Hargreave Hale AIM VCT 1 plc : Annual Financial...
Hargreave Hale AIM VCT 1 plc announced its results for the year ended 30 September 2011 on 22 September 2011. The full Financial Statements can be accessed on the Company's website http://www.hargreave-hale.co.uk/fund-management/venture-capital-trusts/hargreave-hale-aim-vct-1/factsheets-and-reports/ or alternatively by following the link at the bottom of this report.
FINANCIAL HIGHLIGHTS
| Ordinary Shares (as at 30 September): | 2011 | 2010 |
| Net asset value per share | 61.14p | 62.67p |
| Cumulative distributions paid per share since launch | 23.0p | 19.00p |
| Total return | 84.14p | 81.67p |
| Discount to Net Asset Value (based on bid-market price at balance sheet date) | 13.3% | 15.0% |
| Annual Returns per share: | ||
| Revenue return | (0.25)p | 0.07p |
| Capital return | 2.31p | 0.21p |
| Combined Return | 2.06p | 0.28p |
| Dividends per share: | ||
| Interim paid | 2.0p | 2.0p |
| Final proposed | 2.0p | 2.0p |
| Total dividend for year | 4.0p | 4.0p |
| Performance Benchmark: | ||
| Total Return | 88.6% | 86.0% |
| FTSE AIM All-share Index | 72.7% | 81.2% |
| (results rebased to 100 at 29 October 2004) | ||
| The Glossary of Terms can be found on page 39 of the report. |
CHAIRMAN'S STATEMENT
Introduction
At 30 September 2011 the NAV was 61.14 pence which after adding back the dividends paid gives a total return since inception of 84.14 pence. The gain per ordinary share for the year was 2.06 pence per share (comprising revenue loss of (0.25) pence and capital gains of 2.31 pence).
Investments
The Investment Manager, Hargreave Hale Limited, invested a further £2.15 million in 12 qualifying companies during the year and 1 company went into administration realising a net loss of £0.3 million. The Fair Value of qualifying investments at 30 September 2011 was £11.3 million invested in 40 AIM companies and 3 unquoted companies. £5.05 million was held in a mix of cash, fixed income and other non-qualifying equities; more detail can be found in the Investment Manager's Report on page 7.
Dividend
An interim dividend of 2 pence was paid on 14 July 2011 (2010 - 2 pence).
A final dividend of 2 pence is proposed (2010 - 2 pence) which, subject to shareholder approval at the AGM will be paid on 23 January 2012, to ordinary shareholders on the register on 30 December 2011.
The directors have maintained a dividend policy of at least 5 per cent. 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, 1,256,460 Shares were purchased during the year at an average price of 60.19 pence per share.
Continuation Vote
At the forthcoming General Meeting a vote will be put to shareholders to decide whether or not to continue as a VCT. As referred to above we have been able to honour our intention at the outset to buy back shares from shareholders at a 10 per cent. discount. I believe all shareholders who so wished have been able to exit. If we wound up the fund it is unlikely that after all of the costs involved we would achieve a better result than this. Furthermore, in the current market the shares in our portfolio companies are significantly depressed and in most cases very illiquid. Therefore your board recommends that you vote in favour of the Continuation as they will be doing with their own shares (114,163 representing 0.43 per cent. of the Company)
New Joint Offer for Subscription of Ordinary Shares
On the 9 March 2011 a new joint offer for subscription of Ordinary Shares was opened to raise up to approximately £2.65 million, in aggregate, in New Ordinary Shares for Hargreave Hale AIM VCT 1 plc and Hargreave Hale AIM VCT 2 plc. The Offer has resulted in funds being received of £0.37 million and 0.54 million shares have been issued in respect of Hargreave Hale AIM VCT 1 plc. The offer closed on the 29 July 2011.
VCT Status
To maintain its VCT qualifying status we must invest at least 70 per cent. of the net funds raised in any one accounting period in qualifying investments within three years. At the yearend we have achieved 86.34 per cent. and have satisfied all the relevant tests.
Outlook
The major contributor to the recession of the 1930's was the collapse of banks which had a domino effect on other banks and the reduced supply of money massively slowed up the economy. If a major bank in Europe which are today considerably larger and have a much greater market share were allowed to default the knock on effect around the globe is too awful to contemplate.
It is clear in that certain countries, of which Greece is the prime example, are insolvent. Whilst strenuous efforts are being made to stop Greece defaulting there are good reasons to believe that at least in the medium term this will not succeed. However a great number of banks have massive exposure to sovereign debt and will need to be supported by their governments, always assuming they are able to raise money. In the face of this prospect almost all banks are trying to reduce their levels of gearing either by raising more money which few are able to achieve or by reducing the size of their loan books. The effect of this is a slowing of economic growth.
The longer the European Union takes to make strong and effective action the closer Europe moves towards financial meltdown. Stock Markets reflect investor confidence which is affected by many influences. At the present time there are some huge uncertainties about sovereign and bank debt in Europe and the effect that that this will have on the Euro and this is causing a lack of investor confidence and a flight to perceived quality which hits the AIM market hardest.
Despite the extreme negative economic outlook, we believe that we have a well balanced mature portfolio of well funded companies which are well positioned to weather any further economic disruption. The Company maintains 25 per cent. of its NAV in cash or fixed income which may be used to exploit interesting investment opportunities which may arise out of economic adversity.
Sir Aubrey Brocklebank
Chairman
Date: 21 November 2011
For further information, please contact:-
Stuart Brookes
Company Secretary
Hargreave Hale AIM VCT 1 Plc
01253 754740
Annual Report and Accounts - Year ended September 2011
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.
Source: Hargreave Hale AIM VCT 1 plc via Thomson Reuters ONE
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