Hargreave Hale AIM 1 Hargreave Hale Aim Vct 1 Plc : Interim Management Statement
August 07 2017 - 4:12AM
UK Regulatory
TIDMHHV
Investment Manager's Report
This report covers the third quarter of the 2016/17 financial year, 1
April 2017 to 30 June 2017.
Investment Report
Global equity markets had a reasonable quarter as economic data was
generally positive. President Trump's promises to cut taxes and reduce
business regulations were well received by US equity markets, which hit
new highs. In the UK, the Bank of England put through a small upgrade to
their projections for economic growth this year, principally because of
stronger than expected consumer spending, although we have since
witnessed some signs of consumer retrenchment in the face of higher
inflation and decreases in real wage growth.
As is the way these days, each quarter brings with it new challenges and
risks. Brexit chat is not a regular feature in our company meetings
beyond the implications of weakness in Sterling, although we expect it
to re-emerge as a talking point once we get a better feel for the
mechanics and implications of our exit from the European Union. We
remain cautious on certain sectors such as financials and consumer
discretionary; however, we still see ample opportunity for growth within
our investee companies, particularly those with strong product
differentiation and/or structural growth in their end markets. Weaker
companies are vulnerable, particularly those in consumer discretionary,
traditional retail or where there is a high risk of substitution. We
continue to find interesting investment opportunities in qualifying
companies.
Performance
In the three months to 30 June 2017, the NAV increased from 78.12p to
78.43p. A total of 1.75 pence per share was paid in dividends, giving
investors a total return of 2.06 pence per share, which translates to a
gain of 2.6%. During the same period the FTSE AIM All-Share Total Return
gained 4.3%, whilst the FTSE 100 Total Return gained 1.0%.
The qualifying investments made a net contribution of 0.91 pence per
share with thirty-one out of the eighty-two making gains, twelve
unchanged and thirty-nine losing ground. The balance was the net of
non-qualifying portfolio gains, running costs and investment income.
Hardide was the top performing qualifying investment (+100.0%, +0.63
pence per share). The company backed up the recent award of global
approved supplier status by Airbus with an upbeat half-year trading
update that pointed to a year-on-year doubling of sales to the Oil & Gas
sector, which helped the shares to a three year high. Eagle Eye also
performed well (+56.6%, +0.41 pence per share), announcing a new
three-year contract to use their technology in support of John Lewis'
digital strategy. This was followed by a GBP6.0m fundraise to strengthen
their balance sheet and allow further investment in operational and
marketing resource. Abcam (+17.6%, +0.29 pence per share), Faron Pharma
(+35.5%, +0.21 pence per share) and ULS Technology (+26.8%, +0.18 pence
per share) were all also significant contributors over the period.
The biggest losses within the period came from K3 (-42.0%, -0.38 pence
per share) after they announced that longer sale cycles and contract
delays would lead to a significant reduction in revenues, profits and
cashflows for the year ended 30 June 2017. Other losses in the period
came from TLA (-57.1%, -0.37 pence per share), Animal Care (-14.5%,
-0.29 pence per share) and Idox (-12.9%, -0.20 pence per share).
We invested GBP2.34m into seven qualifying investments over the period,
including four further investments into existing listed qualifying
companies, one IPO and two new investments into listed companies.
Within the qualifying portfolio, we exited our investments in Audioboom,
Directa Plus and Haydale Graphene following prolonged periods of
underperformance. We also exited our investment in FreeAgent. We
reduced our investments in ECSC, Faron Pharma and Gfinity following very
strong runs.
Portfolio Structure
The VCT is comfortably through the HMRC defined investment test and
ended the period at 85.83% invested as measured by the HMRC investment
test. By market value, the VCT had a 55.7% weighting to qualifying
investments.
The allocation to non-qualifying equity investments decreased marginally
from 18.9% to 17.9%. We continued to make use of the Marlborough
Special Situations Fund as a temporary home for proceeds from
fundraising; the allocation marginally increased from 10.2% to 10.8%.
The non-qualifying investments contributed +1.34 pence per share to the
overall gains. Cash decreased from 18.8% to 15.9%.
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 section of the
interim management statement. 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.
Buybacks
In total, 468,997 ordinary shares were purchased between 1 April 2017
and 30 June 2017, at a total value of GBP361,388. Since the period end
75,822 ordinary shares were purchased at a total value of GBP57,472.
Dividends
An interim dividend of 1.75 pence per ordinary share was paid on 30 June
2017.
Post Period End Update
Deal flow has been good since period end and we have made one follow on
investment in Surface Transforms and two new investments in Honest Brew
and Gousto. We also have several deals in the pipeline which we expect
to complete in the coming weeks.
For further information, please contact:
Stuart Brookes
Company Secretary
Hargreave Hale AIM VCT 1 plc
01253 754740
Date: 7 August 2017
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Hargreave Hale AIM VCT 1 plc via Globenewswire
https://hargreaveaimvcts.co.uk/
(END) Dow Jones Newswires
August 07, 2017 05:12 ET (09:12 GMT)
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