Hargreave Hale AIM VCT 2 plc : Final Results

Hargreave Hale AIM VCT2 plc

Preliminary Announcement of Final Results for the year ending 29 February 2012.

FINANCIAL HIGHLIGHTS

CHAIRMAN'S STATEMENT

Introduction
At 29 February 2012 the NAV was 96.8 pence which after adjusting for the dividends paid gives a total return since inception of 117.8 pence. The loss per ordinary share for the year was 6.02 pence per share (comprising revenue losses of 2.38 pence and capital losses of 3.64 pence). After allowing for the 2p interim dividend paid in November this reflects a recovery of 4.96 pence in NAV during the second half. During the financial year as a whole the FTSE AIM All Share Index fell by 11.2%. Whilst this index is the only sensible benchmark, it is not strictly comparable as it has a high proportion of large mining and commodities stocks in which a VCT cannot invest.

Investments
The Investment Manager, Hargreave Hale Limited, invested a further £1.01 million in 10 qualifying companies during the year. The Fair Value of qualifying investments at 29 February 2012 was £4.20 million invested in 26 AIM companies and 3 unquoted companies; this compared with an original cost of £3.30 million. The balance of the fund, £2.34 million was held in a mix of cash, fixed income and other non-qualifying equities.

Dividend
An interim dividend of 2 pence was paid on 15 November 2011 (2010 - 2 pence). 

A final dividend of 3 pence is proposed (2011 - 3 pence) which, subject to shareholder approval at the AGM will be paid on 19 July 2012, to ordinary shareholders on the register on 15 June 2012.
Provided the underlying investment performance of the fund remains acceptable and the liquidity position allows, it remains our policy to target a 5% distribution yield referenced to the NAV of the Company.

Buybacks
In total, 10,150 Shares were purchased during the year at an average price of 85.15 pence per share.

As detailed in the recent prospectus the Board has agreed to target a reduced discount of 5% for future market purchases. It should be emphasised that this target is non-binding and dependent on circumstances including the funds liquidity from time to time and market conditions.

New Joint Offer for Subscription of Ordinary Shares

On the 29 February 2012 the Directors of Hargreave Hale AIM VCT 1 plc and Hargreave Hale AIM VCT 2 plc announced the launch of a new offer for subscription of new shares in both VCT's. The companies have also launched an Enhanced Share Buy Back for existing shareholders who have held their shares for at least 5 years.  

Both the offers for subscription and the Enhanced Share Buy Back were approved by shareholders of the Company at a General Meeting on 26 March 2012.

The Enhanced Share Buy Back for the 2011/12 tax year resulted in 1,608,920 Ordinary shares being purchased by the Company for cancellation and 1,558,927 new Ordinary shares being issued by the Company under the terms of the Enhanced Share Buy Back. A maximum of 3,500,000 Ordinary Shares could be repurchased by the Company and so all applications have been accepted in full. The Company announced on 29 March 2012 the extension of the Tender Offer and associated Enhanced Share Buy Back until 31 August 2012.

Since its launch on 29 February 2012 the new joint offers for subscription has resulted in funds being received of £1.23 million and the issue of 1.25 million shares. The offer closes on 31 August 2012.

The funds raised and shares issued to date under the New Joint Offer are post year end events.

VCT Status
To maintain its VCT qualifying status we must invest at least 70% of the net funds raised in any one accounting period in qualifying investments within three years. I am pleased to report that at the year end we have achieved 89.02% and have satisfied all the relevant tests.

Outlook
During the past 12 months the previous steady recovery in the UK economy has almost ground to a halt. This is little surprise given the deep seated domestic problems of high personal and Government indebtedness which have been aggressively countered by loose monetary policy including continued quantitative easing. Against this background performance of the corporate sector, especially those enterprises with international exposure has proved remarkably resilient. With difficulties in the Eurozone still far from resolved, there are no guarantees that this relatively benign situation can persist. Until conditions improve we shall therefore continue to take a fairly cautious approach to new investment.

At the recent General Meeting shareholders agreed the change in our investment policy enabling the manager to invest in Marlborough Special Situations Fund. This fund has an outstanding record and has been managed by Giles Hargreave for 14 years. We believe it represents a valuable addition to our range of investment opportunities enabling ready access to a high quality portfolio of small companies when market conditions are judged to be right.

David Hurst-Brown
Chairman
Date: 6 June 2012

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 29 February 2012

INCOME STATEMENT
For the year ended 28 February 2011

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.

These financial statements were approved and authorised for issue by the Board of Directors on 6 June 2012 and signed on its behalf by

David Hurst-Brown
Chairman

The accompanying notes are an integral part of these financial statements.

CASH FLOW STATEMENT
For the year ending 29 February 2012

RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
For the year ending 29 February 2012

Reserves available for distribution are capital reserve realised, special reserve and revenue reserve.

RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
For the year ending 28 February 2011

Notes to the preliminary announcement

1. The financial information set out in this preliminary announcement does not constitute the Company's statutory accounts for the years ended 29 February 2012 or 28 February 2011. Statutory accounts for the year ended 28 February 2011 have been filed with the Registrar of Companies and those of the year ended 29 February 2012 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 28 February 2011 and 29 February 2012 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 Practise (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 29 February 2012. The full statutory annual accounts will be published in June 2012. 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 16 July 2012 at 11.00am.
    
2. Revenue loss per ordinary share based on a net revenue loss on ordinary activities after taxation of £159,105 (2011 - £195,861) and on 6,676,930 (2011 - 5,494,893) ordinary shares, being the weighted average number of ordinary shares in issue during the year. Capital return per ordinary share based on a net capital loss of £243,238 (2011 - gain of £705,354) for the year and on 6,676,930 (2011 - 5,494,893) ordinary shares, being the weighted average number of ordinary shares in issue during the year.
   
    
3. The net asset value per ordinary share at 29 February 2012 of 96.80p (2011 107.92p) is based on net assets of £6,493,243 (2011 £6,154,270) and on 6,708,062 shares, being the number of ordinary shares in issue as at 29 February 2012 (2011 5,702,685).  

INVESTMENT PORTFOLIO SUMMARY

Ordinary Share Fund
As at 29 February 2012

INVESTMENT PORTFOLIO SUMMARY (continued)

The majority of investments held within the portfolio are listed and/or headquartered in the UK with the exception of the following:

MyCelx Technologies Corporation plc: UK listed but headquartered in Georgia, USA.
Genargo Ltd: Not listed but headquartered in Jersey.
Prophotonix Ltd: Listed in the UK, headquartered in New Hampshire, USA.
Skill Ports and Logistics Ltd: UK listed but headquartered in Guernsey.
Westmount Energy Ltd: UK listed but headquartered in Jersey.
Fulcrum Utility Services Ltd: UK listed but registered in Cayman Islands.

Date 6 June 2012
For further information please contact:
Stuart Brookes
Company Secretary
Hargreave Hale AIM VCT2 plc
01253 754740