Cultivating opportunities

Annual report and accounts

for Hargreave Hale AIM VCT plc

year ended 30 September 2023

Page

Strategic report

Financial highlights for the year ended 30 September 2023 3

Financial calendar 3

Chair’s statement 4

The Company and its business model 10

Investment objectives, policy and strategy 11

Key performance indicators 14

Section 172 statement 18

Principal and emerging risks and uncertainties 22

Long term viability statement 24

Other matters 25

Summary of VCT regulations 26

The Investment Manager and the Administrator 27

Investment Manager’s report 29

Investment portfolio summary 33

Top ten investments 37

Governance

Board of Directors 41

Directors’ report 42

Directors’ remuneration report 46

Corporate governance 51

Report of the Audit Committee 56

Report of the Management and Service Provider Engagement Committee 59

Statement of Directors’ responsibilities 60

Financial statements

Independent Auditor’s report 62

Income statement 69

Balance sheet 70

Statement of changes in equity 71

Statement of cash ows 73

Notes to the nancial statements 74

Alternative performance measures 89

Glossary of terms 91

Shareholder information 93

Company information 95

Notice of annual general meeting 96

Contents

Strategic report

Highlights

The report has been prepared by the Directors in accordance with the requirements of Section 414A of the

Companies Act 2006.

Financial highlights for the year ended 30 September 2023

Net asset value

(NAV) per share

NAV total return Tax free dividends

paid in the period

Share price total

return

Ongoing charges

ratio

46.34p

-14.70%

(1)

5.00p -23.51%

(1)

2.24%

(1)

●

£13.6 million invested in Qualifying Companies in the year.

●

91.65% invested by VCT tax value in Qualifying Investments at 30 September 2023.

●

Final dividend of 1.50 pence per share proposed for the year end.

●

Oer for subscription closed to further applications on 10 February 2023, having raised £40 million.

●

New Oer for subscription launched on 7 September 2023 to raise £20 million, together with an

over-allotment facility to raise up to a further £20 million.

Summary nancial data 2023 2022

NAV (£m) 151.92 160.51

NAV per share (p) 46.34 60.19

NAV total return (%)

(1)

-14.70 -33.42

Market capitalisation (£m) 140.96 167.32

Share price (p) 43.00 62.75

Share price discount/premium to NAV per share (%)

(1)

-7.21 +4.25

(2)

Share price 5 year average discount to NAV per share (%)

(1)

-5.64 -5.65

Share price total return (%)

(1)

-23.51 -28.06

(Loss)/gain per share for the year (p) -9.32 -33.42

Dividends paid per share (p) 5.00 6.65

Ongoing charges ratio (%)

(1)

2.24 2.06

(1) Alternative performance measure denitions and illustrations can be found on pages 89 to 92.

(2) The FY22 year end premium to NAV is a function of the year end NAV of 60.19 pence per share and the year end share price.

Financial Calendar

Financial calendar

Record date for nal dividend 5 January 2024

Payment of nal dividend 15 February 2024

Annual General Meeting 8 February 2024

Announcement of half-yearly results for the six months ending 31 March 2024 June 2024

Payment of interim dividend (subject to Board approval) July 2024

Chair’s statement

Introduction

I would like to welcome shareholders who joined

us as a result of the recent oers for subscription.

As always, we are grateful to new and existing

shareholders who continue to support the VCT,

despite the dicult times we continue to live

through.

The nancial year started with some signicant

headwinds, including high ination, a dislocation in

the UK Government bond market and a forecast by

the Bank of England that the United Kingdom would

endure the longest recession of the last 100 years.

Whilst we would not wish to downplay the hardship

that followed, the economy was stronger than

predicted, in part due to Government intervention

in the energy market over the winter. UK consumer

condence staged a partial recovery o historic lows,

employment remained strong and, towards the end

of the period under review, UK real wage growth

turned positive.

As I noted in our interim report, uncertainty is a

theme that we have all learned to live with these

past few years. To this list, we must now add the

implications of the terrible events that continue to

unfold in Israel and Gaza.

Whilst we are encouraged that much of the deep

pessimism that permeated markets at the start

of the nancial year did not manifest, we remain

mindful of the macro-economic backdrop, both here

and abroad. The cost of borrowing has changed

dramatically within the year, impacting the nancial

sector and companies with high levels of debt. Last

year, this manifested itself within the UK pension

industry. This year, stress emerged in parts of the

US and European banking system. Remote as this

might seem, it aected companies closer to home,

particularly pre-clinical and clinical stage companies

within the life sciences industry that were reliant

upon funding from Silicon Valley Bank (SVB). Those

exposed to SVB became more cautious with their

budgets, which in turn reduced demand for the

products and services sold into them. Several of our

portfolio companies have seen weaker trading as a

consequence of this.

When launching the 2022 oer for subscription, we

were cautious about the short-term outlook but

spoke about the opportunity for value creation over

the medium term. Our experience over the period

under review is consistent with that view. Generating

short-term performance has been very dicult with

the market applying asymmetrical responses to news

ow: positive updates are not getting full recognition

whilst those that disappoint are often treated harshly.

Stock market liquidity is a major contributory factor.

With many active managers now deep into their third

year of outows, there are few institutional buyers of

shares in small UK companies. Taken together, this

has left the sector in deep value territory.

The malaise that continues to hang over markets

in the UK and elsewhere has heavily impacted the

primary markets in which companies raise new capital

through the sale of new shares. With valuations

so depressed and very little capital available for

investment (away from VCTs), very few companies

have undertaken an initial public oering (IPO). On

AIM there were just 3 VCT qualifying initial public

oerings within the year. Despite this, we are

pleased to report that we deployed capital into VCT

qualifying companies ahead of budget, highlighting

the importance of having a dened pool of capital, a

diversied portfolio and a exible investment policy.

Performance

As described in more detail in the Investment

Manager’s report, this has been a second consecutive

dicult year for performance. In contrast to last

year, when we suered a substantial (unrealised) loss

of value across investments in public and private

companies, this year the material declines were

conned to the portfolio of investments in public

companies. The value of the investments in private

companies were protected by the dicult decisions

made last year and, in some cases, better trading.

Although the markets demand a cautious approach,

we are hopeful that we might start to see some value

recovery within the private companies in the current

year. It is worth reiterating at this point that the

predominant factor that drove down the valuations

in our investments in private companies last year

was the broad based (and deep) de-rating of publicly

listed companies.

Whilst higher interest rates are a source of concern

for many and likely to weigh on economic activity,

they have also made a signicant positive impact on

the income generated from within the VCT, either

from cash held on deposit or from recently acquired

short-dated xed income investments. Investment

grade xed income assets were a feature of the

investment portfolio for a number of years during

and after the nancial crisis until negative real yields

(and therefore high prices) forced us to exit those

positions. We have been able to use the sell o in the

bond market this year to rebuild positions that will

continue to generate substantial income for the VCT

for several years.

At 30 September 2023, the NAV per share was

46.34pence which, after adjusting for the dividends

paid in the year of 5 pence, gives a NAV total return

for the year of -14.70 %

(1)

. The NAV total return

(dividends reinvested) for the year was -15.93%

(1)

compared with -8.28 % in the FTSE AIM All-Share

Index Total Return (also calculated on a dividends

Index reinvested basis). The Directors consider

this to be the most appropriate benchmark from a

shareholder’s perspective, however, due to the range

of assets held within the investment portfolio and

the investment restrictions placed on a VCT it is not

wholly comparable.

The earnings per share total return for the year was

a loss of 9.32 pence (comprising a revenue prot of

0.27 pence and a capital loss of 9.59 pence). Revenue

income increased by 168% to £2.6m as a result of an

increase in dividends received from non-qualifying

equity, non-qualifying xed income investments

and bank interest. Interest accrued on loan note

instruments increased after the Investment Manager

made two follow on (qualifying) investments into

Kidly Ltd. For the rst time, income received into the

revenue account exceeded expenses, resulting in a

revenue prot for the year of 0.27 pence per share

(FY22: -0.36 pence per share).

The share price decreased from 62.75 pence to

43.00 pence over the reporting period which, after

adjusting for dividends paid, gives a share price

total return of -23.51%

, the fall amplied by the

normalisation of the share price, having briey traded

at a premium at the close of the last nancial year.

Investments

The Investment Manager invested £13.6 million into

10 Qualifying Companies during the period. The fair

value of Qualifying Investments at 30 September

2023 was £89.1 million (58.7% of NAV) invested in

63AIM companies and 5

(2)

unquoted companies. At

the year end, the fair value of non-qualifying equities

and the Marlborough Special Situations Fund was

£15.4 million (10.1% of NAV) and £8.3 million (5.4%

of NAV) respectively, with most of the non-qualifying

equities listed within the FTSE 350 and oering good

levels of liquidity should the need arise. £17.4 million

(11.4% of NAV) was held in short-dated investment

grade corporate bonds, £2.0 million (1.3% of NAV)

was invested in a UK Government bond exchange

traded fund and £19.2 million (12.7% of NAV) held in

cash at the period end. Further information can be

found in the Investment Manager’s report.

Dividend

The Directors continue to maintain their policy of

targeting a tax free dividend yield equivalent to 5% of

the year end NAV per share (see page25 for the full

policy).

In the 12-month period to 30 September 2023, the

Company paid dividends totalling 5 pence (2022:

6.65 pence). A special dividend of 2 pence and a nal

dividend of 2 pence (2021: 3.15 pence) in respect of

the 2022 nancial year was paid on 10 February 2023

and an interim dividend of 1.00 penny (2022: 1 penny)

was paid on 28 July 2023.

A nal dividend of 1.50 pence is proposed

(2022:2pence) which, subject to shareholder

approval at the Annual General Meeting, will be paid

on 15February 2024 to ordinary shareholders on the

Dividend re-investment scheme

Shareholders may elect to reinvest their dividend

by subscribing for new shares in the Company.

Further information can be found in the shareholder

information section on pages93 to 94.

On 10 February 2023, 1,836,516 ordinary shares

were allotted at a price of 54.95 pence per share,

which was calculated in accordance with the terms

and conditions of the dividend reinvestment scheme

(DRIS), on the basis of the last reported NAV per

share as at 20 January 2023, to shareholders who

elected to receive shares under the DRIS as an

alternative to the nal dividend for the year ended

30September 2022 and special dividend announced

on 19 December 2022.

On 28 July 2023, 591,318 ordinary shares were

allotted at a price of 49.29 pence per share, which

was calculated in accordance with the terms

and conditions of the DRIS, on the basis of the

last reported NAV per share as at 7 July 2023, to

shareholders who elected to receive shares under the

DRIS as an alternative to the interim dividend for the

year ended 30 September 2023.

Share Buybacks

To maintain compliance with the discount control and

management of share liquidity policy, the Company

purchased through share buybacks 7,183,338

ordinary shares (nominal value £71,833) during the

2023 nancial year at a cost of £3,636,841 (average

price: 50.63 pence per share).

As at 18December 2023, a further 2,039,414shares

have been repurchased post the year end at a cost of

£873,229 (average price: 42.82pence per share).

(1) Alternative performance measure denitions and illustrations can be found on pages 89 to 92.

(2) Excluding companies in administration or at risk of administration with zero value.

Share price discount

The Company aims to improve liquidity and to

maintain a discount of approximately 5 per cent.

to the last published NAV per share (as measured

against the mid-price) by making secondary

market purchases of its shares in accordance with

parameters set by the Board (see page 25 for the full

policy).

We continued to operate the discount control and

management of share liquidity policy eectively

during the period. As at 30 September 2023, the

Company had 1 and 5 year average share price

discounts of 6.06% and 5.64% respectively.

The Company’s share price was trading at a discount

of 7.21%

(1)

as at 30 September 2023 compared to

a premium of +4.25%

(1)

as at 30 September 2022,

this being calculated using the closing mid-price of

the Company’s shares on 30 September 2023 as a

percentage of the year end net asset value per share,

as published on 5 October 2023.

As at 15December 2023, the discount to NAV was

6.71% of the last published NAV per share.

Oer for subscription

The Directors of the Company announced on

5 September 2022 the launch of an oer for

subscription for shares to raise up to £20 million,

together with an over-allotment facility of up

to a further £30 million. On 10 February 2023,

the Company announced it had received valid

applications of approximately £40 million. The Board

decided not to utilise any further sums under the

over-allotment facility and therefore the oer for

subscription was closed to further applications.

The oer resulted in gross funds being received of

£40million and the issue of 66 million shares.

New Oer for subscription

The Directors of the Company announced on 7

September 2023 the launch of a new oer for

subscription for shares to raise up to £20 million,

together with an over-allotment facility of up to

a further £20 million. The oer was approved by

shareholders of the Company at a general meeting on

11 October 2023.

On 18December 2023, the Company had allotted

17.6million shares raising gross proceeds of

£8.1million. The Company has received valid

applications for a further £0.5million. Future

decisions by the Board about the potential use of

the over-allotment facility, in part or in full, will be

made with advice from the Investment Manager and

subject to investor demand and the deployment of

capital into VCT qualifying companies.

Cancellation of share premium

At the general meeting of the Company held on

7 October 2022, a special resolution was passed

approving the cancellation of the Company’s

share premium account to expand the size of the

Company’s distributable reserves.

We are pleased to conrm the cancellation of

the share premium account of the Company was

approved by the High Court of Justice in England and

Wales and, accordingly, the amount standing to the

credit of the share premium account (£133.2m) of the

Company as at 9May 2023 was cancelled.

Cost eciency

The Board reviews costs incurred by the Company

on a regular basis and is focused on maintaining

a competitive ongoing charges ratio (OCR). The

year end ongoing charges ratio was 2.24%

(1)

(FY22:2.06%

(1)

) when calculated in accordance

with the AIC’s “Ongoing Charges” methodology.

The increase in the OCR is principally driven by the

fall in the average net assets across the year that

followed the drop in the NAV per share. Other factors

included an increase in the number of independent

non-executive directors to ve and below ination

increases in remuneration. The Company also

made modest investments to improve shareholder

communication through investments into the

Company’s website, video updates and an increased

number of shareholder events. The Ongoing Charges

methodology divides ongoing expenses by average

net assets.

Board remuneration

Following a review of Board remuneration, and taking

into account peer group analysis and ination, the

Board has agreed to increase its remuneration by

5%, eective from 1 October 2023. The annual

remuneration of the Chair will increase to £41,000,

the independent non-executive directors to £32,000

and the non-independent non-executive director,

Oliver Bedford, to £29,500.

An additional fee of £1,500 will continue to be paid to

the Chair of the Management and Service Provider

Engagement Committee. The Chair of the Audit

Committee will continue to receive an additional fee

of £3,000.

Investment Manager

On 2 November 2022, the Company’s Investment

Manager changed its name from Hargreave

Hale Limited (trading as Canaccord Genuity

Fund Management) to Canaccord Genuity Asset

Management Limited (CGAM).

(1) Alternative performance measure denitions and illustrations can be found on pages 89 to 92.

Annual General Meeting

Shareholders are invited to attend the Company’s

Annual General Meeting (AGM) to be held at 4.45 pm

on 8 February 2024 at 88 Wood Street, London, EC2V

7QR. The AGM notice is set out on pages96 to 99.

The AGM will be followed by a presentation from the

Investment Manager and a drinks reception.

Those shareholders who are unable to attend

the AGM in person are encouraged to raise any

questions in advance with the Company Secretary

at HHV.CoSec@jtcgroup.com. The deadline for the

advance submission of questions is 5.00 p.m. on

1February 2024. Answers will be published on the

Company’s website on 8February 2024.

Shareholder Engagement

Shareholder engagement is given a high priority

by the Board. Following a recent review, the Board

agreed to signicantly improve the website and

develop new content (including video content) for

shareholders to provide more information about

the Company’s activities and performance. The new

website is live at www.hargreaveaimvcts.co.uk.

The Company is working hard to make new,

better and more accessible content and hope

that shareholders will nd the output useful.

The website also introduces new functionality to

allow shareholders to request by email updates

on shareholder events, the performance of the

Company (interim management statements, fact

sheets and video updates) and information on the

Company’s fundraising activities.

In addition to this, the Board wants to provide

shareholders with more opportunities to meet

directly with the Directors and the CGAM VCT

management team. As a result, the number of

in-person events has been increased with the

introduction of three new in-person quarterly

updates in February, May and August to sit alongside

the AGM in February and the annual shareholder

event in November. The Board will look to run an

event outside of London in the current nancial year

to improve access for those unable to attend London

based events. The Board is aware that increased

engagement carries a cost; we therefore hope

shareholders will be able to attend at least one of

these events. Further information on future events

and recordings of previous updates can be found on

the Company’s website.

Whilst the Board strongly encourages shareholders

to make use of everything the website has to oer,

the Directors recognise that it is not for everyone.

Should you prefer, you can of course continue to

communicate with the Chair, any other member of

the Board or the Investment Manager by writing

to the Company, for the attention of the Company

Secretary at the address set out on page 95 of this

document or by email to HHV.CoSec@jtcgroup.com

or aimvct@canaccord.com.

Within the 2023 nancial year, the Investment

Manager gave three presentations covering the

12months to 30 September 2022 on 23 November

2022, the 6 months to 31 March 2023 on 21 June

2023 and the 3months to 30 June 2023 on 16 August

2023.

Subsequent to the year end, the Investment Manager

gave a presentation covering the 12 months to

30September 2023 on 29 November 2023. The well

attended shareholder event was once again held

at Everyman Cinema, Broadgate, City of London. It

included presentations and a pre-recorded interview

with several guest speakers and contributions from

a number of portfolio companies, including a panel

discussion and a presentation from the Investment

Manager’s VCT team. The event concluded with the

screening of a feature lm. Summary recordings of

the Investment Manager’s presentations are available

to view on the Company’s website https://www.

hargreaveaimvcts.co.uk.

The next shareholder event will be held at the

Investment Manager’s oces at 88 Wood Street,

London EC2V 7QR following the conclusion of the

AGM to be held at 4.45pm on 8 February 2024. The

presentation will cover the 3 months to 31 December

2023. Shareholders are asked to register their

interest in attending the shareholder event through

the Company’s website (www.hargreaveaimvcts.

co.uk) or by emailing aimvct@canaccord.com.

Electronic communications

As ever, we are respectfully asking shareholders

to opt into electronic communications and update

their dividend payment preference from cheque

to bank transfer. Switching to the digital delivery

of shareholder communications and dividend

distributions is more cost ecient and more secure

whilst also helping to reduce our environmental

footprint.

The Company no longer prints and distributes interim

reports to shareholders. The interim results continue

to be available for download on the Company’s

website (www.hargreaveaimvcts.co.uk) and a

summary of the results are published via a Regulatory

Information Service on the London Stock Exchange.

Where necessary, the Administrator can produce and

send out a hard copy.

To support the digital experience, the Company

has invested in an upgraded website to improve the

experience and include more regular updates to

the content, including recorded updates from the

manager and portfolio companies. Much of the new

content will be available for distribution by email. You

can register your interest in (and opt out of) email

updates through the Company’s website.

Shareholders are also encouraged to make use of

Equiniti’s shareview portal, which can be used to

monitor their investment, review their transaction

history, see information on dividend payments and

update their communication preferences.

Electronic Voting

Electronic proxy voting is available for shareholders

to register the appointment of a proxy and voting

instructions for any general meeting of the Company

once notice has been given. This service assists the

Company to make further printing and production

cost savings, reduce our environmental footprint and

streamline the voting process for investors.

Regulatory update

There were no major changes to VCT legislation

during the period under review.

On 23 September 2022, the Government announced

that it intended to extend the sunset clause that, if

not otherwise repealed or extended, would result in

the withdrawal of the upfront 30% income tax relief

for new investment into VCTs from 6 April 2025.

The sunset clause, introduced as part of the 2015 EU

State aid review, does not aect the Capital Gains Tax

relief or tax free dividend payments, nor does it aect

investors’ income tax relief on VCT investments

made before 6 April 2025.

On 22 November 2023, the Chancellor of the

Exchequer announced as part of the Autumn

Statement the intention to extend the VCT and

EIS schemes to 5 April 2035. The Government will

introduce new legislation as part of a future nance

bill.

Consumer Duty

The Financial Conduct Authority (FCA) introduced

the Consumer Duty on 31 July 2023 to improve the

standard of care provided by rms that are involved in

the manufacture or supply of products and services

to retail clients.

Consumer Duty comprises a new principle and suite

of other rules and guidance to be followed by rms

involved in the manufacture and distribution of a

product to put consumers in a better position to take

responsibility for meeting their nancial needs and

objectives. For consumers, this should:

●

give condence that rms are acting in good

faith, in line with their interests;

●

allow them to make informed choices about

products and services that are t for purpose

and designed to meet a designated target

market;

●

improve the information available to assist with

the review of the products and services most

likely to meet their needs;

●

support the correct delivery of benets that

consumers should reasonably expect from the

product and services they subscribe to;

●

improve the standard of customer service; and

●

help them obtain fair value from nancial

products and services.

As the Company is not regulated by the FCA, it falls

outside of the FCA’s new Consumer Duty regulation.

However, CGAM and Canaccord Genuity Wealth

Limited (CGWL) are regulated companies and in

scope, respectively as the designated manufacturer

and distributor of the Company. In its capacity as

manufacturer, CGAM has conducted a fair value

assessment and a target market assessment.

Having reviewed both reports, the Board is satised

that CGAM and CGWL have complied with their

obligations.

Two of the four pillars that underpin Consumer Duty

relate to consumer understanding and consumer

support.

Although the Board is satised that these obligations

are met in full, the Company’s website has been

upgraded to enhance the services and benets

derived from an investment in the Company. As noted

above, the Board and Investment Manager have

jointly agreed to host more shareholder events to

support the delivery of the consumer understanding

outcome, one of the key outcomes described under

the Consumer Duty.

VCT status

I am pleased to report that the Company continues

to perform well against the requirements of the

legislation and at the period end, the investment

test was 91.65% (2022: 84.85%) against an 80%

requirement when measured using HMRC’s

methodology. The increase in the investment test

percentage reects progress made in deploying

capital raised through the 2022 oer and the return

of capital to shareholders through the payment of

a 2 pence per share special dividend on 10 February

2023 following the successful exit from Ideagen plc.

The Company satised all other tests relevant to its

status as a Venture Capital Trust. Further information

on these tests can be found on page17.

Key information document

In accordance with the Packaged Retail Investment

and Insurance Products (“PRIIPs”) regulations, the

Company’s Key Information Document (“KID”) is

published on the Company’s website at

www.hargreaveaimvcts.co.uk/document-library/.

Risk review

The Board has reviewed the risks facing the

Company. Further detail can be found in the principal

and emerging risks and uncertainties section on

pages22 to 23.

Outlook

Whilst we continue to navigate an uncertain

economic and geopolitical outlook, recent news

suggests that monetary policy is likely to become

more accommodating as we progress through the

year, helping to lay the foundations for a sustainable

recovery in value.

When it nally emerges, a change of sentiment in

public markets will benet our investments in both

public and private companies. Until then, we draw

comfort from a number of factors: rst, the majority

of portfolio companies continue to provide updates

that are in line with expectations; second, there is a

substantial amount of growth on oer from within

the portfolio, even in these more dicult times; third,

a review of valuation metrics within the qualifying

portfolio highlights the deep value on oer; and

nally, a signicant majority of qualifying companies

are well funded and commercially robust.

David Brock

Chair

18December 2023

The Company and its business model

The Company was incorporated and registered in

England and Wales on 16 August 2004 under the

Companies Act 1985, registered number 05206425.

The Company has been approved as a Venture

Capital Trust by HMRC under Section 259 of the

Income Taxes Act 2007. The shares of the Company

were rst admitted to the Ocial List of the UK

Listing Authority and trading on the London Stock

Exchange on 29 October 2004 and can be found

under the TIDM code “HHV”. The Company is

premium listed.

In common with many other VCTs, the Company

revoked its status as an investment company as

dened in Section 266 of the Companies Act 1985 on

23 May 2006 to facilitate the payment of dividends

out of capital prots.

The Company’s principal activity is to invest in a

diversied portfolio of qualifying small UK based

companies, primarily trading on AIM, with a view

to generating capital returns and income from its

portfolio and to make distributions from capital and

income to shareholders whilst maintaining its status

as a VCT.

The Company is registered as a small UK Alternative

Investment Fund Manager (AIFM) with a Board

comprising of six non-executive directors, ve of

whom are independent. Canaccord Genuity Asset

Management Limited acts as investment manager

whilst Canaccord Genuity Wealth Limited (CGWL)

acts as administrator and custodian. JTC (UK) Limited

provides company secretarial services.

The Board has overall responsibility for the

Company’s aairs including the determination of

its investment policy. However, the Board exercises

these responsibilities through delegation to

Canaccord Genuity Asset Management Limited,

Canaccord Genuity Wealth Limited and JTC (UK)

Limited as it considers appropriate.

The Directors have managed and continue to manage

the Company’s aairs in such a manner as to comply

with Section 259 of the Income Taxes Act 2007.

Investors:

Aged over 18

Pay tax in the UK

Capital Dividend distributions and share buybacks

Hargreave Hale AIM VCT plc

Board of Non-Executive Directors

Operations outsourced Operations outsourced

Information Company Secretary

(JTC (UK) Ltd)

Investee Companies

Predominantly AIM Quoted

Display characteristics set out in Investment Policy

Responsible for setting and monitoring investment and other key policies

Administrator and Custodian

(Can

accord Genuity Wealth Ltd)

Registrars

(Equiniti Ltd)

VCT Tax Adviser

(Philip Hare and Associates LLP)

Investment Manager

Canaccord Genuity Asset Management Ltd

Responsible for implementing the investment policy

Capital

Investment objectives, policy and strategy

Investment objectives

The investment objectives of the Company are to

generate capital gains and income from its portfolio

and to make distributions from capital or income

to shareholders whilst maintaining its status as a

Venture Capital Trust.

Investment policy

The Company intends to achieve its investment

objectives by making Qualifying Investments in

companies listed on AIM, private companies and

companies listed on the AQSE Growth Market, as well

as Non-Qualifying Investments as allowed by the VCT

Rules.

Qualifying investments

The Investment Manager will maintain a diversied

portfolio of Qualifying Investments which may

include equities and xed income securities as

permitted by the VCT Rules. Investments will

primarily be made in companies listed on AIM but

may also include private companies that meet the

Investment Manager’s criteria and companies listed

on the AQSE Growth Market. These small companies

have a permanent establishment in the UK and, whilst

of high risk, will have the potential for signicant

capital appreciation.

To maintain its status as a VCT, the Company must

have 80 per cent. by value as measured by the

VCT Rules of all of its investments in Qualifying

Investments throughout accounting periods of the

VCT beginning no later than three years after the

date on which those shares are issued. To provide

some protection against an inadvertent breach of

this rule, the Investment Manager targets a threshold

of approximately 85per cent.

Non-Qualifying Investments

The Non-Qualifying Investments must be permitted

by the VCT Rules and may include equities and

exchange traded funds listed on the main market

of the London Stock Exchange, xed income

securities, bank deposits that are readily realisable,

the Marlborough Special Situations Fund and the

Marlborough UK Micro-Cap Growth Fund. Subject

to the investment controls below, the allocation

to each of these investment classes will vary to

reect the Investment Manager’s view of the

market environment and the deployment of funds

into Qualifying Companies. The market value of

the Non-Qualifying Investments (excluding bank

deposits) will vary between nil and 50 per cent. of the

net assets of the Company.

The value of funds held in bank deposits will vary

between nil and 30 per cent. of the net assets of the

Company.

Investment controls

The Company may make co-investments in investee

companies alongside other funds, including other

funds managed by the Investment Manager.

Other than bank deposits, no individual investment

shall exceed 10 per cent. of the Company’s net assets

at the time of investment.

Borrowings

The Articles permit the Company to borrow up

to 15per cent. of its adjusted share capital and

reserves (as dened in the Articles). However, it

is not anticipated that the Company will have any

borrowings in place and the Directors do not intend to

utilise this authority.

To the extent that any future changes to the

Company’s investment policy are considered to

be material, shareholder consent to such changes

will be sought. Such consent applies to the formal

investment policy described above and not the

investment process set out below.

Investment process and strategy

The Investment Manager follows a stock specic

investment approach based on fundamental analysis

of the investee company.

The Investment Manager’s fund management team

has signicant reach into the market and meets

with large numbers of companies each week. These

meetings provide insight into investee companies,

their end markets, products and services, and

competition. Investments are monitored closely and

the Investment Manager usually meets or engages

with their senior leadership team at least twice each

year. Where appropriate the Company may co-invest

alongside other funds managed by the Investment

Manager.

The key selection criteria used in deciding which

investments to make include, inter alia:

●

the strength and depth of the management

team;

●

the business strategy;

●

a prudent approach to nancial management

and forecasting;

●

a strong balance sheet;

●

prot margins, cash ows and the working

capital cycle;

●

barriers to entry and the competitive landscape;

and

●

the balance of risk and reward over the medium

and long term.

Qualifying Investments

Investments are made to support the growth

and development of a Qualifying Company. The

Investment Manager will maintain a diversied

portfolio that balances opportunity with risk and

liquidity. Qualifying Investments will primarily be

made in companies listed on AIM but may also include

private companies and companies listed on the AQSE

Growth Market. Seed funding is rarely provided and

only when the senior leadership team includes proven

business leaders known to the Investment Manager.

Working with advisers, the Investment Manager will

screen opportunities, often meeting management

teams several times prior to investment to gain a

detailed understanding of the company. Investments

will be sized to reect the risk and opportunity

over the medium and long term. In many cases,

the Investment Manager will provide further

funding as the need arises and the investment

matures. When investing in private companies, the

Investment Manager will shape the investment to

meet the investee company’s needs whilst balancing

the potential for capital appreciation with risk

management.

Investments will be held for the long term unless

there is a material adverse change, evidence of

structural weakness, or poor governance and

leadership. Partial realisations may be made where

necessary to balance the portfolio or, on occasion, to

capitalise on signicant mispricing within the stock

market.

Non-Qualifying Investments

The Investment Manager’s VCT team works

closely with the Investment Manager’s wider fund

management team to deliver the investment

strategy when making Non-Qualifying Investments,

as permitted by the VCT Rules. The Investment

Manager will vary the exposure to the available asset

classes to reect its view of the equity markets,

balancing the potential for capital appreciation with

risk management, liquidity and income.

The Non-Qualifying Investments will typically

include a focused portfolio of direct investments in

companies listed on the main market of the London

Stock Exchange. The portfolio will mix long term

structural growth with more tactical investment

to exploit short term mispricing within the market.

The use of the Marlborough Special Situations Fund

and the Marlborough UK Micro-Cap Fund enables

the Company to maintain its exposure to small UK

companies whilst the Investment Manager identies

opportunities to invest the proceeds of fundraisings

into Qualifying Companies.

The Investment Manager may use certain exchange

traded funds listed on the Main Market of the London

Stock Exchange to gain exposure to asset classes not

otherwise accessible to the Company.

Environmental, social and governance

considerations

Approach

The Company regards the development of a clearly

dened and integrated ESG management system as

an important pillar for the long-term success of its

business, as well as for its investee companies.

The Investment Manager believes that companies

with strong governance, sustainable business models

and balanced workforces are more likely to create

value over the long term whilst reducing investment

risk, beneting the wider UK economy and society

and generating positive shareholder returns.

ESG in the investment process

Holding meaningful stakes in investee companies

provides the Investment Manager with the

opportunity and responsibility to positively inuence

investee company behaviour, both at the point

of investment and during the time in which the

Company is a shareholder.

Due diligence

The Investment Manager assesses ESG factors

across the portfolio. For Qualifying Companies,

the Investment Manager will use the information

provided to develop an individualised ESG risk map

to identify issues and track behavioural themes. The

Investment Manager regularly engages with senior

management teams and boards to identify and raise

issues of note, provide a forum for positive feedback

and promote change where necessary.

Engagement, exclusions and divestment policies

As part of its investment strategy, the Company has

adopted policies covering exclusions and divestment

to describe behaviours that fall outside of the

Company’s expectations of investee companies. The

Investment Manager has adopted an engagement

policy to create a clear framework that denes how it

will interact with investee companies.

The Investment Manager

The Investment Manager adheres to its own ESG

investment and stewardship policies. These include

an ESG Policy, an Engagement Policy, a Conicts

of Interest Policy and a Stewardship Policy that,

together with the investment mandate and the

Company’s ESG approach, inform the Company’s

approach.

CGAM is a signatory of the United Nations Principles

of Responsible Investment (UN PRI) and HM

Treasury’s Women in Finance Charter.

Risk management

The structure of the Company’s investment portfolio

and its investment strategy, has been developed

to mitigate risk where possible. Key risk mitigation

strategies are as follows:

●

The Company has a broad portfolio of

investments to reduce stock specic risk.

●

Flexible allocations to non-qualifying equities,

exchange traded funds listed on the Main

Market of the London Stock Exchange, xed

income securities, bank deposits that are readily

realisable, the Marlborough Special Situations

Fund and the Marlborough UK Micro-Cap

Fund allow the Investment Manager to adjust

portfolio risk without compromising liquidity.

●

Regular meetings with investee companies aid

the close monitoring of investments to identify

potential risks and allow corrective action where

possible.

●

Regular Board meetings and dialogue with

the Directors, along with policies to control

conicts of interest and co-investment with the

Marlborough fund mandates, support strong

governance.

Further information can be found on page 22.

Key performance indicators

The Directors consider the following Key Performance Indicators (KPIs) to assess whether the Company is

achieving its strategic objectives. The Directors believe these measures help shareholders assess how eectively

the Company is applying its investment policy and are satised the results give a fair indication of whether the

Company is achieving its investment objectives and policy. The KPIs are established industry measures.

Further commentary on the performance of these KPIs has been discussed in the Chair’s statement and

Investment Manager’s report on pages 4 to 9 and 29 to 32 respectively.

1 NAV and share price total returns

The Board monitors NAV and share price total return to assess how the Company is meeting its objective of

generating capital gains and income from its portfolio and making distributions to shareholders. The NAV per

share decreased from 60.19 pence to 46.34 pence resulting in a loss to ordinary shareholders of -8.85 pence per

share (-14.70%)

(1)

after adjusting for dividends paid in the year.

100

125

150

175

Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23

Pence per share

NAV and cumulative dividends

NAV per share Cumulative dividends paid

The Board considers peer group and benchmark comparative performance. Due to the very low number of AIM

VCTs, the Board reviews performance against the generalist VCTs as well as the AIM VCTs to provide a broader

peer group for comparison purposes. Performance is also measured against the FTSE AIM All-Share Index Total

Return. With 91% of the portfolio of Qualifying Investments in companies listed on AIM, the Directors consider

this to be the most appropriate benchmark. However, HMRC derived investment restrictions and investments

in private companies, main market listed companies and bonds mean that the index is not a wholly comparable

benchmark for performance.

Rolling Returns to end Sep 2023 1Y 3y 5y 10y

NAV total return -14.70% -15.30% -17.18% 29.11%

Share price total return -23.51% -10.53% -15.87% 35.53%

NAV total return (dividends reinvested)

(1)

-15.93% -22.40% -25.80% 18.49%

Share price total return (dividends reinvested)

(1)

-24.80% -18.58% -25.16% 23.65%

FTSE AIM All-Share Index Total Return -8.28% -21.23% -29.50% 4.21%

Source: Canaccord Genuity Asset Management Ltd

(1) The NAV total return (dividends reinvested) and share price total return (dividends reinvested) measures have been included to improve

comparability with the FTSE AIM All-Share Index Total Return which is also calculated on that basis. The denitions and illustrations of these

alternative performance measures can be found on pages 89 to 92.

Reecting the dicult market conditions that continued to dominate through the nancial year, and in common

with the AIM VCT peer group, the Company reported a signicant reduction in the NAV per share. The NAV total

return fell behind the benchmark over the year; however, it remains ahead of the benchmark over three, ve

and ten years but behind the average of the AIM VCT peer group over the same time horizons. The steep falls

in valuations of companies listed on AIM, which have heavily impacted the performance of the Company and its

AIM VCT peers, have not been mirrored in the Generalist VCT sector, which has reported a very modest average

decline of –0.05% over the period under review (source: Morningstar). The divergence of performance across

the two peer groups is particularly notable across the two years since the start of the bear market with the AIM

(1) Alternative performance measure denitions and illustrations can be found on pages 89 to 92

VCT sector returning an average loss of 42.1% against the average loss within the Generalist VCT sector of

-1.1%. AIM has fallen by 42.0% over the same two-year period. It is dicult to account for the strongly divergent

performance although the possible use of investment structures not accessible to investors in public companies

may account for some of the dierence.

Further detailed information on peer group performance is available through Morningstar

(https://www.morningstar.co.uk) and the AIC (https://www.theaic.co.uk/aic/statistics).

2. Share price discount to NAV per share

The Company uses secondary market purchases of its shares to improve the liquidity in its shares and support

the discount. The discount to NAV per share is an important inuence on a selling shareholder’s eventual return.

The Company aims to maintain a discount of approximately 5 per cent. to the last published NAV per share (as

measured against the mid-price).

The Company’s shares traded at a discount of 7.21%

(1)

as at 30 September 2023 (2022: 4.25%

(1)

premium)

when calculated with reference to the 30 September 2023 NAV per share. The 1 and 5 year average share price

discounts were 6.06%

(1)

and 5.64%

(1)

respectively.

The Company’s shares are priced against the last published NAV per share with the market typically adjusting the

price to reect the NAV after its publication. In line with the Company’s valuation policy, the Company aims to

publish the quarter end NAV per share within 5 business days of the period end to allow time for the Investment

Manager and Board to review and agree the valuation of the private companies held within the investment

portfolio.

The Company’s share price on 30 September 2023 reected the last published NAV per share prior to the year

end, which was released on 26 September 2023. The 30 September 2023 NAV was reported on 5 October 2023,

following the review of the valuations of the private companies.

As at 15 December 2023, the discount to NAV was 6.71% of the last published NAV per share.

(

18.0%)

(

16.0%)

(

14.0%)

(

12.0%)

(

10.0%)

(8.0%)

(6.0%)

(4.0%)

(2.0%)

0.0%

2.0%

4.0%

6.0%

Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23

Share price discount to NAV

3. Ongoing charges ratio

The ongoing charges of the Company were 2.24%

(1)

(2022: 2.06%

(1)

) of the average net assets of the Company

during the nancial year to 30 September 2023.

The increase in the OCR is principally driven by the fall in the average net assets across the year that followed the

drop in the NAV per share. Other factors included below ination increases in board remuneration and an increase

in the number of non-executive directors from ve to six. There were also modest investments made to improve

shareholder communication through investments into the Company’s website, video updates and an increased

(1) Alternative performance measure denitions and illustrations can be found on pages 89 to 92

number of shareholder events. The Ongoing Charges methodology divides ongoing expenses by average net

assets.

The Company’s ongoing charges ratio remains competitive against the wider VCT industry and similar to other

AIM VCTs. This ratio is calculated using the AIC’s “Ongoing Charges” methodology and, although based on

historical information, it provides shareholders with an indication of the likely future cost of managing the fund.

Cost control and eciency continues to be a key focus for the Board. Although the OCR increased within the year,

the Board is pleased to report that the Company’s expenses incurred within the year were below budget.

4. Dividends per share

The Company’s policy is to target a tax free dividend yield equivalent to 5% of the year end NAV per share. The

Board remains committed to maintaining a steady ow of dividend distributions to shareholders.

A total of 5.00 pence per share (2022: 6.65 pence) of dividends was paid during the year, comprised of a special

dividend of 2.00 pence per share paid on 10 February 2023, a nal dividend of 2.00 pence in respect of the

previous nancial year (2021: 3.15 pence) paid on 10 February 2023 and an interim dividend of 1.00 penny (2022:

1.00 penny) paid on 28 July 2023.

A nal dividend of 1.50 pence per share will be proposed at the Annual General Meeting. If approved by

shareholders, the payment of the interim, nal and special dividends in respect of the nancial year to 30

September 2023 would represent a distribution to shareholders of 9.7% of the 30 September 2023 NAV per

share.

The below table demonstrates how the Board has been able to consistently pay dividends in line with the 5%

target and dividend policy.

Dividends paid/payable by nancial year

Year

Year end NAV Dividends

Yield Additional informationpence per share

2010/11 61.14 4.00 6.5%

2011/12 61.35 3.25 5.3%

2012/13 71.87 3.75 5.2%

2013/14 80.31 4.25 5.3%

2014/15 74.64 4.00 5.4%

2015/16 75.93 4.00 5.3%

2016/17 80.82 4.00 4.9%

2017/18 87.59 5.40 6.2% Including special dividend of 1 penny.

2018/19 70.60 3.75 5.3%

2019/20 73.66 5.40 7.3% Including a special dividend of 1.75 pence.

2020/21 100.39 7.40 7.4% Including a special dividend of 2.50 pence.

2021/22 60.19 3.00 5.0%

2022/23 46.34 4.50 9.7% Including a special dividend of 2.00 pence

and proposed nal dividend of 1.50 pence.

(1) Alternative performance measure denitions and illustrations can be found on pages 89 to 92

5. Compliance with VCT regulations

A VCT must be approved by HMRC at all times and, in order to retain its status, the Company must meet a number

of tests as set out by the VCT legislation, a summary of which can be found on page 26. Throughout the year

ended 30 September 2023 the Company continued to meet these tests.

The investment test increased from 84.85% to 91.65% in the nancial year. The increase in the investment test

percentage reects progress made in deploying capital raised through the 2022 oer and the return of capital

to shareholders through the payment of a 2 pence per share special dividend on 10 February 2023 following the

successful exit from Ideagen plc. The investment test remains comfortably ahead of the 80% threshold that

applies to the Company and ahead of the target of 85% as set out in the Company’s investment policy.

The Company invested £13.6 million into 10 Qualifying Companies, 4 of which were investments into new

Qualifying Companies. The Board is pleased with the level of new Qualifying Investment, which was ahead of

expectations.

The Board believes that the Company will continue to meet the HMRC dened investment test and other

qualifying criteria on an ongoing basis.

For further details please refer to the Investment Manager’s report on pages 29 to 32.

Section 172 statement

Under section 172 of the Companies Act (“Section

172”), the Directors have a duty to promote the

success of the Company for the benet of its

shareholders as a whole, and in doing so to have

regard to a number of matters including the interests

of its employees, suppliers and customers and

the impact of the Company’s operations on the

community and the environment.

This section sets out how the Directors meet their

obligations under Section 172. It provides a summary

of how the Directors build and maintain strong

relationships with stakeholders, how they understand

their interests and concerns and how the strength of

these relationships is contributing to the Company’s

success. This Section 172 statement should be read

with the other contents of the Strategic Report on

pages3 to 39.

Purpose

Hargreave Hale AIM VCT aims to support UK

investors to full their longer-term nancial goals

through the eective delivery of its investment

objectives, namely by providing nancial capital to

support growing, innovative businesses across the

UK.

Stakeholder review

Within the reporting year, the Board reviewed the

Company’s key stakeholders, considered how it

engaged with those stakeholders and any material

issues raised during the year.

Noting that the Company is an externally managed

investment company with no employees and no

physical premises or assets, the Board agreed that

its key stakeholders were its shareholders, the

Investment Manager, investee companies, other

service providers and advisers, Government agencies

and industry bodies and distributors. The Company

has dierent engagement strategies to reect the

varied nature of its stakeholders.

Shareholders

The Board is committed to prioritising the Company’s

shareholders and considers active shareholder

engagement as being central to its understanding

of shareholder interests and concerns, in order to

ensure their continued support of and investment

in the Company. As a result, the Board seeks to have

an open, ongoing and positive dialogue with the

Company’s shareholders.

Reecting shareholder requests for access to the

Investment Manager, the Company and Investment

Manager have increased the number of annual

shareholder events with three in-person events held

within the year.

The Company also provides shareholders with

regular reports on performance, investment

activity, governance and compliance with HMRC

legislation through weekly NAV announcements,

monthly factsheets, quarterly interim management

statements, the interim report and audited annual

report. These reports, together with further

background information regarding the Company, can

be found on the Company’s website.

Shareholders have several channels through which

they can ask questions of, or raise matters with, the

Investment Manager, the Board, the Administrator,

the Company Secretary or the Registrar. Details

can be found on the Company’s website. Enquiries

are shared internally or escalated to the Board as

necessary.

One focus area for the Board this year has been

to make the Company’s processes more ecient,

minimising costs for shareholders and reducing

its environmental footprint associated with the

production of the annual reports, circulars and

prospectuses. As part of the 2023/24 Oer

documents, shareholders were asked to subscribe

via an online application form and to elect to receive

electronic communications from the Company to

help reduce costs and paper usage.

Key decisions:

●

Close the 2022/2023 Oer for subscription

having successfully raised £40m;

●

launch the 2023/24 Oer for subscription of

shares in September 2023;

●

payment of dividends totalling 5 pence per

share;

●

continue the share buy-back programme in

support of the discount control policy and to

improve liquidity in the Company’s shares;

●

increase in the number of in-person shareholder

events; and

●

improvements to digital communications

including the website, a new LinkedIn page,

additional recorded content and email

communications.

Impacts:

●

All decisions made in relation to the 2023/24

Oer, dividends and share buy-backs support

the delivery of the Company’s purpose,

investment objectives and key policies as set

out in this report and elsewhere;

●

increased shareholder engagement leads to

increased condence in decisions made by

the Board on behalf of shareholders, improves

shareholder understanding and increases

transparency and accountability; and

●

digital communication allows for better

and more frequent communications with

shareholders whilst substantially reducing the

associated costs and environmental footprint,

improving accessibility and reducing the risk of

fraud and error.

Investment Manager

The Investment Manager is responsible for the

successful delivery of the Company’s investment

policy under a discretionary mandate. A transparent

and open working relationship between the Board

and the Investment Manager is fundamental to the

successful operation of the Company. The Board

and its sub-committees maintain close and frequent

contact with the CGAM VCT fund management team.

Oliver Bedford is a Board member, the lead fund

manager and an employee of Canaccord Genuity and

therefore a key link between the Company and the

Investment Manager and Administrator. He and other

representatives of the Investment Manager attend all

Board meetings and sub-committee meetings where

appropriate, thus ensuring a regular and constructive

dialogue on issues of a strategic and material nature.

Less formal communications are adopted for more

operational issues or those that require the Board’s

immediate attention.

The Board retains overall responsibility for the

Company’s portfolio of investments and risk

management. The Board receives detailed reports

from the Investment Manager, including commentary

on portfolio performance and positioning, which

enables it to oversee the delivery of the Company’s

investment policy throughout the year and upon

which it relies to make its key decisions.

In June 2023, the Board held a strategy day. The

day allowed the Board and the Investment Manager

to have direct and open discussions on a range

of matters of importance to both, including the

Company’s investment strategy, the Investment

Manager’s investment process, resourcing and

approaches to ESG factors.

Through the Management and Service Provider

Engagement Committee (the “MSPEC”), the Board

undertakes an annual review of the Investment

Manager. The most recent review was held on

15November 2023 to cover the nancial year to

30September 2023.

On 7 September 2023, the Board and the Investment

Manager entered into an updated Investment

Management Agreement (“IMA”) in advance of the

Oer. The amended agreement included updates to

reect changes in regulation. There were no changes

to the commercial terms of the agreement.

Key decisions:

●

Retain CGAM as the Investment Manager;

●

review investment policy and processes,

introduce the Marlborough UK Micro-

Cap Growth Fund as an alternative to the

Marlborough Special Situations Fund;

●

further develop the ESG review process,

including the introduction of tailored due

diligence questionnaires, and adopt specic

policies on divestments and excluded activities;

●

update the IMA; and

●

introduce measures to support the delivery of

the Consumer Duty outcomes.

Impacts:

Through engagement with the Investment Manager,

the Board is able to:

●

oversee the execution of the Company’s key

policies;

●

monitor progress with the deployment of capital

into qualifying companies;

●

review the valuation of the Company’s

investments in unquoted assets;

●

receive updates on the key drivers of

performance;

●

monitor compliance with VCT regulations and

FCA regulations, including the Consumer Duty;

●

receive updates on regulatory, governance and

public aairs matters; and

●

identify, monitor and (where applicable) mitigate

other risk factors that may impact the Company.

Investee companies

The Company’s performance is directly linked to the

performance of its underlying investee companies.

Through the IMA, the Board has delegated the

monitoring of its portfolio companies to the

Investment Manager, which directly engages with

senior management teams and boards of investee

companies through meetings, updates, site visits and

through other diligence work.

As a signicant shareholder in investee companies

with a delegated authority to vote on shareholder

resolutions, the Investment Manager is able to

engage with and positively inuence investee

company behaviour, both at the point of investment

and during the time in which the Company is a

shareholder. This allows the Investment Manager

to identify and raise issues of note, provide a forum

for positive feedback and promote change where

necessary.

The Investment Manager has a strong record of

voting on shareholder resolutions on behalf of

the Company. Within the year under review, the

Investment Manager voted on 99% of the available

resolutions.

Key decisions:

●

Delegate authority to vote on shareholder

decisions to the Investment Manager; and

●

publish the Company’s engagement strategy on

the website.

Impacts:

Active engagement programmes create the forum

for:

●

active monitoring of governance;

●

promoting good corporate behaviours;

●

advocating for ESG initiatives where they are

seen to be value accretive or reducing risk; and

●

protecting stakeholders.

The Board believes that responsible investment,

executed through constructive and appropriately

calibrated engagement with investee companies,

underpins the successful delivery of the investment

policy over the long-term.

Key suppliers and professional advisers

As the Company does not have any employees or

premises of its own, it depends on outsourcing its

operations to key third party suppliers and for those

suppliers to run ecient operations on its behalf.

Given this reliance, the Board seeks to have an

open and constructive relationship with all service

providers. Responsibility for the management of the

Company’s key suppliers is delegated to the MSPEC,

which meets bi-annually.

Throughout the year, the Board received a

comprehensive overview of the support functions

provided by its service providers through a

combination of written reports and attendance at

MSPEC meetings.

An updated agreement was signed with the

Administrator in advance of the launch of

the 2023/24 Oer. Following advice from the

Administrator and third-party consultants, the Board

approved a new anti-money laundering (“AML”)

policy to enhance investor due diligence, support

operational eciencies and created an AML High

Risk Sub-Committee to review applications from

investors assessed as carrying an elevated risk when

assessed under AML regulation.

The Company operates within a complex legal,

nancial, tax and regulatory environment. Engaging

specialist, professional advisers provides the Board

with appropriate support as it considers complex

and technical factors, designs and implements the

Company’s policies and monitors compliance with

its regulatory obligations. The Board and Investment

Manager receive quarterly in-person updates and ad

hoc advice as appropriate, compliance status reports

and annual training.

Key decisions:

●

Retain CGWL as the Administrator under an

updated administration agreement;

●

appoint CGWL as the Company’s receiving

agent for the 2023 Oer for subscription;

●

introduce a revised AML risk assessment and

policy, and establish an AML High Risk Sub

Committee of the Board;

●

retain Philip Hare & Associates as the Company’s

tax adviser; and

●

appoint Howard Kennedy LLP as the Company’s

sponsor and legal adviser.

Impacts:

Through the review process, the MSPEC is able to:

●

evolve policies to reect regulatory changes;

●

monitor service level agreements; and

●

review contracts to ensure they provide value

for money to shareholders.

Specialist professional advice supports positive

compliance outcomes and informs decision making.

Distributors

Working alongside the Investment Manager and

the Receiving Agent, the Company’s distributors

promote the VCT to nancial intermediaries and

investors when the Company is raising funds for

investment through oers for subscription. Through

the IMA and, where applicable, Oer Agreements,

the Board delegates responsibility for this to the

Investment Manager and Receiving Agent.

The Investment Manager maintains close contact

with key distributors throughout the year, providing

performance updates and listening to feedback. The

Investment Manager reports this back to the Board,

along with recommendations. As a result of feedback

provided by distributors, the Board reviewed and

made changes to elements of the Company’s AML

policy to reduce operational friction and remove

barriers to investment.

The Board’s ESG Champions and members of the

Investment Manager’s team met with certain of the

Company’s distributors during the year to discuss

their approach to ESG issues, responsible investment

and Consumer Duty.

Key decisions:

●

Review the implementation of Consumer Duty

by CGAM and CGWL; and

●

enhance ESG policies and processes to reect

feedback from key elements of the distribution

chain.

Impacts:

●

Improved alignment on ESG issues with major

distribution partner; and

●

improved understanding of costs and value

within the distribution chain.

Government agencies, regulators and industry

associations

Governments, regulators and industry associations

determine legislation and shape the business and

policy environment the Company operates in. The

Board is committed to having an open, cooperative

and constructive relationship with its regulators and

Government agencies, supporting relevant industry

associations, providing evidence to support the

scheme and engaging in policy reviews and initiatives

to improve the operation of the scheme.

The Company is a member of the Association of

Investment Companies and the VCT Association and

regularly attends events held by both bodies. Oliver

Bedford is a member of two VCT Association sub-

committees.

Key decisions:

●

Continue to actively engage with policy makers

through memberships of industry associations.

Impacts:

●

Promoting the VCT scheme through

engagement with Government agencies; and

●

co-ordinating public aairs initiatives through

work with associations.

Principal and emerging risks

and uncertainties

The Directors acknowledge that they are responsible for the eectiveness of the Company’s risk management

and internal controls and periodically review the principal risks faced by the Company at Board meetings. The

Board may full these responsibilities through delegation to Canaccord Genuity Asset Management Limited and

Canaccord Genuity Wealth Limited as it considers appropriate. The principal risks facing the Company, together

with mitigating actions taken by the Board, are set out below:

Risk Potential consequence How the Board mitigates risk Changes During the Year

Venture Capital Trust approval

risk. The Company operates in a

complex regulatory environment

and faces a number of related

risks. A breach of Section 259 of

the Income Taxes Act 2007 could

result in the disqualication of

the Company as a VCT.

Loss of VCT approval could

lead to the Company losing its

exemption from corporation tax

on capital gains, shareholders

losing their tax reliefs and, in

certain circumstances, being

required to repay the initial tax

relief on their investment.

To reduce this risk, the Board

has appointed an investment

manager with signicant

experience in the management

of venture capital trusts. The

Investment Manager regularly

provides the Board with written

and verbal reports. The Board

also appointed Philip Hare &

Associates LLP to monitor

compliance with regulations and

provide half-yearly compliance

reports to the Board.

No change.

Investment risk. Many of the

Company’s investments are held

in small, high risk companies

which are either listed on AIM or

privately held.

Investment in poor quality

companies could reduce the

capital and income return to

shareholders. Investments in

small companies are often illiquid

and may be dicult to realise.

The Board has appointed an

investment manager with

signicant experience of

investing in small companies.

The Investment Manager

maintains a broad portfolio

of investments across a

wide range of industries and

sectors. Individual Qualifying

Investments rarely exceed 5%

of net assets. The Investment

Manager holds regular

company meetings to monitor

investments and identify

potential risk. The VCT’s liquidity

is monitored on a regular basis

by the Investment Manager and

reported to the Board quarterly

and as necessary.

No change.

Changes in monetary or

scal policy have undermined

consumer, business and investor

condence with negative

impacts on protability,

investment and stock market

performance.

The higher cost of borrowing

is starting to impact the cost

of debt for companies and

consumers. Whilst still subdued,

UK consumer and business

condence has recovered o

lows as energy prices, ination

and supply chain frictions all

eased. Whilst the economy has

outperformed expectations for

this year, the outlook remains

weak.

Compliance risk. The Company

is required to comply with

the FCA Listing Rules and

the Disclosure Guidance

and Transparency Rules, the

Companies Act, Accounting

Standards, the General Data

Protection Regulation and other

legislation. The Company is also

a small registered Alternative

Investment Fund Manager

(“AIFM”) and has to comply with

the requirements of the AIFM

Directive.

Failure to comply with these

regulations could result in a

delisting of the Company’s

shares, nancial penalties, a

qualied audit report or loss of

shareholder trust.

Board members have

considerable experience of

operating at senior levels within

quoted businesses. They have

access to a range of advisors

including solicitors, accountants

and other professional

bodies and take advice when

appropriate.

CGWL provides compliance

oversight to both the

Administrator and the

Investment Manager and

reports to the Board on a

quarterly basis.

No change.

Risk Potential consequence How the Board mitigates risk Changes During the Year

Operational risk and

outsourcing. Failure in

the Investment Manager,

Administrator, Custodian,

Company Secretary or

other appointed third party

systems and controls or

disruption to its business as

a result of operational failure,

environmental hazards or cyber

security attacks.

Failures could put the assets

of the Company at risk or

result in reduced or inaccurate

information being passed to the

Board or shareholders.

Quality standards may be

reduced through lack of

understanding or loss of control.

The Company has in place a

risk matrix and a set of internal

policies which are reviewed on

a regular basis. It has written

agreements in place with its

third-party service providers. The

Board, through the Management

and Service Provider

Engagement Committee,

receives regular reports from

the Investment Manager,

Administrator and custodian

to provide assurance that they

operate appropriate control and

oversight systems and have in

place training and other defence

measures to mitigate the risk of

cyber attack. Additionally, the

Board receives a control report

from the Company’s registrars

on an annual basis. Where tasks

are outsourced to other third

parties, reputable rms are used

and performance is reviewed

periodically by the Management

and Service Provider

Engagement Committee

No change.

Key personnel risk. A change in

the key personnel involved in the

management of the portfolio.

Potential impact on investment

performance.

The Board discusses key

personnel risk and resourcing

with the Investment Manager

periodically. The VCT team

within the Investment Manager

comprises two fund managers

and two investment analysts,

which helps mitigate this risk.

No change.

Exogenous risks such as

economic, political, nancial,

climate change and health.

Economic risks include recession

and sharp changes in interest

rates. Political risks include the

terms of the UK’s exit from the

European Union or a change in

government policy causing the

VCT scheme to be brought to an

end. A condition of the European

Commission’s State aid approval

of the UK’s VCT and EIS schemes

in 2015 was the introduction of

a retirement date for the current

schemes at midnight on 5 April

2025 (the ‘Sunset Clause’). If

the relevant legislation is not

renewed or replaced with similar

or equivalent legislation, new

investors will not be able to claim

income tax relief for investments

into new shares issued by VCTs

after 5 April 2025.

Climate change presents

environmental, geopolitical,

regulatory and economic risks. In

the long term, some companies

may have restrictions imposed

on their operational model that

reduce revenues and prot

margins and increases their cost

of capital.

Instability or changes arising

from these risks could have an

impact on stock markets and

the value of the Company’s

investments so reducing returns

to shareholders. A failure to

renew or replace the relevant

sections of the Finance (No

2) Act 2015 with similar or

equivalent legislation would make

it more dicult for the Company

to attract new capital whilst

continuing to operate under its

current investment policy.

Companies may face

restrictions on emissions, water

consumption and increased risk

of environmental hazards.

Regular dialogue with the

manager provides the Board

with assurance that the

Investment Manager is following

the investment policy agreed

by the Board and appraises

the Board of the portfolio’s

current positioning in the light

of prevailing market conditions.

The Company’s investment

portfolio is well diversied and

the Company has no gearing.

The Board regularly reviews

investment test forecasts and

liquidity analysis, including under

stress scenarios, to monitor

current and anticipate future

performance against HMRC

legislation and to ensure the

Company has, and will continue

to have, access to sucient

liquidity and distributable

reserves to maintain compliance

with its key policies.

The Board keeps abreast of

current thinking through contact

with industry associations and its

advisors.

The Investment Manager

undertakes a review of ESG

factors as part of the investment

process. Climate change, or

the need to limit its impact, will

result in technological innovation

as young companies seek to

develop solutions and create

opportunities for value creation

for existing or new Qualifying

Companies.

No change.

The Bank of England increased

base rates by 300bps to 5.25%

during the nancial year,

signicantly increasing the cost

of debt for companies and and

households with oating rate

debt. Companies and households

with savings benetted. The full

impact of this is yet to be felt.

In the Autumn Statement 2023,

the Government conrmed its

intention to extend the sunset

clause by 10 years to 5 April

2035. Legislation is expected to

be introduced through the next

Finance Bill and passed into law in

early 2024.

The wars in Ukraine and

the Middle East present a

range of risks that may have

profound economic and social

consequences if they impact

access to certain commodities or

much higher prices.

Additional risks and further details of the above risks and how they are managed are explained in note 15 of the

nancial statements. Trends aecting future developments are discussed in the Chair’s statement on pages4 to9

and the Investment Manager’s report on pages29 to32.

Long term viability statement

In accordance with provision 36 of the AIC Code of

Corporate Governance, the Directors have carried

out a robust assessment of the Company’s current

position and its emerging and principal risks, further

details can be found in the principal and emerging

risks and uncertainties section on pages22 to23.

This assessment has been carried out over a longer

period than the 12 months required by the ‘Going

Concern’ provision. The Board conducted this review

for a period of ve years, which was selected because

it:

●

is consistent with investors’ minimum holding

period to retain the 30% income tax relief;

●

exceeds the time allowed to deploy funds raised

under the current oer in accordance with VCT

legislation; and

●

is challenging to forecast beyond ve years with

sucient accuracy to provide actionable insight.

The Board considers the viability of the Company as

part of its continuing programme of monitoring risk.

The Company has a detailed risk control framework,

documented procedures and forecasting model

in place to reduce the likelihood and impact of risk

taking that exceeds the levels agreed by the Board.

These controls are reviewed by the Board and

Investment Manager on a regular basis.

The Board has considered the Company’s nancial

position and its ability to meet its liabilities as they

fall due over the next ve years. Forecasts and stress

tests have been used to support their assessment

and the following factors have been considered in

relation to the Company’s future viability:

●

the Company maintains a highly diversied

portfolio of Qualifying Investments;

●

the Company is well invested against the HMRC

investment test (91.65% at 30 September 2023)

and the Board believes the Investment Manager

will continue to have access to sucient

numbers of investment opportunities to

maintain compliance with the HMRC investment

test;

●

the Company held £19.2 million in cash at the

year end;

●

the Company has distributable reserves of

£134.4 million at 30 September 2023, equivalent

to 41 pence per share;

●

the Company has a portfolio of Non-Qualifying

Investments, most of which are listed in the

FTSE 350 and oer good levels of liquidity

should the need arise;

●

the nancial position of the Company at

30September 2023 was strong with no debt or

gearing;

●

the oer for subscription launched on

7September 2023 has provided further liquidity

for deployment in line with the Company’s

policies and to meet future expenses;

●

the ongoing charges ratio of the Company at

the year end was 2.24%;

●

the Company has procedures and forecast

models in place to identify, monitor and control

risk, portfolio liquidity and other factors relevant

to the Company’s status as a VCT; and

●

the Investment Manager and the Company’s

other key service providers have contingency

plans in place to manage operational

disruptions.

In assessing the Company’s future viability, the Board

has assumed that investors will wish to continue

to have exposure to the Company’s activities, that

performance will be satisfactory and the Company

will continue to have access to sucient capital.

Based on this assessment, the Directors have a

reasonable expectation that the Company will be

able to continue in operation and meet its liabilities as

they fall due over the next ve years.

Other matters

Dividend policy

The Company’s dividend policy is to target a tax free

dividend yield equivalent to 5% of the year end NAV

per share. The ability to pay dividends is dependent

on the Company’s available distributable reserves

and cash resources, the Act, the Listing Rules and

the VCT Rules. The policy is non-binding and at the

discretion of the Board. Dividend payments may vary

from year to year in both quantum and timing. The

level of dividend paid each year will depend on the

performance of the Company’s portfolio. In years

where there is strong investment performance, the

Directors may consider a higher dividend payment,

including the payment of special dividends. In years

where investment performance is not as strong, the

Directors may reduce or even pay no dividend.

Discount control policy and management of share

liquidity

The Company aims to improve liquidity and to

maintain a discount of approximately 5 per cent.

to the last published NAV per share (as measured

against the mid-price) by making secondary

market purchases of its shares in accordance with

parameters set by the Board.

This policy is non-binding and at the discretion

of the Board. Its operation depends on a range of

factors including the Company’s liquidity, shareholder

permissions, market conditions and compliance with

all laws and regulations. These factors may restrict

the eective operation of the policy and prevent the

Company from achieving its objectives.

Diversity

The Board comprises three male non-executive

directors and three female non-executive directors

with a diverse range of experience, skills, length

of service and backgrounds. The Board considers

diversity when reviewing Board composition and

has made a commitment to consider diversity

when making future appointments. The Board will

always appoint the best person for the job. It will not

discriminate on the grounds of gender, race, ethnicity,

religion, sexual orientation, age or physical ability.

Environmental Social and Governance (ESG) and

Considerations

The Board seeks to maintain high standards of

conduct with respect to environmental, social and

governance issues and to conduct the Company’s

aairs responsibly.

The Company does not have any employees or

oces and so the Board does not maintain any

specic policies regarding employee, human rights,

social and community issues but does expect

the Investment Manager to consider them when

fullling their role. As the Company used less than

40MWh of energy during the period it is exempt

from the Streamlined Energy and Carbon Reporting

requirements.

The Company, whilst exempt, continues to monitor

and develop its approach to the recommendations

of the Task Force on Climate related Financial

Disclosures.

The management of the Company’s investment

portfolio has been delegated to its Investment

Manager Canaccord Genuity Asset Management

Ltd. The Company has adopted specic policies

on divestment and excluded activities and it

expects the Investment Manager to take account

of ESG considerations in its investment process

for the selection and ongoing monitoring of

underlying investments. The Board has also given

the Investment Manager discretion to exercise

voting rights on resolutions proposed by investee

companies.

The Investment Manager continues to strengthen its

approach to ESG issues. Further detail regarding the

Investment Manager’s approach to ESG issues can be

found on pages12 to 13.

To minimise the direct impact of its activities the

Company oers electronic communications where

acceptable to reduce the volume of paper it uses and

uses Carbon Balanced paper manufactured at a FSC

accredited mill to print its nancial reports. Vegetable

based inks are used in the printing process where

appropriate.

Prospects

The prospects and future development of the

Company are discussed in detail in the outlook

section of the Chair’s statement on page9.

The strategic report is approved, by order of the

Board of Directors.

David Brock

Chair

18December 2023

Summary of VCT regulations

To maintain its status as a VCT, the Company must

be approved by HMRC and comply with a number

of conditions. A summary of the most important

conditions are detailed below:

VCTs’ obligations

VCTs must:

●

have 80per cent. (by VCT tax value) of all funds

raised from the issue of shares invested in

Qualifying Investments throughout accounting

periods of the VCT beginning no later than three

years after the date on which those shares are

issued;

●

have at least 70per cent. by VCT tax value of

Qualifying Investments in Eligible Shares which

carry no preferential rights (unless permitted

under VCT Rules);

●

have at least 30per cent. of all new funds

raised by the Company invested in Qualifying

Investments within 12months of the end of the

accounting period in which the Company issued

the shares;

●

have no more than 15per cent. by VCT tax value

of its investments in a single company (as valued

in accordance with the VCT Rulesat the date of

investment);

●

derive most of its income from shares and

securities, and, must not retain more than

15per cent. of its income derived from shares

and securities in any accounting period; and

●

have their shares listed on the main market

of the London Stock Exchange or a European

regulated Stock Exchange.

VCTs must not:

●

make a Qualifying Investment in any company

that:

o

has (as a result of the investment or

otherwise) received more than £5million

from State aid investment sources in

the 12months prior to the investment

(£10million for Knowledge Intensive

Companies);

o

has (as a result of the investment or

otherwise) received more than £12million

from State aid investment sources in its

lifetime (or £20million for Knowledge

Intensive Companies);

o

in general has been generating commercial

revenues for more than 7years (or 10years

for Knowledge Intensive Companies); or

o

will use the investment to fund an

acquisition of another company (or its

trade and assets).

●

make any investment which is not a Qualifying

Investment unless permitted by section 274 ITA;

and/or

●

return capital to shareholders before the third

anniversary of the end of the accounting period

during which the subscription for shares occurs.

Qualifying Investments

A Qualifying Investment consists of new shares or

securities issued directly to the VCT by a Qualifying

Company that at the point of investment:

●

has gross assets not exceeding £15million prior

to investment and £16million post investment;

●

carries out activities which are regarded as a

Qualifying Trade;

●

is a private company or is listed on AIM or the

AQSE Growth Market;

●

has a permanent UK establishment;

●

is not controlled by another company;

●

will deploy the money raised for the purposes

of the organic growth and development of a

Qualifying Trade within 2years;

●

has fewer than 250 employees (or fewer than

500 employees in the case of certain Knowledge

Intensive Companies);

●

in general, has not been generating commercial

sales for more than 7years (ten years for

Knowledge Intensive Companies);

●

has not received more than the permitted

annual and lifetime limits of risk nance State aid

investment; and

●

has not been set up for the purpose of accessing

tax reliefs or is in substance a nancing

business.

The Finance Act2018 introduced a principles-based

approach known as the risk to capital condition to

establish whether the activities or investments of an

investee company can qualify for VCT tax reliefs. This

condition has two parts:

●

whether the investee company has an objective

to grow and develop over the long term; and

●

whether there is a signicant risk that there

could be a loss of capital to the investor of an

amount exceeding the net return.

The Investment Manager & the Administrator

Canaccord Genuity Asset Management Limited (“CGAM”), is a wholly owned subsidiary of Canaccord Genuity

Wealth Group Limited. The Investment Manager is a leading small cap UK fund manager with a team of 15 fund

managers and analysts. Their combined experience aligns with the Company’s published investment policy. As

at 30September 2023, the Investment Manager had more than £2.7billion of funds under management across 8

unit trusts/OEICS and the Company, including approximately £1.9billion invested in small UK companies.

The Investment Manager’s VCT fund management team is led by Oliver Bedford with support from Lucy Bloomeld

as the Deputy Fund Manager, Anna Salim and Archie Stirling as investment analysts and Abbe Martineau as legal

counsel. The VCT fund management team is also supported by the wider CGAM fund management team, mainly

in the delivery of the Non-Qualifying Investment Strategy through the direct investment of the Company’s capital

into companies listed on the main market of the London Stock Exchange, as permitted by the VCT Rules.

A short biography on the members of the Investment Manager’s VCT team is set out below.

Oliver Bedford

Oliver Bedford graduated from Durham University

with a degree in Chemistry. He served in the

British Army for 9years before joining the

Investment Manager in 2004. After initially working

as an analyst in support of the VCT, Oliver was

appointed as co-manager in 2011 and then lead

fund manager in 2019.

Lucy Bloomeld

Lucy Bloomeld joined the Investment Manager in

August2018. Prior to this she spent eight years as

an analyst and UK Small& Mid cap fund manager

at BlackRock before her most recent role as a

European Small& Mid-cap fund manager with

Ennismore Fund Management. Lucy graduated

from Durham University in 2007 with a degree in

Economics and is a CFA charterholder.

Abbe Martineau

Abbe Martineau graduated from the University

of Birmingham and went on to qualify as a lawyer

in 2005. Her prior legal experience includes eight

years at Freshelds Bruckhaus Deringer, where

she advised international businesses on a range

of corporate matters and strategic M&A, and

eight years at Prudentialplc, where she worked on

delivering the group’s strategic priorities, including

its rst ESG Report and the demerger of M&G. She

joined the Investment Manager in 2023.

Anna Salim

Anna Salim joined the Investment Manager in

April2018. Her prior experience includes European

lower mid-market private equity investments at

Revolution Capital Group and equity research at

Cormark Securities. Anna graduated from the

University of Toronto and holds an MBA from

University of Western Ontario. She is a CFA

charterholder.

Archie Stirling

Archie Stirling joined the Investment Manager

in September 2021. Prior to this he spent eight

years at KPMG, including ve years in Transaction

Services working for private equity and corporate

clients. Archie graduated from Bristol University

in 2013 with a degree in Economics and is a

Chartered Accountant (ICAEW).

£2.7

BILLION

£1.9

BILLION 25 YEAR

OVER 2,000

MEETINGS

of funds under

management

Invested in small UK

companies

Track record of fund

management

With companies

(12months to

30September 2023)

Source:Canaccord Genuity Asset Management Limited (as at 30September 2023)

The Administrator

Canaccord Genuity Wealth Limited (“CGWL”) provides administration and custody services to the Company.

CGWL is a subsidiary of Canaccord GenuityInc., a full service nancial services company listed on the Toronto

Stock Exchange.

Fees and expenses

The annual running costs of the Company are capped at 3.5per cent. of the net assets of the Company. The

Investment Manager has agreed to indemnify the Company in relation to all costs that exceed this cap (such

costs excluding any VAT payable on the annual running costs of the Company). As at 30September 2023, the

Company’s running costs were 2.24per cent. of the net assets of the Company (including irrecoverable VAT).

Under the investment management agreement, the Investment Manager receives an annual management fee

of 1.7per cent. of the Net Asset Value of the Company. A maximum of 75per cent. of the annual management

charge will be chargeable against capital reserves, with the remainder being chargeable against revenue. The

Company does not pay the Investment Manager a performance fee. As the Investment Manager to the Company

and investment advisor to the Marlborough Special Situations Fund and the Marlborough UK Micro-Cap Growth

Fund (in which the Company may, and does, invest), the Investment Manager adjusts the fee it receives under the

investment management agreement to ensure that the Company is not charged twice for its services.

The Investment Manager carries out some due diligence and transaction services on potential investments

internally. Upon completion of an investment, the Investment Manager is permitted under the investment

management agreement to charge private investee companies a fee equal to 1.5per cent. of the investment

amount. This fee is subject to a cap of £40,000 per investment and is payable directly from the investee company

to the Investment Manager. The Investment Manager may recover external due diligence and transactional

services costs directly from private investee companies.

The Administrator is engaged by the Company under the terms of an administration agreement. Under the terms

of this agreement, with eect from 1October 2023, the Administrator will be paid an annual fee of £250,000

(previously £195,000) (plus VAT) in relation to administration services. Prior to this, administration fees were

last reviewed in June 2019. In addition, the Administrator will continue to receive a fee of £30,000 per annum in

relation to its appointment as the Company’s Custodian.

Any initial or trail commissions paid to Financial Intermediaries are paid by CGWL.

Investment Manager’s report

Introduction

This report covers the 2022/23 nancial year,

1October 2022 to 30September 2023. The

Investment Manager’s report contains references

to movements in the NAV per share and NAV total

return per share. Movements in the NAV per share

do not necessarily mirror the earnings per share

reported in the accounts and elsewhere, which

convey the prot after tax of the Company within the

reported period as a function of the weighted average

number of shares in issue for the period.

Investment performance measures contained in this

report are calculated on apence per share basis and

include realised and unrealised gains and losses.

Investment report

Starting from a very low base, investor sentiment

showed tentative signs of recovery as investors

became more condent that ination was close

to peaking and, with it, the interest rate tightening

cycle that had done so much damage to risk assets

in 2022. The failure in March 2023 of Silicon Valley

Bank, several US regional banks and Credit Suisse

challenged the developing thesis and the markets

swiftly moved to price in a series of rate cuts by the

Federal Reserve throughout the second half of the

year. A series of subsequent data points highlighted a

substantially more robust US economy which would

require US interest rates to remain higher for longer.

This dynamic had implications for risk assets globally.

The UK economy has experienced something

similar, proving to be substantially stronger this

year than most predicted. Ination has remained

disappointingly high, forcing the Bank of England

(“BoE”) into a more hawkish position with many

homeowners protected by xed rate mortgages and

now benetting from higher interest payments on

their savings. UK ination (“CPI”) peaked at 11.1%

in October2022 but has since steadily declined,

reaching 6.7% in September.

UK consumer condence remains low, albeit

substantially better than at the start of the nancial

year. The September reading did, however, suggest

that higher interest rates might nally start to take

their toll. There are other signs too that tighter

monetary policy is starting to impact with retail sales

weakening and unemployment starting to trend

higher, whilst remaining low by historical standards.

With the Bank of England raising interest rates

seven times within the year to 5.25%, the focus has

shifted to the outlook for rate cuts. Currently, the

market is forecasting that the BoE remains on hold

until mid-2024. This is substantially better than the

forecast at the start of the nancial year, but also

much higher than predicted in the Spring following

the failure of SVB. These huge swings in the outlook

have been mirrored in the US and, to a lesser extent,

in Europe making it dicult for a range of asset

classes from equities to bonds and foreign exchange.

Sadly, these factors continue to depress appetite

for investment into high-risk growth equity. AIM

continues to endure a particularly dicult period,

having now fallen by 41.6% in the two years to

30September 2023. By any measure, this is a long

and uncomfortable bear market. Although trading

varies quite signicantly by sector, price action is

heavily inuenced by technical factors with many

UK institutional shareholders still having to manage

sustained outows. This dynamic is not unique

to AIM. Small companies are struggling in other

territories too, with the Russell 2000 (US small

companies) and MSCI Europe Small Cap Index both

posting positive returns over the period under review

whilst remaining negative over two years.

The risk averse environment and constant need for

liquidity has again led to a material underperformance

by AIM (-9.95%) over the year relative to other

domestic indices such as the FTSE100 (+10.36%)

and FTSE250 (+6.47%).

Performance

In the 12months to 30September 2023, the

audited NAV per share decreased from 60.19pence

to 46.34pence, a NAV total return to investors

of -8.85pence per share after adding back the

5.00pence of dividends paid in the year and which

translates to a loss of -14.70%.

The qualifying investments made a net loss of

-7.99pence per share whilst the non-qualifying

investments loss was –0.32pence per share. The

-0.54pence adjusting balance was the net of the

investment in Marlborough Special Situations Fund,

running costs and investment income.



Pence per share 

Contribution to NAV performance  

Opening NAV

Qualifying

Non-Qualifying

Income

Fees

Dividends

Closing NAV

Corporate news ow was mixed across the year. After

a dicult winter, when many companies faced weaker

trading or pressure on margins, primarily due to

macro-economic factors, many companies reported

trading improved through the spring and summer.

September included an unusually high number of

poor updates, although our analysis suggests this

was mostly due to company specic factors rather

than a weakening economy or tightening of nancial

conditions. We report below on those companies

that were the most signicant contributors to

performance. In particular, we notethat three of the

most signicant detractors (Zoo Digital, Maxcyte

and Tortilla Mexican Grill) are companies that have

previously delivered strong contributions to the NAV;

we are hopeful that their share prices can recover

with time.

Equipmake (+44.0%, +0.75pence per share) reported

that revenues in the 12months to May2023 grew

by 34% to £5.1m. The company also announced

two contracts to convert diesel buses into battery

powered buses and a £3.2m grant to develop its

electric powertrain technology for the o-highway

sector in partnership with Caterpillar. The company is

forecast to increase revenues by 163% to £13.4m in

the current year. Prots are not expected until 2026.

The company is expected to close the current year

with £2.0m of net cash.

Following an activist campaign launched by founder

Jonathan Milner, Abcam (+38.0%, +0.25pence per

share) launched a strategic review that resulted in a

$24 per share takeover oer from Danaher. The exit

price represents an increase of 7,086% (71x) over the

book cost of the investment.

Following a two-year legal process, PCI-PAL (+21.7%,

+0.21pence per share) received a favourable ruling

from the UK High Court, comprehensively defeating

the patent infringement claims from competitor

Sycurio. Whilst this is a clear positive and a strong

endorsement of the company’s IP position, the ruling

may yet be subject to appeal. Sycurio led similar

claims in the US courts, which may be heard in 2024.

The company continues to trade well with 2024

revenue growth subject to some modest revision

to £19.1m (previously:£20.0m), equivalent to +28%

YOY. The company is expected to report a maiden

prot within the current nancial year and close the

year with net cash of £0.3m.

XP factory (+37.5%, +0.17pence per share) reported

strong growth in both H1’23 revenues (£18.6m,

+130% YoY) and adjusted EBITDA (£2.4m, +120%).

The company continues to roll out its escape room

and competitive socialising concepts across the UK.

Although trading within the current year remains

strong, the company has moderated the new

openings planned in FY25 and beyond. The company

has a good balance sheet with net cash of £3.6m

(30June 2023).

Diaceutics (+28.8%, +0.15pence per share)

reported H1’23 revenues of £9.9m (+32% YoY) and

an EBITDA loss of £0.2m. Net cash was £17.9m.

Recurring revenues grew by 66% to £4.6m as more

customers signed annual or multi-year licences for

the company’s DXRX platform. The forward order

book of £24.1m provides good cover of the current

year forecast. The company also announced that the

founder would move from his current CEO role into

a business development role with the current COO

moving into the CEO role.

Long running strikes (screenwriters and actors) in

the US have materially aected the commissioning

of new content for distribution through streaming

platforms, leading to a substantial drop o in demand

for Zoo Digital’s (-69.2%, -1.14pence per share)

localisation and media services and several signicant

forecast revisions. On current projections, revenues

will fall by 50% this year to $45m. Whilst the short-

term outlook remains uncertain, production has

resumed with the company expecting to return

to growth in early 2024. There are no changes to

medium term guidance. The company is well funded

following a $15.5m fundraise in April2023.

The commercial impact of last year’s dispute with

Azerion continues to cast a long shadow over

Bidstack (-90.0%, -0.90pence per share), highlighting

profound issues with the company’s operational

model, leadership and governance structures. A

Dutch court will review Azerion’s decision to withhold

payment. In the meantime, a substantially weaker

balance sheet has left the company exposed.

Following a very successful year in 2022 that included

three prot upgrades, Maxcyte (-55.4%, -0.73pence

per share) has been the victim of a notably weaker

end market following the failure of Silicon Valley Bank.

The signicant tightening of nancial conditions

within the healthcare sector has caused many clinical

and pre-clinical companies to adopt a more cautious

approach to investment, leading the company to

substantially revise its expectations for this year

across several updates. Disappointing as this is,

Maxcyte’s long-term prospects remain attractive,

underpinned by an expanding partnership portfolio

with potential pre-commercial milestones valued at

over $1.6b and future royalties. The company’s shares

have been savagely de-rated, at one point valuing the

company at $264m with year-end net cash forecast

to be approximately $200m. Post period end, the

FDA approved Casgevy for the treatment of severe

sickle cell disease, the rst time a therapy developed

using Maxcyte’s ow electroporation technology has

been approved by the FDA. The approval will trigger

further milestone payments and signicant royalties

from 2025.

Initially, the outlook looked promising for Polarean

(-76.9%, -0.70pence per share) with the company

receiving (in December2022) FDA clearance for

Xenoview, its drug-device combination product that

allows MRI scanners to provide detailed evaluation of

lung function. In subsequent updates, the company

reduced its assumptions for revenue growth and

increased its guidance on costs. The company has

appointed a new CEO with prior experience in driving

adoption within the medical equipment sector.

The company has net cash of $9.9m but will need

additional funding in 2024.

A desire to defend its value proposition at the cost of

margins led Tortilla Mexican Grill (-51.7%, -0.56pence

per share) to issue revised prot guidance in late

2022 as inationary pressures (food, labour and

energy) ate into margins. Subsequent updates have

remained consistent with the revised forecasts with

the company reporting revenue growth of 22% in

the 6months to June2023. The company continues

to use its strong balance sheet to expand its UK

footprint with 8 new sites to be opened in 2023. The

medium-term opportunity remains compelling.

We entered the year expecting to see an increase in

the number of companies undertaking an initial public

oering in the second half of the nancial year. This

has not come to pass with the low valuations and the

continued ow of capital out of open-ended funds

increasing the risk of a poor outcome and acting as a

deterrent to new entrants. Investor condence and

appetite for risk was depressed by a broad range of

factors (higher interest rates, US regional banking

crisis, war in the Middle East) and will need to improve

before the market becomes more attractive to new

listings.

We invested £13.6m through 12 Qualifying

Investments into 10 Qualifying Companies that

included 2 IPOs, 2 new investments into companies

listed on AIM, 6 follow on investments into existing

AIM portfolio companies and 2 further investments

into Kidly. The most signicant new investments

included Engage XR, Fadel and Itaconix. We reduced

our investments in Bidstack, Eneraqua, Equipmake,

Faron Pharmaceuticals, Smoove and Zoo Digital. We

made complete exits from Diurnal, In The Style and

Yourgene.

Portfolio structure

The VCT is comfortably through the HMRC dened

investment test and ended the period at 91.65%

invested as measured by the HMRC investment test.

By market value, the VCT had a 58.7% weighting to

Qualifying Investments at year-end.

The allocation to non-qualifying equity investments

increased from 7.7% to 10.1% within the year. In line

with the investment policy, we made investments

in the Marlborough Special Situations Fund as a

temporary home for proceeds from fundraising,

increasing the allocation from 2.1% to 5.4%.

The non-qualifying direct equity investments, which

are mostly held in FTSE350 companies contributed

-0.08pence per share. Within the period, JD Sports

returned +72.4% (+0.17pence per share), Bytes

Technology returned +18.8% (+0.09pence per

share) and Bodycote returned +40.3% (+0.09pence

per share). The largest losses from within the

non-qualifying portfolio came from NCC (-63.4%,

-0.18pence per share), Diversied Energy (-37.6%,

-0.12pence per share) and Harbour Energy (-41.0%,

-0.10pence per share).

We took advantage of the signicant increase in xed

income yields to invest in six short-dated investment

grade bonds and a short-dated UK Gilts exchange

trade fund. As a result, the allocation to non-

qualifying xed income increased from nil to 12.7%

whilst the cash weighting fell from 26.1% to 12.7%.

The Company invests across all available investment

sectors, although VCT legislation tends to promote

investment into sectors such as technology,

healthcare and consumer discretionary. In respect of

the Qualifying investment portfolio, the weightings

to these three sectors changed slightly over the year

as a consequence of additional investment and share

price performance, taking their respective shares

to 37.5%, 20.6% and 13.7%. The weighting to the

industrial sector increased from 14.9% to 17.9%.

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 investment manager’s report.

Funds raised by VCTs are rst 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 dened by the legislation can be

dierent to the portfolio weighting as measured by

market value relative to the net assets of the VCT.

Share Buy Backs& Discount Control

7,183,338 shares were acquired in the year at an

average price of 50.63pence per share. The share

price increased by 0.5% and traded at a discount of

6.78% following the publication of the 30September

2023 NAV on 5October 2023.

Post period end update

The NAV per share has decreased from 46.34 pence

to 45.45pence in the period to 8 December2023, a

decrease of 1.92%.

As at 15 December2023, the share price of

42.40pence represented a discount of 6.71% to the

last published NAV per share.

The start of the new nancial year was particularly

dicult with global markets selling o in the face of

higher oil prices and further increases in the cost of

capital, most obviously exemplied by the march

higher in US10-year Treasury Yields. For a variety of

reasons, the bond markets turned in November with

yields falling sharply. This was in part a consequence

of comments made by several members of the

Federal Open Market Committee that the market

took to be dovish in nature. Both bonds and equities

rallied. In the UK, ination fell further post period to

4.6% in October. Having fallen 6.4% in October, the

AIM All-share index rebounded by 5.0% in November.

Whilst the war in Israel and Gaza is yet to materially

challenge markets, it only adds to the general sense

of unease with investors concerned about the risks

that would follow were it to escalate from a localised

conict into a regional war.

There is considerable debate about the ‘neutral’ rate

for monetary policy, the level at which interest rates

are neither seeking to restrain or stimulate economic

activity. The debate is not as abstract as it might

appear, with important ramications for the risk-

free rate and the cost of capital, both of which have

increased substantially in the year and are factors in

assessing company valuations. When central banks

return to the neutral rate, and where it is set, are

therefore important when establishing the path to a

recovery in value. The outlook for the UK economy

will impact some companies within the portfolio,

but surprisingly few. As we have said in the past,

many portfolio companies continue to develop new

products and services, with success determined by

technical and operational excellence, and access to

capital.

Whilst it is disappointing to again report on dicult

markets, a weak economy and negative performance,

we remain convinced that the portfolio contains a

broad array of companies with a range of maturities

and a shared ambition to grow revenues and deliver

protable outcomes to their shareholders. For now,

the market is unwilling or unable to appropriately

recognise value. The stasis will not persist forever

and valuations will recover. In the meantime, the

portfolio contains substantial amounts of growth at

unreasonably low prices.

We have completed one new qualifying investment

post period end. Deal ow on AIM remains very

subdued. We expect this to remain the case through

the early part of 2024, before improving in the second

half of the new nancial year. In the meantime, we

continue to review large numbers of investment

opportunities in private companies.

For further information please contact:

Oliver Bedford

Lead Fund Manager

18 December 2023

Investment portfolio summary

As at 30 September 2023

Net Assets

% at

30.09.23

Cost

£000

Cumulative

Movement

in value

£000

Valuation

£000

Change in

Value for

the Year

£000

(1)

Market COI

(2)

Qualifying Investments

Equipmake Holdingsplc 5.02 3,662 3,969 7,631 2,501 AIM No

Eagle Eye Solutions Groupplc 2.99 1,642 2,903 4,545 (173) AIM Yes

PCI-PALplc 2.55 2,280 1,596 3,876 692 AIM Yes

Abcamplc 2.02 55 3,007 3,062 843 AIM No

Learning Technologies Groupplc 1.90 2,238 649 2,887 (1,834) AIM No

Innity RelianceLtd (My 1st Years)

(3)

1.81 2,500 243 2,743 – Unlisted Yes

Surface Transformsplc 1.76 1,744 929 2,673 (1,188) AIM Yes

Engage XR Holdingsplc 1.59 3,453 (1,036) 2,417 (1,036) AIM Yes

Cohortplc 1.54 619 1,718 2,337 152 AIM Yes

Fadel Partners, Inc 1.51 2,300 – 2,300 – AIM No

XP Factoryplc 1.40 4,068 (1,939) 2,129 581 AIM Yes

Diaceuticsplc 1.38 1,550 550 2,100 469 AIM Yes

Maxcyte Inc 1.23 1,270 605 1,875 (2,325) AIM Yes

C4X Discovery Holdingsplc 1.18 2,300 (500) 1,800 (199) AIM No

Aquis Exchangeplc 1.18 765 1,024 1,789 398 AIM Yes

Zoo Digital Groupplc 1.16 2,159 (399) 1,760 (3,806) AIM Yes

Tortilla Mexican Grillplc 1.15 1,125 625 1,750 (1,875) AIM Ye s

Beeks Financial Cloud Groupplc 1.09 1,038 623 1,661 (925) AIM Yes

Team Internet Groupplc 1.09 588 1,067 1,655 243 AIM Yes

Intelligent Ultrasound Groupplc 1.09 1,550 103 1,653 119 AIM No

Itaconixplc 1.09 3,025 (1,376) 1,649 (1,376) AIM No

SCA InvestmentsLtd (Gousto) 1.02 2,484 (929) 1,555 (1,228) Unlisted Yes

Cranewareplc 0.95 125 1,316 1,441 (441) AIM Yes

ZapparLtd 0.94 1,600 (171) 1,429 – Unlisted No

Instemplc 0.92 297 1,105 1,402 417 AIM Yes

Belvoir Groupplc 0.86 762 539 1,301 30 AIM Yes

Arecor Therapeuticsplc 0.80 1,687 (471) 1,216 (320) AIM No

Bivictrix TherapeuticsPlc 0.78 1,600 (420) 1,180 (420) AIM No

Idoxplc 0.75 135 1,007 1,142 (22) AIM Ye s

Ilikaplc 0.73 1,636 (526) 1,110 (888) AIM No

Equals Groupplc 0.72 750 345 1,095 253 AIM Ye s

AnimalCare Groupplc 0.67 720 298 1,018 (407) AIM Yes

Eden Researchplc 0.67 1,355 (339) 1,016 (45) AIM No

Blackbirdplc 0.64 606 364 970 (858) AIM No

The Property Franchise Groupplc 0.60 377 534 911 (17) AIM Yes

OneMedia iP Groupplc 0.59 1,141 (245) 896 (244) AIM Ye s

Tristelplc 0.56 543 310 853 252 AIM No

Skillcast Groupplc 0.53 1,570 (764) 806 (42) AIM No

EKF Diagnostics Holdingsplc 0.53 565 239 804 (390) AIM No

Crimson Tideplc 0.50 1,260 (504) 756 – AIM Yes

Nexteqplc 0.48 1,209 (479) 730 (250) AIM No

Rosslyn Data Technologiesplc 0.47 1,345 (629) 716 (299) AIM Yes

Creo Medical Groupplc 0.47 2,329 (1,616) 713 (506) AIM Yes

Crossword Cybersecurityplc 0.47 2,039 (1,332) 707 (864) AIM Yes

Polarean Imagingplc 0.45 2,081 (1,391) 690 (2,297) AIM No

Hardideplc 0.42 3,566 (2,928) 638 (232) AIM Yes

Globaldataplc 0.39 173 424 597 40 AIM Ye s

Verici DXplc 0.35 1,939 (1,405) 534 (463) AIM No

Eneraqua Technologiesplc 0.33 1,401 (895) 506 (702) AIM No

Faron Pharmaceuticals Oy 0.33 1,133 (638) 495 269 AIM No

Tan Delta Systemsplc 0.31 504 (39) 465 (39) AIM No

Intercede Groupplc 0.30 305 157 462 72 AIM Yes

Velocysplc 0.23 2,220 (1,866) 354 (1,372) AIM No

Strip Tinning Holdingsplc 0.22 1,054 (712) 342 28 AIM No

Angleplc 0.22 1,158 (825) 333 (1,182) AIM No

K3 Business Technology Groupplc 0.22 270 60 330 (39) AIM Ye s

KidlyLtd 0.21 1,660 (1,334) 326 (793) Unlisted No

Bidstack Groupplc 0.21 2,733 (2,419) 314 (2,915) AIM No

Smooveplc 0.20 621 (316) 305 83 AIM No

Science in Sportplc 0.19 1,479 (1,191) 288 (96) AIM No

Net Assets

% at

30.09.23

Cost

£000

Cumulative

Movement

in value

£000

Valuation

£000

Change in

Value for

the Year

£000

(1)

Market COI

(2)

Everyman Media Groupplc 0.14 600 (394) 206 (186) AIM Ye s

Trakm8 Holdingsplc 0.09 486 (352) 134 (18) AIM No

MYCELX Technologies Corporation 0.09 361 (230) 131 73 AIM Yes

Renalytix AIplc 0.03 82 (43) 39 2 AIM Ye s

Fusion Antibodiesplc 0.02 624 (588) 36 (280) AIM No

Gnityplc 0.02 2,026 (1,998) 28 (266) AIM Ye s

Osirium Technologiesplc 0.01 858 (845) 13 (5) AIM No

Flowgroupplc – 26 (26) – – Unlisted No

Honest BrewLtd – 2,800 (2,800) – – Unlisted No

LaundrappLtd – 2,450 (2,450) – – Unlisted No

Mporium Groupplc – 33 (33) – – Unlisted No

Airportr TechnologiesLtd

(3)

– 1,888 (1,888) – (529) Unlisted No

Infoserve Groupplc

(4)

– – – – – Unlisted No

Total – equity Qualifying Investments 56.36 100,597 (14,972) 85,625 (25,875)

Qualifying xed income investments

KidlyLtd

(convertible loan notes) 1.58 2,400 – 2,400 – Unlisted No

Osirium Technologiesplc

(convertible loan notes) 0.53 800 – 800 44 AIM No

Rosslyn Data Technologiesplc

(convertible loan notes) 0.20 300 – 300 – AIM No

Honest BrewLtd

(loan notes) – 300 (300) – – Unlisted No

Total qualifying xed income

investments 2.31 3,800 (300) 3,500 44

Total Qualifying Investments 58.67 104,397 (15,272) 89,125 (25,831)

Non qualifying investments

Funds

Marlborough Special Situations Fund 5.44 9,717 (1,449) 8,268 (1,125) Unlisted

iSharesplc ISHRS UK Gilts 0-5Yr ETF GBP

(Dist) 1.30 2,001 (23) 1,978 (24) Main

Total non-qualifying funds 6.74 11,718 (1,472) 10,246 (1,149)

Hollywood Bowl Groupplc 0.98 1,566 (81) 1,485 194 Main Ye s

Bodycoteplc 0.97 1,534 (66) 1,468 296 Main No

Chemring Groupplc 0.82 1,362 (113) 1,249 (59) Main Ye s

Bytes Technology Groupplc 0.75 747 400 1,147 304 Main Ye s

WH Smithplc 0.71 1,220 (145) 1,075 63 Main Yes

Ashtead Groupplc 0.66 1,116 (116) 1,000 (115) Main Ye s

BAE Systemsplc 0.65 782 206 988 180 Main No

National Gridplc 0.65 1,041 (61) 980 (61) Main No

TP ICAP Groupplc 0.63 1,022 (69) 953 (70) Main Ye s

Rotorkplc 0.58 944 (69) 875 176 Main Yes

Energeanplc 0.53 926 (126) 800 (126) Main No

Diversied Energy Companyplc 0.48 1,050 (324) 726 (402) Main Ye s

XP Powerplc 0.47 743 (35) 708 (35) Main Yes

The Watches of Switzerland Groupplc 0.44 1,216 (549) 667 (246) Main Ye s

On the Beach Groupplc 0.38 1,304 (722) 582 (81) Main No

Wickes Groupplc 0.23 585 (242) 343 42 Main No

Tortilla Mexican Grillplc 0.12 161 29 190 (204) Main Ye s

MYCELX Technologies Corporation 0.10 298 (146) 152 85 AIM Ye s

Genagro ServicesLtd – – – – 1 Unlisted Yes

Total – equity non-qualifying

investments 10.15 17,617 (2,229) 15,388 (58)

Fixed income – bonds

Royal Bank of Canada 5.000% SNR

NTS24/01/28 1.90 3,045 (161) 2,884 (161) Main No

British Telecommunicationsplc 5.75%

BDS17/12/28 1.96 3,158 (173) 2,985 (173) Main No

Net Assets

% at

30.09.23

Cost

£000

Cumulative

Movement

in value

£000

Valuation

£000

Change in

Value for

the Year

£000

(1)

Market COI

(2)

Barclaysplc 3.25% NTS12/02/27 1.78 2,876 (169) 2,707 (169) Main No

NatWest Marketsplc 6.375%

NTS08/11/27 1.93 3,051 (122) 2,929 (122) Main No

Next Groupplc 4.375% BDS02/10/26 1.89 2,980 (108) 2,872 (108) Main No

Marks& Spencerplc 3.000%

NTS08/12/23 1.96 2,999 (15) 2,984 (15) Main No

Total non-qualifying xed income - bonds 11.42 18,109 (748) 17,361 (748)

Total – non-qualifying investments 28.31 47,444 (4,449) 42,995 (1,955)

Total investments 86.98 151,841 (19,721) 132,120 (27,786)

Cash at bank 12.65 19,231

Prepayments& accruals 0.37 569

Net assets 100.00 151,920

(1) The change in fair value has been adjusted for additions and disposals in the year and as such does not reconcile to the unrealised total in

note7. The dierence is £0.7million which is the total of 16 full investment disposals in the year.

(2) COI – Co investments with other funds managed by the Investment Manager at 30September 2023.

(3) Dierent classes of shares held in unlisted companies within the portfolio have been aggregated.

(4) Impaired fully through the prot and loss account and therefore shows a zero cost.

The investments listed below are either listed, headquartered or registered outside the UK:

Listed Headquartered Registered

Listed Investments:

Abcamplc UK/USA UK UK

Bytes Technology Groupplc UK/South Africa UK UK

Crimson Tide UK/Republic of Ireland UK UK

Cranewareplc UK UK/USA UK

Engage XRplc UK/Ireland Ireland Ireland

Fadel Partnersplc UK USA USA

Faron Pharmaceuticals Oy UK/Finland Finland Finland

Itaconixplc UK USA UK

Maxcyte Inc UK/USA USA USA

Mycelx Technologies Corporationplc UK USA USA

Polarean Imagingplc UK USA UK

Renalytix AIplc UK/USA USA UK

Verici DXplc UK UK/USA UK

XP PowerLtd UK Singapore Singapore

Unlisted private companies:

GenagroLtd

(1)

– UK Jersey

(1) Companies awaiting liquidation.

ConsumerDiscretionary

Industrials



Materials



Energy

Utilities

Total investmentsbymarketsectorasat30September2023

InformationTechnology

HealthCare

Communication Services

FinancialServices

Real Estate

Consumer Staples

21.4%

1.2%

2.6%

3.2%

2.1%

0.3%

1.8%

0.9%

15.8%

17.6%

33.1%

30.7%

24.3%

17.8%

16.0%

2.1%

1.2%

2.2%

2.7%

0.9%

2.0%

Industrials



Materials



Energy

Total investmentsbymarketsectorasat30September2022

InformationTechnology

HealthCare

ConsumerDiscretionary

Communication Services

Financial Services

Real Estate

Consumer Staples

Top ten investments

As at 30 September 2023 (by market value)

The top 10 investments are shown below. Each investment is valued by reference to the bid price or, in the case of

unquoted companies, the IPEV guidelines using one or more valuation techniques according to the nature, facts

and circumstances of the investment. Forecasts, where given, are drawn from a combination of broker research

and/or Bloomberg consensus forecasts and exclude amortisation, share based payments and exceptional items.

Forecasts are in relation to a period end for which the company results are yet to be released. Published accounts

are used for private companies or public companies with no published broker forecasts. The net asset gures and

net cash values are from published accounts in most cases.

Equipmake Holdingsplc Share Price:9.0p

Investment date July2022 Forecasts for the year to May2024

Equity held 8.94% Turnover (£’000) 13,400

Av. Purchase Price 4.3p (Loss) before tax (£’000) (5,300)

Cost (£’000) 3,662 Net cash May2023 (£’000) 7,000

Valuation (£’000) 7,631 Net assets May2023 (£’000) 13,803

Company description

Equipmake is a UK based technology company, which has developed a range of electrication products for the

provision of electric vehicle (EV) drivetrains to meet the needs of the automotive, aerospace and other sectors in

support of the transition from fossil-fuelled to zero emission powertrains. Equipmake products can be applied in

a variety of other vehicle electrication contexts, including hybrid, fully electric and fuel cell vehicles. Equipmake

provides individual components to full turnkey systems.

Eagle Eye Solutions Groupplc Share Price:525.0p

Investment date April2014 Forecasts for the year to June2024

Equity held 2.96% Turnover (£’000) 50,800

Av. Purchase Price 189.7p Prot before tax (£’000) 4,400

Cost (£’000) 1,642 Net cash June2023 (£’000) 9,300

Valuation (£’000) 4,545 Net assets June2023 (£’000) 24,100

Company description

Eagle Eye is a Software-as-a-Service (SaaS) technology company that creates digital connections enabling

personalised, real-time marketing solutions for large retailers. Through Eagle Eye AIR, the company’s loyalty and

promotions omnichannel SaaS platform, companies connect all aspects of the customer journey in real time,

unlocking the capability to deliver personalisation, streamline marketing execution and open up new revenue

streams through promotions, loyalty apps, subscriptions and gift services.

PCI PALplc Share Price:56.0p

Investment date January2018 Forecasts for the year to June2024

Equity held 10.55% Turnover (£’000) 19,100

Av. Purchase Price 32.9p (Loss) before tax (£’000) 1,000

Cost (£’000) 2,280 Net cash June 2023 (£’000) 1,169

Valuation (£’000) 3,876 Net (liabilities) June 2023 (£’000) (4,109)

Company description

PCI PALplc is a provider of Software-as-a-Service (SaaS) solutions that allows companies to take payments

from their customers securely. Its products secure payments and data in any business communications

environment including voice, chat, social, email, and contact centre and is integrated to, and resold by, business

communications vendors and payment service providers.

Abcamplc

(1)

Share Price:$22.63 USD

Investment date October2005 Forecast for the year to December2023

Equity held 0.07% Turnover (£’000) 438,800

Av. Purchase Price 33.4p Prot before tax (£’000) 118,600

Cost (£’000) 55 Net (debt)December2022 (£’000) (30,600)

Valuation (£’000) 3,062 Net assets December2022 (£’000) 726,900

Company description

Abcam is a global life science company listed on the Nasdaq stock exchange after delisting from AIM. Abcam

produces and distributes research-grade antibodies and biological tools to the life sciences sector. The

Company’s customers include universities, research institutes and pharmaceutical and biotechnology companies

in countries around the world.

(1) Abcam was acquired by Danaher Inc. post period-end for $24.00 a share with £3.14m received by the

Company on 6 December 2023.

Learning Technologies Groupplc Share price:64.15p

Investment date July2015 Forecast for the year to December2023

Equity held 0.57% Turnover (£’000) 560,200

Av. Purchase Price 49.7p Prot/(loss) before tax (£’000) 83,000

Cost (£’000) 2,238 Net (debt)June2023 (£’000) (108,377)

Valuation (£’000) 2,887 Net assets June2023 (£’000) 419,647

Company description

Learning Technologies Group provides workplace digital learning and talent management software and services

to corporate and government clients. The group oers end-to-end learning and talent solutions ranging from

strategic consultancy, through a range of content and platform solutions to analytical insights that enable

corporate and government clients to meet their performance objectives.

Innity RelianceLtd (My 1st Years) Unquoted

Investment date May2018 Results for the year to December2022

Voting rights held 8.97% Turnover (£’000) 18,751

Av. Purchase Price 4670.4p Prot before tax (£’000) 1,091

Cost (£’000) 2,500 Net cash December2022 (£’000) 2,818

Valuation (£’000) 2,743 Net assets December2022 (£’000) 6,235

Income recognised in period (£) 0

Company description

My 1st Years is a UK retail platform that focusses on the sale of personalised baby and children’s gifts through

e-commerce channels. The product range includes bespoke presents for new born babies to seven year olds, for

christenings, birthdays and Christmas.

KidlyLtd

(1)

Unquoted

Investment date March2020 Results for the year to March2022

Voting rights held 9.45% Turnover (£’000)

(2)

–

Av. Purchase Price 165.6p Prot/(loss) before tax (£’000)

(2)

–

Cost (£’000) 4,060 Net cash March2022 (£’000) 358

Valuation (£’000) 2,726 Net assets March2022 (£’000) (1,490)

Income recognised in period (£) 223,562

Company description

Kidly is an online retail platform that curates a range of the world’s best brands for children that sit alongside its

own Kidly Label brand catering to children between the ages of 0-5years.

(1) Includes equity investment of £0.3m and convertible loan note investments of £2.4m.

(2) Not available, data taken from abbreviated accounts.

Surface Transformsplc Share price:27.0p

Investment date March2016 Forecast for the year to December2023

Equity held 4.85% Turnover (£’000) 8,600

Av. Purchase Price 17.6p (Loss) before tax (£’000) (8,500)

Cost (£’000) 1,744 Net cash June2023 (£’000) 3,512

Valuation (£’000) 2,673 Net assets June2023 (£’000) 28,990

Company description

Surface Transforms develops and produces carbon-ceramic brake discs serving customers that include major

OEMs in the global automotive markets. Surface Transforms interweaves continuous carbon bre to form a 3D

multi-directional matrix, producing a stronger, lighter and more durable product with 3x the heat conductivity

compared to standard production components.

Engage XR Holdingsplc Share price:2.80p

Investment date March2023 Forecast for the year to December2023

Equity held 29.72% Turnover (€’000) 5,400

Av. Purchase Price 4.0p (Loss) before tax (€’000) (4,500)

Cost (£’000) 3,453 Net cash December2022 (€’000) 9,447

Valuation (£’000) 2,417 Net assets December2022 (€’000) 10,340

Company description

Engage XR is virtual reality (’VR’) technology company with a proprietary cloud-based professional metaverse

platform used to deliver immersive corporate communications, remote collaborations and events, training and

education. The company has a strong reputation for data security and reliability, with a diverse customer base of

190 clients including several blue-chip companies such as Meta, HP, HTC, KIA and BMW.

Cohortplc Share price:492.0p

Investment date February2006 Forecast for the year to April2024

Equity held 1.15% Turnover (£’000) 187,400

Av. Purchase Price 130.2p Prot before tax (£’000) 19,200

Cost (£’000) 619 Net cash April2023 (£’000) 15,608

Valuation (£’000) 2,337 Net assets April2023 (£’000) 99,778

Company description

Cohort is the parent company of six businesses based in the UK, Germany and Portugal, providing a wide range of

services and products for domestic and export customers in defence and related markets. The group is split into

two divisions:Communications and Intelligence, and Sensors and Eectors.

For further information please contact:

Oliver Bedford

Lead Fund Manager

Canaccord Genuity Asset Management Limited

88 Wood Street

London

EC2V 7QR

0207 523 4837

aimvct@canaccord.com

Governance

Board of Directors

David Brock (Chair)

Date of Appointment: 13 October 2010

David Brock, who is an experienced company chair

in both private and public companies and a former

main board director of MFI Furniture Groupplc.

David is chair of Molten Ventures VCTplc and ECS

Global GroupLtd. David was appointed as Chair of

the Board on 4February 2020.

Oliver Bedford

Date of Appointment: 13 December 2016

Oliver Bedford sits on the Board as part of his role

as lead fund manager at the Investment Manager in

relation to the Company.

Angela Henderson (Management and Service

Provider Engagement Committee Chair)

Date of Appointment: 1 November 2019

Angela Henderson is a non-executive director at

Macquarie Capital (Europe) Limited, Wells Fargo

Securities International Limited and Polar Capital

Global Financials Trustplc following an executive

career in nancial services. She has invested in early

stage technology companies and held non-executive

board seats in the asset management sector.

Previously, she has served on the governing body

of a London hospital and is a trustee of a healthcare

charity. She is a solicitor of the Senior Courts of

England& Wales.

Megan McCracken

Date of Appointment: 1 June 2022

Megan McCracken is Chair of State Street Trustees

Limited, the senior independent director of GB

Bank and chair of Remuneration and Nomination

Committees for Folk2Folk. She was awarded the

Institute of Directors’ Chair’s Award. Megan has held

executive roles at HSBC and Citibank, and was a PwC

consultant and a Boeing Satellite Systems engineer.

She has an MBA from MIT Sloan and a Bachelor of

Science in Aerospace Engineering from the University

of Notre Dame.

Busola Sodeinde

Date of Appointment: 1 June 2022

Busola Sodeinde is a qualied Chartered Accountant

and has spent most of her executive career in Financial

Services. Until 2019 she was a Managing Director/CFO in

Global Markets EMEA at State Street Bank. She is a non-

executive director and chair of the Audit Committee

of TRProperty Investment Trustplc, a member of the

Board of Governors for Church Commissioners (and

sits on its Audit& Risk Committee), is a non-executive

director at The Ombudsman Services and a Trustee of

The Scouts. Busola is the founder of a social start up and

is also an activator supporting women-led ventures.

Justin Ward (Audit Committee Chair)

Date of Appointment: 1 November 2020

Justin Ward is a qualied Chartered Accountant and is

a non-executive director and chair of the Investment

Committee of The Income and Growth VCTplc. He

is also a non-executive director of School Explained

Limited and has previously served on the board of

a number of private companies. Justin formerly led

growth equity and private equity buyout transactions

at CVC Capital Partners, Hermes Private Equity and

Bridgepoint Development Capital.

Directors’ report

For the year end 30 September 2023

The Directors of the Company present their report

together with the audited nancial statements of

the Company for the year from 1October 2022 to

30September 2023 (“Annual Report”), incorporating

the corporate governance statement on pages 51 to

55. The principal activity of the Company has been

outlined in the strategic report on page 10. The Board

believes that the Annual Report taken as a whole is

fair, balanced and understandable and provides the

information necessary for shareholders to assess the

Company’s position, performance, business model

and strategy.

Directors

The Directors of the Company during the year

were David Brock (Chair), Oliver Bedford, Angela

Henderson, Justin Ward, Busola Sodeinde and Megan

McCracken. Brief biographical details are given on

page 41.

Directors’ interests

The Directors’ interests (including those of

connected persons) in the issued share capital of the

Company are outlined in the Directors’ remuneration

report on page 46. There is no minimum holding

requirement that the Directors need to adhere to.

David Brock, Oliver Bedford, Angela Henderson, and

Justin Ward are shareholders in the Company. Their

current shareholdings, as at the date of the Annual

Report, are stated in the Directors’ remuneration

report on page 46.

Directors’ and ocers’ liability insurance

Directors' and ocers' liability insurance cover is held

by the Company in respect of the Directors.

Deeds of Indemnity

The Company has entered into deeds of indemnity

in favour of each of the Directors in order to provide

additional protection to the Directors in certain

liability scenarios. The deeds of indemnity give each

Director the benet of an indemnity, out of the assets

and prots of the Company, to the extent permitted

by the Companies Act2006 and subject to certain

limitations against liabilities incurred by each of them

in the execution of their duties and exercise of the

powers as Directors of the Company.

Disclosable interests

No Director is under contract of service with the

Company and other than as disclosed in note14,

no contract existed during or at the end of the year

in which any Director was materially interested and

which was signicant in relation to the Company’s

business.

Revenue and dividends

The statutory loss for the year amounted to

£29,726,556 (2022:loss £88,670,119). A special

dividend of 2.00pence per share was paid on

10February 2023. An interim ordinary dividend

of 1.00penny per share was paid on 28July

2023 (2022:1.00penny per share). The nal

dividend of 1.50pence per share for the year

ended 30September 2023 is due to be paid on

15 February2024 (2022:2.00pence per share).

Capital structure

The Company’s capital structure is summarised in

notes1 and 11 to the nancial statements.

Voting rights in the Company’s shares

Details of the voting rights in the Company’s shares

as at the date of the Annual Report are given in note2

to the Notice of Annual General Meeting on page 96.

Substantial holdings in the company

As at 30September 2023 and the date of this

report, the Company was aware of the following

shareholdings of 3% or more of the Company’s

issued ordinary share capital:

Shareholder

Number of

ordinary

shares as at

30September

2023 % held

Number of

ordinary

sharesas at

14December

2023 % held

Hargreave Lansdown (Nominees) Limited 12,880,056 3.93 13,109,189 3.87

UBS Banking NomineesLtd 11,140,397 3.40 11,494,052 3.39

Share buybacks and share price discount

During the year, the Company repurchased 7,183,338

ordinary shares (nominal value £71,833) at a cost

of £3,636,841. The repurchased shares represent

2.69% of the ordinary shares in issue on 1October

2022. All repurchased shares were cancelled. As at

18December2023, a further 2,039,414ordinary

shares (nominal value £20,394) have been purchased

since the year end at a total cost of £873,229.

The Directors believe that these share buybacks

are in the best interests of all shareholders as they

provide liquidity for shareholders looking to realise

their investment whilst ensuring the shares are

bought back at a discount to the NAV to the longer

term benet of remaining shareholders.

This policy is non-binding and at the discretion

of the Board. Its operation depends on a range of

factors including the Company’s liquidity, shareholder

permissions, market conditions and compliance with

all laws and regulations. These factors may restrict

the eective operation of the policy and prevent the

Company from achieving its objectives.

Shares issued

During the year, the Company issued 65,917,234

ordinary shares of 1penny (nominal value £659,172)

in the oer for subscription launched in the year

ending September2022, representing 24.7% of the

opening share capital at prices ranging from 54.76p

to 63.84p per share. Gross funds of £39,935,333 were

received. The 3.5% premium of £1,397,737 payable

to Canaccord Genuity WealthLtd (CGWL) under

the terms of the oer was reduced by £555,552,

being the discount awarded to investors in the form

of additional shares. A further reduction of £755

introductory commission was made resulting in fees

payable to CGWL of £841,430 which were used to

pay other costs associated with the prospectus and

marketing. In accordance with the oer agreement,

the Company was entitled to a rebate of £100,000

from CGWL reducing the net fees payable to CGWL

to £741,430.

On 10February 2023, 1,836,516 ordinary shares

were allotted at a price of 54.95pence per share,

which was calculated in accordance with the terms

and conditions of the DRIS, on the basis of the last

reported NAV per share as at 20January 2023, to

shareholders who elected to receive shares under

the DRIS as an alternative to the nal dividend for the

year ended 30September 2022 and special dividend

announced on 19 December 2022.

On 28July 2023, 591,318 ordinary shares were

allotted at a price of 49.29pence per share, which

was calculated in accordance with the terms

and conditions of the DRIS, on the basis of the

last reported NAV per share as at 7July 2023, to

shareholders who elected to receive shares under the

DRIS as an alternative to the interim dividend for the

year ended 30September 2023.

Financial instruments

The Company’s nancial instruments and principal

risks are disclosed in note15 to the accounts.

VCT status monitoring

The Company has appointed Philip Hare&

AssociatesLLP as advisors on, inter alia, compliance

with legislative requirements. The Directors monitor

the Company’s VCT status through regular reports

from Philip Hare& AssociatesLLP.

Auditors

A resolution proposing the reappointment of

BDOLLP as auditors to the Company and authorising

the Directors to determine their remuneration will

be proposed at the forthcoming Annual General

Meeting.

Greenhouse gas emissions

As a UK quoted company, the Company is required

to report on its greenhouse gas emissions. The

Company outsources all of its activities to third

parties and does not have any physical assets,

property, employees or operations. The Company

has no direct greenhouse gas emissions to report

from its operations, nor does it have responsibility

for any other emissions producing sources under the

Companies Act2006 (Strategic Report and Directors’

Reports) Regulations 2013.

Amendments to the Articles of Association

The Company’s Articles of Association may be

amended by the members of the Company by special

resolution (requiring a majority of at least 75% of the

persons voting on the relevant resolution).

At the Company’s General Meeting on 11October

2023, a resolution to adopt amended Articles

of Association which, provided that the next

continuation vote in relation to the Company will

be held in 2030 rather than 2029, was passed, with

96.96% votes in favour.

Post balance sheet events

Post balance sheet events are disclosed in note17 to

the nancial statements on page 87.

Future developments

Consideration of the Company’s future development

and prospects are contained in the Chair’s statement,

long term viability statement and Investment

Manager’s report on pages 4 to 9, 24 and 29 to

32respectively.

Going concern

The Company’s business activities and the factors

aecting its future development are set out in the

Chair’s statement on pages 4 to 9 and the Investment

Manager’s report on pages 29 to 32. The Company’s

principal and emerging risks are set out in the

strategic report on pages 22 to 23.

The Board receives regular reports from the

Investment Manager and Administrator and reviews

the nancial position, performance and liquidity

of the Company’s investment portfolio. Revenue

forecasts and expense budgets are prepared at the

start of each nancial year and performance against

plan is reviewed by the Board. Cash forecasts are

prepared and reviewed by the Board as part of the

HMRC investment test compliance monitoring.

The Directors have assessed the Company’s ability

to continue as a going concern and are satised that

the Company has adequate resources to continue in

operational existence for a period of 12months from

the date these nancial statements were approved.

The Company has sucient cash (£19.2million at

30September 2023) and liquid assets held across

a diversied portfolio of investments in listed

companies to meet obligations as they fall due. The

Company is a close-ended fund, where assets are

not required to be liquidated to meet day-to-day

redemptions. The major driver of cash outows

(dividends, buybacks and investments) are managed

in accordance with the Company’s key policies at

the discretion of the Board or, in the case of the

Company’s investments, the Investment Manager.

The Board has reviewed forecasts and stress tests

to assist them with their going concern assessment.

These tests have included the modelling of a 15%

reduction in NAV, whilst also considering ongoing

compliance with the VCT investment test. It was

concluded that in a plausible downside scenario the

Company would continue to meet its liabilities.

The Directors have carefully considered the principal

risk factors facing the Company, as described on

pages 22 to 29 and their potential impact on income

into the portfolio and the NAV. The Directors are of

the opinion that the Company has sucient cash and

other liquid assets to continue to operate as a going

concern, including under a stress scenario.

The Investment Manager has a team of four

dedicated fund managers and analysts with multi-

year experience working for the VCT. Abbe Martineau

joined the CGAM VCT fund management team as

legal counsel on 17April 2023. The Investment

Manager and the Company’s other key service

providers have contingency plans in place to manage

operational disruptions.

The Directors have not identied any material

uncertainties related to events or conditions that

may cast signicant doubt about the ability of the

Company to continue as a going concern. Therefore,

they are satised that the Company should continue

to operate as a going concern and report its nancial

statements on that basis.

Annual General Meeting

Shareholders are invited to attend the Company’s

Annual General Meeting (AGM) to be held at

4.45pm on 8February2024 at 88 Wood Street,

LondonEC2V7QR. The Company’s Notice of AGM

is set out on pages 96 to 99 of this annual report.

Shareholders who are unable to attend the AGM

in person are invited to vote by proxy ahead of

the AGM and submit any questions in writing to

the Company Secretary at HHV.CoSec@jtcgroup.

com (please include ‘HHV AGM’ in the subject

heading) by 5.00p.m. on 1February2024. Answers

will be published on the Company’s website on

8February2024. The Chair will record the voting for

each resolution by way of a poll to ensure each vote

cast is counted.

A proxy form for the AGM is enclosed separately with

shareholders’ copies of this annual report. The proxy

form permits shareholders to disclose votes ‘for’,

‘against’ and ‘withheld’. A vote ‘withheld’ is not a vote

in law and will not be counted in the proportion of the

votes for and against the resolution. Shareholders

who wish to appoint a proxy are recommended to

appoint the Chair of the AGM as their proxy.

Resolutions being proposed at the AGM

There are 15 resolutions being proposed at the

forthcoming AGM, 13 as ordinary resolutions,

including approval of the annual accounts (resolution

1), and 2 as special resolutions, requiring the majority

of the votes cast and 75per cent of the votes cast to

be in favour of the resolutions, respectively, in order

for the resolutions to carry. Ordinary resolutions

include the re-election of the Directors.

Resolution12 – Authority to implement any scrip

dividend oer

Ordinary resolution number 12 grants the Directors

the necessary authority, in accordance with the

terms of Article29 of the Articles, to continue to

oer a scrip dividend alternative in respect of future

dividends made or paid in the period ending at the

conclusion of the annual general meeting to be held

in 2025. The Board believes that this continued

authority oers the Company and its shareholders

a greater level of exibility in relation to dividend

payments. The appendixon pages 100 to 102 of

this document sets out a summary of key terms

and conditions of the Company’s scrip dividend

scheme. The full terms and conditions can be

accessed via the Company’s website at https://www.

hargreaveaimvcts.co.uk and are available on request

from the Company’s registrar, Equiniti Limited.

Resolution13 – Power to allot shares

Ordinary resolution number 13 will request the

authority for the directors to allot up to an aggregate

nominal amount of £338,803 representing

approximately 10per cent. of the total share capital

of the Company in issue (excluding treasury shares)

as at the date of this document, generally from

time to time or pursuant to shareholders’ right to

elect or participate in the dividend reinvestment

scheme operated by the Company in accordance with

Article29 of the Company’s Articles of Association.

This authority is in addition to any existing

authorities.

The authority sought at the forthcoming Annual

General Meeting will expire 15months from the date

that this resolution is passed, or at the conclusion of

the next Annual General Meeting of the Company,

whichever is earlier.

Resolutions14 and 15 are being proposed as special

resolutions requiring the approval of at least 75per

cent. of the votes cast at the meeting.

Resolution14 – Disapplication of pre-emption

rights

Special resolution number 14 will request the

authority for the Directors to allot equity securities

for cash without rst being required to oer such

securities to existing members. This will include the

sale on a non pre-emptive basis of any shares the

Company holds in treasury for cash. The authority

is limited to (i)an aggregate nominal amount of

£169,401 (representing approximately 5per cent. of

the issued share capital of the Company (excluding

treasury shares) as at the date of this document)

pursuant to the dividend reinvestment scheme

operated by the Company and (ii)for allotments

generally from time to time, an aggregate nominal

amount of £169,401 (representing approximately

5per cent. of the issued share capital of the Company

(excluding treasury shares) as at the date of this

document). This authority is in addition to any

existing authorities.

The authority sought at the forthcoming Annual

General Meeting will expire 15months from the date

that this resolution is passed or at the conclusion of

the next Annual General Meeting of the Company,

whichever is earlier.

Resolution15 – Purchase of own shares

Special resolution number 15 will request the

authority to purchase a maximum of 14.99per cent.

of the Company’s issued ordinary share capital

at the date of the passing of the resolution being

approximately 50,786,705 as at the date of this

document at or between the minimum and maximum

prices specied in resolution 13. Shares bought

back under this authority may be cancelled or held in

treasury.

The Board believes that it is helpful for the Company

to continue to have the exibility to buy its own

shares and this resolution seeks authority from

shareholders to do so. The passing of this resolution

will replace and renew the buyback authority taken at

the last AGM. During the nancial year under review,

the Company purchased 7,183,338 ordinary shares

which were then cancelled.

The authority sought at the forthcoming Annual

General Meeting will expire 15months from the date

this resolution is passed, or at the conclusion of

the next Annual General Meeting of the Company,

whichever is earlier.

Recommendation

The Directors believe that the passing of the

resolutions above are in the best interests of the

Company and its shareholders as a whole and

unanimously recommend that you vote in favour

of these resolutions, as they intend to in respect

of their own benecial shareholdings amounting to

318,689ordinary shares.

By order of the Board

David Brock

Chair

Registered oce:

Hargreave Hale AIM VCTplc

Talisman House

Boardmans Way

Blackpool

FY4 5FY

18December2023

Directors’ remuneration report

For the year ended 30September 2023

The Board presents this report which has been

prepared in accordance with the requirements

of Schedule8 of the Large and Medium-sized

Companies and Groups (Accounts and Reports)

(Amendment) Regulations 2013. Shareholders are

encouraged to vote on the remuneration report

annually at the Annual General Meeting and on the

remuneration policy at least every three years.

Notwithstanding this, the Directors’ policy is to put

the remuneration to the vote of its shareholders at

each Annual General Meeting.

Your Company’s independent auditor is required

to audit certain disclosures provided in this report.

Where disclosures have been audited, they are

indicated in this report. The auditor’s opinion is

included in their report on pages62 to 68.

Statement from the Chair of the Board in relation to

Directors’ remuneration matters

The Board is mindful of its obligation to set

remuneration at levels which attract and

maintain an appropriate calibre of individuals

whilst simultaneously protecting the interests of

shareholders.

Following a review of the Board remuneration levels

of the Company’s peers and taking into account

ination, the Board has decided to increase its

remuneration, eective 1 October 2023. As a result

of the increases, the annual remuneration of the

Chair will be £41,000, the independent non-executive

directors will receive £32,000 and Oliver Bedford, who

is not considered independent, will receive £29,500.

An additional fee of £1,500 will continue to be paid to

the Chair of the Management and Service Provider

Engagement Committee and the Chair of the Audit

Committee will continue to receive an additional fee

of £3,000.

Remuneration responsibilities

As the Board consists entirely of non-executive

directors it is considered appropriate that matters

relating to remuneration are considered by the Board

as a whole, rather than a separate remuneration

committee.

All Directors are considered independent with the

exception of Oliver Bedford who is an employee

of the Investment Manager and is not therefore

independent.

The remuneration policy is set by the Board, who

consider the remuneration of each of the Directors

and whether the remuneration policy is fair and in

line with comparable VCTs. The Board deals with all

matters relating to the Directors’ remuneration and

reporting thereon.

Policy on Directors’ remuneration

The Company has no employees, so the Board’s

policy is that the remuneration of its Directors

should be fair and reasonable in relation to the time

commitment and responsibilities of the Directors

and in line with the remuneration paid by other listed

Venture Capital Trusts and investment trusts. The

Board aims to review Directors’ remuneration from

time to time.

Fees for the Directors are determined by the Board

within the limits stated in the Company’s Articles

of Association. The maximum permitted by the

Company’s Articles of Association is £250,000 per

annum. The Directors are not eligible for bonuses,

pension benets, share options, other incentives

or benets. The Directors may be reimbursed for

reasonable expenses incurred. The Directors do not

receive payment on loss of oce other than in lieu of

notice period, if applicable.

Director’s terms of appointment

It is the Board’s policy that none of the Directors

has a service contract. Each of the Directors has

entered into an agreement with the Company

when appointed. David Brock was appointed on

28September 2010, Oliver Bedford on 13 December

2016, Angela Henderson on 29 October 2019, Justin

Ward on 1 November 2020 and Busola Sodeinde

and Megan McCracken on 1 June 2022. The terms

of appointment provide that a Director shall retire

and be subject to election at the rst Annual

General Meeting after appointment. The Articles of

Association provide that a Director may retire at any

Annual General Meeting following the Annual General

Meeting at which he or she last retired and was

re-elected provided that he or she must retire from

oce at or before the third Annual General Meeting

following the Annual General Meeting at which he

or she last retired and was re-elected. However,

notwithstanding this, the Board agreed in July 2019

that all Directors will be subject to annual re-election.

Either party can terminate the agreement by giving to

the other at least 3months’ notice in writing.

Basis of remuneration

All of the Directors are non-executive and

considered to be independent with the exception

of Oliver Bedford, who is not independent. It is not

considered appropriate to relate any portion of their

remuneration to the performance of the Company

and performance conditions have not been set in

determining their level of remuneration. As the

Company has no employees, it is not possible to take

account of the pay and employment conditions of

the employees when determining the levels of the

Directors’ remuneration.

The following table shows the expected maximum payment that can be received per annum by each director for

the year to 30 September 2024, together with a summary of the Company’s strategy and how this is supported by

the current remuneration policy.

Director Role

Components

of pay package

Expected Fees

for the year to

30 September

2024

Performance

Conditions Company Strategy

Remuneration

Policy

David Brock Chair

Basic Salary

£41,000

N/A

To generate

capital gains and

income from its

portfolio and make

distributions from

capital or income to

shareholders whilst

maintaining its

status as a Venture

Capital Trust

The levels of

remuneration are

considered to be

fair and reasonable

in relation to the

time committed,

responsibilities

of the Directors

and in line with the

remuneration paid

by other VCTs and

investment trusts

Justin Ward Director and Chair of

the Audit Committee £35,000

Angela Henderson Director and Chair

of the Management

and Service Provider

Engagement

Committee £33,500

Oliver Bedford Director £29,500

Megan McCracken Director £32,000

Busola Sodeinde Director £32,000

Annual remuneration report

The purpose of this report is to demonstrate the method by which the Board has implemented the Company’s

remuneration policy and provide shareholders with specic information in respect of the Directors’ remuneration.

Under s439 of the Companies Act 2006, companies are required to ask shareholders to approve the annual

remuneration paid to directors every year and to formally approve the directors’ remuneration policy every three

years. However, the Board’s preferred approach is to put the remuneration policy to shareholders annually for

approval. Any change to the Directors’ remuneration policy will require shareholder approval. As in prior years, the

vote on the Directors’ remuneration report is an advisory vote, whilst the vote on the Directors’ remuneration

policy is binding.

Accordingly, ordinary resolutions will be put to shareholders at the forthcoming Annual General Meeting to be

held on 8February 2024, to receive and adopt the Directors’ remuneration report and to receive and approve the

directors’ remuneration policy.

At the Annual General Meeting held on 2 February 2023 the following votes were cast on the remuneration report

and the remuneration policy:

Votes

for % for

Votes

against % against Total votes cast

Votes

withheld

Remuneration report 12,763,878 93.31 915,521 6.69 13,679,399 531,672

Remuneration policy 12,685,494 92.62 1,010,324 7.38 13,695,818 515,253

Company performance

The Company was incorporated on 16 August 2004 and commenced trading on 29 October 2004. The

performance chart below plots the Company’s NAV total return (dividends reinvested) (rebased to 100) and

share price total return (dividends reinvested) (rebased to 100) over the last 10 years compared to the FTSE AIM

All-Share Index Total Return over the same period (also calculated on a dividends reinvested basis). This index

was chosen for comparison purposes as it represents the closest comparable equity market index. However,

HMRC derived investment restrictions, along with Qualifying Investments in private companies and xed income

securities and Non-Qualifying Investments in main market listed companies, predominantly in the FTSE 350,

mean the index is not a wholly comparable benchmark for performance.

Performance against the FTSE AIM All-Share Index Total Return

50.00

70.00

90.00

Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22

Sep-23

250.00

230.0

210.0

190.0

170.0

150.0

130.0

110.0

FTSE AIM All-Share Index Total Return

Share price total return (dividends reinvested)

NAV total return (dividends reinvested)

Source: Bloomberg

Directors’ emoluments for the year (audited)

The total emoluments of each person who served as a director during the year are set out in the table below.

David Brock is entitled to a higher fee due to his role as Chair of the Board, Justin Ward is entitled to a higher fee

due to his role as Chair of the Audit Committee and Angela Henderson is entitled to a higher fee due to her role as

Chair of the Management and Service Provider Engagement Committee.

2023

Fees

2023

Taxable

Expenses

2023

Total

2022

Fees

2022

Taxable

Expenses

2022

Total

David Brock (Chair) 39,000 532 39,532 36,500 – 36,500

Oliver Bedford 28,000 – 28,000 26,125 – 26,125

Ashton Bradbury

(1)

– – – 9,633 558 10,191

Angela Henderson 32,000 – 32,000 30,125 – 30,125

Justin Ward 33,500 – 33,500 31,625 40 31,665

Megan McCracken

(2)

30,500 – 30,500 9,667 – 9,667

Busola Sodeinde

(2)

30,500 – 30,500 9,667 – 9,667

Total 193,500 532 194,032 153,342 598 153,940

(1) Ashton Bradbury resigned as a Director eective 3 February 2022.

(2) Megan McCracken and Busola Sodeinde were appointed with eect from 1 June 2022 and their 2022 fees are with eect from that date.

Directors’ annual percentage change in remuneration

The increase in Directors’ remuneration over the last two years is set out in the table below. As the Company does

not have any employees no comparisons are given for employees’ remuneration increases.

2023

Fees

Total

2022

Fees

Total

2021

Fees

Total

Annual %

Change

2022-2023

Annual %

Change

2021-2022

David Brock (Chair) 39,532 36,500 34,250 6.9 6.6

Oliver Bedford 28,000 26,125 25,000 7.2 4.5

Ashton Bradbury

(1)

– 10,191 26,875 N/A N/A

Angela Henderson 32,000 30,125 28,000 6.2 7.6

Sir Aubrey Brocklebank – – 9,982 N/A N/A

Justin Ward

(3)

33,500 31,665 26,703 5.8 18.4

Megan McCracken

(2)

30,500 9,667 – 215.5 N/A

Busola Sodeinde

(2)

30,500 9,667 – 215.5 N/A

Total 194,032 153,940 150,810 – –

(1) Ashton Bradbury resigned as a Director eective 3 February 2022.

(2) Megan McCracken and Busola Sodeinde were appointed with eect from 1 June 2022 and their 2022 fees are with eect from that date.

(3) Justin Ward’s annual % change 2021-2022 reects his fee increase following his appointment as Audit Chair in February 2021.

Relative importance of spend on pay (unaudited)

The table below compares Directors’ remuneration to shareholder distributions (through dividend payments and

share buybacks) in respect of the nancial year ended 30 September 2023 and the preceding nancial year:

Year ended

30 September

2023

Year ended

30 September

2022

Growth

Directors’ remuneration

(1)

193,500 153,342 26.2

Dividend paid 15,717,501 16,828,890 -6.6

Share buybacks 3,636,841 3,243,492 12.1

(1) The gures above exclude employer’s National Insurance contributions.

Within the nancial year, the Company paid interim and nal dividends totalling 3.00 pence per share. The

Company also paid a special dividend of 2.00 pence per share on 10 February 2023, taking the total cash

distributions in the year to 5.00 pence per share, a 24.8% decrease on the prior year. Including share buybacks,

the Company returned £19.3 million to shareholders during the period under review.

In light of the signicant time contributed by the independent non-executive Directors during the year,

particularly from those with additional responsibilities as Chair of the Board and its sub committees, the Board

agreed to a modest increase in the Directors’ remuneration for the year ending 30 September 2023.

Directors’ interests (audited)

The Directors’ interests (including those of connected persons) in the issued share capital of the Company are

outlined below. There is no minimum holding requirement that the Directors need to adhere to.

Ordinary Shares

30 September

2022

30 September

2023

Acquired after

Year end

Total holding at

18 December

2023

David Brock 42,170 122,606 216,560 339,336

Oliver Bedford 84,488 167,790 54,475 222,265

Angela Henderson – 8,223 – 8,223

Justin Ward 25,223 62,899 – 62,899

Megan McCracken – – – –

Busola Sodeinde – – – –

Taxable benets

The Directors who served during the year received no taxable benets in the year.

Variable pay

The Directors who served during the year received no variable pay relating to the performance of the Company in

the year.

Pension benets

The Directors who served during the year received no pension benets in the year.

Recruitment remuneration policy

The remuneration levels are designed to reect the duties and responsibilities of the roles and the value of time

spent in carrying these out. The Board will obtain independent advice on this where it considers it necessary. No

such advice was taken during the year under review. This policy would be used when agreeing the remuneration of

any new director.

Approval

The Directors’ remuneration report on pages46 to 50 was approved by the Board of Directors on 18 December

2023 and will be further subject to an advisory vote at the Annual General Meeting being held on the 8 February

2024 and every year thereafter.

Signed on behalf of the Board of Directors

David Brock

Chair

18 December 2023

Corporate governance

For the year ended 30September 2023

Directors’ statement of compliance with the

UK corporate governance code and AIC code of

corporate governance

Introduction

The Board recognises the importance of sound

corporate governance and has chosen to comply with

the Association of Investment Companies (AIC) Code

of Corporate Governance (the AIC Code). This was

last updated in February 2019. The Board believes

that the Company has complied with the principles

and provisions of the AIC Code in the period under

review, with the exceptions of the items outlined

below.

●

Appointment of a senior independent director;

●

Establishment of a separate nomination

committee; and

●

Establishment of a separate remuneration

committee.

For the reasons commented on in the relevant

sections of this Corporate Governance Report, the

Board considers these provisions are not relevant to

the position of the Company and has therefore not

reported in respect of these provisions.

Copies of the AIC Code can be found on the AIC’s

website: https://www.theaic.co.uk.

Board leadership and purpose

The Board considers that the Company’s business

model remains attractive because of the potential

returns available from investing in small companies

and the advantageous VCT tax structure. The

management of the investment portfolio has been

delegated to the Investment Manager and, through

regular meetings with the Investment Manager, the

Board seeks to ensure that the portfolio is managed

in accordance with the agreed investment objectives

and policy. The Company’s investment objectives

and policy are shown on pages11 to 13, these were

reviewed during the year and deemed appropriate for

the Company’s needs. The Board seeks to control risk

by ensuring that appropriate policies and controls are

in place and by reviewing the Company’s risk matrix

every six months and taking mitigating action where

necessary. A summary of the principal and emerging

risks facing the Company is detailed on pages22

to23.

The Board carries out an annual review of its own

culture, practices and behaviour, the ndings from

which are considered by the Board and any actions

required are monitored.

Shareholder relations and relations with key

stakeholders

The Directors have a duty to promote the success

of the Company for the benet of its members and

communication with shareholders is considered

a high priority by the Board. The Board also has

a responsibility to consider the interests of its

other key stakeholders. Please see the section 172

statement on pages18 to 21 for further information.

Management of conicts of interest

In order to manage potential conicts of interest

the Board requires that any conicts are declared

at each meeting. A schedule of all the directorships

held by Board members and director shareholdings

in unquoted companies in which the Company has an

interest is maintained by the Company Secretary and

reviewed by the Board. Where a conict arises the

Board will consider what is in the best interests of the

Company and whether the Director’s ability to act in

accordance with his or her wider duties is aected.

Director responsibilities

The Directors have adopted a formal Schedule of

Matters Reserved for the Board which sets out the

responsibilities of the Board, a copy of which is

available on the Company’s website. These matters

include, but are not limited to:

●

approving strategic objectives and reviewing the

Company’s strategy and investment policy to

ensure it is consistent with the objectives of the

Company;

●

monitoring the performance of the Investment

Manager and other key service providers;

●

changes to the Company’s structure and capital,

this includes capital raising and reductions,

policy on share buybacks and the approval of

any borrowing arrangements;

●

approval of all nancial statements and any

signicant changes in accounting practices or

policies;

●

ensuring the maintenance of a sound system of

internal control and risk management;

●

carrying out an annual review of the contracts in

place with key service providers and approving

any other materially strategic contracts;

●

communication with shareholders;

●

appointment and removal of the Company

Secretary;

●

determining the remuneration of the Chair

and other directors subject to the Articles

of Association and shareholder approval as

appropriate; and

●

responsibility for all corporate governance

matters.

The Directors have delegated the responsibility for

the day to day investment management decisions

of the Company to the Investment Manager. The

provision of administration and custodian services

has been delegated to Canaccord Genuity Wealth

Limited.

The following tables set out the number of scheduled

Board meetings, valuation meetings, Audit

Committee meetings and Management and Service

Provider Engagement Committee meetings held

during the year and the number of meetings attended

by each individual Director:

Scheduled Meetings

Number of Board Meetings

Held Attended

Oliver Bedford 5 5

David Brock (Chair) 5 4

Angela Henderson 5 5

Justin Ward 5 5

Megan McCracken 5 5

Busola Sodeinde 5 5

Approval of private

company valuations

Number of Board Meetings

Held Attended

Oliver Bedford 5 5

David Brock (Chair) 5 5

Angela Henderson 5 5

Justin Ward 5 5

Megan McCracken 5 5

Busola Sodeinde 5 4

Number of Audit Meetings

Held Attended

Angela Henderson 3 3

Justin Ward (Chair) 3 3

Megan McCracken 3 3

Busola Sodeinde 3 3

Number of Management

and Service Provider

Engagement Meetings

Held Attended

David Brock 2 2

Angela Henderson (Chair) 2 2

Justin Ward 2 2

Megan McCracken 2 2

Busola Sodeinde 2 2

The Board also held a number of ad-hoc meetings

outside of the scheduled meeting cycle to meet

business needs.

Board Committees

The Board has established Audit and Management

and Service Provider Engagement Committees. The

terms of reference for these committees are available

on the Company’s website.

Due to the size of the Company and the experience

of its Board members, separate Remuneration and

Nomination Committees have not been established.

These roles are instead fullled by the Board as a

whole. A statement from the Chair in relation to

Directors’ remuneration matters is included in the

Directors’ Remuneration Report on page46.

Audit Committee

Information regarding the composition,

responsibilities and activities of the Audit Committee

are detailed in the report of the Audit Committee on

pages56 to 58. During the year, no fees were paid

to the Company’s auditors for non-audit services

(2022:nil).

Management and Service Provider Engagement

Committee

Information regarding the composition,

responsibilities and activities of the Management

and Service Provider Engagement Committee are

detailed on page59.

Board and Director independence

As at 30 September 2023, the Board consisted of six

directors, all of whom are non-executive.

The Board considers that with the exception

of Oliver Bedford, all of the directors remain

independent. David Brock, Chair of the Company,

has served on the Board for 13 years since his initial

appointment. The Board does not have a policy of

restricting the term served by director to a xed

time limit. As part of the Board evaluation process

a rigorous review was carried out on the Chair’s

independence, without him present. The Directors

concluded that notwithstanding his tenure, David

Brock is still considered to be independent given

that he was independent upon his appointment,

throughout his tenure there has been the absence

of connections with the Investment Manager or

any other of the Company’s advisors, he does not

have any involvement in the day to day running of

the Company and his experience and the range

of skills that he brings to the Board, including his

constructive challenge and support, continues to

be benecial to the success of the Company. All new

directors are required to disclose other roles prior

to their appointment and the Board requires that all

signicant additional external appointments receive

prior Board approval.

Board induction and training

On appointment to the Board, Directors are fully

briefed as to their responsibilities and are kept

regularly informed of industry and regulatory

developments. There is no formal training schedule in

place, Directors’ training needs are identied as part

of the Board evaluation process and addressed on a

case by case basis.

Board meetings

The Administrator and the Company Secretary

ensure that the Directors have timely access to

all relevant management, nancial and regulatory

information to enable informed decisions to be made.

The Board meets on a regular basis at least ve

times each year with additional meetings arranged

as necessary. The Board continued to make eective

use of technology to enable it to operate eciently

which included holding some meetings virtually and

the use of electronic board packs.

The primary focus at these meetings is the review of

the Company’s investment performance, progress

against key performance indicators and corporate

governance.

Relationship with the Investment Manager

Both the Schedule of Matters Reserved for the

Board and the investment management agreement

with the Investment Manager clearly set out those

areas of decision making over which the Investment

Manager has discretion. The Board’s responsibility

is to review the Company’s strategy and investment

policy to ensure it is consistent with the objectives

of the Company, and monitor the performance and

investment approach of the Investment Manager.

The Directors have delegated responsibility for day

to day investment management decisions to the

Investment Manager and a review of the investment

portfolio is carried out at each Board meeting. The

report produced by the Investment Manager includes

information on investment performance and fund

positioning, benchmarking against both indices and

peers, liquidity analysis, cash management and deal

ow.

A formal review of the Investment Manager was

carried out by the Management and Service Provider

Engagement Committee in November 2023. The

independent non-executive directors accepted the

Committee’s recommendation that the continuing

appointment of the Investment Manager was in the

best interests of the Company and its shareholders.

Details of the contractual arrangements with the

Investment Manager can be found on page77.

Relationship with other service providers

The Company maintains a schedule of the contracts

that it has in place with its service providers (including

the administrator, company secretary, custodian,

registrar etc.) and the service provided by each is

monitored and reviewed by the Management and

Service Provider Engagement Committee annually.

The Board has direct access to the Company

Secretary, who is responsible for the timely delivery

of relevant information and advising the Board on all

governance matters. JTC (UK) Limited (“JTC”) was

appointed as Company Secretary on 15 January 2021

and a formal agreement detailing the responsibilities

of JTC to the Company is in place.

The Board also has access to independent

professional advice from lawyers and tax advisors etc.

This is obtainable at the Company’s expense where

the Directors consider it necessary in order to be able

to properly discharge their responsibilities.

Board composition

Due to the independent nature of the majority of its

members, the Board does not consider it necessary

to appoint a senior independent director. However,

this will be kept under review. For the same reason,

the Board has not established a separate nomination

committee and all nomination responsibilities are

therefore carried out by the Board as a whole. These

responsibilities include reviewing the size, structure

and skills of the Board and considering any changes

necessary or new appointments. Directors are

required to seek approval from the Board prior to

taking on any new signicant external appointments.

All Directors are subject to annual re-election. The

Board considers that due to their individual skills,

experience and commitment the re-election of all

Directors is merited.

David Brock is a highly experienced company director

with specic expertise directly relevant to investing in

private companies.

Angela Henderson is a solicitor, bringing legal skills

and a strong knowledge of governance within the

asset management industry.

Oliver Bedford is the Lead Fund Manager to the

Company, has strong technical knowledge covering

the VCT regulations and is an eective liaison

between the Company and the Investment Manager.

Justin Ward is a chartered accountant and has

extensive experience in unquoted company

investment.

Megan McCracken is an experienced director and

brings cross sector knowledge from her executive

career.

Busola Sodeinde is a chartered accountant with

signicant regulatory and governance experience.

The role of the Chair

The Chair leads the Board, and so is responsible

for its eectiveness in directing the Company.

By promoting a culture of openness and positive

debate, whilst demonstrating independent and

objective judgement throughout his tenure, the Chair

sets the tone for the Company and enhances the

Board’s performance. The Chair encourages all non-

executive directors to make an eective contribution

to the Board and acts to facilitate constructive Board

relations. In conjunction with the Company Secretary,

the Chair ensures that the Directors receive accurate

and clear information on a timely basis.

Board succession

The Board’s policy for succession planning is that

there should be forward-looking and detailed

succession and refreshment plans when proposing

re-election of long-serving members. Any member

of the Board who has served for nine years will

be subject to a particularly rigorous review and

evaluation process to determine whether they

remain independent and should continue in their

position. Each Board member is subject to annual re-

election at each annual general meeting.

Board tenure

The Company has put in place a policy on the tenure

of its Board members (Board Tenure and Succession

Planning Policy). The Board Tenure and Succession

Planning Policy states that the term the Chair and

other Directors serve on the Board should not be

restricted to a xed time limit.

The relevance of the individual length of service of

the Chair and other directors will be determined

on a case by case basis. In addition to the length

of service, consideration will be given to the

contribution and ongoing independence of the

individuals and the overall composition of the Board,

including the experience and range of skills of the

Directors. By adopting a rounded approach, the

Board believes it is best placed, through careful

succession planning, to ensure that it has appropriate

levels of experience and diversity whilst introducing

new Board members as needed.

David Brock, Chair of the Company since February

2020, joined the Board in 2010. David is still

considered to be independent given the absence of

connections with the Investment Manager, or any

other of the Company’s advisors and, as a highly

experienced company chairman, is ideally suited

to guide the Board at a time when it is enacting its

succession plans.

In recent years the Board has successfully added

new directors with complementary skills through

the appointments of Megan McCracken and Busola

Sodeinde in June 2022. Summary biographies of all

the Directors can be found on page41.

Board evaluation

The Directors recognise the importance of evaluating

both the performance of the Board as a whole and

that of the individual Directors.

The annual Board evaluation is carried out by means

of a questionnaire which includes accountability and

eectiveness, culture, a Directors’ self-assessment

and an appraisal of the Chair.

A Board evaluation covering the year under review

was carried out. Following this the Board is satised

with the results and nds that the Board, the Chair

and the Directors are suitably qualied to undertake

their responsibilities and perform their duties in

respect of managing the Company and that the

Board culture remains strong.

During the year, the Board also considered whether

it was appropriate to have an externally facilitated

Board evaluation. Following due consideration and

taking into account the satisfactory results of the

Board evaluation, this was not deemed necessary.

Risk and internal control

The Directors acknowledge that they are responsible

for the Company’s systems of internal nancial and

non-nancial controls. The controls are operating

eectively and continue to be in place up to the date

of this report. The key components of this process

are as follows:

●

Day to day measures have been delegated to

the Investment Manager, Administrator and

Custodian. Written agreements are in place

which dene the roles and responsibilities of

these parties including the investment policy

to be followed by the Investment Manager. The

Board receives regular reports to provide it with

assurance that appropriate oversight is in place.

Additionally, the Board receives and reviews the

annual internal control report published by its

Registrar.

●

On a quarterly basis, the Board reviews the

Company’s management accounts, KPIs

and investment reports provided by the

Administrator and Investment Manager.

●

Annual and half-yearly reports and associated

announcements are reviewed and approved by

the Board prior to publication.

●

A detailed risk matrix is maintained, this

identies each of the Company’s principal and

emerging risks, assesses the potential impact

and describes the controls in place to mitigate

those risks. A summary of the principal and

emerging risks can be found in the strategic

report on pages22 to 23. The risk matrix

is discussed regularly at Board and Audit

Committee meetings, thereby ensuring that

the nature and extent of the risks facing the

Company are being actively monitored.

●

The Board reviews the Company’s internal

policies on an annual basis. The Board has

also reviewed a summary of the range of risk

management and internal controls it has in

place to satisfy itself that the overall system of

controls remains appropriate.

All of the Company’s management functions are

performed by the Investment Manager, Canaccord

Genuity Wealth Limited and JTC (UK) Limited, all of

which have their own control systems in place. The

Board receives regular reports to provide it with

assurance that appropriate oversight is being applied

and so has decided that the Company does not need

its own internal audit function.

The Board considers that the control systems in place

provide reasonable, but not absolute, assurance

against material misstatement or loss, and manage

rather than eliminate the risk of failure to achieve

business objectives.

Remuneration

As the Company has no employees and the Board

is wholly comprised of non-executive directors the

Board has not established a separate remuneration

committee and all remuneration responsibilities are

therefore carried out by the Board. The Company’s

disclosure with regard to remuneration is included on

pages46 to 50.

Going concern

Under the AIC Code, the Board needs to consider

whether it is appropriate to adopt the going concern

basis of accounting in preparing these nancial

statements. The Board continues to adopt the going

concern basis and the detailed consideration is

contained on pages43 to 44.

Viability Statement

The viability statement, under which the Directors

assess the prospects of the Company over a longer

period, is contained on page24.

Modern Slavery Statement

As an investment company with no employees

or customers and which does not provide goods

or services in the normal course of business, the

Company considers that it does not fall within the

scope of the Modern Slavery Act 2015 and it is not,

therefore, obliged to make a human tracking

statement. The Company’s own supply chain, which

consists predominantly of professional advisers and

service providers in the nancial services industry, is

considered to be low risk in relation to this matter.

Additional disclosures in the Directors’ Report

Additional disclosures required by Schedule 7

of the Large and Medium sized Companies and

Groups (Accounts and Reports) Regulations 2008

(as amended 2013) are contained in the Directors’

Report on pages42 to 45.

For and on behalf of the Board

JTC (UK) Limited

Company Secretary

18December 2023

Report of the Audit Committee

Composition of the Audit Committee

The Audit Committee consists of four independent

non-executive directors at the year-end; Justin Ward

(Chair), Angela Henderson, Megan McCracken and

Busola Sodeinde.

The Board conrms that, in line with the

recommendations of the AIC Code, at least one

member of the Audit Committee has recent and

relevant nancial experience. Justin Ward and Busola

Sodeinde are both chartered accountants. Angela

Henderson and Megan McCracken also have relevant

nancial experience and the Board is condent that

the Committee as a whole has competence relevant

to the sector in which the Company operates. Oliver

Bedford and David Brock are not members of the

Audit Committee due to their respective roles as

Lead Fund Manager and Chair of the Board.

Duties of the Audit Committee

The main responsibilities of the Audit Committee are

as follows:

●

To monitor the integrity of the Company’s

nancial statements including the interim

reports, preliminary announcements and

related formal statements before submission

to and approval by the Board, paying particular

attention to:

o

critical accounting policies and practices

and any changes in them;

o

the clarity of disclosures;

o

compliance with accounting standards; and

o

compliance with stock exchange and other

legal requirements.

●

To review the eectiveness of the Company’s

internal nancial control and risk management

systems;

●

To consider and make recommendations to the

Board on the appointment, reappointment and

removal of the external auditor; and

●

To assess the independence and objectivity of

the external auditors and the eectiveness of

the external audit process. The external auditor

is not engaged to supply any non-audit services.

Meetings

The Committee met three times during the year to

consider the annual and half-year reports for the

Company and review the audit plan. JTC attends

meetings as Secretary to the Committee and

representatives of the Investment Manager as

well as the Auditor are also invited to attend. The

Committee’s terms of reference were reviewed

during the year and are available on the Company’s

website https://www.hargreaveaimvcts.co.uk and by

request from the Company Secretary.

Activities during the year

A summary of the Audit Committee’s principal

activities and key considerations for the year to 30

September 2023 is provided below.

Financial statements

The interim and annual reports to shareholders and

the accounting policies therein were thoroughly

reviewed by the Committee prior to submission to

the Board for approval.

The Committee carried out a going concern

assessment, taking into account all reasonably

available information about the future nancial

prospects of the Company as well as the possible

outcomes of events and changes in conditions.

Following this assessment, the Committee

considered it was appropriate to adopt the going

concern basis of accounting and reviewed the going

concern statement to ensure any signicant issues

were described in a concise and understandable form.

The Committee also conducted a review of the

viability statement and concluded that this was a fair

representation of the Company’s future prospects

and that the period of the viability statement

remained appropriate.

The Committee is of the view that the Annual Report,

taken as a whole, is fair, balanced and understandable

and provides the information necessary for

shareholders to assess the Company’s position and

performance, business model and strategy.

The Investment Manager and the Company’s

independent auditor (the “Auditor”) conrmed to

the Committee that they were not aware of any

material misstatements to the nancial statements.

Having reviewed the nancial statements and the

report produced by the Auditor, the Committee were

satised that key areas of risks and judgement were

appropriately addressed.

Risk and Internal Control

The Board has identied the key risks faced by the

Company and these are set out in the principal and

emerging risks and uncertainties section on pages22

to 23. The Committee (and the Board as a whole) has

received and reviewed periodic reports to provide it

with assurance that appropriate oversight of controls

is in place at its key third party providers and to

highlight instances of non-compliance.

The Committee has sought and obtained assurance

from the Investment Manager that policies are in

place covering whistleblowing and to help prevent

bribery, corruption and fraud. The Investment

Manager has also conrmed that no instances of

bribery, corruption and fraud have been detected that

would have impacted the Company. The Committee

has received a summary of the Investment Manager’s

approach to mitigating cyber security risks.

The Board maintains a schedule of anti-fraud controls

that is reviewed by the Committee and they are

satised that the Board have sucient oversight and

that adequate procedures are in place.

Key areas of risk

The key areas of risk identied by the Audit

Committee in relation to the business activities and

nancial statements of the Company are as follows:

●

compliance with HM Revenue and Customs

legislation to maintain the Company’s VCT

status;

●

valuation and safe custody of investments; and

●

revenue recognition.

These issues were discussed with the Investment

Manager during the year and with the Auditor, at the

time the Audit Committee reviewed and agreed the

Auditor’s audit plan and when the Auditor presented

its ndings at the conclusion of its year-end audit.

The Committee concluded:

●

Venture Capital Trust Status. The Investment

Manager conrmed to the Audit Committee that

the conditions for maintaining the Company’s

status had been complied with throughout the

year. The Company’s status is also reviewed

by the Company’s tax advisors Philip Hare

& Associates LLP and further half-yearly

reconciliations are carried out. These reports

are reviewed by the Board as a whole, which is

satised with the conclusions;

●

Valuation and safe custody of investments.

The valuation of investments is undertaken in

accordance with the accounting policies in note

1 to the nancial statements. The Investment

Manager has conrmed to the Committee that

the basis of valuation for unquoted investments

was in accordance with industry guidelines.

The Auditor conrmed to the Committee

that they had reviewed the estimates and

judgements made by the Investment Manager

when valuing the unlisted companies and that

the valuations proposed were acceptable. They

further conrmed that there was no evidence

of bias in the valuations of the investments

based on the audit work performed. The

Company’s Custodian, CGWL, provides the

Company with quarterly reports conrming that

reconciliations to check the safe custody of the

Company’s investments have been carried out.

Management accounts, including a full portfolio

listing, are considered at quarterly board

meetings; and

●

Revenue recognition. The recognition of

dividend and interest income is undertaken in

accordance with accounting policy note 1 to the

nancial statements. Management accounts

showing income received by the Company,

and its categorisation, are reviewed by the

Board on a quarterly basis. The Committee also

considered the Auditor’s review of this area

and concluded that there were no issues which

needed to be addressed.

Relationship with the external auditor

The Committee is responsible for overseeing

the relationship with the Auditor, assessing the

eectiveness of the external audit process and

making recommendations on the appointment and

removal of the Auditor, including the level of audit

fees and terms of engagement. The Committee

meets with the Auditor as part of the audit process.

The Committee undertook a review of the Auditor’s

performance during the 2023 audit and concluded

that the Auditor:

●

provided a clear explanation of the audit plan,

scope and strategy;

●

met the agreed audit plan;

●

was appropriately resourced with sound

technical knowledge and demonstrated a clear

understanding of the business;

●

demonstrated a proactive approach to the

planning process and engaged well with the

Committee, Chair and other key individuals

within the business;

●

responded to the Committee’s questions and

handled key audit issues eectively;

●

demonstrated that it had appropriate

procedures and safeguards in place to maintain

its independence and objectivity; and

●

charged justiable fees in respect of the scope

of services provided.

The Committee concluded that it is satised with

the standard of service received and that the

re-appointment of the Auditor was in the best

interest of the Company and its shareholders and

accordingly the Committee has recommended to the

Board that a resolution to re-appoint the Auditor is

proposed to shareholders at the forthcoming Annual

General Meeting.

The Committee undertook a tender process in 2017

in line with mandatory audit tendering legislation.

In accordance with the FRC’s Ethical Standard for

Auditors, rotation of the audit partner took place

during the year.

Subject to the Committee continuing to be satised

with the performance of the Auditor, the next

statutory auditor rotation will take place in 2026,

in line with legislative requirements for UK public

entities.

Policy Reviews

During the year, the Audit Committee conducted

a review of the Company’s policies and provided

recommendations to the Board regarding the

continued appropriateness of these policies. Minor

changes were made to the policies throughout the

year. Each policy is reviewed at least annually and

the Company Secretary maintains a record of when

each policy is due for review by the Committee or the

Board.

Compliance Control

The Committee receives a compliance control

report on a quarterly basis, which details an

operational update from the Administrator as well as

conrmation that the Administrator, Custodian and

Receiving Agent have carried out their relevant duties

under the terms of their agreements. No compliance

issues were reported during the year.

Justin Ward

Chair of the Audit Committee

Report of the Management and

Service Provider Engagement Committee

Composition of the Management and Service

Provider Engagement Committee

The Management and Service Provider

Engagement Committee comprises of all the

independent non-executive directors and is

chaired by Angela Henderson. The Committee’s

terms of reference were reviewed during the year

and are available on the Company’s website

https://www.hargreaveaimvcts.co.uk and by

request from the Company Secretary.

Duties of the Management and Service Provider

Engagement Committee

The duty of the Committee is to review the terms

of appointment of, and the performance by, the

Investment Manager, the Administrator and the other

key service providers appointed by the Company

and to decide whether it is in the best interests of

shareholders for those appointments to continue.

The Auditor is not included in this review as their

appointment falls under the remit of the Audit

Committee.

The key areas of focus for the Committee include:

●

Monitoring and evaluating the performance of

the Investment Manager;

●

Reviewing at least annually the performance of

the Investment Manager;

●

Reviewing at least annually the terms of

appointment of the Investment Manager

including but not limited to the level of fees and

the notice period of the Investment Manager;

and

●

Reviewing the performance and fees of the

other key service providers to the Company.

Meetings

The Committee met twice during the year to review

the performance of the Investment Manager and

other key service providers. JTC (UK) Limited

attends meetings as Secretary to the Committee,

but takes no part in discussions relating to its own

performance. The Investment Manager is also invited

to attend the meetings as appropriate, to provide its

feedback on the Company’s service providers.

Activities during the year

A summary of the Committee’s principal activities

and key considerations for the year to 30 September

2023 is provided below.

Review of the Investment Manager

The Committee reviewed the performance of the

Investment Manager during the year. The Investment

Manager was asked to provide a report detailing the

Company’s performance against its key performance

indicators during this year and previous years, and the

contents of this were considered by the Committee

as part of its review. JTC was also invited to provide

feedback on its experience of working with the

Investment Manager. The views of the Committee

and JTC, which were positive, were subsequently

provided to the Investment Manager by the Chair

of the Committee. The Committee is satised that

its queries and concerns have been adequately

addressed throughout the remainder of the year.

Following the Committee’s recommendation, the

Board concluded that the continuing appointment of

the Investment Manager was in the best interests of

shareholders and the Company.

Review of Key Service Providers

The Committee reviewed the contractual terms, fees

and service levels from its other key service providers

during the year. Each provider was asked to complete

a questionnaire assessing its own performance and

conrming it has complied with the legislation and

statutory requirements related to its role.

The Investment Manager, Administrator and

Company Secretary each provided feedback on their

experience of working alongside the other service

providers. This was generally positive, with some

areas for improvement being identied and fed back

to each provider as appropriate.

Following a detailed review of the feedback and

information provided, the Committee concluded it is

satised that the service providers currently engaged

by the Company are competent to carry out their

roles.

Angela Henderson

Chair of the Management and Service Provider

Engagement Committee

Statement of directors’ responsibilities

in respect of the inancial statements

The Directors are responsible for preparing the annual report and the nancial statements in accordance with

applicable law and regulations. They are also responsible for ensuring that the annual report includes information

required by the Listing Rules of the Financial Conduct Authority.

Company law requires the Directors to prepare nancial statements for each nancial year. Under that law the

Directors are required to prepare the nancial statements and have elected to prepare the company nancial

statements in accordance with United Kingdom Generally Accepted Accounting Practice (UK GAAP) (United

Kingdom Accounting Standards and applicable law). Under company law, the Directors must not approve the

nancial statements unless they are satised that they give a true and fair view of the state of aairs of the

Company and of the prot or loss for the Company for that period.

In preparing these nancial statements, the Directors are required to:

●

select suitable accounting policies and then apply them consistently;

●

make judgements and accounting estimates that are reasonable and prudent;

●

state whether they have been prepared in accordance with UK GAAP, subject to any material departures

disclosed and explained in the nancial statements;

●

prepare the nancial statements on the going concern basis unless it is inappropriate to presume that the

Company will continue in business; and

●

prepare a directors’ report, a strategic report and directors’ remuneration report which comply with the

requirements of the Companies Act 2006.

The Directors are responsible for keeping adequate accounting records that are sucient to show and explain the

Company’s transactions, and disclose with reasonable accuracy at any time the nancial position of the Company,

and enable them to ensure that the nancial statements comply with the Companies Act 2006. They are also

responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention

and detection of fraud and other irregularities.

The Directors are responsible for ensuring that the annual report and accounts, taken as a whole, are fair, balanced

and understandable, and provide the information necessary for shareholders to assess the Company’s position

and performance, business model and strategy.

Website publication

The Directors are responsible for ensuring the annual report and the nancial statements are made available

on a website. The Company’s website address is https://www.hargreaveaimvcts.co.uk. Financial statements

are published on the Company’s website in accordance with legislation in the United Kingdom governing the

preparation and dissemination of nancial statements, which may vary from legislation in other jurisdictions.

The maintenance and integrity of the Company’s website is the responsibility of the Directors. The Directors’

responsibility also extends to the ongoing integrity of the nancial statements contained therein.

Directors’ responsibility statement pursuant to DTR4

David Brock (Chair), Oliver Bedford, Angela Henderson, Justin Ward, Megan McCracken and Busola Sodeinde, the

Directors conrm to the best of their knowledge that:

●

the nancial statements have been prepared in accordance with UK GAAP and give a true and fair view of the

assets, liabilities, nancial position and prot and loss of the Company; and

●

the annual report includes a fair review of the development and performance of the business and the

nancial position of the Company, together with a description of the principal risks and uncertainties that it

faces.

Disclosure of information to the Auditor

The Directors conrm that:

●

so far as each Director is aware, there is no relevant audit information of which the Company’s auditor is

unaware; and

●

the Directors have taken all the steps that they ought to have taken as Directors in order to make themselves

aware of any relevant audit information and to establish that the Company’s auditor is aware of that

information.

For and on behalf of the Board

David Brock

Chair

18December 2023

Financial statements

Independent auditor’s report to the

members of Hargreave Hale AIM VCT PLC

Opinion on the nancial statements

In our opinion the nancial statements:

●

give a true and fair view of the state of the

Company’s aairs as at 30 September 2023 and

of its loss for the year then ended;

●

have been properly prepared in accordance with

United Kingdom Generally Accepted Accounting

Practice; and

●

have been prepared in accordance with the

requirements of the Companies Act 2006.

We have audited the nancial statements of Hargreave

Hale AIM VCT PLC (the ‘Company’) for the year ended

30 September 2023 which comprise the Income

Statement, the Balance Sheet, the Statement of

Changes in Equity, the Statement of Cash Flows

and Notes to the Financial Statements, including a

summary of signicant accounting policies.

The nancial reporting framework that has been

applied in their preparation is applicable law and United

Kingdom Accounting Standard, including Financial

Reporting Standard 102, The Financial Reporting

Standard applicable in the UK and Republic of Ireland

(United Kingdom Generally Accepted Accounting

Practice).

Basis for opinion

We conducted our audit in accordance with

International Standards on Auditing (UK) (ISAs(UK))

and applicable law. Our responsibilities under those

standards are further described in the Auditor’s

responsibilities for the audit of the nancial

statements section of our report. We believe that

the audit evidence we have obtained is sucient and

appropriate to provide a basis for our opinion. Our

audit opinion is consistent with the additional report to

the audit committee.

Independence

Following the recommendation of the audit

committee, we were appointed by the Board of

Directors in January 2007 to audit the nancial

statements for the year ended 30 September 2007

and subsequent nancial periods. The period of total

uninterrupted engagement including re-tenders

and reappointments is 17 years, covering the years

ended 30 September 2007 to 30 September 2023. We

remain independent of the Company in accordance

with the ethical requirements that are relevant to our

audit of the nancial statements in the UK, including

the FRC’s Ethical Standard as applied to listed public

interest entities, and we have fullled our other

ethical responsibilities in accordance with these

requirements. The non-audit services prohibited by

that standard were not provided to the Company.

Conclusions relating to going concern

In auditing the nancial statements, we have

concluded that the Directors’ use of the going

concern basis of accounting in the preparation of the

nancial statements is appropriate. Our evaluation of

the Directors’ assessment of the Company’s ability

to continue to adopt the going concern basis of

accounting included:

●

obtaining the VCT compliance reports during

the year and as at year end and reviewing the

calculations therein to check that the Company

was meeting its requirements to retain VCT

status;

●

consideration of the Company’s expected future

compliance with VCT legislation, the absence of

bank debt, contingencies and commitments and

any market or reputational risks;

●

reviewing the forecasted cash ows that support

the Directors’ assessment of going concern,

challenging assumptions and judgements

made in the forecasts, and assessing them for

reasonableness. In particular, we considered the

available cash resources relative to the forecast

expenditure which was assessed against the

prior year for reasonableness; and

●

evaluating the Directors’ method of assessing

the going concern in light of market volatility

caused by the current macroeconomic

uncertainties.

Based on the work we have performed, we have not

identied any material uncertainties relating to events

or conditions that, individually or collectively, may

cast signicant doubt on the Company’s ability to

continue as a going concern for a period of at least

twelve months from when the nancial statements are

authorised for issue.

In relation to the Company’s reporting on how it has

applied the UK Corporate Governance Code, we have

nothing material to add or draw attention to in relation

to the Directors’ statement in the nancial statements

about whether the Directors considered it appropriate

to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the

Directors with respect to going concern are described

in the relevant sections of this report.

Overview

Key audit matters

Valuation and ownership of investments

Revenue recognition*

*Revenue recognition was no longer considered to

be a key audit matter because based on the nature of

revenue generated being interest & dividends received

from investments and the lack of incentive to manipulate

revenue recognised given the capital growth objective of

the Company.

2023

✓

✗

2022

✓

Materiality

Company nancial statements as a whole

£1,330,000 (2022: £1,200,000) based on 1% of adjusted net assets.

An overview of the scope of our audit

Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s

system of internal control, and assessing the risks of material misstatement in the nancial statements. We also

addressed the risk of management override of internal controls, including assessing whether there was evidence of

bias by the Directors that may have represented a risk of material misstatement.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most signicance in our audit

of the nancial statements of the current period and include the most signicant assessed risks of material

misstatement (whether or not due to fraud) that we identied, including those which had the greatest eect on: the

overall audit strategy, the allocation of resources in the audit, and directing the eorts of the engagement team.

These matters were addressed in the context of our audit of the nancial statements as a whole, and in forming our

opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter How the scope of our audit addressed the key audit matter

Valuation and ownership

of investments (Note1

and Note 7 to the

nancial statements)

The investment portfolio

comprises of quoted and

unquoted investments

held at fair value through

prot and loss.

Quoted Investments

total £122.5 million

(93%) of the investment

portfolio and unquoted

investments make up

£9.5 million (7%).

The Investment

Manager’s fee is based

on the value of the net

assets of the fund, as

shown in note 3.

As the Investment

Manager is also

responsible for

preparing the valuation

of investments for the

ﬁnancial statements,

there is a potential risk

of misstatement in the

investment valuations.

We obtained an understanding of the processes and

controls relating to the valuation of investments.

In respect of quoted investments, we responded

to this matter by testing 100% of the valuation and

ownership of the portfolio.

We performed the following procedures:

●

Conrmed the year end bid price was used by

agreeing to externally quoted prices and for all of

the investments, assessed if there were contra

indicators, such as liquidity considerations, to

suggest bid price is not the most appropriate

indication of fair value;

●

Obtained direct conrmation from the

custodian and agreed all investments held at the

balance sheet date to CREST records.

We also tested 100% of the valuation and ownership

of the unquoted investment portfolio at the year end

and performed the following procedures:

●

Challenged whether the valuation methodology

was the most appropriate in the circumstances

under the International Private Equity and

Venture Capital Valuation (“IPEV”) Guidelines

and the applicable accounting standards.

Key audit matter How the scope of our audit addressed the key audit matter

Valuation and ownership

of investments (Note1

and Note7 to the

nancial statements)

For quoted investments

there is a risk that the

investment balance

includes investments

which are no longer

owned by the Company

or that inappropriate

pricing is used to value

the investment.

For unquoted

investments there is

risk that the investment

balance includes

investments which are

no longer owned by the

Company. Furthermore

there is a high level of

estimation uncertainty

involved in determining

the unquoted

investment valuations.

There is an inherent

risk of management

override arising from the

unquoted investment

valuations being

prepared by the

investment Manager,

who is remunerated

based on a

percentage of the value

of the net assets of the

fund, as shown in note 3.

Therefore we consider

the valuations

and ownership of

investments to be a key

audit matter.

●

Obtained capital tables directly from the

investee companies to conrm the ownership at

year end and recalculated the value attributable

to the Company, having regard to the application

of enterprise value across the capital structures

of the investee companies;

●

Challenged and corroborated the inputs to

the valuation with reference to management

information of investee companies, market data

and our own understanding and assessed the

impact of the estimation uncertainty concerning

these assumptions and the disclosure of these

uncertainties in the nancial statements;

●

Reviewed the historical nancial statements and

any recent management information available

to support assumptions about maintainable

revenues used in the valuation;

●

Considered the revenue multiples applied and

the discounts applied by reference to observable

listed company market data; and

●

Challenged the consistency and

appropriateness of adjustments made to such

market data in establishing the revenue multiple

applied in arriving at the valuations adopted,

by considering the individual performance of

investee companies against plan and relative

to the peer group, the market and sector in

which the investee company operates and other

factors as appropriate;

●

Challenged assumptions made in respect of

the probability weighted average methodology

applied to convertible loan note scenarios

for example assessing the likelihood of

early redemption, redemption at maturity,

assumptions made in respect of sale and prot

forecasts and recalculating the value of the

convertible instrument.

Key audit matter How the scope of our audit addressed the key audit matter

Valuation and ownership

of investments (Note1

and Note7 to the

nancial statements)

●

Where appropriate, we performed a sensitivity

analysis by developing our own point estimate

where we considered that alternative input

assumptions could reasonably have been

applied and we considered the overall impact

of such sensitivities on the portfolio of

investments in determining whether the

valuations as a whole are reasonable and free

from bias.

Key Observations:

Based on our procedures performed we did not

identify any matters to suggest the valuation or

ownership of investments was not appropriate and

we are satised that the estimates and judgements

made in the unquoted investment valuations are

appropriate considering the level of estimation

uncertainty.

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the eect of

misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could

inuence the economic decisions of reasonable users that are taken on the basis of the nancial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we

use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly,

misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the

nature of identied misstatements, and the particular circumstances of their occurrence, when evaluating their

eect on the nancial statements as a whole.

Based on our professional judgement, we determined materiality for the nancial statements as a whole and

performance materiality as follows:

 Company Financial statements



2023

2022

Materiality 1,330,000 1,200,000

Basis for determining materiality 1% of net assets adjusted to exclude funds raised during the year

Rationale for the benchmark

applied

In setting materiality, we have had regard to the nature and disposition of

the investment portfolio. The Company’s portfolio is mainly comprised of

quoted investments, which are considered low risk. Since the portfolio is

low risk where fair values are highly visible, we have applied a percentage

of 1% of adjusted net asset value. An adjusted benchmark was used to

exclude the eects of cash that has been raised from fundraising during

the year.

Performance materiality 1,000,000 900,000

Basis for determining

performance materiality

75% of materiality

Rationale for the percentage

applied for performance

materiality

The level of performance materiality applied was set after having

considered a number of factors including the expected total value of

known and likely misstatements and the level of transactions in the year.

Lower testing threshold

While the majority of long-term returns are expected to arise from capital, we considered that ongoing costs

and revenue returns are still important to users of the nancial statements, despite being considerably smaller

in magnitude. As a result, we determined a lower testing threshold for those items impacting revenue return of

£194,000 (2022: £220,000) based on 5% (2022:5%) of total gross expenditure.

Reporting threshold

We agreed with the Audit Committee that we would report to them all individual audit dierences in excess of

£26,000 (2022: £24,000). We also agreed to report dierences below this threshold that, in our view, warranted

reporting on qualitative grounds.

Other information

The directors are responsible for the other information. The other information comprises the information included

in the annual report and accounts other than the nancial statements and our auditor’s report thereon. Our opinion

on the nancial statements does not cover the other information and, except to the extent otherwise explicitly

stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read

the other information and, in doing so, consider whether the other information is materially inconsistent with the

nancial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially

misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to

determine whether this gives rise to a material misstatement in the nancial statements themselves. If, based on

the work we have performed, we conclude that there is a material misstatement of this other information, we are

required to report that fact.

We have nothing to report in this regard.

Corporate governance statement

The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability

and that part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of

the UK Corporate Governance Code specied for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the

Corporate Governance Statement is materially consistent with the nancial statements or our knowledge obtained

during the audit.

Going concern and longer-term

viability

●

The Directors’ statement with regards to the appropriateness of

adopting the going concern basis of accounting and any material

uncertainties identied; and

●

The Directors’ explanation as to their assessment of the Company’s

prospects, the period this assessment covers and why the period is

appropriate.

Other Code provisions

●

Directors’ statement on fair, balanced and understandable;

●

Board’s conrmation that it has carried out a robust assessment of

the emerging and principal risks;

●

The section of the annual report that describes the review of

eectiveness of risk management and internal control systems; and

●

The section describing the work of the Audit Committee.

Other Companies Act 2006 reporting

Based on the responsibilities described below and our work performed during the course of the audit, we are

required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.

Strategic report and Directors’

report

In our opinion, based on the work undertaken in the course of the audit:

●

the information given in the Strategic report and the Directors’

report for the nancial year for which the nancial statements are

prepared is consistent with the nancial statements; and

●

the Strategic report and the Directors’ report have been prepared in

accordance with applicable legal requirements.

In the light of the knowledge and understanding of the Company and its

environment obtained in the course of the audit, we have not identied

material misstatements in the strategic report or the Directors’ report.

Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be

audited has been properly prepared in accordance with the Companies

Act 2006.

Matters on which we are required

to report by exception

We have nothing to report in respect of the following matters in relation

to which the Companies Act 2006 requires us to report to you if, in our

opinion:

●

adequate accounting records have not been kept, or returns

adequate for our audit have not been received from branches not

visited by us; or

●

the nancial statements and the part of the Directors’

remuneration report to be audited are not in agreement with the

accounting records and returns; or

●

certain disclosures of Directors’ remuneration specied by law are

not made; or

●

we have not received all the information and explanations we

require for our audit.

Responsibilities of Directors

As explained more fully in the Statement of Directors’

Responsibilities, the Directors are responsible for

the preparation of the nancial statements and for

being satised that they give a true and fair view, and

for such internal control as the Directors determine

is necessary to enable the preparation of nancial

statements that are free from material misstatement,

whether due to fraud or error.

In preparing the nancial statements, the Directors

are responsible for assessing the Company’s ability to

continue as a going concern, disclosing, as applicable,

matters related to going concern and using the going

concern basis of accounting unless the Directors

either intend to liquidate the Company or to cease

operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the

nancial statements

Our objectives are to obtain reasonable assurance

about whether the nancial statements as a whole

are free from material misstatement, whether due

to fraud or error, and to issue an auditor’s report

that includes our opinion. Reasonable assurance is

a high level of assurance, but is not a guarantee that

an audit conducted in accordance with ISAs (UK) will

always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate,

they could reasonably be expected to inuence the

economic decisions of users taken on the basis of

these nancial statements.

Extent to which the audit was capable of detecting

irregularities, including fraud

Irregularities, including fraud, are instances of non-

compliance with laws and regulations. We design

procedures in line with our responsibilities, outlined

above, to detect material misstatements in respect

of irregularities, including fraud. The extent to which

our procedures are capable of detecting irregularities,

including fraud is detailed below:

Non-compliance with laws and regulations

Based on:

●

our understanding of the Company and the

industry in which it operates;

●

discussion with management and those charged

with governance; and

●

obtaining an understanding of the Company’s

policies and procedures regarding compliance

with laws and regulations,

we considered the signicant laws and regulations

to be Companies Act 2006, the FCA listing and DTR

rules, the principles of the UK Corporate Governance

Code, industry practice represented by the Statement

of Recommended Practice: Financial Statements

of Investment Trust Companies and Venture

Capital Trusts (2022) (the SORP) and the applicable

nancial reporting framework. We also considered

the Company’s qualication as a VCT under UK tax

legislation.

Our procedures in respect of the above included:

●

agreement of the nancial statement disclosures

to underlying supporting documentation;

●

enquiries of management and those charged with

governance relating to the existence of any non-

compliance with laws and regulations;

●

reviewing minutes of meeting of those charged

with governance throughout the period for

instances of non-compliance with laws and

regulations; and

●

obtaining the VCT compliance reports during

the year and as at year end and reviewing their

calculations to check that the Company was

meeting its requirements to retain VCT status.

Fraud

We assessed the susceptibility of the nancial

statement to material misstatement including fraud.

Our risk assessment procedures included:

●

Enquiry with management and those charged

with governance regarding any known or

suspected instances of fraud;

●

Obtaining an understanding of the Company’s

policies and procedures relating to:

o

Detecting and responding to the risks of

fraud; and

o

Internal controls established to mitigate

risks related to fraud;

●

Review of minutes of meeting of those charged

with governance for any known or suspected

instances of fraud; and

●

Discussion amongst the engagement team as to

how and where fraud might occur in the nancial

statements.

Based on our risk assessment, we considered the

areas most susceptible to be management override of

controls and the valuation of unquoted investments.

Our procedures in respect of the above included:

●

The procedures set out in the Key Audit Matters

section above for the valuation of the unquoted

investments;

●

Review of estimates and judgements applied

by management in the nancial statements to

assess their appropriateness and the existence of

any systematic bias;

●

Review and consideration of the appropriateness

of adjustments made in the preparation of the

nancial statements; and

●

Review of unadjusted audit dierences, if any, for

indications of bias or deliberate misstatement.

We also communicated relevant identied laws and

regulations and potential fraud risks to all engagement

team members who were all deemed to have

appropriate competence and capabilities and remained

alert to any indications of fraud or non-compliance with

laws and regulations throughout the audit.

Our audit procedures were designed to respond

to risks of material misstatement in the nancial

statements, recognising that the risk of not detecting

a material misstatement due to fraud is higher than the

risk of not detecting one resulting from error, as fraud

may involve deliberate concealment by, for example,

forgery, misrepresentations or through collusion.

There are inherent limitations in the audit procedures

performed and the further removed non-compliance

with laws and regulations is from the events and

transactions reected in the nancial statements, the

less likely we are to become aware of it.

A further description of our responsibilities is available

on the Financial Reporting Council’s website at:

www.frc.org.uk/auditorsresponsibilities. This

description forms part of our auditor’s report.

Use of our report

This report is made solely to the Company’s members,

as a body, in accordance with Chapter 3 of Part 16 of

the Companies Act 2006. Our audit work has been

undertaken so that we might state to the Company’s

members those matters we are required to state to

them in an auditor’s report and for no other purpose.

To the fullest extent permitted by law, we do not accept

or assume responsibility to anyone other than the

Company and the Company’s members as a body, for

our audit work, for this report, or for the opinions we

have formed.

Elizabeth Hooper (Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor

London, United Kingdom

Date: 18 December 2023

BDO LLP is a limited liability partnership registered

in England and Wales (with registered number

OC305127).

Income statement

Year to 30September 2023 Year to 30September 2022

Note

Revenue

£000

Capital

£000

Total

£000

Revenue

£000

Capital

£000

Total

£000

Net loss on investments held at fair value

through prot or loss 7 – (28,455) (28,455) – (85,203) (85,203)

Income 2 2,616 – 2,616 975 13 988

2,616 (28,455) (25,839) 975 (85,190) (84,215)

Management fee 3 (699) (2,098) (2,797) (835) (2,505) (3,340)

Other expenses 4 (1,052) (39) (1,091) (1,093) (22) (1,115)

(1,751) (2,137) (3,888) (1,928) (2,527) (4,455)

Prot/(loss) on ordinary activities before

taxation 865 (30,592) (29,727) (953) (87,717) (88,670)

Taxation 5 – – – – – –

Prot/(loss) after taxation 865 (30,592) (29,727) (953) (87,717) (88,670)

Basic and diluted earnings/(loss) per share 6 0.27p (9.59) p (9.32) p (0.36) p (33.06) p (33.42) p

The total column of these statements is the income statement of the Company. All revenue and capital items in

the above statements derive from continuing operations. There was no other comprehensive income other than

the loss for the year.

The accompanying notesare an integral part of these nancial statements.

Balance sheet

As at 30 September 2023

Company Registration Number 5206425 (In England and Wales)

Note

2023

£000

2022

£000

Fixed assets

Investments at fair value through prot or loss 7 132,120 119,188

Current assets

Debtors 9 1,475 408

Cash and cash equivalents 19,231 41,911

20,706 42,319

Creditors:amounts falling due within one year 10 (906) (1,000)

Net current assets 19,800 41,319

Total assets less current liabilities 151,920 160,507

Capital and Reserves

Called up share capital 11 3,278 2,666

Share premium 286 93,660

Capital redemption reserve 272 201

Capital reserve – unrealised 13,640 23,935

Special reserve 177,762 63,931

Capital reserve – realised (41,071) (20,774)

Revenue reserve (2,247) (3,112)

Total shareholders’ funds 151,920 160,507

Net asset value per share (basic and diluted) 12 46.34p 60.19p

The accompanying notes are an integral part of these nancial statements.

These nancial statements were approved and authorised for issue by the Board of Directors on 18 December

2023 and signed on its behalf by

David Brock

Chair

18December2023

Statement of changes in equity

For the year ending 30 September 2023

Non-distributable reserves Distributable reserves

(1)

Note

Capital

£000

Premium

£000

Capital

Redemption

Reserve

£000

Capital

Reserve

Unrealised

£000

Special

Reserve

£000

Capital

Reserve

Realised

£000

Revenue

Reserve

£000

Total

£000

At 1October 2022 2,666 93,660 201 23,935 63,931 (20,774) (3,112) 160,507

Prot and total comprehensive

income for the year

Realised (losses) on

investments 7 – – – – – (8,245) – (8,245)

Unrealised (losses) on

investments 7 – – – (20,210) – – – (20,210)

Management fee charged to

capital 3 – – – – – (2,098) – (2,098)

Income allocated to capital 2 – – – – – – – –

Due diligence investments

costs 4 – – – – – (39) – (39)

Revenue prot after taxation

for the year – – – – – – 865 865

Total (loss) after taxation for

the year – – – (20,210) – (10,382) 865 (29,727)

Contributions by and

distributions to owners

Subscription share issues 11 659 39,277 – – – – – 39,936

Issue costs 11 – (742) – – – – – (742)

Share buybacks 11 (71) – 71 – (3,637) – – (3,637)

DRIS share issues 11 24 1,276 – – – – – 1,300

Equity dividends paid 16 – – – – (15,717) – – (15,717)

Total contributions by and

distributions to owners 612 39,811 71 – (19,354) – – 21,140

Other movements

Capital reduction 11 – (133,185) – – 133,185 – – –

Diminution in value – – – 9,915 – (9,915) – –

Total other movements

At 30September 2023 3,278 286 272 13,640 177,762 (41,071) (2,247) 151,920

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

distributable reserves at 30September 2023 were £134.4 million, following the capital reduction of £133.2m

(2022:£40million). The accompanying notesare an integral part of these nancial statements.

(1) The Income Taxes Act2007 restricts distribution of capital from reserves created by the conversion of the share premium account into a

special (distributable) reserve until the third anniversary of the share allotment that led to the creation of that part of the share premium account.

As at 30September 2023, £108.9million of the special reserve is subject to this restriction.

Statement of changes in equity

For the year ending 30 September 2022

Non-distributable reserves Distributable reserves

(1)

Note

Capital

£000

Premium

£000

Capital

Redemption

Reserve

£000

Capital

Reserve

Unrealised

£000

Special

Reserve

£000

Capital

Reserve

Realised

£000

Revenue

Reserve

£000

Total

£000

At 1October 2021 2,280 53,802 158 102,311 84,004 (11,433) (2,159) 228,963

Prot and total comprehensive

income for the year

Realised gains on investments 7 – – – – – 2,056 – 2,056

Unrealised (losses) on

investments 7 – – – (87,259) – – – (87,259)

Management fee charged to

capital 3 – – – – – (2,505) – (2,505)

Income allocated to capital 2 – – – – – 13 – 13

Due diligence investments

costs 4 – – – – – (22) – (22)

Revenue (loss) after taxation

for the year – – – – – – (953) (953)

Total (loss) after taxation for

the year (87,259) (458) (953) (88,670)

Contributions by and

distributions to owners

Subscription share issues 11 416 39,579 – – – – – 39,995

Issue costs 11 – (746) – – – – – (746)

Share buybacks 11 (43) – 43 – (3,243) – – (3,243)

DRIS share issues 11 13 1,025 – – – – – 1,038

Equity dividends paid 16 – – – – (16,830) – – (16,830)

Total contributions by and

distributions to owners 386 39,858 43 – (20,073) – – 20,214

Other movements

Diminution in value – – – 8,883 – (8,883) – –

Total other movements – – – 8,883 – (8,883) – –

At 30September 2022 2,666 93,660 201 23,935 63,931 (20,774) (3,112) 160,507

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

distributable reserves at 30September 2022 were £40million (2021:£70.4million). The accompanying notesare

an integral part of these nancial statements.

(1) The Income Taxes Act2007 restricts distribution of capital from reserves created by the conversion of the share premium account into a

special (distributable) reserve until the third anniversary of the share allotment that led to the creation of that part of the share premium account.

As at 30September 2023, none of the special reserve is subject to this restriction.

Statement of cash lows

Note

2023

£000

2022

£000

Total (loss) on ordinary activities before taxation (29,727) (88,670)

Realised losses/(gains) on investments 7 8,245 (2,056)

Unrealised losses on investments 7 20,210 87,259

(Increase) in debtors (1,067) (78)

(Decrease) in creditors (94) (183)

Amortisation for discount/premium on bonds (24) –

Non-cash distributions 2 – (126)

Net cash (outow)from operating activities

(1)

(2,457) (3,854)

Purchase of investments 7 (57,699) (29,460)

Sale of investments 7 16,336 27,995

Net cash (used in) investing activities (41,363) (1,465)

Share buybacks 11 (3,637) (3,243)

Issue of share capital 11 39,936 39,995

Issue costs 11 (742) (746)

Dividends paid 16 (14,417) (15,792)

Net cash provided by nancing activities 21,140 20,214

Net (decrease)/increase in cash and cash equivalents (22,680) 14,895

Opening cash and cash equivalents 41,911 27,016

Closing cash and cash equivalents 19,231 41,911

(1) The Company received dividends of £1,178,059 (2022: £715,253) and interest of £599,735 (2022: £47,143).

The accompanying notesare an integral part of these nancial statements.

Notes to the inancial statements

Hargreave Hale AIM VCTplc is a company

incorporated in England and Wales under the

Companies Act. The address of the registered oce

is given in the company information on page 95 and

the nature and principal business activities are set

out in the Strategic Report.

Basis of preparation

The nancial statements have been prepared in

accordance with UK Generally Accepted Accounting

Practice (UKGAAP) , including Financial Reporting

Standard 102 (FRS 102) and with the Companies

Act2006 and the Statement of Recommended

Practice for “Financial Statements of Investment

Trust Companies and Venture Capital Trusts”

July2022 (SORP) .

Going Concern

The nancial statements have been prepared on

a going concern basis and on the basis that the

company maintains its VCT status.

The Directors have assessed the Company’s ability

to continue as a going concern and are satised that

the Company has adequate resources to continue in

operational existence for a period of 12months from

the date these nancial statements were approved.

The Company has sucient cash (£19.2million at

30September 2023) and liquid assets held across

a diversied portfolio of investments in listed

companies to meet obligations as they fall due. The

Company is a close-ended fund, where assets are

not required to be liquidated to meet day-to-day

redemptions. The major driver of cash outows

(dividends, buybacks and investments) are managed

in accordance with the Company’s key policies at

the discretion of the Board or, in the case of the

Company’s investments, the Investment Manager.

The Board has reviewed forecasts and stress tests

to assist them with their going concern assessment.

These tests have included the modelling of a 15%

reduction in NAV, whilst also considering ongoing

compliance with the VCT investment test. It was

concluded that in a plausible downside scenario the

Company would continue to meet its liabilities.

The Directors have carefully considered the principal

risk factors facing the Company, as described on

pages 22 to 23 and their potential impact on income

into the portfolio and the NAV. The Directors are of

the opinion that the Company has sucient cash and

other liquid assets to continue to operate as a going

concern, including under a stress scenario.

The Investment Manager has a team of four

dedicated fund managers and analysts with multi-

year experience working for the VCT. Abbe Martineau

joined the CGAM VCT fund management team

on 17 April 2023. The Investment Manager and

the Company’s other key service providers have

contingency plans in place to manage operational

disruptions.

The Directors have not identied any material

uncertainties related to events or conditions that

may cast signicant doubt about the ability of the

Company to continue as a going concern. Therefore,

they are satised that the Company should continue

to operate as a going concern and report its nancial

statements on that basis.

Key judgements and estimates

The preparation of the nancial statements requires

the Board to make judgements and estimates

that aect the application of policies and reported

amounts of assets, liabilities, income and expenses.

The nature of estimation means that the actual

outcomes could dier from those estimates.

Key judgements and estimates mainly relate to

determination of the fair valuation of unquoted

investments. The policies for these are set out in the

notesto the nancial statements.

The assessment of fair value will reect the market

conditions at the measurement date irrespective

of which valuation technique is used. The IPEV

guidelines describe a range of valuation techniques,

as described in the “nancial instruments” section on

pages 79 to 81.

Further areas requiring judgement and estimation

are recognising and classifying unusual or special

dividends as either capital or revenue in nature. The

estimates and underlying assumptions are under

continuous review with particular attention paid to

the carrying value of the investments.

1. Accounting policies

A summary of the principal accounting policies, all of

which have been applied consistently throughout the

year, is set out below:

Financial instruments

All investments are classied as fair value through

prot or loss. Investments are measured initially

and subsequently at fair value which is deemed

to be market bid prices for listed investments and

investments traded on AIM. Unquoted investments

are valued using the most appropriate methodology

recommended by the International Private Equity

Venture Capital (IPEV) guidelines published in

December2022.

Where no active market exists for the particular

asset, the Company holds the investment at fair

value as determined by the Investment Manager

and approved by the Board. Valuations of unquoted

investments are reviewed on a quarterly basis and

more frequently if events occur that could have a

material impact on the investment.

In estimating fair value for an unquoted investment,

the Investment Manager will apply one or more

valuation techniques according to the nature,

facts and circumstances of the investment. The

Investment Manager will use reasonable current

market data and inputs combined with market

participant assumptions. The assessment of fair

value will reect the market conditions at the

measurement date irrespective of which valuation

technique is used. The IPEV guidelines describe a

range of valuation techniques, including but not

limited to relevant observable market multiples,

independent arms-length transactions, income,

discounted cash ows and net assets. The fair value

of convertible loan notesis estimated by aggregating

the Net Present Value of the bond component and

the derivative value of the option to convert into

equity. The derivative value of the option to convert a

particular loan noteis the probable weighted average

of the present value of each conversion scenario

described in the loan noteinstrument as calculated

using the Black Scholes option pricing model.

Investments are recognised and derecognised

at trade date where a purchase or sale is under a

contract whose terms require delivery within the

time frame established by the market concerned.

Purchases and sales of unlisted investments are

recognised when the contract for acquisition or

sale becomes unconditional. Transaction costs are

included in the initial cost or deducted from the

disposal proceeds as appropriate.

These investments will be managed and their

performance evaluated on a fair value basis in

accordance with a documented investment strategy

and information about them is provided internally on

that basis to the Board.

Gains and losses arising from changes in fair value

(realised and unrealised) are included in the net prot

or loss for the period as a capital item in the income

statement and are taken to the unrealised capital

reserve or realised capital reserve as appropriate.

If an investment has been impaired such that there

is no realistic expectation that there will be a full

return from the investment, the loss is treated

as a diminution in value and transferred to the

capital reserve realised. The Company conducts

impairments reviews on a quarterly basis. In the

case of equity investments, impairment reviews are

triggered when unrealised losses exceed 50% of

book cost, or if the loss when realised would lead to

a material reduction in the Company’s distributable

reserves. Fixed income investments are reviewed for

impairment if the issuing company’s ability to repay

is uncertain unless there are reasonable grounds to

believe that the loan could be recovered through the

sale of the company or its trading assets.

Other nancial assets and liabilities comprise

receivables, payables and cash and cash equivalents

which are measured at amortised cost. There are no

nancial liabilities other than payables.

Cash and cash equivalents

For the purposes of the Balance Sheet, cash

comprises cash in hand and demand deposits. Cash

equivalents are short-term, highly liquid investments

and money market funds that are readily convertible

to known amounts of cash and which are subject

to insignicant risk of changes in value. For the

purposes of the Statement of Cash Flows, cash and

cash equivalents consist of cash and cash equivalents

as dened above, net of outstanding bank overdrafts

when applicable. Cash held at CGWL (see note15)

meets the denition of cash and cash equivalents as

it is to meet short term liquidity requirements and is

available on demand with no restrictions or penalties

on withdrawal.

Income

Equity dividends are analysed to consider if they are

revenue or capital in nature on a case by case basis

and are taken into account on the ex-dividend date,

net of any associated tax credit. Fixed returns on

non-equity shares and debt securities are recognised

on a time apportionment basis so as to reect the

eective yield, provided there is no reasonable

doubt that payment will be received in due course.

All other income is recognised on an accruals basis.

Other income is treated as a repayment of capital or

revenue depending on the facts of each particular

case.

Expenditure

All expenditure is accounted for on an accruals basis.

Of investment management fees, 75% are allocated

to the capital reserve realised and 25% to the revenue

account in line with the Board’s expected long term

split of investment returns in the form of capital

gains to the capital column of the income statement.

Due diligence costs incurred for prospective private

company purchases are charged to capital in addition

to the cost of investment. All other expenditure is

charged to the revenue account.

Capital reserves

Realised prots and losses on the disposal of

investments, due diligence costs, income that is

capital in nature, losses realised on investments

considered to be diminished in value and 75% of

investment management fees are accounted for in

the capital reserve realised.

Increases and decreases in the valuation of

investments held at the year end are accounted for in

the capital reserve unrealised.

Operating segments

There is considered to be one operating segment

being investment in equity and debt securities.

Taxation

Deferred tax is recognised in respect of all timing

dierences that have originated but not yet reversed

at the balance sheet date. Deferred tax assets are

only recognised to the extent that it is probable that

they will be recovered against the reversal of deferred

tax liabilities or other future taxable prots.

Current tax is expected tax payable on the taxable

prot for the period using the current tax rate and

laws that have been enacted or substantially enacted

at the reporting date. The tax eect of dierent

items of income and expenditure is allocated

between capital and revenue on the same basis as the

particular item to which it relates.

Approved VCTs are exempt from tax on capital

gains from the sale of xed asset investments. The

Directors intend that the Company will continue

to conduct its aairs to maintain its VCT status, no

deferred tax has been provided in respect of any

capital gains or losses arising from the revaluation or

disposal of investments.

Dividends

Only dividends recognised during the year are

deducted from revenue or capital reserves. Equity

dividends are recognised in the accounts when they

become legally payable.

Interim dividends are approved by the Board of

Directors and may be varied or rescinded at any

time before payment, therefore the liability is only

established when the dividend is actually paid. Final

dividends are subject to approval at the AGM. When

the dividend is declared it states that it is payable on a

future date, so liability is established on that date.

Functional currency

The Company is required to nominate a functional

currency, being the currency in which the Company

predominantly operates. The Board has determined

that sterling is the Company’s functional currency.

Sterling is also the currency in which these accounts

are presented.

Repurchase of shares to hold in treasury

The cost of repurchasing shares into treasury,

including the related stamp duty and transaction

costs is charged to the special reserve and dealt

with in the statement of changes in equity. Share

repurchase transactions are accounted for on a

trade date basis. Where shares held in treasury are

subsequently cancelled, the nominal value of those

shares is transferred out of share capital and into

capital redemption reserve.

Should shares held in treasury be reissued, the sale

proceeds will be treated as a realised prot up to the

amount of the purchase price of those shares and

will be transferred to capital reserves. The excess

of the sale proceeds over the purchase price will be

transferred to share premium.

Capital structure

Share Capital

Ordinary shares are classed as equity. The ordinary

shares in issue have a nominal value of one penny

and carry one vote each. Substantial holdings in the

Company are disclosed in the Directors’ Report on

page 42.

Share Premium

This reserve represents the dierence between the

issue price of shares and the nominal value of shares

at the date of issue, net of related issue costs.

Capital Redemption Reserve

This reserve is used for the cancellation of shares

bought back under the buyback facility.

Special Reserve

Distributable reserve used to pay dividends and re-

purchase shares under the buyback facility.

Capital Reserve Realised

Gains/losses on disposal of investments, due

diligence costs, income that is capital in nature,

diminishment of nancial assets and 75% of the

investment management fee are accounted for in the

capital reserve realised.

Capital Reserve Unrealised

Unrealised gains and losses on investments held at

the year end arising from movements in fair value are

taken to the capital reserve unrealised.

Revenue Reserve

Net revenue prots and losses of the Company.

2. Income

2023

£000

2022

£000

Income from investments:

Revenue:

Dividend income 1,247 744

Fixed income interest 867

(1)

184

Interest 502 47

Total revenue income 2,616 975

Capital:

Return of capital – –

In-specie dividend – 13

Total capital income – 13

Total Income 2,616 988

(1) Additional loan stock interest of £18k was recognised in the year following reversal of the impairment being carried at 30September 2022.

The loan noteaccrued interest to 30June 2023 in line with the terms of the redemption agreement with Sailpoint Technologies UK Limited.

3. Management fees

2023

Revenue

£000

2023

Capital

£000

2023

Total

£000

2022

Revenue

£000

2022

Capital

£000

2022

Total

£000

Management fees 699 2,098 2,797 835 2,505 3,340

The investment management agreement terminates on 12months’ notice, subject to earlier termination in

certain circumstances. In the event of termination by the Company on less than the agreed notice period,

compensation may be payable to the Investment Manager in lieu of the unexpired notice period. No notice had

been given by the Investment Manager or by the Board to terminate the agreement as at the date of approval of

these accounts.

The Investment Manager receives an investment management fee of 1.7% per annum of the NAV of the

Company, calculated and payable quarterly in arrears. At 30September 2023, £645,397 (2022:£687,373) was

owed in respect of management fees. The Company receives a reduction to the annual management fee for

investments in other funds managed by the Investment Manager, being any investment in the Marlborough

Special Situations Fund and/or the Marlborough UK Micro-Cap Growth Fund so the Company is not charged twice

for these services. This amounted to £49,931 for the year to 30September 2023 (2022:£23,407) . The Investment

Manager has agreed to indemnify the Company against annual running costs exceeding 3.5% of its net assets. No

fees were waived between 1October 2022 and 30September 2023 and no fees were waived between 1October

2021 and 30September 2022 under the indemnity.

4. Other expenses

2023

£000

2022

£000

Other revenue expenses:

Administration fee 195 195

Directors’ fees 205 157

Legal& professional 39 34

London Stock Exchange fees 84 131

Registrar’s fee 47 50

Website and marketing 60 14

Printing, postage and stationary 40 43

Auditors’ remuneration – for audit services 55 41

VCT monitoring fees 15 12

Company secretarial fees 57 72

Custody fee 30 30

Directors’ and ocers’ liability insurance 36 39

Broker’s fee 5 5

VAT 115 128

Other expenses

(1)

104 98

Provision against loan stock interest receivable (35)

(2)

(3)

Total other revenue expenses 1,052 1,093

Other capital expenses:

Due diligence costs 32 18

VAT on due diligence costs 7 4

Total other capital expenses 39 22

Total other expenses 1,091 1,115

(1) Other expenses include FCA fees, AIC membership fees, VCT Association fees, recruitment costs, professional subscriptions, license costs,

shareholder event costs and other nominal expenses.

(2) Reversal of provision against loan interest receivable in previous years of £34,816 for Osiriumplc.

(3) Provision against loan interest receivable of £44,145 (2021:nil) , for loan stock interest regarded as collectable in previous years in relation to

Honest BrewLtd and Osiriumplc.

The Directors’ remuneration above includes national insurance contributions. Directors’ remuneration excluding

employer’s national insurance contributions is detailed in the directors’ remuneration report on page 48.

The maximum aggregate directors’ emoluments authorised by the Articles of Association are detailed in the

directors’ remuneration report on page 48.

5. Tax on ordinary activities

The tax charge for the year is based on the standard rate of UK Corporation Tax of 22%

(1)

(2022:19%) .

2023

Total

£000

2022

Total

£000

Loss on ordinary activities before taxation (29,727) (88,670)

UK Corporation Tax:22% (2022:19%) (6,540) (16,847)

Eect of non taxable losse s on investments 6,260 16,189

Eect of non taxable UK dividend income (274) (144)

Deferred tax not recognised 554 802

Current tax charge – –

(1) Average rate of corporation tax applicable for the period.

At the 30September 2023 the Company had tax losses carried forward of £24,379,001 (2022:£21,921,076) . It

is unlikely that the Company will generate enough taxable income in the future to use these expenses to reduce

future tax charges and therefore no deferred tax asset has been recognised.

There is no taxation charge in relation to capital gains or losses. No asset or liability has been recognised in

relation to capital gains or losses on revaluing investments. The Company is exempt from such tax as a result of

its intention to maintain its status as a Venture Capital Trust.

6. Basic and diluted earnings/(loss) per share

2023

Revenue

£000

2023

Capital

£000

2023

Total

£000

2022

Revenue

£000

2022

Capital

£000

2022

Total

£000

Return (£) 865 (30,592) (29,727) (953) (87,717) (88,670)

Earnings/(loss) per ordinary

share 0.27p (9.59) p (9.32) p (0.36) p (33.06) p (33.42) p

The earnings per share is based on 318,946,009 ordinary shares (2022:265,292,558) , being the weighted average

number of shares in issue during the year.

7. Investments

Quoted

investments

(1)

2023

£000

Unquoted

Investments

2023

£000

Total

investments

2023

£000

Total

investments

2022

£000

Opening Valuation 108,630 10,558 119,188 202,800

Purchases at cost 56,199 1,500 57,699 29,460

Non-cash distribution – – – 126

Sale proceeds (16,336) – (16,336) (27,995)

Realised gains/(losses) (8,245) – (8,245)

(2)

2,056

Unrealised losses (17,705) (2,505) (20,210)

(2)

(87,259)

Amortisation for discount/premium on bonds 24 – 24 –

Closing valuation 122,567 9,553 132,120 119,188

(4)

Cost at 30September 2023 132,600 19,241 151,841 118,699

Unrealised gains 14,981 (1,341) 13,640 23,935

Diminution in value

(3)

(25,014) (8,347) (33,361) (23,446)

Closing valuation 122,567 9,553 132,120 119,188

(1) Includes the Marlborough Special Situations Fund (valuation £8.3m as at 30September 2023), included in unquoted investments previously.

(2) The net loss on investments held at fair value through prot or loss in the income statement of -£28,455 is the sum of the realised gains and

unrealised losses for the year as detailed in the table above.

(3) Diminishments of £14,762,893 were made in the year. Once adjusted for disposals (£4,617,026) and diminishment reversals (£230,000) the

net movement for the year is £9,915,867. Diminishments carried forward are £33,361,442.

(4) Correction to prior year (casting error).

Transaction Costs

During the year the Company incurred transaction costs of £97,493 (2022:£40,809) and £15,710 (2022:£15,989)

on purchases and sales respectively. These amounts are included in the gain on investments as disclosed in the

income statement.

Fair Value Measurement Hierarchy

The table below sets out fair value measurements using FRS102 (appendix to section 2 fair value measurement)

fair value hierarchy. The Company has one class of assets, being at fair value through prot or loss.

●

Level 1:Quoted prices (unadjusted) in active markets for identical assets or liabilities.

●

Level 2:Inputs other than quoted prices included within level 1 that are observable for the asset or liability,

either directly (i.e.as prices) or indirectly (i.e.derived from prices) .

●

Level 3:Valued by reference to valuation techniques using inputs that are not based on observable market data.

2023

Level 1

£’000

2023

Level 2

£’000

2023

Level 3

£’000

2023

Total

£’000

2022

Level 1

£’000

2022

Level 2

£’000

2022

Level 3

£’000

2022

Total

£’000

Investments 82,565 40,002 9,553 132,120 105,069

(1)

3,561 10,558 119,188

(1) Correction to prior year (casting error).

Transfers between level 3 and level 1 occur when a previously unquoted investment undertakes an initial public

oering, resulting in its equity becoming quoted on an active market. There have been no instances in the current

period (2022: £5.9m). Transfers between level 1 and 3 would occur when a quoted investment’s market becomes

inactive, or the portfolio company elects to delist. There have been no instances in the current year (2022: none).

There were transfers of £20.2m between level 1 and level 2 in the current period where the investments market is

not suciently active (2022: £3.6m). There were no transfers between level 2 and level 1 (2022: none).

Level 3 nancial assets

2023

Equity

£’000

2023

Preference

£’000

(1)

2023

Loan

notes

£’000

2023

Total

£’000

2022

Equity

£’000

2022

Preference

£’000

(1)

2022

Loan

notes

£’000

2022

Total

£’000

Opening balance 4,740 3,861 1,957 10,558 19,956 9,380 5,835 35,171

Re-Classication

Adjustment – – – – (457) (3,013) (2,431) (5,901)

(2)

Purchases at cost – – 1,500 1,500 – – 300 300

Non-cash distribution – – – – – 59 – 59

(3)

Sale proceeds – – – – (590) – – (590)

Realised (losses) /gains – – – – (1,159) – – (1,159)

Unrealised (losses) /gains (1,756) (792) 43 (2,505) (13,010) (2,565) (1,747) (17,322)

Closing valuation 2,984 3,069 3,500 9,553 4,740 3,861 1,957 10,558

(1) The preference shares held are in the nature of equity.

(2) Includes Mexican Grill (£4.5m) listed on the London Stock Exchange on 8October 2021 and conversion of the XP Factory loan note(£1.4m)

into listed equity shares on 2February 2022.

(3) The Company elected to convert accrued xed income from a convertible loan notein Kidly into shares (£59k) .

The following table sets out the basis of valuation for the material Level 3 investments and those where the value

has materially changed during the year, held within the portfolio at 30September 2023.

In assessing fair value, the Investment Manager considered a range of valuation methodologies including EV/

Sales, and EV/EBITDA multiples for the current and next nancial year. Where appropriate, the Investment

Manager also assessed value using discounted cash ow analysis. Where observable market multiples were

available, these were used as part of peer group analysis. Market based multiples were taken as reference points

with discounts applied (where appropriate) to reect liquidity and forecast risk.

The manager also undertook sensitivity analysis to consider the impact of a 30% movement in the peer group

multiples, both higher and lower. The use of alternative investment structures such as convertible loan stock by

the Company or other investors can lead to asymmetric movements in value in response to dierent upside and

downside scenarios. For further information on sensitivities, please see note 15.

Level 3 Unquoted Investments

Innity RelianceLtd (My 1st Years) Despite the dicult environment, trading remained resilient and in line with expectations for

the nancial year to December2022. Although trading remains dicult, the company expects to

report further progress with revenues and EBITDA in the current nancial year. The fair value of the

investment, which was unchanged, was reviewed against EV/Sales multiples across a peer group of

listed companies. Peer group multiples recovered some of the heavy declines seen in the prior year.

KidlyLtd Trading was dicult over the winter period with the company closing the nancial year to March2023

with revenues lower year on year. Although trading remains challenging within the current year,

changes to the operating model are expected to increase margins and reduce losses. The company

raised new equity and debt funding (including from the Company) during the period under review.

The fair value of the equity investment, which was reviewed against EV/Sales multiples across a peer

group of listed companies, was reduced. The fair value of the convertible loan noteinvestment was

unchanged. The conversion option is valued using the Black-Scholes option pricing model. Peer group

multiples recovered some of the heavy declines seen in the prior year.

SCA InvestmentsLtd (Gousto) The company raised new equity (February2023) and debt (September2023) to fund capital

expenditure and working capital. EBITDA and cash ow generation improved signicantly within the

year. Although the assessment of value has resulted in an increased enterprise value, the addition of

a new class of share and warrants resulted in a reduction to the value of the investment. EV/Sales and

EV/EBITDA peer group ratios and discounted cash ow analysis were used to support the valuation.

Peer group multiples recovered some of the heavy declines seen in the prior year.

ZapparLtd Trading for the nancial year to March2023 was in line with (modestly) revised guidance. With end

markets remaining dicult and extended sales cycles, the company has made small reductions to

revenue and prot guidance for the nancial year to March2024, although these, if achieved, would

still represent gains over the prior year. The valuation, which was unchanged, was reviewed against the

revised nancial projections for the current year and EV/Sales multiples across a peer group of listed

companies. Peer group multiples reduced in the year under review.

Osirium Technologiesplc –

convertible loan note

On 30August 20203, Osirium announced a recommended cash oer for the company by SailPoint

Technologies through a scheme of arrangement, eective from 30October 2023. As part of the

transaction, the convertible loan notesand all outstanding accrued interest was repaid in full in

November 2023.

Level 3 Unquoted Investments

Rosslyn Data Technologiesplc –

convertible loan note

On 19September 2023, Rosslyn Data Technologies completed a £3.3m fundraising through the issue

of new shares and convertible loan notesto fund its organic growth strategy. As part of the funding

round, the Company invested £0.3m through the new convertible loan notes. The fair value of the

convertible loan noteswas unchanged with the value of the conversion option calculated using the

Black-Scholes option pricing model.

8. Signicant interests

At the year end the Company held 3% or more of the issued share capital of the following investments:

Investment Holding % Investment Holding %

Engage XR Holdingsplc 29.72% Crimson Tideplc 6.39%

Fadel Partners inc 22.55% Eden Researchplc 5.59%

Rosslyn Data Technologiesplc 20.27% Skillcast Groupplc 4.74%

Bivictrix Therapeuticsplc 11.00% Zoo Digital Groupplc 4.50%

PCI-PALplc 10.54% C4X Discovery Holdingsplc 4.26%

Bidstack Groupplc 9.64% Intelligent Ultrasound Groupplc 4.21%

Equipmake Holdingsplc 8.94% Verici DXplc 4.18%

Itaconixplc 8.80% Surface Transformsplc 4.10%

Crossword Cybersecurityplc 8.38% Strip Tinning Holdingsplc 3.69%

XP Factoryplc 7.39% Polarean Imagingplc 3.34%

One Media IP Group 7.33% Blackbirdplc 3.29%

Tortilla Mexican Grillplc 7.17%

9. Debtors

2023

£000

2022

£000

Prepayments and accrued income 1,475 408

The material increase in accrued income from the prior year is due to increased investment in xed interest bonds

and convertible loan notes.

10. Creditors:amounts falling due within one year

2023

£000

2022

£000

Trade Creditors 21 8

Accruals 885 992

906 1,000

11. Called up share capital

2023

£000

2022

£000

Allotted, called-up and fully paid:327,813,939

(2022:266,652,209) ordinary shares of 1p each. 3,278 2,666

During the year 7,183,338 (2022:4,307,731) ordinary shares were purchased through the buyback facility at a

cost of £3,636,841 (2022:£3,243,492) . The repurchased shares represent 2.7% (2022:1.9%) of ordinary shares in

issue on 1October 2022. The acquired shares have been cancelled.

During the year, the Company issued 65,917,234 ordinary shares of 1penny (nominal value £659,172.) in an

oer for subscription, representing 24.7% of the opening share capital at prices ranging from 54.76p to 63.84p

per share. Gross funds of £39,935,333 were received. The 3.5% premium of £1,397,737 payable to Canaccord

Genuity WealthLtd (CGWL) under the terms of the oer was reduced by £555,552 being the discount awarded

to investors in the form of additional shares. A further reduction of £755 introductory commission was

made resulting in fees payable to CGWL of £841,430 which were used to pay other costs associated with the

prospectus and marketing. In accordance with the oer agreement, the Company was entitled to a rebate of

£100,000 from CGWL reducing the net fees payable to CGWL to £741,430.

On 10February 2023, 1,836,516 ordinary shares were allotted at a price of 54.95pence per share, which was

calculated in accordance with the terms and conditions of the DRIS, on the basis of the last reported NAV per

share as at 20January 2023, to shareholders who elected to receive shares under the DRIS as an alternative to the

nal and special dividend for the year ended 30September 2022.

On 28July 2023, 591,318 ordinary shares were allotted at a price of 49.29pence per share, which was calculated

in accordance with the terms and conditions of the DRIS, on the basis of the last reported NAV per share as

at 7July 2023, to shareholders who elected to receive shares under the DRIS as an alternative to the interim

dividend for the year ended 30September 2023.

On 9May 2023, the amount standing to the credit of the share premium account (£133.2m) was cancelled.

Further details of the Company’s capital structure can be seen in note1.

Income entitlement

The revenue earnings of the Company are available for distribution to holders of ordinary shares by way of interim,

nal and special dividends (if any) as may from time to time be declared by the Directors.

Capital entitlement

The capital reserve realised and special reserve of the Company are available for distribution to holders of

ordinary shares by way of interim, nal and special dividends (if any) as may from time to time be declared by the

Directors.

Voting entitlement

Each ordinary shareholder is entitled to one vote on a show of hands and on a poll to one vote for each ordinary

share held. Notices of meetings and proxy forms set out the deadlines for valid exercise of voting rights and other

than with regard to directors not being permitted to vote on matters upon which they have an interest, there are

no restrictions on the voting rights of ordinary shareholders.

Transfers

There are no restrictions on transfers except dealings by directors, persons discharging managerial

responsibilities and their persons closely associated which may constitute insider dealing or is prohibited by the

rules of the FCA.

The Company is not aware of any agreements with or between shareholders which restrict the transfer of

ordinary shares, or which would take eect or alter or terminate in the event of a change of control of the

Company.

12. Net asset value per ordinary share

30September

2023

30September

2022

Net assets (£’000) 151,920 160,507

Shares in issue 327,813,939 266,652,209

NAV per share (p) 46.34 60.19

There are no potentially dilutive capital instruments in issue and as such, the basic and diluted NAV per share are

identical.

13. Contingencies, guarantees and nancial commitments

There were no contingencies, guarantees or nancial commitments of the Company at the year end (2022:nil) .

14. Related party transactions and conicts of interest

The remuneration of the directors, who are key management personnel of the Company, is disclosed in the

Directors’ remuneration report on page 46 and in note4 on page 78.

Transactions with the Investment Manager

As the Company’s Investment Manager, Canaccord Genuity Asset ManagementLtd is a related party to the

Company for the purposes of the Listing Rules. As the Investment Manager and Canaccord Genuity Wealth

Limited (CGWL) are part of the same CGWL group, CGWL also falls into the denition of related party.

On 7September 2023, the Board and the Investment Manager entered into an updated Investment Management

Agreement. The amended agreement included updates to reect changes in regulation. There were no changes

to the commercial terms of the agreement.

Oliver Bedford, a non-executive director of the Company is also an employee of the Investment Manager

which received fees of £28,000 for the year ended 30September 2023 in respect of his position on the Board

(2022:£26,125) . Of these fees £7,000 was still owed at the year end. Oliver Bedford’s non-executive directorship

fees will increase to £29,500 per annum, with eect from 1October 2023.

CGWL act as administrator and custodian to the Company. On 7September 2023, the Company entered into an

amended administration agreement with CGWL. Under the terms of the agreement the fees to be paid to CGWL

were increased to £250,000 per annum (previously £195,000) with eect from 1October 2023.

CGWL received fees for the support functions as follows:

30September

2023

30September

2022

Custody 30,000 30,000

Administration 195,000 195,000

Total 225,000 225,000

Still owed at the year end 55,765 55,240

Under an oer agreement dated 5September 2022, CGWL were appointed by the Company to administer an

oer for subscription and acted as receiving agent in relation to the oer. Under the terms of the agreement

CGWL received a fee of 3.5per cent. of the gross proceeds of the oer for providing these services. The

Administrator agreed to discharge commissions payable to nancial advisers in respect of accepted applications

for oer shares submitted by them, including any trail commission.

The Administrator also agreed to discharge and/or reimburse all costs and expenses of and incidental to the oer

and the preparation of the prospectus, including without limitation to the generality of the foregoing, FCA vetting

fees in relation to the prospectus, sponsor and legal fees, expenses of the Company and CGWL, the Company’s

tax adviser’s fees and expenses, registrar’s fees, costs of printing, postage, advertising, publishing and circulating

the prospectus and marketing the oer, including any introductory commission and discounts to Investors.

However, the Administrator was not responsible for the payment of listing fees associated with the admission of

the ordinary shares to the premium segment of the Ocial List and to trading on the main market of the London

Stock Exchange.

During the year, the Company issued 65,917,234 ordinary shares of 1 penny (nominal value £659,172) in an

oer for subscription, representing 24.7% of the opening share capital at prices ranging from 54.76p to 63.84p

per share. Gross funds of £39,935,333 were received. The 3.5% premium of £1,397,737 payable to Canaccord

Genuity WealthLtd (CGWL) under the terms of the oer was reduced by £555,552, being the discount awarded

to investors in the form of additional shares. A further reduction of £755 introductory commission was made

resulting in fees payable to CGWL of £841,430 which were then used to pay other costs associated with the

prospectus and marketing. In accordance with the oer agreement, the Company was entitled to a rebate of

£100,000 from CGWL reducing the net fees payable to CGWL to £741,430.

Under an oer agreement dated 7September 2023, CGWL were appointed by the Company to administer a new

oer for subscription and act as receiving agent in relation to the oer. Under the terms of the agreement CGWL

will receive a fee of 3.5per cent. of the gross proceeds of the oer for providing these services. The Administrator

has agreed to discharge commissions payable to nancial advisers in respect of accepted applications for Oer

Shares submitted by them, including any trail commission.

The Administrator has also agreed to discharge and/or reimburse all costs and expenses of and incidental to

the oer and the preparation of the prospectus, including without limitation to the generality of the foregoing,

FCA vetting fees in relation to the prospectus, sponsor and legal fees, expenses of the Company and CGWL, the

Company’s tax adviser’s fees and expenses, registrar’s fees, costs of printing, postage, advertising, publishing

and circulating the prospectus and marketing the oer, including any introductory commission and discounts to

Investors. However, the Administrator will not be responsible for the payment of listing fees associated with the

admission of the Ordinary Shares to the premium segment of the Ocial List and to trading on the main market

of the London Stock Exchange.

If following the nal admission under the oer, the aggregate fee that has been paid to CGWL exceeds the costs

and expenses referred to above by more than £25,000, then CGWL will rebate any surplus to the Company subject

to a maximum rebate of £100,000.

Canaccord Genuity Asset ManagementLtd is appointed as Investment Manager to the Company and receives an

investment management fee of 1.7% per annum.

Investment management fees for the year are £2,797,377 (2022:£3,340,182) as detailed in note3. Of these

fees £645,397 (2022: £687,373) were still owed at the year end. As the Investment Manager to the Company

and the investment advisor to the Marlborough Special Situations Fund (in which the Company may invest) ,

the Investment Manager makes an adjustment as necessary to its investment management fee to ensure the

Company is not charged twice for their services.

Upon completion of an investment, the Investment Manager is permitted under the investment management

agreement to charge private investee companies a fee equal to 1.5per cent. of the investment amount. This fee

is subject to a cap of £40,000 per investment and is payable directly from the investee company to the Investment

Manager. The Investment Manager may recover external due diligence and transaction services costs directly

from private investee companies. No fees were charged to investee companies in the year under this agreement

(2022: nil).

Total commission of £63,318 was paid to CGWL in the year for broker services (2022: £30,612).

The Investment Manager has agreed to indemnify the Company and keep indemnied the Company in respect

of the amount by which the annual running costs of the Company exceed 3.5per cent. of the net assets of the

Company, such costs shall exclude any VAT payable thereon and any payments to nancial intermediaries, the

payment of which is the responsibility of the Company. No fees were waived by the Investment Manager in the

nancial year under the indemnity.

The Company also held £8,119,302 in the client account held at CGWL at 30September 2023

(2022:£16,786,442) .

15. Financial instruments

Risk management policies and procedures

The investment objectives of the Company are to generate capital gains and income from its portfolio and to

make distributions from capital or income to shareholders whilst maintaining its status as a Venture Capital Trust.

The Company intends to achieve its investment objectives by making Qualifying Investments in companies

listed on AIM, private companies and companies listed on the AQSE Growth Market, as well as Non-Qualifying

Investments as allowed by the VCT Rules.

At least 80% of the Company’s funds have been invested in qualifying holdings during the year under the HMRC

investment test denition. The balance of the Company’s funds were invested in liquid assets (such as non-

qualifying equities, xed income securities and bank deposits) . The Company is managed as a VCT in order that

shareholders in the Company may benet from the tax relief available.

This strategy exposes the Company to certain risks, which are summarised below.

The structure in place to manage these risks is set out in the corporate governance report on pages 51 to 55 of

the annual report and accounts.

A detailed review of the investment portfolio is contained in the chairman’s statement and Investment Manager’s

report on pages 4 to 9 and 29 to 32 respectively.

Classication of nancial instruments

The investments at year end comprise two types of nancial instruments. The basis of valuation is set out below:

●

Equities – fair value through the prot and loss account.

●

Fixed income securities – fair value through the prot and loss account

Other nancial assets comprise cash and cash equivalents of £19,231,167 (2022:£41,911,058) , accrued income

and debtors of £1,434,688 (2022:£370,624) , which is classied as ‘loans and receivables measured at amortised

cost’. Financial liabilities consist of trade creditors and accruals of £905,897 (2022:£1,000,255) which are

classied as ‘nancial liabilities measured at amortised cost’.

Market risk

Market price risk arises from any uctuations in the value of investments held by the Company. Adherence

to investment policies mitigates the risk of excessive exposure to any particular type of security or issuer. In

particular, other than bank deposits, no individual investment shall exceed 10per cent. of the Company’s net

assets at the time of investment. However, many of the investments are in small companies traded on the AIM

market which by virtue of their size carry more risk than investments in larger companies listed on the main

market of the London Stock Exchange.

Market risk is monitored by the Board on a quarterly basis and on an ongoing basis, through the Investment

Manager.

The following table summarises exposure to price risk by asset class at year end date:

Change in Fair Value of Investments

Asset class

30% market

increase

2023

£’000

30% market

decrease

2023

£’000

Aggregate value

2023

£’000

Aggregate value

2022

£’000

AIM Qualifying Investments

(1)

14,365 -14,232 80,673 93,680

Unquoted Qualifying Investments

(2)

2,004 -2,645 8,453 9,802

Quoted Non-Qualifying Investments 4,496 -4,496 17,366 12,397

Unquoted Non-Qualifying Investments – – – –

Authorised unit trust 1,409 -1,409 8,268 3,309

Quoted Non-Qualifying xed income securities -110 110 17,360 –

22,164 22,672 132,120 119,188

(1) Includes variances in the value of CLN issued by Osiriumplc and Rosslyn Data Technologiesplc.

(2) Including variances in the value of CLNs issued by KidlyLtd.

If market prices had been 30% higher or lower while all other variables remained unchanged the return

attributable to ordinary shareholders for the year ended 30September 2023 would have increased by

£22,164,436 (2022:£25,128,703) or decreased by £22,671,676 (2022:£25,965,809) .

The assessment of market risk is based on the Company’s equity and xed income portfolio including private

company investments, as held at the year end. The assessment uses the AIM All-Share Index and the FTSE250

Index as proxies for the AIM Qualifying Investments and quoted Non-Qualifying Investments and illustrates,

based on historical price movements, their potential change in value in relation to change in value of a reference

index, in this case the FTSE100.

The review has also examined the potential impact of a 30% move in the market on the CLN investments held

by the Company, whose values will vary according to the price of the underlying security into which the loan note

instrument has the option to convert.

Currency risk

The Company is not directly exposed to currency risk and does not invest in currencies other than sterling. There

are indirect exposures through movements in the foreign exchange market as a consequence of investments held

in companies who report in foreign currencies.

Interest rate risk

The Company is fully funded through equity and has no debt; therefore, interest rate risk is not considered a

material risk.

The Company’s nancial assets and liabilities are denominated in sterling as follows:

30September 2023

Fixed

Rate

£000

Variable

Rate

£000

Non-Interest

Bearing

£000

Total

£000

Investments 20,860 – 111,260 132,120

Cash and cash equivalents – 19,231 – 19,231

Other current assets (net) 1,293 – 182

(2)

1,475

Other current liabilities (net) – – (906) (906)

Net assets 22,153 19,231 110,536 151,920

30September 2022

Fixed

Rate

£000

Variable

Rate

£000

Non-Interest

Bearing

£000

Total

£000

Investments 1,956 – 117,232 119,188

Cash and cash equivalents – 41,911 – 41,911

Other current assets (net)

(1)

262 – 146 408

Other current liabilities (net)

(1)

– – (1,000) (1,000)

Net assets 2,218 41,911 116,378 160,507

(1) Prior year updated to split out assets and liabilities and correct xed interest accrual allocation.

(2) Includes prepayments of £40k which is not considered a nancial asset.

Change in Fair Value of Investments

Asset class

30% market

increase

2022

£’000

30% market

decrease

2022

£’000

Aggregate

value

2022

£’000

Aggregate

value

2021

£’000

AIM Qualifying Investments

(1)

+19,281 -19,208 93,680 141,041

Unquoted Qualifying Investments

(2)

+1,783 -2,693 9,802 32,331

Quoted Non-Qualifying Investments +3,470 -3,470 12,397 25,284

Unquoted Non-Qualifying Investments – – – 443

Authorised unit trust +595 -595 3,309 3,701

+25,129 -25,966 119,188 202,800

Interest rate risk exposure relates to cash and cash equivalents (bank deposits) where interest income is primarily

linked to bank base rates. Interest rate risk exposure on debt instruments is reected in the market risk and since

these securities are valued at fair value, no additional disclosure is made in this respect. Movements in interest

rates on cash and cash equivalents are not considered a material risk.

Liquidity risk

Liquidity risk is the risk that the Company is unable to meet obligations as they fall due. The Company has no

debt and maintains sucient investments in cash or cash equivalents, or readily realisable securities to pay trade

creditors and accrued expenses (£905,897 as at 30September 2023) . Liquidity risk is not considered material. As

at 30September 2023 the Company held £19,231,167 in cash or cash equivalents.

Credit risk

Credit risk relates to the risk of default by a counterparty. The Company may have credit risk through investments

made in unsecured loan stock issued by Qualifying Companies or through Non-Qualifying Investments in xed

income securities and exchange traded funds. No assets are past due date for payment.

On 30August 2023, Osirium announced a recommended cash oer for the company by SailPoint Technologies

through a scheme of arrangement, eective from 30October 2023. As part of the transaction, the convertible

loan notesand all outstanding accrued interest was repaid in full in November 2023. In anticipation of the

completion of the transaction, which was completed post period end, the impairments to the carrying value of

the loan noteand accrued interest were reversed.

An investment will be impaired if the investee company is loss making and does not have sucient funds available

to transition into prot and in the opinion of the Investment Manager may fail to secure sucient equity or debt

funding to transition into prot, or if the borrower defaults or is expected to default on payment of accrued

interest or repayment of the principal sum.

The maximum credit risk exposure equates to the carrying value of assets at the balance sheet date:

2023

£000

2022

£000

Fixed income securities;

Qualifying Investments (convertible loan notes) 3,500 1,956

Non-qualifying investments (investment grade corporate bonds) 17,361 –

Non-qualifying investments (UK gilt exchange traded fund) 1,978 –

Total xed income securities 22,839

(1)

1,956

Cash and cash equivalents 19,231 41,911

Other assets 1,475 408

43,545 44,275

(1) Includes UK gilt exchange traded fund as underlying investments are xed income securities.

Cash and cash equivalents include bank deposits held through Canaccord Genuity Wealth Limited of £8.1million

(2022:£16.8million) (CGWL, trading as CGWM) , are held with banks that are authorised and regulated to carry

on banking or deposit-taking business. All these meet the requirements of UK’s FCA CASS rules. Through its

treasury function, CGWM uses a tiered level approach to counterparty selection to reect dierent maturities of

cash held on deposit.

The Company’s cash reserves, when held through CGWL, are pooled with cash deposits from other clients of

CGWL and diversied across a specied panel of banks. CGWM’s treasury function reviews panel members ahead

of selection and prioritises the safety of client assets with the panel selection process placing an emphasis on

quality and security. Participating banks must be rated as investment grade by at least two international credit

rating agencies. CGWM will also consider the expertise and market reputation of the bank; review a bank’s

nancial statements and consider its capital and deposit base; consider the geographical location of the parent;

monitor a bank’s credit default swaps; and ask the bank to complete a due diligence questionnaire. The CGWM

treasury function maintains regular contact with panel banks, typically meeting them every 6months or so. There

are no withdrawal restrictions on the Company’s cash held with CGWL.

Fair value of nancial assets and nancial liabilities

Equity investments are held at fair value. No investments are held for trading purposes only.

Capital management policies and procedures

The current policy is to fund investments through equity. No future change to this policy is envisaged. As a public

limited company, the Company is required to hold a minimum £50,000 share capital.

The Company’s capital is summarised in notes1 and 11 to these accounts. The Company has no debt and is fully

funded by equity.

16. Dividends

2023

Ord

£000

2022

Ord

£000

Paid per share:

Special capital dividend of 2.50pence for the year ended 30September 2021

– 5,704

Paid per share:

Final capital dividend of 3.15pence for year ended 30September 2021 – 8,455

Paid per share:

Interim capital dividend of 1.00penny for year ended 30September 2022 – 2,671

Paid per share:

Special capital dividend of 2.00pence for the year ended 30September 2023 6,216 –

Paid per share:

Final capital dividend of 2.00pence for year ended 30September 2022 6,216 –

Paid per share:

Interim capital dividend of 1.00penny for year ended 30September 2023 3,298 –

Dividends unclaimed (13)

(1)

15,717

(2)

16,830

(3)

Proposed per share:

Final capital dividend of 1.50pence for the year ended 30September 2023 5,151 –

Paid per share:

Special capital dividend of 2.00pence for the year ended 30September 2023 – 6,218

Paid per share:

Final capital dividend of 2.00pence for the year ended 30September 2022 – 6,218

(1) Unclaimed dividends for a period of 12years reverted to the Company.

(2) The dierence between total dividends paid for the period ending 30September 2023 and the cash ow statement is £1,300,000 which

reects the amount of dividends reinvested under the DRIS.

(3) The dierence between total dividends paid for the period ending 30September 2022 and the cash ow statement is £1,038,000 which

reects the amount of dividends reinvested under the DRIS.

17. Post balance sheet events

Share buybacks

As at 18December2023, 2,039,414ordinary shares have been purchased at an average price of 42.82pence per

share and a total cost of £873,229.

Shares issued

As at 18December2023, 17,599,435ordinary shares have been issued through the oer for subscription raising

gross proceeds of £8,101,695.

New investments

The Company has made the following investments since the period end:

Amount

Invested

£000

Investment

into existing

company

Qualifying Investments

Eden Researchplc 500 Yes

Non-Qualifying Investments

Next Groupplc GRTD BDS26/08/25 957 No

Shellplc 809 No

XP Power plc 126 Yes

Marlborough UK Micro-Cap Fund 4,365 No

Marks & Spencer plc 3.75% SNR EMTN 19/05/2026 2,058 No

Unilever plc 1.375% GTD SNR NTS 15/09/24 3,028 No

Disposals

The Company has made the following full disposals since the period end:

Proceeds

£000

Qualifying Investments

Osiruim Technologies plc 14

Osiruim Technologies plc (convertible loan note) 800

Renalytix AI plc 13

Velocys plc 61

Instem plc 1,416

Abcam plc 3,143

Non-Qualifying Investments

Diversied Energy Company plc 659

Watches of Switzerland plc 641

Energean plc 679

Marks and Spencer 3% SNR EMTN 3,000

IShares III plc UK Gilts 0-5 YR UCITS ETF 2,005

Alternative performance measures

An alternative performance measure (APM) is a nancial measure of the Company’s historic or future nancial

performance, nancial position or cash ows which is not dened or specied in the applicable nancial reporting

framework.

The Directors assess the Company’s performance against a range of criteria which are viewed as particularly

relevant for a VCT.

The denition of each APM is in the glossary of terms on pages 91 to 92. Where the calculation of the APM is not

detailed within the nancial statements, an explanation of the methodology employed is below:

NAV total return

30September

2023

30September

2022

Opening NAV per share A 60.19p 100.39p

Special dividend paid B 2.00p 2.50p

Final dividend paid C 2.00p 3.15p

Interim dividend paid D 1.00p 1.00p

Closing NAV per share E 46.34p 60.19p

NAV total return ((B+C+D+E-A) /A) *100 -14.70% -33.42%

NAV total return (dividends reinvested)

30September

2023 % Return

Opening NAV per share

(30September 2022)

A 60.19p

Closing NAV per share

(30September 2023)

46.34p

Special dividend

paid February2023

2.00p

Final dividend for year paid

February2023

2.00p

Interim dividend

July2023

1.00p

Total dividend payments 5.00p

Closing NAV per share plus dividends paid 51.34p -14.70% (-33.42%

30September 2022)

In year performance of reinvested dividends -0.74p

NAV total return (dividends reinvested) ((B-A) /A) *100 B 50.60p -15.93% (-35.47%

30September 2022)

Share price total return

30September

2023

30September

2022

Opening share price A 62.75p 93.00p

(1)

Special dividend paid B 2.00p –

Final dividend paid C 2.00p 3.15p

Interim dividend paid D 1.00p 1.00p

Closing share price E 43.00p 62.75p

Share price total returns ((B+C+D+E-A)/A)*100 -23.51% -28.06%

(1) Ex-dividend

Share price total return (dividends reinvested)

30September

2023 % Return

Opening share price

(30September 2022) A 62.75p

Closing share price

(30September 2023) 43.00p

Special dividend paid

February2023 2.00p

Final dividend for year

paid February2023 2.00p

Interim dividend paid

July2023 1.00p

Total dividend payments 5.00p

Closing share price plus dividends paid 48.00p %

-23.51% (-28.06%

30September 2022)

In year performance of reinvested dividends -0.81p

Share price total return (dividends reinvested)

((B-A) /A) *100

47.19p

-24.80% (-28.98%

30September 2022)

Ongoing charges ratio

The ongoing charges ratio has been calculated using the AIC’s “Ongoing Charges” methodology.

30September

2023

£000

30September

2022

£000

Investment management fee 2,797 3,340

Other expenses 1,035

(1)

989

VCT proportion of MSSF expenses 65 26

Ongoing charges A 3,897 4,355

Average net assets B 174,334 211,552

Ongoing charges ratio (A/B) *100 2.24% 2.06%

(1) Other expenses exclude London Stock Exchange fees of £58,905 for admission of shares under the oer for subscription, reversal of the

provision of loan stock interest previously recognised (£34,816) , capital reduction costs of £15,131 and witholding tax charges of £16,485 as

the Board do not consider these costs to be ongoing costs to the fund.

Share price discount

30September

2023

30September

2022

Share price A 43.00p 62.75p

Net asset value per share B 46.34p 60.19p

(Discount) / premium ((A/B) -1) *100 -7.21% 4.25%

The 1-year average discount of 6.06% is calculated by taking the average of the share price discount at each

month end between 1October 2022 and 30September 2023.

The 5-year average discount of 5.64% is calculated by taking the average of the share price discount at each

month end between 1October 2018 and 30September 2023.

Glossary of terms

AIM

The Alternative Investment Market operated by the London Stock Exchange.

AQSE Growth Market

The Growth Market of the Aquis Stock Exchange, a recognised investment exchange for growth companies

operated by Aquis Exchangeplc.

CGWM

In the UK& Europe, Canaccord Genuity Wealth Management (CGWM) is the trading name of Adam&

Company Investment Management Limited (AIM) , Canaccord Genuity Wealth Limited (‘CGWL’) , Canaccord

Genuity Financial Planning Limited (‘CGFPL’) , CG Wealth Planning Limited (‘CGWPL’) , Canaccord Genuity

Asset Management Limited (‘CGAM’) , Punter Southall Wealth Limited (‘PSW’) and Canaccord Genuity Wealth

(International) Limited.

Earnings per share total return

Total prot/(loss) for the reporting period divided by the weighted average number of shares in issue.

Eligible Shares

Shares in Qualifying Companies which do not carry preferential rights to dividends and/or assets on a winding-up

or redemption.

FTSE AIM All-Share Index Total Return

Measures the total return of the underlying FTSE AIM All-Share index combining both capital performance and

income. Calculated on a dividends re-invested basis.

FTSE All-Share Index Total Return

Measures the total return of the underlying FTSE All-Share index combining both capital performance and

income. Calculated on a dividends re-invested basis.

ITA

Income Tax Act2007, as amended.

Knowledge Intensive Companies

A company satisfying the conditions in Section331(A) of Part6 ITA.

Non-Qualifying Company or Non-Qualifying Investment

An investment made by the Company which is not a Qualifying Investment and is permitted under the VCT Rules.

Oer Shares

New ordinary shares of 1 penny each in the capital of the Company issued or to be issued pursuant to the Oer

for Subscription of Ordinary Shares in Hargreave Hale AIM VCTplc launched on 7September 2023.

Qualifying Company or Qualifying Investment

An investment made by a venture capital trust in a trading company which comprises a qualifying holding under

Chapter4 of Part6 ITA.

Qualifying Trade

A trade complying with the requirements of section 300 ITA.

State aid

State aid received by a company as dened in Section280B (4) of ITA.

VCT or Venture Capital Trust

Venture capital trust as dened in section 259 ITA.

VCT Rules

All rules and regulations that apply to VCTs from time to time, including the ITA.

Alternative performance measures

An alternative performance measure is a nancial measure of the Company’s historic or future nancial

performance, nancial position or cash ows which is not dened or specied in the applicable nancial reporting

framework.

The Company uses the following alternative performance measures:

Net asset value (NAV)

The value of the Company’s assets, less its liabilities.

Net asset value (NAV) per share

The net asset value divided by the total number of shares in issue at the year end.

NAV total return

The NAV total return shows how the NAV per share has performed over a period of time in percentage terms

taking into account both capital returns and dividends paid. We calculate this by adding the dividends paid in the

period to the closing NAV per share and measuring the percentage change relative to the opening NAV per share.

NAV total return since inception

The sum of the published NAV per share plus all dividends paid per share over the lifetime of the Company.

NAV total return (dividends reinvested)

The NAV total return (dividends reinvested) shows the percentage movement in the NAV Total Return per share

over time taking into account both capital returns and dividends paid assuming dividends are re-invested into

new shares. To be consistent with industry standard practice, the allotment price of the new shares issued in

place of the cash dividend is assumed to be the prevailing ex-dividend NAV per share on the day the shares

go ex-dividend. This diers from the methodology followed by the registrar when issuing shares under the

Company’s dividend re-investments scheme.

Ongoing charges ratio

The ongoing costs of managing and operating the Company divided by its average net assets. Calculated in

accordance with AIC guidance, this gure excludes ‘non-recurring costs’.

Share price discount

As stock markets and share prices vary, a VCT’s share price is rarely the same as its NAV. When the share price

is lower than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by

subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share.

If the share price is higher than the NAV per share, this situation is called a premium.

Share price total return

The share price total return shows performance over a period of time in percentage terms by reference to the

mid-price of the Company’s shares taking into account dividends paid and payable having past the ex-dividend

date in the period and any return of capital if applicable.

We calculate this by adding the dividends paid and payable having past the ex-dividend date in the period to the

closing mid-price and measuring the percentage change relative to the opening mid-price.

Share price total return (dividends reinvested)

The performance of the Company’s share price on a total return basis assuming dividends are reinvested in new

shares at the mid-price of the shares on the ex-dividend date.

Shareholder information

The Company’s ordinary shares (Code:HHV) are listed on the London Stock Exchange. Shareholders can visit the

London Stock Exchange website, https://www.londonstockexchange.com, for the latest news and share prices of

the Company. Further information for the Company can be found on its website at

https://www.hargreaveaimvcts.co.uk.

Net asset value per share

The Company’s NAV per share as at 8December2023 was 45.45pence per share. The Company publishes its

unaudited NAV per share on a weekly basis.

Dividends

Subject to approval at the Annual General Meeting on 8February2024, the Board has proposed the payment of a

nal dividend of 1.50pence in respect of the nancial year ending 30September 2023.

Shareholders who wish to have future dividends paid directly into their bank account rather than sent by cheque

to their registered address can complete a mandate for this purpose. Mandates can be obtained by contacting the

Company’s Registrar, Equiniti.

Dividend reinvestment scheme

The Company oers a dividend re-investment scheme (DRIS) allowing shareholders to elect to receive all of their

dividends from the Company in the form of new ordinary shares. Shareholders may elect to join the DRIS at any

time by completing a DRIS mandate form. Mandates can be obtained by contacting the Company’s registrar,

Equiniti or by visiting the Company’s website at https://www.hargreaveaimvcts.co.uk. As new ordinary shares will

be issued, shareholders are also able to claim tax relief on the shares, including 30per cent. income tax relief on

their investment (subject to the terms of the VCT legislation and the personal circumstances of the shareholder) .

Selling your shares

The Company aims to improve the liquidity in its ordinary shares and to maintain a discount of approximately

5% to the last published NAV per share (as measured against the mid-price of the shares) by making secondary

market purchases. This policy is non-binding and at the discretion of the Board. The eective operation of the

policy is dependent on a range of factors which may prevent the Company from achieving its objectives. As a

result there is no guarantee you will be able to sell your shares or of the discount to NAV per share at which they

will be sold.

VCT share disposals are exempt of capital gains tax when the disposal is made at arms’ length, which means a

shareholder should sell their shares to a market maker through a stockbroker or another share dealing service. In

practice, this means that the price achieved in a sale is likely to be below the mid-price of the Company’s shares

and, therefore, the discount is likely to be more than 5% to the last published NAV per share.

VCT share disposals settle two business days post trade if the shares are already dematerialised or placed into

CREST ahead of the trade, or ten days post trade if the stock is held in certicated form.

Investors who sell their VCT shares before the fth anniversary of the share issue are likely to have to repay their

income tax relief. Canaccord Genuity Wealth Management can facilitate the sale of VCT shares and is able to act

for VCT shareholders who wish to sell their shares. However, you are free to nominate any stockbroker or share

dealing service to act for you. If you would like further information from Canaccord Genuity Wealth Management

please contact the VCT administration team at aimvct@canaccord.com or call 01253 376622.

Please notethat Canaccord Genuity Wealth Limited will need to be in possession of the share certicate and a

completed CREST transfer form before executing the sale. If you have lost your share certicate, then you can

request a replacement certicate from the Company’s registrar Equiniti. The registrar will send out an indemnity

form, which you will need to sign. The indemnity form will also need to be countersigned by a UK insurance

company or bank that is a member of the Association of British Insurers. Since indemnication is a form of

insurance, the indemnifying body will ask for a payment to reect their risk. Fees will reect the value of the

potential liability.

Shareholder enquiries:

For general shareholder enquiries, please contact Canaccord Genuity Wealth Limited on 01253 376622 or by

e-mail to aimvct@canaccord.com. For enquiries concerning the performance of the Company, please contact the

Investment Manager on02075234837 or by e-mail to aimvct@canaccord.com.

Electronic copies of this report and other published information can be found on the Company’s website at

https://www.hargreaveaimvcts.co.uk.

Change of address

To notify the Company of a change of address please contact the Company’s registrar at the address on page 95.