Hargreave Hale AIM VCT 1 plc : Interim Manageme...

HARGREAVE HALE AIM VCT 1 PLC

Interim Management Statement

This statement covers the period from 1 October 2011 to the date of the release of the statement on 13 February 2012.

Trading Statement (Quarter to 31 December 2011)

The NAV remained almost unchanged in the first quarter of the financial year, closing at 61.1p on 31 December 2011; a satisfactory result given the uncertainty that swept across the markets, most notably in early December.  The launch of the ECB's 3 year €489bn liquidity operation on 8 December 2011 relieved the pressure on the European financials and, by extension, the peripheral sovereigns.  Confidence returned and risk assets rallied through the second half of December and into January. The major indices were the first to benefit but the lift in sentiment has since filtered through to the small caps.

As at 31 December 2011, the total return for investors in the 2004/5 Ordinary Share issue stood unchanged at 84.1p, whilst for those who invested through the 2005/6 Convertible Share issue, the total return remained unchanged at 90.1p.

Having tailed off in August, qualifying issuance remained fairly subdued as we moved through autumn and into winter.  We continued to make a few selective qualifying investments and added Porta Communications (marketing and communications), TLA Worldwide (US baseball agency) and Sphere Medical (medical monitoring equipment). The VCT is comfortably through the HMRC defined investment test and ended the period at 91% invested according to the HMRC investment test through 45 qualifying investments.  

Net realised and unrealised gains in the qualifying investments totalled -0.13 pence per share. Performance was mixed with 17 out of the 45 investments increasing in value, 19 losing ground and 9 remaining flat.  Advanced Computer Software's shares gained 16% and added 0.58 pence to the NAV per share after a large seller was cleared out and the company made a string of positive announcements:  strong interims, a significantly strengthened Balance Sheet and a 10-year, £17m contract win.  Mexican Grill added 0.29 pence to the NAV per share after Quilvest invested £3.5m at a 37% premium to our entry price. Quilvest is a large global private equity firm and owner of the Yo! Sushi chain of restaurants. The additional capital and strengthened management team leaves Mexican Grill well positioned to continue with its expansion plans.  Cohort gained 14% and added 0.28 pence to the NAV per share after news of some large contract wins and strong interims confirmed the company continues to recover.

The news from Craneware was less encouraging, with a poorly received trading update triggering a raft of earnings downgrades from sell-side analysts. The shares, which had been weak in the lead up to the January update, suffered substantial falls and now sit 40% off their highs. Porta Communications has got off to a poor start since listing.  EKF shares have also swung around, although a strong year-end trading update has since lifted the price.

Trading in non-qualifying equity investments picked up slightly with a net realised gain of £51k. The allocation to non-qualifying equity investments remained flat at around 4.4% (4.5% previously). Our cash position decreased further from £1.2m to £0.8m (7.4% to 5.1%) due to additional investment into the portfolio of qualifying investments. Fixed income exposure declined from £3.1m (19.1%) to £2.4m (14.8%) as Nationwide 3.75% bond reached maturity in November and a smaller investment in Petrobras 6.25% December 2026 was made.

Post Period Update

On 6 February 2012, the Directors announced their intention to raise £5m through an offer for subscription of new Ordinary Shares through a Tender Offer and Enhanced Share Buy Back and a further £10m through a C Share Offer.

The NAV declined from 61.1p per share on 31 December 2011 to 60.5p per share on 3 February 2012.  Adjusting for the 2p dividend paid on 23 January 2012, the fund returned 2.3% in the period.

Purchase of Ordinary Shares

October

187,717 ordinary shares were bought back for cancellation during October at a cost of £103,215.

November

15,000 ordinary shares were bought back for cancellation during November at a cost of £8,327.

December

178,490 ordinary shares were bought back for cancellation during December at a cost of £98,303.

As at 31 December 2011, there were 26,170,711 ordinary shares of 1p in issue (excluding shares held as treasury shares).

For further information please contact:

Stuart Brookes

Company Secretary

Hargreave Hale AIM VCT1 plc

01253 754740

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Source: Hargreave Hale AIM VCT 1 plc via Thomson Reuters ONE

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