Half-yearly report

HARGREAVE HALE AIM VCT 1 PLC FORMERLY KEYDATA AIM VCT plc Unaudited Interim Results for the six month period ending 31 March 2010 Chairman's Statement During the six month period the NAV increased by 0.13%. During the same period the FTSE AIM All Share index rose by 8.81%. Results The net asset value per ordinary share increased to 64.06 pence during the period. Adjusted for dividends paid, the total return for ordinary shareholders is 81.06 pence, a 0.01% increase in the period and for C shareholders (now converted to ordinary shares) a total return of 86.31 pence, a 0.12% increase in the period. The loss per ordinary share for the period was 0.18 pence (comprising revenue losses of 0.16 pence and capital losses of 0.02 pence). The Manager invested £0.45 million in 3 qualifying AIM companies during the period and made full or part disposals of 7 of the qualifying investments, realising a net gain of £0.04 million. In addition, 2 qualifying investments went into administration during the period (Relax Group plc and Hexagon Human Capital Group) realising a combined loss of £0.95 million. A further £1.58 million was invested in 19 non-qualifying equity investments and 23 companies were sold (in full or in part) realising a net gain on sale of £0.13 million in the period. The bid value of qualifying investments at 31 March 2010 was £9.62 million invested in 41 AIM companies and £0.21m in Mexican Grill (an unquoted company) valued at cost. The bid value of non-qualifying investments at 31 March 2010 was £1.46 million invested in 22 listed or AIM companies. £4.35 million was held in UK gilts and corporate bonds. With respect to the 70% investment test, as at 31 March 2010, 79.49% of the Company's investments were in qualifying companies. Shares Repurchased 1.06 million shares were repurchased during the six month period ending 31 March 2010 at a cost of £0.61 million and an average price of 57 pence. Dividend An interim dividend of 2p will be payable to ordinary shareholders in respect of the period. The interim dividend will be payable on 2 July 2010 to ordinary shareholders on the share register on 11 June 2010. A final dividend will be considered at the year end. Linked Offer for Subscription At a General Meeting held on the 19 February 2010 the resolutions were passed in relation to the Offer. The 2009/2010 Offer resulted in funds being received of £0.66 million and 0.99 million shares being issued. The 2010/2011 Offer will conclude on 31 July 2010 (unless the Offer is otherwise closed earlier or extended). Outlook Whilst the economy seems to have avoided the worst recession that was feared the cost has been an unprecedented level of Government borrowings and an enormous ongoing budget deficit. The new government has recognised that this is not sustainable for long and has started to make cuts. It faces a hard balancing act between fiscal rectitude and killing off the green shoots of recovery. I am hopeful that we will see continued recovery but there is little doubt that we live in uncertain economic times. If the market suffers a reversal we may see prices go lower. Because a VCT has to maintain 70% of its assets in qualifying companies the manager would have little scope to sell assets in such circumstances. However I believe that your portfolio is largely comprised of robust companies with competent management and good growth plans and will be well placed to weather any such storm. Shareholder Communication The Company's daily share price can be found on various financial websites under the EPIC code 'HHV', or on our own dedicated website at www.hargreave-hale.co.uk/VCT/aimvct. Sir Aubrey Brocklebank Bt Chairman 28 May 2010 Investment Managers report Market Commentary The stock market rally continued through the autumn and into the New Year, driven higher in part by a belief that monetary policy would remain unchanged for an extended period of time, but also by improving macro data and strong corporate results. However, the New Year brought a renewed focus on the fiscal imbalances that remain in place: notably the very large levels of public debt, high deficits and the potential for one or more Sovereign defaults.  Recent measures put in place by the ECB have averted a potential default in the short-term, but there remain concerns that the accompanying austerity packages will depress the outlook for growth within the Eurozone region. The FTSE All-Share gained 10.5% in the six months to 31 March 2010, although as I write it sits below its closing price on 30 September 2009 level.  Of more direct relevance, FTSE AIM All-Share was +8.8% whilst the FTSE UK Small Cap (Ex Inv Trust) was -7.1%. Both these indices have also suffered falls since 31 March 2010. Portfolio Performance The NAV was almost unchanged in the first half, a mildly disappointing result in our opinion. We suffered some mixed results within both the qualifying and non-qualifying elements of the portfolio that broadly offset one another. Major successes included Abcam and Animalcare: both companies continue to trade well.  The biggest disappointment was Cohort, our largest holding at the year end, which announced the discovery of some accounting irregularities in one of its divisions. The revisions resulted in a restatement of their prior year accounts and reduced expectations for the current trading. The company moved quickly to address the situation and has since announced several large contract wins with a combined value of £60m giving the company its largest ever visible order book. There has been a partial recovery in the share price and we remain confident that the company will make further progress. FDM was subject to a successful MBO and MAMA Group was acquired by HMV.  Both deals were above the price paid and a profit was realised in the period.  At the other end of the spectrum, St Helen's Capital was also acquired by Whim Gully Capital at a loss whilst Hexagon and Relax fell into administration. The net effect was broadly neutral for the period. The non-qualifying equity allocation delivered realised gains of 0.49p per share and remains a key part of our strategy to generate distributable reserves. Portfolio Structure By market value, the fund has 59% of its assets invested in qualifying equities, with another 9% in non-qualifying equities. Our fixed income weighting remained fairly static at 26%. Cash was unchanged at 6%. Buybacks 1,064,606 shares were bought back in the six months to 31 March 2010. The average price paid was 57.36p per share. Investment Test At 79.5% invested (as measured using HMRC's methodology), the VCT remains comfortably above the 70% investment test threshold, allowing us a greater level of flexibility in our approach to the qualifying portfolio.  We made three qualifying investments in the period in Egdon Resources, Mexican Grill and Reneuron Group. Hargreave Hale Limited 28 May 2010 Income Statement for the six month period to 31 March 2010 (unaudited)                                                 For the six month period to                                                 31 March 2010 (unaudited)                                         Revenue    Capital       Total                                             000        000         000 Realised gains on investments                 -       (762)       (762) Unrealised losses on investments              -        811         811 Income                                      152          -         152                                         -------- ----------    --------                                             152         49         201 Management fee                              (18)       (56)        (74) Other expenses                             (176)         -        (176)                                         -------- ----------    --------                                            (194)       (56)       (250)                                         --------   --------    -------- Profit (loss) before taxation               (42)        (7)        (49) Taxation                                      -          -           -                                         --------   --------    -------- Profit (loss) after taxation                (42)        (7)        (49)                                         --------   --------    -------- Earnings (loss) per share (Note 2)        (0.16)p    (0.02)p     (0.18)p The total column of this statement is the income statement of the Company. All revenue and capital items in the above statement derive from continuing operations. Income Statement for the six month period to 31 March 2009(unaudited)                                                 For the six month period to                                                  31 March 2009 (unaudited)                                         Revenue    Capital        Total                                             000        000         000 Realised gains on investments                       (1,595)     (1,595) Unrealised gains on investments               -       (691)       (691) Income                                      216          -         216                                         --------   --------    --------                                             216     (2,286)     (2,070) Management fee                              (21)       (62)        (83) Other expenses                             (177)         -        (177)                                         --------   --------    --------                                            (198)       (62)       (260)                                         --------   --------    -------- Profit before taxation                       18     (2,348)     (2,330) Taxation                                      -          -           -                                         --------   --------    -------- Profit after taxation                        18     (2,348)     (2,330)                                         --------   --------    -------- Earnings per share (Note 2)                0.06p     (7.28)p     (7.22)p The total column of this statement is the income statement of the Company. All revenue and capital items in the above statement derive from continuing operations. Balance sheet as at 31 March 2010 (unaudited)                                                   31 March       31 March                                                   2010           2009                                                   (unaudited)    (unaudited)                                                        000             000 Fixed assets Investments                                         15,629          13,033                                                    --------        -------- Current assets Prepayments and accrued income                          58              44 Cash at bank and on deposit                          1,079           5,635                                                    --------        --------                                                      1,137           5,679 Creditors: amounts falling due within one year Accruals and deferred income                          (193)            (71)                                                    --------        -------- Net current assets                                     944           5,608                                                    --------        -------- Net assets                                          16,573          18,641                                                    --------        -------- Capital and Reserves Called up share capital                                286             322 Capital redemption reserve                             756             718 Capital reserve - realised                          (4,552)         (1,939) Capital reserve - unrealised                        (2,323)         (6,351) Special reserve                                     22,281          25,614 Revenue reserve                                        125             277                                                     -------         ------- Equity shareholders' funds                          16,573          18,641                                                     -------         ------- Net asset value per share (Note 4)                   64.06p          57.91p Cash flow statement for the six month period to 31 March 2010 (unaudited)                                                       2009            2008                                                        000             000 (Loss) profit before taxation                          (42)             18 Management fee charged to capital                      (56)            (62) Decrease (increase) in debtors                          37             112 Increase (decrease) in creditors                        66             (10)                                                     -------         ------- Net cash inflow from operating                           5              58 activities Financial investment: Purchase of investments                             (2,274)         (7,592) Sale of investments                                  2,772          12,967                                                     -------        -------- Net financial investment                               498           5,375 Dividends paid                                           0            (322) Cash inflow before management of liquid resources                                              503           5,111                                                     -------        -------- Financing Purchase of shares for cancellation                   (611)            (85) Proceeds from issue of shares                          127               0                                                     -------        -------- Net financing                                         (484)            (85)                                                     -------        -------- Increase/(decrease) in cash                             19          (5,026)                                                     -------        -------- Reconciliation of movements in shareholders' funds for the six month period to 31 March 2010 (unaudited)                         Share   Capital    Capital  Special  Revenue    Capital                       Capital   Reserve    Reserve  Reserve  Reserve Redemption                                Realised Unrealised                      Reserve                           000       000        000      000      000        000 At beginning of period    294    (3,735)    (3,134)  22,765      167        745 Realised gains on           -      (762)         -        -        -          - investments Unrealised gains on         -         -        811        -        -          - investments Management fee charged      -       (56)         -        -        -          - to capital Equity dividends paid       -         -          -        -        -          - Shares repurchased for    (11)        -          -     (611)       -         11 cancellation Proceeds from               2         -          -      126        -          - issue of shares Profit after taxation       -         -          -        -      (42)         - for the period          ------   -------   -------  ------- --------    ------- At end of period          285     (4,553)   (2,323)  22,280      125        756                         ------   -------   -------  ------- --------    ------- Reconciliation of movements in shareholders' funds for the six month period to 31 March 2009 (unaudited)                         Share   Capital     Capital  Special  Revenue   Capital                       Capital   Reserve     Reserve  Reserve  Reserve Redemtion                                Realised  Unrealised                     Reserve                           000       000         000      000      000       000 At beginning of period    989        40      (5,660)  25,699      259        51 Conversion of C shares   (666)        -           -        -        -       666 Realised gains on           -    (1,595)      1,838        -        -         - investments Unrealised gains on         -         -      (2,529)       -        -         - investments Management fee              -       (62)          -        -        -         - charged to capital Equity dividends paid       -      (322)          -        -        -         - Shares repurchased for     (1)        -           -      (85)       -         1 cancellation Proceeds from               -         -           -        -        -         - issue of shares Profit after taxation       -         -           -        -       18         - for the period         ------    ------      ------   ------- --------   ------- At end of period          322    (1,939)     (6,351)  25,614      277       718                        ------    ------      ------   ------- --------   ------- Notes to the interim report 1    The accounts of the company are prepared in accordance with Accounting Standards applicable in the United Kingdom. The accounting policies used in preparing this report are consistent with those to be adopted at the year end. All AIM investments are valued at bid price. 2    The loss per ordinary share of 0.18p is based on the losses after tax for the period of 49,094 and the weighted average number of ordinary shares in issue over the period of 26,180,890. 3    The results should not be taken as a guide to the results for the financial period ending 30 September 2010. 4    The net asset value per ordinary share at 31 March 2010 of 64.06p is based on net assets of 16,572,770 and on 25,870,079 shares, being the number of ordinary shares in issue as at 31 March 2010. 5    The financial information contained in the 31 March 2010 income statement, balance sheet, cash flow statement and reconciliation of movements in shareholders' funds does not constitute full financial statements and has not been audited. Investment portfolio summary as at 31 March 2010 Qualifying investments        Book cost           Valuation         Valuation                                     000                 000                 % Abcam Plc                           167               1,229               7.9 Advanced Computer Software          400                 918               5.9 Intercede Group                     518                 659               4.2 Animal Care                         300                 655               4.2 Cohort Plc                          800                 553               3.5 Brulines Holdings                   510                 518               3.3 Pressure Technologies               340                 487               3.1 Craneware                           150                 453               2.9 K3 Business Tech                    270                 378               2.4 Vertu Motors                        600                 350               2.2 Mount Engineering                   400                 343               2.2 Rotala                              400                 307               2.0 Keycom                              300                 263               1.7 CBG Group                           534                 238               1.5 I-Dox                               150                 230               1.5 Mexican Grill A Pref                185                 185               1.2 Egdon Resources                     158                 170               1.1 Chime                               220                 156               1.0 Neutra Health Plc                   315                 142               0.9 Universe Group                      385                 137               0.9 Maxima Holdings                     251                 134               0.9 Infrastrata                          46                 126               0.8 Legion Group                        250                 125               0.8 Reneuron Group                      238                 102               0.6 Feedback                            201                 101               0.6 Autoclenz Holdings                  256                  96               0.6 Tangent Communications              300                  92               0.6 Energetix Group                     380                  92               0.6 Advanced Power Components           148                  82               0.5 Expansys                            331                  76               0.5 Plastics Capital                    250                  70               0.4 Jelf Group                          174                  64               0.4 Innovisdion research & Technology   174                  56               0.4 Tasty Plc                           288                  51               0.3 Progressive Digital                 173                  44               0.3 Richoux                             300                  42               0.3 Invocas Group                       169                  23               0.1 Infoserve Group                     200                  22               0.1 Mexican Grill                        20                  20               0.1 Hardide                             396                  13               0.1 Enfis Group                         146                  10               0.1 Sports Media Group                  300                  10               0.1 Invu                                200                   4               0.0                                --------            --------          -------- Total qualifying investments     12,293               9,826              62.8 Non-qualifying investments Anglo Pacific                       159                 180               1.2 BP                                  147                 156               1.0 Legion Group                        162                 148               1.0 IMI                                 107                 132               0.8 Cape                                126                 114               0.7 Westhouse                           110                 100               0.6 Cove Energy                          36                  95               0.6 EMIS                                 82                  95               0.6 Optare                              140                  90               0.6 Sainsbury                            85                  82               0.5 TT Electronics                       70                  75               0.5 Lookers                              62                  57               0.4 Clerkenwell Ventures                 47                  38               0.2 Advanced Medical                     33                  36               0.2 Alliance Pharma                      26                  33               0.2 Craneware                             8                  10               0.1 Abcam                                 8                   9               0.1 Animal Care                           2                   2               0.0 Advanced Computer Software            2                   2               0.0 Vertu Motors                          3                   1               0.0 Tasty Plc                             2                   0               0.0 Enfis Group                           0                   0               0.0                                --------            --------          -------- Non-qualifying equity investments 1,417               1,455               9.3 Treasury 2.25% 2014               1,467               1,499               9.6 Treasury 2.5% 2016                  491                 529               3.4                                --------            --------          -------- Total UK Gilts                    1,958               2,028              13.0                                --------             -------          -------- Lloyds TSB 4% 2011                1,024               1,041               6.7 Nationwide BS 3.75% 2011          1,018               1,036               6.6 Nationwide BS 7.971% 2049           242                 243               1.6                                --------            --------          -------- Total UK Corporate Bonds          2,284               2,320              14.9                                --------             -------          -------- Total non-qualifying investments  5,659               5,802              37.2                                --------             -------          -------- Total investments                17,952              15,629             100.0                                --------            --------          -------- Qualifying investments The top ten qualifying investments are listed below. Abcam plc                                                                1229p ----------------------------------------------------------------------------- Investment date    October 2005 Unaudited results 6 months to    December 2009 Equity held        0.28%        Turnover ('000)                         31,807 Purchase Price     167p         Profit before tax ('000)                11,187 Cost ('000)        167          Net assets ('000)                       45,592 Valuation ('000)   1,229 Abcam is a producer and distributor of research-grade antibodies headquartered in Cambridge, UK, with offices in Cambridge, Massachusetts, USA and Tokyo, Japan.  The Company produces and distributes its own and third party produced antibodies to academic and commercial users throughout the world.  Product ordering is available through the Company's website where customers are also able to access up-to-date and detailed technical product data sheets. All the antibodies are sold under the Abcam brand name and the Company's vision is to build the world's largest online resource of high quality and commercially viable antibodies. Advanced Computer Software plc                                             39p ----------------------------------------------------------------------------- Investment date    May 2008     Unaudited results for 6 months to  August 2009 Equity held        0.66%        Turnover ('000)                         11,017 Purchase Price     17p          Profit before tax ('000)                 1,944 Cost ('000)        400          Net assets ('000)                       75,485 Valuation ('000)     918 Advanced Computer Software is a provider of software and IT services to the primary care sector.  ACS occupies a strategically important niche in the IT framework of the NHS, from which it intends to expand through a strategy of product innovation, selective acquisitions and/or technical collaboration. Intercede plc                                                              42p ----------------------------------------------------------------------------- Investment date    May 2007     Unaudited results 6 months to   September 2009 Equity held        3.26%        Turnover ('000)                          2,811 Purchase Price     33p          Profit before tax ('000)                    85 Cost ('000)        518          Net assets ('000)                        2,731 Valuation ('000)   659 Intercede is an international developer and supplier of software for identity and credential management. This software is branded as the Intercede MyID® Identity and Credential Management System. MyID is a commercial-off-the-shelf product that Intercede has licensed the use of to governments, public authorities and companies around the world to improve the level of identity assurance of their citizens and employees. Animalcare plc                                                            120p ----------------------------------------------------------------------------- Investment date    December 2007 Unaudited results 6 months to    October 2009 Equity held        2.73%         Turnover ('000)                         8,933 Purchase Price     55p           Profit before tax ('000)                  804 Cost ('000)        300           Net assets ('000)                      15,557 Valuation ('000)   655 Animalcare Group plc operates as two divisions, Companion Animal and Livestock. The Companion Animal division is focused on the supply of companion animal medicines, identification and welfare products to veterinary practices in the United Kingdom and the Republic of Ireland, and to distributors in the main EU markets. The Livestock division is focused on the supply of livestock identification and welfare products to agricultural retailers and farmers in the United Kingdom and the Republic of Ireland. Cohort plc                                                               90p ----------------------------------------------------------------------------- Investment date    February 2006 Unaudited results 6 months to    October 2009 Equity held        1.51%         Turnover ('000)                        37,283 Purchase Price     123p          Profit before tax ('000)                1,203 Cost ('000)        800           Net assets ('000)                      45,795 Valuation ('000)   553 Cohort is an independent technology business operating in defense and related markets.  It was formed in 2006 as a holding company to acquire and grow businesses capitalising on the growing demand in the UK and overseas for independent technical advice and cost effective and flexible supply of niche products and services.  It now has three well established, wholly owned subsidiaries providing a wide range of services and products covering the full defense procurement cycle in land, sea and air systems. Brulines plc                                                              125p ----------------------------------------------------------------------------- Investment date    October 2006 Unaudited results 6 months to   September 2009 Equity held        1.48%           Turnover ('000)                        9,895 Purchase Price     123p            Profit before tax ('000)               1,895 Cost ('000)        510            Net assets ('000)                     20,119 Valuation ('000)   518 Brulines is a leading provider of volume and revenue protection systems for draught alcoholic drinks for the UK Licensed on-trade, in particular the tenanted pub sector.  The Dispense Monitoring Division, which represents the Group's core product, measures the actual volume of liquid dispensed each hour against legitimate deliveries and protects the pub owners from the potential loss of revenue from 'buying out'.  A more recent product offering is i-Draught, which scrutinizes the quality as well as the quantity of product being dispensed.  Through acquisition Brulines has built up a range of additional services to meet the needs of the industry's vending and gaming machines.  It also provides services to the petrol forecourt market. Pressure Technologies plc                                                 215p ----------------------------------------------------------------------------- Investment date    May 2007     Audited results for 53 weeks to 3 October 2009 Equity held        2.00%        Turnover ('000)                         26,186 Purchase Price     150p         Profit before tax ('000)                 5,053 Cost ('000)        340          Net assets ('000)                       14,114 Valuation ('000)     487 Pressure Technologies is the holding company for Chesterfield Special Cylinders ("CSC") and Chesterfield BioGas. CSC designs, manufactures and offers retesting and refurbishment services for a range of specialty high pressure, seamless steel gas cylinders for global energy and defense markets. Chesterfield BioGas, formed in November 2008 following the signing of a co-operation agreement with Greenlane® Biogas Limited, gives Pressure Technologies exclusive rights to market Greenlane® equipment in the UK and Eire. Chesterfield BioGas will provide turnkey solutions for the cleaning, storage and dispensing of biomethane, produced from waste water treatment and anaerobic digestion of organic waste. Craneware                                                                 387p ----------------------------------------------------------------------------- Investment date    September 2007 Unaudited results 6 months to  December 2009 Equity held        0.47%          Turnover ($'000)                      13,256 Purchase Price     128p          Profit before tax ($'000)              3,300 Cost ('000)        150            Net assets ($'000)                    20,272 Valuation ('000)   453 Craneware provides proprietary revenue cycle management software solutions for the US healthcare provider market. The Group's main product, Chargemaster Toolkit(TM) ("CMT"), assists US healthcare providers in reducing billing errors, ensuring accurate submission of claims and managing compliance risk. CMT is designed to help hospital finance departments maintain accurate and up-to-date information, increase operational efficiency and increase reimbursement related to outpatient items. Craneware was founded in 1999 and currently maintains its corporate headquarters in Livingston, Scotland, with offices in Florida, Arizona and Kansas. K3 Business technology Group                                              126p ----------------------------------------------------------------------------- Investment date    September 2005Unaudited results 6 months to       June 2009 Equity held        1.17%         Turnover ('000)                        15,941 Purchase Price     90p           Profit before tax ('000)                  131 Cost ('000)        270           Net assets ('000)                      26,984 Valuation ('000)   378 K3 supplies and installs Microsoft based enterprise resource planning software solutions for the supply chain around the world. The company focuses on the retail, manufacturing and distribution markets. Vertu Motors                                                               35p ----------------------------------------------------------------------------- Investment date    December 2006 Unaudited results 6 months to     August 2009 Equity held        0.51%         Turnover ('000)                       401,345 Purchase Price     60p           Profit before tax ('000)                5,053 Cost ('000)        600           Net assets ('000)                      87,131 Valuation ('000)   350 Vertu Motors was formed in late 2006 to acquire and consolidate UK motor retail businesses. In March 2007 the Group acquired the UK's 13th largest motor retailer, Bristol Street Motors. With the addition of further acquisitions, Vertu Motors is now the 9th largest motor retailer in the UK. The Company continues to seek to acquire businesses with the potential for performance improvements and which may contain freehold property portfolios. The Directors envisage that performance improvement opportunities will arise in acquired dealerships from increasing sales in new and used cars and after-sales services. Further profit enhancements will be sought through the possible development and maximisation of channels to market, such as the internet, sub-prime finance, contract hire and fleet operations. 28 May 2010 For further information please contact: Stuart Brookes Company Secretary Hargreave Hale AIM VCT 1 plc 0207 009 4900 [HUG#1419805]

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