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

 
TIDMHHV 
 
 
   Investment Manager's Report 
 
   This report covers the third quarter of the 2016/17 financial year, 1 
April 2017 to 30 June 2017. 
 
   Investment Report 
 
   Global equity markets had a reasonable quarter as economic data was 
generally positive. President Trump's promises to cut taxes and reduce 
business regulations were well received by US equity markets, which hit 
new highs. In the UK, the Bank of England put through a small upgrade to 
their projections for economic growth this year, principally because of 
stronger than expected consumer spending, although we have since 
witnessed some signs of consumer retrenchment in the face of higher 
inflation and decreases in real wage growth. 
 
   As is the way these days, each quarter brings with it new challenges and 
risks. Brexit chat is not a regular feature in our company meetings 
beyond the implications of weakness in Sterling, although we expect it 
to re-emerge as a talking point once we get a better feel for the 
mechanics and implications of our exit from the European Union.  We 
remain cautious on certain sectors such as financials and consumer 
discretionary; however, we still see ample opportunity for growth within 
our investee companies, particularly those with strong product 
differentiation and/or structural growth in their end markets.  Weaker 
companies are vulnerable, particularly those in consumer discretionary, 
traditional retail or where there is a high risk of substitution.  We 
continue to find interesting investment opportunities in qualifying 
companies. 
 
   Performance 
 
   In the three months to 30 June 2017, the NAV increased from 78.12p to 
78.43p. A total of 1.75 pence per share was paid in dividends, giving 
investors a total return of 2.06 pence per share, which translates to a 
gain of 2.6%. During the same period the FTSE AIM All-Share Total Return 
gained 4.3%, whilst the FTSE 100 Total Return gained 1.0%. 
 
   The qualifying investments made a net contribution of 0.91 pence per 
share with thirty-one out of the eighty-two making gains, twelve 
unchanged and thirty-nine losing ground. The balance was the net of 
non-qualifying portfolio gains, running costs and investment income. 
 
   Hardide was the top performing qualifying investment (+100.0%, +0.63 
pence per share). The company backed up the recent award of global 
approved supplier status by Airbus with an upbeat half-year trading 
update that pointed to a year-on-year doubling of sales to the Oil & Gas 
sector, which helped the shares to a three year high. Eagle Eye also 
performed well (+56.6%, +0.41 pence per share), announcing a new 
three-year contract to use their technology in support of John Lewis' 
digital strategy. This was followed by a GBP6.0m fundraise to strengthen 
their balance sheet and allow further investment in operational and 
marketing resource. Abcam (+17.6%, +0.29 pence per share), Faron Pharma 
(+35.5%, +0.21 pence per share) and ULS Technology (+26.8%, +0.18 pence 
per share) were all also significant contributors over the period. 
 
   The biggest losses within the period came from K3 (-42.0%, -0.38 pence 
per share) after they announced that longer sale cycles and contract 
delays would lead to a significant reduction in revenues, profits and 
cashflows for the year ended 30 June 2017. Other losses in the period 
came from TLA (-57.1%, -0.37 pence per share), Animal Care (-14.5%, 
-0.29 pence per share) and Idox (-12.9%, -0.20 pence per share). 
 
   We invested GBP2.34m into seven qualifying investments over the period, 
including four further investments into existing listed qualifying 
companies, one IPO and two new investments into listed companies. 
 
   Within the qualifying portfolio, we exited our investments in Audioboom, 
Directa Plus and Haydale Graphene following prolonged periods of 
underperformance.  We also exited our investment in FreeAgent.  We 
reduced our investments in ECSC, Faron Pharma and Gfinity following very 
strong runs. 
 
 
 
   Portfolio Structure 
 
   The VCT is comfortably through the HMRC defined investment test and 
ended the period at 85.83% invested as measured by the HMRC investment 
test. By market value, the VCT had a 55.7% weighting to qualifying 
investments. 
 
   The allocation to non-qualifying equity investments decreased marginally 
from 18.9% to 17.9%.  We continued to make use of the Marlborough 
Special Situations Fund as a temporary home for proceeds from 
fundraising; the allocation marginally increased from 10.2% to 10.8%. 
The non-qualifying investments contributed +1.34 pence per share to the 
overall gains. Cash decreased from 18.8% to 15.9%. 
 
   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. 
 
   Buybacks 
 
   In total, 468,997 ordinary shares were purchased between 1 April 2017 
and 30 June 2017, at a total value of GBP361,388. Since the period end 
75,822 ordinary shares were purchased at a total value of GBP57,472. 
 
   Dividends 
 
   An interim dividend of 1.75 pence per ordinary share was paid on 30 June 
2017. 
 
   Post Period End Update 
 
   Deal flow has been good since period end and we have made one follow on 
investment in Surface Transforms and two new investments in Honest Brew 
and Gousto. We also have several 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 1 plc 
01253 754740 
 
 
   Date: 7 August 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

August 07, 2017 05:12 ET (09:12 GMT)

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