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HHVT Hargreave 2

112.50
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Hargreave 2 LSE:HHVT London Ordinary Share GB00B1GDYS53 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 112.50 0.00 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

Hargreave Hale AIM 2 Hargreave Hale Aim Vct 2 Plc : Interim Management Statement

28/07/2017 11:15am

UK Regulatory


 
TIDMHHVT 
 
 
   Investment Manager's Report 
 
   This report covers the first quarter of the 2017/18 financial year, 1 
March 2017 to 31 May 2017. 
 
   Investment Report 
 
   Global equity markets had a strong quarter on the back of positive 
economic data.  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. 
 
   Despite posting large gains, UK equity markets were volatile over the 
period as investors responded to the uncertain economic outlook and 
political instability within the UK. 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 31 May 2017, the NAV increased from 109.86p to 
119.58p. No dividends were paid, giving investors a total return of 9.72 
pence per share, which translates to a gain of 8.9%. During the same 
period the FTSE AIM All-Share Total Return gained 9.9% and the FTSE 100 
Total Return gained 4.7%. 
 
   The qualifying investments made a net contribution of 4.94 pence per 
share with thirty-two out of the seventy-five making gains, ten marking 
time and thirty-three losing ground. The balance was a mixture of 
non-qualifying portfolio gains, costs, income and small gains made 
through share buy backs. 
 
   ECSC was the top performing qualifying investment (+142.9%, +1.00 pence 
per share). The company operates as a cyber security consultant and 
managed services provider. After floating in December 2016, the shares 
rallied hard as investors sought exposure to a sector that is expected 
to benefit from new UK legislation to be introduced next year.  Interest 
was further boosted by a series of high profile cyber-attacks that 
further highlighted the potential consequences of an attack.  The rally 
took the shares considerably beyond fair value, triggering a series of 
disposals that significantly reduced our exposure. Management have since 
announced downward revisions to their 2017 revenue projections, which 
have now pushed the shares back towards IPO price. Faron Pharma (+120.3%, 
+0.86 pence per share) performed very well following a positive update 
in May that confirmed their continued progress towards the conclusion of 
its Phase 3 clinical programme for Traumakine. We expect an update later 
this year.  Having added to our position in February, we decided to lock 
in some profit as the valuation increasingly looked to price in a 
successful outcome ahead of publication of the trial data.  Eagle Eye 
(+123.3%, +0.75 pence per share) and Hardide (+78.9%, +0.75 pence per 
share) also performed well. 
 
   The biggest losses within the period came from DP Poland (-17.0%, -0.38 
pence per share) which saw its shares slide gradually lower. The shares 
have had a remarkable run and we do not believe there is anything 
structurally wrong with the investment. The company raised GBP5m in June 
2017 and recently reported trading in-line with management expectations 
with 17% growth in like-for-like system sales. Other losses came from 
Medaphor (-40.0%, -0.13 pence per share), Paragon Entertainment (-23.8%, 
-0.12 pence per share) and Creo (-7.8%, -0.12 pence per share). 
Medaphor is still dealing with the fallout from a US patent dispute 
(resolved in Dec 16); Paragon and Creo continue to progress in line with 
our expectations. 
 
   We made six qualifying investments over the period, which included three 
additional investments into existing qualifying companies (one private) 
and three IPOs. We invested a total of GBP2.2m into qualifying 
investments over the quarter. 
 
   Following strong runs, we reduced the size of our investments in ECSC, 
Faron Pharma, and Gfinity. Due to persistent poor performance, we exited 
investments in Directa Plus, Haydale Graphene and Audioboom. 
 
   Portfolio Structure 
 
   The VCT is comfortably through the HMRC defined investment test and 
ended the period at 86.75% invested as measured by the HMRC investment 
test. By market value, the VCT had a 47.8% weighting to qualifying 
investments. 
 
   The allocation to non-qualifying equity investments increased marginally 
from 20.6% to 22.0%, representing the funds on-going participation in 
non-qualifying equity investments. In line with the investment policy, 
we continued to make use of the Marlborough Special Situations Fund as a 
temporary home for proceeds from fundraising. The allocation marginally 
increased from 12.0% to 15.2% this year. We are pleased to report that 
the non-qualifying investments contributed +5.12 pence per share to the 
overall gains. Fixed income as a percentage of the fund fell from 0.4% 
to 0.3% and cash fell from 20.3 to 15.1%. 
 
   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, 279,206 ordinary shares were purchased between 1 March 2017 
and 31 May 2017, at a total value of GBP306,132. Since the period end, a 
further 89,267 ordinary shares were purchased at a total value of 
GBP100,343. 
 
   Dividends 
 
   There were no dividends paid out in the 3 months to 31 May 2017, a final 
dividend of 4 pence per ordinary share was paid on 25 July 2017. 
 
   Post Period End Update 
 
   Deal flow has been strong since period end with five additional 
qualifying investment made in DP Poland, Gousto, Honest Brew, Imaginatik 
and Surface Transforms.  We have executed an investment agreement for 
another investment with completion delayed pending HMRC advanced 
assurance.  We have several other deals that may complete in the coming 
weeks. 
 
   For further information please contact: 
 
 
 
 
 
  Stuart Brookes 
Company Secretary 
 
  Hargreave Hale AIM VCT 2 plc 
01253 754740 
 
 
   Date: 28 July 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 2 plc via Globenewswire 
 
 
  https://hargreaveaimvcts.co.uk/ 
 

(END) Dow Jones Newswires

July 28, 2017 06:15 ET (10:15 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.

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