News Column

Final Results

May 27, 2014

LONDON--(BUSINESS WIRE)--

Hargreave Hale AIM VCT2 plc

Preliminary Announcement of Final Results for the year ending 28 February 2014.

INVESTMENT MANAGER AND INVESTMENT OBJECTIVES

The Company is managed by Hargreave Hale Limited, a fund manager with approximately £4.15 billion under administration and £3.7 billion under managed accounts. Hargreave Hale has been managing investments in UK Small and Micro Cap companies for 16 years and VCTs for 10 years.

The Company's investment objectives are:

  • to invest in a diversified portfolio of small UK based companies on a high risk, medium term capital growth basis, primarily being companies which are traded on AIM and which have the opportunity for significant value appreciation;
  • to invest in smaller companies which may not be readily accessible to private individuals and which also tend to be more risky;
  • to maximise distributions to shareholders from capital gains and income generated from the Company’s funds; and
  • targeted investment in equities which are non-qualifying investments on an opportunistic basis to boost the performance of the Company.
  • to maintain the Company’s exposure to small companies through an initial investment of new capital into the Marlborough Special Situations Fund pending investment into Qualifying Companies.

    FINANCIAL HIGHLIGHTS

    Ordinary Shares (as at 28 February):   2014   2013
     
    Net asset value per share 120.24p 95.69p
    Cumulative distributions paid per share since launch 31p 26p
    Total return per share 151.24p 121.69p
     
     
    Annual Returns per share:
    Revenue return (1.73)p (2.28)p
    Capital return 33.61p 6.31p
    Combined Return 31.88p 4.03p
     
    Dividends per share:
    Interim paid 2.0p 2.0p
    Final proposed 4.0p 3.0p
    Total dividend for year 6.0p 5.0p
     
    Performance Benchmark:
    Total Return 159.2% 128%
    FTSE AIM All-share Index 77.1% 64%
    (results rebased to 100 at 6 April 2007)


    CHAIRMAN’S STATEMENT

    Introduction

    We are pleased to report on a successful year. The fund has performed well and our recent equity raising efforts have more than doubled the size of assets under management creating a much more cost effective business to the benefit of all our shareholders. I would like to welcome all our new shareholders.

    At 28 February 2014 the NAV was 120.24 pence which after adjusting for the dividends paid gives a total return since inception of 151.24 pence. The profit per ordinary share for the year was 31.88 pence per share (comprising revenue losses of 1.73 pence and capital gains of 33.61 pence). During the financial year as a whole the FTSE AIM All Share Index rose by 20.5% and the FTSE All-share index rose by 9.5%. Whilst the FTSE AIM All-Share index is the only sensible benchmark, it is not strictly comparable as it has a high proportion of large mining and commodities stocks in which a VCT cannot invest.

    Investments

    The Investment Manager, Hargreave Hale Limited, invested a further £2.3 million in 20 qualifying companies during the year. The Fair Value of qualifying investments at 28 February 2014 was £10.4 million invested in 39 AIM companies and 5 unquoted companies. The balance of the fund, £6.4 million was held in a mix of cash, fixed income and other non-qualifying equities.

    Dividend

    An interim dividend of 2 pence was paid on 8 November 2013 (2012 – 2 pence).

    A final dividend of 4 pence is proposed (2013 – 3 pence) which, subject to shareholder approval at the AGM will be paid on 10 July 2014, to ordinary shareholders on the register on 6 June 2014.

    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 NAV of the Company.

    Buybacks

    In total, 438,700 shares were purchased during the year at an average price of 94.41 pence per share.

    The Board continues to target a discount of 5% for market purchases. It should be emphasised that this target is non-binding and dependent on circumstances including the funds liquidity from time to time and market conditions.

    Issue of Equity

    The joint offer for subscription (together with Hargreave Hale AIM VCT 1) closed on 25 September 2013 and resulted in funds being received for Hargreave Hale AIM VCT 2 of £2.74 million and the issue of 2.82 million shares.

    New Joint Offer for Subscription of Ordinary Shares

    The Directors of the Company announced on 1 November 2013 the launch of a new joint offer for subscription for new shares in both VCT’s to raise up to £10 million into each company. The Offer was approved by shareholders of the Company at a General Meeting on 31 October 2013 and is open to both new and existing shareholders.

    Since its launch on 1 November 2013 the offer has resulted in funds being received of £4.28 million and the issue of 3.88 million shares. The Offer will close at 12pm on 31 October 2014 or earlier if the maximum subscription has been reached before then. Since the year end a further £1.97m has been received under the Offer, bringing the total raised to £6.25m.

    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 within three years. I am pleased to report that at the year-end we had achieved 88.97% and have satisfied all the relevant tests.

    Cancellation of Share Premium and Capital Redemption Reserve

    At the Annual General Meeting of the Company held on 8 July 2013, a special resolution was passed approving the cancellation of an amount standing to the credit of the Company's share premium account and capital redemption reserve, subject to the approval of the Court.

    The Company is pleased to announce that, following the approval of the Court and the subsequent registration of the Court order with the Registrar of Companies, the cancellation has now become effective. £7,813,065 and £24,923, previously held in the share premium account and capital redemption reserve respectively, has been transferred to the Company's special reserve account.

    Outlook

    Over the past 12 months we have enjoyed most favourable investment conditions. The UK economy has surprised many with its strong growth. Inflation and interest rates have been benign and Eurozone worries have abated – for the moment. Against this background the AIM market has done especially well stimulated by a number of Government initiatives such as their eligibility for inclusion in ISA funds and more recently their exemption from Stamp Duty.

    Nonetheless there remain huge political and economic uncertainties both internationally and nearer to home. The next 12 months will see the Scottish Referendum and a General Election in the UK. Markets are likely to be nervous ahead of both these milestones because, in each case their outcome could significantly change the business environment. Against this backdrop we expect further, perhaps greater market volatility.

    We feel in a good position to operate in these conditions. As of the end of February 2014, our larger fund was invested 88.97% in Qualifying companies (as defined under the HMRC rules) and yet the Non Qualifying portfolio accounted for 37.5% by value of the fund. For the immediate future we therefore have no great pressure to make any further Qualifying investments and at the same time we have ample potential liquidity should our view of the markets become more defensive.

    David Hurst-Brown

    Chairman

    Date: 23 May 2014

    The Directors each confirm to the best of their knowledge that:

    a) the financial information in this release has been prepared in accordance with UK Generally Accepted Accounting Practice and gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

    b) the Annual Report, to be published shortly, includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

    DIRECTORS’ REMUNERATION

    The Directors’ Remuneration Report was approved by the Board of Directors on 23 May 2014 and will be further subject to a binding vote at the AGM being held on the 4 July 2014 and every year thereafter.

    INCOME STATEMENT

    For the year ended 28 February 2014

    Note
    Revenue   Capital   Total
    £000£000£000
    Net profit on investments held at fair value through profit or loss - 3,737 3,737
    Income 83 - 83
    -------- -------- --------
    83 3,737 3,820
    -------- -------- --------
    Management fee (41) (124) (165)
    Other expenses (228) - (228)
    -------- -------- --------
    (269) (124) (393)
    -------- -------- --------
    (Loss)/Profit on ordinary activities before taxation (186) 3,613 3,427
    Taxation - - -
    -------- -------- --------
    (Loss)/Profit after taxation (186) 3,613 3,427
    -------- -------- --------
    (Loss)/Profit per share 2 (1.73)p 33.61p 31.88p

     

    -------- -------- --------


    INCOME STATEMENT

    For the year ended 28 February 2013

    Note
    Revenue   Capital   Total
    £000£000£000
    Net loss on investments held at fair value through profit or loss - 551 551
    Income 62 - 62
    -------- -------- --------
    62 551 613
    -------- -------- --------
    Management fee (21) (63) (84)
    Other expenses (217) - (217)
    -------- -------- --------
    (238) (63) (301)
    -------- -------- --------
    (Loss)/Profit on ordinary activities before taxation (176) 488 312
    Taxation - - -
    -------- -------- --------
    (Loss)/Profit after taxation (176) 488 312
    -------- -------- --------
    (Loss)/Profit per share 2 (2.28)p 6.31p 4.03p

     

    -------- -------- --------


    The total column of these statements is the income statement of the Company. All revenue and capital items in the above statement derive from continuing operations. There are no recognised gains or losses other than the profit for the year.

    BALANCE SHEET Company registration number: 5941261

    As at 28 February 2014 (in England and Wales)

    20142013
     
    Note    
    £000£000
     
    Fixed assets
    Investments at fair value through profit or loss 14,061 6,503
    -------- --------
     
    Current assets
    Debtors 24 20
    Cash at bank 2,717 1,338
    -------- --------
    2,741 1,358
     
    Creditors: amounts falling due within one year (109) (90)
    -------- --------
    Net current assets 2,632 1,268
    -------- --------
    Net assets 16,693 7,771
    -------- --------
     
    Capital and Reserves
    Called up share capital 139 81
    Special reserve 8,152 1,235
    Capital reserve – realised (108) (22)
    Capital reserve – unrealised 5,059 1,360
    Revenue reserve (768) (582)
    Share Premium 4,217 5,676
    Capital redemption reserve 2 23
    -------- --------
    Equity shareholders’ funds 16,693 7,771
    -------- --------
     
    Net asset value per share 3 120.24p 95.69p


    CASH FLOW STATEMENT

    For the year ending 28 February 2014

      20142013
     
      £000   £000
    Net cash (outflow) from operating activities (295) (215)
    Net financial investment (3,821) (561)
    Dividends paid (507) (389)
    --------- ---------
    Cash (outflow) before management of liquid resources (4,623) (1,165)
    Financing 6,002 1,355
    --------- ---------
    Increase in cash 1,379 190
    --------- ---------


    RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ FUNDS

    For the year ending 28 February 2014

    Ordinary Shares

     

    Share Capital

      Capital Redemption Reserve   Capital Reserve Realised   Capital Reserve Unrealised  

    Special Reserve

     

    Share Premium

     

    Revenue Reserve

     

    Total

    £000£000£000£000£000£000£000£000
    At 1 March 2013 81 23 (22) 1,360 1,235 5,676 (582) 7,771
     
    Share buybacks (4) 4 (414) (414)
    Subscriptions 62 6,354 6,416
    Equity dividends paid (507) (507)
    Capital Reduction   (25)     7,838 (7,813)   0
    Realised gain on investments 38 38
    Unrealised gains on investments 3,699 3,699
    Management fee charged to capital (124) (124)
    Revenue loss after taxation for the period             (186) (186)
    Total profit/(loss) after taxation (86) 3,699 (186) 3,427
    ------ ------ --------- --------- --------- --------- ------ ---------
    At 28 February 2014 139 2 (108) 5,059 8,152 4,217 (768) 16,693
    ------ ------ --------- --------- --------- --------- ------ ---------


    Reserves available for distribution are capital reserve realised, special reserve and revenue reserve.

    RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ FUNDS

    For the year ending 28 February 2013

    Ordinary Shares

     

    Share Capital

      Capital Redemption Reserve   Capital Reserve Realised   Capital Reserve Unrealised  

    Special Reserve

     

    Share Premium

     

    Revenue Reserve

     

    Total

    £000£000£000£000£000£000£000£000
    At 1 March 2012 67 2 (46) 896 3,629 2,351 (406) 6,493
     
    Share buybacks (21) 21 (2,005) (2,005)
    Subscriptions 35 3,325 3,360
    Equity dividends paid         (389)     (389)
    Realised gain on investments 87 87
    Unrealised gains on investments 464 464
    Management fee charged to capital (63) (63)
    Revenue loss after taxation for the period             (176) (176)
    Total loss after taxation 24 464 (176) 312
    ------ ------ --------- --------- --------- --------- ------ ---------
    At 28 February 2013 81 23 (22) 1,360 1,235 5,676 (582) 7,771
    ------ ------ --------- --------- --------- --------- ------ ---------


    Notes to the preliminary announcement

    1. The financial information set out in this preliminary announcement does not constitute the Company’s statutory accounts for the years ended 28 February 2014 or 28 February 2013. Statutory accounts for the year ended 28 February 2013 have been filed with the Registrar of Companies and those of the year ended 28 February 2014 will be delivered to the Registrar in due course; both have been reported on by the Independent Auditors. The independent auditors’ reports on the Statutory accounts for the years ended 28 February 2013 and 28 February 2014 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. The financial information in this preliminary announcement has been prepared under the historical cost convention, except for the revaluation of certain financial instruments, and in accordance with UK GAAP and with the Statement of Recommended Practice (SORP) for Financial Statements of Investment Trust Companies issued in January 2009. The accounting policies adopted in these preliminary results have been consistently applied to all the years presented and are consistent with the policies used in the preparation of the statutory accounts for the years ended 28 February 2014 and 28 February 2013. The full statutory annual accounts will be published in May 2014. Copies may in due course be obtained during normal business hours from Hargreave Hale Limited, 9-11 Neptune Court, Hallam Way, Blackpool, FY4 5LZ.

    The Annual general meeting of the company will be held at the Company’s registered office on 4 July 2014 at 10.00am.

    2. Revenue return per ordinary share is based on a net revenue loss on ordinary activities after tax of £185,984 (2013 -£176,238 loss) and on 10,750,728 (2013 –7,745,745) ordinary shares, being the weighted average number of ordinary shares in issue during the year. Capital return per ordinary share is based on a net capital profit on ordinary activities after tax of £3,612,932 (2013 - £488,149) and on 10,750,728 (2013 – 7,745,745) ordinary shares, being the weighted average number of ordinary shares in issue during the year.

    3. The net asset value per ordinary share at 28 February 2014 of 120.24p (2013 – 95.69p) is based on net assets of £16,692,589 (2012 - £7,770,354) and on 13,882,346 shares, being the number of ordinary shares in issue as at 28 February 2014 (2013 – 8,120,031).

    INVESTMENT PORTFOLIO SUMMARY

    Ordinary Share Fund

    As at 28 February 2014

      Book Cost   Valuation   Valuation
    Qualifying investments£000£000%
     
    Mexican Grill Ltd (A Preference Shares) 277 594 4.22
    Advanced Computer Software Group plc 68 499 3.55
    Intercede Group plc 91 480 3.41
    TrakM8 Holdings plc 160 421 3.00
    WANDisco plc 53 395 2.80
    Quixant plc 120 378 2.69
    Flowgroup plc 268 366 2.60
    Ideagen plc 100 361 2.57
    EKF Diagnostic Holdings plc 150 360 2.56
    Hardide plc 77 357 2.54
    Mycelx Technologies Corporation plc 150 343 2.44
    Lidco Group plc 146 313 2.23
    Porta Communications plc 200 310 2.20
    Fusionex International plc 69 302 2.15
    Omega Diagnostics Group plc 144 297 2.11
    Outsourcery Group Ltd 300 291 2.07
    AnimalCare Group Ltd 100 276 1.97
    Lombard Risk Management plc 92 276 1.96
    TLA Worldwide plc 150 270 1.92
    Plastics Capital plc 202 246 1.75
    Microsaic Systems plc 173 238 1.69
    Reneuron Group plc 179 220 1.56
    Sanderson Group plc 200 218 1.55
    Electric Word plc 185 217 1.54
    Kalibrate Technologies plc 161 196 1.39
    Paragon Entertainment Ltd 200 184 1.31
    Proxama plc 63 183 1.30
    Everyman Media Group plc 172 179 1.28
    Clean Air Power Ltd 150 173 1.23
    Belvoir Lettings plc 150 158 1.13
    MoPowered Group plc 150 147 1.05
    MartinCo plc 113 143 1.02
    Tangent Communications plc 150 135 0.96
    GetLenses plc 132 132 0.94
    Imaginatik plc 100 128 0.91
    Corac Group plc 125 108 0.77
    Nektan Ltd 70 84 0.59
    DP Poland plc 77 80 0.57
    Tristel plc 80 78 0.55
    Ilika plc 68 75 0.54
    Fulcrum Utlility Services Ltd 100 70 0.50
    Mexican Grill Ltd (Ordinary Shares) 31 66 0.47
    Sphere Medical Holdings plc 150 41 0.29
    Corfe Energy Ltd 25 25 0.18
    Brigantes Energy ltd 25 13 0.09
    -------- --------- -------
    Total qualifying investments 5,946 10,426 74.15
      Book Cost   Valuation   Valuation
    Non-Qualifying investments£000£000%
     
    Marlborough Special Situations Fund 1,194 1,368 9.73
    -------- --------- -------
    Total – Unit Trusts 1,194 1,368 9.73
     
    Nationwide Building Society 7.971% 2049 247 260 1.85
    Scottish Amicable Finance 8.5% 2049 154 170 1.21
    Petrobras International Finance 6.25% 2026 148 149 1.06
    UK Treasury 2.5% 2024 121 114 0.81
    -------- --------- -------
    Total – Corporate bonds 670 693 4.93
     
    Advanced Computer Software Group plc 162 250 1.77
    Egdon Resources plc 140 196 1.40
    Vertu Motors plc 76 126 0.90
    Hydrodec Group plc 101 125 0.88
    Restore plc 91 121 0.86
    Amerisur Resources plc 93 119 0.84
    Daily Mail & General Trust 80 105 0.75
    DX plc 72 93 0.66
    Idox plc 69 81 0.57
    Telford Homes plc 49 72 0.51
    Tarsus Group plc 72 69 0.49
    Reneuron Group plc 41 57 0.41
    Plethora Solutions Holdings plc 39 39 0.28
    Dunelm Group plc 33 35 0.25
    Genagro Ltd 22 27 0.19
    HELIUS Energy plc 20 21 0.15
    Optimal Payments plc 8 11 0.08
    Mycelx Technologies Corporation plc 8 10 0.07
    Westmount Energy Ltd 9 9 0.06
    Mexican Grill Ltd (A Preference Shares) 3 5 0.04
    Microsaic Systems plc 1 1 0.01
    TLA Worldwide plc 1 1 0.01
    WANDisco plc 1 1 0.01
    Paragon Entertainment Ltd 1 0 0
    -------- --------- -------
    Total – non-qualifying equities 1,192 1,574 11.19
    -------- --------- -------
    Total – non-qualifying investments 3,056 3,635 25.85
    --------- --------- -------
    Total investments 9,002 14,061 100.00
    --------- --------- -------


    The majority of investments held within the portfolio are listed and/or headquartered in the UK with the exception of the following:

    Clean Air Power Ltd: UK listed, headquartered in Hamilton, Bermuda.

    Fulcrum Utility Services Ltd: UK listed but registered in Cayman Islands. Headquartered in Sheffield.

    Fusionex International Plc: UK listed, registered in Jersey but headquartered in Selangor, Malaysia.

    Genagro Ltd: Not listed but headquartered in Jersey.

    MyCelx Technologies Corporation plc: UK listed but headquartered in Georgia, USA.

    Nektan Ltd: A non-listed company and headquartered in Gibraltar.

    Petrobras International Finance: Listed in Sao Paulo and New York but headquartered in Brazil.

    Westmount Energy Ltd: UK listed but registered and headquartered in Jersey.

    WANDisco plc: UK listed, registered and domiciled in St Helier, Jersey but headquartered in Sheffield.

    Date: 23 May 2014

    For further information please contact:

    Stuart Brookes

    Company Secretary

    Hargreave Hale AIM VCT2 plc

    01253 754740




    Hargreave Hale AIM 2

    Source: Hargreave Hale AIM 2


  • For more stories on investments and markets, please see HispanicBusiness' Finance Channel



    Source: Business Wire (UK Regulatory)