Hargreave Hale AIM 2 Hargreave Hale Aim Vct 2 Plc : Annual Financial Report

 
TIDMHHVT 
 
 
   Hargreave Hale AIM VCT 2 plc announced its results for the year ended 28 
February 2017 on 5 June 2017. The full Financial Statements can be 
accessed on the Company's website http://www.hargreaveaimvcts.co.uk or 
alternatively by following the link at the bottom of this report. 
 
   FINANCIAL HIGHLIGHTS 
 
 
 
 
Ordinary Shares (as at 28/29 February):                       2017      2016 
 
Net asset value per share                                  109.86p   101.18p 
Cumulative distributions paid per share since launch        49.00p    43.00p 
Total return per share                                     158.86p   144.18p 
 
Annual Returns per share (basic and diluted): 
Revenue return                                             (0.43)p   (0.98)p 
Capital return                                              14.97p   (2.41)p 
Combined return                                             14.54p   (3.39)p 
 
Dividends per share: 
Interim paid                                                 2.00p     2.00p 
Final proposed/paid                                          4.00p     4.00p 
Total dividend for year                                      6.00p     6.00p 
 
Ongoing Expense Ratio*                                       1.82%     2.28% 
 
Performance Benchmark: 
FTSE AIM All-share Index (results rebased to 100 at 
 6 April 2007)                                               78.38     66.01 
 
  *Calculated as total expenses minus ad hoc legal costs 
  and adjusted for trail commission written off, divided 
  by year-end net assets 
 
 
   CHAIRMAN'S STATEMENT 
 
   INTRODUCTION 
 
   Following the success of our joint offer for subscription I would like 
to welcome a large number of new shareholders. 
 
   At 28 February 2017 the Net Asset Value (NAV) was 109.86 pence which 
after adjusting for the dividends paid gives a total return since 
inception of 158.86 pence. The gain per ordinary share for the year was 
14.54 pence per share (comprising a revenue loss of 0.43 pence and 
capital gains of 14.97 pence).  Total return for the period increased by 
10.2% compared to a gain of 33.1% in the FTSE AIM All-share Total Return 
Index. Given the constraints placed on managers of VCT funds we are 
pleased with this performance. 
 
   INVESTMENTS 
 
   The investment manager, Hargreave Hale Limited, invested a further 
GBP5.52 million in 21 qualifying companies during the year. The fair 
value of Qualifying Investments at 28 February 2017 was GBP21.39 million 
invested in 64 AIM companies and 7 unquoted companies. GBP24.16 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. 
 
   DIVIDEND 
 
   An interim dividend of 2.00 pence was paid on 2 December 2016 (Interim 
2016: 2.00 pence). 
 
   A final dividend of 4.00 pence is proposed (2016: 4.00 pence) which, 
subject to shareholder approval at the Annual General Meeting will be 
paid on 25 July 2017, to ordinary shareholders on the register on 16 
June 2017. 
 
   Provided the underlying investment performance of the Company remains 
acceptable and the liquidity position allows, it remains our policy to 
target a 5% distribution yield referenced to the year end NAV per share 
of the Company. 
 
   BUYBACKS 
 
   In total, 312,908 shares were purchased during the year at a weighted 
average price of 99.25 pence per share. A further 341,473 shares have 
been purchased since the year end at a weighted average price of 109.70 
pence. 
 
   The Board continues to target a share price discount of 5% to 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 - 2015 
 
   On 17 November 2016 the joint offer for subscription for new shares in 
Hargreave Hale AIM VCT 1 plc and Hargreave Hale AIM VCT 2 plc (launched 
in December 2015) was closed with GBP11.5 million raised for Hargreave 
Hale AIM VCT 2 plc. 
 
   JOINT OFFER FOR SUBSCRIPTION - 2016 
 
   The Directors of the Company announced on 14 December 2016 the launch of 
a new 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. 
 
   VCT STATUS 
 
   To maintain its VCT qualifying status we must invest at least 70% of the 
net funds raised in any one accounting period in Qualifying Investments 
by the start of the accounting period containing the third anniversary 
of the date on which the funds were raised. I am pleased to report that 
we continue to make good progress against this test and, at the year end, 
we had achieved 88.88% and have satisfied all the relevant tests. 
 
   VCT REGULATION 
 
   In order to comply with EU regulations regarding State Aid, the VCT 
rules were subject to substantial changes in the budget on 8 July 2015, 
which came into effect on 18 November 2015. In the round we do not think 
these rules have greatly affected the Company, although we will no 
longer be able to make non-qualifying investments in companies listed on 
AIM or UK government bonds. We are able to continue to invest via the 
Marlborough Special Situations Fund and we are free to invest in 
companies listed on the main market. 
 
   BOARD CHANGES 
 
   Giles Hargreave stepped down as a director of the Company on 13 December 
2016. I would like to take this opportunity to thank Giles for all his 
hard work on the Board. Following the resignation of Giles Hargreave, 
Oliver Bedford was appointed as a non-executive director of the Company 
on 13 December 2016. 
 
   ELECTRONIC COMMUNICATIONS 
 
   Following approval at a general meeting on 12 January 2017, the Company 
has adopted electronic communications. Your Board believes this is 
beneficial to the Company and its shareholders and will result in 
substantial cost savings and improved timeliness and transparency of 
communications. 
 
   CAPITAL REDUCTION 
 
   Following approval at a general meeting on 12 January 2017 the balance 
of the share premium account was cancelled on 18 May 2017 resulting in 
GBP37.5 million being transferred to the special reserve Reserves 
available for distribution as at the date of this document are GBP7.9 
million. 
 
   AUDIT TENDER 
 
   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 are approaching the maximum term and as such a tender 
process will be completed in the current financial year. 
 
   OUTLOOK 
 
   The year has started well with a further increase in NAV up until 31 May 
2017 of 9.72 pence equivalent to 8.8%. Further successful fundraising 
during the past year has increased our net assets as at the present date 
to around GBP45m for the first time. This has led to greater diversity 
in our portfolio. 
 
   So far the investment climate post Brexit has remained surprisingly 
benign. However, it would be dangerous to be too complacent. Company 
valuations have benefited from the steady economic upswing of the past 
few years and AIM in particular has attracted interest, and consequently 
higher valuations, from investors seeking Inheritance Tax relief. 
 
   Less than half of our net assets at 28 February were invested in 
qualifying assets. Our main challenge therefore is to identify and 
invest in more high quality, VCT qualifying, opportunities. To this end 
we have been more active investing in private companies which now 
account for 8.8% of the portfolio. We are seeing some exciting 
opportunities in this field but will take a measured approach 
recognising that the work involved in this style of investment is more 
time consuming and these investments are typically early stage high risk 
companies; also there is rarely any secondary market liquidity until 
there is a change of control or a public market listing. 
 
   David Hurst-Brown 
 
   Chairman 
 
   Date: 5 June 2017 
 
   For further information, please contact: 
 
   Stuart Brookes 
 
   Company Secretary 
 
   Hargreave Hale AIM VCT 2 Plc 
 
   01253 754740 
 
   Annual Report and Accounts - Year ended 28 February 2017: 
https://hargreaveaimvcts.co.uk/application/files/7514/9668/0617/Hargreave_Hale_Annual_Report_A4_May_2017_Single_pages_050617_4_FINAL2.pdf 
 
 
   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

June 05, 2017 12:58 ET (16:58 GMT)

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