Hargreave Hale AIM 1 Hargreave Hale Aim Vct 1 Plc : Interim Management Statement

 
TIDMHHV 
 
 
   Interim Management Statement for the 3 months to 31 December 2016 
 
   This report covers the first quarter of the 2016/17 financial year, 1 
October 2016 to 31 December 2016. 
 
   Investment Report 
 
   The period under review was dominated by the US election. Trump's plans 
to cut taxes, boost infrastructure spending and reduce regulations were 
seen as positive for developed market growth and inflation expectations, 
sparking a rally in global equities. In the UK, fears over the 
consequences of the UKs Brexit decision retreated as third quarter GDP 
growth came in ahead of expectations and consumer spending remained 
stronger than many had predicted. 
 
   Looking ahead we believe the UK trading environment continues to look 
attractive with good evidence of strong and sustainable growth in the 
economy this year, supported by high levels of employment and consumer 
confidence.  Although the medium-term outlook is difficult to forecast, 
the UK continues to benefit from loose monetary policy and a Government 
that has signalled its willingness to provide further support through 
fiscal policy if the need arises. Aside certain sectors which have 
struggled with the depreciation in sterling and higher import costs, our 
corporates continue to report encouraging news flow. 
 
   Performance 
 
   In the three months to 31 December 2016, the NAV increased from 75.93p 
to 76.38p. No dividends were paid, giving investors a total return of 
0.45 pence per share, which translates to a gain of 0.6%. During the 
same period the FTSE AIM All-Share Total Return gained 3.5%, whilst the 
FTSE 100 Total Return gained 4.3%. 
 
   The qualifying investments made a net loss of -0.39 pence per share with 
twenty-seven out of the seventy-nine making gains, seventeen unchanged 
and thirty-five losing ground. The balance was the net of non-qualifying 
portfolio gains, running costs and investment income. 
 
   Cohort was the top performing qualifying investment (+30.6%, +0.71 pence 
per share). They completed the earnings enhancing acquisition of EID, an 
experienced designer and manufacturer of advanced defence communications 
systems. Quixant (+25.9%, +0.38 pence per share) announced a very strong 
set of 2016 interims demonstrating strong organic sales growth, a better 
than expected contribution from the Densitron acquisition and cash flows 
ahead of expectations. Management remain confident on the full year 
outlook and analysts upgraded. Ideagen (+29.2%, +0.29 pence per share) 
also performed well after the earnings enhancing acquisition of IPI 
Solutions. ULS Technology (+43.5%, +0.25 pence per share) and DP Poland 
(+15.5%, +0.23 pence per share) also contributed meaningfully to the 
NAV. 
 
   The biggest losses within the period came from TrakM8 (-48.7%, -0.72 
pence per share) which saw its shares fall significantly after a poor 
set of interims flagging worse than expected revenue growth and poor 
cash generation.  Other losses came from Instem Life (-31.0%, -0.27 
pence per share), TLA (-26.8%, -0.26 pence per share) and Belvoir 
(-30.7%, -0.24 pence per share). 
 
   We invested GBP3.2m into seven qualifying investments over the period, 
including one further investment into an existing qualifying company, 
three IPOs and three private investments. 
 
   Portfolio Structure 
 
   The VCT is comfortably through the HMRC defined investment test and 
ended the period at 94.76% invested as measured by the HMRC investment 
test. By market value, the VCT had a 64.6% weighting to qualifying 
investments. 
 
   The allocation to non-qualifying equity investments increased marginally 
from 15.4% to 16.1%.  We continued to make use of the Marlborough 
Special Situations Fund as a temporary home for proceeds from 
fundraising; the allocation marginally decreased from 4.7% to 3.6%. The 
non-qualifying investments contributed +1.05 pence per share to the 
overall gains. Fixed income as a percentage of the fund decreased from 
0.9% to 0.0% and cash decreased from to 18.4% to 15.8%. 
 
   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 
interim management statement. 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. 
 
   Joint Offer for Subscription of Ordinary Shares 
 
   On 14 December 2016, the Directors of Hargreave Hale AIM VCT 1 plc and 
Hargreave Hale AIM VCT 2 plc announced the launch of a new joint offer 
for subscription of new shares in both VCT's to raise up to GBP10 
million into Hargreave Hale AIM VCT 1 plc and GBP10 million into 
Hargreave Hale AIM VCT 2 plc. 
 
   On the 9 March 2017 the Directors announced their intention to utilise 
the GBP5m Over-Allotment Facility for Hargreave Hale AIM VCT 1 plc. 
 
   Since its launch and the date of this report the offer has resulted in 
funds being received of GBP14.33 million by Hargreave Hale AIM VCT 1, 
and the issue of 18.12 million shares. A further GBP0.67 million is 
pending allotment in the 2017/18 tax year. The offer is now fully 
subscribed. 
 
   Buybacks 
 
   No shares were purchased by the Company between 1 October 2016 and 31 
December 2016. Since the period end 287,094 ordinary shares were 
purchased at a total value of GBP212,889. 
 
   Dividends 
 
   There were no dividends paid out in the 3 months to 31 December 2016, a 
final dividend of 2.25 pence per ordinary share was paid on 17 January 
2017. 
 
   Post Period End Update 
 
   Performance has been strong since quarter end with the NAV gaining 4.83% 
after adjusting for the 2.25 pence per share dividend paid on 17 January 
2017. 
 
   Although we have only completed two follow up qualifying investments in 
Faron Pharmaceuticals and Portr within the current quarter, we are 
engaged with a substantial pipeline of investment opportunities.  We 
expect several of these to complete in the coming weeks. 
 
   For further information, please contact: 
 
 
 
 
 
  Stuart Brookes 
Company Secretary 
 
  Hargreave Hale AIM VCT 1 plc 
01253 754740 
 
 
   Date: 30 March 2017 
 
   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 1 plc via Globenewswire 
 
 
  https://hargreaveaimvcts.co.uk/ 
 

(END) Dow Jones Newswires

March 30, 2017 11:15 ET (15:15 GMT)

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