Hargreave Hale AIM VCT Plc
Unaudited Interim Results for the six month period ending 31 March 2020
FINANCIAL HIGHLIGHTS
| Ordinary Shares (as at 31 March): | 31 March 2020 | 31 March 2019 | 30 September 20191 |
| Net asset value (NAV) per share | 56.70p | 70.67p | 70.60p |
| Cumulative distributions paid per share since launch | 59.15p | 53.65p | 55.15p |
| NAV total return since inception2 | 115.85p | 124.32p | 125.75p |
| Earnings per share (basic and diluted): | |||
| Revenue return | (0.10)p | (0.08)p | (0.01)p |
| Capital return | (9.73)p | (13.34)p | (11.04)p |
| Combined return | (9.83)p | (13.42)p | (11.05)p |
| Dividends per share: | |||
| Interim proposed/paid | 1.00p | 1.50p | 1.50p |
| Special dividend | 1.75p | 1.00p | 1.00p |
| Final paid | - | - | 2.25p |
| Ongoing charges ratio2 | 2.30% | 1.90% | 2.05% |
1 30 September 2019 financial highlights represent annual results
2 Alternative performance measure (APM) definitions and illustrations can be found in the APM and glossary of terms sections.
Investment objectives
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
This is my first report to you since taking over the Chair post the AGM in February and within two months the world couldn’t look more different. Covid-19 has had a dramatic effect on all parts of the economy and society which required a response from your company to take account of these very significant changes.
The investment team have entered remote working which is functioning well. Your Board has received regular updates from the fund manager making full use of video-conferencing where appropriate.
An increasing number of possible deals are coming our way; lots to look at; lots to leave behind. Within these will be some attractive follow on AIM and private company opportunities with the latter requiring additional careful scrutiny and due diligence. In the expectation that this trend will continue your fund manager has increased the team of professionals providing support to the fund.
Whilst the detailed fund performance follows and it is disappointing that our NAV has fallen during the reporting period, it is gratifying to see that your fund has outperformed the relevant indices in the first half of the year.
Performance
At 31 March 2020, the NAV per share was 56.70 pence which after adjusting for the dividends paid gives a NAV total return since inception of 115.85 pence. The earnings per share combined return for the period was a loss of 9.83 pence per share (comprising revenue losses of 0.10 pence and capital losses of 9.73 pence). The share price fell from 66.50 pence to 51.00 pence over the reporting period.
The NAV total return for the period(1) was a loss of 14.0% compared to a fall of 21.3% in the FTSE AIM All Share Total Return Index.
Investments
The investment manager, Hargreave Hale Limited, invested a further £7.64 million in 11 qualifying companies during the period. The fair value of qualifying investments at 31 March 2020 was £73.68 million invested in 73 AIM companies and 9 unquoted companies. The balance of the fund was held in a mix of cash and non-qualifying equities.
Dividend
A final dividend for the year ended 30 September 2019 of 2.25 pence was paid on 11 February 2020. A special dividend of 1.75 pence was paid on 28 November 2019, returning to shareholders proceeds from the realisation of some of the Company’s underlying investments.
An interim dividend of 1.00 pence (2019: 1.50 pence) will be paid on 24 July 2020, with an ex-dividend date of 2 July 2020 and a record date of 3 July 2020.
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.
Buy backs
In total, 1,991,947 shares (nominal value £19,919) were repurchased during the six month period ending 31 March 2020 at a cost of £1,326,339 (average price: 66.59 pence per share). Since the period end a further 1,439,977 shares have been repurchased at a cost of £844,166 (average price of 58.62 pence per share).
Share price discount
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. Share buy backs are governed by the Listing Rules and Market Abuse Regulations, which can restrict the delivery of the policy in volatile markets. The Company has a 5 year average share price discount of 5.68%. The share price discount as at 31 March 2020 was 10.05% compared to 5.81% at 30 September 2019. Whilst the discount reported at 31 March is wider than our target of 5% we were pleased we were able to operate the policy despite the challenging market environment, whilst remaining compliant with relevant legislation.
Offer for subscription
The Company announced on 22 June 2020 its intention to launch a new offer for subscription (the “Offer”). The Company is seeking to raise up to £20 million under the Offer together with an over-allotment facility to raise up to a further £10 million.
Full details of the Offer will be set out in a prospectus to be published by the Company shortly. A further announcement will be made when the prospectus is available.
VCT fund management team
The Company’s investment manager, Hargreave Hale Limited, has also notified the Board of Giles Hargreave’s intention to step back from his role as co-manager of the Company’s portfolio, with effect from 31 December 2020. Since 1 July 2019, Giles Hargreave has primarily supported the delivery of the Company’s non-qualifying investment strategy. Although he will no longer hold a formal portfolio management role, it is the Board’s expectation that he will continue to support the VCT’s fund management team.
Cost efficiency
Your Board reviews costs incurred by the Company on a regular basis and are focused on maintaining a competitively low ongoing charges ratio. The period end ongoing charges ratio was 2.30% when calculated in accordance with the AIC’s “Ongoing Charges” methodology.
Total costs as measured under the EU rules and published in the Company’s Key Information Document (KID) are also monitored by the Board. This measure is calculated using a different methodology including some costs which are not treated as ongoing charges under the AIC’s approach and therefore shows a higher figure than the published ongoing charge ratio. The current KID is published on the Company’s website www.hargreaveaimvcts.co.uk.
Change to audit committee composition
Following my appointment as Chairman and in line with the guidance set out in the UK Corporate Governance Code I have decided to stand down as a member of the audit committee.
Regulatory update
There were no major changes to VCT legislation during the period under review.
VCT status
I am pleased to report that we continue to perform well against the requirements of the legislation and at the period end, the investment test was 94.5% when measured using HMRC’s methodology. The Company satisfied all other tests relevant to its status as a Venture Capital Trust.
Key information document
In accordance with the EU’s PRIIPs regulations the Company’s KID is published on the Company’s website at www.hargreaveaimvcts.co.uk.
The KID has been prepared using the methodology prescribed in the PRIIPS regulation. Although well intended, there are concerns about the application of some aspects of the prescribed methodologies to VCTs. Specifically, the Board is concerned that the risk score may be understating the level of risk and would like shareholders to continue to classify the VCT as a high risk investment.
Covid-19
Your Board has reviewed the risks facing the Company as a result of the Covid-19 pandemic, further detail can be found in the principal risk section.
Outlook
We are clearly in very unsettling times with the Covid-19 outbreak causing so much human sadness and suffering.
Unprecedented central bank and government interventions are taking place around the world which have stabilised markets and led to the shortest bear market of all time. There may of course be a second Covid-19 wave causing uncertainty and volatility with possible further market corrections and then there is Brexit coming up fast.
Notwithstanding these uncertainties, history shows that moments such as these can also offer tremendous investment opportunities which can be exploited by careful stock selection.
Where will all this end? None of us can predict the future with certainty but one thing I can promise is that your Board and investment team are focused on delivering the best possible outcome for shareholders from the well spread, diversified portfolio of quoted and private British companies.
I look forward to updating you further with the annual results later in the year.
David Brock
Chairman
Date: 23 June 2020
(1) Alternative performance measure definitions and illustration can be found in the APM and glossary of terms sections.
Investment manager’s report
Introduction
This report covers the first half of the 2019/20 financial year, 1 October 2019 to 31 March 2020. The investment manager’s report contains references to movements in the NAV per share and NAV total return per share for the period. Movements in the NAV per share do not necessarily mirror the earnings per share 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 financial year started with global equity markets performing well and US indices hitting new highs. Markets also found support from the more dovish stance adopted by many central banks and, in the case of the UK and elsewhere, talk of fiscal stimulus. The General Election produced some clarity on how and when the UK will exit the EU. We started 2020 with an optimistic outlook for the small domestically orientated companies that we invest in. Since then, all of us have had to adjust to a profoundly different way of life and we now contemplate the most significant reduction in global activity in living memory. How we emerge from this crisis is yet to become clear although, after an initial wave of indiscriminate selling, the market has started to apply some filters. Whilst there will be many losers, some companies will emerge in a stronger position than when they entered the crisis. It also seems some emerging or existing trends will accelerate and become more entrenched: deglobalisation, digitisation, remote working/learning and e-commerce are some obvious examples. These will throw up opportunities for those with relevant service propositions and those companies able to adjust quickly to the new world we find ourselves in.
Performance
In the six months to 31 March 2020 the unaudited NAV per share decreased from 70.60p to 56.70p. A special dividend of 1.75 pence was paid on 28 November 2019 and a final dividend of 2.25 pence was paid on 11 February 2020. Adjusting for the total distribution within the period of 4.0 pence per share results in a NAV total return to investors of -9.90 pence per share, which translates to a loss of 14.0%. During the same period, the FTSE AIM All-Share Total Return index lost 21.3%, whilst the FTSE All Share Total Return index lost 22.0%. The qualifying investments made a net contribution of -5.28 pence per share whilst the non-qualifying investments returned -4.11 pence per share. The adjusting balance was the net of running costs and investment income.
Gousto (one of our unquoted companies) was the top performing qualifying investment (+65.1%, +1.45 pence per share) following continued strong performance and a substantial equity raise to fund further investment in technology, infrastructure and proposition to position itself for delivery of its medium-term growth objectives. Gousto is now the largest investment within the VCT, representing 6.5% of net assets. Other positive contributors included Learning Technologies Group (+18.4%, +0.60 pence per share), Faron Pharma (+354.5%, +0.53 pence per share) and Diaceutics (+31.9%, +0.29 pence per share), which enjoyed a strong debut year as a public company. Post period end, Faron Pharma announced a £12 million fundraise and the use of one of its experimental drugs in two global trials and one US. The three trials are not linked; however, each of them will include Covid-19 patients within the treatment arm. Learning Technologies Group raised £81 million post period end to fund acquisition opportunities, whilst Diaceutics raised £21 million to support a new product launch and accelerate growth.
The biggest detractors within the period came from some of our larger investments such as Hardide (-68.9%, -1.42 pence per share), Zoo Digital (-31.6%, -0.57 pence per share) and Laundrapp (-100%, -0.52 pence per share), which appointed administrators on 14 February 2020. Escape Hunt (-92.7%, -0.50 pence per share) was hit particularly hard by the winding up of its largest shareholder. The company, which reported strong trading ahead of lockdown, raised £4 million post period end to strengthen its balance sheet and to support future expansion of its estate once the current restrictions ease. In its recently released interim results, Hardide reported record first-half revenues and maintained guidance for the current financial year. Zoo Digital also released a reassuring trading update following a recovery in the share price back to pre-crisis levels.
Within the period, we invested £7.64 million into 11 qualifying companies, comprising 7 follow on investments into existing portfolio (including one private) companies, 3 secondary placings into new portfolio companies, and one new investment into a private company. Within the qualifying portfolio, we reduced our investments in Faron Pharma, Learning Technologies Group and Blackbird, in all cases as a result of strong share price performance. APC Technology and Synnovia (formerly Plastic Capital) were acquired through private equity backed bids. We also made complete exits from LoopUp and Genedrive.
Portfolio structure
The VCT is comfortably through the HMRC defined investment test and ended the period at 94.5% invested as measured by the HMRC investment test. By market value, the VCT had a 64.3% weighting to qualifying investments.
The allocation to non-qualifying equity investments decreased from 20.1% to 19.2%. We continued to make use of the Marlborough Special Situations Fund as a temporary home for proceeds from fundraising; the allocation reduced from 7.9% to 4.1%. The period ended with no non-qualifying fixed income investments and a decrease in the cash weighting from 17.1% to 12.8%.
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
Having gone to great lengths to reduce Covid-19 infection rates, Governments are now under considerable pressure to re-open their economies. Unfortunately, the virus continues to circulate within the UK, and more freely in other parts of the world, opening us up to the risk of subsequent waves of infection and further loss of life. I am sure we are all united in hoping that is not the case.
We have been consistently impressed by the efforts of the senior leadership teams within our portfolio companies as they try to protect their balance sheets, employment and welfare in the most demanding of circumstances. The near term outlook remains uncertain; however, it is clear that the enormous fiscal and monetary response will go some way to offsetting some of the very worst economic and financial consequences of this crisis.
Although the shape of the recovery remains the subject of much debate, these interventions have catalysed a strong rebound in equity markets, providing positive support to the (unaudited) NAV per share, which has increased by 14.4% to 64.85 pence on 12 June 2020.
We have been able to deploy capital into qualifying companies substantially ahead of budget despite the lack of IPO activity on AIM, investing a further £6.4 million (including one investment subject to a general meeting on 1 July 20) into ten qualifying companies, with April a record for a single month. With investment activity ahead of plan, we took the opportunity to exit eleven legacy qualifying investments. We further reduced the investment in the Marlborough Special Situations Fund to 1.7% and trimmed our allocation to non-qualifying equities to 16.6% to fund investment into qualifying companies. Cash decreased to 11.6% of net assets.
As of 19 June 2020, the share price of 59.00 pence represented a discount of 9.0% to the last published NAV.
For further information please contact:
| Oliver Bedford |
| Lead Manager |
Date: 23 June 2020
Hargreave Hale AIM VCT plc,
41 Lothbury
London
EC2R 7AE
0207 523 4837
aimvct@canaccord.com
Investment portfolio
As at 31 March 2020
| Qualifying investments | Net Assets % | Cost £000 | Cumulative movement in value £000 | Valuation £000 | Market | COI (1) |
| SCA Investments Ltd (Gousto) | 6.50 | 2,484 | 4,962 | 7,446 | Unlisted | Y |
| Learning Technologies Group plc | 5.25 | 2,238 | 3,774 | 6,012 | AIM | Y |
| Ideagen plc | 3.65 | 1,992 | 2,190 | 4,182 | AIM | N |
| Creo Medical Group plc | 2.21 | 2,329 | 201 | 2,530 | AIM | Y |
| Zoo Digital Group plc | 2.18 | 2,266 | 228 | 2,494 | AIM | N |
| Diaceutics plc | 2.14 | 1,550 | 897 | 2,447 | AIM | Y |
| Oxford Genetics Ltd | 1.91 | 2,186 | - | 2,186 | Unlisted | Y |
| Cohort plc | 1.88 | 619 | 1,538 | 2,157 | AIM | Y |
| Abcam plc | 1.65 | 55 | 1,831 | 1,886 | AIM | Y |
| Craneware plc | 1.54 | 125 | 1,639 | 1,764 | AIM | Y |
| Infinity Reliance Ltd | 1.41 | 2,500 | (878) | 1,622 | Unlisted | Y |
| Zappar Ltd | 1.40 | 1,600 | - | 1,600 | Unlisted | N |
| Eden Research plc | 1.38 | 1,355 | 226 | 1,581 | AIM | N |
| Aquis Exchange plc | 1.35 | 764 | 776 | 1,540 | AIM | Y |
| Beeks Financial Cloud Group plc | 1.32 | 1,038 | 472 | 1,510 | AIM | Y |
| Blackbird plc | 1.28 | 700 | 770 | 1,470 | AIM | Y |
| Cloudcall Group plc | 1.27 | 2,442 | (983) | 1,459 | AIM | Y |
| Ilika plc | 1.22 | 1,534 | (136) | 1,398 | AIM | Y |
| Hardide plc | 1.16 | 3,566 | (2,232) | 1,334 | AIM | Y |
| Eagle Eye Solutions Group plc | 1.00 | 1,642 | (491) | 1,151 | AIM | Y |
| Angle plc | 0.98 | 1,158 | (34) | 1,124 | AIM | N |
| Maxcyte Inc | 0.98 | 1,514 | (397) | 1,117 | AIM | Y |
| Mexican Grill Ltd | 0.86 | 1,125 | (145) | 980 | Unlisted | N |
| CentralNic Group plc | 0.85 | 588 | 387 | 975 | AIM | Y |
| Crossword Cybersecurity plc | 0.85 | 877 | 90 | 967 | AIM | Y |
| Surface Transforms plc | 0.84 | 980 | (13) | 967 | AIM | Y |
| Honest Brew Ltd | 0.78 | 2,800 | (1,899) | 901 | Unlisted | N |
| Faron Pharmaceuticals Oy | 0.79 | 1,373 | (473) | 900 | AIM | N |
| AnimalCare Group plc | 0.74 | 720 | 124 | 844 | AIM | N |
| Yourgene Health plc | 0.73 | 521 | 314 | 835 | AIM | N |
| Tristel plc | 0.70 | 543 | 262 | 805 | AIM | N |
| EKF Diagnostics Holdings plc | 0.66 | 565 | 185 | 750 | AIM | Y |
| Science in Sport plc | 0.65 | 1,479 | (734) | 745 | AIM | N |
| Instem plc | 0.64 | 297 | 434 | 731 | AIM | Y |
| Diurnal Group plc | 0.59 | 750 | (70) | 680 | AIM | N |
| Idox plc | 0.53 | 135 | 477 | 612 | AIM | Y |
| Globaldata plc | 0.50 | 173 | 395 | 568 | AIM | Y |
| PCI-PAL plc | 0.49 | 810 | (250) | 560 | AIM | Y |
| Belvoir Group plc | 0.49 | 762 | (205) | 557 | AIM | Y |
| Synairgen plc | 0.48 | 322 | 231 | 553 | AIM | N |
| Intelligent Ultrasound Group plc | 0.48 | 800 | (250) | 550 | AIM | N |
| Clearstar Inc | 0.47 | 720 | (181) | 539 | AIM | Y |
| C4X Discovery Holdings plc | 0.46 | 1,000 | (475) | 525 | AIM | Y |
| The Property Franchise Group plc | 0.43 | 377 | 112 | 489 | AIM | Y |
| Intercede Group plc | 0.41 | 305 | 167 | 472 | AIM | Y |
| Everyman Media Group plc | 0.36 | 600 | (188) | 412 | AIM | Y |
| WANDisco plc | 0.34 | 346 | 38 | 384 | AIM | N |
| Fusion Antibodies plc | 0.33 | 414 | (35) | 379 | AIM | Y |
| Quixant plc | 0.32 | 1,209 | (844) | 365 | AIM | N |
| ULS Technology plc | 0.28 | 770 | (455) | 315 | AIM | N |
| Gfinity plc | 0.27 | 1,526 | (1,213) | 313 | AIM | N |
| KRM22 plc | 0.26 | 619 | (322) | 297 | AIM | Y |
| DP Poland plc | 0.25 | 1,390 | (1,107) | 283 | AIM | Y |
| Lidco Group plc | 0.24 | 307 | (29) | 278 | AIM | N |
| Location Sciences Group plc | 0.23 | 1,200 | (933) | 267 | AIM | N |
| Portr Ltd | 0.22 | 1,888 | (1,633) | 255 | Unlisted | N |
| K3 Business Technology Group plc | 0.22 | 270 | (18) | 252 | AIM | Y |
| bigblu Broadband plc | 0.22 | 347 | (95) | 252 | AIM | Y |
| Equals Group plc | 0.19 | 750 | (527) | 223 | AIM | N |
| Vertu Motors plc | 0.18 | 600 | (393) | 207 | AIM | N |
| Reneuron Group plc | 0.15 | 606 | (435) | 171 | AIM | N |
| Osirium Technologies plc | 0.14 | 858 | (700) | 158 | AIM | Y |
| Renalytix AI plc | 0.12 | 82 | 60 | 142 | AIM | Y |
| TrakM8 Holdings plc | 0.09 | 486 | (379) | 107 | AIM | N |
| MYCELX Technologies Corporation plc | 0.09 | 361 | (260) | 101 | AIM | Y |
| Pressure Technologies plc | 0.09 | 170 | (70) | 100 | AIM | N |
| Verona Pharma plc | 0.08 | 221 | (131) | 90 | AIM | Y |
| Escape Hunt plc | 0.07 | 1,959 | (1,879) | 80 | AIM | Y |
| Universe Group plc | 0.07 | 210 | (135) | 75 | AIM | N |
| Mirada plc | 0.07 | 96 | (21) | 75 | AIM | N |
| Mirriad Advertising plc | 0.06 | 610 | (537) | 73 | AIM | N |
| Omega Diagnostics Group plc | 0.05 | 129 | (67) | 62 | AIM | N |
| Redcentric plc | 0.05 | 42 | 11 | 53 | AIM | N |
| Kidly Ltd | 0.04 | 50 | - | 50 | Unlisted | N |
| Egdon Resources plc | 0.03 | 158 | (127) | 31 | AIM | Y |
| i-nexus Global plc | 0.02 | 700 | (673) | 27 | AIM | Y |
| SEC Newgate S.p.A. | 0.02 | 106 | (80) | 26 | AIM | N |
| Microsaic Systems plc | 0.01 | 26 | (15) | 11 | AIM | N |
| Tasty plc | - | 40 | (36) | 4 | AIM | Y |
| Midatech Pharma plc | - | 53 | (51) | 2 | AIM | N |
| Flowgroup plc | - | 26 | (26) | - | Unlisted | N |
| Fusionex International plc | - | - | - | - | Unlisted | N |
| Hawkwing plc | - | 135 | (135) | - | Listed | N |
| Infoserve Group plc | - | - | - | - | Unlisted | N |
| Laundrapp Ltd | - | 2,450 | (2,450) | - | Unlisted | N |
| Mporium Group plc | - | 33 | (33) | - | Unlisted | N |
| Paragon Entertainment Ltd | - | 87 | (87) | - | Unlisted | N |
| Total – equity qualifying investments | 63.24 | 75,609 | (3,174) | 72,435 | ||
| Qualifying fixed income investments | ||||||
| Osirium Technologies plc (Loan Notes) | 0.70 | 800 | - | 800 | Unlisted | Y |
| Kidly Ltd (Loan Notes) | 0.39 | 450 | - | 450 | Unlisted | N |
| Total fixed income qualifying investments | 1.09 | 1,250 | - | 1,250 | ||
| Total qualifying investments | 64.33 | 76,859 | (3,174) | 73,685 | ||
| Non-qualifying investments | ||||||
| Marlborough Special Situations Fund | 4.15 | 5,816 | (1,062) | 4,754 | Unlisted | N |
| Total - unit trusts | 4.15 | 5,816 | (1,062) | 4,754 | ||
| Future plc | 1.57 | 786 | 1,014 | 1,800 | Main | Y |
| IntegraFin Holdings plc | 1.23 | 893 | 516 | 1,409 | Main | Y |
| Hilton Food Group plc | 1.15 | 1,183 | 138 | 1,321 | Main | Y |
| Tesco plc | 1.15 | 1,287 | 27 | 1,314 | Main | Y |
| Halma plc | 1.09 | 822 | 427 | 1,249 | Main | Y |
| JD Sports Fashion plc | 0.92 | 892 | 156 | 1,048 | Main | Y |
| Dechra Pharmaceuticals plc | 0.83 | 854 | 98 | 952 | Main | Y |
| XP Power Ltd | 0.74 | 871 | (20) | 851 | Main | Y |
| Spirax-Sarco Engineering plc | 0.71 | 633 | 179 | 812 | Main | Y |
| Glaxosmithkline plc | 0.60 | 707 | (26) | 681 | Main | Y |
| Royal Dutch Shell plc | 0.59 | 1,086 | (406) | 680 | Main | N |
| Trainline plc | 0.59 | 796 | (117) | 679 | Main | Y |
| Liontrust Asset Management plc | 0.57 | 820 | (166) | 654 | Main | Y |
| James Fisher and Sons plc | 0.54 | 870 | (254) | 616 | Main | Y |
| BP plc | 0.51 | 793 | (209) | 584 | Main | Y |
| Anglo American plc | 0.50 | 591 | (25) | 566 | Main | N |
| Pennon Group plc | 0.47 | 520 | 23 | 543 | Main | Y |
| Ascential plc | 0.43 | 724 | (231) | 493 | Main | N |
| On the Beach Group plc | 0.42 | 954 | (471) | 483 | Main | Y |
| SThree plc | 0.40 | 703 | (245) | 458 | Main | Y |
| S4 Capital plc | 0.39 | 575 | (125) | 450 | Main | Y |
| Hiscox Ltd | 0.39 | 663 | (219) | 444 | Main | N |
| Cohort plc | 0.38 | 333 | 98 | 431 | AIM | Y |
| NCC Group plc | 0.36 | 534 | (119) | 415 | Main | Y |
| Melrose Industries plc | 0.36 | 867 | (456) | 411 | Main | Y |
| GoCo Group plc | 0.33 | 674 | (295) | 379 | Main | Y |
| Howden Joinery Group plc | 0.31 | 483 | (125) | 358 | Main | N |
| Renishaw plc | 0.26 | 393 | (92) | 301 | Main | N |
| Taylor Wimpey plc | 0.26 | 487 | (193) | 294 | Main | Y |
| Next plc | 0.25 | 481 | (196) | 285 | Main | N |
| Countryside Properties plc | 0.25 | 504 | (219) | 285 | Main | Y |
| Everyman Media Group plc | 0.18 | 293 | (93) | 200 | AIM | Y |
| Easyjet plc | 0.17 | 409 | (209) | 200 | Main | N |
| MYCELX Technologies Corporation plc | 0.10 | 298 | (181) | 117 | AIM | Y |
| Mexican Grill Ltd | 0.09 | 161 | (54) | 107 | Unlisted | N |
| Ricardo plc | 0.09 | 236 | (134) | 102 | Main | Y |
| Abal Group plc | - | - | 3 | 3 | Main | Y |
| Hargreave Hale AIM VCT plc | - | - | 1 | 1 | Main | N |
| Genagro Ltd | - | - | - | - | Unlisted | Y |
| Total – equity non-qualifying investments | 19.18 | 24,176 | (2,200) | 21,976 | ||
| Total - non-qualifying investments | 23.33 | 29,992 | (3,262) | 26,730 | ||
| Total investments | 87.66 | 106,851 | (6,436) | 100,415 | ||
| Cash at bank | 12.79 | 14,651 | ||||
| Prepayments & Accruals | (0.45) | (514) | ||||
| Net assets | 100.00 | 114,552 |
(1) COI – Co-investments with other funds managed by Hargreave Hale at 31 March 2020
Different classes of shares held in unlisted companies within the portfolio have been aggregated
The investments listed below are either listed, headquartered or registered outside the UK:
| Listed | Headquartered | Registered | |
| Listed Investments: | |||
| BP plc | UK | UK/USA | UK |
| Clearstar Inc | UK | USA | Cayman Islands |
| Craneware plc | UK | USA | UK |
| Faron Pharmaceuticals Oy | UK/Finland | Finland | Finland |
| Hiscox Ltd | UK | Bermuda | Bermuda |
| Intelligent Ultrasound Group plc | UK | UK/USA | UK |
| Maxcyte Inc | UK | USA | USA |
| Mycelx Technologies Corporation plc | UK | USA | USA |
| Renalytix AI plc | UK | USA | UK |
| Royal Dutch Shell plc | UK/Netherlands | Netherlands | UK |
| SEC Newgate S.p.A. | UK | Italy | Italy |
| WANDisco plc | UK | UK/USA | Jersey |
| XP Power Ltd | UK | Singapore | Singapore |
| Unlisted private companies: | |||
| Fusionex International plc | - | Malaysia | Jersey |
| Genagro Ltd | - | UK | Jersey |
Top ten investments
As at 31 March 2020 (By Market Value)
The top ten equity investments are shown below; each is valued by reference to the bid price, or, in the case of unquoted companies, the investment manager will apply one or more valuation techniques according to the nature, facts and
circumstances of the investment. 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. Forecasts are not shown for private
companies. The net asset figures and net cash values are from published accounts in most cases.
| SCA Investments Ltd (Gousto) (unquoted) | Share price: 11,125.0p | ||
| Investment date | July 2017 | Results for the year to | December 2018 |
| Equity held | 1.52% | Turnover (£’000) | 49,284 |
| Av. Purchase Price | 3,711.0p | Profit/(loss) before tax (£’000) | (16,544) |
| Cost (£’000) | 2,484 | Net cash/(debt) December 2018 (£’000) | 16,447 |
| Valuation (£’000) | 7,446 | Net assets December 2018 (£’000) | 24,550 |
| Income recognised in period (£) | 0 | Voting rights held | 1.52% |
| 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. | |||
| Learning Technologies Group plc | Share price: 133.6p | ||
| Investment date | November 2014 | Forecasts for the year to | December 2020 |
| Equity held | 0.67% | Turnover (£’000) | 126,400 |
| Av. Purchase Price | 49.7p | Profit/(loss) before tax (£’000) | 36,800 |
| Cost (£’000) | 2,238 | Net cash/(debt) December 2019 (£’000) | 3,830 |
| Valuation (£’000) | 6,012 | Net assets December 2019 (£’000) | 173,989 |
| 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. | |||
| Ideagen plc | Share price: 162.0p | ||
| Investment date | December 2014 | Forecasts for the year to | April 2020 |
| Equity held | 1.17% | Turnover (£’000) | 56,000 |
| Av. Purchase Price | 77.2p | Profit/(loss) before tax (£’000) | 14,500 |
| Cost (£’000) | 1,992 | Net cash/(debt) October 2019 (£’000) | (17,981) |
| Valuation (£’000) | 4,182 | Net assets October 2019 (£’000) | 75,245 |
| 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. | |||
| Cohort plc | Share price: 454.0p | ||
| Investment date | February 2006 | Forecasts for the year to | April 2020 |
| Equity held | 1.39% | Turnover (£’000) | 133,400 |
| Av. Purchase Price | 166.9p | Profit/(loss) before tax (£’000) | 17,500 |
| Cost (£’000) | 952 | Net cash/(debt) October 2019 (£’000) | (6,794) |
| Valuation (£’000) | 2,588 | Net assets October 2019 (£’000) | 74,135 |
| COMPANY DESCRIPTION | |||
| Cohort plc provides electronic and surveillance technology solutions. The Company offers electronic warfare operational support, secure communication systems and networks, test systems and data management. Cohort serves defence and security, transport, offshore energy and other commercial markets. | |||
| Creo Medical Group plc | Share price: 110.0p | ||
| Investment date | December 2016 | Forecasts for the year to | December 2020 |
| Equity held | 2.83% | Turnover (£’000) | 1,100 |
| Av. Purchase Price | 101.3p | Profit/(loss) before tax (£’000) | (18,000) |
| Cost (£’000) | 2,329 | Net cash/(debt) December 2019 (£’000) | 80,331 |
| Valuation (£’000) | 2,530 | Net assets December 2019 (£’000) | 82,663 |
| 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. | |||
| Zoo Digital Group plc | Share price: 54.0p | ||
| Investment date | April 2017 | 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) | 700 |
| Cost (£’000) | 2,266 | Net cash/(debt) September 2019 ($’000) | (6,864) |
| Valuation (£’000) | 2,494 | Net assets September 2019 ($’000) | 5,203 |
| 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. | |||
| Diaceutics plc | Share price: 120.0p | ||
| Investment date | March 2019 | Forecasts for the year to | December 2020 |
| Equity held | 2.93% | Turnover (£’000) | 15,900 |
| Av. Purchase Price | 76.0p | Profit/(loss) before tax (£’000) | 800 |
| Cost (£’000) | 1,550 | Net cash/(debt) December 2019 (£’000) | 11,613 |
| Valuation (£’000) | 2,447 | Net assets December 2019 (£’000) | 20,132 |
| COMPANY DESCRIPTION | |||
| Diaceutics PLC is a leading diagnostics data analytics and implementation services provider for global pharmaceutical companies, enabling pharma to accelerate their market penetration and achieve a better return on precision medicine therapies by helping them to revolutionise patient testing. | |||
| Oxford Genetics Ltd (unquoted) | Share price: 32,000.0p | ||
| Investment date | March 2019 | Results for the year to | April 2019 |
| Equity held | 7.17% | Turnover (£’000) | 2,685 |
| Av. Purchase Price | 32,000.2 | Profit/(loss) before tax (£’000) | (4,632) |
| Cost (£’000) | 2,186 | Net cash/(debt) April 2019 (£’000) | 5,976 |
| Valuation (£’000) | 2,186 | Net assets April 2019 (£’000) | 8,945 |
| Income recognised in period (£) | 0 | Voting rights held | 7.17% |
| 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. | |||
| Abcam plc | Share price: 1,143.0p | ||
| Investment date | October 2005 | Forecasts for the year to | June 2020 |
| Equity held | 0.08% | Turnover (£’000) | 289,900 |
| Av. Purchase Price | 33.4p | Profit/(loss) before tax (£’000) | 74,500 |
| Cost (£’000) | 55 | Net cash/(debt) December 2019 (£’000) | 88,500 |
| Valuation (£’000) | 1,886 | Net assets December 2019 (£’000) | 389,800 |
| COMPANY DESCRIPTION | |||
| Abcam is a global life sciences company providing highly validated antibodies and other binders and assays to the research and clinical communities to help advance the understanding of biology and cause of disease. The company’s customers include universities, research institutes, and pharmaceutical and biotechnology companies in countries around the world. | |||
| Future plc | Share price: 1,000.0p | ||
| Investment date | May 2018 | Forecasts for the year to | September 2020 |
| Equity held | 0.22% | Turnover (£’000) | 322,700 |
| Av. Purchase Price | 436.9p | Profit/(loss) before tax (£’000) | 76,900 |
| Cost (£’000) | 786 | Net cash/(debt) September 2019 (£’000) | (40,300) |
| Valuation (£’000) | 1,800 | Net assets September 2019 (£’000) | 213,400 |
| COMPANY DESCRIPTION | |||
| Future plc is a global multi-platform media company. The company is behind successful brands in specialist consumer and B2B sectors including technology, gaming & entertainment, music, creative & photography, home interest, education and television. | |||
For further information please contact:
Oliver Bedford
Lead Manager
| Hargreave Hale AIM VCT plc, 41 Lothbury London EC2R 7AE 0207 523 4837 aimvct@canaccord.com |
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 risk and outsourcing, political and key personnel 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 2019.
Covid-19
Your Board has reviewed the risks facing the Company as a result of the Covid-19 pandemic.
Operational risk and outsourcing
Covid-19 has compelled companies en masse to adopt remote working. The core outsourced functions of the Company provided by Hargreave Hale Limited and Canaccord Genuity Wealth Limited have had a seamless transition to remote working and continue to operate effectively. Services provided by other outsourced service providers have also been unaffected.
Investment risk
The future path of the Covid-19 epidemic is still uncertain and the full economic impact of measures taken to control the epidemic is yet to be seen. This has given rise to a heightened level of uncertainty resulting in many companies withdrawing future profits guidance and reducing dividend payments. Whilst stock markets have already fallen in an attempt to price in these uncertainties further volatility in share prices is possible in the short term. In mitigation the Board has an experienced investment manager who maintains a well diversified portfolio of investments.
Valuation risk
Most of the Company’s investments are traded on a recognised exchange providing daily share prices. Key estimation uncertainties continue to relate to the fair value of the unquoted investments which in the current conditions require an increased level of judgement. The independent non-executive directors have reviewed the private company valuations with Covid-19 in mind and have applied a prudent approach where appropriate. They will continue to review these valuations on a regular basis to ensure they remain appropriate as conditions change.
Going concern
The Company’s business activities and the factors affecting its future development are set out in the chairman’s statement and the investment manager’s report. The Company’s principal risks are set out above.
The Board receives regular reports from the manager and administrator and reviews the financial position, performance and liquidity of the Company’s investment portfolio. Revenue forecasts and expense budgets are prepared at the start of each financial year and performance against plan is reviewed by the Board. Cash forecasts are prepared and reviewed by the Board as part of the HMRC investment test compliance monitoring.
The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for a period of at least twelve months. No material uncertainties related to events or conditions that may cast significant doubt about the ability of the Company to continue as a going concern have been identified by the Directors. For this reason, they continue to adopt the going concern basis in preparing the financial statements.
On behalf of the Board of Directors.
David Brock
Chairman
Date: 23 June 2020
Statement of directors’ responsibilities
in respect of the half-yearly financial report
In accordance with Disclosure Transparency Rule (DTR) 4.2.10, David Brock (Chairman), Sir Aubrey Brocklebank, Oliver Bedford, Angela Henderson 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 view of the assets, liabilities, financial position and profit of the Company as at 31 March 2020 as required by DTR 4.2.4;
- The interim management report consisting of the chairman’s statement, investment manager’s report, investment portfolio, principal risks and uncertainties disclosure 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.
David Brock
Chairman
Date: 23 June 2020
Condensed income statement
for the six month period to 31 March 2020 (unaudited)
| For the six month period to | For the six month period to | ||||||
| 31 March 2020 (unaudited) | 31 March 2019 (unaudited) | ||||||
| Note | Revenue | Capital | Total | Revenue | Capital | Total | |
| £000 | £000 | £000 | £000 | £000 | £000 | ||
| Net (loss) on investments held at fair value through profit or loss | 5 | - | (18,938) | (18,938) | - | (24,074) | (24,074) |
| Income | 2 | 418 | 65 | 483 | 447 | - | 447 |
| ----------- | ----------- | ----------- | ----------- | ----------- | ----------- | ||
| 418 | (18,873) | (18,455) | 447 | (24,074) | (23,627) | ||
| Management fee | (275) | (824) | (1,099) | (258) | (776) | (1,034) | |
| Other expenses | (355) | (117) | (472) | (345) | (70) | (415) | |
| ----------- | ----------- | ----------- | ----------- | ----------- | ----------- | ||
| (630) | (941) | (1,571) | (603) | (846) | (1,449) | ||
| ----------- | ----------- | ----------- | ----------- | ----------- | ----------- | ||
| (Loss) on ordinary activities before taxation | (212) | (19,814) | (20,026) | (156) | (24,920) | (25,076) | |
| Taxation | - | - | - | - | - | - | |
| ----------- | ----------- | ----------- | ----------- | ----------- | ----------- | ||
| (Loss) on ordinary activities after taxation | (212) | (19,814) | (20,026) | (156) | (24,920) | (25,076) | |
| ----------- | ----------- | ----------- | ----------- | ----------- | ----------- | ||
| (Loss) per share basic and diluted | 3 | (0.10)p | (9.73)p | (9.83)p | (0.08)p | (13.34)p | (13.42)p |
The total columns of these statements are the income statements of the Company. All revenue and capital items in the above statements derive from continuing operations. There was no other comprehensive income other than the losses for the six-month periods as set out above. The accompanying notes are an integral part of these financial statements.
Condensed income statement
for the year ended 30 September 2019 (audited)
| For the year to | ||||
| 30 September 2019 (audited) | ||||
| Note | Revenue | Capital | Total | |
| £000 | £000 | £000 | ||
| Net (loss) on investments held at fair value through profit or loss | 5 | - | (20,687) | (20,687) |
| Income | 2 | 1,163 | 354 | 1,517 |
| ----------- | ----------- | ----------- | ||
| 1,163 | (20,333) | (19,170) | ||
| Management fee | (565) | (1,696) | (2,261) | |
| Other expenses | (616) | (133) | (749) | |
| ----------- | ----------- | ----------- | ||
| (1,181) | (1,829) | (3,010) | ||
| ----------- | ----------- | ----------- | ||
| (Loss) on ordinary activities before taxation | (18) | (22,162) | (22,180) | |
| Taxation | - | - | - | |
| ----------- | ----------- | ----------- | ||
| (Loss) after taxation | (18) | (22,162) | (22,180) | |
| ----------- | ----------- | ----------- | ||
| (Loss) per share basic and diluted | 3 | (0.01)p | (11.04)p | (11.05)p |
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. There was no other comprehensive income other than the loss 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 2020 (unaudited)
| Note | 31 March | 31 March | 30 September | |
| 2020 | 2019 | 2019 | ||
| (unaudited) | (unaudited) | (audited) | ||
| £000 | £000 | £000 | ||
| Fixed assets | ||||
| Investments at fair value through profit or loss | 5 | 100,415 | 123,272 | 119,947 |
| ----------- | ----------- | ----------- | ||
| Current assets | ||||
| Debtors | 7 | 132 | 157 | 466 |
| Cash at bank | 14,651 | 21,897 | 24,638 | |
| ----------- | ----------- | ----------- | ||
| 14,783 | 22,054 | 25,104 | ||
| Creditors: amounts falling due within one year | 8 | (646) | (340) | (1,009) |
| ----------- | ----------- | ----------- | ||
| Net current assets | 14,137 | 21,714 | 24,095 | |
| ----------- | ----------- | ----------- | ||
| Net assets | 114,552 | 144,986 | 144,042 | |
| ----------- | ----------- | ----------- | ||
| Capital and Reserves | ||||
| Called up share capital | 2,020 | 2,052 | 2,040 | |
| Share premium | 24,238 | 23,735 | 24,238 | |
| Capital redemption reserve | 66 | 27 | 46 | |
| Special reserve | 103,339 | 117,153 | 112,803 | |
| Capital reserve – realised | (24,161) | (7,978)(1) | (16,043) | |
| Capital reserve – unrealised | 10,017 | 10,890(1) | 21,713 | |
| Revenue reserve | (967) | (893) | (755) | |
| ----------- | ----------- | ----------- | ||
| Total shareholders' funds | 114,552 | 144,986 | 144,042 | |
| ----------- | ----------- | ----------- | ||
| Net asset value per share basic and diluted | 4 | 56.70p | 70.67p | 70.60p |
The accompanying notes are an integral part of these financial statements.
(1) Re-stated due to prior period impairment adjustment.
Condensed statement of changes in equity
for the six month period to 31 March 2020 (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 | |||||||
| Note | £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | |
| At 1 October 2019 | 2,040 | 24,238 | 46 | 21,713 | 112,803 | (16,043) | (755) | 144,042 | |
| Share buybacks | 9 | (20) | - | 20 | - | (1,326) | - | - | (1,326) |
| Equity dividends paid | 6 | - | - | - | - | (8,138) | - | - | (8,138) |
| Permanent impairment | 5 | - | - | - | 5,802 | - | (5,802) | - | - |
| Realised (loss) on investments | 5 | - | - | - | - | - | (1,440) | - | (1,440) |
| Unrealised (loss) on investments | 5 | - | - | - | (17,498) | - | - | - | (17,498) |
| Management fee charged to capital | - | - | - | - | - | (824) | - | (824) | |
| Income allocated to capital | 2 | - | - | - | - | - | 65 | - | 65 |
| Due diligence investment costs | - | - | - | - | - | (117) | - | (117) | |
| Revenue (loss) after taxation for the period | - | - | - | - | - | - | (212) | (212) | |
| Total (loss) after taxation | - | - | - | (17,498) | - | (2,316) | (212) | (20,026) | |
| ---------- | ----------- | ----------- | ----------- | ---------- | ----------- | ----------- | ---------- | ||
| At 31 March 2020 | 2,020 | 24,238 | 66 | 10,017 | 103,339 | (24,161) | (967) | 114,552 | |
| ---------- | ---------- | ----------- | ----------- | ---------- | ----------- | ----------- | ---------- | ||
Reserves available for distribution are capital reserve realised, special reserve and revenue reserve. Total distributable reserves at 31 March 2020 were £78.2 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 2020, £47.2 million of the special reserve is subject to this restriction.
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 | |||||||
| Note | £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) | |
| Permanent impairment(2) | 5 | - | - | - | 3,255 | - | (3,255) | - | - |
| Realised (loss) on investments(2) | 5 | - | - | - | - | - | (1,103) | - | (1,103) |
| Unrealised (loss) on investments(2) | 5 | - | - | - | (22,971) | - | - | - | (22,971) |
| Management fee charged to capital | - | - | - | - | - | (776) | - | (776) | |
| Due diligence costs | - | - | - | - | - | (70) | - | (70) | |
| Revenue (loss) after taxation for the period | - | - | - | - | - | - | (156) | (156) | |
| Total (loss) after taxation | - | - | - | (22,971) | - | (1,949) | (156) | (25,076) | |
| ---------- | ----------- | ----------- | ----------- | ---------- | ----------- | ---------- | ---------- | ||
| At 31 March 2019 | 2,052 | 23,735 | 27 | 10,890 | 117,153 | (7,978) | (893) | 144,986 | |
| --------- | ----------- | ----------- | ----------- | ---------- | --------- | ---------- | ---------- | ||
Reserves available for distribution are capital reserve realised, special reserve and revenue reserve. Total distributable reserves at 31 March 2019 were £108.3 million (re-stated as per (2) below). 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.
(2) Re-stated due to prior period impairment adjustment.
Condensed statement of changes in equity
for the year ended 30 September 2019 (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 | |||||||
| Note | £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 | (41) | - | 41 | - | (2,902) | - | - | (2,902) | |
| Share issues | 314 | 24,686 | - | - | - | - | - | 25,000 | |
| Issue costs | - | (448) | - | - | - | - | - | (448) | |
| Equity dividends paid | 6 | - | - | - | - | (10,214) | - | - | (10,214) |
| Permanent impairment | 5 | - | - | - | 10,651 | - | (10,651) | - | - |
| Realised (loss) on investments | 5 | - | - | - | - | - | (1,143) | - | (1,143) |
| Unrealised (loss) on investments | 5 | - | - | - | (19,544) | - | - | - | (19,544) |
| Management fee charged to capital | - | - | - | - | - | (1,696) | - | (1,696) | |
| Income allocated to capital | 2 | - | - | - | - | - | 354 | - | 354 |
| Due diligence investment costs | - | - | - | - | - | (133) | - | (133) | |
| Revenue (loss) after taxation for the period | - | - | - | - | - | - | (18) | (18) | |
| Total (loss) after taxation | - | - | - | (19,544) | - | (2,618) | (18) | (22,180) | |
| ---------- | ----------- | ----------- | ----------- | ---------- | ----------- | ---------- | ---------- | ||
| At 30 September 2019 | 2,040 | 24,238 | 46 | 21,713 | 112,803 | (16,043) | (755) | 144,042 | |
| ---------- | ----------- | ----------- | ----------- | ---------- | ----------- | ---------- | ---------- | ||
Reserves available for distribution are capital reserve realised, special reserve and revenue reserve. Total distributable reserves at 30 September 2019 were £96.0 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 2019, £70.8 million of the special reserve is subject to this restriction.
Condensed statement of cash flows
for the six month period to 31 March 2020 (unaudited)
| 31 March 2020 | 31 March 2019 | 30 September 2019(1) | ||
| Note | (unaudited) | (unaudited) | (audited) | |
| £000 | £000 | £000 | ||
| Total (loss) on ordinary activities before taxation | (20,026) | (25,076) | (22,180) | |
| Realised loss on investments | 5 | 1,440 | 1,103(2) | 1,143 |
| Unrealised loss on investments | 5 | 17,498 | 22,971(2) | 19,544 |
| Decrease/(Increase) in debtors | 7 | 334 | 10 | (299) |
| (Decrease)/Increase in creditors | 8 | (363) | (6) | 663 |
| Non-cash distributions | 2 | (65) | - | (166) |
| ----------- | ----------- | ----------- | ||
| Net cash (outflow) from operating activities | (1,182) | (998) | (1,295) | |
| Purchase of investments | 5 | (17,219) | (23,666) | (35,628) |
| Sale of investments | 5 | 17,878 | 6,425 | 25,265 |
| ----------- | ----------- | ----------- | ||
| Net cash used in investing activities | 659 | (17,241) | (10,363) | |
| Share buybacks | 9 | (1,326) | (1,625) | (2,902) |
| Issue of share capital | - | 24,482 | 25,000 | |
| Share issue costs | - | (440) | (448) | |
| Dividends paid | (8,138) | (7,141) | (10,214) | |
| ----------- | ----------- | ----------- | ||
| Net cash provided by financing activities | (9,464) | 15,276 | 11,436 | |
| ----------- | ----------- | ----------- | ||
| Net (decrease) in cash | (9,987) | (2,963) | (222) | |
| ----------- | ----------- | ----------- | ||
| Opening cash | 24,638 | 24,860 | 24,860 | |
| Closing cash | 14,651 | 21,897 | 24,638 |
The accompanying notes are an integral part of these financial statements.
(1) 30 September 2019 cash flow represents annual results
(2) Re-stated due to prior period impairment adjustment.
Explanatory notes
for the six month period to 31 March 2020 (unaudited)
Basis of preparation
The Company has prepared its half-yearly financial results for the six month period ending 31 March 2020. The condensed financial statements have been prepared in accordance with UK Generally Accepted Accounting Practice (“UK GAAP”), including Financial Reporting Standard 104 (“FRS 104”) and with the Companies Act 2006 and the Statement of Recommended Practice for “Financial Statements of Investment Trust Companies and Venture Capital Trusts” October 2019 (“SORP”).
They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2019 annual report.
1. Significant accounting policies
Hargreave Hale AIM VCT plc has applied the same accounting policies and methods of computation in its interim consolidated financial statements as in its 2019 annual financial statements.
Segmental reporting
There is considered to be one operating segment being investment in equity and debt securities.
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.
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, as described in the “financial instruments” section in note 5.
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 fair value hierarchy described in note 5 to the financial statements.
2. Income
| Income from investments | Six months to 31 March 2020 (unaudited) £000 | Six months to 31 March 2019 (unaudited) £000 | Year ended 30 September 2019 (audited) £000 |
| Revenue: | |||
| Dividend income | 364 | 408 | 1,093 |
| Fixed income interest | 28 | 12 | 13 |
| Interest | 26 | 27 | 57 |
| 418 | 447 | 1,163 | |
| Capital: | |||
| Return of capital | - | - | 188(2) |
| In-specie dividend | 65(1) | - | 166(3) |
| 65 | - | 354 | |
| Total income | 483 | 447 | 1,517 |
(1) The Company received shares in M&G plc as an in-specie non-cash distribution following its demerger from Prudential plc. This has been treated as capital income.
(2) Distribution from Micro Focus plc relating to the completion of the disposal of the SUSE business.
Distribution from Cineworld plc relating to the sale and leaseback transaction of 18 US based multi-screen cinemas.
(3) The Company received shares in Renalytix plc as a result of an in-specie dividend from EKF Diagnostics Holdings plc. This has been treated as capital income.
3. Earnings per share (basic and diluted)
| Six months to 31 March 2020 (unaudited) | Six months to 31 March 2019 (unaudited) | Year ended 30 September 2019 (audited) | |
| (Loss) per share | (9.83)p | (13.42)p | (11.05)p |
| Net (loss) for the period | (£20,025,750) | (£25,076,246) | (£22,180,473) |
| Weighted average number of shares | 203,721,910 | 186,851,704 | 200,668,966 |
4. Net asset value per share
| Six months to 31 March 2020 (unaudited) | Six months to 31 March 2019 (unaudited) | Year ended 30 September 2019 (audited) | |
| Net asset value per share | 56.70p | 70.67p | 70.60p |
| Net assets | £114,551,888 | £144,985,833 | £144,042,275 |
| Number of shares in issue at period end | 202,022,420 | 205,167,942 | 204,014,367 |
5. Investments
| Quoted | Unquoted | Total | Total | Total | ||
| Investments | Investments | Investments | Investments | Investments | ||
| 31-Mar-20 | 31-Mar-20 | 31-Mar--20 | 31-Mar-19 | 30-Sep-19 | ||
| £000 | £000 | £000 | £000 | £000 | ||
| Opening valuation | 94,647 | 25,300 | 119,947 | 130,105 | 130,105 | |
| Purchases at cost | 14,235 | 2,984 | 17,219 | 23,666 | 35,692 | |
| Re-classification adjustment(1) | (2) | 2 | - | - | (64) | |
| In-specie dividend | 65 | - | 65 | - | 166 | |
| Sale proceeds | (11,242) | (6,636) | (17,878) | (6,425) | (25,265) | |
| Realised (losses)/gains | (1,843) | 403 | (1,440) | (1,103)(2) | (1,143) | |
| Unrealised (losses)/gains | (16,596) | (902) | (17,498) | (22,971)(2) | (19,544) | |
| Closing valuation | 79,264 | 21,151 | 100,415 | 123,272 | 119,947 | |
| Cost at period end | 82,396 | 24,455 | 106,851 | 115,980 | 108,885 | |
| Unrealised gains at period end | 6,271 | 3,746 | 10,017 | 10,547 | 21,713 | |
| Permanent impairment at period end(3) | (9,403) | (7,050) | (16,453) | (3,255) | (10,651) | |
| Valuation at period end | 79,264 | 21,151 | 100,415 | 123,272 | 119,947 |
(1) Mporium delisting adjustment for March 2020. Commission Rebate of £64k from investment manager for September 2019 that reduces the cost of impacted stocks.
(2) Restated due to prior period impairment adjustment.
(3) Further impairments of £7,252,639 were made in the 6 month period ending 31 March 2020. Once adjusted for the disposal of impaired assets by £1,451,286, permanent impairments at the period end are £16,452,704.
Financial Instruments – fair value measurement hierarchy
The table below sets out fair value measurements using FRS102 (appendix to section 2 fair value measurement) fair value hierarchy. The Company has one class of assets, being at fair value through profit or loss.
• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
• Level 3: Valued by reference to valuation techniques using inputs that are not based on observable market data.
The following table sets out the basis of valuation for the Level 3 investments held within the portfolio at 31 March 2020.
| Level 3 Unquoted Investments | |
| SCA Investments Ltd (Gousto) | The fair value of the investment has been increased to £111.25 per share. Enterprise Value-to-sales (EV/Sales) peer group ratios and a Discounted Cash Flow (DCF) valuation were analysed to support the valuation. The share price also reflects the price of the most recent transaction in the shares (on an arm’s length basis). |
| Honest Brew Ltd | The fair value of the investment has been marked down to £0.02 per share reflecting liquidity and forecast risk. |
| Kidly Ltd | The fair value of the investment has been maintained at £20.23 per share, our entry price. The valuation was tested against listed peers. |
| Kidly Ltd - CLN | The fair value of the convertible loan note has been maintained at the redemption value of the instrument. |
| Mexican Grill Ltd | The fair value of the investment has been marked down to £39.19 per share and is based on a reduced EV/Sales multiple applied to reduced forecasts. The EV/Sales multiple was cross-referenced to a listed peer group. |
| Infinity Reliance Ltd (My 1st Years) | The Enterprise Value of the company was decreased to reflect disappointing performance, downgrades to 2019 and 2020 forecasts and the requirement for further funding. However, the holding value was increased due to a change of valuation methodology that more accurately reflects the structure of the investment. The valuation was tested against peer group EV/Sales ratios. |
| Osirium plc - CLN | The fair value of the convertible loan note has been maintained at the redemption value of the instrument. |
| Oxford Genetics Ltd | The fair value of the investment has been maintained at £320.00 per share, our entry price. The valuation was tested against listed peers. |
| Portr Ltd | The fair value of the investment was written down to £0.50 per share reflecting significant risks to the outlook. |
| Zappar Ltd | Fair value of investment is maintained at £74.45 per share, our entry price. The valuation was tested against listed peers. |
| Level 1 Investments £’000 | Level 2 Investments £’000 | Level 3 Investments £’000 | Total Investments £’000 | |
| Six months ended 31 March 2020 (unaudited) | 84,019 | - | 16,396 | 100,415 |
| Year ended 30 September 2019 (audited) | 106,087 | - | 13,860 | 119,947 |
| Six months ended 31 March 2019 (unaudited) | 109,906 | - | 13,366 | 123,272 |
6. Dividends paid
Summary of dividends paid in the six months to 31 March 2020 and the financial year ending 30 September 2019 are detailed below:
| Six months ended 31 March 2020 (unaudited) £’000 | Year ended 30 September 2019 (audited) £’000 | |
| Special capital dividend of 1.00 pence 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 | - | 5,370 |
| Interim capital dividend of 1.50 pence per share for the half year ended 31 March 2019 paid on 26 July 2019 | - | 3,072 |
| Special capital dividend of 1.75 pence per share paid on 28 November 2019 | 3,564 | - |
| Final capital dividend of 2.25 pence per share for the year ended 30 September 2019 paid on 11 February 2020 | 4,576 | - |
| Unclaimed dividends (1) | (2) | |
| Total | 8,138 | 10,214 |
(1) Dividends unclaimed for a period of 12 years reverted to the Company
7. Debtors
| Six months to 31 March 2020 (unaudited) £000 | Six months to 31 March 2019 (unaudited) £000 | Year ended 30 September 2019 (audited) £000 | |
| Prepayments and accrued income | 132 | 157 | 466 |
8. Creditors: amounts falling due within one year
| Six months to 31 March 2020 (unaudited) £000 | Six months to 31 March 2019 (unaudited) £000 | Year ended 30 September 2019 (audited) £000 | |
| Trade Creditors | 2 | 11 | 3 |
| Accruals and deferred income | 644 | 329 | 1,006 |
| 646 | 340 | 1,009 |
9. Transactions in shares
Buybacks
In total, the Company repurchased 1,991,947 shares during the six month period ending 31 March 2020 at a total cost of £1,326,339. The repurchased shares represent 0.98% of ordinary shares in issue on 1 October 2019. The acquired shares have been cancelled.
10. Contingencies, guarantees and financial commitments
There were no contingencies, guarantees or financial commitments of the Company at 31 March 2020.
11. Legal form and principal activities
There were no contingencies, guarantees or financial commitments of the Company at 31 March 2020.
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.
In common with many other VCTs, the Company revoked its status as an investment company as defined in Section 256 of the Companies Act 1985 on 23 May 2006 to facilitate the payment of dividends out of capital profits.
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 registered as a small UK Alternative Investment Fund Manager (AIFM) with a Board comprising of five non-executive directors, four of whom are independent. Hargreave Hale Limited acts as investment manager whilst Canaccord Genuity Wealth Limited acts as administrator and custodian and provides the company secretary.
The Board has overall responsibility for the Company’s affairs including the determination of its investment policy, however, the Board may exercise these responsibilities through delegation to Hargreave Hale/Canaccord Genuity Wealth Limited 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.
12. Cautionary statement
The results should not be taken as a guide to the results for the financial period ending 30 September 2020. 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.
13. Publication of non-statutory accounts
The financial information contained in the 31 March 2020 income statement, balance sheet, statement of cash flows and statement of changes in equity has not been audited and does not comprise full financial statements within the meaning of Section 434 of the Companies Act 2006. No statutory accounts in respect of any period after 30 September 2019 have been reported on by the Company’s auditors.
The comparative figures for the financial year ended 30 September 2019 have been extracted from the latest published audited Annual Report and Financial Statements. Those accounts have been reported on by the Company’s auditor and lodged with the Registrar of Companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
14. Related party transactions
The remuneration of the directors, who are key management personnel of the Company are disclosed in the table below.
| Director | Role | Fees for the six-month period ending 31 March 2020 |
| David Brock (1) | Chairman | £14,612 |
| Sir Aubrey Brocklebank (1) | Director | £15,388 |
| Oliver Bedford | Director | £12,500 |
| Ashton Bradbury | Director | £12,500 |
| Angela Henderson (2) | Director | £10,622 |
(1) Aubrey Brocklebank stepped down as Chairman at the AGM on 4 February 2020 and was appointed as Chairman of the Audit Committee. David Brock replaced Aubrey Brocklebank as Chairman on 4 February 2020 and at the same time retired as Chairman of the Audit Committee.
(2)Angela Henderson was appointed as a director on 29 October 2019
David Brock was appointed as Chairman of Honest Brew Limited which is an investee company in the VCT’s portfolio on 25 July 2019. David is also a shareholder in Honest Brew Limited, however he does not control the entity.
Transactions with the manager
As the Company’s investment manager, Hargreave Hale Limited is a related party to the Company for the purposes of the Listing Rules. As Hargreave Hale Limited 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 Hargreave Hale Limited which received fees of £12,500 for the period ended 31 March 2020 in respect of his position on the Board (2018: £9,000). On 1 October 2019 Oliver Bedford’s directors’ fees increased from £18,000 to £25,000 per annum. Of these fees £6,250 was still owed at the period end.
CGWL act as administrator and custodian to the Company and provide the company secretary. During the financial year ending 30 September 2019 administration fees increased from £110,000 to £195,000 per annum and custodian fees increased from £10,000 to £30,000 per annum. CGWL received fees for the support functions as follows:
| 31 March 2020 (£) | 31 March 2019 (£) | 30 September 2019 (£) | |
| Custody | 15,000 | 5,000 | 19,642 |
| Administration | 97,500 | 55,000 | 132,713 |
| Company secretarial | 8,500 | 8,500 | 17,000 |
| Total | 121,000 | 77,000 | 169,355 |
| Still owed at the year end | 60,500 | 22,833 | 88,130 |
Hargreave Hale Limited is appointed as investment manager to the Company and receives an investment management fee of 1.7% per annum (increased from 1.5% effective 1 April 2019). Investment management fees for the half-year are £1,099,314 (2019: £1,034,310). Of these fees £481,493 was still owed at the period end. As the investment manager to the Company and the investment advisor to the Marlborough Special Situations Fund (in which the VCT has an investment), Hargreave Hale Limited makes an adjustment to its investment management fee to ensure the VCT is not charged twice for their services.
Total commission of £32,332 was paid to CGWL in the half year for broker services.
Hargreave Hale 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 Hargreave Hale in the first half of the financial year under the indemnity.
The Company held £8,485,819 in the client account at CGWL at 31 March 2020.
15. Post balance sheet events
Buybacks
Since the period end, a further 1,439,977 ordinary shares have been purchased at an average price of 58.62 pence and a total cost of £844,166.
Investments
The Company has made the following investments since the period end
| Amount Invested £000 | Investment into existing company | |
| Qualifying companies | ||
| C4X Discovery Holdings plc | 150 | Yes |
| Escape Hunt plc (subject to approval at general meeting) | 340 | Yes |
| Fusion Antibodies plc | 300 | Yes |
| Intelligent Ultrasound Group plc | 350 | Yes |
| Kidly Ltd | 500 | Yes |
| Oxford Genetics Ltd | 1,000 | Yes |
| PCI-PAL plc | 1,545 | Yes |
| Polarean Imaging plc | 1,000 | No |
| Rosslyn Data Technologies plc | 750 | No |
| Surface Transforms plc | 500 | Yes |
| Non-qualifying companies | ||
| On the Beach Group plc | 170 | Yes |
| Taylor Wimpey plc | 141 | Yes |
| Trifast plc | 500 | No |
Alternative Performance Measure (“APM”)
An alternative performance measure is a financial measure of the Company’s historic or future financial performance, financial position or cash flows which is not defined or specified in the applicable financial reporting framework.
The Directors assess the Company’s performance against a range of criteria which are viewed as particularly relevant for a VCT.
The definition of each APM is in the glossary of terms. Where the calculation of the APM is not detailed within the financial statements, an explanation of the methodology employed is below:
NAV total return since inception
| 31 March 2020 | ||
| Net asset value per share | A | 56.70p |
| Dividends paid per share since inception | B | 59.15p |
| NAV total return since inception(1) | A+B | 115.85p |
(1) Includes 100 pence initial cost
NAV total return
| 31 March 2020 | ||
| Net asset value per share 30 September 2019 | A | 70.60p |
| Dividends paid | B | 4.00p |
| Net asset value per share 31 March 2020 | C | 56.70p |
| NAV total return | [(B+C-A)/A]*100 | -14.02% |
Ongoing charges ratio
The ongoing charges ratio has been calculated using the AIC’s “Ongoing Charges” methodology.
| 31 March 2020 £000 | ||
| Investment management fee(1) | 2,199 | |
| Other expenses(1) | 943 | |
| VCT proportion of MSSF expenses(1) | 37 | |
| Ongoing charges | A | 3,179 |
| Average net assets | B | 138,249 |
| Ongoing charges ratio | (A/B)*100 | 2.30% |
(1) Figures for the period ending 31 March 2020 have been annualised to calculate the ongoing charges ratio
Share price discount
| 31 March 2020 | ||
| Share price | A | 51.00p |
| Net asset value per share | B | 56.70p |
| (Discount) / premium | [(A/B)-1]*100 | (10.05%) |
The 5 year average discount of 5.68% is calculated by taking the average of the share price discount at each month end between 1 April 2015 and 31 March 2020.
Glossary of terms
Qualifying company or qualifying investment
An investment made by a venture capital trust in a trading company which comprises a qualifying holding under Chapter 4 of Part 6 ITA
VCT or Venture Capital Trust
A Venture Capital Trust or VCT is a company, broadly similar to an investment trust, which has been approved by HMRC and which subscribes for shares in (or lends money to) small unquoted companies, including those quoted on AIM or NEX (formally ISDX). Under the VCT scheme, VCTs and their investors enjoy certain tax reliefs. The VCT scheme is designed to encourage investment in small unquoted companies. Individuals invest by holding shares in a VCT.
Revenue return
Revenue profit/(loss) for the reporting period divided by the weighted average number of shares in issue.
Capital return
Capital profit/(loss) for the reporting period divided by the weighted average number of shares in issue.
Combined return
Total profit/(loss) for the reporting period divided by the weighted average number of shares in issue.
Alternative performance measures
An alternative performance measure is a financial measure of the Company’s historic or future financial performance, financial position or cash flows which is not defined or specified in the applicable financial reporting framework.
The Company uses the following alternative performance measures:
Net asset value (NAV)
The value of the Company’s assets, less its liabilities.
Net asset value (NAV) per share
The net asset value divided by the total number of shares in issue.
Ongoing charges ratio
The ongoing costs of managing and operating the Company divided by its average net assets. Calculated in accordance with AIC guidance, this figure excludes ‘non-recurring costs’.
Share price discount
The price of a share is derived from buyers and sellers agreeing a price at which to trade their shares. The share price may not be identical to the NAV per share of the underlying assets less liabilities of the Company. If the share price is lower than the NAV per share, the shares are trading at a discount. Shares trading at a price above NAV per share are said to be at a premium.
NAV total return
The NAV total return shows how the NAV per share has performed over a period of time in percentage terms taking into account both capital returns and dividends paid. We calculate this by adding the dividends paid in the period to the closing NAV per share and measuring the percentage change relative to the opening NAV per share.
NAV total return since inception
The sum of the published NAV per share plus all dividends paid per share over the lifetime of the Company.
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 12 June 2020 was 64.85 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 1.00 pence in respect of the six months ended 31 March 2020.
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 uses secondary market purchases of its shares to improve the liquidity in its ordinary shares and support the discount. The share 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, which is measured against the mid-price per share as listed on the London Stock Exchange.
VCT share disposals are exempt of capital gains tax when the disposal is made at arms’ length, which means a shareholder should sell their shares to a market maker through a stockbroker or another share dealing service. In practice, this means that the price achieved in a sale is likely to be below the mid-price of the Company’s shares and, therefore, the discount is likely to be more than 5% to the last published NAV per share.
The policy is non-binding and at the discretion of the Board. Its operation depends on a range of factors including the Company's liquidity, shareholder permissions, market conditions and compliance with all laws and regulations. As a result, there is no guarantee that a shareholder will be able to sell their shares on request or the discount to the NAV per share at which the shares will be sold.
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.
Investors who sell their VCT shares before the fifth anniversary of the share issue are likely to have to repay their income tax relief. Canaccord Genuity Wealth Limited 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 Limited 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 Limited 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 376622 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 David Brock, Chairman Sir Aubrey Brocklebank Oliver Bedford Ashton Bradbury Angela Henderson |
| 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 150 Aldersgate Street London EC1A 4AB |
| Solicitors Dickson Minto W.S. 16 Charlotte Square Edinburgh EH2 4DF | VCT status adviser Philip Hare & Associates LLP Hamilton House 1 Temple Avenue London EC4Y 0HA |
| Brokers Nplus1 Singer Capital Markets Limited One Bartholomew Lane London EC2N 2AX | Company registration number 05206425 in England and Wales |
Canaccord Genuity Wealth Limited
Company Secretary
Registered office:
Hargreave Hale AIM VCT plc,
41 Lothbury
London
EC2R 7AE
23 June 2020