Final Results

Final Results

Hargreave Hale AIM 1

Hargreave Hale AIM VCT1 plc

Preliminary Announcement of Final Results for the year ending 30 September 2013.

INVESTMENT MANAGER AND INVESTMENT OBJECTIVES

The Company is managed by Hargreave Hale Limited, a fund manager with approximately £2.83 billion under management. Hargreave Hale has been managing investments in UK Small and Micro Cap companies for 15 years and VCTs for 9 years.

The Company's investment objectives are:

  • to invest in a diversified portfolio of small UK based companies on a high risk, medium term capital growth basis, primarily being companies which are traded on AIM and which have the opportunity for significant value appreciation;
  • to invest in smaller companies which may not be readily accessible to private individuals and which also tend to be more risky;
  • to maximise distributions to shareholders from capital gains and income generated from the Company's funds;
  • targeted investment in equities which are non-qualifying investments on an opportunistic basis to boost the performance of the Ordinary Shares; and
  • To maintain the Company’s exposure to small companies through an initial investment of new capital into the Marlborough Special Situations Fund pending investment into Qualifying Companies.

FINANCIAL HIGHLIGHTS

Ordinary Shares (as at 30 September):   2013   2012
 
Net asset value per share 71.87 61.35p
Cumulative distributions paid per share since launch 29.75 26.5p
Total return 101.62 87.85p
 
Annual Returns per share:
Revenue return (0.24)p (0.30)p
Capital return 14.05p 3.94p

Combined Return

13.81p 3.64p
 
Dividends per share:
Interim paid 1.5p 1.5p
Final proposed 2.25p 1.75p
Total dividend for year 3.75p 3.25p
 
Performance Benchmark:
Total Return 107% 92.5%
FTSE AIM All-share Index 82.3% 73.2%
(results rebased to 100 at 29 October 2004)

CHAIRMAN’S STATEMENT

Introduction

At 30 September 2013 the NAV was 71.87 pence which after adding back the dividends paid gives a total return since inception of 101.62 pence. The gain per ordinary share for the year was 13.81 pence per share (comprising revenue loss of 0.24 pence and capital gains of 14.05 pence) which after adding back the dividends paid amounts to a rise of some 22.44%.

Investments

The Investment Manager, Hargreave Hale Limited, invested a further £1.76 million in 10 qualifying companies during the year. The Fair Value of qualifying investments at 30 September 2013 was £16.33 million invested in 37 AIM companies and 7 unquoted companies. £3.74 million was held in a mix of cash, fixed income and other non-qualifying equities.

Dividend

An interim dividend of 1.5 pence was paid on 5 July 2013 (Interim 2012 – 1.5 pence).

A final dividend of 2.25 pence is proposed (2012 – 1.75 pence) which, subject to shareholder approval at the AGM will be paid on 24 January 2014, to ordinary shareholders on the register on 3 January 2014.

The directors have maintained a dividend policy of at least 5% of the year end NAV. Subject to market conditions they expect that this will continue.

Buybacks

We were pleased that we were able to maintain our policy of offering our shareholders an efficient exit route through the buyback scheme. In total, 1,269,517 shares were purchased during the year at an average price of 60.04 pence per share.

Issue of Equity

The joint offer for subscription (together with Hargreave Hale AIM VCT 2) closed on 25 September 2013 and resulted in funds being received for Hargreave Hale AIM VCT 1 of £2.6 million and the issue of 3,998,082 shares.

New Joint Offer for Subscription of Ordinary Shares

After our success this year, on the 1 November 2013 the Directors of Hargreave Hale AIM VCT 1 plc and Hargreave Hale AIM VCT 2 plc announced the launch of a new joint offer for subscription of new shares in both VCT’s to raise up to £10 million into this company.

The offer for subscription was approved by shareholders of the Company at a General Meeting on 31 October 2013.

VCT Status

To maintain its VCT qualifying status we must invest at least 70% of the net funds raised in any one accounting period in qualifying investments within three years. At the yearend we have achieved 94.2% per cent and have satisfied all the relevant tests.

Outlook

At the time of the budget in March the Office for Budget Responsibility reduced its forecast for GDP growth to 0.6% in the space of just 8 months, the general consensus forecasts are now of the order of 1.4% rising to as much as 2.5% for 2014. This remarkable change in the economy has had a beneficial effect on the stock market and in particular we have seen a marked positive change in sentiment towards the merits of investing in AIM.

There are many reasons to be cautious about the future as we should not forget that the UK is still running an enormous budget deficit and many of our European neighbours are far from being economically out of the woods. However on the positive front various observers see Shale gas as a being potentially even more beneficial to the UK economy than was North Sea oil. If only 10% of the estimated reserves in the North West come to production that would provide all the gas requirements for the UK for the next 40 years. As usual the greatest danger to our economy comes from Westminster and a labour leader with views slightly left of Karl Marx could provide for an interesting General election in 2015.

The Fund is largely invested in good well run companies which continue to outperform their peers. The number of new issues seems to be starting to increase which will provide opportunities to make suitable new investments with the new money that we raised in 2013. The outlook for 2014 looks to be well placed for those who invest in the new issue referred to above.

Sir Aubrey Brocklebank

Chairman

Date: 13 December 2013

The Directors each confirm to the best of their knowledge that:

a) the financial statements have been prepared in accordance with UK Generally Accepted Accounting Practice and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

b) the Annual Report, to be published shortly, includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

DIRECTORS’ REMUNERATION

The Directors’ Remuneration Report was approved by the Board of Directors on 3 December 2013 and will be further subject to a binding vote at the AGM being held on the 22 January 2014 and every year thereafter.

INCOME STATEMENT

For the year ended 30 September 2013

  Revenue   Capital   Total
£000 £000 £000
Net gain on investments held at fair value through profit or loss - 3,910 3,910
Income 213 - 213
-------- -------- --------
213 3,910 4,123
-------- -------- --------
Management fee (65) (194) (259)
Other expenses (212) - (212)
-------- -------- --------
(277) (194) (471)
-------- -------- --------
(Loss)/Profit on ordinary activities before taxation (64) 3,716 3,652
Taxation - - -
-------- -------- --------
(Loss)/Profit after taxation (64) 3,716 3,652
-------- -------- --------
(Loss)/Profit per share (pence) (0.24) 14.05 13.81
-------- -------- --------

INCOME STATEMENT

For the year ended 30 September 2012

  Revenue   Capital   Total
£000 £000 £000
Net gain on investments held at fair value through profit or loss - 1,184 1,184
Income 217 - 217
-------- -------- --------
217 1,184 1,401
-------- -------- --------
Management fee (58) (174) (232)
Other expenses (236) - (236)
-------- -------- --------
(294) (174) (468)
-------- -------- --------
(Loss)/Profit on ordinary activities before taxation (77) 1,010 933
Taxation - - -
-------- -------- --------
(Loss)/Profit after taxation (77) 1,010 933
-------- -------- --------
(Loss)/Profit per share (pence) (0.30) 3.94 3.64
-------- -------- --------

The total column of these statements is the income statement of the Company. All revenue and capital items in the above statement derive from continuing operations. There are no recognised gains or losses other than the profit for the year.

BALANCE SHEET Company registration number: 5206425

As at 30 September 2013 (in England and Wales)

  2013   2012
 
£000 £000
 
Fixed assets
Investments at fair value through profit or loss 18,000 14,621
-------- --------
 
Current assets
Debtors 32 28
Cash at bank 2,077 863
-------- --------
2,109 891
 
Creditors: amounts falling due within one year (179) (173)
-------- --------
Net current assets 1,930 718
-------- --------
Net assets 19,930 15,339
-------- --------
 
Capital and Reserves
Called up share capital 304 277
Special reserve 10,188 11,808
Capital reserve – realised (5,606) (5,786)
Capital reserve – unrealised 4,996 1,460
Revenue reserve (22) 42
Share Premium 9,186 6,667
Capital redemption reserve 884 871
-------- --------
Equity shareholders’ funds 19,930 15,339
-------- --------
 
Net asset value per share 71.87p 61.35p

These financial statements were approved and authorised for issue by the Board of Directors on 13 December 2013 and signed on its behalf by

Sir Aubrey Brocklebank Bt

Chairman

CASH FLOW STATEMENT

For the year ending 30 September 2013

  2013   2012
 
£000 £000
Net cash (outflow) from operating activities (256) (215)
Net financial investment 531 1,704
Dividends paid (853) (906)
--------- ---------
Cash (outflow)/inflow before management of liquid resources (578) 583
Financing 1,792 (922)
--------- ---------
Increase/(Decrease) in cash 1,214 (339)
--------- ---------

RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ FUNDS

For the year ending 30 September 2013

 

 

Share Capital

  Capital Redemption Reserve   Capital Reserve Realised   Capital Reserve Unrealised  

Special Reserve

 

Share Premium

 

Revenue Reserve

 

Total

£000 £000 £000 £000 £000 £000 £000 £000
At 1 October 2012 277 871 (5,786) 1,460 11,808 6,667 42 15,339
 
Share buybacks (13) 13 - - (767) - - (767)
Subscriptions 40 - - - - 2,519 - 2,559
Equity dividends paid - - - - (853) - - (853)
Realised gains on investments - - 374 - - - - 374
Unrealised gains on investments - - - 3,536 - - - 3,536
Management fee charged to capital - - (194) - - - - (194)
Revenue loss after taxation for the year - - - - - - (64) (64)
Total profit after taxation - - 180 3,536 - - (64) 3,652
 
------ ------ --------- --------- --------- --------- ------ ---------
At 30 September 2013 304 884 (5,606) 4,996 10,188 9,186 (22) 19,930
------ ------ --------- --------- --------- --------- ------ ---------

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

RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ FUNDS

For the year ending 30 September 2012

 

 

Share Capital

  Capital Redemption Reserve   Capital Reserve Realised   Capital Reserve Unrealised  

Special Reserve

 

Share Premium

 

Revenue Reserve

 

Total

£000 £000 £000 £000 £000 £000 £000 £000
At 1 October 2011 292 775 (4,882) (454) 18,632 1,752 119 16,234
 
 
Share buybacks (96) 96 - - (5,918) - - (5,918)
Subscriptions 81 - - - - 4,915 - 4,996
Equity dividends paid - - - - (906) - - (906)
Realised losses on investments - - (730) - - - - (730)
Unrealised gains on investments - - - 1,914 - - - 1,914
Management fee charged to capital - - (174) - - - - (174)
Revenue loss after taxation for the year - - - - - - (77) (77)
Total profit after taxation - - (904) 1,914 - - (77) 933
 
------ ------ --------- --------- --------- --------- ------ ---------
At 30 September 2012 277 871 (5,786) 1,460 11,808 6,667 42 15,339
------ ------ --------- --------- --------- --------- ------ ---------

Notes to the preliminary announcement

1. The financial information set out in this preliminary announcement does not constitute the Company’s statutory accounts for the years ended 30 September 2013 or 30 September 2012. Statutory accounts for the year ended 30 September 2012 have been filed with the Registrar of Companies and those of the year ended 30 September 2013 will be delivered to the Registrar in due course; both have been reported on by the Independent Auditors. The independent auditors’ reports on the Statutory accounts for the years ended 30 September 2012 and 30 September 2013 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. The financial information in this preliminary announcement has been prepared under the historical cost convention, except for the revaluation of certain financial instruments, and in accordance with UK GAAP and with the Statement of Recommended Practice (SORP) for Financial Statements of Investment Trust Companies issued in January 2009. The accounting policies adopted in these preliminary results have been consistently applied to all the years presented and are consistent with the policies used in the preparation of the statutory accounts for the year ended 30 September 2013. The full statutory annual accounts will be published in December 2013. Copies may in due course be obtained during normal business hours from Hargreave Hale Limited, 9-11 Neptune Court, Hallam Way, Blackpool, FY4 5LZ.

The Annual general meeting of the company will be held at the Company’s registered office on 22 January 2014 at 10.30am.

2. Revenue return per ordinary share based on a net revenue loss on ordinary activities after taxation of £63,935 (2012 - £76,754 loss) and on 26,446,613 (2012 – 25,634,536) ordinary shares, being the weighted average number of ordinary shares in issue during the year. Capital return per ordinary share based on a net capital profit of £3,715,983 (2012 – £1,009,644) for the year and on 26,446,613 (2012 – 25,634,536) ordinary shares, being the weighted average number of ordinary shares in issue during the year.

3. The net asset value per ordinary share at 30 September 2013 of 71.87p (2012 – 61.35p) is based on net assets of £19,930,424 (2012 - £15,338,810) and on 27,730,188 (2012 – 25,001,623) ordinary shares bring the number of shares in issue at year end (Not including 2,711,134 shares held as treasury (2012 – 2,711,134)).

INVESTMENT PORTFOLIO SUMMARY

  Book Cost   Valuation   Valuation
Qualifying investments £000 £000 %
Intercede Group plc 363 1,199 6.66
Cohort plc 800 1,111 6.17
Advanced Computer Software Group plc 212 1,083 6.01
Abcam plc 67 1,005 5.58
AnimalCare Group plc 220 708 3.93

Mycelx Technologies Corporation plc

300 707 3.93
Idox plc 135 702 3.9
Pressure Technologies Corporation plc 300 696 3.87
EKF Diagnostic Holdings plc 300 630 3.5
WANDisco plc 88 563 3.13
Porta Communications plc 505 530 2.94
Vertu Motors plc 600 520 2.89
TLA Worldwide plc 300 488 2.71
Craneware plc 150 480 2.67
Microsaic Systems plc 350 463 2.57
K3 Business Technology Group plc 270 441 2.45
Hardide plc 535 362 2.01
Reneuron Group plc 518 332 1.85
Outsourcery Group Ltd 300 308 1.71
Quixant plc 160 306 1.7
APC Technology Group plc 148 297 1.65
Fusionex International plc 138 295 1.64
Mexican Grill Ltd (A Preference Shares) 185 288 1.6
Instem plc 297 284 1.58
Tasty plc 288 276 1.54
Plastics Capital plc 250 263 1.46
Imaginatik plc 180 245 1.36
Lidco Group plc 220 236 1.31
Tangent Communications plc 400 215 1.19
Universe Group plc 210 150 0.83
Flowgroup plc 399 148 0.82
Egdon Resources plc 158 138 0.76
Jelf Group plc 174 138 0.76
Nektan Ltd 130 130 0.72
Progressive Digital Media Group plc 173 120 0.67
Corac Group plc 135 108 0.6
Sphere Medical Holdings plc 300 104 0.58
DP Poland plc 64 77 0.42
Brigantes Energy Ltd 50 50 0.28
Corfe Energy Ltd 50 50 0.28
Redcentric plc 214 45 0.25
Mexican Grill Ltd (Ordinary shares) 21 32 0.18
Invocas Group plc 169 12 0.07
Infoserve Group plc 200 1 0.01
TMO Renewables Ltd 200 0 0
-------- --------- -------
Total qualifying investments 11,226 16,336 90.74
  Book Cost   Valuation   Valuation
Non-Qualifying investments £000 £000 %
 
Marlborough Special Situations Fund 200 217 1.21
-------- --------- -------
Total – Unit Trusts 200 217 1.21
 
Scottish Amicable Finance 8.5% 2049 256 280 1.56
Nationwide Building Society 7.971% 2049 242 255 1.42
Petrobras International Finance 6.25% 2026 247 255 1.42
-------- --------- -------
Total – UK corporate bonds 745 790 4.40
 
 
 
WANdisco plc 150 178 0.99
Restore plc 137 145 0.80
Telford Homes plc 100 114 0.63
Amerisur Resources plc 93 97 0.54
In-Deed Online plc 268 51 0.28
Mexican Grill Ltd (A Preference shares) 34 38 0.21
HELIUS Energy plc 40 23 0.13
MyCelx Technologies Corporation plc 8 10 0.06
Microsaic Systems plc 1 1 0.01
TMO Renewables Ltd Warrants*** 0 0 0
Reneuron Group plc Warrants*** 0 0 0
APC Technology Group plc** 0 0 0
Idox plc** 1 0 0
Flowgroup plc** 0 0 0
-------- --------- -------
Total – non-qualifying equities 832 657 3.65
 
-------- --------- -------
Total – non-qualifying investments 1,777 1,664 9.26
 
--------- --------- -------
Total investments 13,003 18,000 100.00
--------- --------- -------
 
** These are actual holdings of less than £500.
*** Warrants held not exercised

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

Fusionex International plc: UK listed, registered in Jersey but headquartered in Selangor, Malaysia.

Mycelx Technologies Corporation: UK listed but headquartered in USA

Petrobras International Finance: Listed in Sao Paulo and New York but headquartered in Brazil.

Wandisco plc: UK listed, registered and domiciled in St Helier, Jersey but headquartered in Sheffield.

Nektan Ltd: A non-listed company and headquartered in Gibraltar

Date: 16 December 2013

For further information please contact:

Stuart Brookes

Company Secretary

Hargreave Hale AIM VCT1 plc

01253 754740

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