment management fee that took effect from 1 April 2019 but will remain competitive when compared with similar companies. As the investment manager to the Company and the investment advisor to the Marlborough Special Situation Fund, Hargreave Hale Limited makes an adjustment to its investment management fee to ensure the VCT is not charged twice for their services.
Total costs as measured under the EU rules and published in the Company’s Key Information Document are also monitored by the Board. This measure is calculated using a different methodology and includes transaction costs therefore showing a higher figure than the published ongoing charge ratio.
Hargreave Hale Limited integration with Canaccord Genuity Wealth Limited
The integration of Hargreave Hale’s private client business into Canaccord Genuity Wealth Limited was completed on 8 April 2019. The fund management business remains with Hargreave Hale Limited, a wholly owned subsidiary of Canaccord Genuity Wealth Limited.
New agreements
Following the acquisition of Hargreave Hale Limited (HH) by Canaccord Genuity Wealth Limited (CGWL) the Company has entered into a series of new agreements with CGWL.
As previously announced, on 5 April 2019 the Company entered into a new custody agreement with CGWL. Under the terms of the new custody agreement the annual custody fee was increased from £10,000 to £30,000. On 25 June 2019, the Company entered into new administration and secretarial contracts with CGWL. As part of the new arrangements Stuart Brookes will be replaced by CGWL as the Company's named company secretary. Under the new agreements the annual fee for administration services increases from £110,000 to £195,000. The fee for secretarial services remains unchanged at £17,000.
Investment management will continue to be provided by HH under a new agreement which commenced on 25 June 2019. As previously disclosed the annual fee payable to the investment manager increased to 1.7% with effect from 1 April 2019. The annual fee continues at this rate under the new agreement. The investment manager’s previous entitlement to earn a performance fee has been removed under the updated arrangements.
Related party transactions
As the Company's investment manager, HH is a related party to the Company for the purposes of the Listing Rules. As HH and CGWL are part of the CGWM group, CGWL also falls within the definition of a related party as they are part of the same group as the investment manager.
In addition to the new agreements set out above the Board have resolved to increase the Directors' fees. Oliver Bedford, a non-executive director of the Company is also an employee of the investment manager and the fee in respect of his position on the Board is paid to the investment manager.
The Company announced the increase in the investment manager's fees and the new custody arrangements on 16 May 2018 and 10 April 2019 respectively.
When aggregated with the commission received by the investment manager in relation to the offer agreement entered into on 19 September 2018 the increase in the annual administration fees, custody fees and the director’s fee paid to HH in respect of Oliver Bedford's appointment are classified as smaller related party transactions as defined in LR 11.1.10R.
VCT fund management team
With effect from 1 July 2019, Oliver Bedford will assume the role of lead manager of the Hargreave Hale AIM VCT plc. He will be supported by Lucy Bloomfield who becomes a co-manager of the VCT and will work closely with Oliver Bedford to deliver the investment strategy. Giles Hargreave will continue to act as a co-manager to the VCT and will focus primarily on supporting the delivery of the non-qualifying investment strategy through the direct investment of the Company’s capital into listed equities as permitted by the VCT rules.
Board composition
The Directors have decided that it would be beneficial to the Company, to increase diversity and to recruit another independent non-executive director with skills that are complementary to the existing directors. To that end a recruitment consultant has been appointed to initiate the process and I look forward to updating shareholders in due course.
Having been chairman of your Board since the Company was founded in 2004, I have decided that I will step down as chairman at the next AGM at which point David Brock will succeed me. In due course we will recruit an additional director at which time I intend to retire fully.
We have reviewed the directors’ remuneration which was last changed in 2015. At a time when we will be seeking to recruit new directors to the Board it is important that the directors’ fees are competitive with those paid by other VCTs in order that we can attract strong candidates to the Company. With that in mind, it was decided that the chairman should receive £32,000 and the other directors £25,000 with an extra £3,000 for the chairman of the audit committee. These changes will take effect from 1 October 2019.
Regulatory update
There were no major changes to VCT legislation during the period under review.
VCT status
To maintain its status as a Venture Capital Trust, the Company is currently 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. This is 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 92.03% when measured using HMRC’s methodology. Legislation introduced through the Finance Act 2018 will apply to the Company from the start of the next financial year and result in an increase in the investment test to 80%. The Company’s investment test has consistently tracked ahead of this higher threshold, giving the Board confidence that the Company can meet this new requirement when it comes into effect on 1 October 2019. The Company satisfied all other tests relevant to its status as a Venture Capital Trust.
Key information document
The EU’s PRIIPs regulation came into effect in January 2018. The intent is to increase customer protection by improving the functioning of financial markets and in this instance through the Key Information Document (KID) to provide shareholders with more information about the risks, potential returns and charges within VCTs. The regulation requires the Company to publish a KID. Retail investors must now be directed to this before buying shares in the Company. The KID is published on the Company website at www.hargreaveaimvcts.co.uk/document-library.
The document has been prepared using the methodology prescribed in the PRIIPS regulation. Although well intended, there are widespread concerns about the application of some aspects of the prescribed methodologies to VCTs. Specifically, there are concerns that:
- the risk score may be understating the level of risk; and
- investment performance scenarios may indicate future returns for shareholders that are too optimistic.
The Association of Investment Companies has engaged on this matter and it is hoped that these issues will be resolved in the future. In the meantime, the Board would like shareholders to continue to classify VCTs as a high risk investment.
Post period end update
Stock markets are constantly adjusting to developments that are one way or another linked to domestic or global politics. Overlaying that has been concern of a synchronised slowdown in the UK, Europe, the US (albeit not in the short-term) and China as signalled by the reductions in the various (Government) benchmark yields and the potential for monetary or fiscal policy responses. The FTSE 100 endured a sustained sell off in late April and early May. Subsequent conditions have been easier to operate within, although the currency markets and FTSE 250 hint at a more cautious view of BREXIT starting to re-emerge, perhaps reflecting comments made by those looking to succeed Theresa May as Prime Minister. Although the AIM Index has been relatively quiet, primary market activity remains very subdued, particularly when it comes to IPO activity. There have been just 4 IPOs on AIM in the 5 months to 31 May 2019 (5m to 31 May 2018: 15). Of these, just one has been VCT qualifying.
The NAV has increased by 2.3% to 72.31 pence (21 June 2019) since period end, broadly tracking the FTSE 100 Total Return Index +3.0% and the AIM All-Share +1.8%. The investment manager has continued to deploy capital into qualifying companies in line with the budget, despite the challenges within the public markets. £1.9m has been invested as follow on qualifying investments into existing portfolio companies since the period end, £0.8m was invested into an existing AIM qualifying company with the balance invested through follow on investments into 3 private companies.
As of 25 June 2019, the share price of 68.50 pence represented a discount of 5.3% to the last published net asset value per share.
Outlook
After a positive end to last year the markets had a large set back during the first half of this year and whilst we have seen some improvement in the last few months the overall position is down. The current uncertainty within parliament with regards to Brexit looks set to carry on until October and quite possibly beyond. We live in uncertain times. Under these unprecedented circumstances, the major indices have held up reasonably well. We continue to see some interesting unquoted opportunities, enough to ensure we are making good progress against our year end investment targets. Although there have been very few IPOs on AIM, we continue to see reasonable demand for growth capital from within our existing portfolio of companies and from other VCT qualifying companies listed on AIM.
Whilst we are constantly finding and investing in new and exciting young companies, your Company has a good spread of more established that should be able to weather which looks to be a volatile period ahead.
Sir Aubrey Brocklebank
Chairman
Date: 27 June 2019
Investment manager’s report
Introduction
This report covers the first half of the 2018/19 financial year, 1 October 2018 to 31 March 2019. The investment manager’s report contains references to movements in the Net Asset Value (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 of the Company within the reported period as a function of the weighted average number of shares in issue for the period.
Investment performance measures contained in this report are calculated on a pence per share basis and include realised and unrealised gains and losses.
Investment report
The period under review included more uncertainty and considerable volatility. The political landscape, at home and abroad, is contentious and increasingly confrontational. More recently, commentators have started to question the capacity for the US economy to continue to grow, with the US yield curve hinting at a possible recession in 2020. The strength of the Chinese economy and the potential impact of the trade dispute with the US has been another source of concern for many companies and commentators. US equities, in particular the large US technology companies, had a substantial pullback in late 2018, further damaging sentiment in the US and further afield. The UK and European economies have continued along a path of sub-trend growth.
We continue to grapple with the potential direction and impact of BREXIT on our portfolio. By and large, most companies continue to trade perfectly well. However, the uncertainty is clearly weighing on a small number of companies and we increasingly see evidence of more companies deferring investment and consumers taking a more cautious approach to discretionary spending. In the round, we have not observed BREXIT related uncertainty influencing deal flow, although public market volatility and, one might argue, political uncertainty is increasingly leading to some companies choosing to defer their plans to float and instead raise capital off-market. It helps that we can now offer to meet their funding needs whilst they remain private companies. It is difficult to position the portfolio to meet an outlook which contains such a range of wildly different scenarios, but broadly speaking we are sitting in a more defensive posture with elevated cash balances and a focus on qualifying companies with structural growth opportunities or, in the case of non-qualifying equities, higher quality FTSE 350 companies with support from reliable growth, income or overseas earnings.
Performance
In the six months to 31 Mar 2019, the NAV decreased from 87.59 pence to 70.67 pence. A total of 3.65 pence per share was paid in dividends, resulting in a combined loss of 13.27 pence per share, which translates to a loss of 15.2%. During the same period, the FTSE AIM All-Share Index fell 16.0%, whilst the FTSE 100 Index lost 1.1%. The losses during the period under review were a consequence of a very difficult start to the financial year with the NAV falling by 15.5% in the first quarter in a challenging market environment in which growth stocks were under particular pressure. After adjusting for the dividend payment in February, the NAV gained a modest +0.37% during the second quarter of the financial year.
The Qualifying Investments made a net loss of 10.65 pence per share. The adjusting balance was the net of non-qualifying portfolio losses (-1.86 pence per share), running costs and investment income.
During the period, Aquis Exchange was the top performing qualifying investment (+35.3%, +0.38 pence per share). The company’s year-end update confirmed it continued to expand its share of daily trading in pan-European equities, with a 4.3% market share in March 2019. Business momentum remains strong and a more recent update confirmed further gains in market share, placing it in a strong position to surpass its year-end target of a 5% market share of continuous trading and establish its credentials as a mainstream, trusted and low cost equities platform. Diaceutics was the next most significant contributor (+32.9%, +0.25 pence per share), delivering strong aftermarket performance following a successful IPO in March 2019. With a placing price of 76 pence per share, Diaceutics raised £17m through a placing of 22.4m new shares and 4.9m existing shares. Other positive contributors include Crosswords (+46.6%, +0.23 pence per share). Ilika (+124.2%, +0.18 pence per share) and Angle (+26.4%, +0.13).
The biggest loss within the period came from Learning Technologies Group (-57.8%, -2.59 pence per share), our largest investment (by market value) at the start of the period under review. As a highly rated growth company, Learning Technologies Group shares were particularly vulnerable with some substantial directors’ selling already underway when the market correction took hold. The company hosted a well-attended capital markets day in November and we remain positive on its prospects, noting that 72% of the company’s revenues are recurring whilst 75% is from overseas. In a recent AGM update, the company reaffirmed its strategic goal of run rate revenues of £200 million and run rate operating profit of at least £55 million by the end of 2021. Other holdings impacted by the market sell off included Zoo Digital (-53.3%, -1.49 pence per share) and DP Poland (-78.1%, -0.60 pence per share), in both cases compounded by disappointing updates and analyst downgrades. Craneware (-27.6%, -0.45 pence per share) and Hardide (-30.9%, -0.44 pence per share) were also weak.
The private company portfolio, which accounted for 9.1% of NAV at the period end, was down -15.3% (adjusted for the new investment in Oxford Genetics). During the period we marked down the value of our investments in Portr, Honest Brew and My 1st Years. We did not mark any of the private company investments higher.
We invested £9.2 million into 10 Qualifying Companies over the period, including 5 further investments into existing listed qualifying companies, 2 IPOs, 2 new qualifying investments into companies listed on AIM and 1 new private investment.
Portfolio structure
The VCT is comfortably through the HMRC defined investment test and ended the period at 92.03% invested as measured by the HMRC investment test. By market value, the VCT had a 52.50% weighting to qualifying investments.
The allocation to non-qualifying equity investments increased from 18.5% to 22.5%. We continued to make use of the Marlborough Special Situations Fund as a temporary home for proceeds from fundraising; the allocation remained broadly the same at 9.9%. The period ended with no non-qualifying fixed income investments and a decrease in the cash weighting from 16.1% to 15.1%.
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 interim 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.
Post period end update
Stock markets are constantly adjusting to developments that are one way or another linked to domestic or global politics. Overlaying that has been concern of a synchronised slowdown in the UK, Europe, the US (albeit not in the short-term) and China as signalled by the reductions in the various (Government) benchmark yields and the potential for monetary or fiscal policy responses. The FTSE 100 endured a sustained sell off in late April and early May. Subsequent conditions have been easier to operate within, although the currency markets and FTSE 250 hint at a more cautious view of BREXIT starting to re-emerge, perhaps reflecting comments made by those looking to succeed Theresa May as Prime Minister. Although the AIM Index has been relatively quiet, primary market activity remains very subdued, particularly when it comes to IPO activity. There have been just 4 IPOs on AIM in the 5 months to 31 May 2019 (5m to 31 May 2018: 15). Of these, just one has been VCT qualifying.
The NAV has increased by 2.3% to 72.31 pence (21 June 2019) since period end, broadly tracking the FTSE 100 Total Return Index +3.0% and the AIM All-Share +1.8%. The investment manager has continued to deploy capital into qualifying companies in line with the budget, despite the challenges within the public markets. £1.9m has been invested as follow on qualifying investments into existing portfolio companies since the period end, £0.8m was invested into an existing AIM qualifying company with the balance invested through follow on investments into 3 private companies.
As of 25 June 2019, the share price of 68.50 pence represented a discount of 5.3% to the last published net asset value per share.
For further information please contact:
| Oliver Bedford |
| Co-Manager |
Date: 27 June 2019
Investment portfolio
As at 31 March 2019
| Qualifying investments | Net Assets % | Cost £000 | Cumulative movement in value £000 | Valuation £000 | Market | COI(1) |
| Creo Medical Group plc | 3.01 | 2,333 | 2,037 | 4,370 | AIM | Y |
| Ideagen plc | 2.60 | 1,992 | 1,777 | 3,769 | AIM | Y |
| Learning Technologies Group plc | 2.50 | 2,586 | 1,044 | 3,630 | AIM | Y |
| SCA Investments Ltd (Gousto) | 2.45 | 2,486 | 1,061 | 3,547 | Unlisted | Y |
| Aquis Exchange plc | 1.97 | 765 | 2,092 | 2,857 | AIM | Y |
| Zoo Digital Group plc | 1.82 | 2,267 | 366 | 2,633 | AIM | N |
| Hardide plc | 1.66 | 3,140 | (735) | 2,405 | AIM | N |
| Craneware plc | 1.62 | 125 | 2,217 | 2,342 | AIM | Y |
| Oxford Genetics Ltd | 1.51 | 2,190 | (4) | 2,186 | Unlisted | Y |
| Diaceutics plc | 1.42 | 1,553 | 506 | 2,059 | AIM | Y |
| Abcam plc | 1.29 | 55 | 1,813 | 1,868 | AIM | Y |
| Beeks Financial Cloud Group plc | 1.26 | 1,039 | 792 | 1,831 | AIM | Y |
| Quixant plc | 1.23 | 1,209 | 568 | 1,777 | AIM | Y |
| Cohort plc | 1.18 | 619 | 1,091 | 1,710 | AIM | Y |
| Loopup Group plc | 1.12 | 1,204 | 424 | 1,628 | AIM | Y |
| Honest Brew Ltd | 1.10 | 2,203 | (601) | 1,602 | Unlisted | N |
| Zappar Ltd | 1.10 | 1,602 | (2) | 1,600 | Unlisted | N |
| Crossword Cybersecurity plc | 1.01 | 1,002 | 464 | 1,466 | AIM | Y |
| Mexican Grill Ltd (A Preference Shares) | 0.95 | 1,013 | 367 | 1,380 | Unlisted | N |
| Angle plc | 0.87 | 1,159 | 103 | 1,262 | AIM | N |
| Science in Sport plc | 0.85 | 1,480 | (254) | 1,226 | AIM | Y |
| Eagle Eye Solutions Group plc | 0.84 | 1,643 | (431) | 1,212 | AIM | N |
| Forbidden Technologies plc | 0.77 | 852 | 270 | 1,122 | AIM | Y |
| Maxcyte Inc Com Stk USD0.01 (DI) | 0.72 | 932 | 116 | 1,048 | AIM | Y |
| FairFX Group plc | 0.71 | 751 | 283 | 1,034 | AIM | N |
| Location Sciences Group plc | 0.70 | 1,002 | 20 | 1,022 | AIM | Y |
| EKF Diagnostics Holdings plc | 0.65 | 476 | 472 | 948 | AIM | Y |
| Surface Transforms plc | 0.64 | 981 | (46) | 935 | AIM | Y |
| Infinity Reliance Ltd (My 1st Years 'D' shares) | 0.63 | 1,503 | (584) | 919 | Unlisted | Y |
| Everyman Media Group plc | 0.55 | 600 | 200 | 800 | AIM | Y |
| Clearstar Inc | 0.54 | 720 | 60 | 780 | AIM | Y |
| Cloudcall Group plc | 0.53 | 1,288 | (516) | 772 | AIM | Y |
| Infinity Reliance Ltd (My 1st Years 'C' shares) | 0.51 | 1,001 | (267) | 734 | Unlisted | Y |
| Osirium Technologies plc | 0.47 | 859 | (171) | 688 | AIM | Y |
| AnimalCare Group plc | 0.47 | 720 | (39) | 681 | AIM | N |
| Ilika plc | 0.46 | 507 | 159 | 666 | AIM | Y |
| K3 Business Technology Group plc | 0.46 | 270 | 396 | 666 | AIM | Y |
| Idox plc | 0.45 | 135 | 513 | 648 | AIM | Y |
| Yourgene Health plc | 0.45 | 521 | 126 | 647 | AIM | N |
| ULS Technology plc | 0.43 | 770 | (140) | 630 | AIM | N |
| Maxcyte Inc Com Stk USD0.01 (DI/REG S) | 0.42 | 583 | 33 | 616 | AIM | Y |
| Belvoir Lettings plc | 0.42 | 762 | (157) | 605 | AIM | Y |
| CentralNic Group plc | 0.39 | 588 | (25) | 563 | AIM | Y |
| KRM22 plc | 0.37 | 621 | (88) | 533 | AIM | Y |
| Tristel plc | 0.36 | 543 | (19) | 524 | AIM | N |
| Escape Hunt plc | 0.36 | 1,130 | (609) | 521 | AIM | Y |
| Instem plc | 0.35 | 298 | 212 | 510 | AIM | Y |
| WANDisco plc | 0.34 | 347 | 152 | 499 | AIM | N |
| Laundrapp Ltd | 0.32 | 468 | - | 468 | Unlisted | N |
| Gfinity plc | 0.31 | 1,177 | (730) | 447 | AIM | Y |
| The Property Franchise Group plc | 0.30 | 377 | 58 | 435 | AIM | Y |
| Synnovia plc | 0.30 | 478 | (49) | 429 | AIM | N |
| MYCELX Technologies Corporation plc | 0.30 | 361 | 67 | 428 | AIM | Y |
| PCI-PAL plc | 0.29 | 811 | (391) | 420 | AIM | Y |
| bigblu Broadband plc | 0.29 | 347 | 73 | 420 | AIM | Y |
| Portr Ltd | 0.28 | 410 | - | 410 | Unlisted | N |
| Vertu Motors plc | 0.24 | 600 | (250) | 350 | AIM | N |
| Fulcrum Utility Services Ltd | 0.24 | 580 | (235) | 345 | AIM | Y |
| Sanderson Group plc | 0.23 | 298 | 37 | 335 | AIM | Y |
| DP Poland plc | 0.23 | 1,391 | (1,061) | 330 | AIM | Y |
| Globaldata plc | 0.22 | 173 | 150 | 323 | AIM | Y |
| i-nexus Global plc | 0.21 | 701 | (400) | 301 | AIM | Y |
| C4X Discovery Holdings plc | 0.20 | 501 | (218) | 283 | AIM | Y |
| APC Technology Group plc | 0.18 | 634 | (369) | 265 | AIM | Y |
| Laundrapp Ltd (Loan Notes) | 0.14 | 200 | - | 200 | Unlisted | N |
| Faron Pharmaceuticals Oy | 0.13 | 2,220 | (2,026) | 194 | AIM | N |
| Velocity Composites plc | 0.13 | 624 | (437) | 187 | AIM | N |
| Renalytix AI plc | 0.13 | 89 | 97 | 186 | AIM | Y |
| Reneuron Group plc | 0.12 | 606 | (426) | 180 | AIM | N |
| TrakM8 Holdings plc | 0.12 | 486 | (307) | 179 | AIM | N |
| Intercede Group plc | 0.11 | 305 | (141) | 164 | AIM | N |
| Mexican Grill Ltd (Ordinary Shares) | 0.11 | 113 | 40 | 153 | Unlisted | N |
| Universe Group plc | 0.10 | 210 | (66) | 144 | AIM | N |
| Lidco Group plc | 0.10 | 307 | (168) | 139 | AIM | N |
| Fusion Antibodies plc | 0.08 | 415 | (297) | 118 | AIM | Y |
| Omega Diagnostics Group plc | 0.08 | 129 | (17) | 112 | AIM | N |
| Verona Pharma plc | 0.07 | 221 | (122) | 99 | AIM | Y |
| Pressure Technologies plc | 0.07 | 170 | (74) | 96 | AIM | N |
| Egdon Resources plc | 0.06 | 158 | (68) | 90 | AIM | Y |
| Genedrive plc | 0.05 | 72 | - | 72 | AIM | N |
| Mirriad Advertising plc | 0.05 | 71 | - | 71 | AIM | N |
| Mirada plc | 0.04 | 96 | (32) | 64 | AIM | N |
| Porta Communications plc | 0.04 | 63 | - | 63 | AIM | N |
| Intelligent Ultrasound Group plc | 0.04 | 61 | - | 61 | AIM | N |
| Redcentric plc | 0.03 | 42 | (2) | 40 | AIM | N |
| Paragon Entertainment Ltd | 0.02 | 30 | - | 30 | AIM | N |
| Mporium Group plc | 0.02 | 33 | (9) | 24 | AIM | N |
| TLA Worldwide plc | 0.02 | - | 23 | 23 | AIM | N |
| Microsaic Systems plc | 0.01 | 26 | (8) | 18 | AIM | N |
| Tasty plc | 0.01 | 16 | - | 16 | AIM | N |
| Abal Group plc | 0.01 | - | 9 | 9 | AIM | Y |
| Midatech Pharma plc | 0.01 | 8 | - | 8 | AIM | N |
| Flowgroup plc | - | - | - | - | AIM | N |
| Fusionex International plc | - | - | - | - | Unlisted | N |
| Infoserve Group plc | - | - | - | - | Unlisted | N |
| Total - qualifying investments | 52.55 | 68,503 | 7,697 | 76,200 | ||
| Non-qualifying investments | ||||||
| Marlborough Special Situations Fund | 9.92 | 14,172 | 213 | 14,385 | ||
| Total - unit trusts | 9.92 | 14,172 | 213 | 14,385 | ||
| Future plc | 1.16 | 979 | 710 | 1,689 | Main | Y |
| JD Sports Fashion plc | 1.09 | 1,223 | 355 | 1,578 | Main | Y |
| Melrose Industries plc | 1.04 | 1,755 | (250) | 1,505 | Main | Y |
| Royal Dutch Shell plc | 1.00 | 1,327 | 130 | 1,457 | Main | Y |
| BP plc | 1.00 | 1,203 | 249 | 1,452 | Main | Y |
| Anglo American plc | 0.91 | 931 | 383 | 1,314 | Main | N |
| Dechra Pharmaceuticals plc | 0.84 | 949 | 262 | 1,211 | Main | Y |
| Hilton Food Group plc | 0.80 | 907 | 248 | 1,155 | Main | Y |
| IntegraFin Holdings plc | 0.75 | 815 | 278 | 1,093 | Main | N |
| On the Beach Group plc | 0.75 | 1,045 | 46 | 1,091 | Main | Y |
| Halma plc | 0.75 | 822 | 264 | 1,086 | Main | Y |
| Tesco plc | 0.68 | 906 | 81 | 987 | Main | Y |
| Fisher (James) & Sons plc | 0.67 | 870 | 96 | 966 | Main | Y |
| Ascential plc | 0.65 | 951 | (4) | 947 | Main | Y |
| NMC Health plc | 0.63 | 1,014 | (100) | 914 | Main | Y |
| Charter Court Financial Services Group plc | 0.62 | 732 | 163 | 895 | Main | Y |
| Vesuvius plc | 0.61 | 897 | (8) | 889 | Main | Y |
| Cineworld Group plc | 0.61 | 877 | 1 | 878 | Main | Y |
| Zotefoams plc | 0.58 | 750 | 97 | 847 | Main | Y |
| XP Power Ltd | 0.56 | 949 | (131) | 818 | Main | Y |
| Oxford Biomedica plc | 0.56 | 956 | (150) | 806 | Main | Y |
| Micro Focus International plc | 0.55 | 509 | 289 | 798 | Main | N |
| Spirax-Sarco Engineering plc | 0.50 | 633 | 86 | 719 | Main | N |
| Glaxosmithkline plc | 0.50 | 707 | 11 | 718 | Main | Y |
| Countryside Properties plc | 0.36 | 585 | (66) | 519 | Main | Y |
| Ocean Wilsons (Holdings) Ltd | 0.36 | 535 | (20) | 515 | Main | Y |
| MYCELX Technologies Corporation plc | 0.34 | 298 | 199 | 497 | AIM | Y |
| Lloyds Banking Group plc | 0.34 | 549 | (52) | 497 | Main | Y |
| GVC Holdings plc | 0.34 | 734 | (248) | 486 | Main | Y |
| Fulcrum Utility Services Ltd | 0.32 | 284 | 178 | 462 | AIM | Y |
| Prudential plc | 0.32 | 470 | (9) | 461 | Main | Y |
| FDM Group (Holdings) plc | 0.31 | 489 | (41) | 448 | Main | Y |
| Everyman Media Group plc | 0.27 | 293 | 95 | 388 | AIM | Y |
| Cohort plc | 0.26 | 368 | 10 | 378 | AIM | Y |
| Renishaw plc | 0.23 | 415 | (81) | 334 | Main | Y |
| Horizon Discovery Group plc | 0.23 | 374 | (42) | 332 | AIM | Y |
| Quixant plc | 0.23 | 159 | 169 | 328 | AIM | Y |
| Ricardo plc | 0.22 | 472 | (154) | 318 | Main | Y |
| Bakkavor Group plc | 0.22 | 376 | (64) | 312 | Main | Y |
| GoCompare.com Group plc | 0.13 | 324 | (131) | 193 | Main | Y |
| Mexican Grill Ltd (A Preference Shares) | 0.10 | 135 | 13 | 148 | Unlisted | N |
| Regent Pacific Group Ltd | 0.07 | 201 | (95) | 106 | Non UK Listed | N |
| Amerisur Resources plc | 0.06 | 212 | (130) | 82 | AIM | Y |
| Egdon Resources plc | 0.03 | 47 | 3 | 50 | AIM | Y |
| Mexican Grill Ltd (Ordinary Shares) | 0.01 | 26 | (7) | 19 | Unlisted | N |
| Hargreave Hale AIM VCT plc | - | - | 1 | 1 | Main | Y |
| Genagro Ltd | - | - | - | - | Unlisted | Y |
| Total - equity investments | 22.56 | 30,053 | 2,634 | 32,687 | ||
| Total - non-qualifying investments | 32.48 | 44,225 | 2,847 | 47,072 | ||
| Total investments | 85.03 | 112,728 | 10,544 | 123,272 | ||
| Cash at bank | 15.10 | 21,897 | ||||
| Prepayments & Accruals | (0.13) | (183) | ||||
| Net assets | 100.00 | 144,986 |
(1) COI – Co-investments with other funds managed by Hargreave Hale at 31 March 2019
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 | |
| Listed Investments: | |||
| Clearstar Inc | UK | Cayman Islands | Cayman Islands |
| Faron Pharmaceuticals Oy | UK | Finland | Finland |
| Fulcrum Utility Services Ltd | UK | UK | Cayman Islands |
| GVC Holdings plc | UK | Isle of Man | UK |
| Maxcyte Inc | UK | USA | USA |
| Mycelx Technologies Corporation plc | UK | USA | USA |
| Ocean Wilsons (Holdings) Ltd | UK | Bermuda | UK |
| Paragon Entertainment Ltd | UK | UK | Cayman Islands |
| Regent Pacific Group Ltd | Hong Kong | Hong Kong | Cayman Islands |
| Renalytix AI plc | UK | USA | UK |
| Royal Dutch Shell plc | UK | Netherlands | UK |
| WANDisco plc | UK | UK and USA | Jersey |
| XP Power Ltd | UK | Singapore | Singapore |
| Unlisted private companies: | |||
| 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 |
| Laundrapp Ltd | - | UK | UK |
| Mexican Grill Ltd | - | UK | UK |
| Oxford Genetics Ltd | - | UK | UK |
| Portr Ltd | - | UK | UK |
| SCA Investments Ltd (Gousto) | - | UK | UK |
| Zappar Ltd | - | UK | UK |
| Authorised unit trust: | |||
| MFM Special Situations Fund | - | UK | UK |
Top ten investments
As at 31 March 2019 (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 based on the most appropriate methodology recommended by the International Private Equity Venture Capital (IPEV) guidelines. 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 and asset values are drawn from published accounts in most cases.
| Creo Medical Group plc | 190.0p | ||
| Investment date | Dec-16 | Forecasts for the year to | December 2019 |
| Equity held | 1.89% | Turnover (£’000) | 302 |
| Av. Purchase Price | 101.4p | Profit/(loss) before tax (£’000) | (17,100) |
| Cost (£’000) | 2,333 | Net cash/(debt) December 2018 (£’000) | 44,155 |
| Valuation (£’000) | 4,370 | Net assets December 2018 (£’000) | 47,714 |
| COMPANY DESCRIPTION | |||
| Creo Medical is a medical device company focused on the emerging field of surgical endoscopy, a recent development in minimally invasive surgery. Creo Medical was founded in 2003, initially to target the treatment of cancers through use of high frequency microwave energy and dynamic matching techniques. | |||
| Ideagen plc | 146.0p | ||
| Investment date | Dec-14 | Forecasts for the year to | April 2019 |
| Equity held | 1.18% | Turnover (£’000) | 46,300 |
| Av. Purchase Price | 77.2p | Profit/(loss) before tax (£’000) | 12,000 |
| Cost (£’000) | 1,992 | Net cash/(debt) October 2018 (£’000) | (1,303) |
| Valuation (£’000) | 3,769 | Net assets October 2018 (£’000) | 71,657 |
| 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. | |||
| Learning Technologies Group plc | 69.8p | ||
| Investment date | Nov-14 | Forecasts for the year to | December 2019 |
| Equity held | 0.78% | Turnover (£’000) | 126,000 |
| Av. Purchase Price | 49.7p | Profit/(loss) before tax (£’000) | 32,800 |
| Cost (£’000) | 2,586 | Net cash/(debt) December 2018 (£’000) | (11,465) |
| Valuation (£’000) | 3,630 | Net assets December 2018 (£’000) | 168,819 |
| COMPANY DESCRIPTION | |||
| Learning Technologies Group provides a comprehensive and integrated range of e-learning services and technologies to corporate and government clients. The Group offers end-to-end learning and talent solutions ranging from strategic consultancy, through a range of content and platform solutions to analytical insights that enable corporate and government clients to meet their performance objectives. | |||
| SCA Investments Ltd (Gousto) (unquoted) | 5,299.0p | ||
| Investment date | Jul-17 | Results for the year to | December 2017 |
| Equity held | 2.12% | Turnover (£’000) | 23,204 |
| Av. Purchase Price | 3,714.0p | Profit/(loss) before tax (£’000) | (13,426) |
| Cost (£’000) | 2,486 | Net cash/(debt) December 2017 (£’000) | 17,700 |
| Valuation (£’000) | 3,547 | Net assets December 2017 (£’000) | 18,781 |
| 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. | |||
| Aquis Exchange plc | 575.0p | ||
| Investment date | Oct-16 | Forecasts for the year to | December 2019 |
| Equity held | 1.83% | Turnover (£’000) | 6,490 |
| Av. Purchase Price | 154.0p | Profit/(loss) before tax (£’000) | (978) |
| Cost (£’000) | 765 | Net cash/(debt) December 2018 (£’000) | 11,610 |
| Valuation (£’000) | 2,857 | Net assets December 2018 (£’000) | 14,570 |
| COMPANY DESCRIPTION | |||
| Aquis Exchange is an independent, pan-European cash equities trading venue with a unique, subscription based, pricing model. Aquis Exchange uses its own highly-performant trading technology, which is developed in-house. Aquis Exchange’s technology is also available for licencing to third parties via the Company’s software division, Aquis Technologies. | |||
| Zoo Digital Group plc | 57.0p | ||
| Investment date | Apr-17 | Forecasts for the year to | March 2020 |
| Equity held | 6.21% | Turnover ($’000) | 35,000 |
| Av. Purchase Price | 49.1p | Profit/(loss) before tax ($’000) | 800 |
| Cost (£’000) | 2,267 | Net cash/(debt) March 2019 ($’000) | (2,319) |
| Valuation (£’000) | 2,633 | Net assets March 2019 ($’000) | 4,684 |
| COMPANY DESCRIPTION | |||
| Zoo Digital is a leading provider of cloud-based dubbing, subtitling, localisation and distribution services for the global entertainment industry. Zoo's clients are some of the best-known brands in the world including major Hollywood studios, global broadcasters and independent distributors. Zoo's point of difference in the marketplace is its development and use of innovative cloud technology that ensures that content is localised in any language and delivered to all the major online platforms such as Amazon, iTunes, Google and Hulu with reduced time to market, higher quality and lower costs. | |||
| Hardide plc | 47.0p | ||
| Investment date | Mar-05 | Forecasts for the year to | September 2019 |
| Equity held | 10.56% | Turnover (£’000) | 4,800 |
| Av. Purchase Price | 61.4p | Profit/(loss) before tax (£’000) | (1,200) |
| Cost (£’000) | 3,140 | Net cash/(debt) September 2018 (£’000) | 3,234 |
| Valuation (£’000) | 2,405 | Net assets September 2018 (£’000) | 5,079 |
| COMPANY DESCRIPTION | |||
| Hardide is the leading global innovator and provider of advanced tungsten carbide coatings that significantly increase the working life of critical metal components operating in abrasive, erosive, corrosive and chemically aggressive environments. | |||
| Craneware plc | 2,390.0p | ||
| Investment date | Sep-07 | Forecasts for the year to | June 2019 |
| Equity held | 0.37% | Turnover ($’000) | 79,300 |
| Av. Purchase Price | 128.0p | Profit/(loss) before tax ($’000) | 25,300 |
| Cost (£’000) | 125 | Net cash/(debt) December 2018 ($’000) | 38,668 |
| Valuation (£’000) | 2,342 | Net assets December 2018 ($’000) | 56,256 |
| COMPANY DESCRIPTION | |||
| Craneware develops and sells billing software analysis tools for the United States healthcare services sector. The company’s software automates the checking process, aids in cash flow and revenue generation, and ensures accurate submission of claims and management of compliance risks. | |||
| Oxford Genetics Ltd (unquoted) | 32,000.0p | ||
| Investment date | Mar-19 | Results for the year to | April 2018 |
| Equity held | 7.17% | Turnover (£’000) | 1,015 |
| Av. Purchase Price | 32,064.2p | Profit/(loss) before tax (£’000) | (3,028) |
| Cost (£’000) | 2,190 | Net cash/(debt) April 2018 (£’000) | 2,905 |
| Valuation (£’000) | 2,186 | Net assets April 2018 (£’000) | 6,357 |
| Income recognised in period (£) | 0 | ||
| COMPANY DESCRIPTION | |||
| Oxford Genetics is a synthetic biology company focused on developing novel technologies to overcome the challenges associated with the discovery, development and production of biologics, gene therapies, cell therapies and vaccines. | |||
| Quixant plc | 292.0p | ||
| Investment date | May-13 | Forecasts for the year to | December 2019 |
| Equity held | 1.09% | Turnover ($’000) | 119,700 |
| Av. Purchase Price | 189.6p | Profit/(loss) before tax ($’000) | 19,800 |
| Cost (£’000) | 1,368 | Net cash/(debt) December 2018 ($’000) | 9,729 |
| Valuation (£’000) | 2,105 | Net assets December 2018 ($’000) | 59,433 |
| COMPANY DESCRIPTION | |||
| Quixant designs and manufactures complete advanced hardware and software solutions for the pay-to-play gaming 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. | |||
For further information please contact:
Oliver Bedford
Co-Manager
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 2019 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
Chairman
Date: 27 June 2019
Condensed income statement
for the six month period to 31 March 2019 (unaudited)
| For the six month period to | For the six month period to | |||||
| 31 March 2019 (unaudited) | 31 March 2018 (unaudited)(1) | |||||
| Revenue | Capital | Total | Revenue | Capital | Total | |
| £000 | £000 | £000 | £000 | £000 | £000 | |
| Net (loss)/gain on investments held at fair value through profit or loss (Note 5) | - | (24,074) | (24,074) | - | 2,654 | 2,654 |
| Income (Note 2) | 447 | - | 447 | 271 | - | 271 |
| ----------- | ----------- | ----------- | ----------- | ----------- | ----------- | |
| 447 | (24,074) | (23,627) | 271 | 2,654 | 2,925 | |
| Management fee | (258) | (776) | (1,034) | (138) | (414) | (552) |
| Other expenses | (345) | (70) | (415) | (485) | - | (485) |
| ----------- | ----------- | ----------- | ----------- | ----------- | ----------- | |
| (603) | (846) | (1,449) | (623) | (414) | (1,037) | |
| ----------- | ----------- | ----------- | ----------- | ----------- | ----------- | |
| (Loss)/gain on ordinary activities before taxation | (156) | (24,920) | (25,076) | (352) | 2,240 | 1,888 |
| Taxation | - | - | - | - | - | - |
| ----------- | ----------- | ----------- | ----------- | ----------- | ----------- | |
| (Loss)/gain on ordinary activities after taxation | (156) | (24,920) | (25,076) | (352) | 2,240 | 1,888 |
| ----------- | ----------- | ----------- | ----------- | ---------- | ---------- | |
| (Loss)/gain per share basic and diluted (Note 3) | (0.08)p | (13.34)p | (13.42)p | (0.43)p | 2.71p | 2.28p |
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.
(1) Results for the six month period to 31 March 2018 are predominantly pre-merger. The acquisition of Hargreave Hale AIM VCT 2 plc was completed on 23 March 2018.
Condensed income statement
for the year ended 30 September 2018 (audited)
| For the year to | |||
| 30 September 2018 (audited) | |||
| Revenue | Capital | Total | |
| £000 | £000 | £000 | |
| Net gain on investments held at fair value through profit or loss (Note 5) | - | 16,519 | 16,519 |
| Income (Note 2) | 806 | 78 | 884 |
| ----------- | ----------- | ----------- | |
| 806 | 16,597 | 17,403 | |
| Management fee | (416) | (1,249) | (1,665) |
| Other expenses | (633) | (109) | (742) |
| ----------- | ----------- | ----------- | |
| (1,049) | (1,358) | (2,407) | |
| ----------- | ----------- | ----------- | |
| (Loss)/gain on ordinary activities before taxation | (243) | 15,239 | 14,996 |
| Taxation | - | - | - |
| ----------- | ----------- | ----------- | |
| (Loss)/gain after taxation | (243) | 15,239 | 14,996 |
| ----------- | ----------- | ----------- | |
| (Loss)/gain per share basic and diluted (Note 3) | (0.19)p | 11.81p | 11.62p |
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 2019 (unaudited)
| 31 March | 31 March | 30 September | |
| 2019 | 2018 | 2018 | |
| (unaudited) | (unaudited) | (audited) | |
| £000 | £000 | £000 | |
| Fixed assets | |||
| Investments at fair value through profit or loss | 123,272 | 108,355 | 130,105 |
| ----------- | ----------- | ----------- | |
| Current assets | |||
| Debtors | 157 | 290 | 167 |
| Cash at bank | 21,897 | 24,506 | 24,860 |
| ----------- | ----------- | ----------- | |
| 22,054 | 24,796 | 25,027 | |
| Creditors: amounts falling due within one year (Note 7) | (340) | (628) | (346) |
| ----------- | ----------- | ----------- | |
| Net current assets | 21,714 | 24,168 | 24,681 |
| ----------- | ----------- | ----------- | |
| Net assets | 144,986 | 132,523 | 154,786 |
| ----------- | ----------- | ----------- | |
| Capital and Reserves | |||
| Called up share capital | 2,052 | 1,621 | 1,767 |
| Share premium | 23,735 | 104,229 | - |
| Capital redemption reserve | 27 | 50 | 5 |
| Special reserve | 117,153 | 12,636 | 125,919 |
| Capital reserve - realised | (9,384) | (2,968) | (2,774) |
| Capital reserve - unrealised | 12,296 | 17,801 | 30,606 |
| Revenue reserve | (893) | (846) | (737) |
| ----------- | ----------- | ----------- | |
| Total shareholders' funds | 144,986 | 132,523 | 154,786 |
| ----------- | ----------- | ----------- | |
| Net asset value per share basic and diluted (Note 4) | 70.67p | 81.74p | 87.59p |
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 2019 (unaudited)
| Non-distributable reserves | Distributable reserves (1) | |||||||
| Share | Share | Capital | Capital | Special | Capital | Revenue | Total | |
| capital | premium | redemption | reserve | reserve | reserve | reserve | ||
| reserve | unrealised | realised | ||||||
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | |
| At 1 October 2018 | 1,767 | - | 5 | 30,606 | 125,919 | (2,774) | (737) | 154,786 |
| Share buybacks | (22) | - | 22 | - | (1,625) | - | - | (1,625) |
| Share issues | 307 | 24,175 | - | - | - | - | - | 24,482 |
| Issue costs | - | (440) | - | - | - | - | - | (440) |
| Equity dividends paid | - | - | - | - | (7,141) | - | - | (7,141) |
| Realised (loss) on investments | - | - | - | - | - | (5,764) | - | (5,764) |
| Unrealised (loss) on investments | - | - | - | (18,310) | - | - | - | (18,310) |
| Management fee charged to capital | - | - | - | - | - | (776) | - | (776) |
| Due diligence investment costs | - | - | - | - | - | (70) | - | (70) |
| Revenue (loss) after taxation for the period | - | - | - | - | - | - | (156) | (156) |
| Total (loss) after taxation | - | - | - | (18,310) | - | (6,610) | (156) | (25,076) |
| ---------- | ----------- | ----------- | ----------- | ---------- | ----------- | ----------- | ---------- | |
| At 31 March 2019 | 2,052 | 23,735 | 27 | 12,296 | 117,153 | (9,384) | (893) | 144,986 |
| ---------- | ----------- | ----------- | ----------- | ---------- | ----------- | ----------- | ---------- | |
Reserves available for distribution are capital reserve realised, special reserve and revenue reserve. Total distributable reserves at 31 March 2019 were £106.9 million. The accompanying notes are an integral part of these financial statements.
(1) The Income Taxes Act 2007 restricts distribution of capital from reserves created by the conversion of the share premium account into a special (distributable) reserve until the third anniversary of the share allotment that led to the creation of that part of the share premium account. As at 31 March 2019, £70.8 million of the special reserve is subject to this restriction.
Condensed statement of changes in equity
for the six month period to 31 March 2018 (unaudited)(1)
| Non-distributable reserves | Distributable reserves | |||||||
| Share | Share | Capital | Capital | Special | Capital | Revenue | Total | |
| capital | premium | redemption | reserve | reserve | reserve | reserve | ||
| reserve | unrealised | realised | ||||||
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | |
| At 1 October 2017 | 816 | 37,515 | 37 | 17,237 | 15,522 | (4,644) | (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 | - | - | - | 564 | - | 1,676 | (352) | 1,888 |
| ---------- | ----------- | ----------- | ----------- | ---------- | ----------- | ---------- | ---------- | |
| At 31 March 2018 | 1,621 | 104,229 | 50 | 17,801 | 12,636 | (2,968) | (846) | 132,523 |
| ---------- | ----------- | ----------- | ----------- | ---------- | ----------- | ---------- | ---------- | |
Reserves available for distribution are capital reserve realised, special reserve and revenue reserve. Total distributable reserves at 31 March 2018 were £8.8 million. The accompanying notes are an integral part of these financial statements.
(1) Results for the six month period to 31 March 2018 are predominantly pre-merger. The acquisition of Hargreave Hale AIM VCT 2 plc was completed on 23 March 2018.
Condensed statement of changes in equity
for the year ended 30 September 2018 (audited)
| Non-distributable reserves | Distributable reserves(1) | |||||||
| Share | Share | Capital | Capital | Special | Capital | Revenue | Total | |
| capital | premium | redemption | reserve | reserve | reserve | reserve | ||
| reserve | unrealised | realised | ||||||
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | |
| At 1 October 2017 | 816 | 37,515 | 37 | 17,237 | 15,522 | (4,644) | (494) | 65,989 |
| Share buybacks | (29) | - | 29 | - | (2,387) | - | - | (2,387) |
| Share issues | 293 | 24,707 | - | - | - | - | - | 25,000 |
| Issue costs | - | (499) | - | - | - | - | - | (499) |
| Acquisition of Hargreave Hale AIM VCT 2 plc | 687 | 55,919 | - | - | - | - | - | 56,606 |
| Capital reduction | - | (117,642) | (61) | - | 117,703 | - | - | - |
| Equity dividends paid | - | - | - | - | (4,919) | - | - | (4,919) |
| Realised gain on investments | - | - | - | - | - | 3,150 | - | 3,150 |
| Unrealised gain on investments | - | - | - | 13,369 | - | - | - | 13,369 |
| Management fee charged to capital | - | - | - | - | - | (1,249) | - | (1,249) |
| Income allocated to capital | - | - | - | - | - | 78 | - | 78 |
| Due diligence investment costs | - | - | - | - | - | (109) | - | (109) |
| Revenue (loss) after taxation for the period | - | - | - | - | - | - | (243) | (243) |
| Total gain/(loss) after taxation | - | - | - | 13,369 | - | 1,870 | (243) | 14,996 |
| ---------- | ----------- | ----------- | ----------- | ---------- | ----------- | ---------- | ---------- | |
| At 30 September 2018 | 1,767 | - | 5 | 30,606 | 125,919 | (2,774) | (737) | 154,786 |
| ---------- | ----------- | ----------- | ----------- | ---------- | ----------- | ----------- | ---------- | |
Reserves available for distribution are capital reserve realised, special reserve and revenue reserve. Total distributable reserves at 30 September 2018 were £122.4 million. The accompanying notes are an integral part of these financial statements.
(1) The Income Taxes Act 2007 restricts distribution of capital from reserves created by the conversion of the share premium account into a special (distributable) reserve until the third anniversary of the share allotment that led to the creation of that part of the share premium account. As at 30 September 2018, £80.8 million of the special reserve is subject to this restriction.
Condensed statement of cash flows
for the six month period to 31 March 2019 (unaudited)
| 31 March 2019 | 31 March 2018(1)(2) | 30 September 2018(3) | |
| (unaudited) | (unaudited) | (audited) | |
| £000 | £000 | £000 | |
| Total profit on ordinary activities before taxation | (25,076) | 1,888 | 14,996 |
| Realised loss/(gain) on investments | 5,764 | (2,090) | (3,150) |
| Unrealised loss/(gain) on investments | 18,310 | (564) | (13,369) |
| Decrease/(Increase) in debtors | 10 | (227) | (104) |
| (Decrease)/Increase in creditors | (6) | 422 | 140 |
| ----------- | ----------- | ----------- | |
| Net cash (outflow) from operating activities | (998) | (571) | (1,487) |
| Purchase of investments | (23,666) | (4,599) | (18,487) |
| Sale of investments | 6,425 | 7,013 | 13,016 |
| ----------- | ----------- | ----------- | |
| Net cash used in investing activities | (17,241) | 2,414 | (5,471) |
| Share buybacks | (1,625) | (1,071) | (2,387) |
| Issue of share capital | 24,482 | 11,114 | 25,000 |
| Share issue costs | (440) | (188) | (499) |
| Cash acquired on acquisition of Hargreave Hale AIM VCT 2 plc | - | 6,616 | 6,616 |
| Dividends paid | (7,141) | (1,815) | (4,919) |
| ----------- | ----------- | ----------- | |
| Net cash provided by financing activities | 15,276 | 14,656 | 23,811 |
| ----------- | ----------- | ----------- | |
| Net (decrease)/increase in cash | (2,963) | 16,499 | 16,853 |
| ----------- | ----------- | ----------- | |
| Opening cash | 24,860 | 8,007 | 8,007 |
| Closing cash | 21,897 | 24,506 | 24,860 |
(1) 31 March 2018 figures restated
(2) Results for the six month period to 31 March 2018 are predominantly pre-merger. The acquisition of Hargreave Hale AIM VCT 2 plc was completed on 23 March 2018.
(3) 30 September 2018 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 2019 (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 2019. The Company applies FRS 104 and the Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts (AIC SORP)(2014), updated February 2018.
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.
Financial instruments
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 in accordance with the International Private Equity Venture Capital (“IPEV”) guidelines published in December 2018.
Where no active market exists for the particular asset, the Company holds the investment at fair value as determined by the investment manager and approved by the Board. Valuations of unquoted investments are reviewed on a quarterly basis and more frequently if events occur that could have a material impact on the investment.
In estimating fair value for an unquoted investment, the investment manager will apply one or more valuation techniques according to the nature, facts, and circumstances of the investment. The investment manager will use reasonable current market data and inputs combined with market participant assumptions. The assessment of fair value will reflect the market conditions at the measurement date irrespective of which valuation technique is used. The IPEV guidelines describe a range of valuation techniques, including but not limited to relevant observable market multiples, independent arms-length transactions, income, discounted cash flows and net assets.
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 capital reserve unrealised or capital reserve realised 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.
Other financial assets and liabilities comprise receivables, payable and cash which are measured at amortised cost. There are no financial liabilities other than payables.
Acquisition accounting
Where the assets and liabilities of another VCT are acquired by the Company through a business combination, the identifiable assets and liabilities are initially recognised at their fair values at the acquisition date.
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 is recognised on an accruals basis. Other income is treated as a repayment of capital or revenue depending on the facts of each particular case. 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. Due diligence costs incurred for prospective private company purchases are charged to capital in addition to the cost of the investment. 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 being investment in equity and debt securities.
Dividends
Only dividends recognised during the year are deducted from revenue or capital reserves. Equity dividends are recognised in the accounts when they become legally payable. Interim dividends are approved by the Board of Directors and may be varied or rescinded at any time before payment, therefore the liability is only established when the dividend is actually paid. Final dividends are subject to approval at the AGM. When the dividend is declared, it states that it is payable on a future date so liability is established on that date.
Summary of dividends paid in the six months to 31 March 2019 and the financial year ending 30 September 2018 are detailed below:
| Six months ended 31 March 2019 (unaudited) £’000 | Year ended 30 September 2018 (audited) £’000 | |
| Final capital dividend of 2.25 pence per share for the year ended 30 September 2017 paid on 30 January 2018 | - | 1,816 |
| Interim capital dividend of 1.75 pence per share for the half year ended 31 March 2018 paid on 31 July 2018 | - | 3,106 |
| Unclaimed dividends (1) | - | (3) |
| Special dividend of 1 penny per share paid on 24 October 2018 | 1,772 | - |
| Final capital dividend of 2.65 pence per share for the year ended 30 September 2018 paid on 8 February 2019 | 5,369 | - |
| Total | 7,141 | 4,919 |
(1) Unclaimed dividends for a period of 12 years reverted to the Company
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 it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.
Current tax is expected tax payable on the taxable profit for the period using the current tax rate and laws that have been enacted or substantially enacted at the reporting date. 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.
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 the 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.
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.
Contingencies, guarantees and financial commitments
There were no contingencies, guarantees or financial commitments of the Company at 31 March 2019.
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.
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, income that is capital in nature, 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.
- Income
| Income from investments | Six months to 31 March 2019 (unaudited) £000 | Six months to 31 March 2018 (unaudited) £000 | Year ended 30 September 2018 (audited) £000 |
| Revenue: | |||
| Dividend income | 408 | 261 | 793 |
| Fixed income interest | 12 | 10 | 13 |
| Bank deposit interest | 27 | - | - |
| 447 | 271 | 806 | |
| Capital: | |||
| Arrangement fees (1) | - | - | 22 |
| Return of capital (2) | - | - | 56 |
| - | - | 78 | |
| Total income | 447 | 271 | 884 |
(1) Arrangement fees received in relation to the acquisition of Infinity Reliance (My 1st Years) in May 2018.
(2) Distribution from Sportech plc following the successful sale of their Football Pools business completed in June 2017 and the subsequent approval of the Company’s application to reduce its capital.
3. Earnings per share (basic and diluted)
| Six months to 31 March 2019 (unaudited) | Six months to 31 March 2018 (unaudited) | Year ended 30 September 2018 (audited) | |
| (loss)/gain per share | (13.42)p | 2.28p | 11.62p |
| Net (loss)/gain for the period | (£25,076,246) | £1,888,431 | £14,996,362 |
| Weighted average number of shares | 186,851,704 | 82,641,439 | 129,091,888 |
- Net asset value per share
| Six months to 31 March 2019 (unaudited) | Six months to 31 March 2018 (unaudited) | Year ended 30 September 2018 (audited) | |
| Net asset value per share | 70.67p | 81.74p | 87.59p |
| Net assets | £144,985,833 | £132,522,812 | £154,786,376 |
| Number of shares in issue at period end | 205,167,942 | 162,125,608 | 176,711,020 |
- Investments
| Capital | Six months to 31 March 2019 (unaudited) £000 | Six months to 31 March 2018 (unaudited) £000 | Year ended 30 September 2018 (audited) £000 |
| Realised (loss) /gain on investments held at fair value through profit or loss | (5,764) | 2,090 | 3,150 |
| Unrealised (loss) /gain on investments held at fair value through profit or loss | (18,310) | 564 | 13,369 |
| Net (loss) /gain on investments held at fair value through profit or loss | (24,074) | 2,654 | 16,519 |
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 2019 (unaudited) | 109,906 | - | 13,366 | 123,272 |
| Year ended 30 September 2018 (audited) | 116,907 | - | 13,198 | 130,105 |
| Six months ended 31 March 2018 (unaudited) | 97,457(1) | - | 10,898 | 108,355 |
(1) Includes £12,912 reclassification adjustment from level 2 to level 1
- Debtors
| Debtors | Six months to 31 March 2019 (unaudited) £000 | Six months to 31 March 2018 (unaudited) £000 | Year ended 30 September 2018 (audited) £000 |
| Prepayments and accrued income | 157 | 290 | 167 |
- Creditors: amounts falling due within one year
| Six months to 31 March 2019 (unaudited) £000 | Six months to 31 March 2018 (unaudited) £000 | Year ended 30 September 2018 (audited) £000 | |
| Trade Creditors | 11 | - | 7 |
| Accruals and deferred income | 329 | 628 | 339 |
| 340 | 628 | 346 |
- Cautionary statement
The results should not be taken as a guide to the results for the financial period ending 30 September 2019. 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.
- Publication of non-statutory accounts
The financial information contained in the 31 March 2019 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, compliance, operational, outsourcing and reputational risk. Other risks faced by the Company include market risk, currency risk, interest rate risk, liquidity 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 2018. 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 2,204,772 shares during the six month period ending 31 March 2019 at a total cost of £1,624,495. The repurchased shares represent 1.25% of ordinary shares in issue on 1 October 2018. The acquired shares have been cancelled.
Share issues
In total, the Company issued 30,661,694 new shares (nominal value £306,617) through an offer for subscription during the six month period ending 31 March 2019 raising net proceeds of £24,041,421.
- Related party transactions
As the Company’s investment manager, Hargreave Hale Limited (HH) is a related party to the Company for the purposes of the Listing Rules. As HH and Canaccord Genuity Wealth Limited (CGWL) are part of the same CGWL group, CGWL also falls into the definition of related party.
Oliver Bedford, a non-executive director of the Company is also an employee of HH and the fee in respect of his position on the Board is paid to HH. CGWL act as administrator and custodian to the Company and provide the company secretary.
Fees received by HH in its capacity as investment manager for the half-year are £1,034,310 (2018: £552,245). In relation to the other support functions described above, CGWL received fees of £77,500 in the period (2018: £74,237) for these services. Of those fees, £205,880 (2018: £196,379) was still owed at the half-year end.
HH has agreed to indemnify the Company and keep indemnified the Company in respect of the amount by which the annual running costs of the Company exceed 3.5 per cent. of the net assets of the Company, such costs shall exclude any VAT payable thereon and any payments to financial intermediaries the payment of which is the responsibility of the Company. No fees were waved by HH in the first half of the financial year under the indemnity.
During the half year, the Company issued 30,661,694 ordinary shares (nominal value £306,617) in an offer for subscription which resulted in gross funds being received of £24,481,500. As marketing adviser and receiving agent to the Company, CGWL was entitled to 3.5% of the gross proceeds (£856,852), often referred to as the ‘premium’. From this, CGWL paid for the allotment of additional shares to investors with a value of £416,773 and introductory commission of £150, resulting in net fees payable to CGWL of £439,929 to cover the costs of the offer.
Following the acquisition of HH by CGWL, the Company has entered into a series of new agreements.
As previously announced, on 5 April 2019 the Company entered into a new custody agreement with CGWL. Under the terms of the new custody agreement the annual custody fee was increased from £10,000 to £30,000. On 25 June 2019, the Company entered into new administration and secretarial contracts with CGWL. Under the new agreements the annual fee for administration services increases from £110,000 to £195,000. The fee for secretarial services remains unchanged at £17,000.
Investment management will continue to be provided by HH under a new agreement which commenced on 25 June 2019. As previously disclosed the annual fee payable to the investment manager increased to 1.7% with effect from 1 April 2019. The annual fee continues at this rate under the new agreement. The investment manager’s previous entitlement to earn a performance fee has been removed under the updated arrangements.
- 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 717,823 ordinary shares being issued, raising gross proceeds of £518,500.
Buybacks
Since the period end, a further 921,507 ordinary shares have been purchased at an average price of 68.84 pence and a total cost of £634,385.
Investments
The Company has made the following investments since the period end
| Amount Invested £000 | Investment into existing company | |
| Qualifying companies | ||
| Laundrapp Ltd | 1,015 | Yes |
| Escape Hunt plc | 832 | Yes |
| Honest Brew Ltd | 80 | Yes |
| Portr Ltd | 25 | Yes |
| Non-qualifying companies | ||
| BP plc | 1,471 | Yes |
| Melrose Industries plc | 1,265 | Yes |
| Hilton Food Group plc | 1,183 | Yes |
| Charter Court Financial Services Group plc | 948 | Yes |
| Ascential plc | 890 | Yes |
| Trainline plc | 681 | No |
| TT Electronics plc | 656 | No |
| XP Power Ltd | 554 | Yes |
| Lloyds Banking Group plc | 506 | Yes |
| FDM Group (Holdings) plc | 465 | Yes |
| Renishaw plc | 374 | Yes |
| GoCo Group plc | 133 | Yes |
| Cineworld Group plc | 103 | Yes |
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 21 June 2019 was 72.31 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 1.50 pence in respect of the six months ended 31 March 2019.
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 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. Canaccord Genuity Wealth Management 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 Canaccord Genuity Wealth Management to act for you as their client (as opposed to a shareholder in the Company) then please contact Andrew Pang for further information (0207 523 4872, andrew.pang@canaccord.com).
Please note that Canaccord Genuity Wealth Management 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 Canaccord Genuity Wealth Limited on 01253 754755 or by e-mail to aimvct@canaccord.com.
For enquiries concerning the performance of the Company, please contact the investment manager on 0207 523 4837 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 below.
Company information
| Secretary and registered office Canaccord Genuity Wealth Limited 41 Lothbury London EC2R 7AE | Directors Sir Aubrey Brocklebank David Brock Oliver Bedford Ashton Bradbury |
| Manager Hargreave Hale Limited c/o 41 Lothbury London EC2R 7AE Registrars Equiniti Aspect House Spencer Road Lancing West Sussex BN99 6DA | Administrator and Custodian Canaccord Genuity Wealth Limited c/o Talisman House Boardmans Way Blackpool FY4 5FY Auditors BDO LLP 55 Baker Street London W1U 7EU |
| Solicitors Dickson Minto W.S. 16 Charlotte Square Edinburgh EH2 4DF | VCT status adviser Philip Hare & Associates LLP 4-6 Staple Inn High Holborn London WC1V 7QH |
Latest directors dealings
- 17 minutes ago Prudential
- 41 minutes ago Scottish Mortgage Inv Trust
- 3 hours ago Seeing Machines Ltd. NPV (DI)
- 3 hours ago Taseko Mines Limited NPV (DI)
- 3 hours ago Taseko Mines Limited NPV (DI)