TIDMHHV
19 December 2023
HARGREAVE HALE AIM VCT PLC
(the "Company" or the "VCT")
Full Year Results and Notice of AGM
Hargreave Hale AIM VCT plc announces its results for the year
ended 30 September 2023.
The Company also announces that its 2024 Annual General Meeting
will be held at 4:45pm on 8 February 2024 at 88 Wood Street,
London, EC2V 7QR.
The Company's Annual Report and Financial Statements for the
year ended 30 September 2023 and the formal Notice of the Annual
General Meeting will be posted to shareholders who have elected to
receive hard copies and in accordance with Listing Rule 9.6.1
copies of the documents have been submitted to the UK Listing
Authority and will shortly be available to view on the Company's
corporate website at https://www.hargreaveaimvcts.co.uk and have
also been submitted to the UK Listing Authority and will be shortly
available for inspection from the National Storage Mechanism at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
Strategic report
The report has been prepared by the Directors in accordance with
the requirements of Section 414A of the Companies Act 2006.
Financial highlights for the year ended 30 September 2023
Tax free
dividends Ongoing
Net asset value (NAV) per NAV total paid in Share price charges
share return the period total return ratio
46.34p -14.70%(1) 5.00p -23.51%(1) 2.24%(1)
-- GBP13.6 million invested in Qualifying Companies in the year.
-- 91.65% invested by VCT tax value in Qualifying Investments at 30 September 2023.
-- Final dividend of 1.50 pence per share proposed for the year end.
-- Offer for subscription closed to further applications on 10 February 2023, having raised GBP40 million.
-- New Offer for subscription launched on 7 September 2023 to raise GBP20 million, together with an over--allotment facility to raise up to a further GBP20 million.
Summary financial data 2023 2022
NAV (GBPm) 151.92 160.51
NAV per share (p) 46.34 60.19
NAV total return (%)(1) -14.70 -33.42
Market capitalisation (GBPm) 140.96 167.32
Share price (p) 43.00 62.75
Share price discount/premium to NAV per share
(%)(1) -7.21 +4.25(2)
Share price 5 year average discount to NAV per
share (%)(1) -5.64 -5.65
Share price total return (%)(1) -23.51 -28.06
(Loss)/gain per share for the year (p) -9.32 -33.42
Dividends paid per share (p) 5.00 6.65
Ongoing charges ratio (%)(1) 2.24 2.06
(1) Alternative performance measure definitions and illustrations can be found in this report.
(2) The FY22 year end premium to NAV is a function of the year end NAV of 60.19 pence per share and the year end share price.
Financial Calendar
Financial calendar
Record date for final dividend 5 January 2024
Payment of final dividend 15 February
2024
Annual General Meeting 8 February
2024
Announcement of half-yearly results for the six June 2024
months ending 31 March 2024
Payment of interim dividend (subject to Board approval) July 2024
Chair's statement
Introduction
I would like to welcome shareholders who joined us as a result
of the recent offers for subscription. As always, we are grateful
to new and existing shareholders who continue to support the VCT,
despite the difficult times we continue to live through.
The financial year started with some significant headwinds,
including high inflation, a dislocation in the UK Government bond
market and a forecast by the Bank of England that the United
Kingdom would endure the longest recession of the last 100 years.
Whilst we would not wish to downplay the hardship that followed,
the economy was stronger than predicted, in part due to Government
intervention in the energy market over the winter. UK consumer
confidence staged a partial recovery off historic lows, employment
remained strong and, towards the end of the period under review, UK
real wage growth turned positive.
As I noted in our interim report, uncertainty is a theme that we
have all learned to live with these past few years. To this list,
we must now add the implications of the terrible events that
continue to unfold in Israel and Gaza.
Whilst we are encouraged that much of the deep pessimism that
permeated markets at the start of the financial year did not
manifest, we remain mindful of the macro-economic backdrop, both
here and abroad. The cost of borrowing has changed dramatically
within the year, impacting the financial sector and companies with
high levels of debt. Last year, this manifested itself within the
UK pension industry. This year, stress emerged in parts of the US
and European banking system. Remote as this might seem, it affected
companies closer to home, particularly pre-clinical and clinical
stage companies within the life sciences industry that were reliant
upon funding from Silicon Valley Bank (SVB). Those exposed to SVB
became more cautious with their budgets, which in turn reduced
demand for the products and services sold into them. Several of our
portfolio companies have seen weaker trading as a consequence of
this.
When launching the 2022 offer for subscription, we were cautious
about the short-term outlook but spoke about the opportunity for
value creation over the medium term. Our experience over the period
under review is consistent with that view. Generating short-term
performance has been very difficult with the market applying
asymmetrical responses to news flow: positive updates are not
getting full recognition whilst those that disappoint are often
treated harshly. Stock market liquidity is a major contributory
factor. With many active managers now deep into their third year of
outflows, there are few institutional buyers of shares in small UK
companies. Taken together, this has left the sector in deep value
territory.
The malaise that continues to hang over markets in the UK and
elsewhere has heavily impacted the primary markets in which
companies raise new capital through the sale of new shares. With
valuations so depressed and very little capital available for
investment (away from VCTs), very few companies have undertaken an
initial public offering (IPO). On AIM there were just 3 VCT
qualifying initial public offerings within the year. Despite this,
we are pleased to report that we deployed capital into VCT
qualifying companies ahead of budget, highlighting the importance
of having a defined pool of capital, a diversified portfolio and a
flexible investment policy.
Performance
As described in more detail in the Investment Manager's report,
this has been a second consecutive difficult year for performance.
In contrast to last year, when we suffered a substantial
(unrealised) loss of value across investments in public and private
companies, this year the material declines were confined to the
portfolio of investments in public companies. The value of the
investments in private companies were protected by the difficult
decisions made last year and, in some cases, better trading.
Although the markets demand a cautious approach, we are hopeful
that we might start to see some value recovery within the private
companies in the current year. It is worth reiterating at this
point that the predominant factor that drove down the valuations in
our investments in private companies last year was the broad based
(and deep) de-rating of publicly listed companies.
Whilst higher interest rates are a source of concern for many
and likely to weigh on economic activity, they have also made a
significant positive impact on the income generated from within the
VCT, either from cash held on deposit or from recently acquired
short-dated fixed income investments. Investment grade fixed income
assets were a feature of the investment portfolio for a number of
years during and after the financial crisis until negative real
yields (and therefore high prices) forced us to exit those
positions. We have been able to use the sell off in the bond market
this year to rebuild positions that will continue to generate
substantial income for the VCT for several years.
At 30 September 2023, the NAV per share was 46.34 pence which,
after adjusting for the dividends paid in the year of 5 pence,
gives a NAV total return for the year of -14.70%(1) . The NAV total
return (dividends reinvested) for the year was -15.93%(1) compared
with -8.28% in the FTSE AIM All-Share Index Total Return (also
calculated on a dividends Index reinvested basis). The Directors
consider this to be the most appropriate benchmark from a
shareholder's perspective, however, due to the range of assets held
within the investment portfolio and the investment restrictions
placed on a VCT it is not wholly comparable.
The earnings per share total return for the year was a loss of
9.32 pence (comprising a revenue profit of 0.27 pence and a capital
loss of 9.59 pence). Revenue income increased by 168% to GBP2.6m as
a result of an increase in dividends received from non-qualifying
equity, non-qualifying fixed income investments and bank interest.
Interest accrued on loan note instruments increased after the
Investment Manager made two follow on (qualifying) investments into
Kidly Ltd. For the first time, income received into the revenue
account exceeded expenses, resulting in a revenue profit for the
year of 0.27 pence per share (FY22: -0.36 pence per share).
The share price decreased from 62.75 pence to 43.00 pence over
the reporting period which, after adjusting for dividends paid,
gives a share price total return of -23.51%(1) , the fall amplified
by the normalisation of the share price, having briefly traded at a
premium at the close of the last financial year.
Investments
The Investment Manager invested GBP13.6 million into 10
Qualifying Companies during the period. The fair value of
Qualifying Investments at 30 September 2023 was GBP89.1 million
(58.7% of NAV) invested in 63 AIM companies and 5(2) unquoted
companies. At the year end, the fair value of non-qualifying
equities and the Marlborough Special Situations Fund was GBP15.4
million (10.1% of NAV) and GBP8.3 million (5.4% of NAV)
respectively, with most of the non-qualifying equities listed
within the FTSE 350 and offering good levels of liquidity should
the need arise. GBP17.4 million (11.4% of NAV) was held in
short-dated investment grade corporate bonds, GBP2.0 million (1.3%
of NAV) was invested in a UK Government bond exchange traded fund
and GBP19.2 million (12.7% of NAV) held in cash at the period end.
Further information can be found in the Investment Manager's
report.
Dividend
The Directors continue to maintain their policy of targeting a
tax free dividend yield equivalent to 5% of the year end NAV per
share.
In the 12-month period to 30 September 2023, the Company paid
dividends totalling 5 pence (2022: 6.65 pence). A special dividend
of 2 pence and a final dividend of 2 pence (2021: 3.15 pence) in
respect of the 2022 financial year was paid on 10 February 2023 and
an interim dividend of 1.00 penny (2022: 1 penny) was paid on 28
July 2023.
A final dividend of 1.50 pence is proposed (2022: 2 pence)
which, subject to shareholder approval at the Annual General
Meeting, will be paid on 15 February 2024 to ordinary shareholders
on the register on 5 January 2024.
Dividend re-investment scheme
Shareholders may elect to reinvest their dividend by subscribing
for new shares in the Company. Further information can be found in
the shareholder information section.
On 10 February 2023, 1,836,516 ordinary shares were allotted at
a price of 54.95 pence per share, which was calculated in
accordance with the terms and conditions of the dividend
reinvestment scheme (DRIS), on the basis of the last reported NAV
per share as at 20 January 2023, to shareholders who elected to
receive shares under the DRIS as an alternative to the final
dividend for the year ended 30 September 2022 and special dividend
announced on 19 December 2022.
On 28 July 2023, 591,318 ordinary shares were allotted at a
price of 49.29 pence per share, which was calculated in accordance
with the terms and conditions of the DRIS, on the basis of the last
reported NAV per share as at 7 July 2023, to shareholders who
elected to receive shares under the DRIS as an alternative to the
interim dividend for the year ended 30 September 2023.
Share Buybacks
To maintain compliance with the discount control and management
of share liquidity policy, the Company purchased through share
buybacks 7,183,338 ordinary shares (nominal value GBP71,833) during
the 2023 financial year at a cost of GBP3,636,841 (average price:
50.63 pence per share).
As at 18 December 2023, a further 2,039,414 shares have been
repurchased post the year end at a cost of GBP873,229 (average
price: 42.82 pence per share).
(1) Alternative performance measure definitions and
illustrations can be found in the glossary of terms.
(2) Excluding companies in administration or at risk of
administration with zero value.
Share price discount
The Company aims to improve liquidity and to maintain a discount
of approximately 5 per cent. to the last published NAV per share
(as measured against the mid-price) by making secondary market
purchases of its shares in accordance with parameters set by the
Board.
We continued to operate the discount control and management of
share liquidity policy effectively during the period. As at 30
September 2023, the Company had 1 and 5 year average share price
discounts of 6.06% and 5.64% respectively.
The Company's share price was trading at a discount of 7.21%(1)
as at 30 September 2023 compared to a premium of +4.25%(1) as at 30
September 2022, this being calculated using the closing mid-price
of the Company's shares on 30 September 2023 as a percentage of the
year end net asset value per share, as published on 5 October
2023.
As at 15 December 2023, the discount to NAV was 6.71% of the
last published NAV per share.
Offer for subscription
The Directors of the Company announced on 5 September 2022 the
launch of an offer for subscription for shares to raise up to GBP20
million, together with an over-allotment facility of up to a
further GBP30 million. On 10 February 2023, the Company announced
it had received valid applications of approximately GBP40 million.
The Board decided not to utilise any further sums under the
over-allotment facility and therefore the offer for subscription
was closed to further applications. The offer resulted in gross
funds being received of GBP40 million and the issue of 66 million
shares.
New Offer for subscription
The Directors of the Company announced on 7 September 2023 the
launch of a new offer for subscription for shares to raise up to
GBP20 million, together with an over-allotment facility of up to a
further GBP20 million. The offer was approved by shareholders of
the Company at a general meeting on 11 October 2023.
On 18 December 2023, the Company had allotted 17.6 million
shares raising gross proceeds of GBP8.1 million. The Company has
received valid applications for a further GBP0.5 million. Future
decisions by the Board about the potential use of the
over-allotment facility, in part or in full, will be made with
advice from the Investment Manager and subject to investor demand
and the deployment of capital into VCT qualifying companies.
Cancellation of share premium
At the general meeting of the Company held on 7 October 2022, a
special resolution was passed approving the cancellation of the
Company's share premium account to expand the size of the Company's
distributable reserves.
We are pleased to confirm the cancellation of the share premium
account of the Company was approved by the High Court of Justice in
England and Wales and, accordingly, the amount standing to the
credit of the share premium account (GBP133.2m) of the Company as
at 9 May 2023 was cancelled.
Cost efficiency
The Board reviews costs incurred by the Company on a regular
basis and is focused on maintaining a competitive ongoing charges
ratio (OCR). The year end ongoing charges ratio was 2.24%(1) (FY22:
2.06%(1) ) when calculated in accordance with the AIC's "Ongoing
Charges" methodology. The increase in the OCR is principally driven
by the fall in the average net assets across the year that followed
the drop in the NAV per share. Other factors included an increase
in the number of independent non-executive directors to five and
below inflation increases in remuneration. The Company also made
modest investments to improve shareholder communication through
investments into the Company's website, video updates and an
increased number of shareholder events. The Ongoing Charges
methodology divides ongoing expenses by average net assets.
Board remuneration
Following a review of Board remuneration, and taking into
account peer group analysis and inflation, the Board has agreed to
increase its remuneration by 5%, effective from 1 October 2023. The
annual remuneration of the Chair will increase to GBP41,000, the
independent non-executive directors to GBP32,000 and the
non-independent non-executive director, Oliver Bedford, to
GBP29,500.
An additional fee of GBP1,500 will continue to be paid to the
Chair of the Management and Service Provider Engagement Committee.
The Chair of the Audit Committee will continue to receive an
additional fee of GBP3,000.
Investment Manager
On 2 November 2022, the Company's Investment Manager changed its
name from Hargreave Hale Limited (trading as Canaccord Genuity Fund
Management) to Canaccord Genuity Asset Management Limited
(CGAM).
(1) Alternative performance measure definitions and
illustrations can be found in the glossary of terms.
Annual General Meeting
Shareholders are invited to attend the Company's Annual General
Meeting (AGM) to be held at 4.45 pm on 8 February 2024 at 88 Wood
Street, London, EC2V 7QR. The AGM will be followed by a
presentation from the Investment Manager and a drinks
reception.
Those shareholders who are unable to attend the AGM in person
are encouraged to raise any questions in advance with the Company
Secretary at HHV.CoSec@jtcgroup.com. The deadline for the advance
submission of questions is 5.00 p.m. on 1 February 2024. Answers
will be published on the Company's website on 8 February 2024.
Shareholder Engagement
Shareholder engagement is given a high priority by the Board.
Following a recent review, the Board agreed to significantly
improve the website and develop new content (including video
content) for shareholders to provide more information about the
Company's activities and performance. The new website is live at
www.hargreaveaimvcts.co.uk.
The Company is working hard to make new, better and more
accessible content and hope that shareholders will find the output
useful. The website also introduces new functionality to allow
shareholders to request by email updates on shareholder events, the
performance of the Company (interim management statements, fact
sheets and video updates) and information on the Company's
fundraising activities.
In addition to this, the Board wants to provide shareholders
with more opportunities to meet directly with the Directors and the
CGAM VCT management team. As a result, the number of in--person
events has been increased with the introduction of three new
in-person quarterly updates in February, May and August to sit
alongside the AGM in February and the annual shareholder event in
November. The Board will look to run an event outside of London in
the current financial year to improve access for those unable to
attend London based events. The Board is aware that increased
engagement carries a cost; we therefore hope shareholders will be
able to attend at least one of these events. Further information on
future events and recordings of previous updates can be found on
the Company's website.
Whilst the Board strongly encourages shareholders to make use of
everything the website has to offer, the Directors recognise that
it is not for everyone. Should you prefer, you can of course
continue to communicate with the Chair, any other member of the
Board or the Investment Manager by writing to the Company, for the
attention of the Company Secretary.
Within the 2023 financial year, the Investment Manager gave
three presentations covering the 12 months to 30 September 2022 on
23 November 2022, the 6 months to 31 March 2023 on 21 June 2023 and
the 3 months to 30 June 2023 on 16 August 2023.
Subsequent to the year end, the Investment Manager gave a
presentation covering the 12 months to 30 September 2023 on 29
November 2023. The well attended shareholder event was once again
held at Everyman Cinema, Broadgate, City of London. It included
presentations and a pre-recorded interview with several guest
speakers and contributions from a number of portfolio companies,
including a panel discussion and a presentation from the Investment
Manager's VCT team. The event concluded with the screening of a
feature film. Summary recordings of the Investment Manager's
presentations are available to view on the Company's website
https://www.hargreaveaimvcts.co.uk.
The next shareholder event will be held at the Investment
Manager's offices at 88 Wood Street, London EC2V 7QR following the
conclusion of the AGM to be held at 4.45 pm on 8 February 2024. The
presentation will cover the 3 months to 31 December 2023.
Shareholders are asked to register their interest in attending the
shareholder event through the Company's website
(www.hargreaveaimvcts.co.uk) or by emailing
aimvct@canaccord.com.
Electronic communications
As ever, we are respectfully asking shareholders to opt into
electronic communications and update their dividend payment
preference from cheque to bank transfer. Switching to the digital
delivery of shareholder communications and dividend distributions
is more cost efficient and more secure whilst also helping to
reduce our environmental footprint.
The Company no longer prints and distributes interim reports to
shareholders. The interim results continue to be available for
download on the Company's website (www.hargreaveaimvcts.co.uk) and
a summary of the results are published via a Regulatory Information
Service on the London Stock Exchange. Where necessary, the
Administrator can produce and send out a hard copy.
To support the digital experience, the Company has invested in
an upgraded website to improve the experience and include more
regular updates to the content, including recorded updates from the
manager and portfolio companies. Much of the new content will be
available for distribution by email. You can register your interest
in (and opt out of) email updates through the Company's
website.
Shareholders are also encouraged to make use of Equiniti's
shareview portal, which can be used to monitor their investment,
review their transaction history, see information on dividend
payments and update their communication preferences.
Electronic Voting
Electronic proxy voting is available for shareholders to
register the appointment of a proxy and voting instructions for any
general meeting of the Company once notice has been given. This
service assists the Company to make further printing and production
cost savings, reduce our environmental footprint and streamline the
voting process for investors.
Regulatory update
There were no major changes to VCT legislation during the period
under review.
On 23 September 2022, the Government announced that it intended
to extend the sunset clause that, if not otherwise repealed or
extended, would result in the withdrawal of the upfront 30% income
tax relief for new investment into VCTs from 6 April 2025.
The sunset clause, introduced as part of the 2015 EU State aid
review, does not affect the Capital Gains Tax relief or tax free
dividend payments, nor does it affect investors' income tax relief
on VCT investments made before 6 April 2025.
On 22 November 2023, the Chancellor of the Exchequer announced
as part of the Autumn Statement the intention to extend the VCT and
EIS schemes to 5 April 2035. The Government will introduce new
legislation as part of a future finance bill.
Consumer Duty
The Financial Conduct Authority (FCA) introduced the Consumer
Duty on 31 July 2023 to improve the standard of care provided by
firms that are involved in the manufacture or supply of products
and services to retail clients.
Consumer Duty comprises a new principle and suite of other rules
and guidance to be followed by firms involved in the manufacture
and distribution of a product to put consumers in a better position
to take responsibility for meeting their financial needs and
objectives. For consumers, this should:
-- give confidence that firms are acting in good faith, in line with their interests;
-- allow them to make informed choices about products and services that are fit for purpose and designed to meet a designated target market;
-- improve the information available to assist with the review of the products and services most likely to meet their needs;
-- support the correct delivery of benefits that consumers should reasonably expect from the product and services they subscribe to;
-- improve the standard of customer service; and
-- help them obtain fair value from financial products and services.
As the Company is not regulated by the FCA, it falls outside of
the FCA's new Consumer Duty regulation. However, CGAM and Canaccord
Genuity Wealth Limited (CGWL) are regulated companies and in scope,
respectively as the designated manufacturer and distributor of the
Company. In its capacity as manufacturer, CGAM has conducted a fair
value assessment and a target market assessment. Having reviewed
both reports, the Board is satisfied that CGAM and CGWL have
complied with their obligations.
Two of the four pillars that underpin Consumer Duty relate to
consumer understanding and consumer support.
Although the Board is satisfied that these obligations are met
in full, the Company's website has been upgraded to enhance the
services and benefits derived from an investment in the Company. As
noted above, the Board and Investment Manager have jointly agreed
to host more shareholder events to support the delivery of the
consumer understanding outcome, one of the key outcomes described
under the Consumer Duty.
VCT status
I am pleased to report that the Company continues to perform
well against the requirements of the legislation and at the period
end, the investment test was 91.65% (2022: 84.85%) against an 80%
requirement when measured using HMRC's methodology. The increase in
the investment test percentage reflects progress made in deploying
capital raised through the 2022 offer and the return of capital to
shareholders through the payment of a 2 pence per share special
dividend on 10 February 2023 following the successful exit from
Ideagen plc. The Company satisfied all other tests relevant to its
status as a Venture Capital Trust.
Key information document
In accordance with the Packaged Retail Investment and Insurance
Products ("PRIIPs") regulations, the Company's Key Information
Document ("KID") is published on the Company's website at
www.hargreaveaimvcts.co.uk/document-library/.
Risk review
The Board has reviewed the risks facing the Company. Further
detail can be found in the principal and emerging risks and
uncertainties section.
Outlook
Whilst we continue to navigate an uncertain economic and
geopolitical outlook, recent news suggests that monetary policy is
likely to become more accommodating as we progress through the
year, helping to lay the foundations for a sustainable recovery in
value.
When it finally emerges, a change of sentiment in public markets
will benefit our investments in both public and private companies.
Until then, we draw comfort from a number of factors: first, the
majority of portfolio companies continue to provide updates that
are in line with expectations; second, there is a substantial
amount of growth on offer from within the portfolio, even in these
more difficult times; third, a review of valuation metrics within
the qualifying portfolio highlights the deep value on offer; and
finally, a significant majority of qualifying companies are well
funded and commercially robust.
David Brock
Chair
18 December 2023
The Company and its business model
The Company was incorporated and registered in England and Wales
on 16 August 2004 under the Companies Act 1985, registered number
05206425.
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 266 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 generating capital returns and income from
its portfolio and to make distributions from capital and income to
shareholders whilst maintaining its status as a VCT.
The Company is registered as a small UK Alternative Investment
Fund Manager (AIFM) with a Board comprising of six non-executive
directors, five of whom are independent. Canaccord Genuity Asset
Management Limited acts as investment manager whilst Canaccord
Genuity Wealth Limited (CGWL) acts as administrator and custodian.
JTC (UK) Limited provides company secretarial services.
The Board has overall responsibility for the Company's affairs
including the determination of its investment policy. However, the
Board exercises these responsibilities through delegation to
Canaccord Genuity Asset Management Limited, Canaccord Genuity
Wealth Limited and JTC (UK) 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.
Investment objectives, policy and strategy
Investment objectives
The investment objectives of the Company are to generate capital
gains and income from its portfolio and to make distributions from
capital or income to shareholders whilst maintaining its status as
a Venture Capital Trust.
Investment policy
The Company intends to achieve its investment objectives by
making Qualifying Investments in companies listed on AIM, private
companies and companies listed on the AQSE Growth Market, as well
as Non-Qualifying Investments as allowed by the VCT Rules.
Qualifying investments
The Investment Manager will maintain a diversified portfolio of
Qualifying Investments which may include equities and fixed income
securities as permitted by the VCT Rules. Investments will
primarily be made in companies listed on AIM but may also include
private companies that meet the Investment Manager's criteria and
companies listed on the AQSE Growth Market. These small companies
have a permanent establishment in the UK and, whilst of high risk,
will have the potential for significant capital appreciation.
To maintain its status as a VCT, the Company must have 80 per
cent. by value as measured by the VCT Rules of all of its
investments in Qualifying Investments throughout accounting periods
of the VCT beginning no later than three years after the date on
which those shares are issued. To provide some protection against
an inadvertent breach of this rule, the Investment Manager targets
a threshold of approximately 85 per cent.
Non-Qualifying Investments
The Non-Qualifying Investments must be permitted by the VCT
Rules and may include equities and exchange traded funds listed on
the main market of the London Stock Exchange, fixed income
securities, bank deposits that are readily realisable, the
Marlborough Special Situations Fund and the Marlborough UK
Micro-Cap Growth Fund. Subject to the investment controls below,
the allocation to each of these investment classes will vary to
reflect the Investment Manager's view of the market environment and
the deployment of funds into Qualifying Companies. The market value
of the Non--Qualifying Investments (excluding bank deposits) will
vary between nil and 50 per cent. of the net assets of the
Company.
The value of funds held in bank deposits will vary between nil
and 30 per cent. of the net assets of the Company.
Investment controls
The Company may make co-investments in investee companies
alongside other funds, including other funds managed by the
Investment Manager.
Other than bank deposits, no individual investment shall exceed
10 per cent. of the Company's net assets at the time of
investment.
Borrowings
The Articles permit the Company to borrow up to 15 per cent. of
its adjusted share capital and reserves (as defined in the
Articles). However, it is not anticipated that the Company will
have any borrowings in place and the Directors do not intend to
utilise this authority.
To the extent that any future changes to the Company's
investment policy are considered to be material, shareholder
consent to such changes will be sought. Such consent applies to the
formal investment policy described above and not the investment
process set out below.
Investment process and strategy
The Investment Manager follows a stock specific investment
approach based on fundamental analysis of the investee company.
The Investment Manager's fund management team has significant
reach into the market and meets with large numbers of companies
each week. These meetings provide insight into investee companies,
their end markets, products and services, and competition.
Investments are monitored closely and the Investment Manager
usually meets or engages with their senior leadership team at least
twice each year. Where appropriate the Company may co-invest
alongside other funds managed by the Investment Manager.
The key selection criteria used in deciding which investments to
make include, inter alia:
-- the strength and depth of the management team;
-- the business strategy;
-- a prudent approach to financial management and forecasting;
-- a strong balance sheet;
-- profit margins, cash flows and the working capital cycle;
-- barriers to entry and the competitive landscape; and
-- the balance of risk and reward over the medium and long term.
Qualifying Investments
Investments are made to support the growth and development of a
Qualifying Company. The Investment Manager will maintain a
diversified portfolio that balances opportunity with risk and
liquidity. Qualifying Investments will primarily be made in
companies listed on AIM but may also include private companies and
companies listed on the AQSE Growth Market. Seed funding is rarely
provided and only when the senior leadership team includes proven
business leaders known to the Investment Manager.
Working with advisers, the Investment Manager will screen
opportunities, often meeting management teams several times prior
to investment to gain a detailed understanding of the company.
Investments will be sized to reflect the risk and opportunity over
the medium and long term. In many cases, the Investment Manager
will provide further funding as the need arises and the investment
matures. When investing in private companies, the Investment
Manager will shape the investment to meet the investee company's
needs whilst balancing the potential for capital appreciation with
risk management.
Investments will be held for the long term unless there is a
material adverse change, evidence of structural weakness, or poor
governance and leadership. Partial realisations may be made where
necessary to balance the portfolio or, on occasion, to capitalise
on significant mispricing within the stock market.
Non-Qualifying Investments
The Investment Manager's VCT team works closely with the
Investment Manager's wider fund management team to deliver the
investment strategy when making Non-Qualifying Investments, as
permitted by the VCT Rules. The Investment Manager will vary the
exposure to the available asset classes to reflect its view of the
equity markets, balancing the potential for capital appreciation
with risk management, liquidity and income.
The Non-Qualifying Investments will typically include a focused
portfolio of direct investments in companies listed on the main
market of the London Stock Exchange. The portfolio will mix long
term structural growth with more tactical investment to exploit
short term mispricing within the market. The use of the Marlborough
Special Situations Fund and the Marlborough UK Micro-Cap Fund
enables the Company to maintain its exposure to small UK companies
whilst the Investment Manager identifies opportunities to invest
the proceeds of fundraisings into Qualifying Companies.
The Investment Manager may use certain exchange traded funds
listed on the Main Market of the London Stock Exchange to gain
exposure to asset classes not otherwise accessible to the
Company.
Environmental, social and governance considerations
Approach
The Company regards the development of a clearly defined and
integrated ESG management system as an important pillar for the
long-term success of its business, as well as for its investee
companies.
The Investment Manager believes that companies with strong
governance, sustainable business models and balanced workforces are
more likely to create value over the long term whilst reducing
investment risk, benefiting the wider UK economy and society and
generating positive shareholder returns.
ESG in the investment process
Holding meaningful stakes in investee companies provides the
Investment Manager with the opportunity and responsibility to
positively influence investee company behaviour, both at the point
of investment and during the time in which the Company is a
shareholder.
Due diligence
The Investment Manager assesses ESG factors across the
portfolio. For Qualifying Companies, the Investment Manager will
use the information provided to develop an individualised ESG risk
map to identify issues and track behavioural themes. The Investment
Manager regularly engages with senior management teams and boards
to identify and raise issues of note, provide a forum for positive
feedback and promote change where necessary.
Engagement, exclusions and divestment policies
As part of its investment strategy, the Company has adopted
policies covering exclusions and divestment to describe behaviours
that fall outside of the Company's expectations of investee
companies. The Investment Manager has adopted an engagement policy
to create a clear framework that defines how it will interact with
investee companies.
The Investment Manager
The Investment Manager adheres to its own ESG investment and
stewardship policies. These include an ESG Policy, an Engagement
Policy, a Conflicts of Interest Policy and a Stewardship Policy
that, together with the investment mandate and the Company's ESG
approach, inform the Company's approach.
CGAM is a signatory of the United Nations Principles of
Responsible Investment (UN PRI) and HM Treasury's Women in Finance
Charter.
Risk management
The structure of the Company's investment portfolio and its
investment strategy, has been developed to mitigate risk where
possible. Key risk mitigation strategies are as follows:
-- The Company has a broad portfolio of investments to reduce stock specific risk.
-- Flexible allocations to non-qualifying equities, exchange traded funds listed on the Main Market of the London Stock Exchange, fixed income securities, bank deposits that are readily realisable, the Marlborough Special Situations Fund and the Marlborough UK Micro-Cap Fund allow the Investment Manager to adjust portfolio risk without compromising liquidity.
-- Regular meetings with investee companies aid the close monitoring of investments to identify potential risks and allow corrective action where possible.
-- Regular Board meetings and dialogue with the Directors, along with policies to control conflicts of interest and co-investment with the Marlborough fund mandates, support strong governance.
Further information can be found in this report.
Key performance indicators
The Directors consider the following Key Performance Indicators
(KPIs) to assess whether the Company is achieving its strategic
objectives. The Directors believe these measures help shareholders
assess how effectively the Company is applying its investment
policy and are satisfied the results give a fair indication of
whether the Company is achieving its investment objectives and
policy. The KPIs are established industry measures.
Further commentary on the performance of these KPIs has been
discussed in the Chair's statement and Investment Manager's
report.
1 NAV and share price total returns
The Board monitors NAV and share price total return to assess
how the Company is meeting its objective of generating capital
gains and income from its portfolio and making distributions to
shareholders. The NAV per share decreased from 60.19 pence to 46.34
pence resulting in a loss to ordinary shareholders of -8.85 pence
per share (-14.70%)(1) after adjusting for dividends paid in the
year.
The Board considers peer group and benchmark comparative
performance. Due to the very low number of AIM VCTs, the Board
reviews performance against the generalist VCTs as well as the AIM
VCTs to provide a broader peer group for comparison purposes.
Performance is also measured against the FTSE AIM All-Share Index
Total Return. With 91% of the portfolio of Qualifying Investments
in companies listed on AIM, the Directors consider this to be the
most appropriate benchmark. However, HMRC derived investment
restrictions and investments in private companies, main market
listed companies and bonds mean that the index is not a wholly
comparable benchmark for performance.
Rolling Returns to end Sep 2023 1Y 3y 5y 10y
NAV total return -14.70% -15.30% -17.18% 29.11%
Share price total return -23.51% -10.53% -15.87% 35.53%
NAV total return (dividends
reinvested) (1) -15.93% -22.40% -25.80% 18.49%
Share price total return (dividends
reinvested) (1) -24.80% -18.58% -25.16% 23.65%
FTSE AIM All-Share Index Total
Return -8.28% -21.23% -29.50% 4.21%
Source: Canaccord Genuity Asset Management Ltd
(1) The NAV total return (dividends reinvested) and share price total return (dividends reinvested) measures have been included to improve comparability with the FTSE AIM All-Share Index Total Return which is also calculated on that basis.
Reflecting the difficult market conditions that continued to
dominate through the financial year, and in common with the AIM VCT
peer group, the Company reported a significant reduction in the NAV
per share. The NAV total return fell behind the benchmark over the
year; however, it remains ahead of the benchmark over three, five
and ten years but behind the average of the AIM VCT peer group over
the same time horizons. The steep falls in valuations of companies
listed on AIM, which have heavily impacted the performance of the
Company and its AIM VCT peers, have not been mirrored in the
Generalist VCT sector, which has reported a very modest average
decline of --0.05% over the period under review (source:
Morningstar). The divergence of performance across the two peer
groups is particularly notable across the two years since the start
of the bear market with the AIM VCT sector returning an average
loss of 42.1% against the average loss within the Generalist VCT
sector of -1.1%. AIM has fallen by 42.0% over the same two-year
period. It is difficult to account for the strongly divergent
performance although the possible use of investment structures not
accessible to investors in public companies may account for some of
the difference.
(1) Alternative performance measure definitions and
illustrations can be found in the glossary of terms.
Further detailed information on peer group performance is
available through Morningstar
(https://www.morningstar.co.uk) and the AIC
(https://www.theaic.co.uk/aic/statistics).
2. Share price discount to NAV per share
The Company uses secondary market purchases of its shares to
improve the liquidity in its shares and support the discount. The
discount to NAV per share is an important influence on a selling
shareholder's eventual return. The Company aims to maintain a
discount of approximately 5 per cent. to the last published NAV per
share (as measured against the mid-price).
The Company's shares traded at a discount of 7.21%(1) as at 30
September 2023 (2022: 4.25%(1) premium) when calculated with
reference to the 30 September 2023 NAV per share. The 1 and 5 year
average share price discounts were 6.06%(1) and 5.64%(1)
respectively.
The Company's shares are priced against the last published NAV
per share with the market typically adjusting the price to reflect
the NAV after its publication. In line with the Company's valuation
policy, the Company aims to publish the quarter end NAV per share
within 5 business days of the period end to allow time for the
Investment Manager and Board to review and agree the valuation of
the private companies held within the investment portfolio.
The Company's share price on 30 September 2023 reflected the
last published NAV per share prior to the year end, which was
released on 26 September 2023. The 30 September 2023 NAV was
reported on 5 October 2023, following the review of the valuations
of the private companies.
As at 15 December 2023, the discount to NAV was 6.71% of the
last published NAV per share.
3. Ongoing charges ratio
The ongoing charges of the Company were 2.24%(1) (2022: 2.06%(1)
) of the average net assets of the Company during the financial
year to 30 September 2023.
The increase in the OCR is principally driven by the fall in the
average net assets across the year that followed the drop in the
NAV per share. Other factors included below inflation increases in
board remuneration and an increase in the number of non-executive
directors from five to six. There were also modest investments made
to improve shareholder communication through investments into the
Company's website, video updates and an increased number of
shareholder events. The Ongoing Charges methodology divides ongoing
expenses by average net assets.
The Company's ongoing charges ratio remains competitive against
the wider VCT industry and similar to other AIM VCTs. This ratio is
calculated using the AIC's "Ongoing Charges" methodology and,
although based on historical information, it provides shareholders
with an indication of the likely future cost of managing the
fund.
Cost control and efficiency continues to be a key focus for the
Board. Although the OCR increased within the year, the Board is
pleased to report that the Company's expenses incurred within the
year were below budget.
(1) Alternative performance measure definitions and
illustrations can be found in the glossary of terms.
4. Dividends per share
The Company's policy is to target a tax free dividend yield
equivalent to 5% of the year end NAV per share. The Board remains
committed to maintaining a steady flow of dividend distributions to
shareholders.
A total of 5.00 pence per share (2022: 6.65 pence) of dividends
was paid during the year, comprised of a special dividend of 2.00
pence per share paid on 10 February 2023, a final dividend of 2.00
pence in respect of the previous financial year (2021: 3.15 pence)
paid on 10 February 2023 and an interim dividend of 1.00 penny
(2022: 1.00 penny) paid on 28 July 2023.
A final dividend of 1.50 pence per share will be proposed at the
Annual General Meeting. If approved by shareholders, the payment of
the interim, final and special dividends in respect of the
financial year to 30 September 2023 would represent a distribution
to shareholders of 9.7% of the 30 September 2023 NAV per share.
The below table demonstrates how the Board has been able to
consistently pay dividends in line with the 5% target and dividend
policy.
Dividends paid/payable by financial year
Year end
NAV Dividends
Additional
Year pence per share Yield information
2010/11 61.14 4.00 6.5%
2011/12 61.35 3.25 5.3%
2012/13 71.87 3.75 5.2%
2013/14 80.31 4.25 5.3%
2014/15 74.64 4.00 5.4%
2015/16 75.93 4.00 5.3%
2016/17 80.82 4.00 4.9%
Including
special
dividend
2017/18 87.59 5.40 6.2% of 1 penny.
2018/19 70.60 3.75 5.3%
Including
a special
dividend
of 1.75
2019/20 73.66 5.40 7.3% pence.
Including
a special
dividend
of 2.50
2020/21 100.39 7.40 7.4% pence.
2021/22 60.19 3.00 5.0%
Including
a special
dividend
of 2.00
pence and
proposed
final dividend
of 1.50
2022/23 46.34 4.50 9.7% pence.
(1) Alternative performance measure definitions and
illustrations can be found in the glossary of terms.
5. Compliance with VCT regulations
A VCT must be approved by HMRC at all times and, in order to
retain its status, the Company must meet a number of tests as set
out by the VCT legislation. Throughout the year ended 30 September
2023 the Company continued to meet these tests.
The investment test increased from 84.85% to 91.65% in the
financial year. The increase in the investment test percentage
reflects progress made in deploying capital raised through the 2022
offer and the return of capital to shareholders through the payment
of a 2 pence per share special dividend on 10 February 2023
following the successful exit from Ideagen plc. The investment test
remains comfortably ahead of the 80% threshold that applies to the
Company and ahead of the target of 85% as set out in the Company's
investment policy.
The Company invested GBP13.6 million into 10 Qualifying
Companies, 4 of which were investments into new Qualifying
Companies. The Board is pleased with the level of new Qualifying
Investment, which was ahead of expectations.
The Board believes that the Company will continue to meet the
HMRC defined investment test and other qualifying criteria on an
ongoing basis.
For further details please refer to the Investment Manager's
report.
Principal and emerging risks and uncertainties
The Directors acknowledge that they are responsible for the
effectiveness of the Company's risk management and internal
controls and periodically review the principal risks faced by the
Company at Board meetings. The Board may fulfil these
responsibilities through delegation to Canaccord Genuity Asset
Management Limited and Canaccord Genuity Wealth Limited as it
considers appropriate. The principal risks facing the Company,
together with mitigating actions taken by the Board, are set out
below:
Risk Potential consequence How the Board mitigates Changes During
risk the Year
Venture Capital Loss of VCT approval To reduce this No change.
Trust approval could lead to the risk, the Board
risk. The Company Company losing has appointed an
operates in a complex its exemption from investment manager
regulatory environment corporation tax with significant
and faces a number on capital gains, experience in the
of related risks. shareholders losing management of venture
A breach of Section their tax reliefs capital trusts.
259 of the Income and, in certain The Investment
Taxes Act 2007 circumstances, Manager regularly
could result in being required provides the Board
the disqualification to repay the initial with written and
of the Company tax relief on their verbal reports.
as a VCT. investment. The Board also
appointed Philip
Hare & Associates
LLP to monitor
compliance with
regulations and
provide half-yearly
compliance reports
to the Board.
Investment risk. Investment in poor The Board has appointed No change.
Many of the Company's quality companies an investment manager Changes in monetary
investments are could reduce the with significant or fiscal policy
held in small, capital and income experience of investing have undermined
high risk companies return to shareholders. in small companies. consumer, business
which are either Investments in The Investment and investor confidence
listed on AIM or small companies Manager maintains with negative impacts
privately held. are often illiquid a broad portfolio on profitability,
and may be difficult of investments investment and
to realise. across a wide range stock market performance.
of industries and The higher cost
sectors. Individual of borrowing is
Qualifying Investments starting to impact
rarely exceed 5% the cost of debt
of net assets. for companies and
The Investment consumers. Whilst
Manager holds regular still subdued,
company meetings UK consumer and
to monitor investments business confidence
and identify potential has recovered off
risk. The VCT's lows as energy
liquidity is monitored prices, inflation
on a regular basis and supply chain
by the Investment frictions all eased.
Manager and reported Whilst the economy
to the Board quarterly has outperformed
and as necessary. expectations for
this year, the
outlook remains
weak.
Compliance risk. Failure to comply Board members have No change.
The Company is with these regulations considerable experience
required to comply could result in of operating at
with the FCA Listing a delisting of senior levels within
Rules and the Disclosure the Company's shares, quoted businesses.
Guidance and Transparency financial penalties, They have access
Rules, the Companies a qualified audit to a range of advisors
Act, Accounting report or loss including solicitors,
Standards, the of shareholder accountants and
General Data Protection trust. other professional
Regulation and bodies and take
other legislation. advice when appropriate.
The Company is CGWL provides compliance
also a small registered oversight to both
Alternative Investment the Administrator
Fund Manager ("AIFM") and the Investment
and has to comply Manager and reports
with the requirements to the Board on
of the AIFM Directive. a quarterly basis.
Operational risk Failures could The Company has No change.
and outsourcing. put the assets in place a risk
Failure in the of the Company matrix and a set
Investment Manager, at risk or result of internal policies
Administrator, in reduced or inaccurate which are reviewed
Custodian, Company information being on a regular basis.
Secretary or other passed to the Board It has written
appointed third or shareholders. agreements in place
party systems and Quality standards with its third-party
controls or disruption may be reduced service providers.
to its business through lack of The Board, through
as a result of understanding or the Management
operational failure, loss of control. and Service Provider
environmental hazards Engagement Committee,
or cyber security receives regular
attacks. reports from the
Investment Manager,
Administrator and
custodian to provide
assurance that
they operate appropriate
control and oversight
systems and have
in place training
and other defence
measures to mitigate
the risk of cyber
attack. Additionally,
the Board receives
a control report
from the Company's
registrars on an
annual basis. Where
tasks are outsourced
to other third
parties, reputable
firms are used
and performance
is reviewed periodically
by the Management
and Service Provider
Engagement Committee
Key personnel risk. Potential impact The Board discusses No change.
A change in the on investment performance. key personnel risk
key personnel involved and resourcing
in the management with the Investment
of the portfolio. Manager periodically.
The VCT team within
the Investment
Manager comprises
two fund managers
and two investment
analysts, which
helps mitigate
this risk.
Exogenous risks Instability or Regular dialogue No change.
such as economic, changes arising with the manager The Bank of England
political, financial, from these risks provides the Board increased base
climate change could have an impact with assurance rates by 300bps
and health. Economic on stock markets that the Investment to 5.25% during
risks include recession and the value of Manager is following the financial year,
and sharp changes the Company's investments the investment significantly increasing
in interest rates. so reducing returns policy agreed by the cost of debt
Political risks to shareholders. the Board and appraises for companies and
include the terms A failure to renew the Board of the and households
of the UK's exit or replace the portfolio's current with floating rate
from the European relevant sections positioning in debt. Companies
Union or a change of the Finance the light of prevailing and households
in government policy (No 2) Act 2015 market conditions. with savings benefitted.
causing the VCT with similar or The Company's investment The full impact
scheme to be brought equivalent legislation portfolio is well of this is yet
to an end. A condition would make it more diversified and to be felt.
of the European difficult for the the Company has In the Autumn Statement
Commission's State Company to attract no gearing. 2023, the Government
aid approval of new capital whilst The Board regularly confirmed its intention
the UK's VCT and continuing to operate reviews investment to extend the sunset
EIS schemes in under its current test forecasts clause by 10 years
2015 was the introduction investment policy. and liquidity analysis, to 5 April 2035.
of a retirement Companies may face including under Legislation is
date for the current restrictions on stress scenarios, expected to be
schemes at midnight emissions, water to monitor current introduced through
on 5 April 2025 consumption and and anticipate the next Finance
(the 'Sunset Clause'). increased risk future performance Bill and passed
If the relevant of environmental against HMRC legislation into law in early
legislation is hazards. and to ensure the 2024.
not renewed or Company has, and The wars in Ukraine
replaced with similar will continue to and the Middle
or equivalent legislation, have, access to East present a
new investors will sufficient liquidity range of risks
not be able to and distributable that may have profound
claim income tax reserves to maintain economic and social
relief for investments compliance with consequences if
into new shares its key policies. they impact access
issued by VCTs The Board keeps to certain commodities
after 5 April 2025. abreast of current or much higher
Climate change thinking through prices.
presents environmental, contact with industry
geopolitical, regulatory associations and
and economic risks. its advisors.
In the long term, The Investment
some companies Manager undertakes
may have restrictions a review of ESG
imposed on their factors as part
operational model of the investment
that reduce revenues process. Climate
and profit margins change, or the
and increases their need to limit its
cost of capital. impact, will result
in technological
innovation as young
companies seek
to develop solutions
and create opportunities
for value creation
for existing or
new Qualifying
Companies.
Additional risks and further details of the above risks and how
they are managed are explained in note 15 of the financial
statements. Trends affecting future developments are discussed in
the Chair's statement and the Investment Manager's report.
Long term viability statement
--In accordance with provision 36 of the AIC Code of Corporate
Governance, the Directors have carried out a robust assessment of
the Company's current position and its emerging and principal
risks. This assessment has been carried out over a longer period
than the 12 months required by the 'Going Concern' provision. The
Board conducted this review for a period of five years, which was
selected because it:
-- is consistent with investors' minimum holding period to retain the 30% income tax relief;
-- exceeds the time allowed to deploy funds raised under the current offer in accordance with VCT legislation; and
-- is challenging to forecast beyond five years with sufficient accuracy to provide actionable insight.
The Board considers the viability of the Company as part of its
continuing programme of monitoring risk. The Company has a detailed
risk control framework, documented procedures and forecasting model
in place to reduce the likelihood and impact of risk taking that
exceeds the levels agreed by the Board. These controls are reviewed
by the Board and Investment Manager on a regular basis.
The Board has considered the Company's financial position and
its ability to meet its liabilities as they fall due over the next
five years. Forecasts and stress tests have been used to support
their assessment and the following factors have been considered in
relation to the Company's future viability:
-- the Company maintains a highly diversified portfolio of Qualifying Investments;
-- the Company is well invested against the HMRC investment test (91.65% at 30 September 2023) and the Board believes the Investment Manager will continue to have access to sufficient numbers of investment opportunities to maintain compliance with the HMRC investment test;
-- the Company held GBP19.2 million in cash at the year end;
-- the Company has distributable reserves of GBP134.4 million at 30 September 2023, equivalent to 41 pence per share;
-- the Company has a portfolio of Non-Qualifying Investments, most of which are listed in the FTSE 350 and offer good levels of liquidity should the need arise;
-- the financial position of the Company at 30 September 2023 was strong with no debt or gearing;
-- the offer for subscription launched on 7 September 2023 has provided further liquidity for deployment in line with the Company's policies and to meet future expenses;
-- the ongoing charges ratio of the Company at the year end was 2.24%;
-- the Company has procedures and forecast models in place to identify, monitor and control risk, portfolio liquidity and other factors relevant to the Company's status as a VCT; and
-- the Investment Manager and the Company's other key service providers have contingency plans in place to manage operational disruptions.
In assessing the Company's future viability, the Board has
assumed that investors will wish to continue to have exposure to
the Company's activities, that performance will be satisfactory and
the Company will continue to have access to sufficient capital.
Based on this assessment, the Directors have a reasonable
expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the next five
years.
Other matters
Dividend policy
The Company's dividend policy is to target a tax free dividend
yield equivalent to 5% of the year end NAV per share. The ability
to pay dividends is dependent on the Company's available
distributable reserves and cash resources, the Act, the Listing
Rules and the VCT 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. The level of dividend paid each
year will depend on the performance of the Company's portfolio. In
years where there is strong investment performance, the Directors
may consider a higher dividend payment, including the payment of
special dividends. In years where investment performance is not as
strong, the Directors may reduce or even pay no dividend.
Discount control policy and management of share liquidity
The Company aims to improve liquidity and to maintain a discount
of approximately 5 per cent. to the last published NAV per share
(as measured against the mid-price) by making secondary market
purchases of its shares in accordance with parameters set by the
Board.
This 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. These factors may
restrict the effective operation of the policy and prevent the
Company from achieving its objectives.
Diversity
The Board comprises three male non-executive directors and three
female non-executive directors with a diverse range of experience,
skills, length of service and backgrounds. The Board considers
diversity when reviewing Board composition and has made a
commitment to consider diversity when making future appointments.
The Board will always appoint the best person for the job. It will
not discriminate on the grounds of gender, race, ethnicity,
religion, sexual orientation, age or physical ability.
Environmental Social and Governance (ESG) and Considerations
The Board seeks to maintain high standards of conduct with
respect to environmental, social and governance issues and to
conduct the Company's affairs responsibly.
The Company does not have any employees or offices and so the
Board does not maintain any specific policies regarding employee,
human rights, social and community issues but does expect the
Investment Manager to consider them when fulfilling their role. As
the Company used less than 40MWh of energy during the period it is
exempt from the Streamlined Energy and Carbon Reporting
requirements.
The Company, whilst exempt, continues to monitor and develop its
approach to the recommendations of the Task Force on Climate
related Financial Disclosures.
The management of the Company's investment portfolio has been
delegated to its Investment Manager Canaccord Genuity Asset
Management Ltd. The Company has adopted specific policies on
divestment and excluded activities and it expects the Investment
Manager to take account of ESG considerations in its investment
process for the selection and ongoing monitoring of underlying
investments. The Board has also given the Investment Manager
discretion to exercise voting rights on resolutions proposed by
investee companies.
The Investment Manager continues to strengthen its approach to
ESG issues.
To minimise the direct impact of its activities the Company
offers electronic communications where acceptable to reduce the
volume of paper it uses and uses Carbon Balanced paper manufactured
at a FSC accredited mill to print its financial reports. Vegetable
based inks are used in the printing process where appropriate.
Prospects
The prospects and future development of the Company are
discussed in detail in the outlook section of the Chair's
statement.
The strategic report is approved, by order of the Board of
Directors.
David Brock
Chair
18 December 2023
Summary of VCT regulations
To maintain its status as a VCT, the Company must be approved by
HMRC and comply with a number of conditions. A summary of the most
important conditions are detailed below:
VCTs' obligations
VCTs must:
-- have 80 per cent. (by VCT tax value) of all funds raised from the issue of shares invested in Qualifying Investments throughout accounting periods of the VCT beginning no later than three years after the date on which those shares are issued;
-- have at least 70 per cent. by VCT tax value of Qualifying Investments in Eligible Shares which carry no preferential rights (unless permitted under VCT Rules);
-- have at least 30 per cent. of all new funds raised by the Company invested in Qualifying Investments within 12 months of the end of the accounting period in which the Company issued the shares;
-- have no more than 15 per cent. by VCT tax value of its investments in a single company (as valued in accordance with the VCT Rules at the date of investment);
-- derive most of its income from shares and securities, and, must not retain more than 15 per cent. of its income derived from shares and securities in any accounting period; and
-- have their shares listed on the main market of the London Stock Exchange or a European regulated Stock Exchange.
VCTs must not:
-- make a Qualifying Investment in any company that:
-- has (as a result of the investment or otherwise) received more than GBP5 million from State aid investment sources in the 12 months prior to the investment (GBP10 million for Knowledge Intensive Companies);
-- has (as a result of the investment or otherwise) received more than GBP12 million from State aid investment sources in its lifetime (or GBP20 million for Knowledge Intensive Companies);
-- in general has been generating commercial revenues for more than 7 years (or 10 years for Knowledge Intensive Companies); or
-- will use the investment to fund an acquisition of another company (or its trade and assets).
-- make any investment which is not a Qualifying Investment unless permitted by section 274 ITA; and/or
-- return capital to shareholders before the third anniversary of the end of the accounting period during which the subscription for shares occurs.
Qualifying Investments
A Qualifying Investment consists of new shares or securities
issued directly to the VCT by a Qualifying Company that at the
point of investment:
-- has gross assets not exceeding GBP15 million prior to investment and GBP16 million post investment;
-- carries out activities which are regarded as a Qualifying Trade;
-- is a private company or is listed on AIM or the AQSE Growth Market;
-- has a permanent UK establishment;
-- is not controlled by another company;
-- will deploy the money raised for the purposes of the organic growth and development of a Qualifying Trade within 2 years;
-- has fewer than 250 employees (or fewer than 500 employees in the case of certain Knowledge Intensive Companies);
-- in general, has not been generating commercial sales for more than 7 years (ten years for Knowledge Intensive Companies);
-- has not received more than the permitted annual and lifetime limits of risk finance State aid investment; and
-- has not been set up for the purpose of accessing tax reliefs or is in substance a financing business.
The Finance Act 2018 introduced a principles-based approach
known as the risk to capital condition to establish whether the
activities or investments of an investee company can qualify for
VCT tax reliefs. This condition has two parts:
-- whether the investee company has an objective to grow and develop over the long term; and
-- whether there is a significant risk that there could be a loss of capital to the investor of an amount exceeding the net return.
Investment Manager's report
Introduction
This report covers the 2022/23 financial year, 1 October 2022 to
30 September 2023. The Investment Manager's report contains
references to movements in the NAV per share and NAV total return
per share. 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
Starting from a very low base, investor sentiment showed
tentative signs of recovery as investors became more confident that
inflation was close to peaking and, with it, the interest rate
tightening cycle that had done so much damage to risk assets in
2022. The failure in March 2023 of Silicon Valley Bank, several US
regional banks and Credit Suisse challenged the developing thesis
and the markets swiftly moved to price in a series of rate cuts by
the Federal Reserve throughout the second half of the year. A
series of subsequent data points highlighted a substantially more
robust US economy which would require US interest rates to remain
higher for longer. This dynamic had implications for risk assets
globally.
The UK economy has experienced something similar, proving to be
substantially stronger this year than most predicted. Inflation has
remained disappointingly high, forcing the Bank of England ("BoE")
into a more hawkish position with many homeowners protected by
fixed rate mortgages and now benefitting from higher interest
payments on their savings. UK inflation ("CPI") peaked at 11.1% in
October 2022 but has since steadily declined, reaching 6.7% in
September.
UK consumer confidence remains low, albeit substantially better
than at the start of the financial year. The September reading did,
however, suggest that higher interest rates might finally start to
take their toll. There are other signs too that tighter monetary
policy is starting to impact with retail sales weakening and
unemployment starting to trend higher, whilst remaining low by
historical standards.
With the Bank of England raising interest rates seven times
within the year to 5.25%, the focus has shifted to the outlook for
rate cuts. Currently, the market is forecasting that the BoE
remains on hold until mid--2024. This is substantially better than
the forecast at the start of the financial year, but also much
higher than predicted in the Spring following the failure of SVB.
These huge swings in the outlook have been mirrored in the US and,
to a lesser extent, in Europe making it difficult for a range of
asset classes from equities to bonds and foreign exchange.
Sadly, these factors continue to depress appetite for investment
into high-risk growth equity. AIM continues to endure a
particularly difficult period, having now fallen by 41.6% in the
two years to 30 September 2023. By any measure, this is a long and
uncomfortable bear market. Although trading varies quite
significantly by sector, price action is heavily influenced by
technical factors with many UK institutional shareholders still
having to manage sustained outflows. This dynamic is not unique to
AIM. Small companies are struggling in other territories too, with
the Russell 2000 (US small companies) and MSCI Europe Small Cap
Index both posting positive returns over the period under review
whilst remaining negative over two years.
The risk averse environment and constant need for liquidity has
again led to a material underperformance by AIM (-9.95%) over the
year relative to other domestic indices such as the FTSE 100
(+10.36%) and FTSE 250 (+6.47%).
Performance
In the 12 months to 30 September 2023, the audited NAV per share
decreased from 60.19 pence to 46.34 pence, a NAV total return to
investors of -8.85 pence per share after adding back the 5.00 pence
of dividends paid in the year and which translates to a loss of
-14.70%.
The qualifying investments made a net loss of -7.99 pence per
share whilst the non-qualifying investments loss was --0.32 pence
per share. The -0.54 pence adjusting balance was the net of the
investment in Marlborough Special Situations Fund, running costs
and investment income.
Corporate news flow was mixed across the year. After a difficult
winter, when many companies faced weaker trading or pressure on
margins, primarily due to macro-economic factors, many companies
reported trading improved through the spring and summer. September
included an unusually high number of poor updates, although our
analysis suggests this was mostly due to company specific factors
rather than a weakening economy or tightening of financial
conditions. We report below on those companies that were the most
significant contributors to performance. In particular, we note
that three of the most significant detractors (Zoo Digital, Maxcyte
and Tortilla Mexican Grill) are companies that have previously
delivered strong contributions to the NAV; we are hopeful that
their share prices can recover with time.
Equipmake (+44.0%, +0.75 pence per share) reported that revenues
in the 12 months to May 2023 grew by 34% to GBP5.1m. The company
also announced two contracts to convert diesel buses into battery
powered buses and a GBP3.2m grant to develop its electric
powertrain technology for the off-highway sector in partnership
with Caterpillar. The company is forecast to increase revenues by
163% to GBP13.4m in the current year. Profits are not expected
until 2026. The company is expected to close the current year with
GBP2.0m of net cash.
Following an activist campaign launched by founder Jonathan
Milner, Abcam (+38.0%, +0.25 pence per share) launched a strategic
review that resulted in a $24 per share takeover offer from
Danaher. The exit price represents an increase of 7,086% (71x) over
the book cost of the investment.
Following a two-year legal process, PCI-PAL (+21.7%, +0.21 pence
per share) received a favourable ruling from the UK High Court,
comprehensively defeating the patent infringement claims from
competitor Sycurio. Whilst this is a clear positive and a strong
endorsement of the company's IP position, the ruling may yet be
subject to appeal. Sycurio filed similar claims in the US courts,
which may be heard in 2024. The company continues to trade well
with 2024 revenue growth subject to some modest revision to
GBP19.1m (previously: GBP20.0m), equivalent to +28% YOY. The
company is expected to report a maiden profit within the current
financial year and close the year with net cash of GBP0.3m.
XP factory (+37.5%, +0.17 pence per share) reported strong
growth in both H1'23 revenues (GBP18.6m, +130% YoY) and adjusted
EBITDA (GBP2.4m, +120%). The company continues to roll out its
escape room and competitive socialising concepts across the UK.
Although trading within the current year remains strong, the
company has moderated the new openings planned in FY25 and beyond.
The company has a good balance sheet with net cash of GBP3.6m (30
June 2023).
Diaceutics (+28.8%, +0.15 pence per share) reported H1'23
revenues of GBP9.9m (+32% YoY) and an EBITDA loss of GBP0.2m. Net
cash was GBP17.9m. Recurring revenues grew by 66% to GBP4.6m as
more customers signed annual or multi-year licences for the
company's DXRX platform. The forward order book of GBP24.1m
provides good cover of the current year forecast. The company also
announced that the founder would move from his current CEO role
into a business development role with the current COO moving into
the CEO role.
Long running strikes (screenwriters and actors) in the US have
materially affected the commissioning of new content for
distribution through streaming platforms, leading to a substantial
drop off in demand for Zoo Digital's (-69.2%, -1.14 pence per
share) localisation and media services and several significant
forecast revisions. On current projections, revenues will fall by
50% this year to $45m. Whilst the short-term outlook remains
uncertain, production has resumed with the company expecting to
return to growth in early 2024. There are no changes to medium term
guidance. The company is well funded following a $15.5m fundraise
in April 2023.
The commercial impact of last year's dispute with Azerion
continues to cast a long shadow over Bidstack (-90.0%, -0.90 pence
per share), highlighting profound issues with the company's
operational model, leadership and governance structures. A Dutch
court will review Azerion's decision to withhold payment. In the
meantime, a substantially weaker balance sheet has left the company
exposed.
Following a very successful year in 2022 that included three
profit upgrades, Maxcyte (-55.4%, -0.73 pence per share) has been
the victim of a notably weaker end market following the failure of
Silicon Valley Bank. The significant tightening of financial
conditions within the healthcare sector has caused many clinical
and pre-clinical companies to adopt a more cautious approach to
investment, leading the company to substantially revise its
expectations for this year across several updates. Disappointing as
this is, Maxcyte's long-term prospects remain attractive,
underpinned by an expanding partnership portfolio with potential
pre-commercial milestones valued at over $1.6b and future
royalties. The company's shares have been savagely de-rated, at one
point valuing the company at $264m with year-end net cash forecast
to be approximately $200m. Post period end, the FDA approved
Casgevy for the treatment of severe sickle cell disease, the first
time a therapy developed using Maxcyte's flow electroporation
technology has been approved by the FDA. The approval will trigger
further milestone payments and significant royalties from 2025.
Initially, the outlook looked promising for Polarean (-76.9%,
-0.70 pence per share) with the company receiving (in December
2022) FDA clearance for Xenoview, its drug-device combination
product that allows MRI scanners to provide detailed evaluation of
lung function. In subsequent updates, the company reduced its
assumptions for revenue growth and increased its guidance on costs.
The company has appointed a new CEO with prior experience in
driving adoption within the medical equipment sector. The company
has net cash of $9.9m but will need additional funding in 2024.
A desire to defend its value proposition at the cost of margins
led Tortilla Mexican Grill (-51.7%, -0.56 pence per share) to issue
revised profit guidance in late 2022 as inflationary pressures
(food, labour and energy) ate into margins. Subsequent updates have
remained consistent with the revised forecasts with the company
reporting revenue growth of 22% in the 6 months to June 2023. The
company continues to use its strong balance sheet to expand its UK
footprint with 8 new sites to be opened in 2023. The medium-term
opportunity remains compelling.
We entered the year expecting to see an increase in the number
of companies undertaking an initial public offering in the second
half of the financial year. This has not come to pass with the low
valuations and the continued flow of capital out of open-ended
funds increasing the risk of a poor outcome and acting as a
deterrent to new entrants. Investor confidence and appetite for
risk was depressed by a broad range of factors (higher interest
rates, US regional banking crisis, war in the Middle East) and will
need to improve before the market becomes more attractive to new
listings.
We invested GBP13.6m through 12 Qualifying Investments into 10
Qualifying Companies that included 2 IPOs, 2 new investments into
companies listed on AIM, 6 follow on investments into existing AIM
portfolio companies and 2 further investments into Kidly. The most
significant new investments included Engage XR, Fadel and Itaconix.
We reduced our investments in Bidstack, Eneraqua, Equipmake, Faron
Pharmaceuticals, Smoove and Zoo Digital. We made complete exits
from Diurnal, In The Style and Yourgene.
Portfolio structure
The VCT is comfortably through the HMRC defined investment test
and ended the period at 91.65% invested as measured by the HMRC
investment test. By market value, the VCT had a 58.7% weighting to
Qualifying Investments at year-end.
The allocation to non-qualifying equity investments increased
from 7.7% to 10.1% within the year. In line with the investment
policy, we made investments in the Marlborough Special Situations
Fund as a temporary home for proceeds from fundraising, increasing
the allocation from 2.1% to 5.4%.
The non-qualifying direct equity investments, which are mostly
held in FTSE 350 companies contributed -0.08 pence per share.
Within the period, JD Sports returned +72.4% (+0.17 pence per
share), Bytes Technology returned +18.8% (+0.09 pence per share)
and Bodycote returned +40.3% (+0.09 pence per share). The largest
losses from within the non-qualifying portfolio came from NCC
(-63.4%, -0.18 pence per share), Diversified Energy (-37.6%, -0.12
pence per share) and Harbour Energy (-41.0%, -0.10 pence per
share).
We took advantage of the significant increase in fixed income
yields to invest in six short-dated investment grade bonds and a
short-dated UK Gilts exchange trade fund. As a result, the
allocation to non-qualifying fixed income increased from nil to
12.7% whilst the cash weighting fell from 26.1% to 12.7%.
The Company invests across all available investment sectors,
although VCT legislation tends to promote investment into sectors
such as technology, healthcare and consumer discretionary. In
respect of the Qualifying investment portfolio, the weightings to
these three sectors changed slightly over the year as a consequence
of additional investment and share price performance, taking their
respective shares to 37.5%, 20.6% and 13.7%. The weighting to the
industrial sector increased from 14.9% to 17.9%.
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
investment manager's report. Funds raised by VCTs are first
included in the investment tests from the start of the accounting
period containing the third anniversary of the date on which the
funds were raised. Therefore, the allocation of qualifying
investments as defined by the legislation can be different to the
portfolio weighting as measured by market value relative to the net
assets of the VCT.
Share Buy Backs & Discount Control
7,183,338 shares were acquired in the year at an average price
of 50.63 pence per share. The share price increased by 0.5% and
traded at a discount of 6.78% following the publication of the 30
September 2023 NAV on 5 October 2023.
Post period end update
The NAV per share has decreased from 46.34 pence to 45.45 pence
in the period to 8 December 2023, a decrease of 1.92%.
As at 15 December 2023, the share price of 42.40 pence
represented a discount of 6.71% to the last published NAV per
share.
The start of the new financial year was particularly difficult
with global markets selling off in the face of higher oil prices
and further increases in the cost of capital, most obviously
exemplified by the march higher in US 10-year Treasury Yields. For
a variety of reasons, the bond markets turned in November with
yields falling sharply. This was in part a consequence of comments
made by several members of the Federal Open Market Committee that
the market took to be dovish in nature. Both bonds and equities
rallied. In the UK, inflation fell further post period to 4.6% in
October. Having fallen 6.4% in October, the AIM All-share index
rebounded by 5.0% in November.
Whilst the war in Israel and Gaza is yet to materially challenge
markets, it only adds to the general sense of unease with investors
concerned about the risks that would follow were it to escalate
from a localised conflict into a regional war.
There is considerable debate about the 'neutral' rate for
monetary policy, the level at which interest rates are neither
seeking to restrain or stimulate economic activity. The debate is
not as abstract as it might appear, with important ramifications
for the risk-free rate and the cost of capital, both of which have
increased substantially in the year and are factors in assessing
company valuations. When central banks return to the neutral rate,
and where it is set, are therefore important when establishing the
path to a recovery in value. The outlook for the UK economy will
impact some companies within the portfolio, but surprisingly few.
As we have said in the past, many portfolio companies continue to
develop new products and services, with success determined by
technical and operational excellence, and access to capital.
Whilst it is disappointing to again report on difficult markets,
a weak economy and negative performance, we remain convinced that
the portfolio contains a broad array of companies with a range of
maturities and a shared ambition to grow revenues and deliver
profitable outcomes to their shareholders. For now, the market is
unwilling or unable to appropriately recognise value. The stasis
will not persist forever and valuations will recover. In the
meantime, the portfolio contains substantial amounts of growth at
unreasonably low prices.
We have completed one new qualifying investment post period end.
Deal flow on AIM remains very subdued. We expect this to remain the
case through the early part of 2024, before improving in the second
half of the new financial year. In the meantime, we continue to
review large numbers of investment opportunities in private
companies.
For further information please contact:
Oliver Bedford
Lead Fund Manager
18 December 2023
Investment portfolio summary
As at 30 September 2023
Cumulative Change
Movement in Value
Net Assets Cost in value Valuation for the
% at 30.09.23 GBP000 GBP000 GBP000 Year GBP000(1) Market COI(2)
Qualifying
Investments
Equipmake
Holdings
plc 5.02 3,662 3,969 7,631 2,501 AIM No
Eagle
Eye
Solutions
Group
plc 2.99 1,642 2,903 4,545 (173) AIM Yes
PCI-PAL
plc 2.55 2,280 1,596 3,876 692 AIM Yes
Abcam
plc 2.02 55 3,007 3,062 843 AIM No
Learning
Technologies
Group
plc 1.90 2,238 649 2,887 (1,834) AIM No
Infinity
Reliance
Ltd
(My
1st
Years)(3) 1.81 2,500 243 2,743 -- Unlisted Yes
Surface
Transforms
plc 1.76 1,744 929 2,673 (1,188) AIM Yes
Engage
XR Holdings
plc 1.59 3,453 (1,036) 2,417 (1,036) AIM Yes
Cohort
plc 1.54 619 1,718 2,337 152 AIM Yes
Fadel
Partners,
Inc 1.51 2,300 -- 2,300 -- AIM No
XP Factory
plc 1.40 4,068 (1,939) 2,129 581 AIM Yes
Diaceutics
plc 1.38 1,550 550 2,100 469 AIM Yes
Maxcyte
Inc 1.23 1,270 605 1,875 (2,325) AIM Yes
C4X
Discovery
Holdings
plc 1.18 2,300 (500) 1,800 (199) AIM No
Aquis
Exchange
plc 1.18 765 1,024 1,789 398 AIM Yes
Zoo
Digital
Group
plc 1.16 2,159 (399) 1,760 (3,806) AIM Yes
Tortilla
Mexican
Grill
plc 1.15 1,125 625 1,750 (1,875) AIM Yes
Beeks
Financial
Cloud
Group
plc 1.09 1,038 623 1,661 (925) AIM Yes
Team
Internet
Group
plc 1.09 588 1,067 1,655 243 AIM Yes
Intelligent
Ultrasound
Group
plc 1.09 1,550 103 1,653 119 AIM No
Itaconix
plc 1.09 3,025 (1,376) 1,649 (1,376) AIM No
SCA
Investments
Ltd
(Gousto) 1.02 2,484 (929) 1,555 (1,228) Unlisted Yes
Craneware
plc 0.95 125 1,316 1,441 (441) AIM Yes
Zappar
Ltd 0.94 1,600 (171) 1,429 -- Unlisted No
Instem
plc 0.92 297 1,105 1,402 417 AIM Yes
Belvoir
Group
plc 0.86 762 539 1,301 30 AIM Yes
Arecor
Therapeutics
plc 0.80 1,687 (471) 1,216 (320) AIM No
Bivictrix
Therapeutics
Plc 0.78 1,600 (420) 1,180 (420) AIM No
Idox
plc 0.75 135 1,007 1,142 (22) AIM Yes
Ilika
plc 0.73 1,636 (526) 1,110 (888) AIM No
Equals
Group
plc 0.72 750 345 1,095 253 AIM Yes
AnimalCare
Group
plc 0.67 720 298 1,018 (407) AIM Yes
Eden
Research
plc 0.67 1,355 (339) 1,016 (45) AIM No
Blackbird
plc 0.64 606 364 970 (858) AIM No
The
Property
Franchise
Group
plc 0.60 377 534 911 (17) AIM Yes
OneMedia
iP Group
plc 0.59 1,141 (245) 896 (244) AIM Yes
Tristel
plc 0.56 543 310 853 252 AIM No
Skillcast
Group
plc 0.53 1,570 (764) 806 (42) AIM No
EKF
Diagnostics
Holdings
plc 0.53 565 239 804 (390) AIM No
Crimson
Tide
plc 0.50 1,260 (504) 756 -- AIM Yes
Nexteq
plc 0.48 1,209 (479) 730 (250) AIM No
Rosslyn
Data
Technologies
plc 0.47 1,345 (629) 716 (299) AIM Yes
Creo
Medical
Group
plc 0.47 2,329 (1,616) 713 (506) AIM Yes
Crossword
Cybersecurity
plc 0.47 2,039 (1,332) 707 (864) AIM Yes
Polarean
Imaging
plc 0.45 2,081 (1,391) 690 (2,297) AIM No
Hardide
plc 0.42 3,566 (2,928) 638 (232) AIM Yes
Globaldata
plc 0.39 173 424 597 40 AIM Yes
Verici
DX plc 0.35 1,939 (1,405) 534 (463) AIM No
Eneraqua
Technologies
plc 0.33 1,401 (895) 506 (702) AIM No
Faron
Pharmaceuticals
Oy 0.33 1,133 (638) 495 269 AIM No
Tan
Delta
Systems
plc 0.31 504 (39) 465 (39) AIM No
Intercede
Group
plc 0.30 305 157 462 72 AIM Yes
Velocys
plc 0.23 2,220 (1,866) 354 (1,372) AIM No
Strip
Tinning
Holdings
plc 0.22 1,054 (712) 342 28 AIM No
Angle
plc 0.22 1,158 (825) 333 (1,182) AIM No
K3 Business
Technology
Group
plc 0.22 270 60 330 (39) AIM Yes
Kidly
Ltd 0.21 1,660 (1,334) 326 (793) Unlisted No
Bidstack
Group
plc 0.21 2,733 (2,419) 314 (2,915) AIM No
Smoove
plc 0.20 621 (316) 305 83 AIM No
Science
in Sport
plc 0.19 1,479 (1,191) 288 (96) AIM No
Everyman
Media
Group
plc 0.14 600 (394) 206 (186) AIM Yes
Trakm8
Holdings
plc 0.09 486 (352) 134 (18) AIM No
MYCELX
Technologies
Corporation 0.09 361 (230) 131 73 AIM Yes
Renalytix
AI plc 0.03 82 (43) 39 2 AIM Yes
Fusion
Antibodies
plc 0.02 624 (588) 36 (280) AIM No
Gfinity
plc 0.02 2,026 (1,998) 28 (266) AIM Yes
Osirium
Technologies
plc 0.01 858 (845) 13 (5) AIM No
Flowgroup
plc -- 26 (26) -- -- Unlisted No
Honest
Brew
Ltd -- 2,800 (2,800) -- -- Unlisted No
Laundrapp
Ltd -- 2,450 (2,450) -- -- Unlisted No
Mporium
Group
plc -- 33 (33) -- -- Unlisted No
Airportr
Technologies
Ltd(3) -- 1,888 (1,888) -- (529) Unlisted No
Infoserve
Group
plc(4) -- -- -- -- -- Unlisted No
Total
-- equity
Qualifying
Investments 56.36 100,597 (14,972) 85,625 (25,875)
Qualifying
fixed
income
investments
Kidly
Ltd
(convertible
loan
notes) 1.58 2,400 -- 2,400 -- Unlisted No
Osirium
Technologies
plc
(convertible
loan
notes) 0.53 800 -- 800 44 AIM No
Rosslyn
Data
Technologies
plc
(convertible
loan
notes) 0.20 300 -- 300 -- AIM No
Honest
Brew
Ltd
(loan
notes) -- 300 (300) -- -- Unlisted No
Total
qualifying
fixed
income
investments 2.31 3,800 (300) 3,500 44
Total
Qualifying
Investments 58.67 104,397 (15,272) 89,125 (25,831)
Non
qualifying
investments
Funds
Marlborough
Special
Situations
Fund 5.44 9,717 (1,449) 8,268 (1,125) Unlisted
iShares
plc
ISHRS
UK Gilts
0-5Yr
ETF
GBP
(Dist) 1.30 2,001 (23) 1,978 (24) Main
Total
non-qualifying
funds 6.74 11,718 (1,472) 10,246 (1,149)
Hollywood
Bowl
Group
plc 0.98 1,566 (81) 1,485 194 Main Yes
Bodycote
plc 0.97 1,534 (66) 1,468 296 Main No
Chemring
Group
plc 0.82 1,362 (113) 1,249 (59) Main Yes
Bytes
Technology
Group
plc 0.75 747 400 1,147 304 Main Yes
WH Smith
plc 0.71 1,220 (145) 1,075 63 Main Yes
Ashtead
Group
plc 0.66 1,116 (116) 1,000 (115) Main Yes
BAE
Systems
plc 0.65 782 206 988 180 Main No
National
Grid
plc 0.65 1,041 (61) 980 (61) Main No
TP ICAP
Group
plc 0.63 1,022 (69) 953 (70) Main Yes
Rotork
plc 0.58 944 (69) 875 176 Main Yes
Energean
plc 0.53 926 (126) 800 (126) Main No
Diversified
Energy
Company
plc 0.48 1,050 (324) 726 (402) Main Yes
XP Power
plc 0.47 743 (35) 708 (35) Main Yes
The
Watches
of Switzerland
Group
plc 0.44 1,216 (549) 667 (246) Main Yes
On the
Beach
Group
plc 0.38 1,304 (722) 582 (81) Main No
Wickes
Group
plc 0.23 585 (242) 343 42 Main No
Tortilla
Mexican
Grill
plc 0.12 161 29 190 (204) Main Yes
MYCELX
Technologies
Corporation 0.10 298 (146) 152 85 AIM Yes
Genagro
Services
Ltd -- -- -- -- 1 Unlisted Yes
Total
-- equity
non-qualifying
investments 10.15 17,617 (2,229) 15,388 (58)
Fixed
income
-- bonds
Royal
Bank
of Canada
5.000%
SNR
NTS
24/01/28 1.90 3,045 (161) 2,884 (161) Main No
British
Telecommunications
plc
5.75%
BDS
17/12/28 1.96 3,158 (173) 2,985 (173) Main No
Barclays
plc
3.25%
NTS
12/02/27 1.78 2,876 (169) 2,707 (169) Main No
NatWest
Markets
plc
6.375%
NTS
08/11/27 1.93 3,051 (122) 2,929 (122) Main No
Next
Group
plc
4.375%
BDS
02/10/26 1.89 2,980 (108) 2,872 (108) Main No
Marks
& Spencer
plc
3.000%
NTS
08/12/23 1.96 2,999 (15) 2,984 (15) Main No
Total
non-qualifying
fixed
income
-- bonds 11.42 18,109 (748) 17,361 (748)
Total
-- non-qualifying
investments 28.31 47,444 (4,449) 42,995 (1,955)
Total
investments 86.98 151,841 (19,721) 132,120 (27,786)
Cash
at bank 12.65 19,231
Prepayments
& accruals 0.37 569
Net
assets 100.00 151,920
(1) The change in fair value has been adjusted for additions and disposals in the year and as such does not reconcile to the unrealised total in note 7. The difference is GBP0.7 million which is the total of 16 full investment disposals in the year.
(2) COI -- Co investments with other funds managed by the Investment Manager at 30 September 2023.
(3) Different classes of shares held in unlisted companies within the portfolio have been aggregated.
(4) Impaired fully through the profit and loss account and therefore shows a zero cost.
The investments listed below are either listed, headquartered or
registered outside the UK:
Listed Headquartered Registered
Listed Investments:
Abcam plc UK/USA UK UK
Bytes Technology Group plc UK/South UK UK
Africa
Crimson Tide UK/Republic UK UK
of Ireland
Craneware plc UK UK/USA UK
Engage XR plc UK/Ireland Ireland Ireland
Fadel Partners plc UK USA USA
Faron Pharmaceuticals Oy UK/Finland Finland Finland
Itaconix plc UK USA UK
Maxcyte Inc UK/USA USA USA
Mycelx Technologies Corporation plc UK USA USA
Polarean Imaging plc UK USA UK
Renalytix AI plc UK/USA USA UK
Verici DX plc UK UK/USA UK
XP Power Ltd UK Singapore Singapore
Unlisted private companies:
Genagro Ltd(1) -- UK Jersey
(1) Companies awaiting liquidation.
Top ten investments
As at 30 September 2023 (by market value)
The top 10 investments are shown below. Each investment is
valued by reference to the bid price or, in the case of unquoted
companies, the IPEV guidelines using 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. Published accounts are used for private
companies or public companies with no published broker forecasts.
The net asset figures and net cash values are from published
accounts in most cases.
Equipmake Holdings plc Share Price: 9.0p
Forecasts for the
Investment date July 2022 year to May 2024
Equity held 8.94% Turnover (GBP'000) 13,400
(Loss) before tax
Av. Purchase Price 4.3p (GBP'000) (5,300)
Net cash May 2023
Cost (GBP'000) 3,662 (GBP'000) 7,000
Net assets May
Valuation (GBP'000) 7,631 2023 (GBP'000) 13,803
Company description
Equipmake is a UK based technology company, which has developed
a range of electrification products for the provision of electric
vehicle (EV) drivetrains to meet the needs of the automotive,
aerospace and other sectors in support of the transition from
fossil-fuelled to zero emission powertrains. Equipmake products can
be applied in a variety of other vehicle electrification contexts,
including hybrid, fully electric and fuel cell vehicles. Equipmake
provides individual components to full turnkey systems.
Eagle Eye Solutions Group plc Share Price: 525.0p
Forecasts for the
Investment date April 2014 year to June 2024
Equity held 2.96% Turnover (GBP'000) 50,800
Profit before tax
Av. Purchase Price 189.7p (GBP'000) 4,400
Net cash June 2023
Cost (GBP'000) 1,642 (GBP'000) 9,300
Net assets June
Valuation (GBP'000) 4,545 2023 (GBP'000) 24,100
Company description
Eagle Eye is a Software-as-a-Service (SaaS) technology company
that creates digital connections enabling personalised, real-time
marketing solutions for large retailers. Through Eagle Eye AIR, the
company's loyalty and promotions omnichannel SaaS platform,
companies connect all aspects of the customer journey in real time,
unlocking the capability to deliver personalisation, streamline
marketing execution and open up new revenue streams through
promotions, loyalty apps, subscriptions and gift services.
PCI PAL plc Share Price: 56.0p
Forecasts for the
Investment date January 2018 year to June 2024
Equity held 10.55% Turnover (GBP'000) 19,100
(Loss) before tax
Av. Purchase Price 32.9p (GBP'000) 1,000
Net cash June 2023
Cost (GBP'000) 2,280 (GBP'000) 1,169
Net (liabilities)
Valuation (GBP'000) 3,876 June 2023 (GBP'000) (4,109)
Company description
PCI PAL plc is a provider of Software-as-a-Service (SaaS)
solutions that allows companies to take payments from their
customers securely. Its products secure payments and data in any
business communications environment including voice, chat, social,
email, and contact centre and is integrated to, and resold by,
business communications vendors and payment service providers.
Abcam plc(1) Share Price: $22.63 USD
Forecast for the
Investment date October 2005 year to December 2023
Equity held 0.07% Turnover (GBP'000) 438,800
Profit before tax
Av. Purchase Price 33.4p (GBP'000) 118,600
Net (debt) December
Cost (GBP'000) 55 2022 (GBP'000) (30,600)
Net assets December
Valuation (GBP'000) 3,062 2022 (GBP'000) 726,900
Company description
Abcam is a global life science company listed on the Nasdaq
stock exchange after delisting from AIM. Abcam produces and
distributes research-grade antibodies and biological tools to the
life sciences sector. The Company's customers include universities,
research institutes and pharmaceutical and biotechnology companies
in countries around the world.
(1) Abcam was acquired by Danaher Inc. post period-end for $24.00 a share with GBP3.14m received by the Company on 6 December 2023.
Learning Technologies Group plc Share price: 64.15p
Forecast for the
Investment date July 2015 year to December 2023
Equity held 0.57% Turnover (GBP'000) 560,200
Profit/(loss) before
Av. Purchase Price 49.7p tax (GBP'000) 83,000
Net (debt) June
Cost (GBP'000) 2,238 2023 (GBP'000) (108,377)
Net assets June
Valuation (GBP'000) 2,887 2023 (GBP'000) 419,647
Company description
Learning Technologies Group provides workplace digital learning
and talent management software and services 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.
Infinity Reliance Ltd (My 1st
Years) Unquoted
Results for the
Investment date May 2018 year to December 2022
Voting rights held 8.97% Turnover (GBP'000) 18,751
Profit before tax
Av. Purchase Price 4670.4p (GBP'000) 1,091
Net cash December
Cost (GBP'000) 2,500 2022 (GBP'000) 2,818
Net assets December
Valuation (GBP'000) 2,743 2022 (GBP'000) 6,235
Income recognised
in period (GBP) 0
Company description
My 1st Years is a UK retail platform that focusses on the sale
of personalised baby and children's gifts through e-commerce
channels. The product range includes bespoke presents for new born
babies to seven year olds, for christenings, birthdays and
Christmas.
Kidly Ltd(1) Unquoted
Results for the
Investment date March 2020 year to March 2022
Voting rights held 9.45% Turnover (GBP'000)(2) --
Profit/(loss) before
Av. Purchase Price 165.6p tax (GBP'000)(2) --
Net cash March
Cost (GBP'000) 4,060 2022 (GBP'000) 358
Net assets March
Valuation (GBP'000) 2,726 2022 (GBP'000) (1,490)
Income recognised
in period (GBP) 223,562
Company description
Kidly is an online retail platform that curates a range of the
world's best brands for children that sit alongside its own Kidly
Label brand catering to children between the ages of 0-5 years.
(1) Includes equity investment of GBP0.3m and convertible loan note investments of GBP2.4m.
(2) Not available, data taken from abbreviated accounts.
Surface Transforms plc Share price: 27.0p
Forecast for the
Investment date March 2016 year to December 2023
Equity held 4.85% Turnover (GBP'000) 8,600
(Loss) before tax
Av. Purchase Price 17.6p (GBP'000) (8,500)
Net cash June 2023
Cost (GBP'000) 1,744 (GBP'000) 3,512
Net assets June
Valuation (GBP'000) 2,673 2023 (GBP'000) 28,990
Company description
Surface Transforms develops and produces carbon-ceramic brake
discs serving customers that include major OEMs in the global
automotive markets. Surface Transforms interweaves continuous
carbon fibre to form a 3D multi-directional matrix, producing a
stronger, lighter and more durable product with 3x the heat
conductivity compared to standard production components.
Engage XR Holdings plc Share price: 2.80p
Forecast for the
Investment date March 2023 year to December 2023
Equity held 29.72% Turnover (EUR'000) 5,400
(Loss) before tax
Av. Purchase Price 4.0p (EUR'000) (4,500)
Net cash December
Cost (GBP'000) 3,453 2022 (EUR'000) 9,447
Net assets December
Valuation (GBP'000) 2,417 2022 (EUR'000) 10,340
Company description
Engage XR is virtual reality ('VR') technology company with a
proprietary cloud-based professional metaverse platform used to
deliver immersive corporate communications, remote collaborations
and events, training and education. The company has a strong
reputation for data security and reliability, with a diverse
customer base of 190 clients including several blue-chip companies
such as Meta, HP, HTC, KIA and BMW.
Cohort plc Share price: 492.0p
Forecast for the
Investment date February 2006 year to April 2024
Equity held 1.15% Turnover (GBP'000) 187,400
Profit before tax
Av. Purchase Price 130.2p (GBP'000) 19,200
Net cash April
Cost (GBP'000) 619 2023 (GBP'000) 15,608
Net assets April
Valuation (GBP'000) 2,337 2023 (GBP'000) 99,778
Company description
Cohort is the parent company of six businesses based in the UK,
Germany and Portugal, providing a wide range of services and
products for domestic and export customers in defence and related
markets. The group is split into two divisions: Communications and
Intelligence, and Sensors and Effectors.
For further information please contact:
Oliver Bedford
Lead Fund Manager
Canaccord Genuity Asset Management Limited
88 Wood Street
London
EC2V 7QR
0207 523 4837
aimvct@canaccord.com
Statement of directors' responsibilities in respect of the
financial statements
The Directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law and
regulations. They are also responsible for ensuring that the annual
report includes information required by the Listing Rules of the
Financial Conduct Authority.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
are required to prepare the financial statements and have elected
to prepare the company financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (UK GAAP)
(United Kingdom Accounting Standards and applicable law). Under
company law, the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or
loss for the Company for that period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with UK GAAP, subject to any material departures disclosed and explained in the financial statements;
-- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and
-- prepare a directors' report, a strategic report and directors' remuneration report which comply with the requirements of the Companies Act 2006.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions, and disclose with reasonable accuracy at any time the
financial position of the Company, and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are responsible for ensuring that the annual
report and accounts, taken as a whole, are fair, balanced and
understandable, and provide the information necessary for
shareholders to assess the Company's position and performance,
business model and strategy.
Website publication
The Directors are responsible for ensuring the annual report and
the financial statements are made available on a website. The
Company's website address is https://www.hargreaveaimvcts.co.uk.
Financial statements are published on the Company's website in
accordance with legislation in the United Kingdom governing the
preparation and dissemination of financial statements, which may
vary from legislation in other jurisdictions. The maintenance and
integrity of the Company's website is the responsibility of the
Directors. The Directors' responsibility also extends to the
ongoing integrity of the financial statements contained
therein.
Directors' responsibility statement pursuant to DTR4
David Brock (Chair), Oliver Bedford, Angela Henderson, Justin
Ward, Megan McCracken and Busola Sodeinde, the Directors confirm to
the best of their knowledge that:
-- the financial statements have been prepared in accordance with UK GAAP and give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company; and
-- the annual report includes a fair review of the development and performance of the business and the financial position of the Company, together with a description of the principal risks and uncertainties that it faces.
Disclosure of information to the Auditor
The Directors confirm that:
-- so far as each Director is aware, there is no relevant audit information of which the Company's auditor is unaware; and
-- the Directors have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
For and on behalf of the Board
David Brock
Chair
18 December 2023
Income statement
Year to 30 September 2023 Year to 30 September 2022
Revenue Capital Total Revenue Capital Total
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Net
loss
on investments
held
at fair
value
through
profit
or loss 7 -- (28,455) (28,455) -- (85,203) (85,203)
Income 2 2,616 -- 2,616 975 13 988
2,616 (28,455) (25,839) 975 (85,190) (84,215)
Management
fee 3 (699) (2,098) (2,797) (835) (2,505) (3,340)
Other
expenses 4 (1,052) (39) (1,091) (1,093) (22) (1,115)
(1,751) (2,137) (3,888) (1,928) (2,527) (4,455)
Profit/(loss)
on ordinary
activities
before
taxation 865 (30,592) (29,727) (953) (87,717) (88,670)
Taxation 5 -- -- -- -- -- --
Profit/(loss)
after
taxation 865 (30,592) (29,727) (953) (87,717) (88,670)
Basic 6 0.27p (9.59) (9.32) (0.36) (33.06) (33.42)
and p p p p p
diluted
earnings/(loss)
per
share
The total column of these statements is the income statement 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 loss for the year.
The accompanying notes are an integral part of these financial
statements.
Balance sheet
As at 30 September 2023
Company Registration Number 5206425 (In England and Wales)
2023 2022
Note GBP000 GBP000
Fixed assets
Investments at fair value through profit
or loss 7 132,120 119,188
Current assets
Debtors 9 1,475 408
Cash and cash equivalents 19,231 41,911
20,706 42,319
Creditors: amounts falling due within
one year 10 (906) (1,000)
Net current assets 19,800 41,319
Total assets less current liabilities 151,920 160,507
Capital and Reserves
Called up share capital 11 3,278 2,666
Share premium 286 93,660
Capital redemption reserve 272 201
Capital reserve -- unrealised 13,640 23,935
Special reserve 177,762 63,931
Capital reserve -- realised (41,071) (20,774)
Revenue reserve (2,247) (3,112)
Total shareholders' funds 151,920 160,507
Net asset value per share (basic and 12 46.34p 60.19p
diluted)
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 18 December 2023 and signed on
its behalf by
David Brock
Chair
18 December 2023
Statement of changes in equity
For the year ending 30 September 2023
Distributable reserves
Non-distributable reserves (1)
Capital Capital Capital
Share Share Redemption Reserve Special Reserve Revenue
Capital Premium Reserve Unrealised Reserve Realised Reserve Total
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 October
2022 2,666 93,660 201 23,935 63,931 (20,774) (3,112) 160,507
Profit and
total comprehensive
income for
the year
Realised
(losses)
on investments 7 -- -- -- -- -- (8,245) -- (8,245)
Unrealised
(losses)
on investments 7 -- -- -- (20,210) -- -- -- (20,210)
Management
fee charged
to capital 3 -- -- -- -- -- (2,098) -- (2,098)
Income allocated
to capital 2 -- -- -- -- -- -- -- --
Due diligence
investments
costs 4 -- -- -- -- -- (39) -- (39)
Revenue
profit after
taxation
for the
year -- -- -- -- -- -- 865 865
Total (loss)
after taxation
for the
year -- -- -- (20,210) -- (10,382) 865 (29,727)
Contributions
by and distributions
to owners
Subscription
share issues 11 659 39,277 -- -- -- -- -- 39,936
Issue costs 11 -- (742) -- -- -- -- -- (742)
Share buybacks 11 (71) -- 71 -- (3,637) -- -- (3,637)
DRIS share
issues 11 24 1,276 -- -- -- -- -- 1,300
Equity dividends
paid 16 -- -- -- -- (15,717) -- -- (15,717)
Total contributions
by and distributions
to owners 612 39,811 71 -- (19,354) -- -- 21,140
Other movements
Capital
reduction 11 -- (133,185) -- -- 133,185 -- -- --
Diminution
in value -- -- -- 9,915 -- (9,915) -- --
Total other
movements
At 30 September
2023 3,278 286 272 13,640 177,762 (41,071) (2,247) 151,920
Reserves available for distribution are capital reserve
realised, special reserve and revenue reserve. Total distributable
reserves at 30 September 2023 were GBP134.4 million, following the
capital reduction of GBP133.2m (2022: GBP40 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 2023, GBP108.9 million of the special reserve is subject to this restriction.
Statement of changes in equity
For the year ending 30 September 2022
Distributable reserves
Non-distributable reserves (1)
Capital Capital Capital
Share Share Redemption Reserve Special Reserve Revenue
Capital Premium Reserve Unrealised Reserve Realised Reserve Total
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 October
2021 2,280 53,802 158 102,311 84,004 (11,433) (2,159) 228,963
Profit and
total comprehensive
income for
the year
Realised
gains on
investments 7 -- -- -- -- -- 2,056 -- 2,056
Unrealised
(losses)
on investments 7 -- -- -- (87,259) -- -- -- (87,259)
Management
fee charged
to capital 3 -- -- -- -- -- (2,505) -- (2,505)
Income allocated
to capital 2 -- -- -- -- -- 13 -- 13
Due diligence
investments
costs 4 -- -- -- -- -- (22) -- (22)
Revenue
(loss) after
taxation
for the
year -- -- -- -- -- -- (953) (953)
Total (loss)
after taxation
for the
year (87,259) (458) (953) (88,670)
Contributions
by and distributions
to owners
Subscription
share issues 11 416 39,579 -- -- -- -- -- 39,995
Issue costs 11 -- (746) -- -- -- -- -- (746)
Share buybacks 11 (43) -- 43 -- (3,243) -- -- (3,243)
DRIS share
issues 11 13 1,025 -- -- -- -- -- 1,038
Equity dividends
paid 16 -- -- -- -- (16,830) -- -- (16,830)
Total contributions
by and distributions
to owners 386 39,858 43 -- (20,073) -- -- 20,214
Other movements
Diminution
in value -- -- -- 8,883 -- (8,883) -- --
Total other
movements -- -- -- 8,883 -- (8,883) -- --
At 30 September
2022 2,666 93,660 201 23,935 63,931 (20,774) (3,112) 160,507
Reserves available for distribution are capital reserve
realised, special reserve and revenue reserve. Total distributable
reserves at 30 September 2022 were GBP40 million (2021: GBP70.4
million). The accompanying notes are an integral part of these
financial statements.
(1) The Income Taxes Act 2007 restricts distribution of capital from reserves created by the conversion of the share premium account into a special (distributable) reserve until the third anniversary of the share allotment that led to the creation of that part of the share premium account. As at 30 September 2023, none of the special reserve is subject to this restriction.
Statement of cash flows
2023 2022
Note GBP000 GBP000
Total (loss) on ordinary activities
before taxation (29,727) (88,670)
Realised losses/(gains) on investments 7 8,245 (2,056)
Unrealised losses on investments 7 20,210 87,259
(Increase) in debtors (1,067) (78)
(Decrease) in creditors (94) (183)
Amortisation for discount/premium on
bonds (24) --
Non-cash distributions 2 -- (126)
Net cash (outflow) from operating activities(1) (2,457) (3,854)
Purchase of investments 7 (57,699) (29,460)
Sale of investments 7 16,336 27,995
Net cash (used in) investing activities (41,363) (1,465)
Share buybacks 11 (3,637) (3,243)
Issue of share capital 11 39,936 39,995
Issue costs 11 (742) (746)
Dividends paid 16 (14,417) (15,792)
Net cash provided by financing activities 21,140 20,214
Net (decrease)/increase in cash and
cash equivalents (22,680) 14,895
Opening cash and cash equivalents 41,911 27,016
Closing cash and cash equivalents 19,231 41,911
(1) The Company received dividends of GBP1,178,059 (2022: GBP715,253) and interest of GBP599,735 (2022: GBP47,143).
The accompanying notes are an integral part of these financial
statements.
Notes to the financial statements
Hargreave Hale AIM VCT plc is a company incorporated in England
and Wales under the Companies Act. The address of the registered
office is given in the company information section and the nature
and principal business activities are set out in the Strategic
Report.
Basis of preparation
The financial statements have been prepared in accordance with
UK Generally Accepted Accounting Practice (UK GAAP) , including
Financial Reporting Standard 102 (FRS 102) and with the Companies
Act 2006 and the Statement of Recommended Practice for "Financial
Statements of Investment Trust Companies and Venture Capital
Trusts" July 2022 (SORP) .
Going Concern
The financial statements have been prepared on a going concern
basis and on the basis that the company maintains its VCT
status.
The Directors have assessed the Company's ability to continue as
a going concern and are satisfied that the Company has adequate
resources to continue in operational existence for a period of 12
months from the date these financial statements were approved.
The Company has sufficient cash (GBP19.2 million at 30 September
2023) and liquid assets held across a diversified portfolio of
investments in listed companies to meet obligations as they fall
due. The Company is a close-ended fund, where assets are not
required to be liquidated to meet day-to-day redemptions. The major
driver of cash outflows (dividends, buybacks and investments) are
managed in accordance with the Company's key policies at the
discretion of the Board or, in the case of the Company's
investments, the Investment Manager.
The Board has reviewed forecasts and stress tests to assist them
with their going concern assessment. These tests have included the
modelling of a 15% reduction in NAV, whilst also considering
ongoing compliance with the VCT investment test. It was concluded
that in a plausible downside scenario the Company would continue to
meet its liabilities.
The Directors have carefully considered the principal risk
factors facing the Company and their potential impact on income
into the portfolio and the NAV. The Directors are of the opinion
that the Company has sufficient cash and other liquid assets to
continue to operate as a going concern, including under a stress
scenario.
The Investment Manager has a team of four dedicated fund
managers and analysts with multi-year experience working for the
VCT. Abbe Martineau joined the CGAM VCT fund management team on 17
April 2023. The Investment Manager and the Company's other key
service providers have contingency plans in place to manage
operational disruptions.
The Directors have not identified any material uncertainties
related to events or conditions that may cast significant doubt
about the ability of the Company to continue as a going concern.
Therefore, they are satisfied that the Company should continue to
operate as a going concern and report its financial statements on
that basis.
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. The nature of estimation means that the actual outcomes
could differ from those estimates. Key judgements and estimates
mainly relate to determination of the fair valuation of unquoted
investments. The policies for these are set out in the notes to the
financial statements.
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.
Further areas requiring judgement and estimation are recognising
and classifying unusual or special dividends as either capital or
revenue in nature. The estimates and underlying assumptions are
under continuous review with particular attention paid to the
carrying value of the investments.
1. Accounting policies
A summary of the principal accounting policies, all of which
have been applied consistently throughout the year, is set out
below:
Financial instruments
All investments are classified as fair value through profit or
loss. Investments are measured initially and subsequently at fair
value which is deemed to be market bid prices for listed
investments and investments traded on AIM. Unquoted investments are
valued using the most appropriate methodology recommended by the
International Private Equity Venture Capital (IPEV) guidelines
published in December 2022.
Where no active market exists for the particular asset, the
Company holds the investment at fair value as determined by the
Investment Manager and approved by the Board. Valuations of
unquoted investments are reviewed on a quarterly basis and more
frequently if events occur that could have a material impact on the
investment.
In estimating fair value for an unquoted investment, the
Investment Manager will apply one or more valuation techniques
according to the nature, facts and circumstances of the investment.
The Investment Manager will use reasonable current market data and
inputs combined with market participant assumptions. The assessment
of fair value will reflect the market conditions at the measurement
date irrespective of which valuation technique is used. The IPEV
guidelines describe a range of valuation techniques, including but
not limited to relevant observable market multiples, independent
arms-length transactions, income, discounted cash flows and net
assets. The fair value of convertible loan notes is estimated by
aggregating the Net Present Value of the bond component and the
derivative value of the option to convert into equity. The
derivative value of the option to convert a particular loan note is
the probable weighted average of the present value of each
conversion scenario described in the loan note instrument as
calculated using the Black Scholes option pricing model.
Investments are recognised and derecognised at trade date where
a purchase or sale is under a contract whose terms require delivery
within the time frame established by the market concerned.
Purchases and sales of unlisted investments are recognised when the
contract for acquisition or sale becomes unconditional. Transaction
costs are included in the initial cost or deducted from the
disposal proceeds as appropriate.
These investments will be managed and their performance
evaluated on a fair value basis in accordance with a documented
investment strategy and information about them is provided
internally on that basis to the Board.
Gains and losses arising from changes in fair value (realised
and unrealised) are included in the net profit or loss for the
period as a capital item in the income statement and are taken to
the unrealised capital reserve or realised capital reserve as
appropriate.
If an investment has been impaired such that there is no
realistic expectation that there will be a full return from the
investment, the loss is treated as a diminution in value and
transferred to the capital reserve realised. The Company conducts
impairments reviews on a quarterly basis. In the case of equity
investments, impairment reviews are triggered when unrealised
losses exceed 50% of book cost, or if the loss when realised would
lead to a material reduction in the Company's distributable
reserves. Fixed income investments are reviewed for impairment if
the issuing company's ability to repay is uncertain unless there
are reasonable grounds to believe that the loan could be recovered
through the sale of the company or its trading assets.
Other financial assets and liabilities comprise receivables,
payables and cash and cash equivalents which are measured at
amortised cost. There are no financial liabilities other than
payables.
Cash and cash equivalents
For the purposes of the Balance Sheet, cash comprises cash in
hand and demand deposits. Cash equivalents are short-term, highly
liquid investments and money market funds that are readily
convertible to known amounts of cash and which are subject to
insignificant risk of changes in value. For the purposes of the
Statement of Cash Flows, cash and cash equivalents consist of cash
and cash equivalents as defined above, net of outstanding bank
overdrafts when applicable. Cash held at CGWL (see note 15) meets
the definition of cash and cash equivalents as it is to meet short
term liquidity requirements and is available on demand with no
restrictions or penalties on withdrawal.
Income
Equity dividends are analysed to consider if they are revenue or
capital in nature on a case by case basis and are taken into
account on the ex-dividend date, net of any associated tax credit.
Fixed returns on non-equity shares and debt securities are
recognised on a time apportionment basis so as to reflect the
effective yield, provided there is no reasonable doubt that payment
will be received in due course. All other income is recognised on
an accruals basis. Other income is treated as a repayment of
capital or revenue depending on the facts of each particular
case.
Expenditure
All expenditure is accounted for on an accruals basis. Of
investment management fees, 75% are allocated to the capital
reserve realised and 25% to the revenue account in line with the
Board's expected long term split of investment returns in the form
of capital gains to the capital column of the income statement. Due
diligence costs incurred for prospective private company purchases
are charged to capital in addition to the cost of investment. All
other expenditure is charged to the revenue account.
Capital reserves
Realised profits and losses on the disposal of investments, due
diligence costs, income that is capital in nature, losses realised
on investments considered to be diminished in value and 75% of
investment management fees are accounted for in the capital reserve
realised.
Increases and decreases in the valuation of investments held at
the year end are accounted for in the capital reserve
unrealised.
Operating segments
There is considered to be one operating segment being investment
in equity and debt securities.
Taxation
Deferred tax is recognised in respect of all timing differences
that have originated but not yet reversed at the balance sheet
date. Deferred tax assets are only recognised to the extent that it
is probable that they will be recovered against the reversal of
deferred tax liabilities or other future taxable profits.
Current tax is expected tax payable on the taxable profit for
the period using the current tax rate and laws that have been
enacted or substantially enacted at the reporting date. The tax
effect of different items of income and expenditure is allocated
between capital and revenue on the same basis as the particular
item to which it relates.
Approved VCTs are exempt from tax on capital gains from the sale
of fixed asset investments. The Directors intend that the Company
will continue to conduct its affairs to maintain its VCT status, no
deferred tax has been provided in respect of any capital gains or
losses arising from the revaluation or disposal of investments.
Dividends
Only dividends recognised during the year are deducted from
revenue or capital reserves. Equity dividends are recognised in the
accounts when they become legally payable.
Interim dividends are approved by the Board of Directors and may
be varied or rescinded at any time before payment, therefore the
liability is only established when the dividend is actually paid.
Final dividends are subject to approval at the AGM. When the
dividend is declared it states that it is payable on a future date,
so liability is established on that date.
Functional currency
The Company is required to nominate a functional currency, being
the currency in which the Company predominantly operates. The Board
has determined that sterling is the Company's functional currency.
Sterling is also the currency in which these accounts are
presented.
Repurchase of shares to hold in treasury
The cost of repurchasing shares into treasury, including the
related stamp duty and transaction costs is charged to the special
reserve and dealt with in the statement of changes in equity. Share
repurchase transactions are accounted for on a trade date basis.
Where shares held in treasury are subsequently cancelled, the
nominal value of those shares is transferred out of share capital
and into capital redemption reserve.
Should shares held in treasury be reissued, the sale proceeds
will be treated as a realised profit up to the amount of the
purchase price of those shares and will be transferred to capital
reserves. The excess of the sale proceeds over the purchase price
will be transferred to share premium.
Capital structure
Share Capital
Ordinary shares are classed as equity. The ordinary shares in
issue have a nominal value of one penny and carry one vote each.
Substantial holdings in the Company are disclosed in the Directors'
Report.
Share Premium
This reserve represents the difference between the issue price
of shares and the nominal value of shares at the date of issue, net
of related issue costs.
Capital Redemption Reserve
This reserve is used for the cancellation of shares bought back
under the buyback facility.
Special Reserve
Distributable reserve used to pay dividends and re-purchase
shares under the buyback facility.
Capital Reserve Realised
Gains/losses on disposal of investments, due diligence costs,
income that is capital in nature, diminishment of financial assets
and 75% of the investment management fee are accounted for in the
capital reserve realised.
Capital Reserve Unrealised
Unrealised gains and losses on investments held at the year end
arising from movements in fair value are taken to the capital
reserve unrealised.
Revenue Reserve
Net revenue profits and losses of the Company.
2. Income
2023 2022
GBP000 GBP000
Income from investments:
Revenue:
Dividend income 1,247 744
Fixed income interest 867 (1) 184
Interest 502 47
Total revenue income 2,616 975
Capital:
Return of capital -- --
In-specie dividend -- 13
Total capital income -- 13
Total Income 2,616 988
(1) Additional loan stock interest of GBP18k was recognised in the year following reversal of the impairment being carried at 30 September 2022. The loan note accrued interest to 30 June 2023 in line with the terms of the redemption agreement with Sailpoint Technologies UK Limited.
3. Management fees
2023 2023 2023 2022 2022 2022
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Management fees 699 2,098 2,797 835 2,505 3,340
The investment management agreement terminates on 12 months'
notice, subject to earlier termination in certain circumstances. In
the event of termination by the Company on less than the agreed
notice period, compensation may be payable to the Investment
Manager in lieu of the unexpired notice period. No notice had been
given by the Investment Manager or by the Board to terminate the
agreement as at the date of approval of these accounts.
The Investment Manager receives an investment management fee of
1.7% per annum of the NAV of the Company, calculated and payable
quarterly in arrears. At 30 September 2023, GBP645,397 (2022:
GBP687,373) was owed in respect of management fees. The Company
receives a reduction to the annual management fee for investments
in other funds managed by the Investment Manager, being any
investment in the Marlborough Special Situations Fund and/or the
Marlborough UK Micro-Cap Growth Fund so the Company is not charged
twice for these services. This amounted to GBP49,931 for the year
to 30 September 2023 (2022: GBP23,407) . The Investment Manager has
agreed to indemnify the Company against annual running costs
exceeding 3.5% of its net assets. No fees were waived between 1
October 2022 and 30 September 2023 and no fees were waived between
1 October 2021 and 30 September 2022 under the indemnity.
4. Other expenses
2023 2022
GBP000 GBP000
Other revenue expenses:
Administration fee 195 195
Directors' fees 205 157
Legal & professional 39 34
London Stock Exchange fees 84 131
Registrar's fee 47 50
Website and marketing 60 14
Printing, postage and stationary 40 43
Auditors' remuneration -- for audit services 55 41
VCT monitoring fees 15 12
Company secretarial fees 57 72
Custody fee 30 30
Directors' and officers' liability insurance 36 39
Broker's fee 5 5
VAT 115 128
Other expenses(1) 104 98
Provision against loan stock interest receivable (35) (2) 44(3)
Total other revenue expenses 1,052 1,093
Other capital expenses:
Due diligence costs 32 18
VAT on due diligence costs 7 4
Total other capital expenses 39 22
Total other expenses 1,091 1,115
(1) Other expenses include FCA fees, AIC membership fees, VCT Association fees, recruitment costs, professional subscriptions, license costs, shareholder event costs and other nominal expenses.
(2) Reversal of provision against loan interest receivable in previous years of GBP34,816 for Osirium plc.
(3) Provision against loan interest receivable of GBP44,145 (2021: nil) , for loan stock interest regarded as collectable in previous years in relation to Honest Brew Ltd and Osirium plc.
The Directors' remuneration above includes national insurance
contributions. Directors' remuneration excluding employer's
national insurance contributions is detailed in the directors'
remuneration report.
The maximum aggregate directors' emoluments authorised by the
Articles of Association are detailed in the directors' remuneration
report.
5. Tax on ordinary activities
The tax charge for the year is based on the standard rate of UK
Corporation Tax of 22%(1) (2022: 19%) .
2023 2022
Total Total
GBP000 GBP000
Loss on ordinary activities before taxation (29,727) (88,670)
UK Corporation Tax: 22% (2022: 19%) (6,540) (16,847)
Effect of non taxable losse s on investments 6,260 16,189
Effect of non taxable UK dividend income (274) (144)
Deferred tax not recognised 554 802
Current tax charge -- --
(1) Average rate of corporation tax applicable for the period.
At the 30 September 2023 the Company had tax losses carried
forward of GBP24,379,001 (2022: GBP21,921,076) . It is unlikely
that the Company will generate enough taxable income in the future
to use these expenses to reduce future tax charges and therefore no
deferred tax asset has been recognised.
There is no taxation charge in relation to capital gains or
losses. No asset or liability has been recognised in relation to
capital gains or losses on revaluing investments. The Company is
exempt from such tax as a result of its intention to maintain its
status as a Venture Capital Trust.
6. Basic and diluted earnings/(loss) per share
2023 2023 2023 2022 2022 2022
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Return (GBP) 865 (30,592) (29,727) (953) (87,717) (88,670)
Earnings/(loss) 0.27p (9.59) (9.32) (0.36) (33.06) (33.42)
per ordinary p p p p p
share
The earnings per share is based on 318,946,009 ordinary shares
(2022: 265,292,558) , being the weighted average number of shares
in issue during the year.
7. Investments
Quoted Unquoted Total Total
investments(1) Investments investments investments
2023 2023 2023 2022
GBP000 GBP000 GBP000 GBP000
Opening Valuation 108,630 10,558 119,188 202,800
Purchases at cost 56,199 1,500 57,699 29,460
Non-cash distribution -- -- -- 126
Sale proceeds (16,336) -- (16,336) (27,995)
(8,245)
Realised gains/(losses) (8,245) -- (2) 2,056
Unrealised losses (17,705) (2,505) (20,210)(2) (87,259)
Amortisation for discount/premium
on bonds 24 -- 24 --
Closing valuation 122,567 9,553 132,120 119,188(4)
Cost at 30 September 2023 132,600 19,241 151,841 118,699
Unrealised gains 14,981 (1,341) 13,640 23,935
Diminution in value (3) (25,014) (8,347) (33,361) (23,446)
Closing valuation 122,567 9,553 132,120 119,188
(1) Includes the Marlborough Special Situations Fund (valuation GBP8.3m as at 30 September 2023), included in unquoted investments previously.
(2) The net loss on investments held at fair value through profit or loss in the income statement of -GBP28,455 is the sum of the realised gains and unrealised losses for the year as detailed in the table above.
(3) Diminishments of GBP14,762,893 were made in the year. Once adjusted for disposals (GBP4,617,026) and diminishment reversals (GBP230,000) the net movement for the year is GBP9,915,867. Diminishments carried forward are GBP33,361,442.
(4) Correction to prior year (casting error).
Transaction Costs
During the year the Company incurred transaction costs of
GBP97,493 (2022: GBP40,809) and GBP15,710 (2022: GBP15,989) on
purchases and sales respectively. These amounts are included in the
gain on investments as disclosed in the income statement.
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.
2023 2023 2023 2022 2022 2022
Level Level Level 2023 Level Level Level 2022
1 2 3 Total 1 2 3 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investments 82,565 40,002 9,553 132,120 105,069(1) 3,561 10,558 119,188
(1) Correction to prior year (casting error).
Transfers between level 3 and level 1 occur when a previously
unquoted investment undertakes an initial public offering,
resulting in its equity becoming quoted on an active market. There
have been no instances in the current period (2022: GBP5.9m).
Transfers between level 1 and 3 would occur when a quoted
investment's market becomes inactive, or the portfolio company
elects to delist. There have been no instances in the current year
(2022: none).
There were transfers of GBP20.2m between level 1 and level 2 in
the current period where the investments market is not sufficiently
active (2022: GBP3.6m). There were no transfers between level 2 and
level 1 (2022: none).
Level 3 financial assets
2023 2023 2023 2022 2022 2022
Equity Preference Loan 2023 Equity Preference Loan 2022
shares Shares notes Total shares Shares notes Total
GBP'000 GBP'000(1) GBP'000 GBP'000 GBP'000 GBP'000(1) GBP'000 GBP'000
Opening
balance 4,740 3,861 1,957 10,558 19,956 9,380 5,835 35,171
Re-Classification (5,901)
Adjustment -- -- -- -- (457) (3,013) (2,431) (2)
Purchases
at cost -- -- 1,500 1,500 -- -- 300 300
Non-cash
distribution -- -- -- -- -- 59 -- 59(3)
Sale
proceeds -- -- -- -- (590) -- -- (590)
Realised
(losses)
/gains -- -- -- -- (1,159) -- -- (1,159)
Unrealised
(losses)
/gains (1,756) (792) 43 (2,505) (13,010) (2,565) (1,747) (17,322)
Closing
valuation 2,984 3,069 3,500 9,553 4,740 3,861 1,957 10,558
(1) The preference shares held are in the nature of equity.
(2) Includes Mexican Grill (GBP4.5m) listed on the London Stock Exchange on 8 October 2021 and conversion of the XP Factory loan note (GBP1.4m) into listed equity shares on 2 February 2022.
(3) The Company elected to convert accrued fixed income from a convertible loan note in Kidly into shares (GBP59k) .
The following table sets out the basis of valuation for the
material Level 3 investments and those where the value has
materially changed during the year, held within the portfolio at 30
September 2023.
In assessing fair value, the Investment Manager considered a
range of valuation methodologies including EV/Sales, and EV/EBITDA
multiples for the current and next financial year. Where
appropriate, the Investment Manager also assessed value using
discounted cash flow analysis. Where observable market multiples
were available, these were used as part of peer group analysis.
Market based multiples were taken as reference points with
discounts applied (where appropriate) to reflect liquidity and
forecast risk.
The manager also undertook sensitivity analysis to consider the
impact of a 30% movement in the peer group multiples, both higher
and lower. The use of alternative investment structures such as
convertible loan stock by the Company or other investors can lead
to asymmetric movements in value in response to different upside
and downside scenarios. For further information on sensitivities,
please see note 15.
Level 3 Unquoted Investments
Infinity Reliance Ltd (My 1st Despite the difficult environment,
Years) trading remained resilient and
in line with expectations for
the financial year to December
2022. Although trading remains
difficult, the company expects
to report further progress with
revenues and EBITDA in the current
financial year. The fair value
of the investment, which was unchanged,
was reviewed against EV/Sales
multiples across a peer group
of listed companies. Peer group
multiples recovered some of the
heavy declines seen in the prior
year.
Kidly Ltd Trading was difficult over the
winter period with the company
closing the financial year to
March 2023 with revenues lower
year on year. Although trading
remains challenging within the
current year, changes to the operating
model are expected to increase
margins and reduce losses. The
company raised new equity and
debt funding (including from the
Company) during the period under
review. The fair value of the
equity investment, which was reviewed
against EV/Sales multiples across
a peer group of listed companies,
was reduced. The fair value of
the convertible loan note investment
was unchanged. The conversion
option is valued using the Black-Scholes
option pricing model. Peer group
multiples recovered some of the
heavy declines seen in the prior
year.
SCA Investments Ltd (Gousto) The company raised new equity
(February 2023) and debt (September
2023) to fund capital expenditure
and working capital. EBITDA and
cash flow generation improved
significantly within the year.
Although the assessment of value
has resulted in an increased enterprise
value, the addition of a new class
of share and warrants resulted
in a reduction to the value of
the investment. EV/Sales and EV/EBITDA
peer group ratios and discounted
cash flow analysis were used to
support the valuation. Peer group
multiples recovered some of the
heavy declines seen in the prior
year.
Zappar Ltd Trading for the financial year
to March 2023 was in line with
(modestly) revised guidance. With
end markets remaining difficult
and extended sales cycles, the
company has made small reductions
to revenue and profit guidance
for the financial year to March
2024, although these, if achieved,
would still represent gains over
the prior year. The valuation,
which was unchanged, was reviewed
against the revised financial
projections for the current year
and EV/Sales multiples across
a peer group of listed companies.
Peer group multiples reduced in
the year under review.
Osirium Technologies plc -- convertible On 30 August 20203, Osirium announced
loan note a recommended cash offer for the
company by SailPoint Technologies
through a scheme of arrangement,
effective from 30 October 2023.
As part of the transaction, the
convertible loan notes and all
outstanding accrued interest was
repaid in full in November 2023.
Rosslyn Data Technologies plc On 19 September 2023, Rosslyn
-- convertible loan note Data Technologies completed a
GBP3.3m fundraising through the
issue of new shares and convertible
loan notes to fund its organic
growth strategy. As part of the
funding round, the Company invested
GBP0.3m through the new convertible
loan notes. The fair value of
the convertible loan notes was
unchanged with the value of the
conversion option calculated using
the Black-Scholes option pricing
model.
8. Significant interests
At the year end the Company held 3% or more of the issued share
capital of the following investments:
Holding Holding
Investment % Investment %
Crimson
Engage XR Holdings plc 29.72% Tide plc 6.39%
Eden Research
Fadel Partners inc 22.55% plc 5.59%
Skillcast
Rosslyn Data Technologies plc 20.27% Group plc 4.74%
Zoo Digital
Bivictrix Therapeutics plc 11.00% Group plc 4.50%
C4X Discovery
Holdings
PCI-PAL plc 10.54% plc 4.26%
Intelligent
Ultrasound
Bidstack Group plc 9.64% Group plc 4.21%
Verici
Equipmake Holdings plc 8.94% DX plc 4.18%
Surface
Transforms
Itaconix plc 8.80% plc 4.10%
Strip Tinning
Holdings
Crossword Cybersecurity plc 8.38% plc 3.69%
Polarean
Imaging
XP Factory plc 7.39% plc 3.34%
Blackbird
One Media IP Group 7.33% plc 3.29%
Tortilla Mexican Grill plc 7.17%
9. Debtors
2023 2022
GBP000 GBP000
Prepayments and accrued income 1,475 408
The material increase in accrued income from the prior year is
due to increased investment in fixed interest bonds and convertible
loan notes.
10. Creditors: amounts falling due within one year
2023 2022
GBP000 GBP000
Trade Creditors 21 8
Accruals 885 992
906 1,000
11. Called up share capital
2023 2022
GBP000 GBP000
Allotted, called-up and fully paid: 327,813,939
(2022: 266,652,209) ordinary shares of 1p each. 3,278 2,666
During the year 7,183,338 (2022: 4,307,731) ordinary shares were
purchased through the buyback facility at a cost of GBP3,636,841
(2022: GBP3,243,492) . The repurchased shares represent 2.7% (2022:
1.9%) of ordinary shares in issue on 1 October 2022. The acquired
shares have been cancelled.
During the year, the Company issued 65,917,234 ordinary shares
of 1 penny (nominal value GBP659,172.) in an offer for
subscription, representing 24.7% of the opening share capital at
prices ranging from 54.76p to 63.84p per share. Gross funds of
GBP39,935,333 were received. The 3.5% premium of GBP1,397,737
payable to Canaccord Genuity Wealth Ltd (CGWL) under the terms of
the offer was reduced by GBP555,552 being the discount awarded to
investors in the form of additional shares. A further reduction of
GBP755 introductory commission was made resulting in fees payable
to CGWL of GBP841,430 which were used to pay other costs associated
with the prospectus and marketing. In accordance with the offer
agreement, the Company was entitled to a rebate of GBP100,000 from
CGWL reducing the net fees payable to CGWL to GBP741,430.
On 10 February 2023, 1,836,516 ordinary shares were allotted at
a price of 54.95 pence per share, which was calculated in
accordance with the terms and conditions of the DRIS, on the basis
of the last reported NAV per share as at 20 January 2023, to
shareholders who elected to receive shares under the DRIS as an
alternative to the final and special dividend for the year ended 30
September 2022.
On 28 July 2023, 591,318 ordinary shares were allotted at a
price of 49.29 pence per share, which was calculated in accordance
with the terms and conditions of the DRIS, on the basis of the last
reported NAV per share as at 7 July 2023, to shareholders who
elected to receive shares under the DRIS as an alternative to the
interim dividend for the year ended 30 September 2023.
On 9 May 2023, the amount standing to the credit of the share
premium account (GBP133.2m) was cancelled.
Further details of the Company's capital structure can be seen
in note 1.
Income entitlement
The revenue earnings of the Company are available for
distribution to holders of ordinary shares by way of interim, final
and special dividends (if any) as may from time to time be declared
by the Directors.
Capital entitlement
The capital reserve realised and special reserve of the Company
are available for distribution to holders of ordinary shares by way
of interim, final and special dividends (if any) as may from time
to time be declared by the Directors.
Voting entitlement
Each ordinary shareholder is entitled to one vote on a show of
hands and on a poll to one vote for each ordinary share held.
Notices of meetings and proxy forms set out the deadlines for valid
exercise of voting rights and other than with regard to directors
not being permitted to vote on matters upon which they have an
interest, there are no restrictions on the voting rights of
ordinary shareholders.
Transfers
There are no restrictions on transfers except dealings by
directors, persons discharging managerial responsibilities and
their persons closely associated which may constitute insider
dealing or is prohibited by the rules of the FCA.
The Company is not aware of any agreements with or between
shareholders which restrict the transfer of ordinary shares, or
which would take effect or alter or terminate in the event of a
change of control of the Company.
12. Net asset value per ordinary share
30 September 30 September
2023 2022
Net assets (GBP'000) 151,920 160,507
Shares in issue 327,813,939 266,652,209
NAV per share (p) 46.34 60.19
There are no potentially dilutive capital instruments in issue
and as such, the basic and diluted NAV per share are identical.
13. Contingencies, guarantees and financial commitments
There were no contingencies, guarantees or financial commitments
of the Company at the year end (2022: nil) .
14. Related party transactions and conflicts of interest
The remuneration of the directors, who are key management
personnel of the Company, is disclosed in the Directors'
remuneration report and in note 4.
Transactions with the Investment Manager
As the Company's Investment Manager, Canaccord Genuity Asset
Management Ltd is a related party to the Company for the purposes
of the Listing Rules. As the Investment Manager and Canaccord
Genuity Wealth Limited (CGWL) are part of the same CGWL group, CGWL
also falls into the definition of related party.
On 7 September 2023, the Board and the Investment Manager
entered into an updated Investment Management Agreement. The
amended agreement included updates to reflect changes in
regulation. There were no changes to the commercial terms of the
agreement.
Oliver Bedford, a non-executive director of the Company is also
an employee of the Investment Manager which received fees of
GBP28,000 for the year ended 30 September 2023 in respect of his
position on the Board (2022: GBP26,125) . Of these fees GBP7,000
was still owed at the year end. Oliver Bedford's non-executive
directorship fees will increase to GBP29,500 per annum, with effect
from 1 October 2023.
CGWL act as administrator and custodian to the Company. On 7
September 2023, the Company entered into an amended administration
agreement with CGWL. Under the terms of the agreement the fees to
be paid to CGWL were increased to GBP250,000 per annum (previously
GBP195,000) with effect from 1 October 2023.
CGWL received fees for the support functions as follows:
30 September 30 September
2023 2022
Custody 30,000 30,000
Administration 195,000 195,000
Total 225,000 225,000
Still owed at the year end 55,765 55,240
Under an offer agreement dated 5 September 2022, CGWL were
appointed by the Company to administer an offer for subscription
and acted as receiving agent in relation to the offer. Under the
terms of the agreement CGWL received a fee of 3.5 per cent. of the
gross proceeds of the offer for providing these services. The
Administrator agreed to discharge commissions payable to financial
advisers in respect of accepted applications for offer shares
submitted by them, including any trail commission.
The Administrator also agreed to discharge and/or reimburse all
costs and expenses of and incidental to the offer and the
preparation of the prospectus, including without limitation to the
generality of the foregoing, FCA vetting fees in relation to the
prospectus, sponsor and legal fees, expenses of the Company and
CGWL, the Company's tax adviser's fees and expenses, registrar's
fees, costs of printing, postage, advertising, publishing and
circulating the prospectus and marketing the offer, including any
introductory commission and discounts to Investors. However, the
Administrator was not responsible for the payment of listing fees
associated with the admission of the ordinary shares to the premium
segment of the Official List and to trading on the main market of
the London Stock Exchange.
During the year, the Company issued 65,917,234 ordinary shares
of 1 penny (nominal value GBP659,172) in an offer for subscription,
representing 24.7% of the opening share capital at prices ranging
from 54.76p to 63.84p per share. Gross funds of GBP39,935,333 were
received. The 3.5% premium of GBP1,397,737 payable to Canaccord
Genuity Wealth Ltd (CGWL) under the terms of the offer was reduced
by GBP555,552, being the discount awarded to investors in the form
of additional shares. A further reduction of GBP755 introductory
commission was made resulting in fees payable to CGWL of GBP841,430
which were then used to pay other costs associated with the
prospectus and marketing. In accordance with the offer agreement,
the Company was entitled to a rebate of GBP100,000 from CGWL
reducing the net fees payable to CGWL to GBP741,430.
Under an offer agreement dated 7 September 2023, CGWL were
appointed by the Company to administer a new offer for subscription
and act as receiving agent in relation to the offer. Under the
terms of the agreement CGWL will receive a fee of 3.5 per cent. of
the gross proceeds of the offer for providing these services. The
Administrator has agreed to discharge commissions payable to
financial advisers in respect of accepted applications for Offer
Shares submitted by them, including any trail commission.
The Administrator has also agreed to discharge and/or reimburse
all costs and expenses of and incidental to the offer and the
preparation of the prospectus, including without limitation to the
generality of the foregoing, FCA vetting fees in relation to the
prospectus, sponsor and legal fees, expenses of the Company and
CGWL, the Company's tax adviser's fees and expenses, registrar's
fees, costs of printing, postage, advertising, publishing and
circulating the prospectus and marketing the offer, including any
introductory commission and discounts to Investors. However, the
Administrator will not be responsible for the payment of listing
fees associated with the admission of the Ordinary Shares to the
premium segment of the Official List and to trading on the main
market of the London Stock Exchange.
If following the final admission under the offer, the aggregate
fee that has been paid to CGWL exceeds the costs and expenses
referred to above by more than GBP25,000, then CGWL will rebate any
surplus to the Company subject to a maximum rebate of
GBP100,000.
Canaccord Genuity Asset Management Ltd is appointed as
Investment Manager to the Company and receives an investment
management fee of 1.7% per annum.
Investment management fees for the year are GBP2,797,377 (2022:
GBP3,340,182) as detailed in note 3. Of these fees GBP645,397
(2022: GBP687,373) were still owed at the year end. As the
Investment Manager to the Company and the investment advisor to the
Marlborough Special Situations Fund (in which the Company may
invest) , the Investment Manager makes an adjustment as necessary
to its investment management fee to ensure the Company is not
charged twice for their services.
Upon completion of an investment, the Investment Manager is
permitted under the investment management agreement to charge
private investee companies a fee equal to 1.5 per cent. of the
investment amount. This fee is subject to a cap of GBP40,000 per
investment and is payable directly from the investee company to the
Investment Manager. The Investment Manager may recover external due
diligence and transaction services costs directly from private
investee companies. No fees were charged to investee companies in
the year under this agreement (2022: nil).
Total commission of GBP63,318 was paid to CGWL in the year for
broker services (2022: GBP30,612).
The Investment Manager 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 waived
by the Investment Manager in the financial year under the
indemnity.
The Company also held GBP8,119,302 in the client account held at
CGWL at 30 September 2023 (2022: GBP16,786,442) .
15. Financial instruments
Risk management policies and procedures
The investment objectives of the Company are to generate capital
gains and income from its portfolio and to make distributions from
capital or income to shareholders whilst maintaining its status as
a Venture Capital Trust.
The Company intends to achieve its investment objectives by
making Qualifying Investments in companies listed on AIM, private
companies and companies listed on the AQSE Growth Market, as well
as Non-Qualifying Investments as allowed by the VCT Rules.
At least 80% of the Company's funds have been invested in
qualifying holdings during the year under the HMRC investment test
definition. The balance of the Company's funds were invested in
liquid assets (such as non-qualifying equities, fixed income
securities and bank deposits) . The Company is managed as a VCT in
order that shareholders in the Company may benefit from the tax
relief available.
This strategy exposes the Company to certain risks, which are
summarised below.
The structure in place to manage these risks is set out in the
corporate governance report of the annual report and accounts.
A detailed review of the investment portfolio is contained in
the chairman's statement and Investment Manager's report.
Classification of financial instruments
The investments at year end comprise two types of financial
instruments. The basis of valuation is set out below:
-- Equities -- fair value through the profit and loss account.
-- Fixed income securities -- fair value through the profit and loss account
Other financial assets comprise cash and cash equivalents of
GBP19,231,167 (2022: GBP41,911,058) , accrued income and debtors of
GBP1,434,688 (2022: GBP370,624) , which is classified as 'loans and
receivables measured at amortised cost'. Financial liabilities
consist of trade creditors and accruals of GBP905,897 (2022:
GBP1,000,255) which are classified as 'financial liabilities
measured at amortised cost'.
Market risk
Market price risk arises from any fluctuations in the value of
investments held by the Company. Adherence to investment policies
mitigates the risk of excessive exposure to any particular type of
security or issuer. In particular, other than bank deposits, no
individual investment shall exceed 10 per cent. of the Company's
net assets at the time of investment. However, many of the
investments are in small companies traded on the AIM market which
by virtue of their size carry more risk than investments in larger
companies listed on the main market of the London Stock
Exchange.
Market risk is monitored by the Board on a quarterly basis and
on an ongoing basis, through the Investment Manager.
The following table summarises exposure to price risk by asset
class at year end date:
Change in Fair Value of Investments
30% market 30% market Aggregate Aggregate
increase decrease value value
2023 2023 2023 2022
Asset class GBP'000 GBP'000 GBP'000 GBP'000
AIM Qualifying Investments(1) 14,365 -14,232 80,673 93,680
Unquoted Qualifying
Investments(2) 2,004 -2,645 8,453 9,802
Quoted Non-Qualifying
Investments 4,496 -4,496 17,366 12,397
Unquoted Non-Qualifying
Investments -- -- -- --
Authorised unit trust 1,409 -1,409 8,268 3,309
Quoted Non-Qualifying fixed
income securities -110 110 17,360 --
22,164 22,672 132,120 119,188
(1) Includes variances in the value of CLN issued by Osirium plc and Rosslyn Data Technologies plc.
(2) Including variances in the value of CLNs issued by Kidly Ltd.
If market prices had been 30% higher or lower while all other
variables remained unchanged the return attributable to ordinary
shareholders for the year ended 30 September 2023 would have
increased by GBP22,164,436 (2022: GBP25,128,703) or decreased by
GBP22,671,676 (2022: GBP25,965,809) .
The assessment of market risk is based on the Company's equity
and fixed income portfolio including private company investments,
as held at the year end. The assessment uses the AIM All-Share
Index and the FTSE 250 Index as proxies for the AIM Qualifying
Investments and quoted Non-Qualifying Investments and illustrates,
based on historical price movements, their potential change in
value in relation to change in value of a reference index, in this
case the FTSE 100.
The review has also examined the potential impact of a 30% move
in the market on the CLN investments held by the Company, whose
values will vary according to the price of the underlying security
into which the loan note instrument has the option to convert.
Currency risk
The Company is not directly exposed to currency risk and does
not invest in currencies other than sterling. There are indirect
exposures through movements in the foreign exchange market as a
consequence of investments held in companies who report in foreign
currencies.
Interest rate risk
The Company is fully funded through equity and has no debt;
therefore, interest rate risk is not considered a material
risk.
The Company's financial assets and liabilities are denominated
in sterling as follows:
30 September 2023
Fixed Variable Non-Interest
Rate Rate Bearing Total
GBP000 GBP000 GBP000 GBP000
Investments 20,860 -- 111,260 132,120
Cash and cash equivalents -- 19,231 -- 19,231
Other current assets (net) 1,293 -- 182(2) 1,475
Other current liabilities (net) -- -- (906) (906)
Net assets 22,153 19,231 110,536 151,920
30 September 2022
Fixed Variable Non-Interest
Rate Rate Bearing Total
GBP000 GBP000 GBP000 GBP000
Investments 1,956 -- 117,232 119,188
Cash and cash equivalents -- 41,911 -- 41,911
Other current assets (net) (1) 262 -- 146 408
Other current liabilities (net)
(1) -- -- (1,000) (1,000)
Net assets 2,218 41,911 116,378 160,507
(1) Prior year updated to split out assets and liabilities and correct fixed interest accrual allocation.
(2) Includes prepayments of GBP40k which is not considered a financial asset.
Interest rate risk exposure relates to cash and cash equivalents
(bank deposits) where interest income is primarily linked to bank
base rates. Interest rate risk exposure on debt instruments is
reflected in the market risk and since these securities are valued
at fair value, no additional disclosure is made in this respect.
Movements in interest rates on cash and cash equivalents are not
considered a material risk.
Liquidity risk
Liquidity risk is the risk that the Company is unable to meet
obligations as they fall due. The Company has no debt and maintains
sufficient investments in cash or cash equivalents, or readily
realisable securities to pay trade creditors and accrued expenses
(GBP905,897 as at 30 September 2023) . Liquidity risk is not
considered material. As at 30 September 2023 the Company held
GBP19,231,167 in cash or cash equivalents.
Credit risk
Credit risk relates to the risk of default by a counterparty.
The Company may have credit risk through investments made in
unsecured loan stock issued by Qualifying Companies or through
Non-Qualifying Investments in fixed income securities and exchange
traded funds. No assets are past due date for payment.
On 30 August 2023, Osirium announced a recommended cash offer
for the company by SailPoint Technologies through a scheme of
arrangement, effective from 30 October 2023. As part of the
transaction, the convertible loan notes and all outstanding accrued
interest was repaid in full in November 2023. In anticipation of
the completion of the transaction, which was completed post period
end, the impairments to the carrying value of the loan note and
accrued interest were reversed.
An investment will be impaired if the investee company is loss
making and does not have sufficient funds available to transition
into profit and in the opinion of the Investment Manager may fail
to secure sufficient equity or debt funding to transition into
profit, or if the borrower defaults or is expected to default on
payment of accrued interest or repayment of the principal sum.
The maximum credit risk exposure equates to the carrying value
of assets at the balance sheet date:
2023 2022
GBP000 GBP000
Fixed income securities;
--Qualifying Investments (convertible loan notes) 3,500 1,956
--Non-qualifying investments (investment grade
corporate bonds) 17,361 --
--Non-qualifying investments (UK gilt exchange
traded fund) 1,978 --
Total fixed income securities 22,839(1) 1,956
Cash and cash equivalents 19,231 41,911
Other assets 1,475 408
43,545 44,275
(1) Includes UK gilt exchange traded fund as underlying investments are fixed income securities.
Cash and cash equivalents include bank deposits held through
Canaccord Genuity Wealth Limited of GBP8.1 million (2022: GBP16.8
million) (CGWL, trading as CGWM) , are held with banks that are
authorised and regulated to carry on banking or deposit-taking
business. All these meet the requirements of UK's FCA CASS rules.
Through its treasury function, CGWM uses a tiered level approach to
counterparty selection to reflect different maturities of cash held
on deposit.
The Company's cash reserves, when held through CGWL, are pooled
with cash deposits from other clients of CGWL and diversified
across a specified panel of banks. CGWM's treasury function reviews
panel members ahead of selection and prioritises the safety of
client assets with the panel selection process placing an emphasis
on quality and security. Participating banks must be rated as
investment grade by at least two international credit rating
agencies. CGWM will also consider the expertise and market
reputation of the bank; review a bank's financial statements and
consider its capital and deposit base; consider the geographical
location of the parent; monitor a bank's credit default swaps; and
ask the bank to complete a due diligence questionnaire. The CGWM
treasury function maintains regular contact with panel banks,
typically meeting them every 6 months or so. There are no
withdrawal restrictions on the Company's cash held with CGWL.
Fair value of financial assets and financial liabilities
Equity investments are held at fair value. No investments are
held for trading purposes only.
Capital management policies and procedures
The current policy is to fund investments through equity. No
future change to this policy is envisaged. As a public limited
company, the Company is required to hold a minimum GBP50,000 share
capital.
The Company's capital is summarised in notes 1 and 11 to these
accounts. The Company has no debt and is fully funded by
equity.
16. Dividends
2023 2022
Ord Ord
GBP000 GBP000
Paid per share:
Special capital dividend of 2.50 pence for the
year ended 30 September 2021 -- 5,704
Paid per share:
Final capital dividend of 3.15 pence for year
ended 30 September 2021 -- 8,455
Paid per share:
Interim capital dividend of 1.00 penny for year
ended 30 September 2022 -- 2,671
Paid per share:
Special capital dividend of 2.00 pence for the
year ended 30 September 2023 6,216 --
Paid per share:
Final capital dividend of 2.00 pence for year
ended 30 September 2022 6,216 --
Paid per share:
Interim capital dividend of 1.00 penny for year
ended 30 September 2023 3,298 --
Dividends unclaimed (13) (1)
15,717(2) 16,830(3)
Proposed per share:
Final capital dividend of 1.50 pence for the
year ended 30 September 2023 5,151 --
Paid per share:
Special capital dividend of 2.00 pence for the
year ended 30 September 2023 -- 6,218
Paid per share:
Final capital dividend of 2.00 pence for the
year ended 30 September 2022 -- 6,218
(1) Unclaimed dividends for a period of 12 years reverted to the Company.
(2) The difference between total dividends paid for the period ending 30 September 2023 and the cash flow statement is GBP1,300,000 which reflects the amount of dividends reinvested under the DRIS.
(3) The difference between total dividends paid for the period ending 30 September 2022 and the cash flow statement is GBP1,038,000 which reflects the amount of dividends reinvested under the DRIS.
17. Post balance sheet events
Share buybacks
As at 18 December 2023, 2,039,414 ordinary shares have been
purchased at an average price of 42.82 pence per share and a total
cost of GBP873,229.
Shares issued
As at 18 December 2023, 17,599,435 ordinary shares have been
issued through the offer for subscription raising gross proceeds of
GBP8,101,695.
New investments
The Company has made the following investments since the period
end:
Amount Investment
Invested into existing
GBP000 company
Qualifying Investments
Eden Research plc 500 Yes
Non-Qualifying Investments
Next Group plc GRTD BDS 26/08/25 957 No
Shell plc 809 No
XP Power plc 126 Yes
Marlborough UK Micro-Cap Fund 4,365 No
Marks & Spencer plc 3.75% SNR EMTN 19/05/2026 2,058 No
Unilever plc 1.375% GTD SNR NTS 15/09/24 3,028 No
Disposals
The Company has made the following full disposals since the
period end:
Proceeds
GBP000
Qualifying Investments
Osiruim Technologies plc 14
Osiruim Technologies plc (convertible loan note) 800
Renalytix AI plc 13
Velocys plc 61
Instem plc 1,416
Abcam plc 3,143
Non-Qualifying Investments
Diversified Energy Company plc 659
Watches of Switzerland plc 641
Energean plc 679
Marks and Spencer 3% SNR EMTN 3,000
IShares III plc UK Gilts 0-5 YR UCITS ETF 2,005
Alternative performance measures
Alternative performance measures
An alternative performance measure (APM) 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.
Where the calculation of the APM is not detailed within the
financial statements, an explanation of the methodology employed is
below:
NAV total return
30 September 30 September
2023 2022
Opening NAV per share A 60.19p 100.39p
Special dividend paid B 2.00p 2.50p
Final dividend paid C 2.00p 3.15p
Interim dividend paid D 1.00p 1.00p
Closing NAV per share E 46.34p 60.19p
((B+C+D+E-A)
NAV total return /A) *100 -14.70% -33.42%
NAV total return (dividends reinvested)
30 September % Return
2023
Opening NAV per share A 60.19p
(30 September 2022)
Closing NAV per share 46.34p
(30 September 2023)
Special 2.00p
dividend
paid February
2023
Final dividend 2.00p
for year
paid February
2023
Interim 1.00p
dividend
July 2023
Total dividend payments 5.00p
Closing NAV per share plus dividends 51.34p -14.70%
paid (-33.42%
30 September
2022)
In year performance of reinvested -0.74p
dividends
NAV total return (dividends ((B-A) B 50.60p -15.93%
reinvested) /A) *100 (-35.47%
30 September
2022)
Share price total return
30 September 30 September
2023 2022
Opening share price A 62.75p 93.00p(1)
Special dividend paid B 2.00p --
Final dividend paid C 2.00p 3.15p
Interim dividend paid D 1.00p 1.00p
Closing share price E 43.00p 62.75p
Share price total returns ((B+C+D+E-A)/A)*100 -23.51% -28.06%
(1) Ex-dividend
Share price total return (dividends reinvested)
30 September % Return
2023
Opening share price A 62.75p
(30 September 2022)
Closing share price 43.00p
(30 September 2023)
Special 2.00p
dividend
paid February
2023
Final dividend 2.00p
for year
paid February
2023
Interim 1.00p
dividend
paid July
2023
Total dividend payments 5.00p
Closing share price plus dividends 48.00p %
paid -23.51%
(-28.06%
30 September
2022)
In year performance of reinvested -0.81p
dividends
Share price total return (dividends ((B-A) B 47.19p %
reinvested) /A) *100 -24.80%
(-28.98%
30 September
2022)
Ongoing charges ratio
The ongoing charges ratio has been calculated using the AIC's
"Ongoing Charges" methodology.
30 September 30 September
2023 2022
GBP000 GBP000
Investment management fee 2,797 3,340
Other expenses 1,035(1) 989
VCT proportion of MSSF expenses 65 26
Ongoing charges A 3,897 4,355
Average net assets B 174,334 211,552
Ongoing charges ratio (A/B) *100 2.24% 2.06%
(1) Other expenses exclude London Stock Exchange fees of GBP58,905 for admission of shares under the offer for subscription, reversal of the provision of loan stock interest previously recognised (GBP34,816) , capital reduction costs of GBP15,131 and witholding tax charges of GBP16,485 as the Board do not consider these costs to be ongoing costs to the fund.
Share price discount
30 September 30 September
2023 2022
Share price A 43.00p 62.75p
Net asset value per share B 46.34p 60.19p
((A/B)
(Discount) / premium -1) *100 -7.21% 4.25%
The 1-year average discount of 6.06% is calculated by taking the
average of the share price discount at each month end between 1
October 2022 and 30 September 2023.
The 5-year average discount of 5.64% is calculated by taking the
average of the share price discount at each month end between 1
October 2018 and 30 September 2023.
END
For further information, please contact:
JTC (UK) Limited
https://www.globenewswire.com/Tracker?data=H4wiZj8jfJgebMDvgvaRR2lr6dviSScl2QsHxOqHjizcKIerG-TOb6CCQfVhN1py9l8tNYI9IZUitVhBJFk2xBp3iWcl_aqXuzlkssgLiFk=
HHV.CoSec@jtcgroup.com
Susan Fadil +44 20 3893 1005
Uloma Adighibe +44 207 409 0181
LEI: 213800LRYA19A69SIT31
(END) Dow Jones Newswires
December 19, 2023 02:00 ET (07:00 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
Hargreave Hale Aim Vct (LSE:HHV)
Gráfico Histórico do Ativo
De Mai 2024 até Jun 2024
Hargreave Hale Aim Vct (LSE:HHV)
Gráfico Histórico do Ativo
De Jun 2023 até Jun 2024
