Cultivating opportunities
Annual report and accounts
for Hargreave Hale AIM VCT plc
year ended 30 September 2024
1
Page
Strategic report
Financial highlights for the year ended 30September 2024 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
Section172 statement 17
Principal and emerging risks and uncertainties 21
Long-term viability statement 23
Other matters 24
Summary of VCT regulations 25
The Investment Manager and the Administrator 26
Investment Manager’s report 28
Investment portfolio summary 32
Top ten investments 36
Governance
Board of Directors 40
Directors’ report 41
Directors’ remuneration report 45
Corporate governance 50
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 63
Income statement 71
Balance sheet 72
Statement of changes in equity 73
Statement of cash ows 75
Notesto the nancial statements 76
Alternative performance measures 92
Glossary of terms 94
Shareholder information 98
Company information 100
Notice of Annual General Meeting 101
Contents
Strategic report
2
Highlights
3
The report has been prepared by the Directors in accordance with the requirements of Section414A of the
Companies Act2006.
Financial highlights for the year ended 30September 2024
Net asset value
(“NAV”) per share
NAV total return Tax free dividends
paid in the period
Share price total
return
Ongoing charges
ratio (“OCR”)
40.55p
-3.86%
(1)
4.00p 0%
(1)
2.43%
(1)
●
£9.2million invested in Qualifying Companies in the year.
●
100% invested by VCT tax value in Qualifying Investments at 30September 2024.
●
Final dividend of 1.25pence per share proposed for the year end and special dividend of 1.50pence per
share approved by the Board.
●
Oer for subscription closed having raised £20.3million. The Board decided to utilise the over-allotment
facility only to the extent that valid applications were received by 5pm on 22March 2024.
●
New Oer for subscription launched on 9October 2024 to raise up to £20million.
Summary nancial data 2024 2023
NAV (£m) 148.01 151.92
NAV per share (p) 40.55 46.34
NAV total return (%)
(1)
-3.86 -14.70
Market capitalisation (£m) 142.34 140.96
Share price (p) 39.00 43.00
Share price discount to NAV per share (%)
(1)
-3.82 -7.21
Share price 5year average discount to NAV per share (%)
(1)
-5.79 -5.64
Share price total return (%)
(1)
0.00 -23.51
Loss per share for the year (p) -1.86 -9.32
Dividends paid per share (p) 4.00 5.00
Ongoing charges ratio (%)
(1)
2.43 2.24
(1) Alternative performance measure denitions and illustrations can be found on pages 92 to 93.
Financial calendar
Record date for nal dividend 3January2025
Payment of nal and special dividends 14February2025
Annual General Meeting 6February 2025
Announcement of half-yearly results for the six months ending 31March 2025 June2025
Payment of interim dividend (subject to Board approval) July2025
Chair’s statement
4
Introduction
Once again, I would like to welcome Shareholders
who joined us as a result of the recent oers for
subscription. As always, we are grateful to new and
existing Shareholders who continue to support the
VCT, despite the dicult times we continue to live
through.
For much of the 2024 nancial year, investor
sentiment improved as UK ination (Consumer Price
Index) returned to the Bank of England’s target of
2%, drawing to a close a 3-year ination cycle that
was very dicult for UK consumers and households
and bringing with it hope that the United Kingdom
can nally move on from the cost-of-living crisis. The
economy has withstood the pressure better than
many had predicted. All the same, businesses and
households had to navigate an immensely dicult
period of high ination and stagnating economic
activity. With ination now on target and the Bank
of England starting to reduce interest rates, many
businesses and households can look forward to
reduced borrowing costs.
Although the Investment Association continues to
report sustained outows from UK equity funds,
there was an improvement in the ow dynamic within
UK small companies after the UK economy returned
to growth in early 2024 and UK ination returned to
target. More recent updates highlight a deteriorating
trend in the run up to the 2024 Autumn Budget
as markets responded to the Government’s very
negative messaging and potential changes to scal
policy. It is premature to take a denitive position
on the impact of the Government’s 2024 Autumn
Budget on our portfolio companies. Clearly, changes
to National Insurance Contributions are going to
weigh heavily on certain companies, particularly
those in high service, low margin industries such
as those in leisure and hospitality. There are a
number of portfolio companies that will feel the
impact. However, their response is likely to include
price increases, less employment and downward
pressure on wages as companies look to mitigate
the additional tax burden. However, for most our
investments, the change will not signicantly impact
performance. As ever, prots and losses will (for
the most part) be determined by the success of
management teams as they seek to develop and then
commercialise new products and services.
After a period of improving economic activity, the
economy notably softened through the summer with
economic indicators and news ow clearly signalling
that we were working our way through a soft patch.
Falls in business and consumer condence ahead
of the budget gave an early indication of the likely
impact of higher taxation. That having been said,
the signicant increase in Government spending
announced at the budget is expected to lift the
economy in 2025 and 2026, albeit at a cost.
Consistent with our updates of the last few years,
generating performance remains very dicult in
the shortterm. Whilst we entered the second half
of the nancial year with grounds for optimism, the
uncertainty created by the election, the potential
for a radically dierent approach to scal policy by
the new Government and its stark messaging again
undermined condence in UK small companies.
Whilst we believe investors still recognise the
value opportunity within the UK stock market, and
specically within small companies, many adopted a
wait and see approach pending the outcome of the
2024 Autumn Budget. Three years of outows from
UK funds have weighed heavily on performance. We
continue to believe that the sector is in deep value
territory. There is a saying within the stock market
that ‘value will out’; unfortunately, it is proving very
dicult to forecast when that might happen. For the
time being, we will need to remain patient.
The fog of uncertainty that hung over the UK markets
ahead of the 2024 Autumn Budget continues
to weigh on the primary markets through which
companies raise new capital. With valuations
so depressed and very little capital available for
investment (away from VCTs), very few companies
have undertaken an initial public oering (“IPO”). On
AIM there were just two VCT qualifying IPOs within
the year. Ironically, neither IPO succeeded in raising
any funds from the established AIM VCTs. After a
dicult third quarter, we are pleased to report a
stronger nal quarter in which we deployed capital
into VCT qualifying companies in line with our revised
budget. The improved activity levels have continued
into the new nancial year and the Investment
Manager reports that its network of investment
banks and corporate advisers are signalling that
interest in IPOs is starting to recover and activity is
expected to pick up in 2025.
Performance
As described in more detail in the Investment
Manager’s report, this has been a third year of
dicult performance. After notable rallies in UK small
companies (including those on AIM) in late 2023 and
the early summer of 2024, the tone in the market
changed in late May with the calling of the UK General
Election. The nal quarter was a dicult one for
companies on AIM, in particular those favoured by
5
investors looking for Business Property (IHT) Relief or
where investors had accumulated signicant gains.
Trading volumes on AIM increased by 99% in the
3months to 30September 2024 when compared to
the same period in 2023 as many investors chose to
exit the market. This selling pressure weighed on our
portfolio of AIM investments in the nal quarter of
the nancial year and, as a result, we are disappointed
to report small losses across the year from that
element of the portfolio. There was also a slight
downward adjustment to the value of the qualifying
investments held in private companies; however,
this was not a signicant factor in performance more
broadly. The portfolio of investments in private
companies is quite heavily skewed towards the UK
consumer discretionary sector, where peer group
valuations remain low.
At 30September 2024, the NAV per share was
40.55pence which, after adjusting for the dividends
paid in the year of 4.00pence, gives a NAV total
return for the year of -3.86%
(1)
which compares
with +3.90% in the FTSE AIM All-Share Index Total
Return (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 1.86pence (comprising a revenue prot
of 0.20pence and a capital loss of 2.06pence).
Revenue income increased by 8.9% to £2.9m
as a result of a full-year contribution from the
non-qualifying investment grade corporate bonds,
unit trust accumulations and bank interest. There
was a reduction in the interest accrued on loan
noteinstruments after the Investment Manager
(acting on behalf of the VCT) agreed to convert some
of the outstanding Kidly loan notesand reduce the
balance of accrued interest in exchange for new
preference shares in Kidly as part of a renancing
plan. Income received into the revenue account
exceeded expenses, resulting in a revenue prot for
the year of 0.20pence per share (FY23:0.27pence
per share).
The share price decreased from 43.00pence to
39.00pence over the reporting period which, after
adjusting for dividends paid of 4.00pence per share,
gives a share price total return of nil
(1)
.
Investments
The Investment Manager invested £9.2million into
seven Qualifying Companies during the period. The
fair value of Qualifying Investments at 30September
2024 was £82.8million (56.0% of NAV) invested in
55 AIM companies and 8
(2)
unquoted companies. At
the year end, the fair value of non-qualifying equities,
the IFSL Marlborough UK Micro-Cap Growth Fund
and the IFSL Marlborough Special Situations Fund
were £12.0million (8.1% of NAV), £10.4million (7.0%
of NAV) and £9.4million (6.3% of NAV) respectively,
with most of the non-qualifying equities listed within
the FTSE350 and oering good levels of liquidity
should the need arise. £19.1million (12.9% of NAV)
was held in short-dated investment grade corporate
bonds, £0.7million (0.4% of NAV) was invested in
VanEck Gold Miners UCITS exchange traded fund
and £13.7million
(3)
(9.3% of NAV) held in cash at the
period end (including £8.8m held with the Custodian).
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 24 for the full
policy).
In the 12-month period to 30September 2024,
the Company paid dividends totalling 4.00pence
(2023:5.00pence). A nal dividend of 1.50pence
(2022:2.00pence) in respect of the 2023 nancial
year was paid on 15February 2024 and an interim
dividend of 1 penny along with a special dividend of
1.50pence (2023:1 penny) was paid on 26July 2024.
The payment of the special dividend reected the
receipt of proceeds from the sale of Abcamplc and
Instemplc.
A nal dividend of 1.25pence is proposed
(2023:1.50pence) which, subject to Shareholder
approval at the forthcoming AGM, will be paid on
14February2025 to ordinary Shareholders on the
register on 3January2025. A special dividend of
1.50pence per share has been approved by the
Board. The distribution will return to Shareholders
the proceeds from various exits and disposals. The
special dividend will be paid together with the nal
dividend on 14February 2025.
(1) Alternative performance measure denitions and illustrations can be found on pages 92 to 93.
(2) Excluding companies in administration or at risk of administration with zero value.
(3) Net of prepayments and accruals.
6
Dividend re-investment scheme (“DRIS”)
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 pages98 to 99.
On 15February 2024, 1,100,783 ordinary shares
were allotted at a price of 44.58pence 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 26January 2024, to
shareholders who elected to receive shares as an
alternative to the nal dividend for the year ended
30September 2023 announced on 19December
2023.
On 26July 2024, 2,235,192 ordinary shares were
allotted at a price of 42.49pence 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 5July 2024, to
Shareholders who elected to receive shares as an
alternative to the interim and special dividend for the
year ended 30September 2024.
Share buybacks
To maintain compliance with the discount control and
management of share liquidity policy, the Company
purchased through share buybacks 10,657,350
ordinary shares (nominal value £106,574) during the
2024 nancial year at a cost of £4,472,418 (average
price: 41.97pence per share).
As at 17December2024, a further 3,559,262 shares
have been repurchased post the year end at a cost of
£1,361,156 (average price: 38.24pence per share).
Share price discount
The Company aims to improve liquidity and to
maintain a discount of approximately 5per 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 24 for the full
policy).
We continued to operate the discount control and
management of share liquidity policy eectively
during the period. As at 30September 2024, the
Company had one and veyear average share price
discounts of 5.46%
(1)
and 5.79%
(1)
respectively.
The Company’s share price was trading at a discount
of 3.82%
(1)
as at 30September 2024 compared to
a discount of 7.21%
(1)
as at 30September 2023,
this being calculated using the closing mid-price
of the Company’s shares on 30September 2024
as a percentage of the year end NAV per share, as
published on 10October 2024.
As at 17 December2024, the discount to NAV was
4.69% of the last published NAV per share.
Oer for subscription
The Directors of the Company announced on
7September 2023 the launch of an oer for
subscription for shares to raise up to £20million,
together with an over-allotment facility of up to a
further £20million. On 22March 2024, the Company
announced it had received valid applications of
approximately £20million. The Board decided to
utilise the over-allotment facility only to the extent
that valid applications under the oer were received
by 5pm on 22March 2024. The oer closed on
22March 2024 at 5pm.
The oer resulted in gross funds being received of
£20.3million and the issue of 44.5million shares.
New oer for subscription
The Directors of the Company announced on
9October 2024 the launch of a new 2024/2025 oer
for subscription for shares to raise up to £20million.
The oer was approved by shareholders of the
Company at a general meeting on 12November
2024.
By 17December 2024, the Company had allotted
5.9million shares raising gross proceeds of
£2.4million. As at the date of this document, the
Company has received valid applications for a further
£0.2million.
Cost eciency
The Board reviews costs incurred by the Company
on a regular basis and is focused on maintaining a
competitive OCR. The year end OCR was 2.43%
(1)
(FY23:2.24%
(1)
) when calculated in accordance with
the Association of Investment Companies’ (“AIC”)
“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 and
the payment of special dividends. Other material
factors include increases in some of the xed
costs of the Company such as the administration,
auditor and company secretarial fees, and the
increased investment in the IFSL Marlborough UK
Micro-Cap Growth Fund and the IFSL Marlborough
Special Situations Funds. The Ongoing Charges
methodology divides ongoing expenses by average
net assets.
(1) Alternative performance measure denitions and illustrations can be found on pages92 to 93.
7
Board remuneration
Following a review of Board remuneration, and taking
into account peer group analysis and ination, the
Board has agreed to increase its remuneration by
3.2%, eective from 1October 2024. The annual
remuneration of the Chair will increase to £42,500,
the independent non-executive directors to £33,000
and the non-independent non-executive director,
Oliver Bedford, to £30,500.
An additional fee of £1,500 will continue to be paid
to the Chair of the MSPEC. The Chair of the Audit
Committee will continue to receive an additional fee
of £3,000.
Annual General Meeting
Shareholders are invited to attend the Company’s
AGM to be held at 12.30pm on 6February 2025 at
88Wood Street, London,EC2V7QR. The AGM notice
is set out on pages101 to 105.
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 5.00p.m. on
30January 2025. Answers will be published on the
Company’s website on 6February 2025.
Angela Henderson has notied the Board of her
intention not to seek re-election as an Independent
Non-Executive Director of the Company at the
forthcoming AGM. I wish to take this opportunity to
thank Angela for her valuable contribution over the
years. The Company has decided that, due to the
current size of the Board, there is no intention to
appoint an additional Non-Executive Director at the
present time.
Shareholder engagement
Shareholder engagement is given a high priority
by the Board. The Company provides a signicant
amount of information, including recorded content,
about its activities and performance through its
website (www.hargreaveaimvcts.co.uk).
The website also allows Shareholders to request
(by email) updates on Shareholder events, the
performance of the fund (interim management
statements, fact sheets and video updates) and
information on the Company’s fundraising activities.
Reecting our wish to improve the ow of information
to our Shareholders whilst simultaneously reducing
costs and waste, we launched a major drive to
upgrade and expand our database of Shareholders
who opt in for email and digital communications.
Please do register your consent with us through the
website.
Whilst the Board strongly encourages Shareholders
to make use of everything the website has to oer,
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 page100 of this
document or by email to HHV.CoSec@jtcgroup.com.
The Board also wants to provide Shareholders
with regular opportunities to meet directly with
the Directors and the CGAM VCT investment
management team. As a result, the Company held
four in-person events (including the 2024 Annual
General Meeting) and a webinar in the 12months to
30September 2024.
The rst of these was our annual Shareholder event
on 28November 2024, once again held at Everyman
Cinema Broadgate, City of London. The event
included a presentation by the Investment Manager
covering the 12months to 30September 2024,
along with presentations, pre-recorded interviews
and a panel discussion with several guest speakers
and a number of portfolio companies. The event
concluded with the screening of a feature lm.
Summary recordings of the Investment Manager’s
presentations are available toview on the Company’s
website (www.hargreaveaimvcts.co.uk).
In the new nancial year, we expect to hold 3 in-
person events (including the Annual General Meeting)
and two webinars. The next Shareholder events
include the forthcoming AGM to be held at the
Investment Manager’s oces at 88 Wood Street,
LondonEC2V7QR at 12.30pm on 6February 2025
and a separate Shareholder webinar at 4.30pm on
Monday10February 2025. Shareholders are asked
to register their interest in attending Shareholder
events through the Company’s website
(www.hargreaveaimvcts.co.uk) or by emailing
aimvct@canaccord.com.
Electronic communications and digital dividends
As ever, we are asking Shareholders to opt into
electronic communications and update their dividend
payment preference from cheque to bank transfer.
With this in mind, we intend to bring to a close the
use of bank cheques for the payment of dividends.
The last dividend payment by bank cheque will be
in July 2025. Thereafter, all future dividends will be
paid by bank transfer. We are therefore asking all
Shareholders currently receiving dividends by bank
8
cheque to provide their bank account details ahead
of the payment of the nal dividend in respect of the
year to 30 September 2025, due in February 2026.
Switching to the digital delivery of Shareholder
communications and dividend distributions is more
cost ecient, secure and faster 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.
Shareholders are also encouraged to make use of
the shareview portal operated by the Registrar,
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.
Through the Finance Act2024, the Government
extended the sunset clause for the VCT scheme from
5April 2025 to 5April 2035, allowing investors to
claim income tax relief for subscriptions for new VCT
shares for a further 10years. The Treasury Order was
laid before Parliament on 3September 2024, meaning
the sunset clause has now been ocially extended to
5April 2035.
Administration agreement
With eect from 1October 2024, the administration
agreement was novated from CGWL to CGAM.
Under the terms of the novation agreement, the
administration fees paid by the Company were
unchanged at £250,000 (plus VAT). Notwithstanding
the novation, CGWL will continue to receive a fee of
£30,000 per annum in relation to its appointment as
the Custodian. Any future initial or trail commissions
paid to Financial Intermediaries will be paid by CGAM.
Consumer duty
The Consumer Duty regulation is designed to
improve the standard of care provided by rms that
are involved in the manufacture or supply of products
and services to retail clients.
As the Company is not regulated by the FCA, it falls
outside of the Consumer Duty regulation. However,
CGAM and CGWL are regulated companies and
were in scope, respectively as the designated
manufacturer and distributor of the Company during
the nancial year. In its capacity as manufacturer,
CGAM has conducted a fair value assessment and
a target market assessment. Having reviewed
both reports, the Board is satised that CGAM and
CGWL continued to comply with their obligations
throughout the period.
As a consequence of the novation of the
administration agreement, CGAM became both
the designated manufacturer and distributor of the
Company with eect from 1October 2024.
VCT status
I am pleased to report that the Company continues
to perform well against the requirements of the VCT
Rulesand at the period end, the investment test was
100% (2023:91.65%) against an 80% requirement
when measured using HMRC’s methodology. The
increase in the investment test percentage reects
progress made in deploying capital into Qualifying
Companies and the return of capital to Shareholders
through the payment of a 1.50pence per share
special dividend on 26July 2024 following receipt of
proceeds from the sale of Abcamplc and Instemplc.
The Company satised all other tests relevant to its
status as a Venture Capital Trust. Further information
on these tests can be found on page25.
Key information document (“KID”)
In accordance with the PRIIPs regulations, the
Company’s 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
pages21 to22.
Outlook
Once again, we have endured a dicult start to the
nancial year, albeit for very dierent reasons. The
Government’s unhelpfully stark messaging in the run
up to the budget has weighed on economic activity
9
with GDP data and PMI surveys both highlighting a
notable softening in UK economy through the late
Summer and Autumn. Measures of UK consumer
and business condence both dipped, suggesting
that households and companies were becoming
increasingly cautious ahead of and subsequent to
the Autumn 2024 Budget. However, in large part due
to the very signicant increase in public spending
expected next year, we expect to see economic
activity pick up as we head into next year. The Oce
for Budget Responsibility forecasts GDP to increase
from 1.1% in 2024 to 2.0%in 2025.
The FTSE AIM All-Share Index has been noticeably
weak post period end with potential changes to
Business Property Relief weighing heavily on the
index ahead of the Autumn 2024 Budget. In the end,
when viewed through the narrow lens that we apply
to the VCT, the budget was substantially better
than many had feared. That is not to downplay the
pain that many households and businesses will
feel. However, the changes to National Insurance
Contributions (“NICs”), the source of much post-
budget commentary, is unlikely to be a major factor in
shaping the outcomes for many of our investments
with the impact muted by the spread of investments
we hold.
We are pleased to report that deal ow has started
to improve. Post period end, we have invested
£1.8million across 3 qualifying investments. Weare
active on a large number of deals across both public
and private markets, including a limited number of
IPOs. It is too early to say that the tide has turned
decisively but we can see clear evidence that green
shoots might nally start toemerge.
David Brock
Chair
17 December2024
The Company and its business model
10
The Company was incorporated and registered in
England and Wales on 16August 2004 under the
Companies Act1985, registered number 05206425.
The Company has been approved as a Venture
Capital Trust by HMRC under Section259 of the
Income Taxes Act2007. The shares of the Company
were rst admitted to the Ocial List of the
UKListing Authority and trading on the London
Stock Exchange on 29October 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
dened in Section266 of the Companies Act1985,
on 23May 2006 to facilitate the payment of dividends
out of capital prots.
The Company’s principal activity is to invest in a
diversied 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 AIFM with
a Board comprising six non-executive directors,
ve of whom are independent. CGAM acts as
Investment Manager and (from 1October 2024)
Administrator, whilst CGWL acts as Custodian (and,
until 30September 2024, the Administrator) of
the Company. JTC (UK) Limited is engaged as the
Company Secretary.
The Board has overall responsibility for the
Company’s aairs including the determination of
its investment policy. However, the Board exercises
these responsibilities through delegation to
the Investment Manager, the Administrator, the
Custodian and the Company Secretary as it considers
appropriate.
The Directors have managed and continue to manage
the Company’s aairs in such a manner as to comply
with Section259 of the Income Taxes Act2007.
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
Investee Companies
Predominantly AIM Quoted
Display characteristics set out in investment policy
Responsible for setting and monitoring investment and other key policies
Administrator
(Canaccord Genuity Asset Management Ltd)
Custodian
(Canaccord Genuity Wealth Ltd)
Company Secretary
(JTC (UK) Ltd)
Registrars
(Equiniti Ltd)
VCT Tax Adviser
(Philip Hare and Associates LLP)
Investment Manager
(Canaccord Genuity Asset Management L
td)
Responsible for implementing the investment policy
Investment objectives, policy and strategy
11
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 diversied
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 signicant
capital appreciation.
To maintain its status as a VCT, the Company must
have 80per 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 85per cent.
Non-Qualifying Investments
Non-Qualifying Investments must be permitted
by the VCT Rulesand 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 IFSL
Marlborough Special Situations Fund and the IFSL
Marlborough UK Micro-Cap Growth Fund. Subject
to the investment controls below, the allocation
to each of these investment classes will vary to
reect 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 50per cent. of the
net assets of the Company.
The value of funds held in bank deposits will vary
between nil and 30per 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 10per cent. of the Company’s net assets
at the time of investment.
Borrowings
The Articles permit the Company to borrow up
to 15per cent. of its adjusted share capital and
reserves (as dened 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 specic
investment approach based on fundamental analysis
of the investee company.
The Investment Manager’s fund management team
has signicant 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;
●
prot margins, cash ows and the working
capital cycle;
12
●
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 diversied
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 reect 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 signicant 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 reect 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 IFSL Marlborough Special Situations
Fund and the IFSL Marlborough UK Micro-Cap Fund
enables the Company to maintain its exposure to
small UK companies whilst the Investment Manager
identies 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
dened 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, durable business models and
balanced workforces are more likely to create value
over the long term whilst reducing investment risk,
beneting 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 inuence
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, over time, 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 denes how it
will interact with investee companies.
13
The Investment Manager
The Investment Manager adheres to its own ESG
investment and stewardship policies. These include
an ESG Policy, an Engagement Policy, a Conicts
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 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 specic 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 IFSL Marlborough Special
Situations Fund and the IFSL 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; and
●
Regular Board meetings and dialogue with the
Directors, along with policies to control conicts
of interest and co-investment with the IFSL
Marlborough fund mandates support strong
governance.
Further information can be found on page 21.
Key performance indicators
14
The Directors consider the following KPIs to assess whether the Company is achieving its strategic objectives.
The Directors believe these measures help Shareholders assess how eectively the Company is applying its
investment policy and are satised 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 provided in the Chair’s statement and
Investment Manager’s report on pages4 to 9 and 28 to31 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 46.34pence to 40.55pence resulting in a loss to ordinary Shareholders of -1.79pence per
share (-3.86%)
(1)
after adjusting for dividends paid in the year.
-
25
50
75
100
125
150
175
Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23 Sep-24
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 48.3% of the NAV 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 2024 1Y 3y 5y 10y
NAV total return
(1)
-3.86% -44.02% -7.08% 8.33%
Share price total return 0.00% -41.24% -3.68% 13.18%
NAV total return (dividends reinvested)
(2)
-4.21% -48.03% -16.53% -3.23%
Share price total return (dividends reinvested)
(2)
-0.18% -46.69% -12.94% 2.41%
FTSE AIM All-Share Index Total Return 3.90% -39.74% -9.13% 13.40%
Source:CGAM
(1) Reecting the signicant return of capital through regular and special dividends in recent years, which materially exceeds the dividends
paid by the FTSE AIM All-Share Index, the Board is of the view that it is more accurate to report performance against the benchmark on a
(simple) total return basis rather than on a dividends re-invested basis. The Board also notes that approximately 90% of Shareholders do
not participate in the Company’s DRIS scheme, making the simple total return (without dividends reinvested) more reective of Shareholder
returns as experienced by the vast majority of Shareholders. The denition and illustration of this alternative performance measure can be
found on pages 92 to 93.
(2) 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 denitions and illustrations of these
alternative performance measures can be found on pages92 to 93.
Reecting the dicult market conditions that continued to weigh on the NAV through the nancial year, and in
common with the AIM VCT peer group, the Company reported a modest reduction in the NAV per share. The
NAV total return fell behind the benchmark over one and three years; however, it remains ahead of the benchmark
15
over ve 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 an average gain of +3.47%
over the period under review (source:Morningstar). The divergence of performance across the two peer groups
is particularly notable across the three years since the start of the bear market with the AIM VCT sector returning
an average loss of -42.9% against the average gain within the Generalist VCT sector of+3.35%. AIM has fallen by
-39.7% over the same three-year period. It is dicult to account for the strongly divergent performance although
the possible use of preferred investment structures not accessible to investors in public companies may account
for some of the dierence. The steady sell-o of investments on AIM ahead of the 2024 Autumn Budget will have
also been a factor.
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/nd-compare-investment-companies).
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 inuence on a selling Shareholder’s eventual return.
The Company aims to maintain a discount of approximately 5per cent. to the last published NAV per share (as
measured against the mid-price).
The Company’s shares traded at a discount of 3.82%
(1)
as at 30September 2024 (2023:7.21%
(1)
) when calculated
with reference to the 30September 2024 NAV per share. The one and veyear average share price discounts
were 5.46%
(1)
and 5.79
(1)
respectively.
The Company’s shares are priced against the last published NAV per share with the market typically adjusting
the price to reect 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 seven 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 30September 2024 reected the last published NAV per share prior to the year
end, which was released on 1October 2024. The 30September 2024 NAV was reported on 10October 2024,
following the review of the valuations of the private companies.
As at 17December 2024, the discount to NAV was 4.69% of the last published NAV per share.
(18.0%
)
(16.0%
)
(14.0%
)
(12.0%
)
(10.0%
)
(8.0%)
(6.0%)
(2.0%)
0.0%
2.0%
4.0%
6.0%
Sep-19 Sep-20 Sep-21 Sep-22 Sep-23 Sep-24
Share price discount to NAV
(4.0%)
3. Ongoing charges ratio
The ongoing charges of the Company were 2.43%
(1)
(2023:2.24%
(1)
) of the average net assets of the Company
during the nancial year to 30September 2024.
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 and the payment of special dividends. Other material factors include increases in
some of the xed costs of the Company such as administration, auditor and company secretarial fees, along with
(1) Alternative performance measure denitions and illustrations can be found on pages92 to 93.
16
the increased investment in the IFSL Marlborough UK Micro-Cap Growth Fund and the IFSL Marlborough Special
Situations Funds. The Ongoing Charges methodology divides ongoing expenses by average net assets.
The Company’s OCR remains competitive against the wider VCT industry but marginally higher than the 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 eciency 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 4.00pence per share (2023:5.00pence) of dividends was paid during the year, comprising a nal
dividend of 1.50pence in respect of the previous nancial year (2022:2.00pence) paid on 15February 2024, a
special dividend of 1.50pence per share paid on 26July 2024 and an interim dividend of 1penny (2023:1penny)
also paid on 26July 2024.
A nal dividend of 1.25pence per share will be proposed at the forthcoming AGM. If approved by Shareholders,
the payment of the interim, nal and special dividends in respect of the nancial year to 30September 2024 would
represent a distribution to Shareholders of 9.2% of the 30September 2024 NAV per share. A special dividend of
1.50pence per share has been approved by the Board. The distribution will return to Shareholders proceeds from
various exits and disposals. The special dividend will be paid together with the nal dividend on 14February 2025.
The below table demonstrates how the Board has been able to consistently pay dividends in line with the
5%target and the Company’s 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 1.75pence.
2020/21 100.39 7.40 7.4% Including a special dividend of 2.50pence.
2021/22 60.19 3.00 5.0%
2022/23 46.34 4.50 9.7% Including a special dividend of 2.00pence.
2023/24 40.55 3.75 9.2% Including a special dividend of 1.50pence
and proposed nal dividend of 1.25pence.
5. Compliance with VCT Rules
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 Rules, a summary of which can be found on page25. Throughout the year ended
30September 2024 the Company continued to meet these tests.
The investment test increased from 91.65% to 100% in the nancial year. The increase in the investment test
percentage reects progress made in deploying capital into Qualifying Companies and the return of capital to
Shareholders through the payment of a 1.50pence per share special dividend on 26July 2024 following receipt of
proceeds from the sale of Abcamplc and Instemplc. 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 £9.2million into seven Qualifying Companies, three of which were investments into new
Qualifying Companies.
The Board believes that the Company will continue to meet the HMRC dened investment test and other
qualifying criteria on an ongoing basis.
For further details please refer to the Investment Manager’s report on pages28 to31.
Section 172 statement
17
Under Section172, the Directors have a duty to
promote the success of the Company for the benet
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 Section172. It provides a summary
of how the Directors build and maintain strong
relationships with the Company’s key stakeholders,
how they understand their interests and concerns
and how the strength of these relationships is
contributing to the Company’s success. Within the
reporting year, the Board continued to engage with
its key stakeholders.
In 2023, the Board reviewed and identied its key
stakeholders, being shareholders, the Investment
Manager, investee companies, key suppliers and
professional advisers, distributors, and government
agencies, regulators and industry associations. These
stakeholders did not change during the nancial
period. The Company continues not to have any
employees or customers.
This Section172 statement should be read with
the other contents of the Strategic Report on
pages3to38.
Purpose
Hargreave Hale AIM VCT plc aims to support UK
investors to full their longer-term nancial goals
through the eective delivery of its investment
objectives, namely by providing nancial capital
to support growing, innovative businesses across
theUK.
Shareholders
The Board remains strongly committed to prioritising
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
Shareholders.
Reecting Shareholder requests to increase
access for those unable to travel to London for
in-person events or attend during the working day,
the Investment Manager increased the number of
Shareholder events to four, including a rst event
outside of London, two evening events and the rst
Shareholder webinar. With the Shareholder webinar
reaching a wider audience at a substantially lower
cost than the event in Manchester, the Investment
Manager plans to hold two in-person events in
London (one at the Investment Manager’s oce and
one at Everyman Cinema Broadgate, London) and
two webinars over the course of the 2025 nancial
year.
Additional Shareholder updates, CEO interviews
and other economic updates were produced with
members of the Investment Manager’s team and
have been posted on the Company’s website.
During the year, the Company also provided
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 the audited annual report. These reports,
together with further background information
regarding the Company, can be found on the
Company’s website.
In addition, Shareholders had several channels
through which they could 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 were addressed internally or via
escalation to the Board, as necessary.
The Board continued last year’s focus to make the
Company’s processes more ecient, minimise
costs for Shareholders and reduce its environmental
footprint associated with the production of the
annual reports, circulars, and prospectuses. Post
year end, the Company ran a campaign (‘more
informed, less waste’) to encourage Shareholders
to elect (through the website) to receive electronic
communications from the Company. Currently, about
one third of Shareholders have signed up.
Key decisions:
●
close the 2023/2024 Oer for subscription
having successfully raised £20.3m;
●
payment of dividends totalling fourpence 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 Shareholder access to the Investment
Manager and the Board; and
●
run a campaign to improve the adoption of
digital communications.
18
Impacts:
●
support the delivery of the Company’s purpose,
investment objectives and key policies as set
out in this report and elsewhere;
●
increase Shareholder engagement,
transparency, accountability and understanding;
and
●
substantially reduce the costs and
environmental footprint.
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, therefore, fundamental to
the successful operation of the Company. During the
year, the Board and its sub-committees maintained
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
CGAM and a key link between the Company and the
Investment Manager and the Administrator. He and
other representatives of the Investment Manager
attended 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 were
adopted for more operational issues or those that
required the Board’s immediate attention.
The Board retains overall responsibility for the
Company’s portfolio of investments and risk
management. Throughout the reporting period, the
Board received detailed reports from the Investment
Manager, including commentary on portfolio
performance and positioning, which enabled the
Directors to oversee the delivery of the Company’s
investment policy and upon which it relied to make its
key decisions.
Through the MSPEC, the Board undertakes an annual
review of the Investment Manager. The most recent
review was held on 12November2024 to cover the
nancial year to 30September 2024.
Key decisions:
●
retain CGAM as the Investment Manager; and
●
review the ESG features of the investment
process.
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 Rulesand FCA
regulations, including the Consumer Duty;
●
receive updates on regulatory, governance and
public aairs 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 signicant shareholder in investee companies
with a delegated authority to vote on shareholder
resolutions, the Investment Manager is able to
engage with and positively inuence 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 more than 98% of the
available resolutions.
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. During the reporting
period, the Board received regular updates from
the Investment Manager on its engagement with
investee companies. The Board accompanied the
19
Investment Manager on site visits to two of the
portfolio companies (Gousto and Science in Sport).
Key decisions:
●
delegate authority to vote on shareholder
decisions to the Investment Manager.
Impacts:
Active engagement programmes create the forum
for:
●
active monitoring of governance in investee
companies;
●
promoting good corporate behaviours in
investee companies; and
●
advocating for ESG-related initiatives where
they are seen to be value accretive or reducing
risk.
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 ecient 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 led by 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. In particular, the MSPEC reviewed
information provided by key suppliers conrming
that they appropriately manage cyber risks, data
protection and business continuity programs,
together with reviewing information on their
governance structures, insurance cover, controls
and culture. In addition, the Board approved a new
Procurement Procedure which included introducing
standardised due diligence and risk assessments for
engaging all new third-party suppliers.
Following advice from the Company’s legal advisers,
the Board approved and refreshed the Company’s
Privacy Notice which sets out how the Company
processes personal information. The most up-to-
date notice can be found on the Company’s website.
The Board also reviewed the Company’s corporate
and operating policies as part of an annual review.
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. During the year, the Board
and Investment Manager received quarterly in-
person updates and ad hoc advice, as appropriate,
compliance status reports and annual training from
the Company’s professional advisers.
During the year, the Board visited the Administrator
in Blackpool and approved the transfer of the
administration team from CGWL to CGAM and
related novation of the Administration Agreement.
Key decisions:
●
retain CGWL as the Administrator (subsequently
novated to CGAM);
●
introduce a new Procurement Procedure for all
new third-party suppliers;
●
refresh the Privacy Notice;
●
retain Philip Hare & Associates LLP as the
Company’s tax adviser; and
●
appoint Howard KennedyLLP as the Company’s
sponsor and legal adviser in advance of the
prospective 2024/25 Oer.
Impacts:
Through the review process, the MSPEC is able to:
●
evolve policies to reect 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 Company to nancial intermediaries
and investors when the Company is raising funds for
investment through oers for subscription. Through
the IMA and, where applicable, an Oer Agreement,
the Board delegates responsibility for this to the
Investment Manager and Receiving Agent.
The Investment Manager maintained close
contact with key distributors throughout the year,
provided in-person performance updates and
listened to feedback. The Investment Manager
reported this feedback to the Board, along with
any recommendations. The Board also received
an update on the impact of compliance with the
Consumer Duty principle.
20
Key decisions:
●
review the implementation of Consumer Duty
by CGAM and CGWL.
Impacts:
●
improved understanding of costs and value
within the distribution chain;
●
improved understanding of services provided by
distributors; and
●
provided more opportunities for feedback from
Shareholders and their advisers.
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 regulators and
Government agencies, supporting relevant industry
associations, providing evidence to support the
VCT scheme and engaging in policy reviews and
initiatives to improve the operation of the scheme.
The Company is a member of the AIC and the VCTA
and attended events held by both bodies. Oliver
Bedford is a member of the VCTA Policy Committee.
The Company is also represented on the VCTA
Marcomms Committee. In particular, representations
were made through the AIC and VCTA to Government
agencies to advocate for the extension of the ‘sunset
clause’ to 2035 (now adopted into UK legislation).
Key decisions:
●
continue to actively engage with policymakers
through memberships of industry associations.
Impacts:
Our involvement:
●
assisted the industry in successfully achieving
the extension of the VCT ‘sunset clause’ to
2035; and
●
helped to maintain support for VCTs from within
government departments, including HMRC and
HMT, and industry associations.
Principal and emerging risks
and uncertainties
21
The Directors acknowledge that they are responsible for the eectiveness of the Company’s risk management
and internal controls and periodically review the principal risks faced by the Company. The Board may full these
responsibilities through delegation to CGAM and CGWL 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 Section259 of
the Income Taxes Act2007 could
result in the disqualication 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 signicant
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&
AssociatesLLP 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 dicult to realise.
The Board has appointed the
Investment Manager which
has signicant 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. The UK economy
is forecast to grow by 2.0%
in 2025 (source:Oce for
Budget Responsibility). The
Bank of England is expected
to continue to reduce interest
rates. In both cases, this
should improve consumer
and business condence and
encourage investment into
growth. Osetting this, the
Autumn Budget 2024 introduced
a signicantly tighter scal
policy that will increase the
cost of employment, limit
private sector wage growth,
depress protability and reduce
investment by the private sector.
Whilst changes to Business
Property Relief may make AIM
less attractive to investors
seeking to mitigate Inheritance
Tax, the Budget and the recent
extension of Sunset Clause
conrmed the Government’s
support for two important
groups of investors on AIM.
Compliance risk. The Company
is required to comply with
the FCA UK Listing Rulesand
the Disclosure Guidance
and Transparency Rules, the
Companies Act 2006, Accounting
Standards, the General Data
Protection Regulation and other
legislation. The Company is also a
small registered UK 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
qualied audit report and/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 advisers
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.
Operational risk and
outsourcing. Failure in
the Investment Manager,
Administrator, Custodian,
Company Secretary or other
appointed third-party systems
and controls or disruption to
their respective businesses 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 receives regular
reports from the Investment
Manager, Administrator and
Custodian to provide assurance
that they operate appropriate
control and oversight systems
No change.
22
Risk Potential consequence How the Board mitigates risk Changes during the year
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 Registrars on an annual basis.
Where tasks are outsourced to
other third parties, reputable
rms are used and performance
is reviewed periodically by the
MSPEC.
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. To mitigate this
risk, the VCT team within the
Investment Manager has a
large team comprising two fund
managers, a portfolio manager,
an investment analyst and a legal
counsel.
No change.
Exogenous risks such as
economic, political, geopolitical
nancial, climate change and
health. Economic risks include
recession and sharp changes
in interest rates. Political risks
include a change in government
policy causing the VCT scheme
to be brought to an end, changes
to economic or scal policy or the
introduction of taris or other
restrictions that might impact
upon a company’s operational
model, reduce revenues, depress
prot margins and increase the
cost of capital. Geopolitical
risks include the impact of wars
or conicts. Climate change
presents environmental,
geopolitical, regulatory and
economic risks. Health risks
include the possibility of another
pandemic.
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.
Companies may face
restrictions on emissions, water
consumption and increased risk
of environmental hazards.
Regular dialogue with the
Investment 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
diversied 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 sucient
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
advisers.
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.
On 3September 2024, a Treasury
Order was laid before Parliament
extending the sunset clause until
5April 2035.
The Bank of England has
started to reduce interest rates,
decreasing the cost of debt for
companies and households.
Interest rates are expected to fall
further during 2025.
However, 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.
The incoming US administration
may adjust US trade policy,
including the introduction of new
taris on countries exporting
goods and services into the
US, impacting revenues and
protability.
Additional risks and further details of the above risks and how they are managed are explained in note15 of the
nancial statements. Trends aecting future developments are discussed in the Chair’s statement on pages4 to9
and the Investment Manager’s report on pages28 to31.
Long-term viability statement
23
In accordance with provision 36 of the AIC Code, 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 pages21 to22. This assessment has been
carried out over a longer period than the 12months
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 oer in accordance with the
VCT Rules; and
●
is challenging to forecast beyond ve years with
sucient 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 diversied
portfolio of Qualifying Investments;
●
the Company is well invested against the HMRC
investment test (100% at 30September 2024)
and the Board believes the Investment Manager
will continue to have access to sucient
numbers of investment opportunities to
maintain compliance with the HMRC investment
test;
●
the Company held £13.6million in cash at
the year end (includes £8.8m held with the
Custodian);
●
the Company has distributable reserves of
£106.6million at 30September 2024, equivalent
to 29pence per share;
●
the Company has a portfolio of Non-Qualifying
Investments, most of which are listed in the
FTSE350 and oer good levels of liquidity
should the need arise;
●
the nancial position of the Company at
30September 2024 was strong with no debt or
gearing;
●
the oer for subscription launched on
9October 2024 has provided further liquidity for
deployment in line with the Company’s policies
and to meet future expenses;
●
the OCR of the Company at the year end was
2.43%;
●
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 sucient 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
24
Dividend policy
The Company’s dividend policy is to target a tax free
dividend yield equivalent to 5per cent. 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 Companies Act
2006, the UK Listing Rulesand 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 5per 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 eective 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 will always
appoint the best person for the job. However the
Board considers diversity when reviewing Board
composition and has made a commitment to
consider diversity when making future appointments.
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 ESG issues and to conduct
the Company’s aairs responsibly.
The Company does not have any employees or
oces and so the Board does not maintain any
specic policies regarding employee, human rights,
social and community issues but does expect the
Investment Manager to consider them when fullling
its role. The Company qualies for an exemption
from the Streamlined Energy and Carbon Reporting
requirements as a low energy use company with
regards to greenhouse gas emissions (producing less
than 40,000kWh of energy per year) and, therefore, is
not obliged to report emissions from its operations.
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, CGAM. The Company has adopted specic
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 pages12 to13.
To minimise the direct impact of its activities, the
Company oers 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 8.
The Strategic Report is approved, by order of the
Board of Directors.
David Brock
Chair
17December 2024
Summary of VCT regulations
25
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 80per 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
3years after the date on which those shares are
issued;
●
have at least 70per cent. by VCT tax value of
Qualifying Investments in Eligible Shares which
carry no preferential rights (unless permitted
under VCT Rules);
●
have at least 30per cent. of all new funds
raised by the Company invested in Qualifying
Investments within 12months of the end of the
accounting period in which the Company issued
the shares;
●
have no more than 15per cent. by VCT tax value
of its investments in a single company (as valued
in accordance with the VCT Rulesat the date of
investment);
●
derive most of its income from shares and
securities, and, must not retain more than
15per 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 £5million
from State aid investment sources in
the 12months prior to the investment
(£10million for Knowledge Intensive
Companies);
o
has (as a result of the investment or
otherwise) received more than £12million
from State aid investment sources in its
lifetime (or £20million for Knowledge
Intensive Companies);
o
in general has been generating commercial
revenues for more than sevenyears
(or tenyears 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 £15million prior
to investment and £16million 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 2years;
●
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 sevenyears (tenyears 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 Act2018 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 signicant risk that there
could be a loss of capital to the investor of an
amount exceeding the net return.
The Investment Manager & the Administrator
26
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 30September 2024, the Investment Manager had
more than £2.6billion of funds under management across eight unit trusts/OEICS and the Company which are
managed under delegation, including approximately £1.7billion invested in small UK companies.
The Investment Manager’s VCT fund management team is led by Oliver Bedford with support from Lucy
Bloomeld, Abbe Martineau, Anna Salim and Archie Stirling. The VCT fund management team is 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 – Lead Manager
Oliver Bedford graduated from Durham University
with a degree in Chemistry. He served in the
British Army for nine 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
manager in 2019.
Lucy Bloomeld – Co-Manager
Lucy Bloomeld joined the Investment Manager
in August2018 as deputy fund manager, she was
subsequently appointed as co-manager in 2024. 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 charter holder.
Abbe Martineau – Legal Counsel
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 Freshelds, where she advised
international businesses on a range of corporate
matters and strategic M&A, and eight years at
Prudentialplc, 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 – Portfolio Manager
Anna Salim joined the Investment Manager in
April2018. 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 charter holder.
27
Archie Stirling – Investment Analyst
Archie Stirling graduated from Bristol University
with a BSc in Economics, joined KPMGLLP in
2013 and qualied as a chartered accountant
in 2016. Archie joined the Investment Manager
in September2021 following 5years working in
transactional services.
Nicky Warnes – Head of VCT Administration
Nicky joined the administration team in 2009 and was
appointed Head of VCT Administration in 2011. Nicky
has been a Chartered Management Accountant since
2016.
£2.6
BILLION
£1.7
BILLION 26 YEAR
OVER 1,800
MEETINGS
of funds under
management
Invested in small UK
companies
Track record of fund
management
With companies
(12months to
30September 2024)
Source:CGAM (as at 30September 2024)
The Administrator
CGWL provided administration services to the Company for the year ending 30September 2024. With eect
from 1October 2024, the administration agreement between the Company and CGWL was novated to CGAM.
Notwithstanding the novation of the administration agreement, CGWL continues to act as the Custodian post-
period end. CGWL is a subsidiary of Canaccord GenuityInc., 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 3.5per 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 30September 2024, the
Company’s running costs were 2.43per cent. of the net assets of the Company (including irrecoverable VAT).
Under the IMA, the Investment Manager receives an annual management fee of 1.7per cent. of the Net Asset
Value of the Company. A maximum of 75per 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 is also investment adviser
to the IFSL Marlborough Special Situations Fund and the IFSL Marlborough UK Micro-Cap Growth Fund (in which
the Company may, and does, invest), the Investment Manager adjusts the fee it receives under the IMA 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 IMA to charge
private investee companies a fee equal to 1.5per 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 also 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, the Administrator is paid an annual fee of £250,000 (plus VAT) in relation to administration
services. In addition, CGWL receives a fee of £30,000 per annum in relation to its appointment as the Custodian.
Any initial or trail commissions paid to Financial Intermediaries up to 30September 2024 were paid by CGWL. Any
future initial or trail commissions paid to Financial Intermediaries will be paid by CGAM.
Investment Manager’s report
28
Introduction
This report covers the 2023/24 nancial year,
1October 2023 to 30September 2024. 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 prot 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 apence per share basis and
include realised and unrealised gains and losses.
Investment report
The UK economy bounced back strongly after
experiencing a shallow recession in late 2023. For
much of the year, the economy has proven to be
surprisingly resilient with GDP better than expected,
healthy employment markets, strongly positive real
wage growth and, as a result, increasing consumer
condence. The more optimistic tone that took hold
in the third quarter (of the nancial year) was also
showing up in measures of UK business condence
and indices that measure economic data points
relative to expectations. Unfortunately, more
recently these same yardsticks are now signalling
that the negative messaging of the new Government
is starting to weigh on the economy. It has been an
unusual and clumsy start for a government that is
keen to promote itself as pro-growth.
If there has been huge uncertainty about the outlook
for US interest rates, the same has not been true
for UK monetary policy. Interest rates have started
to come down broadly as expected with two 25
basis point reductions in August and in November,
providing relief to many households and companies.
Interest rates are expected to decline further as
we head through the next year, potentially down to
4.00% by September2025.
We have frequently agged the impact of sustained
fund outows on UK equities, which have remained
negative across the year. That having been said, we
and other small cap managers saw an improvement
in the ow dynamic within UK small companies in the
early summer. Unfortunately, the improving picture
did not survive the 2024 Autumn Budget with UK
equity fund ows turning more deeply negative.
Although bookended by two periods of notably poor
performance, for the most part the AIM All-Share
Index has been on an improving trend. After a dicult
start to the nancial year, positive momentum was
building as the year progressed, right through to
the announcement on 21May 2024 that the UK
would hold a general election. Concerns about
potential changes to scal policy had an immediate
and strongly negative impact on AIM that continued
through to year end and beyond. Although the
net outcome was a gain of 3.90% in the FTSE AIM
All-Share Index for the 12months to 30September
2024, the index lagged the FTSE UK Small Cap Index
(excluding Investment Trusts) by 18.47% across the
year, with most of that (13.07%) underperformance
occurring since the 2024 General Election was called.
Performance
In the 12months to 30September 2024, the NAV per
share decreased from 46.34pence to 40.55pence, a
NAV total return to investors of -1.79pence per share
after adding back the 4.00pence of dividends paid in
the year, this translates to a loss of -3.86%.
The qualifying investments made a net loss of
-2.73pence per share whilst the non-qualifying
investments made a net gain of 1.17pence per share.
The -0.23pence adjusting balance was the net of
running costs and investment income.
29
The contribution to NAV is split out in further detail below:
35
40
45
50
Pence per share
Contribuon to NAV performance
Opening NAV
Qualifying
Non-Qualifying
Income received
Fees
Dividends paid
Closing NAV
Notwithstanding the more negative mood that has
set in since the 2024 General Election, corporate
news ow steadily improved as the year progressed
and the economy recovered from the recession in
late 2023. For many retailers and consumer facing
companies, the key Christmas trading period and
the months that followed were challenging. More
broadly speaking, we observed an increasing number
of companies reporting trading that was in line with
their expectations, with fewer companies reducing
their guidance.
The 2024 Autumn Budget cast a long shadow over
AIM, undermining performance and introducing
idiosyncratic factors that have distorted
valuations:the composition of the Shareholder
register became an unusually important determinant
of share price performance.
Whilst market distortions have, in our opinion,
weighed on performance within the year, they have
not been a factor in those companies that have
made the most signicant individual contributions
to performance. As is nearly always the case,
management execution has been the dominant driver
of the outcome for most of the ten companies we
highlight below.
Looking forward, we believe that the qualifying
portfolio remains well set and attractively priced.
We continue to expect investor interest in small UK
companies to return, following the lead of those
private equity and trade investors that continue
to exploit market ineciencies. There is plenty of
opportunity for those able and willing to make a long
term investment in UK innovation and growth.
Beeks Group (+177%, +0.83pence per share)
reported excellent FY24 results with strong revenue
and EBITDA growth of 27% and an 18% increase in
annualised committed monthly recurring revenue
to £28m. The company is successfully winning large
contracts for its Exchange Cloud and Proximity cloud
oering. Beeks Group’s multi-year contract with one
of the world’s largest exchanges received regulatory
approval in August2024 and is expected to launch
in FY25 and drive considerable revenue growth. The
company has a strong balance sheet with net cash of
£6.6m.
Cohort (+93%, +0.60pence per share) issued several
positive trading updates over the year and reported
record April FY24 results with revenues increasing
11% to £202.5m and operating prot of £21.1m.
Several contract wins, including a £135m 10-year
contract from the Ministry of Defence to supply
the Royal Navy with its Trainable Decoy Launcher
System, contributed to a very strong order intake of
£392m over the year (+78% over the prior year). The
last-reported order book of £575m provides over
90% cover for April FY25 revenue forecasts as well as
visibility out to 2037.
Intercede (+349%, +0.45pence per share) delivered
exceptionally strong results for the year to
March2024 with revenue growth of 65% to £20.0m
and prot before tax of £5.6m. This included a record
contract with a large US Federal Agency for over $8m,
which was treated as an exceptional item. This good
operating momentum has continued into the current
year and Intercede has announced several more
contract wins for its MyID credential management
system which underpin the forecasts for FY25. The
company has a strong balance sheet with £16.2m net
cash.
Shares in Learning Technology Group (+48%,
+0.40pence per share) re-rated over the early part
of the year as investor sentiment towards the stock
improved. Whilst the company reported that weak
end markets were weighing on revenues, a strong
margin performance has moderated the impact on
prot guidance. Good cash generation, coupled with
30
the sale of Vector VMS, has left the company with a
substantially stronger unlevered (net cash) balance
sheet. In September2024, the company announced
an approach by private equity rm General Atlantic
with a possible cash oer at 100p alongside an option
for LTGShareholders to re-invest a portion of their
holding into the private acquisition vehicle.
Skillcast (+137%, +0.31pence per share) reported
strong 2023 results with revenues growing 15%
to £11.3m. 2024 interim results showed further
progress as revenues grew 24% to £6.4m and the
company broke even at the EBITDA level. Annualised
recurring revenues have increased by over 50% from
£6.8m in December2022 to £10.3m in June2024.
The balance sheet is strong, with net cash of £8.3m.
Equipmake (-72%, -1.63pence per share) reported
FY24 revenues of £8.1m, 60% growth on the prior
year. EBITDA losses were higher and cash lower
than forecast due to a revenue miss, cost overruns
and working capital movements. The company
has invested into a new management team over
the year, appointing a more experienced COO,
CFO and business development director. Revised
guidance reects the pivot to a higher margin
less capital intensive business model that should
result in reduced losses in FY25 and bring forward
the transition to prot in FY26. Equipmake has
established relationships with several high-calibre
original equipment manufacturer (OEM) for its
components and drivetrain solutions and looks to
build on this and announce further partnership deals
in due course. The company raised a further £3m in
October to support its working capital requirements.
Surface Transforms (-99%, -0.76ppence per share)
faced signicant production issues over the period as
the company sought to scale-up production rates to
meet customer demand. As a result, revenues were
signicantly below target and costs also exceeded
plans. In May2024, the company raised £8.5m of
additional funding for working capital and capex in
a deeply discounted fundraise that was not VCT
qualifying and very dilutive to existing Shareholders.
The investment was sold post period end.
Engage XR (-71%, -0.49pence per share) warned
in December 2023 that prots would be below
expectations due to project delays. In April2024,
the company reported revenues of €3.7m (-5%
year on year), and an EBITDA loss of €-4.0m for the
12months to December2023. The balance sheet is
strong with net cash of €7.9m following the €10.5m
fundraise earlier in 2023. More recently, the company
announced its rst €1m+ contract with a Middle East
based education and training company through its
partnership with PWC and appointed an experienced
non-executive chair to the board.
Children’s products and clothing retailer Kidly (-54%,
-0.42pence per share) experienced a dicult trading
environment through Christmas 2023 and early 2024
that was compounded by balance sheet constraints.
Although revenue performance was below budget,
operational eciencies resulted in signicantly lower
losses. Trading improved as the year progressed.
Reecting the need for additional funding, the
fair value of the equity was reduced to nil and the
value of the debt heavily impaired. Subsequently,
Kidly secured new funding as part of a nancial
restructuring that included a partial conversion of the
loan noteinstrument into new preferred shares. The
reduction in risk allowed a partial recovery in the fair
value of the convertible loan noteinstrument.
In a signicant announcement, Arecor Therapeutics
(-67%, -0.23pence per share) reported that its ultra-
concentrated and ultra-rapid acting insulin candidate
AT278 demonstrated superiority to the current best-
in-class insulins in a Phase 1 clinical trial for patients
with Type 2 diabetes and high BMI. However, supply
chain issues in its subsidiary Tetris Pharma negatively
impacted revenues and cash ow. Despite a more
challenging fundraising environment for life-sciences
companies on AIM, the company successfully
raised £6.4m to continue its insulin development
programmes and provide working capital funding for
Tetris Pharma.
Reecting the very dicult market, there were
no funds raised from AIM VCTs by companies
undertaking an IPO on AIM in the year under
review. Despite this, we invested £9.2m into seven
Qualifying Companies including one new investment
into a company listed on AIM, one new investment
into a company listed on the AQSE APEX market,
three follow on investments into existing portfolio
companies listed on AIM, one follow on investment
into a company listed on the AQSE APEX market and
one new investment into a private company. The
three new investments included Abingdon Healthplc,
Oberon Investments Groupplc and QureightLtd. The
follow on investments included Eden Researchplc,
Equipmakeplc, PCI Pal plc and Strip Tinningplc.
We reduced our investments in Blackbirdplc, Team
Internet Groupplc and made complete exits from
Abcamplc, Instemplc, Osiriumplc and Renalytixplc,
Smooveplc and Velocysplc. BidstackGroup plc was
placed into administration.
Portfolio structure
The VCT is comfortably above the HMRC dened
investment test and ended the period at 100%
invested as measured by the HMRC investment
test. By market value, the weighting to qualifying
31
investments decreased from 58.7% to 56.0%
following several disposals of qualifying companies.
The allocation at the year end to non-qualifying
equity investments decreased from 10.1% to 8.1%. In
line with the investment policy, we made investments
in the IFSL Marlborough Special Situations Fund and
the IFSL Marlborough UK Micro-Cap Growth Fund
as temporary homes for proceeds from fundraising;
the allocations increased from 5.4% to 13.4% and
returned +0.57pence per share in the period.
The non-qualifying direct equity investments,
which are mostly held in FTSE350 companies
contributed +0.37pence per share. Within the period,
the largest contributors to non-qualifying gains
were Chemring (+32.3%, +0.12pence per share),
Hollywood Bowl (+25.3%, + 0.11pence per share)
and TP ICAP (+38.7%, +0.10pence per share). The
largest non-qualifying losses came from XP Power
(-55.4%, -0.12pence per share), Energean (-13.5%,
-0.04pence per share) and Bodycote (-7.7%,
-0.03pence per share).
We have maintained a substantial investment in
short-dated investment grade corporate bonds.
Within the year, we reinvested the proceeds from
the redemption of one Marks& Spencer’s bond into
another Mark& Spencer’s bond, acquired a new
Unilever bond which was subsequently redeemed
just prior to yearend and made a small investment
into a second Next bond. In the round, the allocation
increased from 11.4% to 12.9%. The average yield to
maturity at year end was 4.7%. Our cash weighting
dropped from 12.7% to 9.3%
(1)
.
The Company invests across all available investment
sectors, although VCT Rulestends 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 40.4%, 21.0% and 11.8%. There is also a 13.8%
weighting to industrials.
The HMRC investment tests are set out in Chapter3
of Part6 Income Tax Act2007, 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 dened by the legislation can be
dierent to the portfolio weighting as measured by
market value relative to the net assets of the VCT.
(1) Net of prepayments and accruals.
Share buy backs& discount control
10,657,350 shares were acquired in the year at an
average price of 41.97pence per share. The share
price decreased from 43.00p to 39.00p and traded at
a discount of 6.78% following the publication of the
30September 2024 NAV on 10October 2024.
Post period end update
The NAV per share has decreased from 40.55pence
to 40.29 pence in the period to 6December2024, a
decrease of 0.6%.
As at 17December2024, the share price of
38.40pence represented a discount of 4.69% to the
last published NAV per share.
Economic activity has noticeably slowed since
the early summer with the economy growing by a
meagre +0.1% in the 3 months to October 2024,
having peaked at +0.7% in the 3 months to May
2024. Business and consumer condence has dipped
and corporate newsow has noticeably softened,
although trading continues to vary markedly by
sector. However, this period of weaker activity is not
expected to last and the economy should pick up
momentum as we head through 2025.
Whilst many businesses (and business owners)
are understandably frustrated by changes to NICs,
Business Property Relief and Business Asset Disposal
Relief, households and consumers should at least
benet from lower borrowing costs and, at least
within the public sector, substantially positive real
wage growth.
For most portfolio companies, the outlook is not
signicantly altered by the Autumn 2024 Budget.
Increases in employment taxes, whilst unhelpful,
are not a signicant factor within the portfolio and
we remain condent that our portfolio companies
can continue to build value through good execution.
When and how that crystallises remains dicult to
forecast in the short-term.
Deal ow has improved noticeably since the Autumn
2024 budget and we are active on a large number of
deals. We are also seeing signs of a recovery in the
pipeline of companies looking to undertake an IPO.
For further information please contact:
Oliver Bedford
Lead Fund Manager
17 December2024
Investment portfolio summary
As at 30 September 2024
32
Net Assets
% at
30.09.24
Cost
£000
Cumulative
movement
in value
£000
Valuation
£000
Change in
value for
the year
£000
(1)
Market COI
(2)
Equity Qualifying Investments
Beeks Financial Cloud Group plc 3.11 1,038 3,569 4,607 2,945 AIM Yes
Cohort plc 3.04 619 3,884 4,503 2,166 AIM Ye s
Learning Technologies Group plc 2.89 2,238 2,037 4,275 1,388 AIM No
Eagle Eye Solutions Group plc 2.69 1,642 2,340 3,982 (563) AIM Ye s
PCI-PAL plc 2.43 2,703 890 3,593 (706) AIM Ye s
The Property Franchise Group plc 2.31 1,139 2,287 3,426 1,753 AIM Yes
Innity Reliance Ltd (My 1st Years)
(3)
2.10 2,500 607 3,107 364 Unlisted Yes
Diaceutics plc 1.82 1,550 1,141 2,691 591 AIM Yes
Qureight Ltd 1.69 2,500 – 2,500 – Unlisted No
Equipmake Holdings plc 1.57 4,162 (1,834) 2,328 (5,803) AIM No
Maxcyte Inc 1.47 1,270 905 2,175 300 AIM Ye s
Intercede Group plc 1.40 305 1,767 2,072 1,611 AIM Ye s
Craneware plc 1.29 125 1,786 1,911 470 AIM Ye s
Skillcast Group plc 1.29 1,570 340 1,910 1,104 AIM No
Aquis Exchange plc 1.21 765 1,024 1,789 – AIM Ye s
Abingdon Health plc 1.14 1,823 (140) 1,683 (140) AIM No
Fadel Partners, Inc 1.13 2,300 (623) 1,677 (623) AIM No
Team Internet Group plc 1.05 565 997 1,562 4 AIM No
XP Factory plc 1.04 4,068 (2,520) 1,548 (581) AIM Ye s
Itaconix plc 1.04 3,025 (1,483) 1,542 (107) AIM No
Zoo Digital Group plc 1.04 2,159 (619) 1,540 (220) AIM No
Intelligent Ultrasound Group plc 0.93 1,550 (173) 1,377 (275) AIM No
AnimalCare Group plc 0.91 720 630 1,350 332 AIM Yes
SCA Investments Ltd (Gousto) 0.89 2,484 (1,166) 1,318 (237) Unlisted No
Oberon Investments Group plc 0.85 1,461 (208) 1,253 (209) AIM No
Zappar Ltd 0.81 1,600 (400) 1,200 (229) Unlisted No
Tortilla Mexican Grill plc 0.81 1,125 75 1,200 (550) AIM Ye s
Eden Research plc 0.80 1,855 (674) 1,181 (336) AIM No
Equals Group plc 0.77 750 396 1,146 51 AIM No
C4X Discovery Holdings Ltd 0.75 2,300 (1,193) 1,107 (693) Unlisted No
Idox plc 0.73 135 949 1,084 (58) AIM Ye s
EKF Diagnostics Holdings plc 0.61 565 335 900 96 AIM No
Ilika plc 0.57 1,636 (785) 851 (259) AIM No
Blackbird plc 0.56 594 238 832 (117) AIM No
Globaldata plc 0.55 173 635 808 211 AIM Yes
BiVictriX Therapeutics Ltd 0.58 1,600 (828) 772 (408) Unlisted No
Tristel plc 0.51 543 217 760 (93) AIM No
Engage XR Holdings plc 0.47 3,453 (2,762) 691 (1,727) AIM No
One Media iP Group plc 0.44 1,141 (489) 652 (244) AIM Ye s
Science in Sport plc 0.39 1,479 (902) 577 289 AIM Ye s
Nexteq plc 0.38 1,209 (649) 560 (170) AIM No
Creo Medical Group plc 0.37 2,329 (1,777) 552 (161) AIM Yes
Crimson Tide plc 0.35 1,260 (735) 525 (231) AIM Ye s
Tan Delta Systems plc 0.33 504 (20) 484 19 AIM No
Verici DX plc 0.31 1,939 (1,476) 463 (71) AIM No
Arecor Therapeutics plc 0.27 1,687 (1,290) 397 (819) AIM No
Rosslyn Data Technologies plc 0.27 1,345 (951) 394 (322) AIM Ye s
Faron Pharmaceuticals Oy 0.25 1,133 (763) 370 (125) AIM No
Hardide plc 0.23 3,566 (3,218) 348 (290) AIM Ye s
Everyman Media Group plc 0.16 600 (369) 231 25 AIM No
K3 Business Technology Group plc 0.14 270 (60) 210 (120) AIM Ye s
Eneraqua Technologies plc 0.14 1,401 (1,194) 207 (298) AIM No
Strip Tinning Holdings plc 0.13 1,054 (866) 188 (154) AIM No
Angle plc 0.12 1,158 (974) 184 (149) AIM No
Crossword Cybersecurity plc 0.09 2,039 (1,906) 133 (573) AIM No
Polarean Imaging plc 0.07 2,081 (1,978) 103 (587) AIM No
Mycelx Technologies Corporation 0.05 361 (282) 79 (51) AIM Ye s
33
Net Assets
% at
30.09.24
Cost
£000
Cumulative
movement
in value
£000
Valuation
£000
Change in
value for
the year
£000
(1)
Market COI
(2)
Trakm8 Holdings plc 0.03 486 (432) 54 (80) AIM No
Surface Transforms plc 0.02 1,744 (1,709) 35 (2,639) AIM No
Fusion Antibodies plc 0.02 624 (597) 27 (9) AIM No
Gnity plc – 2,026 (2,021) 5 (23) AIM No
Bidstack Group plc – 2,733 (2,733) – (314) Unlisted No
Kidly Ltd
(3)
– 2,660 (2,660) – (326) Unlisted No
Laundrapp Ltd
(3)
– 2,450 (2,450) – – Unlisted No
Airportr Technologies Ltd
(3)
– 1,888 (1,888) – – Unlisted No
Mporium Group plc – 33 (33) – – Unlisted No
Flowgroup plc – 26 (26) – – Unlisted No
Infoserve Group plc
(4)
– – – – – Unlisted No
Total – equity Qualifying Investments 53.41 101,836 (22,807) 79,029 (7,971)
Qualifying xed income investments
Strip Tinning Holdings plc
(convertible loan notes) 1.45 2,000 158 2,158 158 Unlisted No
Kidly Ltd
(convertible loan notes) 0.85 1,400 (138) 1,262 (1,138) Unlisted No
Rosslyn Data Technologies plc (convertible
loan notes) 0.24 300 58 358 58 Unlisted No
Total qualifying xed income
investments 2.54 3,700 78 3,778 (922)
Total Qualifying Investments 55.95 105,536 (22,729) 82,807 (8,893)
Non-qualifying funds
IFSL Marlborough UK Micro-Cap Growth
fund 7.01 9,339 1,044 10,383 1,044 Unlisted No
IFSL Marlborough Special Situations fund 6.34 9,833 (448) 9,385 1,001 Unlisted No
Vaneck Gold Miners UCITS ETF 0.44 634 22 656 22 Main No
Total non-qualifying funds 13.79 19,806 618 20,424 2,067
Equity non-qualifying investments
Hollywood Bowl Group plc 1.26 1,566 294 1,860 375 Main Ye s
Bodycote plc 0.91 1,534 (179) 1,355 (114) Main No
National Grid plc 0.90 1,229 101 1,330 162 Main No
TP ICAP Group plc 0.89 1,022 300 1,322 369 Main Ye s
Chemring Group plc 0.84 1,023 217 1,240 405 Main Ye s
WH Smith plc 0.79 1,220 (54) 1,166 91 Main Ye s
Rotork plc 0.63 944 (10) 934 59 Main No
BAE Systems plc 0.63 593 334 927 246 Main Ye s
Wickes Group plc 0.59 950 (75) 875 167 Main Ye s
Shell plc 0.49 804 (77) 727 (77) Main No
Tortilla Mexican Grill plc 0.09 161 (30) 131 (60) AIM Ye s
Mycelx Technologies Corporation 0.06 298 (206) 92 (60) AIM Ye s
Genagro Services Ltd – – – – 2 Unlisted Ye s
Total – equity non-qualifying
investments 8.08 11,344 615 11,959 1,565
Non-qualifying xed income – bonds
British Telecommunications 5.75% SNR
BDS 07/12/2028 2.12 3,130 2 3,132 174 Main No
Marks and Spencer plc 3.75% SNR EMTN
19/05/2026 2.06 3,032 17 3,049 17 Main No
Natwest Markets plc 6.375% SNR EMTN
08/11/2027 2.05 3,017 18 3,035 140 Main No
Royal Bank of Canada 5% SNR NTS
24/01/2028 2.05 3,036 (8) 3,028 153 Main No
Next Group plc 4.375% SNR BDS
02/10/2026 2.01 2,987 (12) 2,975 96 Main No
34
Net Assets
% at
30.09.24
Cost
£000
Cumulative
movement
in value
£000
Valuation
£000
Change in
value for
the year
£000
(1)
Market COI
(2)
Barclays plc 3.25% SNR NTS 12/02/2027 1.95 2,912 (25) 2,887 145 Main No
Next Group plc 3% GTD SNR BDS
26/08/2025 0.66 969 12 981 13 Main No
Total non-qualifying xed income –
bonds 12.90 19,083 4 19,087 738
Total – non-qualifying investments 34.77 50,233 1,237 51,470 4,370
Total investments 90.72 155,769 (21,492) 134,277 (4,523)
Cash at bank 3.2 4,766
Funds held with Custodian 6.0 8,846
Prepayments & accruals 0.08 120
Net assets 100.00 148,009
(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
note7. The dierence is £0.8million which is the total of 17 full investment disposals in the year.
(2) COI – Co investments with other funds managed by the Investment Manager at 30September 2024.
(3) Dierent classes of shares held in unlisted companies within the portfolio have been aggregated.
(4) Impaired fully through the prot 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:
Fadel Partners, Inc UK USA USA
Faron Pharmaceuticals Oy UK/Finland Finland Finland
Itaconix plc UK USA UK
Maxcyte Inc UK/USA USA USA
Mycelx Technologies Corporation UK USA USA
Polarean Imaging plc UK USA UK
Unlisted private companies:
Genagro Ltd
(1)
– UK Jersey
(1) Companies awaiting liquidation.
35
35.3%
18.4%
14.6%
16.8%
0.7%
4.6%
3.2%
3.6%
0.6%
0.8%
1.4%
Total Investments by market sector as at 30 September 2024
Information
Technology
Health Care
Consumer
Discretionary
Industrials
Communication
Services
Financial Services
Materials
Real Estate
Consumer Staples
Energy
Utilities
33.1%
17.6%
15.8%
21.4%
1.2%
2.6%
3.2%
2.1%
0.3%
1.8%
0.9%
Total Investments by market sector as at 30 September 2023
Information
Technology
Health Care
Consumer
Discretionary
Industrials
Communication
Services
Financial Services
Materials
Real Estate
Consumer Staples
Energy
Utilities
Top ten investments
As at 30 September 2024 (by market value)
36
The top ten 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.
Beeks Financial Cloud Groupplc Share Price: 244.0p
Investment date November 2017 Forecasts for the year to June 2025
Equity held 2.84% Turnover (£’000) 39,600
Av. Purchase Price 55.0p Prot before tax (£’000) 6,100
Cost (£’000) 1,038 Net cash June 2024 (£’000) 7,100
Valuation (£’000) 4,607 Net assets June 2024 (£’000) 37,495
Company description
Beeks Financial Cloud Group plc is a cloud-based connectivity provider of technology solutions to the nancial
services sector. The company’s Infrastructure-as-a-Service model is optimised for low-latency private cloud
compute, connectivity and analytics, providing the exibility to deploy and connect to exchanges, trading venues
and public cloud for a true hybrid cloud experience. The company serves over 1,000 enterprise clients from its
global network of data centres.
Cohort plc Share Price: 948.0p
Investment date February 2006 Forecasts for the year to April 2025
Equity held 1.14% Turnover (£’000) 241,200
Av. Purchase Price 130.2p Prot before tax (£’000) 25,800
Cost (£’000) 619 Net cash October 2024 (£’000) 37,900
Valuation (£’000) 4,503 Net assets October 2024 (£’000) 111,203
Company description
Cohort provides electronic and surveillance technology solutions. The company oers electronic warfare
operational support, secure communication systems and networks, test systems and data management. Cohort
serves defence and security, transport, oshore energy and other commercial markets.
Learning Technologies Group plc Share Price: 95.0p
Investment date July 2015 Forecasts for the year to December 2024
Equity held 0.57% Turnover (£’000) 477,000
Av. Purchase Price 49.7p Prot before tax (£’000) 77,000
Cost (£’000) 2,238 Net (debt) June 2024 (£’000) (57,524)
Valuation (£’000) 4,275 Net assets June 2024 (£’000) 443,743
Company description
Learning Technologies Group provides workplace digital learning and talent management software and services
to corporate and government clients. The group oers 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.
37
Eagle Eye Solutions Group plc Share Price: 460.0p
Investment date April 2014 Forecast for the year to June 2025
Equity held 2.92% Turnover (£’000) 55,500
Av. Purchase Price 189.7p Prot before tax (£’000) 6,200
Cost (£’000) 1,642 Net cash June 2024 (£’000) 10,404
Valuation (£’000) 3,982 Net assets June 2024 (£’000) 34,056
Company description
Eagle Eye is a 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: 46.80p
Investment date January 2018 Forecast for the year to June 2025
Equity held 10.58% Turnover (£’000) 22,400
Av. Purchase Price 35.2p Prot before tax (£’000) 800
Cost (£’000) 2,703 Net (debt) June 2024 (£’000) 4,332
Valuation (£’000) 3,593 Net (liabilities) June 2024 (£’000) (1,970)
Company description
PCI PAL plc is a provider of 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.
The Property Franchise Group plc Share price: 415.0p
Investment date December 2013 Forecast for the year to December 2024
Equity held 2.56% Turnover (£’000) 68,700
Av. Purchase Price 138.0p Prot before tax (£’000) 22,300
Cost (£’000) 1,139 Net (debt) June 2024 (£’000) (14,302)
Valuation (£’000) 3,426 Net assets June 2024 (£’000) 143,972
Company description
The Property Franchise Group is the UK’s largest property franchise business and manages the second largest
estate agency network and portfolio of lettings properties in the UK. The group has 1,946 outlets, manages more
than 152k tenanted properties and is expected to sell in excess of 28k properties per annum. The group also
includes an established nancial services business.
Innity Reliance Ltd (My First Years) Unquoted
Investment date May 2018 Results for the year to December 2023
Voting rights held 9.66% Turnover (£’000) 20,973
Av. Purchase Price 4,670.4p Prot before tax (£’000) 2,885
Cost (£’000) 2,500 Net cash December 2023 (£’000) 6,221
Valuation (£’000) 3,107 Net assets December 2023 (£’000) 9,121
Income recognised in period (£) –
Company description
My 1st Years is a European retail platform that focusses on the sale of personalised baby and children’s gifts
primarily through e-commerce channels. The product range includes bespoke presents for newborn babies to
seven year olds, for christenings, birthdays and Christmas.
38
Diaceutics plc Share price: 132.0p
Investment date July 2019 Forecast for the year to December 2024
Equity held 2.41% Turnover (£’000) 30,100
Av. Purchase Price 76.0p (Loss) before tax (£’000) (2,800)
Cost (£’000) 1,550 Net cash June 2024 (£’000) 16,749
Valuation (£’000) 2,691 Net assets June 2024 (£’000) 38,740
Company description
The Diaceutics proprietary diagnostic commercialisation platform (“DXRX”) integrates real-world diagnostic
testing data from a global network of laboratories to enable the supply of precision medicine therapeutics to
patients. The company provides its solutions to leading pharmaceutical and biotech companies in Europe and
theUSA.
Qureight Ltd Unquoted
Investment date March 2024 Results for the year to December 2023
Voting rights held 15.10% Turnover (£’000)
(1)
–
Av. Purchase Price 7,394.0p Prot/(loss) before tax (£’000)
(1)
–
Cost (£’000) 2,500 Net cash December 2023 (£’000) 380
Valuation (£’000) 2,500 Net assets December 2023 (£’000) 846
Income recognised in period (£) –
(1) Company has total exemption from full accounts.
Company description
Qureight’s proprietary technology uses articial intelligence to analyse medical images of the respiratory system
through its innovative approach to clinical data curation and articial intelligence-powered digital biomarkers.
This approach enables researchers and scientists to analyse disease progression and drug responses in patients
across a range of complex conditions.
Strip Tinning Holdings plc
(1)
Share price: 33.0p
Investment date February 2022 Forecast for the year to December 2024
Equity held 3.13% Turnover (£’000) 9,000
Av. Purchase Price 118.8p (Loss) before tax (£’000) (3,700)
Cost (£’000) 3,054 Net (debt) June 2024 (£’000) (2,247)
Valuation (£’000) 2,346 Net assets June 2024 (£’000) 4,240
(1) Holding inclusive of equity and convertible loan note investments.
Company description
Strip Tinning manufactures specialist exible electrical connectors related primarily to heating and antennae
systems embedded within automotive glazing and to the connection of the cells within electric vehicle battery
packs, increasingly using exible and lightweight printed circuit technology.
For further information please contact:
Oliver Bedford
Lead Fund Manager
17 December 2024
Governance
39
Board of Directors
40
David Brock (Chair)
Date of Appointment: 28 September 2010
David Brock 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 GroupLtd. David
was appointed as Chair of the Board on 4February 2020.
Oliver Bedford
Date of Appointment:13December 2016
Oliver Bedford sits on the Board as part of his
role as lead fund manager at the Company’s
Investment Manager.
Angela Henderson (MSPEC Chair)
Date of Appointment:29October 2019
Angela Henderson is a non-executive director at
Macquarie Capital (Europe) Limited, Wells Fargo Securities
International Limited and Polar Capital Global Financials
Trustplc, 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 a healthcare
charity. She is a solicitor of the Senior Courts of England&
Wales.
Megan McCracken
Date of Appointment:1June 2022
Megan McCracken is chair of State Street Trustees
Limited and a non-executive director and chair of
the remuneration and nomination committees
of Folk2Folk. She was awarded the Institute of
Directors’ Chair’s Award. Megan held executive
roles at HSBC and Citibank, was a PwC consultant
and a Boeing Satellite Systems engineer. She was
previously the senior independent director of
GB Bank and has an MBA from MIT Sloan and a
Bachelor of Science in Aerospace Engineering.
Busola Sodeinde
Date of Appointment:1June 2022
Busola Sodeinde is a qualied Chartered Accountant
and has spent most of her executive career in nancial
services. She is a non-executive director and chair of
the Audit Committee of TR Property Investment Trust
plc, a non-executive director and chair of the Audit and
Governance Committee of Railpen Limited, a member of
the Board of Governors for Church Commissioners, 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:1November 2020
Justin Ward is a qualied Chartered Accountant.
He is a non-executive director and chair of the
investment committee of The Income and
Growth VCTplc and chair of Schroder British
Opportunities Trustplc. 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 2024
41
The Directors of Hargreave Hale AIM VCTplc
present their Annual Report together with the
audited nancial statements of the Company for
the year from 1October 2023 to 30September
2024, incorporating the corporate governance
statement on pages 50 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, Megan McCracken, Busola Sodeinde and
Justin Ward. Brief biographical details are given on
page 40.
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 45. There is no minimum holding
requirement, in the shares of the Company, that the
Directors are required to adhere to.
Oliver Bedford, David Brock, Angela Henderson and
Justin Ward are Shareholders in the Company. Their
current shareholdings, as at the date of this Annual
Report, and subsequently, are stated in the Directors’
remuneration report on page 48.
Directors’ and ocers’ liability insurance
Directors’ and ocers’ 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 benet of an indemnity out of the assets
and prots of the Company, to the extent permitted
by the Companies Act2006 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 note14,
no contract existed during or at the end of the year
in which any Director was materially interested and
which was signicant in relation to the Company’s
business.
Revenue and dividends
The statutory loss for the year amounted to
£6,585,156 (2023:loss £29,726,556). An interim
dividend of 1 penny per ordinary share was paid on
26July 2024 (2023:1 penny per ordinary share).
Aspecial dividend of 1.50pence per ordinary
share was also paid on 26July 2024 (2023:0). The
nal dividend of 1.25pence per ordinary share for
the year ended 30September 2024 is due to be
paid on 14February2025 (2023:1.50pence per
ordinary share). A special dividend of 1.50pence per
ordinary share has been approved by the Board. The
distribution will return to Shareholders proceeds
from various exits and disposals. The special dividend
will be paid together with the nal dividend on
14February 2025.
Capital structure
The Company’s capital structure is summarised in
notes1 and 11 to the nancial statements.
Voting rights in the Company’s shares
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. 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.
Substantial holdings in the Company
As at 30September 2024 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
30September
2024 % held
Number of
ordinary
shares as at
13December
2024 % held
Hargreaves Lansdown (Nominees) Limited 13,597,754 3.73 13,543,691 3.72
UBS Private Banking NomineesLtd 12,321,015 3.38 11,910,075 3.28
42
Share buybacks and share price discount
During the year, the Company repurchased
10,657,350 ordinary shares (nominal value £106,574)
at a cost of £4,472,418. The repurchased shares
represent 3.25% of the ordinary shares in issue
on 1October 2023. All repurchased shares were
cancelled. As at 17December2024, a further
3,559,262ordinary shares (nominal value £35,593)
have been purchased since the year end at a total
cost of £1,361,156.
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 benet 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 eective operation of the policy and prevent the
Company from achieving its objectives.
Shares issued
During the year, the Company issued 44,485,284
ordinary shares of 1 penny (nominal value £444,853)
in the oer for subscription launched in the year
ending September2023, representing 13.57% of the
opening share capital at prices ranging from 44.80p
to 47.10p per share. Gross funds of £20,321,529 were
received. The 3.5% premium of £711,254 payable to
CGWL under the terms of the oer was reduced by
£264,162, being the discount awarded to investors in
the form of additional shares. A further reduction of
£470 representing an introductory commission was
made resulting in fees payable to CGWL of £446,622
which were used to pay other costs associated with
the prospectus, relating to the oer, and marketing.
In accordance with the oer agreement, the
Company was entitled to a rebate of £100,000 from
CGWL reducing the net fees payable to CGWL to
£346,622.
On 15February 2024, 1,100,783 ordinary shares
were allotted at a price of 44.58pence 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 26January 2024, to
Shareholders who elected to receive shares under the
DRIS as an alternative to a cash payment of the nal
dividend for the year ended 30September 2023.
On 26July 2024, 2,235,192 ordinary shares were
allotted at a price of 42.49pence 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 5July 2024, to
Shareholders who elected to receive shares under
the DRIS as an alternative to a cash payment of the
interim dividend for the year ended 30September
2024.
Financial instruments
The Company’s nancial instruments and principal
risks are disclosed in note15 to the nancial
statements.
VCT status monitoring
The Company has appointed Philip Hare&
AssociatesLLP as advisers on, inter alia, compliance
with the VCT Rules. The Directors monitor the
Company’s VCT status through regular reports from
Philip Hare& AssociatesLLP.
Auditors
A resolution proposing the reappointment of
BDOLLP as auditors to the Company and authorising
the Directors to determine their remuneration will be
proposed at the forthcoming AGM.
Greenhouse gas emissions
As a UK quoted company, the Company would
ordinarily be required to report on its greenhouse
gas emissions. However, 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 and
is exempt from reporting under the Streamlined
Energy and Carbon Reporting requirements. It is not
required to report on any other emissions under the
Companies Act2006 (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 held on
12November 2024, a resolution to adopt amended
Articles of Association which, provided that the
Company’s next continuation vote would be held
in 2031 rather than 2030, was passed, with 95.45%
votes in favour.
Post balance sheet events
Post balance sheet events are disclosed in note17 to
the nancial statements on page90.
43
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, 23 and 28 to 31
respectively.
Going concern
The Company’s business activities and the factors
aecting its future development are set out in the
Chair’s statement on pages 4 to 9 and the Investment
Manager’s report on pages 28 to 31. The Company’s
principal and emerging risks are set out in the
Strategic Report on pages 21 to 22.
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 satised that
the Company has adequate resources to continue in
operational existence for a period of 12months from
the date these nancial statements were approved.
The Company has sucient cash at bank, funds held
with the Custodian (£4.8 million and £8.8 million
respectively at 30September 2024) and liquid assets
held across a diversied portfolio of investments in
listed companies to meet obligations as they fall due.
The Company is a closed-ended fund, where assets
are not required to be liquidated to meet day-to-
day redemptions. The major driver of cash outows
(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 21 to 22 and their potential impact on income
into the portfolio and the NAV. The Directors are of
the opinion that the Company has sucient 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 ve dedicated
fund managers, analysts and a lawyer with multi-year
experience working for the VCT. The Investment
Manager and the Company’s other key service
providers have contingency plans in place to manage
operational disruptions.
The Directors have not identied any material
uncertainties related to events or conditions that
may cast signicant doubt about the ability of the
Company to continue as a going concern. Therefore,
they are satised 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 forthcoming AGM to be held at
12.30pm on 6February 2025 at 88 Wood Street,
LondonEC2V7QR. The Company’s Notice of AGM
is set out on pages 101 to 105 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 5.00p.m. on 30January 2025. Answers will be
published on the Company’s website on 6February
2025. Voting at the AGM will be conducted by way of a
poll to ensure that 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 14 resolutions being proposed at the
forthcoming AGM, 12 as ordinary resolutions,
including approval of the annual accounts and re-
election of the Directors, and 2 resolutions as special
resolutions, requiring a simple majority of 50per cent
and 75per cent, respectively, of the votes cast in
order for the resolutions to pass.
Resolution11 – Authority to implement any scrip
dividend oer
Ordinary resolution number 11 grants the Directors
the necessary authority, in accordance with the
terms of Article29 of the Articles, to continue to
44
oer 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 oers the Company and its Shareholders
a greater level of exibility in relation to dividend
payments. The appendix on pages 106 to 108 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 viatheCompany’s website
(www.hargreaveaimvcts.co.uk) and are
available on request from the Registrar.
Resolution12 – Power to allot shares
Ordinary resolution number 12 will request the
authority for the directors to allot up to an aggregate
nominal amount of £367,326 representing
approximately 10per 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 DRIS operated by the Company
in accordance with Article29 of the Articles. This
authority is in addition to any existing authorities.
The authority sought at the forthcoming AGM will
expire 15months from the date that this resolution
is passed, or at the conclusion of the next Annual
General Meeting of the Company, whichever is earlier.
Resolutions13 and 14 are being proposed as special
resolutions requiring the approval of at least 75per
cent. of the votes cast at the AGM.
Resolution13 – Disapplication of pre-emption
rights
Special resolution number 13 will request the
authority for the Directors to allot equity securities
for cash without rst being required to oer such
securities to existing Shareholders. 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
£183,663 (representing approximately 5per cent. of
the issued share capital of the Company (excluding
treasury shares) as at the date of this document)
pursuant to the DRIS operated by the Company and
(ii)for allotments generally from time to time, an
aggregate nominal amount of £183,663 (representing
approximately 5per 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 AGM will
expire 15months from the date that this resolution
is passed or at the conclusion of the next Annual
General Meeting of the Company, whichever is earlier.
Resolution14 – Purchase of own shares
Special resolution number 14 will request the
authority to purchase a maximum of 14.99per cent.
of the Company’s issued ordinary share capital
at the date of the passing of the resolution being
approximately 55,062,233 as at the date of this
document at or between the minimum and maximum
prices specied in resolution 12. 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 Company's last Annual General Meeting.
During the nancial year under review, the Company
purchased 10,657,350 ordinary shares which were
then cancelled.
The authority sought at the forthcoming AGM will
expire 15months 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 Shareholders vote
in favour of these resolutions, as they intend to
in respect of their own benecial shareholdings
amounting to 715,067 ordinary shares.
By order of the Board
David Brock
Chair
17December2024
Directors’ remuneration report
For the year ended 30September 2024
45
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
Company’s remuneration policy at least every three
years. Notwithstanding this, the Directors’ policy
is to put the remuneration policy to the vote of
Shareholders at each Annual General Meeting.
The 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 pages63 to70.
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
ination, the Board has decided to increase its
remuneration, eective 1October 2024. As a result
of the increases, the annual remuneration of the
Chair will be £42,500, the independent non-executive
directors will receive £33,000 and Oliver Bedford, who
is not considered independent, will receive £30,500.
An additional fee of £1,500 will continue to be paid
to the Chair of the MSPEC 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 and investment trusts. 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
comparable listed VCTs 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 Articles. The maximum
permitted by the Articles is £250,000 per annum.
The Directors are not eligible for bonuses, pension
benets, share options, other incentives or benets.
The Directors may be reimbursed for reasonable
expenses incurred. The Directors do not receive
payment on loss of oce 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
28September 2010, Oliver Bedford on 13December
2016, Angela Henderson on 29October 2019, Justin
Ward on 1November 2020 and Busola Sodeinde and
Megan McCracken on 1June 2022. Either party can
terminate the agreement by giving to the other at
least threemonths’ notice in writing.
The terms of appointment provide that a Director
shall retire and be subject to election at the rst
Annual General Meeting following their respective
appointments. The Articles 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 oce 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, and in line
with the provisions of the AIC Code, the Board agreed
in July2019 that all Directors will be subject to annual
re-election at the AGM.
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 therefore performance conditions have not been
set in determining their level of remuneration. As the
Company has no employees, it is not possible to take
46
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 30September 2025, 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
2025
Performance
Conditions Company Strategy
Remuneration
Policy
David Brock Chair
Basic Salary
£42,500
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
Oliver Bedford Director £30,500
Angela Henderson Director and Chair of
the MSPEC £12,000
(1)
Megan McCracken Director £34,000
(2)
Busola Sodeinde Director £33,000
Justin Ward Director and Chair of
the Audit Committee
£36,000
(1) Angela Henderson will not seek re-election at the forthcoming AGM. Therefore her expected fee for the year to 30 September 2025 has been
calculated on a pro-rata basis.
(2) Megan McCracken will replace Angela Henderson as Chair of the MSPEC. The additional fee that Megan is entitled to as MSPEC Chair from the
2025 AGM has been calculated and included within the expected fee for the year 30 September 2025 on a pro-rata basis.
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 specic information in respect of the Directors’ remuneration.
Under s.439 of the Companies Act2006, 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 AGM to be held on 6February
2025, to receive and adopt the Directors’ remuneration report and to receive and approve the Directors’
remuneration policy.
At the Annual General Meeting held on 8February 2024, the following votes were cast on the Directors’
remuneration report and the remuneration policy:
Votes
for % for
Votes
against % against Total votes cast
Votes
withheld
Remuneration report 14,147,293 90.14 1,548,285 9.86 14,147,293 478,536
Remuneration policy 13,827,588 88.56 1,786,973 11.44 13,827,588 559,553
Company performance
The Company was incorporated on 16August 2004 and commenced trading on 29October 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 10years 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 FTSE350,
mean the index is not a wholly comparable benchmark for performance.
47
Performance against the FTSE AIM All-Share Index Total Return
50.00
70.00
90.00
110.00
130.00
150.00
170.00
190.00
210.00
Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23
Sep-24
FTSE AIM All-Share Total Return Index
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 MSPEC.
2024
Fees
£
2024
Taxable
Expenses
£
2024
Total
£
2023
Fees
£
2023
Taxable
Expenses
£
2023
Total
£
David Brock (Chair) 41,000 – 41,000 39,000 532 39,532
Oliver Bedford 29,500 – 29,500 28,000 – 28,000
Angela Henderson 33,500 – 33,500 32,000 – 32,000
Megan McCracken 32,000 71 32,071 30,500 – 30,500
Busola Sodeinde 32,000 – 32,000 30,500 – 30,500
Justin Ward 35,000 – 35,000 33,500 – 33,500
Total 203,000 71 203,071 193,500 532 194,032
48
Directors’ annual percentage change in remuneration
The increase in Directors’ remuneration over the last four years is set out in the table below. As the Company
does not have any employees no comparisons are given for employees’ remuneration increases.
Date appointed 2020-2021 2021-2022 2022-2023 2023-2024
David Brock (Chair)
(1)
28 September 2010 11.9% 6.6% 6.9% 5.13%
Oliver Bedford 13 December 2016 Nil Nil 7.2% 5.36%
Angela Henderson
(2)
29 October 2019 21.1% 7.6% 6.2% 4.69%
Megan McCracken
(3)
1 June 2022 N/A N /A 215.5% 4.92%
Busola Sodeinde
(3)
1 June 2022 N/A N /A 215.5% 4.92%
Justin Ward
(4)
1 November 2020 N/A 18.4% 5.8% 4.48%
(1) David Brock’s annual % change 2020-2021 reects his fee increase following his appointment as Chair of the Board, eective February2020.
(2) Angela Henderson received an additional £1,500 per annum with eect from 1January 2021 for her role as Chair of the Management and
Service Provider Engagement Committee.
(3) Megan McCracken and Busola Sodeinde were appointed with eect from 1June 2022 and their annual % change 2022- 2023 reects this.
(4) Justin Ward’s annual % change 2021-2022 reects his fee increase following his appointment as Audit Chair in February 2021.
Relative importance of spend on pay
The table below compares Directors’ remuneration to Shareholder distributions (through dividend payments and
share buybacks) in respect of the nancial year ended 30September 2024 and the preceding nancial year:
Year ended
30 September
2024
£
Year ended
30 September
2023
£
Growth
%
Directors’ remuneration
(1)
203,000 193,500 4.9
Dividends paid 14,268,141 15,717,501 -9.2
Share buybacks 4,472,418 3,636,841 23.0
(1) The gures above exclude employer’s National Insurance contributions.
Within the nancial year, the Company paid interim and nal dividends totalling 2.50pence per share. The
Company also paid a special dividend of 1.50pence per share on 26July 2024, taking the total cash distributions
in the year to 4.00pence per share, a 20% decrease on the prior year. Including share buybacks, the Company
returned £18.7million to Shareholders during the period under review.
In light of the signicant 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 30September 2025.
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
2023
30 September
2024
Acquired after
Year end
Total holding at
17 December
2024
David Brock 122,606 339,336 – 339,336
Oliver Bedford 167,790 297,890 – 297,890
Angela Henderson 8,223 9,000 – 9,000
Megan McCracken – – – –
Busola Sodeinde – – – –
Justin Ward 62,899 68,841 – 68,841
49
Taxable benets
The Directors who served during the year received no taxable benets 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 benets
The Directors who served during the year received no pension benets in the year.
Recruitment remuneration policy
The remuneration levels are designed to reect 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 pages45 to49 was approved by the Board on 17December 2024 and will
be further subject to an advisory vote at the forthcoming AGM being held on the 6February 2025.
Signed on behalf of the Board.
David Brock
Chair
17December 2024
Corporate governance
For the year ended 30September 2024
50
Directors’ statement of compliance with the UK
Corporate Governance Code and AIC Code
Introduction
The Board recognises the importance of sound
corporate governance and has chosen to comply with
the AIC Code. 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 provided in the relevant sections
of this Corporate Governance Report, the Board
considers these provisions are not relevant to the
size, structure and business 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 pages11 to13, 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 21 to
22.
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 benet 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 pages17 to20 for further information.
Management of conicts of interest
In order to manage potential conicts of interest
the Board requires that any conicts 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 conict arises the
Board will consider what is in the best interests of the
Company and whether the relevant Director’s ability
to act in accordance with his or her wider duties is
aected.
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
signicant 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 and
Shareholder approval as appropriate; and
●
responsibility for all corporate governance
matters.
51
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
were delegated to CGWL until 30September 2024.
The administration services were novated from
CGWL to CGAM with an eective date of 1October
2024.
The following tables set out the number of scheduled
Board meetings, valuation meetings, Audit
Committee meetings and MSPEC meetings held
during the year and the number of meetings attended
by each individual Director:
Number of Scheduled
BoardMeetings
Held Attended
David Brock (Chair) 5 5
Oliver Bedford 5 5
Angela Henderson 5 5
Megan McCracken 5 5
Busola Sodeinde 5 5
Justin Ward 5 5
Approval of private
company valuations
Number of Board Meetings
Held Attended
David Brock (Chair) 4 4
Oliver Bedford 4 4
Angela Henderson 4 4
Megan McCracken 4 4
Busola Sodeinde 4 3
Justin Ward 4 4
Number of Audit Meetings
Held Attended
Justin Ward (Chair) 3 3
Angela Henderson 3 3
Megan McCracken 3 3
Busola Sodeinde 3 3
Number of Management
and Service Provider
Engagement Meetings
Held Attended
Angela Henderson (Chair) 2 2
David Brock 2 2
Megan McCracken 2 2
Busola Sodeinde 2 2
Justin Ward 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 an Audit Committee and
MSPEC. The terms of reference for these committees
are available on the Company’s website.
Due to the size, structure and business of the
Company and the experience of its Board members,
separate remuneration and nomination committees
have not been established. These roles are instead
fullled 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 45.
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
(2023:nil).
Management and Service Provider Engagement
Committee
Information regarding the composition,
responsibilities and activities of the MSPEC are
detailed on page 59.
Board and Director independence
As at 30September 2024, 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 14years since his initial
appointment. The Board does not have a policy of
restricting the term served by Directors 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 advisers, 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 benecial
to the success of the Company. All new Directors
are required to disclose other roles prior to their
appointment and the Board requires that any new
signicant additional external appointments receive
prior Board approval.
52
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 identied 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 eective
use of technology to enable it to operate eciently
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 KPIs and corporate governance.
Relationship with the Investment Manager
Both the Schedule of Matters Reserved for the Board
and the IMA 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 MSPEC in November2024.
The Board, excluding the Investment Manager,
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 40.
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
and Registrar) and the service provided by each is
monitored and reviewed by the MSPEC 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 was appointed
as Company Secretary on 15January 2021 and a
formal agreement detailing the responsibilities of the
Company Secretary to the Company is in place.
The Board has access to independent professional
advice from lawyers and tax advisers 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 signicant 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. Angela Henderson will
not be standing for re-election and the remaining
Directors will oer themselves for re-election. Megan
McCracken will replace Angela as Chair of the MSPEC
following the 2025 AGM.
David Brock is a highly experienced company director
with specic expertise directly relevant to investing in
private companies.
Oliver Bedford is the Lead Fund Manager to the
Company, has strong technical knowledge covering
the VCT Rulesand is an eective liaison between the
Company and the Investment Manager.
Megan McCracken is an experienced director and
brings cross sector knowledge from her executive
career.
53
Busola Sodeinde is a chartered accountant with
signicant regulatory and governance experience.
Justin Ward is a chartered accountant and has
extensive experience in unquoted company
investment.
The role of the Chair
The Chair leads the Board, and so is responsible
for its eectiveness 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 eective 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
the 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 of the Company.
Board tenure
The Company has put in place a policy on the
tenure of its Board members (the 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 while introducing new Board
members as needed.
David Brock, Chair of the Company since
February2020, 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 advisers and, as a highly
experienced company chair, 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 June2022. Summary biographies of all
the Directors can be found on page 40.
Board evaluation
The Directors recognise the importance of evaluating
both the performance of the Board as a whole,
individual Directors as well as the Committees.
The annual Board evaluation is carried out by means
of a questionnaire which includes accountability and
eectiveness, 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 satised
with the results and nds that the Board, the Chair
and the Directors are suitably qualied to undertake
their responsibilities, 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, but
will be kept under review.
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
eectively 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 dene 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;
54
●
on a quarterly basis, amongst other things, 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
identies 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 21 to 22. 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; and
●
the Company’s internal policies are reviewed
on an annual basis, either by the Board or the
Audit Committee. 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, the
Administrator and the Company Secretary, 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.
Diversity
The Board has adopted a Diversity Policy and
considers that a combination of skills, experience,
knowledge, independence, race, age, gender,
educational and professional background along with
other relevant personal attributes provide the range
of perspectives, insights and challenge needed to
support good decision making.
As at 30September 2024, the Board comprised six
non-executive directors, three male and three female
(being 50% female representation).
In accordance with UK Listing Rule 6.6.6R 9, the
Company is required to include a statement in the
annual nancial report setting out whether it has met
the following targets on Board diversity:
a) at least 40% of individuals on the Board are
women;
b) at least one of the senior Board positions
(dened by the FCA as either the Chair, SID, CEO
or CFO) is held by a woman; and
c) at least one individual on the Board is from a
minority ethnic background.
The following tables set out the composition of
the Board as at 30 September 2024 and the date of
this report. The information is based on voluntary
self-declaration made by the Directors.
Number
of Board
members
Percentage
of the Board
Number of
senior positions
on the Board
(CEO, CFO, SID
and Chair)
Men 3 50%
*Not applicable
– see note.Women 3 50%
Not specied/
prefer not to say – – –
Number
of Board
members
Percentage
of the Board
Number of
senior positions
on the Board
(CEO, CFO, SID
and Chair)
White British
or other White
(including
minority-white
groups)
5 83.33% *Not applicable
– see note.
Black/African/
Caribbean/Black
British
1 16.67%
* The Company is externally managed, does not have executive
management functions and specically does not have a CEO, CFO
or SID.
Remuneration
As the Company has no employees, and the Board
wholly comprises 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 45 to 49.
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.
55
Viability Statement
The viability statement, under which the Directors
assess the prospects of the Company over a longer
period, is contained on page 23.
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 Act2015 and it is not,
therefore, obliged to make a human tracking
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) are contained in the Directors’ Report on
pages 41 to 44.
For and on behalf of the Board.
JTC (UK) Limited
Company Secretary
17December 2024
Report of the Audit Committee
56
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 conrms 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 have relevant
nancial experience and the Board is condent 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 eectiveness 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 eectiveness 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.
The Company Secretary attends meetings as
Secretary to the Committee and representatives
of the Investment Manager as well as the
Company’s external Auditor, BDO LLP, are also
invited to attend. The Committee’s terms of
reference were reviewed during the year and are
available on the Company’s website
(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
30September 2024 is provided below.
Financial statements
The interim and annual reports to Shareholders and
the accounting policies therein were thoroughly
reviewed by the Audit 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 Audit Committee
considered it was appropriate to adopt the going
concern basis of accounting and reviewed the going
concern statement to ensure any signicant issues
were described in a concise and understandable form.
The Audit 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 Audit 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 Auditor
conrmed to the Audit 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 Audit Committee was satised that key areas of
risks and judgement were appropriately addressed.
Risk and Internal Control
The Board has identied the key risks faced by the
Company and these are set out in the principal and
emerging risks and uncertainties section on pages21
to22. The Audit Committee (and the Board as a
57
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 Audit 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 conrmed that, during
the nancial year, no instances of bribery, corruption
and fraud have been detected that would have
impacted the Company. The Audit 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 Audit Committee, and they
are satised that the Board have sucient oversight
and that adequate procedures are in place.
Key areas of risk
The key areas of risk identied by the Audit
Committee in relation to the business activities and
nancial statements of the Company are as follows:
●
compliance with HMRC 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 Audit Committee concluded:
●
Venture Capital Trust Status. The Investment
Manager conrmed 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 advisers Philip Hare&
AssociatesLLP and further half-yearly
reconciliations are carried out. These reports
are reviewed by the Board as a whole, which is
satised with the conclusions;
●
Valuation and safe custody of investments.
The valuation of investments is undertaken
in accordance with the accounting policies
in note1 to the nancial statements. The
Investment Manager has conrmed to the
Audit Committee that the basis of valuation for
unquoted investments was in accordance with
industry guidelines. The Auditor conrmed to
the Audit 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 conrmed that
there was no evidence of bias in the valuations
of the investments based on the audit work
performed. The Custodian provides the
Company with quarterly reports conrming 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 note1 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 Audit Committee is responsible for overseeing
the relationship with the Auditor, assessing the
eectiveness 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 Audit Committee
meets with the Auditor as part of the audit process.
The Audit Committee undertook a review of the
Auditor’s performance during the 2024 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 Audit Committee, Chair and other key
individuals within the business;
●
responded to the Audit Committee’s questions
and handled key audit issues eectively;
●
demonstrated that it had appropriate
procedures and safeguards in place to maintain
its independence and objectivity; and
●
charged justiable fees in respect of the scope
of services provided.
58
The Audit Committee is aware of the FRC’s
Audit Quality Inspection and Supervision report
published in July 2024 relating to the inspection
cycle 2023/2024, where concerns were raised about
the performance of BDO LLP. This was discussed
in detail with the Auditor in a meeting of the Audit
Committee and, particularly, the Committee sought
assurance that none of the Company’s audits
had been impacted by the matters raised in the
report. The Committee also sought assurance on
the quality and consistency of future audits whilst
the Auditor implemented a remediation plan. The
Committee received details on the improvement
plan and was comfortable with the assurances given
to their queries. The Committee was keen to keep
the matter under review and the Auditor agreed
to provide updates on the progress of the ongoing
improvements.
The Audit Committee concluded that it is satised
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 Audit Committee has recommended
to the Board that a resolution to re-appoint
the Auditor is proposed to Shareholders at the
forthcoming AGM.
The Audit 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 Audit Committee continuing to be
satised 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 and this is under review by the Audit
Committee.
Policy Reviews
During the year, the Audit Committee conducted
a review of certain Company policies and, where
relevant, 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
Audit Committee or the Board.
Compliance Control
The Audit Committee receives a compliance
control report on a quarterly basis, which details an
operational update from the Administrator as well as
conrmation that the Administrator, Custodian and
Receiving Agent have carried out their relevant duties
under the terms of their respective agreements with
the Company. No compliance issues were reported
during the year.
Justin Ward
Chair of the Audit Committee
17December 2024
Report of the Management and
Service Provider Engagement Committee
59
Composition of the Management and Service
Provider Engagement Committee
The MSPEC comprises all the independent
non-executive directors and is chaired by
Angela Henderson. The MSPEC’s terms of
reference were reviewed during the year and
are available on the Company’s website
(www.hargreaveaimvcts.co.uk) and by request
from the Company Secretary.
Duties of the Management and Service Provider
Engagement Committee
The duties of the MSPEC are to review the terms
of appointment and evaluate the performance of
the Investment Manager, review the performance
and fees of the Administrator and other key service
providers of the Company and to decide whether it is
in the best interests of Shareholders, to recommend
to the Board, that those appointments should
continue. The Auditor is not reviewed by the MSPEC
as their appointment falls under the remit of the
Audit Committee.
The key areas of focus for the MSPEC are:
●
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 MSPEC met twice during the year to review
the performance of the Investment Manager and
other key service providers. The Company Secretary
attends meetings as Secretary to the MSPEC 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 MSPEC’s principal activities and
key considerations for the year to 30September 2024
is provided below.
Review of the Investment Manager
The MSPEC 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 the current year and previous years,
the contents of which were considered by the MSPEC
as part of its review. The Company Secretary was
also invited to provide feedback on its experience
of working with the Investment Manager. The views
of the MSPEC and the Company Secretary, which
were positive, were subsequently provided to the
Investment Manager by the Chair of the MSPEC.
The MSPEC is satised that its queries and concerns
have been adequately addressed throughout the
remainder of the year.
Following the MSPEC’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 MSPEC 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 conrming it has complied with legislation and
statutory requirements relating 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 identied and fed back
to each provider as appropriate.
Following a detailed review of the feedback and
information provided, the MSPEC concluded it is
satised that the service providers currently engaged
by the Company are competent to carry out their
roles.
Angela Henderson
Chair of the MSPEC
17December 2024
Statement of directors’ responsibilities
in respect of the inancial statements
60
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 UK Listing Rulesof the Financial Conduct Authority.
The Companies Act2006 (and related legislation) 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 UKGAAP and the Directors must not approve
the nancial statements unless they are satised that they give a true and fair view of the state of aairs of the
Company and of the prot 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 UKGAAP, 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 Act2006.
The Directors are responsible for keeping adequate accounting records that are sucient 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
Each of the Directors, David Brock (Chair), Oliver Bedford, Angela Henderson, Justin Ward, Megan McCracken and
Busola Sodeinde, conrms to the best of their knowledge that:
●
the nancial statements have been prepared in accordance with UKGAAP and give a true and fair view of the
assets, liabilities, nancial position and prot 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.
61
Disclosure of information to the Auditor
The Directors conrm 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 Auditor is aware of that information.
For and on behalf of the Board.
David Brock
Chair
17December 2024
62
Financial statements
Independent auditor’s report to the members
of Hargreave Hale AIM VCTPLC
63
Opinion on the nancial statements
In our opinion the nancial statements:
●
give a true and fair view of the state of the
Company’s aairs as at 30 September 2024 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 2024 which comprise the
Income statement, the Balance sheet, the Statement
of changes in equity, the Statement of cash ows
and Notes to the nancial statements, including a
summary of signicant accounting policies.
The nancial reporting framework that has been
applied in their preparation is applicable law and
United Kingdom Accounting Standards, 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 sucient 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 18 years, covering the years ended
30 September 2007 to 30 September 2024. 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 fullled 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 of the Company,
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 conditions.
Based on the work we have performed, we have
not identied any material uncertainties relating to
events or conditions that, individually or collectively,
may cast signicant 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.
64
Overview
Key audit matters
Valuation and ownership of investments
2024
✓
2023
✓
Materiality
Company nancial statements as a whole
£1,350,000 (2023: £1,330,000) 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 signicance in our audit
of the nancial statements of the current period and include the most signicant assessed risks of material
misstatement (whether or not due to fraud) that we identied, including those which had the greatest eect on:
the overall audit strategy, the allocation of resources in the audit, and directing the eorts 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 quoted, unit
trust fund and unquoted
investments held at fair
value through prot and
loss.
Quoted and unit trust
fund investments total
£120.5 million (90%)
of the investment
portfolio and unquoted
investments make up
£13.7 million (10%).
We considered the
valuation and ownership
of investments to be the
most signicant audit
area as investments
represent the most
signicant balance in the
Financial Statements and
underpin the principal
activity of the entity.
We assessed the design and implementation of
controls in relation 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:
●
Conrmed the year end bid price was used by
agreeing to externally quoted prices;
●
Assessed if there were contra indicators, such
as liquidity considerations, to suggest bid price
is not the most appropriate indication of fair
value by considering the realisation period for
individual holdings;
●
Recalculated the valuation by multiplying the
number of shares held per the statement
obtained from the Custodian by the valuation
per share; and
●
Obtained direct conrmation from the
custodian and agreed all investments held at the
balance sheet date to CREST records.
65
Key audit matter How the scope of our audit addressed the key audit matter
Valuation and ownership
of investments (Note1
and Note7 to the
nancial statements)
Whilst we do not
consider the valuation of
the listed investments to
be subject to a signicant
degree of estimation or
judgement, there is a
risk that the prices used
by the Company are not
reective of the fair value
of those investments as
at the year end.
The unlisted investments
have signicant
judgement involved in
selecting a valuation
methodology and
signicant estimation
uncertainty involved
in determining their
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
For these reasons and
the materiality of the
balance in relation to the
Financial Statements as
a whole, we considered
this to be a key audit
matter.
We assessed the valuation and ownership of the
unquoted investment portfolio that constitutes the
year-end unquoted investments balance, performing
the following procedures:
●
Challenged whether the valuation methodology
was the most appropriate in the circumstances
under the IPEV Guidelines and the applicable
accounting standards.
●
Obtained capital tables directly from the
investee companies to conrm 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 multiples applied and the
discounts applied by reference to observable
listed company market data;
●
Challenged the consistency and
appropriateness of adjustments made to
such market data in establishing the 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 prot
forecasts and recalculating the value of the
convertible instrument; and
66
Key audit matter How the scope of our audit addressed the key audit matter
Valuation and ownership
of investments (Note1
and Note7 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 satised 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 eect of
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could
inuence 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 identied misstatements, and the particular circumstances of their occurrence, when evaluating their
eect 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
2024
£
2023
£
Materiality 1,350,000 1,330,000
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 mainly comprises
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 eects of cash that has been raised from fundraising during
the year.
Performance materiality 1,012,000 1,000,000
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.
67
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit dierences in excess of
£27,000 (2023: £26,000). We also agreed to report dierences 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, 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 UK 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 specied 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 identied set out on page 43; and
●
The Directors’ explanation as to their assessment of the
Company’sprospects, the period this assessment covers and why
the period is appropriate set out on page 23.
Other Code provisions
●
Directors’ statement on fair, balanced and understandable set out
on page 60;
●
Board’s conrmation that it has carried out a robust assessment
ofthe emerging and principal risks set out on page 23;
●
The section of the annual report that describes the review of
eectiveness of risk management and internal control systems set
out on page 21; and
●
The section describing the work of the Audit Committee set out
onpage 56.
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.
68
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 identied
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 specied 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 Directors’
responsibilities statement, the Directors are
responsible for the preparation of the nancial
statements and for being satised 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 inuence 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:
69
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 signicant laws and regulations
to be Companies Act 2006, the UK Listing Rules and
Disclosure Guidance and Transparency Rules, the
principles of the UK Corporate Governance Code,
industry practice represented by the SORP and the
applicable nancial reporting framework. We also
considered the Company’s qualication 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 relating to 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 dierences, if any, for
indications of bias or deliberate misstatement.
We also communicated relevant identied 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 reected 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: https://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 Chapter3
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
70
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, UK
17 December 2024
BDO LLP is a limited liability partnership registered
in England and Wales (with registered number
OC305127).
71
Income statement
Year to 30September 2024 Year to 30September 2023
Note
Revenue
£000
Capital
£000
Total
£000
Revenue
£000
Capital
£000
Total
£000
Net loss on investments held at fair value
through prot or loss 7 – (5,341) (5,341) – (28,455) (28,455)
Income 2 2,849 – 2,849 2,616 – 2,616
2,849 (5,341) (2,492) 2,616 (28,455) (25,839)
Management fee 3 (641) (1,924) (2,565) (699) (2,098) (2,797)
Other expenses 4 (1,485) (43) (1,528) (1,052) (39) (1,091)
(2,126) (1,967) (4,093) (1,751) (2,137) (3,888)
Prot/(loss) on ordinary activities before
taxation 723 (7,308) (6,585) 865 (30,592) (29,727)
Taxation 5 – – – – – –
Prot/(loss) after taxation 723 (7,308) (6,585) 865 (30,592) (29,727)
Basic and diluted earnings/(loss) per share 6 0.20p (2.06)p (1.86)p 0.27p (9.59)p (9.32)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 notesare an integral part of these nancial statements.
72
Balance sheet
As at 30 September 2024
Company Registration Number 5206425 (In England and Wales)
Note
2024
£000
2023
£000
Fixed assets
Investments at fair value through prot or loss 7 134,277 132,120
Current assets
Debtors 9 1,047 1,475
Funds held with Custodian
(1)
15 8,846 8,119
Cash at bank and in hand
(1)
4,766 11,112
14,659 20,706
Creditors:amounts falling due within one year 10 (927) (906)
Net current assets 13,732 19,800
Total assets less current liabilities 148,009 151,920
Capital and Reserves
Called up share capital 11 3,649 3,278
Share premium 21,222 286
Capital redemption reserve 379 272
Capital reserve – unrealised 16,046 13,640
Special reserve 159,022 177,762
Capital reserve – realised (50,785) (41,071)
Revenue reserve (1,524) (2,247)
Total Shareholders’ funds 148,009 151,920
Net asset value per share (basic and diluted) 12 40.55p 46.34p
(1) Cash at bank and in hand in the Balance Sheet has been restated to show separately Funds held with Custodian for the year ended
30September2023, to conform with the requirements of the Companies Act 2006 – Statutory format of the Balance Sheet. There is no impact on
other line items in the Balance Sheet nor the total net current assets.
The accompanying notesare an integral part of these nancial statements.
These nancial statements were approved and authorised for issue by the Board of Directors on
17December2024 and signed on its behalf by
David Brock
Chair
17December2024
73
Statement of changes in equity
For the year ending 30 September 2024
Non-distributable reserves Distributable reserves
(1)
Note
Share
Capital
£000
Share
Premium
£000
Capital
Redemption
Reserve
£000
Capital
Reserve
Unrealised
£000
Special
Reserve
£000
Capital
Reserve
Realised
£000
Revenue
Reserve
£000
Total
£000
At 1October 2023 3,278 286 272 13,640 177,762 (41,071) (2,247) 151,920
Prot and total comprehensive
income for the year
Realised (losses) on
investments 7 – – – – – (3,570) – (3,570)
Unrealised (losses) on
investments 7 – – – (1,771) – – – (1,771)
Management fee charged to
capital 3 – – – – – (1,924) – (1,924)
Transaction costs charged to
capital – – – – – (33) – (33)
Income allocated to capital 2 – – – – – – – –
Due diligence investments
costs 4 – – – – – (10) – (10)
Revenue prot after taxation
for the year – – – – – – 723 723
Total (loss) after taxation for
the year – – – (1,771) – (5,537) 723 (6,585)
Contributions by and
distributions to owners
Subscription share issues 11 445 19,876 – – – – – 20,321
Issue costs 11 – (347) – – – – – (347)
Share buybacks 11 (107) – 107 – (4,472) – – (4,472)
DRIS share issues 11 33 1,407 – – – – – 1,440
Equity dividends paid 16 – – – – (14,268) – – (14,268)
Total contributions by and
distributions to owners 371 20,936 107 – (18,740) – – 2,674
Other movements
Capital reduction 11 – – – – – – – –
Diminution in value – – – 4,177 – (4,177) – –
Total other movements
At 30September 2024 3,649 21,222 379 16,046 159,022 (50,785) (1,524) 148,009
Reserves available for distribution are capital reserve realised, special reserve and revenue reserve. Total
distributable reserves at 30September 2024 were £106.6million, adjusted to remove £0.1million accumulation
income included in the revenue reserve but not distributable (2023:£134.4million). The accompanying notesare
an integral part of these nancial statements.
(1) The Income Taxes Act2007 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 30September 2024, £108.9million of the special reserve is subject to this restriction.
74
Statement of changes in equity
For the year ending 30 September 2023
Non-distributable reserves Distributable reserves
(1)
Note
Share
Capital
£000
Share
Premium
£000
Capital
Redemption
Reserve
£000
Capital
Reserve
Unrealised
£000
Special
Reserve
£000
Capital
Reserve
Realised
£000
Revenue
Reserve
£000
Total
£000
At 1October 2022 2,666 93,660 201 23,935 63,931 (20,774) (3,112) 160,507
Prot 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 prot 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 30September 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 30September 2023 were £134.4million following the capital reduction of £133.2m
(2022:£40million). The accompanying notesare an integral part of these nancial statements.
(1) The Income Taxes Act2007 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 30September 2023, £108.9million of the special reserve is subject to this restriction.
75
Statement of cash lows
Note
2024
£000
2023
£000
Total loss on ordinary activities before taxation (6,585) (29,727)
Realised losses on investments 7 3,570 8,245
Unrealised losses on investments 7 1,771 20,210
Decrease/(increase) in debtors 428 (1,067)
Increase/(decrease) in creditors 21 (94)
Amortisation for discount/premium on bonds (129) (24)
Unclaimed dividend forfeiture 4 –
Non-cash distributions 2 (143) –
Net cash (outow)from operating activities
(1)
(1,063) (2,457)
Purchase of investments 7 (27,582) (57,699)
Sale of investments 7 20,356 16,336
Net cash (used in) investing activities (7,226) (41,363)
Share buybacks 11 (4,472) (3,637)
Issue of share capital 11 20,321 39,936
Issue costs 11 (347) (742)
Dividends paid 16 (12,832) (14,417)
Net cash provided by nancing activities 2,670 21,140
Net (decrease) in cash and cash equivalents (5,619) (22,680)
Opening cash and cash equivalents
(2)
19,231 41,911
Closing cash and cash equivalents
(3)
13,612 19,231
(1)
The Company received cash dividends of £977,491 (2023:£1,178,059) and interest of £1,711,217 (2023:£599,735).
(2)
The opening cash and cash equivalents includes £8,119,302 (2023: £16,786,442) of funds held with Custodian.
(3)
The closing cash and cash equivalents includes £8,845,455 (2023: £8,119,302) of funds held with Custodian.
The accompanying notesare an integral part of these nancial statements.
76
Notes to the inancial statements
Hargreave Hale AIM VCTplc is a company
incorporated in England and Wales under the
Companies Act2006. The address of the registered
oce is given in the company information on page
100 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 UKGAAP, including FRS102 and with
the Companies Act2006 and the 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 satised that
the Company has adequate resources to continue in
operational existence for a period of 12months from
the date these nancial statements were approved.
The Company has sucient cash at bank, funds
held with Custodian (£4.8 million and £8.8 million
respectively at 30 September 2024) and liquid assets
held across a diversied portfolio of investments in
listed companies to meet obligations as they fall due.
The Company is a closed-ended fund, where assets
are not required to be liquidated to meet day-to-
day redemptions. The major driver of cash outows
(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 21 to 22 and their potential impact on income
into the portfolio and the NAV. The Directors are of
the opinion that the Company has sucient 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 and one
dedicated legal counsel. The Investment Manager
and the Company’s other key service providers have
contingency plans in place to manage operational
disruptions. The Directors have not identied any
material uncertainties related to events or conditions
that may cast signicant doubt about the ability
of the Company to continue as a going concern.
Therefore, they are satised 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 aect the application of policies and reported
amounts of assets, liabilities, income and expenses.
The most critical judgements and estimates mainly
relate to the determination of the fair valuation of
unquoted investments. The policies for these are set
out in the notesto the nancial statements. The IPEV
Guidelines describe a range of valuation techniques,
as described in the “nancial instruments” section on
pages 87 to 89.
The nature of estimation means that the actual
outcomes could dier from those estimates.
Estimates and underlying assumptions are under
continuous review with particular attention paid to
the carrying value of the investments.
Key judgements when determining the fair value of
unquoted investments include:
●
selecting risk factors to include in the valuation
model;
●
peer group selection; and
●
loan noteconversion scenarios.
Key estimates involved in determining the fair value
of unquoted investments include:
●
forecast compliance within the appropriate
nancial metric;
●
future working capital requirements;
●
liquidity risk;
●
determining the appropriate discount to apply to
peer group selection; and
●
the probabilities applied to the loan note
conversion scenarios.
Further areas requiring judgement are the
allocation of income and expenses, recognition
and classication of unusual or special dividends as
either capital or revenue in nature, the permanent
impairment of investments and categorisation of
public companies between level 1 and level 2 of the
fair value hierarchy.
77
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 classied as fair value through
prot 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 IPEV Guidelines published
in December2022. Investments deemed to be
associates due to the shareholding and level of
inuence exerted over the portfolio company
are measured at fair value using a consistent
methodology to the rest of the trust’s portfolio as
permitted by FRS102 and Para. 32 of the SORP.
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 reect 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 notesis 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 noteis the probable weighted average
of the present value of each conversion scenario
described in the loan noteinstrument 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. Until 30September
2023, transaction costs were included in the initial
cost or deducted from the disposals proceeds
of investments. However, from 1October 2023
transaction costs in relation to the purchase or sale
of investments have been recognised as a capital
expense.
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 prot
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 at bank and in hand
For the purposes of the Balance Sheet, cash at bank
and in hand is cash held in bank accounts subject to
immediate access.
Funds held with Custodian
For the purposes of the Balance Sheet, funds held
with Custodian is cash held at CGWL (see note 15).
Cash held with CGWL is to meet short term liquidity
requirements and is available on demand with no
restrictions or penalties.
78
For the purposes of the Statement of Cash Flows,
cash comprises cash at bank and in hand and funds
held with Custodian as dened above.
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 reect the
eective 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.
Where a clear connection with the maintenance or
enhancement of value of the investments can be
demonstrated, expenses are allocated to capital.
Accordingly, 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 and
transaction costs in relation to the purchase and
sale of investments are charged to capital. Prior to
1October 2023, transaction costs were included
within the cost and/or deducted from disposal
proceeds of investment.
All other expenditure is charged to the revenue
account.
Capital reserves
Realised prots 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
dierences 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 prots.
Current tax is expected tax payable on the taxable
prot for the period using the current tax rate and
laws that have been enacted or substantially enacted
at the reporting date. The tax eect of dierent
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 aairs 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, capital or special 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. Where
a dividend is stated to be payable on a future date, the
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.
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
79
Company are disclosed in the Directors’ Report on
page 41.
Share Premium
This reserve represents the dierence 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 and transaction 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 prots and losses of the Company.
2. Income
2024
£000
2023
£000
Income from investments:
Revenue:
Dividend income 973 1,247
Interest from bonds 1,031 579
Interest from loan notes 171
(1)
288
Bank interest 531 502
Accumulation fund income 143
(2)
–
Total revenue income 2,849 2,616
(1) The amount of loan stock interest recognised in the period is lower than prior year, largely because of the Kidly loan interest being fully
impaired in the period.
(2) Accumulation income from the IFSL Marlborough Special Situations and Marlborough UK Micro-Cap Growth funds (2023: nil).
No capital income was recognised in the year (2023:nil).
3. Management fees
2024
Revenue
£000
2024
Capital
£000
2024
Total
£000
2023
Revenue
£000
2023
Capital
£000
2023
Total
£000
Management fees 641 1,924 2,565 699 2,098 2,797
The IMA terminates on 12months’ 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 30September 2024, £615,231 (2023:£645,397) 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 IFSL Marlborough
Special Situations Fund and/or the IFSL Marlborough UK Micro-Cap Growth Fund so the Company is not charged
twice for these services. This amounted to £75,184 for the year to 30September 2024 (2023:£49,931). 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 1October 2023 and 30September 2024 and no fees were waived
between 1October 2022 and 30September 2023 under the indemnity.
80
4. Other expenses
2024
£000
2023
£000
Other revenue expenses:
Administration fee 250 195
Directors’ fees 216 205
Legal& professional 27 39
London Stock Exchange fees 83 84
Registrar’s fee 46 47
Website and marketing 36 60
Printing, postage and stationary 42 40
Auditors’ remuneration – for audit services 63 55
VCT monitoring fees 14 15
Company secretarial fees 73 57
Custody fee 30 30
Directors’ and ocers’ liability insurance 27 36
Broker’s fee 5 5
VAT 128 115
Other expenses
(1)
76 104
Provision against income receivable 368
(2)
(35)
Total other revenue expenses 1,485 1,052
Other capital expenses:
Due diligence costs 9 32
VAT on due diligence costs 1 7
Transaction costs on investment transactions charged to capital
(3)
33 –
Total other capital expenses 43 39
Total other expenses 1,528 1,091
(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) Kidly loan stock interest impairment of £362,795 and XP Powerplc cancelled dividend of £5,700.
(3) During the year the Company incurred transaction costs of £23,907 (2023:£97,493) and £9,439 (2023:£15,710) on purchases and sales
respectively. These amounts are included in capital expenses; (2023:included in the losses on investments as disclosed in the income
statement.
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 45.
The maximum aggregate directors’ emoluments authorised by the Articles are detailed in the Directors’
Remuneration Report on page 45.
5. Tax on ordinary activities
The tax charge for the year is based on the standard rate of UK Corporation Tax of 25% (2023:22%
(1)
).
2024
Total
£000
2023
Total
£000
Loss on ordinary activities before taxation (6,585) (29,727)
UK Corporation Tax:25% (2023:22%) (1,646) (6,540)
Eect of non taxable losse s on investments 1,335 6,260
Eect of non taxable UK dividend income (242) (274)
Eect of disallowed costs 8 –
Deferred tax not recognised 545 554
Current tax charge – –
(1) Average rate of corporation tax applicable for the period.
At the 30September 2024 the Company had tax losses carried forward of £26,556,949 (2023:£24,379,001). 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.
81
6. Basic and diluted earnings/(loss) per share
2024
Revenue
£000
2024
Capital
£000
2024
Total
£000
2023
Revenue
£000
2023
Capital
£000
2023
Total
£000
Return (£) 723 (7,308) (6,585) 865 (30,592) (29,727)
Earnings/(loss) per ordinary
share 0.20p (2.06)p (1.86)p 0.27p (9.59)p (9.32)p
The earnings per share is based on 353,964,930 ordinary shares (2023:318,946,009), being the weighted average
number of shares in issue during the year.
7. Investments
Quoted
investments
(1)
2024
£000
Unquoted
investments
2024
£000
Total
investments
2024
£000
Quoted
investments
(1)
2023
£00
Unquoted
investments
2023
£000
Total
investments
2023
£000
Opening Valuation 122,567 9,553 132,120 108,630 10,558 119,188
Purchases at cost 23,082 4,500 27,582 56,199 1,500 57,699
Non-cash distribution 143 – 143 – – –
Sale proceeds (19,554) (802) (20,356) (16,336) – (16,336)
Realised gains/(losses) (471) (3,099) (3,570)
(2)
(8,245) – (8,245)
Unrealised losses (2,106) 335 (1,771)
(2)
(17,705) (2,505) (20,210)
Amortisation for discount/
premium on bonds 129 – 129 24 – 24
Re-Classication
Adjustment (3,294) 3,294 – – – –
Closing valuation 120,496 13,781 134,277 122,567 9,553 132,120
Cost at 30September 129,295 26,474 155,769 132,600 19,241 151,841
Unrealised gains/(losses) 16,845 (799) 16,046 14,981 (1,341) 13,640
Diminution in value
(3)
(25,644) (11,894) (37,538) (25,014) (8,347) (33,361)
Closing valuation 120,496 13,781 134,277 122,567 9,553 132,120
(1) Includes the IFSL Marlborough Special Situations Fund and the IFSL Marlborough UK Micro-Cap Fund with valuations of £9.4m (2023:£8.3m)
and £10.4m (2023:nil) respectively as at 30September 2024. Whilst unlisted, the two investments are UCITS funds with daily dealing and
daily published pricing.
(2) The net loss on investments held at fair value through prot or loss in the income statement of £5,341k (2023:loss£28,455k) is the sum of
the realised and unrealised losses for the year as detailed in the table above.
(3) Diminishments of £11,899,074 (2023:£14,762,893) were made in the year. Once adjusted for disposals/dissolutions (£7,373,105)
(2023:£4,617,026) and diminishment reversals (£349,248) (2023:£230,000) the net movement for the year is £4,176,721 (2023:£9,915,867).
Diminishments carried forward are £37,538,163 (2023: £33,361,442).
Transaction Costs
During the year the Company incurred transaction costs of £23,907 (2023:£97,493) and £9,439 (2023:£15,710)
on purchases and sales respectively. These amounts are included in capital expenses; (2023:included in the
losses 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 prot 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.
2024
Level 1
£’000
2024
Level 2
£’000
2024
Level 3
£’000
2024
Total
£’000
2023
Level 1
£’000
2023
Level 2
£’000
2023
Level 3
£’000
2023
Total
£’000
Investments 91,496 29,000 13,781 134,277 82,565 40,002 9,553 132,120
Transfers between level 3 and level 1 occur when a previously unquoted investment undertakes an initial public
oering, resulting in its equity becoming quoted on an active market. There have been no instances in the current
period (2023:none). Transfers between level 1 and/or 2 and 3 would occur when a quoted investment’s market
becomes inactive, or the portfolio company elects to delist. There has been one transfer from level 1 to level 3 in
82
the current year for £1.1m in relation to C4X DiscoveryHoldings Ltd (2023:none) and one transfer from level 2 to
level 3 for £0.8m in relation to BiVictriX Therapeutics Ltd (2023:none). Transfer values at 30 September 2024.
There were transfers of £53.6k between level 1 and level 2 in the current period where the investments market
is not suciently active (2023:£20.2m). There were transfers between level 2 and level 1 of £3.8m (2023:none).
Transfer values at 30 September 2024.
Level 3 nancial assets
2024
Equity
shares
£’000
2024
Preference
shares
£’000
(1)
2024
Loan
notes
£’000
2024
Total
£’000
2023
Equity
shares
£’000
2023
Preference
shares
£’000
(1)
2023
Loan
notes
£’000
2023
Total
£’000
Opening balance 2,984 3,069 3,500 9,553 4,740 3,861 1,957 10,558
Transfer from Level1 and 2 3,294
(2)
– – 3,294 – – – –
Purchases at cost – 2,500 2,000 4,500 – – 1,500 1,500
Sale proceeds (2) – (800) (802) – – – –
Realised (losses)
(3)
(2,199) (600) (300) (3,099) – – – –
Unrealised (losses)/gains 319 638 (622) 335 (1,756) (792) 43 (2,505)
Closing valuation 4,396 5,607 3,778 13,781 2,984 3,069 3,500 9,553
(1) The preference shares held are in the nature of equity.
(2) BiVictriX Therapeutics Ltd and C4X Discovery HoldingsLtd delisted on 11September 2024 and 26April 2024 respectively. Bidstack Groupplc
was placed into administration and delisted on 23April 2024. The transfer value of the delisted investments included in the table is the
brought forward value as at 30 September 2023.
(3) Honest Brew Limited was dissolved on 19September 2024.
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 30September 2024.
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 reect 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 dierent upside and
downside scenarios. For further information on sensitivities, please see note15.
Level 3 Unquoted Investments
Innity RelianceLtd (My 1st Years) Trading continues to be positive with the company reporting revenue growth despite the weaker
consumer environment. EBITDA growth in 2024 will be limited by investments designed to increase
the addressable market in the medium term. The fair value of the investment increased as the
valuation rolled forward into the nancial year ending December2024. The valuation was reviewed
against EV/Sales multiples across a peer group of listed companies which was broadly static.
BiVictriX Therapeutics Ltd On 12August 2024, BiVictriX announced the proposed cancellation of admission of its ordinary shares
to trading on AIM and re-registration as a private limited company after the directors concluded
that the company’s market capitalisation did not fully reect the positive achievements nor the
underlying prospects of the business and was a potential barrier to future growth and funding, as well
as potential partnership and licensing opportunities. The directors believe that, as a private company,
BiVictriX would be able to access a greater pool of investors who are more likely to support clinical
development. The company has engaged a US healthcare investment bank with signicant experience
in the antibody drug-conjugate (“ADC”) space to assist the company in securing additional capital.
The cancellation took eect from 11September 2024. Given the short period since the delisting the
investment is held at the closing bid price on the last day of trading on AIM.
Bidstack Group plc Following a protracted period of underperformance, failed fundraising eorts, and a strategic review
which also failed to solicit a buyer for the company’s assets, Bidstack entered administration on
22March 2024. Following this, shares in the company were cancelled from trading on AIM on 23April
2024.
83
Level 3 Unquoted Investments
C4X DiscoveryHoldings Ltd On 27March 2024, C4X Discovery announced the proposed cancellation of admission of its ordinary
shares to trading on AIM and re-registration as a private limited company. Having reviewed the
company’s opportunities for value creation and optimal capital structure, the directors determined
that, as a private company, C4X would have access to a larger quantum of funding than has
historically been available through its AIM listing and that would allow it to pursue a greater number
of opportunities to key value inexion points. The cancellation took eect from 26April 2024. The
valuation of the investment is taken from the closing bid price on the last day of trading on AIM;
however, it was also tested against a composite valuation that included the closing bid price prior to
delisting and a risked net present value analysis of the company’s balance sheet cash and partnered
drug development assets.
KidlyLtd A dicult trading environment through Christmas 2023 and early 2024 was compounded by balance
sheet constraints. Although revenue performance was below budget, operational eciencies resulted
in signicantly lower losses. Trading has improved as the year progressed. Reecting the need
for additional funding, the fair value of the equity was reduced to nil and the value of the debt heavily
impaired. Subsequently, Kidly secured new funding as part of a nancial restructuring that included a
partial conversion of the loan noteinstrument into new preferred shares. The reduction in risk allowed
a partial recovery in the fair value of the convertible loan note instrument. The value of the conversion
options and equity remain nil. The outstanding principal of the convertible loan note instrument is
valued according to an assessment of recovery. There is no value attributed to the conversion option,
which is valued using the Black Scholes option pricing model.
QureightLtd The investment into QureightLtd completed on 19March 2024. The valuation was set with reference
to FY25 EV/Sales multiples and assessed against listed peers.
SCA InvestmentsLtd (Gousto) The company closed 2023 strongly with EBITDA ahead of budget. EBITDA and cash ow generation
improved signicantly over the course of the year. Margin growth is expected to support further
increases in EBITDA and cash ow in 2024. The fair value of the investment was reduced slightly within
the period we moved away from EV/Sales to EV/EBITDA as the primary valuation metric and several
members of the peer group reported dicult trading, leading to a reduction in peer group multiples.
ZapparLtd Trading conditions remained challenging over the period as the arrival of new headset technologies
sparked increased interest in immersive experiences at the expense of augmented reality. Weakness in
the US digital marketing sector provided an additional headwind and revenues and prots were below
budget. The valuation of the investment was reviewed against listed peers using EV/Sales multiple,
and was reduced to reect the weaker outlook. The investment was valued on a composite basis that
took into account both the assessment of value on an ongoing basis as an independent company
(based upon peer group EV/Sales multiples) and the potential sale of the company to Innite Reality.
Despite the potential acquisition of the company the fair value assessment was reduced slightly to
reect the more dicult trading environment.
Rosslyn Data Technologiesplc –
convertible loan note
Rosslyn Data Technologies experienced challenging trading conditions in FY24 predominantly due to
extended sales cycles for sizable new clients. However, on 21August 2024 the company announced
a material contract win with a leading global technology company. Post period end, Rosslyn Data
Technologies secured additional equity and convertible loan notefunding. As part of this fundraise,
the Company committed to converting the current 2023 convertible loan noteinto equity and
investing into a new 2024 convertible loan note. There was a non-material change to the fair value of
the convertible loan notes with the value of the conversion option calculated using the Black-Scholes
option pricing model.
Strip Tinningplc –
convertible loan note
On 17January 2024, Strip Tinning completed a £5.1m fundraising through the issue of new shares
and convertible loan notesto fund its EV growth strategy. As part of the funding round, the Company
invested £2.0m through the new convertible loan notes. Whilst there have been short-term trading
challenges in the automotive sector, the company has announced two record contract wins to supply
Smart Glass Connectors for new EV platforms and a £43m strategic nomination for the supply of
a cell contacting system for the battery pack of an autonomous vehicle being developed by one of
the world’s largest corporations, based in the USA. The fair value of the convertible loan noteshave
increased modestly since the investment with the value of the conversion option calculated using the
Black-Scholes option pricing model.
84
8. Signicant interests
At the year end the Company held 3% or more of the issued share capital of the following investments:
Investment
Holding % Investment Holding %
Rosslyn Data Technologiesplc 20.27% Tortilla Mexican Grillplc 6.47%
Engage XR Holdingsplc 16.45% Crimson Tideplc 6.39%
Abingdon Healthplc 14.76% Oberon Investmentsplc 6.08%
PCI-PALplc 10.58% Eden Researchplc 5.44%
Equipmake Holdingsplc 9.13% Skillcast Groupplc 4.74%
Itaconixplc 8.80% Intelligent Ultrasound Groupplc 4.21%
Fadel Partners Inc 7.89% Zoo Digital Groupplc 3.37%
XP Factoryplc 7.39% Strip Tinning Holdingsplc 3.13%
One Media iP Groupplc 7.33% Blackbirdplc 3.07%
9. Debtors
2024
£000
2023
£000
Prepayments 29 40
Accrued income 949 1,430
Other debtors 69 5
1,047 1,475
10. Creditors:amounts falling due within one year
2024
£000
2023
£000
Trade Creditors 12 21
Accruals 915 885
927 906
11. Called up share capital
2024
£000
2023
£000
Allotted, called-up and fully paid:364,977,848
(2023:327,813,939) ordinary shares of 1p each. 3,650 3,278
During the year 10,657,350 (2023:7,183,338) ordinary shares were purchased through the buyback facility at a
cost of £4,472,418 (2023:£3,636,841). The repurchased shares represent 3.25% (2023:2.7%) of ordinary shares
in issue on 1October 2023. The acquired shares have been cancelled.
During the year, the Company issued 44,485,284 ordinary shares of 1 penny (nominal value £444,853) in an oer
for subscription, representing 13.57% of the opening share capital at prices ranging from 44.80p to 47.10p per
share. Gross funds of £20,321,529 were received. The 3.5% premium of £711,254 payable to CGWL under the
terms of the oer was reduced by £264,162, being the discount awarded to investors in the form of additional
shares. A further reduction of £470 introductory commission was made resulting in fees payable to CGWL of
£446,622 which were used to pay other costs associated with the prospectus and marketing. In accordance with
the oer agreement, the Company was entitled to a rebate of £100,000 from CGWL reducing the net fees payable
to CGWL to £346,622.
On 15February 2024, 1,100,783 ordinary shares were allotted at a price of 44.58pence 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 26January 2024, to Shareholders who elected to receive shares under the DRIS as an alternative to
the nal dividend for the year ended 30September 2023.
On 26July 2024, 2,235,192 ordinary shares were allotted at a price of 42.49pence 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 5July 2024, to Shareholders who elected to receive shares under the DRIS as an alternative to the interim
dividend for the year ended 30September 2024.
Further details of the Company’s capital structure can be seen in note1.
85
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 eect or alter or terminate in the event of a change of control of the
Company.
12. Net asset value per ordinary share
30September
2024
30September
2023
Net assets (£’000) 148,009 151,920
Shares in issue 364,977,848 327,813,939
NAV per share (p) 40.55 46.34
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 (2023:nil).
14. Related party transactions and conicts of interest
The remuneration of the Directors, who are key management personnel of the Company, is disclosed in the
Directors’ Remuneration Report on page 41 and in note4 on page 80.
Transactions with the Investment Manager
As the Company’s Investment Manager, CGAM is a related party to the Company for the purposes of the
UKListing Rules. As CGAM and CGWL are part of the same CGWL group, CGWL also falls into the denition of
related party.
Oliver Bedford, a non-executive director of the Company is also an employee of the Investment Manager
which received fees of £29,500 for the year ended 30September 2024 in respect of his position on the Board
(2023:£28,000). Of these fees £7,375 was still owed at the year end. Oliver Bedford’s non-executive directorship
fees will increase to £30,500 per annum, with eect from 1October 2024.
CGWL acted as Administrator and Custodian for the year ended 30September 2024. On 7September 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 eect from 1October
2023.
With eect from 1October 2024, the administration agreement between the Company and CGWL was novated
to CGAM. Under the terms of the novation agreement, the administration fees paid by the Company were
unchanged at £250,000 (plus VAT). Notwithstanding the novation, CGWL will continue to receive a fee of £30,000
per annum in relation to its appointment as the Custodian. Any future initial or trail commissions paid to Financial
86
Intermediaries will be paid by CGAM.
For the year ended 30September 2024, CGWL received fees for the support functions as follows:
30September
2024
30September
2023
Custody 30,000 30,000
Administration 250,000 195,000
Total 280,000 225,000
Still owed at the year end 69,585 55,765
Under an oer agreement dated 7September 2023, CGWL was appointed by the Company to administer an oer
for subscription in the 2023/24 tax year and acted as receiving agent in relation to the oer. Under the terms
of the agreement CGWL received a fee of 3.5per cent. of the gross proceeds of the oer for providing these
services. The Administrator agreed to discharge commissions payable to nancial advisers in respect of accepted
applications for oer 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 oer
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 oer, including any introductory commission and discounts to potential
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 Ocial List and to trading on the main market of
the London Stock Exchange.
During the year, the Company issued 44,485,284 ordinary shares of 1 penny (nominal value £444,853) in an oer
for subscription, representing 13.57% of the opening share capital at prices ranging from 44.80p to 47.10p per
share. Gross funds of £20,321,529 were received. The 3.5% premium of £711,254 payable to CGWL under the
terms of the oer was reduced by £264,162, being the discount awarded to investors in the form of additional
shares. A further reduction of £470 introductory commission was made resulting in fees payable to CGWL of
£446,622 which were then used to pay other costs associated with the prospectus and marketing. In accordance
with the oer agreement, the Company was entitled to a rebate of £100,000 from CGWL reducing the net fees
payable to CGWL to £346,622.
CGAM 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 £2,565,844 (2023:£2,797,377) as detailed in note3. Of these fees
£615,231 (2023:£645,397) were still owed at the year end. As the Investment Manager to the Company and the
investment adviser to the IFSL Marlborough Special Situations Fund and the IFSL Marlborough UK Micro-Cap
Fund (in which the Company may and does 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 IMA to charge private
investee companies a fee equal to 1.5per 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 also recover external due diligence and transaction services costs directly from private investee
companies. Fees of £37,502 (2023:nil) were charged to investee companies in the year under this agreement.
Total commission of £31,925 was paid to CGWL in the year for broker services (2023:£63,318).
The Investment Manager has agreed to indemnify the Company and keep indemnied the Company in respect
of the amount by which the annual running costs of the Company exceed 3.5per 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 £8,845,455 in the client account held at CGWL at 30September 2024 (2023:£8,119,302).
87
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 denition. 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 may benet 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 50 to 55 of
the Annual Report.
A detailed review of the investment portfolio is contained in the Chair’s Statement and Investment Manager’s
Report on pages 4 to 9 and 28 to 31 respectively.
Classication 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 prot and loss account.
●
Fixed income securities – fair value through the prot and loss account
Other nancial assets comprise cash at bank and in hand of £4,766,381 (2023: £11,111,865), funds held with
Custodian of £8,845,455 (2023: £8,119,302), accrued income and debtors of £1,017,944 (2023:£1,434,688),
which is classied as ‘loans and receivables measured at amortised cost’. Financial liabilities consist of trade
creditors and accruals of £926,784 (2023:£905,897) which are classied 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 10per 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
2024
£’000
30% market
decrease
2024
£’000
Aggregate value
2024
£’000
Aggregate value
2023
£’000
AIM Qualifying Investments
(1)
13,234 -12,993 71,541 80,673
Unquoted Qualifying Investments
(2)
1,450 -2,389 11,265 8,453
Quoted Non-Qualifying Investments 3,613 -3,613 11,959 17,366
Authorised unit trusts 2,125 -2,125 19,768 8,268
Quoted Non-Qualifying xed income securities 338 -338 19,087 17,360
Vaneck Gold Miners UCITS ETF 229 -229 656 –
20,989 -21,687 134,277 132,120
(1) Includes variances in the value of CLN issued by Rosslyn Data Technologiesplc and Strip Tinningplc.
(2) Including variances in the value of CLNs issued by KidlyLtd.
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 30September 2024 would have increased by
£20,988,954 (2023:£22,164,436) or decreased by £21,686,392 (2023:£22,671,676) respectively.
88
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 FTSE250
Index as proxies for the AIM Qualifying Investments and quoted Non-Qualifying Investments and illustrates,
based on historical price movements and their relationship to movements in the FTSE100 index, their potential
change in value in relation to change in value of the reference index.
The review has also examined the potential impact of a 30% move in the market on the convertible loan note
investments held by the Company, whose values will vary according to the price of the underlying security into
which the loan noteinstrument 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, the impact of such exposure would be insignicant.
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:
30September 2024
Fixed
Rate
£000
Variable
Rate
£000
Non-Interest
Bearing
£000
Total
£000
Investments 22,866 – 111,411 134,277
Cash at bank and in hand – 4,766 – 4,766
Funds held with Custodian – 8,846 – 8,846
Other current assets (net) 823 – 224
(1)
1,047
Other current liabilities (net) – – (927) (927)
Net assets 23,689 13,612 110,708 148,009
30September 2023
Fixed
Rate
£000
Variable
Rate
£000
Non-Interest
Bearing
£000
Total
£000
Investments 20,860 – 111,260 132,120
Cash at bank and in hand – 11,112 – 11,112
Funds held with Custodian – 8,119 – 8,119
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
(1) Includes prepayments of £29k which is not considered a nancial asset.
(2) Includes prepayments of £40k which is not considered a nancial asset.
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 reected 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 sucient investments in cash or cash equivalents, or readily realisable securities to pay trade
creditors and accrued expenses (£926,784 as at 30September 2024). Liquidity risk is not considered material. As
at 30September 2024 the Company held £13,611,835 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 the due date for payment.
89
An investment will be impaired if the investee company is loss making and does not have sucient funds available
to transition into prot and in the opinion of the Investment Manager may fail to secure sucient equity or debt
funding to transition into prot, 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:
2024
£000
2023
£000
Fixed income securities;
Qualifying Investments (convertible loan notes) 3,778 3,500
Non-qualifying investments (investment grade corporate bonds) 19,088 17,361
Non-qualifying investments (UK gilt exchange traded fund) – 1,978
Total xed income securities 22,866 22,839
(1)
Cash at bank and in hand 4,766 11,112
Funds held at Custodian 8,846 8,119
Other assets 1,047 1,475
37,525 43,545
(1) Includes UK gilt exchange traded fund as underlying investments are xed income securities.
Cash held with Custodian comprises bank deposits held through CGWL (trading as CGWM) of £8.8million
(2023:£8.1million) . Funds are held with banks that are authorised and regulated to carry on banking or deposit-
taking business. All these meet the requirements of the UK’s FCA CASS rules. Through its treasury function,
CGWM uses a tiered level approach to counterparty selection to reect dierent maturities of cash held on
deposit.
Funds held on deposit through CGWL, are pooled with cash deposits from other clients of CGWL and diversied
across a specied 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 6months 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 notes1 and 11 to these accounts. The Company has no debt and is fully
funded by equity.
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16. Dividends
2024
Ord
£000
2023
Ord
£000
Paid per share:
Special capital dividend of 2.00pence for the year ended 30September 2023
–
6,216
Paid per share:
Final capital dividend of 2.00pence for year ended 30September 2022
–
6,216
Paid per share:
Interim capital dividend of 1.00 penny for year ended 30September 2023
–
3,298
Paid per share:
Final capital dividend of 1.50pence for the year ended 30September 2023
5,149
–
Paid per share:
Interim capital dividend of 1 penny for year ended 30September 2024
3,649
–
Paid per share:
Special capital dividend of 1.50pence for year ended 30September 2024
5,474
–
Dividends unclaimed (4)
(2)
(13)
(2)
14,268
(1)
15,717
(3)
Proposed per share:
Final capital dividend of 1.25pence for the year ended 30September 2024
4,591
–
Proposed per share:
Special capital dividend of 1.50pence for the year ended 30September 2025
5,510
–
Paid per share:
Final capital dividend of 1.50pence for the year ended 30September 2023
–
5,151
(1) The dierence between total dividends paid for the period ending 30September 2024 and the cash ow statement is £1,436,000 which
reects the amount of dividends reinvested under the DRIS of £1,440,000 less the £4,000 due to the Company for unclaimed dividends for a
period over 12years.
(2) Unclaimed dividends for a period of 12years due/reverted to the Company.
(3) The dierence between total dividends paid for the period ending 30September 2023 and the cash ow statement is £1,300,000 which
reects the amount of dividends reinvested under the DRIS.
17. Post balance sheet events
Share buybacks
As at 17December2024, 3,559,262 ordinary shares have been purchased at an average price of 38.24pence per
share and a total cost of £1,361,156.
Oer for subscription and shares issued
Under an oer agreement dated 9October 2024, CGAM was appointed by the Company to administer a new oer
for subscription for the 2024/25 tax year and act as receiving agent in relation to the oer. Under the terms of the
agreement CGAM will receive a fee of 3.5per cent. of the gross proceeds of the oer for providing these services.
The Administrator has agreed to discharge commissions payable to nancial advisers in respect of accepted
applications for Oer 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 oer 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 CGAM, 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 oer, including any introductory commission and discounts to
potential investors. However, the Administrator will not be responsible for the payment of listing fees associated
with the admission of the Oer Shares to the premium segment of the Ocial List and to trading on the main
market of the London Stock Exchange.
If following the nal admission under the oer, the aggregate fee that has been paid to CGAM exceeds the costs
and expenses referred to above by more than £25,000, then CGAM will rebate any surplus to the Company subject
to a maximum rebate of £100,000.
As at 17December2024, 5,907,854Oer Shares have been issued through the oer for subscription raising
gross proceeds of £2,411,037.
91
New investments
The Company has made the following investments since the period end:
Amount
invested
£000
Investment
into existing
company
Qualifying Investments
Feedback plc 750 No
Ixico plc 710 No
Rosslyn Data Technologiesplc 10% unsecured loan notes2029 400 Yes
Non-Qualifying Investments
Disposals
The Company has made the following full disposals since the period end:
Proceeds
£000
Qualifying Investments
Gnity plc 5
Surface Transforms plc 24
Non-Qualifying Investments
Bodycote plc 1,248
Corporate Actions
On 25 October 2024, the Company invested a further £400,000 into a new 2029 convertible loan note instrument
whilst also converting £300,000 (plus accrued interest) of the 2028 convertible loan note instrument into new
ordinary shares in Rosslyn Data Technologies plc.
On 11 November 2024, Aquis Exchange plc announced a recommended cash oer by SIX Exchange Group AG for
727 pence per share in cash. The acquisition remains subject to approval by a majority of shareholders.
On 4 December 2024, Learning Technologies Group plc announced a recommended cash oer by General
Atlantic (through Leopard UK Bidco Ltd) for 100 pence per share in cash. The acquisition remains subject to
approval by a majority of shareholders.
On 3 December 2024, Zappar Ltd announced that its acquisition by Innite Reality had not completed.
92
Alternative performance measures
Alternative performance measures
An APM is a nancial measure of the Company’s historic or future nancial performance, nancial position or cash
ows which is not dened or specied 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 denition of each APM is in the glossary of terms on pages 94 to 97. Where the calculation of the APM is not
detailed within the nancial statements, an explanation of the methodology employed is below:
NAV total return
30September
2024
30September
2023
Opening NAV per share A 46.34p 60.19p
Special dividend paid B 1.50p 2.00p
Final dividend paid C 1.50p 2.00p
Interim dividend paid D 1.00p 1.00p
Closing NAV per share E 40.55p 46.34p
NAV total return ((B+C+D+E-A)/A)*100 -3.86% -14.70%
NAV total return (dividends reinvested)
30September
2024
% Return
Opening NAV per share
(30September 2023)
A 46.34p
Closing NAV per share
(30September 2024)
40.55p
Final dividend for year paid
February2024
1.50p
Interim dividend
July2024
1.00p
Special dividend
July2024
1.50p
Total dividend payments 4.00p
Closing NAV per share plus dividends paid 44.55p -3.86% (-14.70%
30September 2023)
In year performance of reinvested dividends -0.16p
NAV total return (dividends reinvested) ((B-A)/A)*100 B 44.39p -4.21% (-15.93%
30September 2023)
Share price total return
30September
2024
30September
2023
Opening share price A 43.00p 62.75p
Special dividend paid B 1.50p 2.00p
Final dividend paid C 1.50p 2.00p
Interim dividend paid D 1.00p 1.00p
Closing share price E 39.00p 43.00p
Share price total returns ((B+C+D+E-A)/A)*100 0.00% -23.51%
93
Share price total return (dividends reinvested)
30September
2024
% Return
Opening share price
(30September 2023)
A 43.00p
Closing share price
(30September 2024)
39.00p
Final dividend for year
paid February2024 1.50p
Interim dividend
July2024
1.00p
Special dividend
July2024 1.50p
Total dividend payments 4.00p
Closing share price plus dividends paid 43.00p 0.00% (-23.51%
30September 2023)
In year performance of reinvested dividends -0.08p
Share price total return (dividends reinvested) ((B-A)/A)*100 B 42.92p -0.18% (-24.80%
30September 2023)
Ongoing charges ratio
The OCR has been calculated using the AIC’s “Ongoing Charges” methodology.
30September
2024
£000
30September
2023
£000
Investment management fee 2,565 2,797
Other expenses 1078
(1)
1,035
VCT proportion of IFSL Marlborough funds expenses 153 65
Ongoing charges A 3,796 3,897
Average net assets B 156,509 174,334
Ongoing charges ratio (A/B)*100 2.43% 2.24%
(1) Other expenses exclude London Stock Exchange fees of £49,110 for admission of shares under the oer for subscription and prior year
recognised loan stock interest and dividends not receivable of £368,495 expensed through the income statement as the Board do not
consider these costs to be ongoing costs to the fund. As per the AIC’s “Ongoing Charges” methodology, transaction costs are also excluded.
Share price discount
30September
2024
30September
2023
Share price A 39.00p 43.00p
Net asset value per share B 40.55p 46.34p
Discount ((A/B)-1)*100 -3.82% -7.21%
The 1-year average discount of -5.46% is calculated by taking the average of the share price discount at each
month end between 1October 2023 and 30September 2024.
The 5-year average discount of -5.79% is calculated by taking the average of the share price discount at each
month end between 1October 2019 and 30September 2024.
94
Glossary of terms
Administrator
Canaccord Genuity Wealth Limited (“CGWL”) until 30September 2024 and CGAM from 1October 2024.
AGM
The Company’s Annual General Meeting to be held at 12:30pm on 6February 2025 at 88 Wood Street,
London,EC2V7QR.
AIC
The Association of Investment Companies.
AIC Code
The AIC Code of Corporate Governance.
AIFM
Alternative Investment Fund Manager.
AIM
The Alternative Investment Market operated by the London Stock Exchange.
Annual Report
This annual report of the Company for the nancial year 1 October 2023 to 30 September 2024.
Articles
The articles of association of the Company from time to time.
AQSE Growth Market
The Growth Market of the Aquis Stock Exchange, a recognised investment exchange for growth companies
operated by Aquis Exchangeplc.
Auditor
The independent auditor of the Company, BDO LLP.
Board
The board of directors of the Company, from time to time.
CGWM
In the UK& Europe, Canaccord Genuity Wealth Management (“CGWM”) is a trading name of CGWL, CG Wealth
Planning Limited (“CGWPL”), CGAM, Intelligent CapitalLtd (“ICL”) and Canaccord Genuity Wealth (International)
Limited (“CGWIL”), which are all subsidiaries of Canaccord Genuity GroupInc. In Scotland, Adam& Company
is a trading name of Canaccord Genuity Wealth Limited (“CGWL”), CG Wealth Planning Limited (“CGWPL”) and
Intelligent Capital Limited (“ICL”).
Company
Hargreave Hale AIM VCTplc.
Company Secretary
JTC (UK) Limited.
Custodian
Canaccord Genuity Wealth Limited (“CGWL”).
Director
A director of the Company.
DRIS
The dividend reinvestment scheme operated by the Company.
Earnings per share total return
Total prot/(loss) for the reporting period divided by the weighted average number of shares in issue.
95
Eligible Shares
Shares in Qualifying Companies which do not carry preferential rights to dividends and/or assets on a winding-up
or redemption.
FCA
The Financial Conduct Authority.
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.
IMA
Investment management agreement between the Company and CGAM dated 7September 2023.
Investment Manager
Canaccord Genuity Asset Management Limited (“CGAM”).
IPEV Guidelines
International Private Equity and Venture Capital Valuation guidelines.
IPO
The process by which a company obtains a rst listing or quotation for securities on an investment exchange and
oers securities to the public for the rst time.
ISAs (UK)
International Standards on Auditing (UK).
ITA
Income Tax Act2007, as amended.
KID
The Company’s Key Information Document.
Knowledge Intensive Companies
A company satisfying the conditions in Section331(A) of Part6 ITA.
KPIs
Key performance indicators.
MSPEC
The Management and Service Provider Engagement Committee of the Board.
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.
Oer Shares
New ordinary shares of 1 penny each in the capital of the Company issued or to be issued pursuant to the Oer
for Subscription of Ordinary Shares in Hargreave Hale AIM VCTplc launched on 9October 2024.
PRIIPs
(Retained EU legislation) Regulation (EU) No 1286/2014 on key information documents for packaged retail and
insurance-based investment products (PRIIPs).
Qualifying Company or Qualifying Investment
An investment made by a venture capital trust in a trading company which comprises a qualifying holding under
Chapter4 of Part6 ITA.
96
Qualifying Trade
A trade complying with the requirements of section 300 ITA.
Receiving Agent
Canaccord Genuity Asset Management Limited (or “CGAM”).
Registrar
Equiniti Limited.
SaaS
Software-as-a-Service.
Section 172
Section 172 of the Companies Act 2006.
Shareholders
Holders of ordinary shares of 1pence each in the capital of the Company, from time to time.
SORP
Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital
Trusts (2022).
State aid
State aid received by a company as dened in Section280B (4) of ITA.
UK GAAP
United Kingdom Generally Accepted Accounting Practice and applicable law.
VCT or Venture Capital Trust
Venture capital trust as dened in section 259 ITA.
VC TA
The VCT Association.
VCT Rules
All legislation, rules and regulations that apply to VCTs from time to time, including the ITA.
Alternative performance measures (or “APMs”)
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 dened or specied 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.
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
97
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 diers from the methodology followed by the registrar when issuing shares under the
Company’s dividend re-investments scheme.
Ongoing charges ratio (or “OCR”)
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.
98
Shareholder information
The Company’s ordinary shares (Code:HHV) are listed on the London Stock Exchange. Shareholders can visit the
London Stock Exchange website, 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 www.hargreaveaimvcts.co.uk.
Net asset value per share
The Company’s NAV per share as at 6December2024 was 40.29pence per share. The Company publishes its
unaudited NAV per share on a weekly basis.
Dividends
Subject to approval at the forthcoming AGM on 6February 2025, the Board has proposed the payment of a nal
dividend of 1.25pence in respect of the nancial year ending 30September 2024. A special dividend of 1.50pence
per share has also been approved by the Board.
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
Registrar. Alternatively, bank details can be updated through the Registrar’s Shareview system.
Dividend reinvestment scheme
The Company oers a DRIS scheme 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 Registrar or by visiting the Company’s website
at www.hargreaveaimvcts.co.uk. As new ordinary shares will be issued, Shareholders are also able to claim tax
relief on the shares, including 30per cent. income tax relief on their investment (subject to the terms of the VCT
Rulesand the personal circumstances of the Shareholder). To exit the DRIS, a revoke form must be completed and
returned to the Registrar. Revoke forms can be obtained by contacting the Registrar or by visiting the Company’s
website at www.hargreaveaimvcts.co.uk. Please notethat completing a bank mandate form or adding bank details
to your account through Shareview in isolation will not remove you from the DRIS scheme.
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 eective 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 certicated 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. CGWM can facilitate the sale of the Company’s shares and is able to act for 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 CGAM please contact the VCT administration team at aimvct@
canaccord.com or call 01253 376622.
Please notethat CGAM will need to be in possession of the share certicate and a completed CREST transfer form
before executing the sale. If you have lost your share certicate, then you can request a replacement certicate
from the Registrar. 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 indemnication is a form of insurance, the indemnifying body will ask for a payment to
reect their risk. Fees will reect the value of the potential liability.
Shareholder enquiries:
For general Shareholder enquiries, please contact the administration team at CGAM on 01253 376622 or by
99
e-mail to aimvct@canaccord.com. For enquiries concerning the performance of the Company, please contact the
Investment Manager on02075234837 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 www.
hargreaveaimvcts.co.uk.
Change of address
To notify the Company of a change of address please contact the Registrar at the address on page100.
Alternatively, address details can be updated through the Registrar’s Shareview system.
100
Company information
Directors
David Brock, Chair
Oliver Bedford
Angela Henderson
Megan McCracken
Busola Sodeinde
Justin Ward
Investment Manager and Administrator
Canaccord Genuity Asset Management Limited
88 Wood Street
London
EC2V 7QR
Custodian
Canaccord Genuity Wealth Limited
c/o Talisman House
Boardmans Way
Blackpool
FY4 5FY
Company Secretary
JTC (UK) Limited
The Scalpel
18th Floor
52 Lime Street
London
EC3M 7AF
VCT Status Adviser
Philip Hare& AssociatesLLP
6 Snow Hill
London
EC1A 2AY
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Auditors
BDOLLP
55 Baker Street
London
W1U 7EU
Brokers
Singer Capital Markets Securities Limited
One Bartholomew Lane
London
EC2N 2AX
Company Registration Number
05206425 in England and Wales
Registered oce
Talisman House
Boardmans Way
Blackpool
FY4 5FY
Solicitors
Howard KennedyLLP
1 London Bridge
London
SE1 9BG
101
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the ANNUAL GENERAL MEETING of Hargreave Hale AIM VCTplc
(the“Company”) (the “AGM”) will be held at 88 Wood Street, LondonEC2V7QR on Thursday6February 2025 at
12.30pm for the purposes of considering and if thought t, passing the following resolutions, of which resolutions
1 to 12 (inclusive) will be proposed as ordinary resolutions and resolutions 13 and 14 as special resolutions:
Ordinary Resolutions
1. To receive and adopt the reports of the directors and auditor and the audited nancial statements for the
year ended 30September 2024.
2. To receive and approve the directors’ remuneration report for the year ended 30September 2024.
3. To approve the directors’ remuneration policy, the full text of which is contained in the directors’
remuneration report for the year ended 30September 2024.
4. To reappoint BDOLLP as auditors to the Company and to authorise the directors of the Company to
determine their remuneration.
5. To re-elect David Brock as a director of the Company.
6. To re-elect Oliver Bedford as a director of the Company.
7. To re-elect Justin Ward as a director of the Company.
8. To re-elect Megan McCracken as a director of the Company.
9. To re-elect Busola Sodeinde as a director of the Company.
10. To approve a nal dividend of 1.25pence per ordinary share in respect of the year ended 30September 2024.
11. To authorise the directors of the Company (the “Directors”), in addition to any existing power and authority
granted to the Company pursuant to Article29 of the Company’s articles of association (the “Articles”),
to exercise the power conferred on them by Article29 of the Articles to oer holders of ordinary shares in
the capital of the Company the right to elect to receive ordinary shares of 1 penny each in the capital of the
Company (“Ordinary Shares”) credited as fully paid, instead of cash, in respect of the whole (or some part to
be determined by the Directors) of dividends declared, made or paid during the period starting with the date
of this resolution and ending at the conclusion of the next annual general meeting of the Company following
the date of this resolution and to authorise the Directors to do all acts and things required or permitted to be
done in accordance with the Articles in connection therewith.
12. THAT, in addition to all existing authorities, the Directors be and are hereby generally and unconditionally
authorised in accordance with section 551 of the Companies Act2006 (the “Act”) to exercise all the powers
of the Company to allot Ordinary Shares and to grant rights to subscribe for, or to convert any security into,
Ordinary Shares (“Rights”), up to an aggregate nominal value of £367,326 (being equal to approximately
10per cent. of the Company’s issued share capital (excluding treasury shares) as at 17December2024
generally from time to time or pursuant to Shareholders’ right to elect to participate in the dividend
reinvestment scheme operated by the Company in accordance with Article29 of the Articles on such terms
as the Directors may determine, such authority to expire on the earlier of the conclusion of the Annual
General Meeting of the Company to be held in 2026 and the expiry of 15months from the passing of this
resolution (unless previously renewed, varied or revoked by the Company in a general meeting), but so that
this authority shall allow the Company to make, before the expiry of this authority oers or agreements
which would or might require Shares to be allotted or Rights to be granted after such expiry and the Directors
shall be entitled to allot Shares or grant Rights pursuant to any such oers or agreements as if the power
conferred by this resolution had not expired.
Special Resolutions
13. THAT, in addition to all existing authorities and subject to the passing of Resolution12 set out in this notice
of meeting, the Directors be and are hereby empowered, pursuant to sections 570 and 573 of the Act to
allot equity securities (within the meaning of section 560 of the Act) for cash pursuant to the authority given
pursuant to Resolution12 set out in the notice of this meeting, or by way of a sale of treasury shares, as if
section 561(1) of the Act did not apply to any such allotment or sale, provided that this power:
(i) shall be limited to the allotment of equity securities and the sale of treasury shares for cash up to an
aggregate nominal amount of £183,663 (representing approximately 5per cent. of the issued share
capital of the Company (excluding treasury shares) as at 17December2024) pursuant to the dividend
reinvestment scheme operated by the Company;
102
(ii) shall be limited to the allotment of equity securities and the sale of treasury shares for cash (otherwise
than pursuant to sub-paragraph(i) above), up to an aggregate nominal amount of £183,663
(representing approximately 5per cent. of the issued share capital of the Company (excluding treasury
shares) as at 17December2024); and
(iii) expires on the earlier of the conclusion of the Annual General Meeting of the Company to be held in
2026 and the expiry of 15months from the passing of this resolution (unless previously renewed, varied
or revoked by the Company in a general meeting), save that the Company may before such expiry make
an oer or agreement which would or might require equity securities to be allotted after such expiry
and the Directors may allot equity securities in pursuance of such an oer or agreement as if the power
conferred by this resolution had not expired.
14. THAT, in substitution for any existing authority but without prejudice to the exercise of any such authority
prior to the date hereof, the Company be generally and unconditionally authorised, in accordance with
section 701 of the Act, to make one or more market purchases (within the meaning of section 693(4) of the
Act) of its Ordinary Shares on such terms and in such manner as the directors may determine (either for
cancellation or for retention as treasury shares for future re-issue, resale, transfer or cancellation) provided
that:
a) the maximum aggregate number of Ordinary Shares hereby authorised to be purchased is
55,062,233Ordinary Shares or, if less, the number representing approximately 14.99per cent. of the
issued share capital of the Company as at the date of the passing of this resolution;
b) the maximum price (excluding expenses) which may be paid for any Ordinary Share purchased pursuant
to this authority shall not be more than the higher of:
(i) 105per cent. of the average of the middle market quotations of an Ordinary Share in the
Company, as derived from the London Stock Exchange Daily Ocial List, for the ve business
days immediately preceding the date of purchase; and
(ii) the higher price of the last independent trade of an Ordinary Share and the highest current
independent bid for such a share on the London Stock Exchangeplc;
c) the minimum price (excluding expenses) which may be paid for an Ordinary Share shall be 1 penny (the
nominal value thereof); and
d) unless previously varied, revoked or renewed by the Company in general meeting, the authority hereby
conferred shall expire at the conclusion of the Annual General Meeting of the Company to be held in
2026 or on the expiry of 15months following the passing of this resolution, whichever is the earlier,
save that the Company may, prior to the expiry of such authority, enter into a contract or contracts to
purchase ordinary shares under such authority which will or might be completed or executed wholly or
partly after the expiration of such authority and may make a purchase of Ordinary Shares pursuant to
any such contract or contracts as if the power conferred by this resolution had not expired.
By order of the Board of Directors.
JTC (UK) Limited
Company Secretary
Registered Oce:
The Scalpel
18th Floor
52 Lime Street
London
EC3M 7AF
17December2024
A member entitled to attend and vote at this meeting may appoint a proxy or proxies to attend and vote on their
behalf. A proxy need not also be a member of the Company, however Shareholders who wish to appoint a proxy
are recommended to appoint the Chair of the AGM as their proxy. To be eective, forms of proxy together with
the power of attorney or other authority, if any, under which it is signed, or a notorially certied copy or a copy
103
certied in accordance with the Powers of Attorney Act1971 of that power or authority must be lodged with
the Company’s Registrar, Equiniti Limited, Aspect House, Spencer Road, Lancing, West SussexBN996DA (the
“Registrar”) not less than 48hours (excluding non-working days) before the time appointed for holding the
meeting or any adjourned meeting.
A member may appoint more than one proxy, provided each proxy is appointed to exercise rights attached to
dierent shares. Members may not appoint more than one proxy to exercise rights attached to any one ordinary
share. The return of a completed proxy form or other instrument of proxy will not prevent you attending the AGM
and voting in person if you wish. The right to appoint a proxy does not apply to persons whose shares are held
on their behalf by another person and who have been nominated to receive communications from the Company
in accordance with Section146 of the Companies Act2006 (nominated persons). Nominated persons may have
a right under an agreement with the member who holds the shares on their behalf to be appointed (or to have
someone else appointed) as a proxy. Alternatively, if nominated persons do not have such a right, or do not wish
to exercise it, they may have a right under such an agreement to give instructions to the person holding the
shares as to the exercise of voting rights.
The Company, pursuant to Regulation 41 of the Uncertied Securities Regulations 2001 species that only
those members registered in the register of members of the Company as at 6.30pm on 4February 2025 or, in
the event that the meeting is adjourned, on the register of members at 6.30pm on the day two days (excluding
non-working days) prior to the reconvened meeting, shall be entitled to attend or vote at the aforesaid annual
general meeting in respect of the number of shares registered in their name at that time. Changes to entries on
the relevant register of members after 6.30pm on 4February 2025 (or in the event that the meeting is adjourned,
as at 6.30pm two days (excluding non-working days) prior to the adjourned meeting) shall be disregarded in
determining the rights of any person to attend or vote at the meeting notwithstanding any provisions in any
enactment, the Articles of Association of the Company or any other instrument to the contrary.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment
service may do so for the meeting and any adjournment(s) thereof by using the procedures described in the
CREST Manual (www.euroclear.com). CREST personal members or other CREST sponsored members who have
appointed a voting service provider(s) should refer to their CREST sponsor or voting service provider(s), who
will be able to take appropriate action on their behalf. In order for a proxy appointment or instruction made by
means of CREST to be valid, the appropriate CREST message (a “CREST proxy instruction”) must be properly
authenticated in accordance with Euroclear’s specications and must contain the information required for
such instructions, as described in the CREST Manual. The message must be transmitted so as to be received
by the Registrar (ID RA19), not later than 48hours (excluding non-working days) before the time appointed for
the meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp
applied to the message by the CREST Applications Host) from which the Registrar is able to retrieve the message
by enquiry to CREST in the manner prescribed by CREST.
CREST members and where applicable their CREST sponsors or voting service provider(s) should notethat
Euroclear does not make available special procedures in CREST for any particular messages. Normal system
timings and limitations will therefore apply in relation to the input of CREST proxy instructions. It is the
responsibility of the CREST member concerned to take (or if the CREST member is a CREST personal member or
sponsored member or has appointed a voting service provider(s), to procure that their CREST sponsor or voting
service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means
of the CREST system by any particular time. In this connection, CREST members and where applicable, their
CREST sponsors or voting service provider(s) are referred, in particular, to those sections of the CREST Manual
concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST proxy instruction in the circumstances set out in Regulation 35(5)(a) of
the Uncerticated Securities Regulations 2001.
If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity platform, a
process which has been agreed by the Company and approved by the Registrar. For further information regarding
Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 12.30pm on 4February 2025 in order to
be considered valid. Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s
associated terms and conditions. It is important that you read these carefully as you will be bound by them and
they will govern the electronic appointment of your proxy.
104
It is possible for you to submit your proxy votes online by going to the Registrar’s Shareview website,
www.shareview.co.uk, and logging in to your Shareview Portfolio. Once you have logged in, simply click ‘View’ on
the ‘My Investments’ page and then click on the link to vote and follow the on-screen instructions. If you have
not yet registered for a Shareview Portfolio, go to www.shareview.co.uk and enter the requested information.
It is important that you register for a Shareview Portfolio with enough time to complete the registration and
authentication processes.
A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for
or against the resolution. If no voting indication is given, the proxy will vote or abstain from voting at his or her
discretion. The proxy will vote (or abstain from voting) as he or she thinks t in relation to any other matter which
is put before the meeting.
Information regarding the AGM, including the information required by section 311A of the Companies Act2006, is
available from https://www.hargreaveaimvcts.co.uk.
Under section 319A of the Companies Act2006, the Company must answer at the AGM any question a member
asks relating to the business being dealt with at the AGM unless:
●
answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of
condential information;
●
the answer has already been given on a website in the form of an answer to a question; or
●
it is undesirable in the interests of the Company or the good order of the meeting that the question be
answered.
In accordance with Section311A of the Companies Act2006, the contents of this notice of meeting, details of
the total number of shares in respect of which members are entitled to exercise voting rights at the AGM and if
applicable, any members’ statements, members’ resolutions or members’ matters of business received by the
Company after the date of this notice will be available on the Company’s website https://www.hargreaveaimvcts.
co.uk.
Members satisfying the thresholds in Section527 of the Companies Act2006 can require the Company to publish
a statement on its website setting out any matter relating to the audit of the Company’s accounts (including the
auditor’s report and the conduct of the audit) that are to be laid before the AGM that the members propose to
raise at the meeting. The Company cannot require the members requesting the publication to pay its expenses.
Any statement required to be placed on the website must also be sent to the Company’s auditor no later than
the time it makes its statement available on the website. The business which may be dealt with at the meeting
includes any statement that the Company has been required to publish on its website.
Members representing 5per cent. or more of the total voting rights of all members or at least 100 persons (being
either members who have a right to vote at the AGM and hold shares on which there has been paid up an average
sum, per member, of £100, or persons satisfying the requirements set out in s.153(2)of the Companies Act 2006)
may:
a) require the Company, under s.338 of the Companies Act2006, to give notice of a resolution which may
properly be moved at the AGM. Any such request, which must comply with s.338(4)of the Companies
Act2006, must be received by the Company no later than 6 weeks before the date xed for the AGM; and
b) require the Company, under s.338A of the Companies Act2006 to include any matter (other than a proposed
resolution) in the business to be dealt with at the AGM. Any such request, which must comply with s.338A of
the Companies Act2006, must be received by the Company no later than 6 weeks before the date xed for
the AGM.
Any person holding 3per cent. or more of the total voting rights of the Company who appoints a person other
than the Chair of the meeting as his/her proxy will need to ensure that both he/she and his/her proxy complies
with their respective disclosure obligations under the UK Disclosure Guidance and Transparency Rules.
Any corporation which is a member can appoint one or more corporate representatives who may exercise on its
behalf all of its powers as a member provided that they do not do so in relation to the same shares.
Shareholders (and any proxy or representatives they appoint) agree, by attending the meeting, that they are
expressly requesting that they are willing to receive any communications (including communications relating to
the Company’s securities) made at the meeting.
105
Members who have general queries about the meeting should contact the Registrar on +44(0)3713842714,
ifcalling from outside the UK, please ensure the country code is used, or contact them via their website
www.shareview.co.uk. Lines are open 8.30am to 5.30pm Monday to Friday (excluding public holidays in England
and Wales), (no other methods of communication will be accepted). You may not use any electronic address
provided either in this notice of meeting or any related documents (including the form of proxy) to communicate
with the Company for any purpose other than those expressly stated.
Note:
1. The following documents will be available for inspection at the registered oce of the Company, Talisman
House, Boardmans Way, Blackpool, England,FY45FY, during usual business hours on a weekday (except
Saturdays, Sundays and Public Holidays) until the date of the meeting and at the place of the meeting for a
period of 15 minutes up to and during the meeting;
a) copies of the Directors’ letters of appointment;
b) the Articles of Association of the Company; and
c) the register of Directors’ interests in the shares of the Company.
2. As at 17December2024 (being the latest business day prior to the publication of this Notice), the Company’s
issued share capital consists of 367,326,440Ordinary Shares, carrying one vote each. Therefore, the total
voting rights in the Company are 367,326,440.
106
Appendix - Scrip dividend scheme
SUMMARY TERMS AND CONDITIONS
General
The Company operates, through the Registrar, a DRIS whereby Shareholders can elect to have relevant dividends
reinvested in new Ordinary Shares.
The Company seeks to renew its DRIS by virtue of Resolution11 set out in the Notice of AGM. If Resolution11 is
passed, the DRIS will apply to any subsequent interim or nal dividend of the Company in respect of which a scrip
dividend alternative is oered and this Shareholder authority will expire at the AGM to be held in 2026.
When a future dividend is announced, the Company will advise if the DRIS applies to that dividend, together with
the relevant details for that dividend.
The details (including the timetable, price etc.) for each relevant dividend to which the DRIS will apply along with
the full terms and conditions of the DRIS, will be/are available on the Company’s website at
https://www.hargreaveaimvcts.co.uk. Information regarding future scrip dividend alternatives will also be
provided via a Regulatory Information Service. Shareholders can also contact the Registrar on their helpline
at03713842714 (or from overseas on +441214157047) if they have any questions about the operation of the
DRIS in respect of any relevant dividend.
Whether or not you should elect to receive new Ordinary Shares instead of cash in respect of any future relevant
dividends may depend on your own personal tax circumstances. Please note, the tax treatment may change
during the period for which the Scrip Dividend Scheme is available.
For the avoidance of doubt, if you currently participate in the Company’s DRIS and do not wish to cancel your
standing mandate, there is no need to complete a new Mandate Form as your existing mandate will stand.
For general enquiries about the DRIS please contact the Registrar on03713842714 (or from overseas on
+441214157047) or contact them via their website www.shareview.co.uk. Lines are open from 8:30a.m. to
5:30p.m. Monday to Friday (except UK public holidays). Calls to the helpline from outside the UK will be charged at
applicable international rates. Calls may be recorded and randomly monitored for security and training purposes.
The helpline cannot provide advice on the merits of the DRIS nor give any personal nancial, legal or tax advice.
Summary terms and conditions of the DRIS
For the avoidance of doubt, unless the context otherwise requires, all dened terms used in this
Appendixhave the same meanings as set out in the ‘DRIS Terms and Conditions’ available on the Company’s
website at https://www.hargreaveaimvcts.co.uk.
1. Participation in the DRIS
a. Applicants may join the DRIS by giving notice in writing to the DRIS Manager. The Company, acting through
the DRIS Manager, shall have absolute discretion to accept or reject applications to participate in the DRIS. An
Applicant shall become a member of the DRIS upon acceptance of his or her application by the DRIS Manager
on the Company’s behalf. The DRIS Manager will provide written notication if an application is rejected. Only
Shareholders or their applicable Nominee Shareholder may join the DRIS.
b. In order to participate in the DRIS in relation to a certain Investment Date an Applicant must have notied
the DRIS Manager of their intention to participate in the DRIS at least ten Business Days prior to the relevant
Investment Day.
c. The Company shall not be obliged to accept any application or issue Ordinary Shares hereunder if the
Directors so decide in their absolute discretion. The Company may do or refrain from doing anything which,
in the reasonable opinion of the Directors, is necessary to comply with the law of any jurisdiction or any rules,
regulations or requirement of any regulatory authority or other body which is binding upon the Company or
the DRIS Manager.
d. The Company and the DRIS Manager shall be entitled, at their absolute discretion at any time and from time
to time, to suspend the operation of the DRIS and/or to terminate the DRIS without notice to the Applicants
and/or to resolve to pay dividends to Applicants partly by way of cash and partly by way of new Ordinary
Shares and/or to refuse to invest dividends due on Ordinary Shares held by a Nominee Shareholder where
the DRIS Manager is unable to obtain conrmation of the identity and shareholdings of the relevant Benecial
Shareholder. In the event of termination, the Company shall, subject to the terms and conditions, pay to each
Applicant all of the monies held by the Company on his or her behalf under the DRIS.
107
e. Applicants who are not Shareholders may join the DRIS in respect of the number of Ordinary Shares of the
Company specied as Nominee Shareholdings and notied to the DRIS Manager by the Applicant and the
Shareholder in whose name the Ordinary Shares are held.
f. The number of Ordinary Shares held by any such Applicant which are mandated to the DRIS shall be altered
immediately following any change to the number of Ordinary Shares in respect of which such Shareholder is
the registered holder as entered onto the share register of the Company from time to time.
g. Applicants who hold their Ordinary Shares through a Nominee may join the DRIS in respect of the number of
Ordinary Shares of the Company specied as Nominee Shareholdings and notied to the DRIS Manager by
the Applicant and the Shareholder in whose name the Ordinary Shares are held.
2. Issue of Ordinary Shares under the DRIS
a. On an Investment Day, dividends paid, or to be paid, on Ordinary Shares held by, or on behalf of, Applicants
who have elected to participate in the DRIS in relation to those Ordinary Shares shall be transferred by the
Company to the DRIS.
b. On or as soon as practicable after an Investment Day, the funds held within the DRIS on behalf of an Applicant
shall be applied on behalf of that Applicant in the subscription for the maximum number of whole new
Ordinary Shares as can be acquired with those funds.
c. The number of new Ordinary Shares to be allotted to an Applicant shall be calculated by dividing the funds
held within the DRIS on behalf of the Applicant by the greater of:
I. the latest published net asset value per Ordinary Share (net of all unpaid dividends declared on or before
an Investment Day);
II. the nominal value per Ordinary Share; and
III. the mid-market price per Ordinary Share as quoted on the London Stock Exchange, each at the close of
business on the tenth Business Day preceding the date of issue of such Ordinary Shares.
Fractions of new Ordinary Shares will not be allotted to Applicants and their entitlement will be rounded down
to the nearest whole number of new Ordinary Shares.
d. Any balance of cash remaining within the DRIS for the account of an Applicant after an issue of Ordinary
Shares is made shall be held by the Company on behalf of the relevant Applicant and added to the cash
available in respect of that Applicant for the subscription of Ordinary Shares on the next Investment Day. No
interest shall accrue or be payable in favour of any Applicant on any such cash balances carried forward. All
cash balances held by the Company will be held as banker and not trustee and as a result will not be held in
accordance with any client money rules made by the Financial Conduct Authority from time to time.
e. The new Ordinary Shares will rank equally with all existing Ordinary Shares.
f. The issue of Ordinary Shares under the DRIS shall be conditional on the following:
I. the Company having the requisite Shareholder authorities to allot Ordinary Shares under the DRIS; and
II. the Company having not issued Ordinary Shares representing more than 10per cent. of its issued share
capital under the DRIS in the 12months immediately preceding the Investment Date, and if this limit
is reached in relation to Ordinary Shares to be issued on an Investment Date, the entitlements of each
Applicant in relation to that Investment Date will be scaled back on a pro-rata basis.
g. The Company shall immediately after the issue of Ordinary Shares under the DRIS take all necessary steps
to ensure that those Ordinary Shares shall be admitted to the Ocial List and to trading on the premium
segment of the main market of the London Stock Exchange, provided that at the time of such issue the
existing Ordinary Shares in issue are so admitted to the Ocial List and to trading on the premium segment
of the main market of the London Stock Exchange.
h. The DRIS Manager shall as soon as practicable after the issue of Ordinary Shares take all necessary steps
to ensure that the Applicants (or, where an Applicant is not a Shareholder, the Shareholder on whose behalf
the Ordinary Shares mandated to the DRIS are held) are entered onto the share register of the Company as
the registered holders of the Ordinary Shares issued to them in accordance with the DRIS, and that share
certicates (unless such Ordinary Shares are to be uncerticated in which case the new Ordinary Shares will
be credited to the Applicant’s CREST account) in respect of such Ordinary Shares are issued and delivered to
Applicants at their own risk
108
Applicants (or such other person as aforesaid) will receive with their share certicates (if any) a statement
detailing:
I. the total number of Ordinary Shares held at the Investment Day in respect of which a valid election to
participate in the DRIS was made;
II. the amount of the dividend available for investment and participation in the DRIS;
III. the price at which each Ordinary Share was issued under the DRIS;
IV. the number of Ordinary Shares issued and the date of issue; and the amount of cash to be carried
forward for investment on the next Investment Day.
3. Terminating and amending participation in the DRIS
a. An Applicant may at any time by completing a Mandate Form and sending it to the DRIS Manager, terminate
his or her participation in the DRIS and withdraw any monies held by the Company on his or her behalf in
relation thereto.
b. If an Applicant who is a Shareholder shall at any time cease to hold Ordinary Shares, he or she shall be
deemed to have submitted a Mandate Form under paragraph3(a) above in respect of his or her participation
in the DRIS. Whenever a Nominee Shareholder sells Ordinary Shares on behalf of the Benecial Shareholder,
the Nominee Shareholder agrees to notify the DRIS Manager of the full details of the sale as soon as
practicable. Neither the Company nor the DRIS Manager shall be responsible for any loss or damage as
a result directly or indirectly of a failure by a Nominee Shareholder to comply with such obligation. If a
Shareholder in whose name Ordinary Shares are held on behalf of an Applicant shall at any time cease to hold
any Ordinary Shares on behalf of that Applicant, he or she shall be deemed to have submitted a Mandate
Form under paragraph3(a) above in respect of his or her participation in the DRIS. If notice of termination
is served or deemed to have been served, all of the monies held by the Company on the Applicant’s behalf
shall be delivered to the Applicant as soon as reasonably practicable at the address set out in the Mandate
Form, subject to any deductions which the Company may be entitled or bound to make. Any Mandate Form
submitted or deemed to have been submitted as set out above shall not be eective in respect of the next
forthcoming Investment Day unless it is received by the DRIS Manager at least ten Business Days prior to
such Investment Day.
c. Cash balances of less than £1 held on behalf of Applicants who have withdrawn from, or otherwise cease
to participate in, the DRIS will not be repaid, but will be donated to a recognised registered charity at the
discretion of the Company.
4. Notices
All Mandate Forms and any other notices and instructions to be given to the DRIS Manager shall be in writing and
delivered or posted to Equiniti Limited, Aspect House, Spencer Road, LancingBN996DA.
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100% of the inks used are vegetable oil based, 95% of press chemicals are recycled for further use and, on
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Hargreave Hale AIM VCT plc
(Incorporated in England and Wales
under the companies act 1985
with registered number 05206425)
