TIDMHHVT
Hargreave Hale AIM VCT 2 Plc
Unaudited Interim Results for the six month period ending 31 August 2017
FINANCIAL HIGHLIGHTS
31 31 28
August August February
Ordinary Shares (as at 31 August): 2017 2016 2017*
Net asset value per share 115.47p 104.58p 109.86p
Cumulative distributions paid per share since launch 53.00p 47.00p 49.00p
Total return per share 168.47p 151.58p 158.86p
Half Yearly/Annual Returns per share (basic and
diluted):
Revenue return (0.18)p (0.09)p (0.43)p
Capital return 9.75p 7.04p 14.97p
Combined return 9.57p 6.95p 14.54p
Dividends per share:
Interim proposed/paid 2.00p 2.00p 2.00p
Final paid 4.00p 4.00p 4.00p
Ongoing expense ratio** 2.10% 2.09% 1.82%
Performance Benchmark:
FTSE AIM All-share Index (rebased to 100 at 6 April
2007) 87.34 68.38 78.38
* 28 February 2017 financial highlights represent annual results
** Calculated as total expenses (annualised for half yearly results)
minus ad hoc legal costs, divided by period end net assets
INVESTMENT OBJECTIVE
The objective of the VCT is to achieve long term capital growth and to
maximise tax free distributions to shareholders by investing in a
diversified portfolio of small UK companies primarily traded on AIM. At
least 70% of the Company's funds must be invested in qualifying holdings
within three years of raising the funds. The balance of the Company's
funds will be invested in liquid assets (such as fixed income securities
and bank deposits) and non-qualifying equity investments on an
opportunistic basis. The Company is managed as a Venture Capital Trust
in order that shareholders in the Company may benefit from the tax
relief available.
CHAIRMAN'S STATEMENT
INTRODUCTION
In the first half of the financial year the Net Asset Value per share
(NAV) increased from 109.86 pence to 115.47 pence equivalent to an
increase of 8.7% after adding back the 4 pence dividend distributed in
July 2017. During the same period the FTSE 100 Total Return Index gained
4.7% and the FTSE AIM All Share Total Return Index gained 12.2%.
RESULTS
The gain per share for the period was 9.57 pence per share (comprising
revenue losses of 0.18 pence and capital gains of 9.75 pence). At 31
August 2017 the total return since inception was 168.47 pence.
INVESTMENTS
The investment manager, Hargreave Hale Limited, invested a further
GBP4.37 million in 12 qualifying companies during the period. The fair
value of qualifying investments at 31 August 2017 was GBP26.52 million
invested in 58 AIM companies and 10 private companies. The balance of
the funds was held in a mix of cash, fixed income and other
non-qualifying equities.
At 31 August 2017 the VCT was 89.3% invested in qualifying companies
calculated in accordance with HMRC guidelines.
DIVID
A final dividend for the year ended 28 February 2017 of 4 pence was paid
on 25 July 2017.
The Directors continue to maintain their policy of targeting a tax free
dividend yield equivalent to 5% of the year end NAV. An interim dividend
of 2 pence (2016 - 2p) will be paid on 1 December 2017, with an
ex-dividend date of 9 November 2017 and a record date of 10 November
2017.
BUYBACKS
We have been able to maintain our policy of offering our shareholders an
efficient exit route through the buyback scheme. In total, 430,945
shares were repurchased during the six month period ending 31 August
2017 at a weighted average price of 109.28 pence per share. Since the
period end a further 75,978 shares have been purchased at a cost of
GBP85,845.
The Board continues to target a share price discount of 5% of the NAV
per share (as measured against the mid-price) for market purchases. It
should be emphasised that this target is non-binding and dependent on
circumstances including the Company's liquidity from time to time and
market conditions.
JOINT OFFER FOR SUBSCRIPTION
The Directors of the Company announced on 14 December 2016 the launch of
a joint offer for subscription for shares in both Hargreave Hale AIM
VCTs to raise up to GBP10 million in Hargreave Hale AIM VCT 1 plc and up
to GBP10 million in the Company. The offer was approved by shareholders
of the Company at a general meeting on 12 January 2017 and was open to
both new and existing shareholders.
The offer was fully subscribed and resulted in gross funds being
received of GBP10 million and the issue of 8.96 million new shares in
the Company.
On 18 September 2017 the Company announced its intention to re-open the
Offer by making the Over-Allotment facility available and increasing the
facility from GBP5 million to GBP7.5 million. A Supplementary Prospectus
was published on 2 October 2017 as increasing the offer amount
constitutes a significant event under the Prospectus Rules.
The Offer will close on 17 November 2017 unless fully subscribed before
then.
AUDIT TER
As announced in the annual report and accounts for the year ended 28
February 2017 mandatory audit tendering legislation states that the
maximum period for which a firm can be appointed auditor of a public
listed entity is 10 years. BDO LLP were approaching the maximum term
permitted and as such an audit tender has been completed.
The process was led by the Audit Committee who invited several firms to
participate in the tender process. Companies were chosen based on their
reputation or by recommendation/personal experience and where it was
known they had specific knowledge and experience of VCT/investment trust
auditing.
The Committee documented the Company's objectives and agreed on a
selection criteria and scorecard to enable them to assess each applicant
on a fair basis. Proposals and presentations were reviewed by the
committee and a recommendation made to the Board.
I am pleased to announce that the Board agreed BDO LLP were the
strongest candidate and re-appointed them as statutory auditor for the
Company.
OUTLOOK
The progress we have made in recent months in identifying and increasing
our investment in the qualifying portfolio has encouraged us to re-open
our December 2016 share offer. In particular, we have completed
investments in a number of early stage private companies, many of whom
have exciting and 'disruptive' business plans. The potential of some of
these is considerable but we recognise their higher risk profiles and
illiquidity and will proceed cautiously with this part of the fund.
Given the ever increasing uncertainty with domestic politics we are a
little surprised at how benign equity markets have been over recent
months and, as our fund manager states in his report, 'we remain
cautious'. Nonetheless, as long term investors we will continue to build
our qualifying portfolio when the right opportunities present
themselves.
DAVID HURST-BROWN
Chairman
Date: 19 October 2017
INVESTMENT MANAGER'S REPORT
This report covers the first half of the financial year, 1 March 2017 to
31 August 2017. The manager's report contains references to movements in
the Net Asset Value (NAV) per share and Total Return per share (NAV per
share plus distributed earnings per share). Movements in the NAV per
share do not necessarily mirror the earnings per share (EPS) reported in
the accounts and elsewhere, which convey the profit after tax within the
company within the reported period as a function of the weighted average
number of shares in issue for the period.
INVESTMENT REPORT
The period under review has been generally positive with global equity
markets advancing off the back of strong corporate earnings and
encouraging economic data. In contrast, the FTSE 100 was volatile over
the period and ended flat as investors grappled with the implications of
the election result for Sterling, for inflation and for Government
policy in several areas, most obviously our path out of the European
Union. That aside, small and mid-caps continued to make ground as robust
corporate news flow helped feed investors' appetite for growth companies
with large and global addressable markets, which in turn fed through to
some strong performance in the junior indices.
As we look towards the second half of the financial year we remain
cautious given the potential headwinds approaching. UK inflation has
risen to 3% and the Bank of England has insinuated that a rate rise is
possible this year. The potential impact on consumer spending and
corporate investment is unknown but potentially negative. We have
witnessed weaker trading from several 'high street' brands, particularly
in retail and casual dining, as companies struggle to manage margin
pressure (input price inflation, higher business rates and the living
wage) against the backdrop of an increasingly cautious consumer. In
parallel, the UK government continues to try and navigate a way out of
the EU. We still feel it is too early to know the impact (if any) of
Brexit on our portfolio; that seems unlikely to change in the short
term. By and large we have left the portfolio of qualifying and
non-qualifying investments untouched. While we are cautious of certain
sectors, consumer discretionary for example, we continue to find
interesting investment opportunities in qualifying companies that we
believe can grow regardless of the outcome. To that end, we intend to
continue with business as usual while keeping a close eye on events as
they unfold and, perhaps, reducing at the margin some of our
non-qualifying equity risk.
Performance was good in the six months to 31 August 2017 with the NAV
increasing from 109.86p to 115.47p and the payment of a 4 pence per
share dividend. The total return of 9.61 pence per share translates to a
gain of 8.7%. During the same period the FTSE AIM All-Share Total Return
gained 12.2%.
The qualifying investments made a net contribution of 5.54 pence per
share with the non-qualifying investments adding a further 4.83 pence
per share. The balance was a mixture of costs, income and small gains
made through share buy backs.
Zoo Digital, a recent investment, was the top performing qualifying
investment (+166.7%, +1.90 pence per share) as the shares responded to
strong revenue growth and a significantly improved balance sheet.
Gfinity also performed well (+76.7%, +0.76 pence per share) after
announcing broadcasting agreements with BT Sport and the BBC and a
partnership with Formula 1 to deliver the Formula 1 ESports Series.
Other stocks that made a significant contribution included Faron
Pharmaceuticals (+100.0%, +0.74 pence per share), Eagle Eye (+91.7%,
+0.69 pence per share) and Tristel (+79.4%, +0.60 pence per share).
The biggest loss within the period came from Portr (-30.0%, -0.75 pence
per share), which we marked to the price of a recent funding round that
saw a large UK listed company make a strategic investment into the
company. Although the new mark was lower than the prior round, it
remains above our entry price. Commercial progress has been made through
Portr's partnership with British Airways and we look forward to news of
progress with other airlines over the coming months. Other losses came
from DP Poland (-27.2%, -0.64 pence per share) following a consolidation
in the share price despite recent reports of strong trading; Science in
Sport (-14.1%, -0.28 pence per share), TLA (-50.0%, -0.26 pence per
share) and Creo Medical (-14.4%, -0.22 pence per share).
We made 12 qualifying investments over the period, which included 6
additional investments into existing qualifying companies (1 private
company), 2 IPOs, 2 secondary placings into listed companies and 2
private investments. We invested a total of GBP4.37 million into
qualifying investments over the period.
Within the qualifying portfolio, we reduced our investments in Gfinity,
Faron Pharma and Hardide following strong runs in their share prices.
We exited Electrical Geodesics, Kalibrate and Electric Word through M&A
activity and disposed of all our shares in ECSC, Haydale Graphene,
Audioboom, Directa Plus and Synairgen following prolonged periods of
poor news flow. We also sold our shares in Free Agent after a
disappointing update that hinted at potential weakness in their model.
PORTFOLIO STRUCTURE
The VCT is comfortably through the HMRC defined investment test and
ended the period at 89.3% invested as measured by the HMRC investment
test. By market value, the VCT had a 52.4% weighting to qualifying
investments.
The allocation to non-qualifying equity investments increased marginally
from 20.6% to 21.5%. We continued to make use of the Marlborough
Special Situations Fund as a temporary home for proceeds from
fundraising; the allocation increased from 12.0% to 14.8%. Fixed income
as a percentage of the fund decreased from 0.4% to 0.3% and cash fell
from 20.3% to 11.4%.
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
investment manager's report. 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.
POST PERIOD UPDATE
Deal flow has been good since period end with 4 additional qualifying
investments being made in Gfinity, Laundrapp, Faron Pharma and Angle.
There are a number of 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 2 plc
Date: 19 October 2017
INVESTMENT PORTFOLIO SUMMARY
As at 31 August 2017
Cost Valuation Valuation Net Assets
Qualifying Investments GBP000 GBP000 % % Sector
Information
Zoo Digital Group plc 501 1,333 2.96 2.63 Technology
Information
Ideagen plc 190 1,238 2.75 2.44 Technology
Information
Learning Technologies Group plc 534 1,195 2.65 2.36 Technology
Consumer
Mexican Grill Ltd (A Preference Shares)** 277 1,154 2.56 2.28 Discretionary
Consumer
Quixant plc 120 1,096 2.43 2.16 Discretionary
Consumer
SCA Investments Ltd (Gousto)** 1,002 1,000 2.22 1.97 Discretionary
Information
Eagle Eye Solutions Ltd 811 997 2.21 1.97 Technology
Consumer
DP Poland plc 574 955 2.12 1.89 Discretionary
Information
Portr Ltd** 689 770 1.71 1.52 Technology
Science in Sport plc 518 760 1.69 1.50 Consumer Staples
Information
Zappar Ltd** 701 700 1.55 1.38 Technology
Information
Gfinity plc 255 693 1.54 1.37 Technology
AnimalCare Group plc 100 687 1.53 1.36 Health Care
Consumer
Escape Hunt plc 618 658 1.46 1.30 Discretionary
Hardide plc 224 656 1.46 1.30 Materials
Tristel plc 81 591 1.31 1.17 Health Care
Creo Medical Group plc 559 565 1.25 1.12 Health Care
Fulcrum Utility Services Ltd 100 525 1.17 1.04 Utilities
Faron Pharmaceuticals Oy 201 518 1.15 1.02 Health Care
Consumer
Honest Brew Ltd** 501 500 1.11 0.99 Discretionary
Consumer
Infinity Reliance Ltd (My 1st Years)** 501 500 1.11 0.99 Discretionary
Maxcyte Inc Com Stk USD0.01 (DI) 142 487 1.08 0.96 Health Care
Information
Loopup Group plc 236 420 0.93 0.83 Technology
Information
E G Solutions plc 200 415 0.92 0.82 Technology
Information
ULS Technology plc 139 411 0.91 0.81 Technology
Information
Aquis Exchange Ltd** 401 400 0.89 0.79 Technology
Information
Laundrapp Ltd** 301 384 0.85 0.76 Technology
Information
FairFX Group plc 295 370 0.82 0.73 Technology
Information
TrakM8 Holdings plc 91 352 0.78 0.69 Technology
Information
CentralNic Group plc 207 347 0.77 0.69 Technology
Velocity Composites plc 332 331 0.74 0.65 Industrials
Clearstar Inc 360 322 0.72 0.64 Industrials
Consumer
Everyman Media Group plc 172 320 0.71 0.63 Discretionary
Surface Transforms plc 301 318 0.71 0.63 Industrials
Information
Osirium Technologies plc 301 269 0.60 0.53 Technology
Belvoir Lettings plc 335 257 0.57 0.51 Real Estate
Information
Lombard Risk Management plc 92 247 0.55 0.49 Technology
Information
Sanderson Group plc 200 240 0.53 0.47 Technology
EKF Diagnostics Holdings plc 150 235 0.52 0.46 Health Care
Plastics Capital plc 202 220 0.49 0.43 Materials
Information
WANDisco plc 53 216 0.48 0.43 Technology
Premaitha Health plc 330 190 0.42 0.37 Health Care
Omega Diagnostics Group plc 129 189 0.42 0.37 Health Care
Telecommunication
Cloudcall Group plc 234 181 0.40 0.36 Services
Telecommunication
Satellite Solutions Worldwide Group plc 103 166 0.37 0.33 Services
Paragon Entertainment Ltd 200 156 0.35 0.31 Industrials
The Property Franchise Group 113 152 0.34 0.30 Real Estate
Lidco Group plc 146 142 0.32 0.28 Health Care
Angle plc 252 142 0.31 0.28 Health Care
Reneuron Group plc 262 139 0.31 0.27 Health Care
Information
Intercede Group plc 91 135 0.30 0.27 Technology
Consumer
Mexican Grill Ltd (Ordinary Shares)** 31 128 0.28 0.25 Discretionary
Ilika plc 203 126 0.28 0.25 Industrials
Information
Imaginatik plc 215 124 0.28 0.24 Technology
Maxcyte Inc Com Stk USD0.01 (DI/REG S) 141 123 0.27 0.24 Health Care
Information
APC Technology Group plc 350 114 0.25 0.22 Technology
Consumer
TLA Worldwide plc 150 113 0.25 0.22 Discretionary
Consumer
Medaphor Group plc 251 78 0.17 0.15 Discretionary
Verona Pharma plc 71 75 0.17 0.15 Health Care
Mycelx Technologies Corporation plc (Com SHS $0.025
REG S+ shares) 150 64 0.14 0.13 Industrials
Consumer
Porta Communications plc 200 60 0.13 0.12 Discretionary
TP Group plc 125 57 0.13 0.11 Industrials
Genedrive plc 140 56 0.12 0.11 Health Care
Midatech Pharma plc 150 50 0.11 0.10 Health Care
Information
Mirada plc 95 42 0.09 0.08 Technology
Information
Fusionex International plc** 69 29 0.06 0.06 Technology
Information
Mporium Group plc 23 15 0.03 0.03 Technology
Information
Microsaic Systems plc 20 11 0.02 0.02 Technology
Flowgroup plc 54 10 0.02 0.02 Industrials
Brigantes Energy Ltd* - - - - Energy
Total Qualifying Investments 17,865 26,519 58.85 52.35
Cost Valuation Valuation Net Assets
Non-Qualifying Investments GBP000 GBP000 % % Sector
Scottish Amicable 8.5% 2049 154 159 0.35 0.31
Total - Corporate bonds 154 159 0.35 0.31
Marlborough Special Situations Fund** 5,742 7,487 16.62 14.78
Total - Unit Trusts 5,742 7,487 16.62 14.78
NMC Health plc 426 757 1.68 1.50 Health Care
Melrose Industries plc 444 682 1.51 1.35 Industrials
Royal Dutch Shell plc 582 648 1.44 1.28 Energy
Dechra Pharmaceuticals plc 461 612 1.36 1.21 Health Care
BP plc 596 579 1.28 1.14 Energy
Consumer
On the Beach Group plc 391 574 1.28 1.13 Discretionary
Anglo American plc 373 421 0.93 0.83 Materials
Sanne Group plc 292 413 0.92 0.82 Financials
Consumer
Ascential plc 326 403 0.90 0.80 Discretionary
Consumer
Merlin Entertainments plc 386 401 0.89 0.79 Discretionary
Cohort plc 176 394 0.87 0.78 Industrials
Consumer
Wizz Air Holdings plc 220 353 0.78 0.70 Discretionary
Medica Group plc 213 340 0.75 0.67 Health Care
RPC Group plc 289 296 0.66 0.59 Materials
Consumer
Hilton Food Group plc 252 291 0.65 0.57 Discretionary
XP Power Ltd 292 286 0.64 0.56 Industrials
FCFM Group Ltd** 150 283 0.63 0.56 Financials
Information
Renishaw plc 276 274 0.61 0.54 Technology
Consumer
Clipper Logistics plc 234 267 0.59 0.53 Discretionary
Consumer
JD Sports Fashion plc 274 259 0.57 0.51 Discretionary
Fulcrum Utility Services Ltd 56 256 0.57 0.50 Utilities
Lloyds Banking Group plc 285 255 0.57 0.50 Financials
Consumer
Sportech plc 209 230 0.51 0.45 Discretionary
Information
Learning Technologies Group plc 80 207 0.46 0.41 Technology
Information
Micro Focus International plc 121 196 0.44 0.39 Technology
Horizon Discovery Group plc 124 167 0.37 0.33 Health Care
Consumer
Everyman Media Group plc 85 155 0.34 0.31 Discretionary
Eurocell plc 119 135 0.30 0.27 Industrials
Finsbury Food Group plc 70 129 0.29 0.26 Consumer Staples
Information
Alfa Financial Software Holdings plc 92 128 0.29 0.25 Technology
Information
Just Eat plc 82 100 0.22 0.20 Technology
Egdon Resources plc 140 69 0.15 0.14 Energy
Information
Eagle Eye Solutions Ltd 44 64 0.14 0.13 Technology
Consumer
The Fulham Shore plc 38 57 0.13 0.11 Discretionary
Amerisur Resources plc 167 45 0.10 0.09 Energy
Midatech Pharma plc 134 44 0.10 0.09 Health Care
Regent Pacific Group Ltd 93 43 0.09 0.08 Health Care
Mycelx Technologies Corporation plc (Com SHS $0.025
+ (D1) shares) 170 40 0.09 0.08 Industrials
Reneuron Group plc 41 29 0.06 0.06 Health Care
Consumer
Mexican Grill Ltd (A Preference Shares)** 3 10 0.02 0.02 Discretionary
Genagro Ltd** 22 2 - - Industrials
Mycelx Technologies Corporation plc (Com SHS $0.025
REG S+ shares) 8 2 - - Industrials
Total - Non-Qualifying equities 8,836 10,896 24.18 21.53
Total -Non-Qualifying Investments 14,732 18,542 41.15 36.62
Total investments 32,597 45,061 100.00 88.97
Cash at bank 5,773 11.40
Prepayments & Accruals (186) (0.37)
Net Assets 50,648 100.00
* Unquoted Company holding of less than GBP500
**Unquoted Companies
The majority of investments held within the portfolio are listed and/or
headquartered in the UK with the exception of the following:
Listed Headquartered Registered
AIM listed Investments:
Clearstar Inc UK Cayman Islands Cayman Islands
DP Poland UK Poland UK
Faron Pharmaceuticals Oy UK Finland Finland
Fulcrum Utility Services Ltd UK UK Cayman Islands
Maxcyte Inc UK USA USA
Mycelx Technologies Corporation plc UK USA USA
Paragon Entertainment Ltd UK UK Cayman Islands
Regent Pacific Group Ltd Hong Kong Hong Kong Cayman Islands
Royal Dutch Shell plc UK Netherlands UK
Sanne Group plc UK Jersey Jersey
WANDisco plc UK UK and USA Jersey
Wizz Air Holdings plc UK Switzerland Jersey
XP Power Ltd UK Singapore Singapore
Unlisted private companies:
Aquis Exchange Ltd - UK UK
Brigantes Energy Ltd - UK UK
FCFM Group Ltd - UK UK
Fusionex International plc - UK Jersey
Genagro Ltd - Jersey Jersey
Honest Brew Ltd - UK UK
Infinity Reliance Ltd (My 1(st) - UK UK
Years)
Laundrapp Ltd - UK UK
Mexican Grill Ltd - UK UK
Portr Ltd - UK UK
SCA Investments Ltd (Gousto) - UK UK
Zappar Ltd - UK UK
Authorised unit trust:
Marlborough Special Situations Fund - UK UK
TOP TEN INVESTMENTS
As at 31 August 2017 (By Market Value)
The top 10 equity investments are shown below; each is valued by
reference to the bid price, or, in the case of unquoted companies,
values are either based on the last arm's length transaction or
valuation techniques, such as earnings multiples. Forecasts, where given,
are drawn from a combination of broker research and/or Bloomberg
consensus forecasts and exclude amortisation, share based payments and
exceptional items. Forecasts are in relation to a period end for which
the company results are yet to be released. The net cash values are
drawn from published accounts in most cases.
Learning Technology Group plc 47.0p
Investment date April 2014 Forecasts for the year to December 2017
Equity held 0.52% Turnover (GBP'000) 51,500
Profit/(loss) before tax
Av Purchase Price 20.6p (GBP'000) 11,300
Cost (GBP'000) 614 Net Cash (GBP'000) (8,486)
Net Assets December 2016
Valuation (GBP'000) 1,402 (GBP'000) 30,710
COMPANY DESCRIPTION
Learning Technologies Group (LTG) provides a comprehensive
and integrated range of e-learning services and technologies
to corporate and government clients. LTG is making
good progress towards its goal of establishing a substantial
global organisation of specialist digital learning
businesses from Europe, US, Latin America and Asia
to form a market-leading technologies agency.
Zoo Digital Group plc 24.0p
Investment date April 2017 Forecasts for the year to March 2018
Equity held 7.56% Turnover ($'000) 20,988
Av Purchase Price 9.0p Profit/(loss) before tax ($'000) 347
Cost (GBP'000) 501 Net Cash ($'000) (300)
Valuation (GBP'000) 1,333 Net Assets March 2017 ($'000) 2,561
COMPANY DESCRIPTION
Zoo is a leading provider of subtitling and digital
distribution services for the global entertainment
industry. Zoo combine their own technology with talented
client teams across the globe to translate original
video programmes into more than 50 foreign languages.
Their technology helps process the edited digital
materials to meet the technical delivery requirements
of a growing number of online video services.
Mexican Grill Ltd 8,550.0p
Investment date October 2009 Results for the year to December 2016
Equity held 4.25% Turnover (GBP'000) 25,327
Profit/(loss) before
Av Purchase Price 2,059.0p tax (GBP'000) (1,025)
Cost (GBP'000) 311 Net Cash (GBP'000) (2,862)
Net Assets December
Valuation (GBP'000) 1,292 2016 (GBP'000) 3,312
Income recognised in
period (GBP) 0
COMPANY DESCRIPTION
Mexican Grill is a private company that operates 33
fast casual California-Mexican restaurants that provide
fresh, made to order cuisine for eat in or take-away,
making it among the largest chains within its niche.
Ideagen plc 90.0p
Investment date March 2011 Forecasts for the year to April 2018
Equity held 0.69% Turnover (GBP'000) 34,900
Profit/(loss) before tax
Av Purchase Price 13.8p (GBP'000) 9,700
Cost (GBP'000) 190 Net Cash (GBP'000) 4,205
Valuation (GBP'000) 1,238 Net Assets April 2017 (GBP'000) 46,419
COMPANY DESCRIPTION
Ideagen is a supplier of compliance based information
management software with operations in the UK and
the United States. The company specialises in enterprise
governance, risk and compliance and healthcare solutions
for organisations operating within highly regulated
industries. Ideagen provides complete content lifecycle
solutions that enable organisations to meet their
regulatory and quality compliance standards, helping
them to reduce costs and improve efficiency.
Quixant plc 420.0p
Investment date May 2013 Forecasts for the year to December 2017
Equity held 0.40% Turnover ($'000) 102,300
Profit/(loss) before tax
Av Purchase Price 46.0p ($'000) 15,800
Cost (GBP'000) 120 Net Cash ($'000) (69)
Net Assets December 2016
Valuation (GBP'000) 1,096 ($'000) 34,306
COMPANY DESCRIPTION
Quixant designs and manufactures complete advanced
hardware and software solutions for the pay-for-play
gaming and slot machine industry. Quixant's specialised
products provide an all-in-one solution, based on
PC technology but with additional hardware features
and operating software developed specifically to address
the requirements of the gaming industry.
Eagle Eye Solutions plc 255.0p
Investment date April 2014 Forecasts for the year to June 2018
Equity held 1.64% Turnover (GBP'000) 15,900
Profit/(loss) before tax
Av Purchase Price 205.7 (GBP'000) (3,600)
Cost (GBP'000) 855 Net Cash (GBP'000) 3,724
Valuation (GBP'000) 1,061 Net Assets June 2017 (GBP'000) 8,862
COMPANY DESCRIPTION
Eagle Eye Solutions plc operates in the e-commerce
industry. The Company provides a digital platform
that enables retailers to connect with customers to
deliver offers, rewards and services that can be redeemed.
SCA Investments Ltd (Gousto) 2,988.0p
Investment date July 2017 Results for the year to December 2016
Equity held 1.53% Turnover (GBP'000) 12,755
Profit/(loss) before tax
Av Purchase Price 2,994.0p (GBP'000) (6,739)
Cost (GBP'000) 1,002 Net Cash (GBP'000) 5,407
Net Assets December 2016
Valuation (GBP'000) 1,000 (GBP'000) 6,512
Income recognised in
period (GBP) 0
COMPANY DESCRIPTION
Founded in February 2012, Gousto is an e-commerce
company offering recipe kit boxes which include fresh
ingredients for step-by-step chef designed recipes
to be made at home. Shoppers select meals from a variety
of options on Gousto's e-commerce platform. Gousto
then delivers the pre-proportioned ingredients to
the doorstep, along with instructions on how to prepare
the meal.
DP Poland plc 40.8p
Investment date November 2012 Forecasts for the year to December 2017
Equity held 1.57% Turnover (GBP'000) 11,000
Profit/(loss) before tax
Av Purchase Price 24.5p (GBP'000) (2,000)
Cost (GBP'000) 574 Net Cash (GBP'000) 6,001
Net Assets December 2016
Valuation (GBP'000) 955 (GBP'000) 11,210
COMPANY DESCRIPTION
DP Poland (Domino's Pizza Poland) is a fast food company
that operates a sub-franchise of the Domino's Pizza
brand in Poland. The company operate in 14 Polish
cities, with 16 corporate and 23 sub-franchised stores.
They continue to roll out and anticipate finishing
the current year with 50 operational sites, with a
longer-term ambition of 100 stores by 2020.
Fulcrum Utility Services Ltd 52.5p
Investment date December 2009 Forecasts for the year to March 2018
Equity held 0.85% Turnover (GBP'000) 41,600
Profit/(loss) before tax
Av Purchase Price 10.5p (GBP'000) 7,400
Cost (GBP'000) 156 Net Cash (GBP'000) 12,561
Net Assets March 2017
Valuation (GBP'000) 781 (GBP'000) 10,446
COMPANY DESCRIPTION
Fulcrum Utility Services provides utility infrastructure
solutions. The company offers solutions that include
gas connection, multi utility, meter installation,
outlet pipe work, and gas disconnection services,
renewable energy solutions and consulting services.
Portr Ltd 741.0p
Investment date July 2015 Results for the year to December 2016
Equity held 3.64% Turnover (GBP'000) -
Profit/(loss) before tax
Av Purchase Price 662.4p (GBP'000) (4,824)
Cost (GBP'000) 689 Net Cash (GBP'000) 825
Net Assets December 2016
Valuation (GBP'000) 770 (GBP'000) 1,100
Income recognised in
period (GBP) 0
COMPANY DESCRIPTION
Portr run's AirPortr, London's same day luggage transfer
service. In its most basic form they deliver luggage
from London Airports to your hotel, office or home
and vice versa. They recently launched an off airport
check in solution in partnership with British Airways,
allowing you to check in your bag from your house,
hotel or office for an outbound flight from London
airports.
CO-INVESTMENT
As at 31 August 2017, other funds managed by Hargreave
Hale Ltd were also invested in all of the investments
held within the Company's portfolio with the exception
of the following: Omega Diagnostics Group plc, Paragon
Entertainment Ltd, Scottish Amicable 8.5% 2049 and
Tristel plc.
For further information please contact:
STUART BROOKES
Company Secretary
Hargreave Hale AIM VCT 2 plc
01253 754740
Date: 19 October 2017
STATEMENT OF DIRECTOR'S RESPONSIBILITIES
in respect of the half-yearly financial report
In accordance with Disclosure Transparency Rule (DTR) 4.2.10, David
Hurst-Brown (Chairman), Philip Cammerman and Oliver Bedford, the
Directors, confirm that to the best of their knowledge:
-- The half yearly financial results have been prepared in accordance with
UK GAAP and give a true and fair review of the assets, liabilities,
financial position and profit of the Company as at 31 August 2017 as
required by DTR 4.2.4;
-- The interim management report included within the chairman's statement,
investment manager's report, investment portfolio summary and notes to
the half yearly report includes a fair review of the information required
by the Financial Conduct Authority Disclosure and Transparency Rules,
being;
-- an indication of the important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of financial statements;
-- a description of the principal risks and uncertainties for the
remaining six months of the year; and
-- a description of related party transactions that have taken place
in the first six months of the current financial year, that may
have materially affected the financial position or performance of
the Company during that period and any changes in the related
party transactions described in the last annual report that could
do so.
On behalf of the Board
DAVID HURST-BROWN
Chairman
Date: 19 October 2017
CONDENSED INCOME STATEMENT
for the six month period to 31 August 2017 (unaudited)
For the six month period to For the six month period to
31 August 2017 (unaudited) 31 August 2016 (unaudited)
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Realised gains on investments held at fair value through
profit or loss - 626 626 - 228 228
Unrealised gains on investments held at fair value
through profit or loss - 3,936 3,936 - 2,328 2,328
Income 184 - 184 164 - 164
----------- ----------- ----------- ----------- ----------- -----------
184 4,562 4,746 164 2,556 2,720
Management fee (93) (280) (373) (60) (179) (239)
Other expenses (172) (13) (185) (134) - (134)
----------- ----------- ----------- ----------- ----------- -----------
(265) (293) (558) (194) (179) (373)
----------- ----------- ----------- ----------- ----------- -----------
(Loss)/gain on ordinary activities before taxation (81) 4,269 4,188 (30) 2,377 2,347
Taxation - - - - - -
----------- ----------- ----------- ----------- ----------- -----------
(Loss)/gain on ordinary activities after taxation (81) 4,269 4,188 (30) 2,377 2,347
----------- ---------- ---------- ----------- ---------- ----------
(Loss)/gain per share basic and diluted (Note 2) (0.18)p 9.75p 9.57p (0.09)p 7.04p 6.95p
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. The Company has no other comprehensive
income other than the results for the six month period as set out above.
The accompanying notes are an integral part of these financial
statements.
CONDENSED INCOME STATEMENT
for the year ended 28 February 2017 (audited)
For the year to
28 February 2017 (audited)
Revenue Capital Total
GBP000 GBP000 GBP000
Realised (losses) on investments held at fair value
through profit or loss - (339) (339)
Unrealised gains on investments held at fair value
through profit or loss - 5,876 5,876
Income 286 15 301
----------- ----------- -----------
286 5,552 5,838
Management fee (129) (387) (516)
Other expenses (305) (28) (333)
----------- ----------- -----------
(434) (415) (849)
----------- ----------- -----------
(Loss)/gain on ordinary activities before taxation (148) 5,137 4,989
Taxation - - -
----------- ----------- -----------
(Loss)/gain after taxation (148) 5,137 4,989
----------- ----------- -----------
(Loss)/gain per share basic and diluted (Note 2) (0.43)p 14.97p 14.54p
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. The Company has no other comprehensive
income other than the results for the year as set out above. The
accompanying notes are an integral part of these financial statements.
CONDENSED BALANCE SHEET
as at 31 August 2017 (unaudited)
31 August 31 August 28 February
2017 2016 2017
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Fixed assets
Investments at fair value through profit or loss 45,061 27,757 36,359
----------- ----------- -----------
Current assets
Prepayments and accrued income 68 54 37
Cash at bank 5,773 8,096 9,190
----------- ----------- -----------
5,841 8,150 9,227
Creditors: amounts falling due within one year
Accruals and deferred income (254) (183) (219)
----------- ----------- -----------
Net current assets 5,587 7,967 9,008
----------- ----------- -----------
Net assets 50,648 35,724 45,367
----------- ----------- -----------
Capital and Reserves
Called up share capital 439 342 413
Share premium - 26,509 34,246
Capital redemption reserve 14 9 10
Special reserve 38,200 3,699 2,891
Capital reserve - realised 961 1,416 628
Capital reserve - unrealised 12,465 4,981 8,529
Revenue reserve (1,431) (1,232) (1,350)
----------- ----------- -----------
Total shareholders' funds 50,648 35,724 45,367
----------- ----------- -----------
Net asset value per share basic and diluted (Note 115.47p 104.58p 109.86p
4)
The accompanying notes are an integral part of these financial
statements.
CONDENSED STATEMENT OF CHANGES IN EQUITY
for the six month period to 31 August 2017 (unaudited)
Ordinary
Shares Called up Share Capital Special Capital Capital Revenue Total
share premium redemption reserve reserve reserve reserve
capital reserve realised unrealised
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2017 413 34,246 10 2,891 628 8,529 (1,350) 45,367
Share
buybacks (4) 4 (475) (475)
Share issues 30 3,378 3,408
Issue costs (81) (81)
Capital
Reduction (37,543) 37,543 -
Equity
dividends
paid (1,759) (1,759)
Realised
gains on
investments 626 626
Unrealised
gains on
investments 3,936 3,936
Management
fee charged
to capital (280) (280)
Due
diligence
investment
costs (13) (13)
Revenue loss
after
taxation
for the
period (81) (81)
Total profit
after
taxation 333 3,936 (81) 4,188
---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------
At 31 August
2017 439 - 14 38,200 961 12,465 (1,431) 50,648
---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------
The distributable reserves are capital reserve realised, special reserve
and revenue reserve. Total distributable reserves at 31 August 2017 were
GBP37.73 million of which GBP6.91 million is available to pay dividends
now. The accompanying notes are an integral part of these financial
statements.
CONDENSED STATEMENT OF CHANGES IN EQUITY
for the six month period to 31 August 2016 (unaudited)
Ordinary
Shares Called up Share Capital Special Capital Capital Revenue Total
share premium redemption reserve reserve reserve reserve
capital reserve realised unrealised
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2016 295 21,484 7 5,250 1,367 2,653 (1,202) 29,854
Share
buybacks (2) 2 (198) (198)
Share issues 49 5,153 5,202
Issue costs (128) (128)
Equity
dividends
paid (1,353) (1,353)
Realised
gains on
investments 228 228
Unrealised
gains on
investments 2,328 2,328
Management
fee charged
to capital (179) (179)
Revenue loss
after
taxation
for the
period (30) (30)
Total loss
after
taxation 49 2,328 (30) 2,347
---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------
At 31 August
2016 342 26,509 9 3,699 1,416 4,981 (1,232) 35,724
---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------
Reserves available for distribution are capital reserve realised,
special reserve and revenue reserve. Total distributable reserves at 31
August 2016 were GBP3.88 million. The accompanying notes are an integral
part of these financial statements.
CONDENSED STATEMENT OF CHANGES IN EQUITY
for the year ended 28 February 2017 (audited)
Ordinary
Shares Called up Share Capital Special Capital Capital Revenue Total
share premium redemption reserve reserve reserve reserve
capital reserve realised unrealised
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2016 295 21,484 7 5,250 1,367 2,653 (1,202) 29,854
Share
buybacks (3) 3 (313) (313)
Share issues 121 13,034 13,155
Issue costs (272) (272)
Equity
dividends
paid (2,046) (2,046)
Realised
gains on
investments (339) (339)
Unrealised
gains on
investments 5,876 5,876
Management
fee charged
to capital (387) (387)
Arrangement
Fee Income 15 15
Due
Diligence
investment
cost (28) (28)
Revenue loss
after
taxation
for the
period (148) (148)
Total loss
after
taxation (739) 5,876 (148) 4,989
---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------
At 28
February
2017 413 34,246 10 2,891 628 8,529 (1,350) 45,367
---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------
Reserves available for distribution are capital reserve realised,
special reserve and revenue reserve. Total distributable reserves at 28
February 2017 were GBP2.17 million. The accompanying notes are an
integral part of these financial statements.
CONDENSED STATEMENT OF CASH FLOWS
for the six month period to 31 August 2017 (unaudited)
31 August 2017 31 August 2016 28 February 2017*
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Return on ordinary
activities after
taxation 4,188 2,347 4,989
Realised (gain)/loss on
investments (626) (228) 339
Unrealised (gain) on
investments (3,936) (2,328) (5,876)
(Increase) in debtors (31) (34) (17)
Increase/(decrease) in
creditors 35 (8) 28
----------- ----------- -----------
Net cash (outflow) from
operating activities (370) (251) (537)
Cash flows from investing
activities
Purchase of investments (9,359) (7,309) (16,778)
Sale of investments 5,219 5,139 8,987
----------- ----------- -----------
Net cash (outflow) from
investing activities (4,140) (2,170) (7,791)
Cash flows from financing
activities
Proceeds from share issues 3,408 5,202 13,155
Share issue costs (81) (128) (272)
Share buybacks (475) (198) (313)
Dividends paid (1,759) (1,353) (2,046)
----------- ----------- -----------
Net cash from financing
activities 1,093 3,523 10,524
----------- ----------- -----------
Increase in cash (3,417) 1,102 2,196
----------- ----------- -----------
Analysis of net funds
Opening cash 9,190 6,994 6,994
Cash movement (3,417) 1,102 2,196
Closing cash 5,773 8,096 9,190
* 28 February 2017 cash flow represents annual results
The accompanying notes are an integral part of these financial
statements
EXPLANATORY NOTES
for the six month period to 31 August 2017 (unaudited)
1. ACCOUNTING POLICIES
Basis of preparation
The Company has prepared its half-yearly financial results for the six
month period ending 31 August 2017 in accordance with Financial
Reporting Standard 104 (FRS104) and the Statement of Recommended
Practice for "Financial Statements of Investment Trust Companies and
Venture Capital Trusts" (the SORP).
The same accounting policies and methods of computation are followed in
the half-yearly financial results as compared with the most recent
annual financial statements.
Investments
All investments are classified as fair value through profit or loss.
Investments are measured initially and subsequently at fair value which
is deemed to be bid market prices for listed investments and investments
traded on AIM. Unquoted investments are valued using the most
appropriate methodology recommended by the International Private Equity
Venture Capital ("IPEV") guidelines.
Where the classification of a financial instrument requires it to be
stated at fair value, this is determined by reference to the quoted bid
price in an active market wherever possible. Where no such active market
exists for the particular asset or liability the Company holds the
investment at cost for a period where there is considered to be no
change in fair value.
Valuations of unquoted investments are reviewed on a six monthly basis
and more frequently if events occur that could have a material impact on
the investment. Where cost is no longer considered appropriate the
Company will use a value indicated by a material arms-length transaction
by an independent third party in the shares of a company. Where no such
transaction exists, the Company will use the most appropriate valuation
technique including discounted cash flow analysis, earnings multiples,
net assets and industry valuation benchmarks. All inputs are market
observable with the exception of level C financial instruments.
Investments are recognised and derecognised at trade date where a
purchase or sale is under a contract whose terms require delivery within
the time frame established by the market concerned. Purchases and sales
of unlisted investments are recognised when the contract for acquisition
or sale becomes unconditional. Transaction costs are included in the
initial book cost or deducted from the disposal proceeds as appropriate.
These investments will be managed and their performance evaluated on a
fair value basis in accordance with a documented investment strategy and
information about them is provided internally on that basis to the
Board.
Gains and losses arising from changes in fair value (realised and
unrealised) are included in the net profit or loss for the period as a
capital item in the income statement and are taken to the unrealised
capital reserve or realised capital reserve as appropriate.
If an investment has been impaired such that there is no realistic
expectation that there will be a full return from the investment, the
loss is treated as a permanent impairment and transferred to the capital
reserve realised.
Financial Instruments - fair value measurement hierarchy
FRS 102 requires certain disclosures which require the classification of
financial assets and financial liabilities measured at fair value using
a fair value hierarchy that reflects the significance of the inputs used
in making the fair value measurement.
The fair value hierarchy has the following levels:
Level Methodology
(a) The best evidence of fair value is a quoted price
for an identical asset in an active market. Quoted
in an active market in this context means quoted prices
are readily and regularly available and those prices
represent actual and regularly occurring market transactions
on an arm's length basis. The quoted price is usually
the current bid price.
(b) When quoted prices are unavailable, the price of a
recent transaction for an identical asset provides
evidence of fair value as long as there has not been
a significant change in economic circumstances or
a significant lapse of time since the transaction
took place. If the entity can demonstrate that the
last transaction price is not a good estimate of fair
value (e.g. because it reflects the amount that an
entity would receive or pay in a forced transaction,
involuntary liquidation or distress sale), that price
is adjusted.
(c) If the market for the asset is not active and recent
transactions of an identical asset on their own are
not a good estimate of fair value, an entity estimates
the fair value by using a valuation technique. The
objective of using a valuation technique is to estimate
what the transaction price would have been on the
measurement date in an arm's length exchange motivated
by normal business considerations.
Level (b) Level (c) Total
Level (a) Investments Investments Investments Investments
GBP'000 GBP'000 GBP'000 GBP'000
Six months
ended 31
August 2017
(unaudited) 33,242 7,487 4,332 45,061
Year ended 28
February
2017
(audited) 26,469 5,462 4,428 36,359
Six months
ended 31
August 2016
(unaudited) 21,421 3,921 2,415 27,757
Key judgements and estimates
The preparation of the financial statements requires the Board to make
judgements and estimates that affect the application of policies and
reported amounts of assets, liabilities, income and expenses. Key
estimation uncertainties mainly relate to the fair valuation of unquoted
investments, which are based on historical experience and other factors
that are considered reasonable including the transfer price of the most
recent transaction on an arm's length basis. The estimates are under
continuous review with particular attention paid to the carrying value
of the investments. The process of estimation is also affected by the
determination of the fair value hierarchy.
Income
Equity dividends are taken into account on the ex-dividend date, net of
any associated tax credit. Fixed returns on non-equity shares and debt
securities are recognised on a time apportionment basis so as to reflect
the effective yield, provided there is no reasonable doubt that payment
will be received in due course. All other income, including deposit
interest receivable, is recognised on an accruals basis. All revenue and
capital items in the unaudited income statement derive from continuing
operations. There are no other items of comprehensive income other than
those disclosed in the unaudited income statement.
Expenditure
All expenditure is accounted for on an accruals basis. 75% of management
fees are allocated to the capital reserve realised and 25% to the
revenue account in line with the Board's expected long term split of
investment returns in the form of capital gains to the capital column of
the income statement. All other expenditure is charged to the revenue
account.
Trail commission
Trail commission previously due is held as a creditor until such time as
claims are made by the relevant intermediary and supporting
documentation provided. If claims are not received these amounts are
written off after a period of six years.
Capital reserves
Realised profits and losses on the disposal of investments, due
diligence costs and income in relation to private company investments,
losses realised on investments considered to be permanently impaired and
75% of investment management fees are accounted for in the capital
reserve realised.
Increases and decreases in the valuation of investments held at the year
end are accounted for in the capital reserve unrealised.
Operating Segments
There is considered to be one operating segment as reported to the chief
operating decision maker being investment in equity and debt securities.
Taxation
Deferred tax is recognised in respect of all timing differences that
have originated but not yet reversed at the balance sheet date. Deferred
tax assets are only recognised to the extent that recovery is probable
in the foreseeable future.
Current tax is expected tax payable on the taxable revenue for the
period using the current tax rate. The tax effect of different items of
income and expenditure is allocated between capital and revenue on the
same basis as the particular item to which it relates.
Approved VCTs are exempt from tax on capital gains from the sale of
fixed asset investments. The Directors intend that the Company will
continue to conduct its affairs to maintain its VCT status, no deferred
tax has been provided in respect of any capital gains or losses arising
from the revaluation or disposal of investments.
Dividends
Only dividends recognised during the period are deducted from revenue or
capital reserves. Final and interim dividends are recognised in the
accounts when the Company's liability to pay them has been established.
Summary of dividends paid in the six months to 31 August 2017 and the
financial year ending 28 February 2017 are detailed below:
Year
Six months ended 28
ended 31 February
August 2017 2017
(unaudited) (audited)
GBP'000 GBP'000
Final capital dividend of 4 pence per share for the
year ended 29 February 2016 paid on 20 July 2016 - 1,353
Interim capital dividend of 2 pence per share for
the half year ended 31 August 2016 paid on 2 December
2016 - 693
Final capital dividend of 4 pence per share for the
year ended 28 February 2017 paid on 25 July 2017 1,759 -
Total 1,759 2,046
Functional Currency
In accordance with FRS 102 s.30, the Company is required to nominate a
functional currency, being the currency in which the Company
predominantly operates. The Board has determined that sterling is the
Company's functional currency. Sterling is also the currency in which
these accounts are presented.
Repurchase of shares to hold in Treasury
The cost of repurchasing shares into treasury, including the related
stamp duty and transaction costs is charged to the special reserve and
dealt with in the statement of changes in equity. Share repurchase
transactions are accounted for on a trade date basis. Where shares held
in treasury are subsequently cancelled, the nominal value of those
shares is transferred out of share capital and into capital redemption
reserve.
Should shares held in treasury be reissued, the sale proceeds will be
treated as a realised profit up to the amount of the purchase price of
those shares and will be transferred to capital reserves. The excess of
the sale proceeds over the purchase price will be transferred to share
premium.
Contingencies, guarantees and financial commitments
There were no contingencies, guarantees or financial commitments of the
Company at the 31 August 2017.
Legal form and principal activities
The Company was incorporated and registered in England and Wales on 20
September 2006 under the Companies Act 1985, registered number 05941261.
The Company has been approved as a Venture Capital Trust by HMRC under
section 259 of the Income Taxes Act 2007. The shares of the Company were
first admitted to the Official List of the UK Listing Authority and
trading on the London Stock Exchange on 16 April 2007 and can be found
under the TIDM code "HHVT". The Company is premium listed.
The Company's principal activity is to invest in a diversified portfolio
of qualifying small UK based companies, primarily trading on AIM, with a
view to maximising tax free dividend distributions to shareholders.
The Company is an externally managed fund with a Board comprising of
three non-executive directors. Hargreave Hale Limited acts as investment
manager, administrator and custodian to the Company and provide the
company secretary.
The Board has overall responsibility for the Company's affairs including
the determination of its investment policy, however, the Board may
exercise these responsibilities through delegation to Hargreave Hale as
it considers appropriate.
The Directors have managed and continue to manage the Company's affairs
in such a manner as to comply with Section 259 of the Income Taxes Act
2007.
The Company's registered office is Accurist House, 44 Baker Street,
London, W1U 7AL.
CAPITAL STRUCTURE
Share capital
Ordinary shares are classed as equity. The ordinary shares in issue have
a nominal value of one pence and carry one vote each.
Reserves
A description of each of the reserves follows:
Share premium
This reserve represents the difference between the issue price of shares
and the nominal value of shares at the date of issue, net of related
issue costs.
Capital redemption reserve
This reserve is used for the cancellation of shares bought back under
the buyback facility.
Special reserve
Distributable reserve used to pay dividends and re-purchase shares under
the buyback facility.
Capital reserve realised
Gains/losses on disposal of investments, due diligence costs and income
from private company investments, permanent impairment of financial
assets and 75% of the investment management fee are accounted for in the
capital reserve realised.
Capital reserve unrealised
Unrealised gains and losses on investments held at the year-end arising
from movements in fair value are taken to the capital reserve
unrealised.
Revenue reserve
Net revenue returns and losses of the Company.
1. EARNINGS PER SHARE (BASIC AND DILUTED)
The gain per ordinary share of 9.57 pence at 31 August 2017 (31 August
2016: gain 6.95 pence and 28 February 2017: gain 14.54 pence) is based
on a net gain for the period of GBP4,187,739 (31 August 2016: gain
GBP2,347,000 and 28 February 2017: gain GBP4,989,474) and the weighted
average number of ordinary shares in issue over the period of 43,776,326
(31 August 2016: of 33,764,458 and 28 February 2017: 34,327,158).
1. CAUTIONARY STATEMENT
The results should not be taken as a guide to the results for the
financial period ending 28 February 2018. This report may contain
forward looking statements with regards to the financial condition and
results of the Company, which are made in the light of current economic
and business circumstances. Nothing in this report should be considered
as a profit forecast.
1. NET ASSET VALUE PER SHARE
The net asset value per ordinary share at 31 August 2017 of 115.47 pence
(31 August 2016: 104.58 pence and 28 February 2017: 109.86 pence) is
based on net assets of GBP50,648,374 (31 August 2016: GBP35,723,815 and
28 February 2017: GBP45,366,681) and on 43,863,946 shares (31 August
2016: 34,159,249 shares and 28 February 2017: 41,296,035 shares), being
the number of ordinary shares in issue as at 31 August 2017.
1. PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information contained in the 31 August 2017 income
statement, balance sheet, statement of cash flows and statement of
changes in equity does not constitute full financial statements and has
not been audited.
1. PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks facing the Company relate to the Company's
investment activities and include venture capital trust approval,
investment, discount volatility, compliance, economic, fraud,
operational, reputational, liquidity and outsourcing risk. Other risks
faced by the Company include market, currency, interest rate and credit
risk. These risks and the way in which they are managed are described in
more detail in the Company's annual report and accounts for the year
ended 28 February 2017. The Company's principal risks and uncertainties
have not changed materially since the date of that report.
7. TRANSACTIONS IN SHARES
Buybacks
In total, the Company repurchased 430,945 shares during the six month
period ending 31 August 2017 at a total cost of GBP474,473. The
repurchased shares represent 1.04% of ordinary shares in issue on 1
March 2017. The acquired shares have been cancelled.
Share Issues
In total, the Company issued 2,998,856 new shares during the six month
period ending 31 August 2017 raising net proceeds of GBP3,326,563.
1. RELATED PARTY TRANSACTIONS
Hargreave Hale Limited is considered to be a related party to the
Company. Oliver Bedford, a non-executive director of the Company and a
member of its key management personnel, is an employee of Hargreave Hale
Limited. In addition, Hargreave Hale Limited acts as investment manager,
administrator and custodian to the Company and it provides the company
secretary. All of the support functions performed by Hargreave Hale
Limited are segregated by department and location and are independent of
each other.
Hargreave Hale Limited in its capacity as investment manager of the fund
receives annual fees of 1.5% per annum of the net assets of the Company,
calculated and payable quarterly in arrears. Fees for the half-year are
GBP373,557 (2016: GBP238,524). In relation to the other support
functions described above, Hargreave Hale Limited also provides
administration services, custody services, company secretarial services
and one non-executive director and receive fees of GBP50,000 per
half-year (2016: GBP40,000) in relation to these services. Of those fees,
GBP192,975 (2016: GBP137,010) was still owed at the half-year end.
Hargreave Hale Limited has agreed to indemnify the Company against
annual running costs (such costs excluding VAT, any performance
incentive fee and any trail commissions the payment of which is the
responsibility of the Company) exceeding 3.5% of its net assets. No fees
were waived by Hargreave Hale in the first half of the financial year
under the indemnity.
During the half year, the Company issued 2,998,856 ordinary shares
(nominal value GBP29,989) in a joint offer for subscription which
resulted in gross funds being received of GBP3,407,743. As marketing
adviser and receiving agent to the Company, and in return for covering
the costs of the joint offer, Hargreave Hale Limited was entitled to
3.5% of the gross proceeds (GBP119,271), often referred to as the
'premium'. From this, Hargreave Hale Limited paid for the allotment of
additional shares to investors with a value of GBP38,091 and introducer
commission of GBP990, resulting in net fees payable to Hargreave Hale of
GBP80,190.
1. GOING CONCERN
After making enquires, the Directors have a reasonable expectation that
the Company has adequate resources to continue in operational existence
for the foreseeable future. For this reason, they continue to adopt the
going concern basis in preparing the financial statements.
1. POST BALANCE SHEET EVENTS
Buybacks
Since the period end, a further 75,978 ordinary shares have been
repurchased at a total value of GBP85,845.
New investments
An investment in the following company has been made since the period
end:
Charter Court Financial Services Group plc
Qualifying companies
The Company has made additional investments into the following
qualifying companies since the period end:
Gfinity plc (GBP60k)
Laundrapp Ltd (GBP501k)
Faron Pharmaceuticals Oy (GBP469k)
Angle plc (GBP100k)
SHAREHOLDER INFORMATION
The Company's ordinary shares (Code: HHVT) are listed on the London
Stock Exchange. Shareholders can visit the London Stock Exchange website,
www.londonstockexchange.com, for the latest news and share prices of the
Company. Further information for the Company can be found on its website
at www.hargreaveaimvcts.co.uk.
NET ASSET VALUE PER SHARE
The Company's NAV per share as at 13 October 2017 was 120.80 pence per
share. The Company publishes its unaudited NAV per share on a weekly
basis.
DIVIDENDS
The Board has approved the payment of an interim dividend of 2 pence in
respect of the six months ended 31 August 2017.
Shareholders who wish to have future dividends paid directly into their
bank account rather than sent by cheque to their registered address can
complete a mandate for this purpose. Mandates can be obtained by
contacting the Company's registrar, Equiniti.
SELLING YOUR SHARES
Hargreave Hale AIM VCT 2 plc operates a share buy-back policy to improve
the liquidity in its ordinary shares. Share buy-back policies are
subject to the Act, the Listing Rules and tax legislation, which may
restrict the VCTs' ability to buy shares back in. The policy is
non-binding and is at the discretion of the Board.
The buy-back policy targets a 5% discount to the last published NAV per
share as announced on the London Stock Exchange through a regulatory
news service provider. The discount is measured against the mid-price
per share as listed on the London Stock Exchange and reflects the price
at which the Company buys its shares off the market makers. The Company
publishes its unaudited NAV per share on a weekly basis.
VCT share disposals settle two business days post trade if the shares
are already dematerialised or placed into CREST ahead of the trade, or
ten days post trade if the stock is held in certificated form.
VCT share disposals are exempt of capital gains tax when the disposal is
made at arms' length, which means a shareholder must sell their shares
to a market maker through a stockbroker or another share dealing
service. Hargreave Hale has particular expertise in the sale of VCT
shares and is able to act for VCT shareholders who wish to sell their
shares. However, you are free to nominate any stockbroker or share
dealing service to act for you. If you would like Hargreave Hale to act
for you as their client (as opposed to a shareholder in the Company)
then please contact Andrew Pang for further information (020 7009 4900,
andrew.pang@hargreave.com).
Please note that Hargreave Hale will need to be in possession of the
share certificate and a completed CREST transfer form before executing
the sale. If you have lost your share certificate, then you can request
a replacement certificate from the Company's registrar Equiniti. The
registrar will send out an indemnity form, which you will need to sign.
The indemnity form will also need to be countersigned by a UK insurance
company or bank that is a member of the Association of British Insurers.
Since indemnification is a form of insurance, the indemnifying body will
ask for a payment to reflect their risk. Fees will reflect the value of
the potential liability.
SHAREHOLDER ENQUIRIES:
For general Shareholder enquiries, please contact Hargreave Hale Limited
on 01253 754755 or by e-mail to aimvct@hargreave.com.
For enquiries concerning the performance of the Company, please contact
the investment manager on 0207 009 4937 or by e-mail to
aimvct@hargreave.com.
Electronic copies of this report and other published information can be
found on the Company's website at www.hargreaveaimvcts.co.uk.
CHANGE OF ADDRESS
To notify the Company of a change of address please contact the
Company's registrar.
COMPANY INFORMATION
SECRETARY AND REGISTERED OFFICE DIRECTORS
Stuart Brookes David Hurst-Brown, Chairman
Accurist House Philip Cammerman
44 Baker Street Oliver Bedford
London
W1U 7AL
MANAGER AUDITORS
Hargreave Hale Limited BDO LLP
Accurist House 55 Baker Street
44 Baker Street London
LONDON W1U 7EU
W1U 7AL
REGISTRARS VCT STATUS ADVISER
Equiniti Philip Hare & Associates LLP
Aspect House 4-6 Staple Inn
Spencer Road High Holborn
Lancing London
West Sussex WC1V 7QH
BN99 6DA
SOLICITORS BROKERS
Howard Kennedy Singer Capital Markets Limited
No. 1 London Bridge One Hanover Street
London London
SE1 9BG W1S 1YZ
COMPANY REGISTRATION NUMBER
05941261 in England and Wales
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 2 plc via Globenewswire
https://hargreaveaimvcts.co.uk/
(END) Dow Jones Newswires
October 19, 2017 10:48 ET (14:48 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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