16 December 2022

HARGREAVE HALE AIM VCT PLC
(the “Company”)

Full Year Results and Notice of AGM

Hargreave Hale AIM VCT plc announces its results for the year ended 30 September 2022.

The Company also announces that its 2023 Annual General Meeting will be held at 10.30am on 2 February 2023 at Wood Street, London, EC2V 7QR.

The Company’s Annual Report and Financial Statements for the year ended 30 September 2022 and the formal Notice of the Annual General Meeting will be posted to shareholders who have elected to receive hard copies and in accordance with Listing Rule 9.6.1 copies of the documents have been submitted to the UK Listing Authority and will shortly be available to view on the Company's corporate website at https://www.hargreaveaimvcts.co.uk  and have also been submitted to the UK Listing Authority and will be shortly available for inspection from the National Storage Mechanism at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism

Strategic report
The report has been prepared by the Directors in accordance with the requirements of Section 414A of the Companies Act 2006.

Financial highlights for the year ended 30 September 2022

Net asset value (NAV) per share NAV total return Tax free dividends paid in the period Share price total return Ongoing charges ratio
60.19p -33.42%(1) 6.65p -28.06%(1 2.06%(1

Financial highlights for the year ended 30 September 2022 

Summary financial data 2022 2021
NAV (£m) 160.51 228.96
NAV per share (p) 60.19 100.39
NAV total return (%)(1) -33.42 42.26
Market capitalisation (£m) 167.32 212.11
Share price (p) 62.75 93.00
Share price premium/discount to NAV per share (%)(1) +4.25(2) -5.00(3)
Share price 5 year average discount to NAV per share (%)(1) -5.65(2) -6.31(3)
Share price total return (%)(1) -28.06 51.36
(Loss)/gain per share for the year (p) -33.42 30.45
Dividends paid per share (p) 6.65 4.40
Ongoing charges ratio (%)(1) 2.06 2.12

(1)   Alternative performance measure definitions and illustrations can be found in the glossary of terms.

(2)   The FY22 year end premium to NAV and the 5 year average discount to NAV is a function of the year end NAV of 60.19 pence per share and the year end share price.

(3)   The FY21 year end discount to NAV and the 5 year average discount to NAV is a function of the year end ex-dividend NAV of 97.89p pence per share and the year end share price.

 Financial Calendar

Financial calendar  
Record date for final and special dividends 6 January 2023
Payment of final and special dividends 10 February 2023
Annual General Meeting 2 February 2023
Announcement of half-yearly results for the six months ending 31 March 2023 June 2023
Payment of interim dividend (subject to Board approval) July 2023


Chairman’s statement

Introduction
I would like to welcome shareholders who have joined us as a result of the recent offers for subscription. As always, we are grateful to new and existing shareholders who continue to support the VCT, despite the difficult times we are living through.

2021 featured much discussion about the inflationary threat, transitory or sticky. Many central banks, including our own, were of the view that the supply disruption that had played an important role in driving inflation higher in 2021 would abate in 2022 as the world continued to normalise through a post-Covid reopening. Russia’s invasion of Ukraine, devastating for those directly involved, catalysed an energy shock with profound implications for the economy, households and wider society. Central banks have responded aggressively with immediate consequences for the cost of capital, both to companies and households. The economic outlook, already challenging, got significantly worse.

We are fortunate to be investing in some of the UK’s most exciting growth companies. For many, these more difficult times will not significantly impact their growth journey. Their success will be determined by the quality of the products and services they are developing, and their ability to commercialise those on attractive terms. Others, most obviously those facing the UK consumer, currently under so much pressure, will see revenues and cash flows come under pressure next year. However, those that are well-capitalised and well-managed will have opportunities to emerge stronger or build market share as weaker competitors retrench.

Performance
As described in more detail in the Investment Manager’s report, this has been a very difficult year for performance; the largest decline in the net asset value since the global financial crisis. The pain has not been limited to the investments in public companies; our investments in private companies have been significantly marked lower too. With the exception of Zappar, our unlisted companies are consumer facing. All of them face markedly more difficult trading environments in the short term, now reflected in their valuations. Equally important, in some cases more so, is the very dramatic decline in the valuations of their public company peers. This cannot be ignored, even if it has required us to make some uncomfortable decisions but we do not expect the changes to reflect permanent loss of value. At some point in 2023, we expect to look forward to better times. As we emerge from recession, fundamentals will improve and markets will recover their poise. In the meantime, your manager will work tirelessly to invest in tomorrow’s success stories, laying the foundations for future performance.

At 30 September 2022, the NAV per share was 60.19 pence which, after adjusting for the dividends paid in the year of 6.65 pence, gives a NAV total return for the year of –33.42 %. The NAV total return (dividends reinvested) for the year was –35.47% compared with -34.34% in the FTSE AIM All-Share Total Return Index (also calculated on a dividends reinvested basis). The Directors consider this to be the most appropriate benchmark from a shareholder’s perspective, however, due to 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 33.42 pence (comprising a revenue loss of 0.36 pence and a capital loss of 33.06 pence). Revenue income increased by 9.1% to £0.98m as a result of an increase in dividends received from portfolio companies and bank interest. Interest accrued on loan note instruments decreased, partly a consequence of the conversion of the loan to XP Factory plc into ordinary shares. Revenue expenses exceeded income and resulted in a revenue loss for the year of 0.36 pence per share, broadly unchanged on last year.

The share price decreased from 93.00 pence (ex-dividend) to 62.75 pence over the reporting period which, after adjusting for dividends paid, gives a share price total return of –28.06%.

Investments
The Investment Manager invested £14.7 million into 11 Qualifying Companies during the period. The fair value of Qualifying Investments at 30 September 2022 was £103.5 million (64.5% of NAV) invested in 62 AIM companies and 51 unquoted companies. At the year end, the fair value of non-qualifying equities and the Marlborough Special Situations Fund were £12.4 million (7.7% of NAV) and £3.3 million (2.1% of NAV) respectively, with most of the non-qualifying equities listed within the FTSE 350 and offering good levels of liquidity should the need arise. £41.9 million (26.1% of NAV) was held in cash, higher than normal, reflecting an underweight allocation to non-qualifying equities and fixed income. Further information can be found in the Investment Manager’s report.
1 Excluding companies in administration or at risk of administration with zero value.

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.

In the 12 month period to 30 September 2022, the Company paid dividends totalling 6.65 pence (2021: 4.40 pence). A special dividend of 2.50 pence was paid on 29 October 2021. A final dividend of 3.15 pence in respect of the previous financial year was paid on 10 February 2022 (2020: 2.65 pence) and an interim dividend of 1.00 pence (2021: 1.75 pence) was paid on 29 July 2022.

A final dividend of 2.00 pence is proposed (2021: 3.15 pence) which, subject to shareholder approval at the Annual General Meeting, will be paid on 10 February 2023 to ordinary shareholders on the register on 6 January 2023. A special dividend of 2.00 pence per share has been approved by the Board. The distribution will return to shareholders profits arising from the cash acquisition of Ideagen plc by funds managed by Hg Capital in July 2022. The special dividend will be paid together with the final dividend on 10 February 2023.

Dividend re-investment scheme
Shareholders may elect to reinvest their dividend by subscribing for new shares in the Company. Further information can be found in the shareholder information section of the Annual Report.

On 29 October 2021, 327,293 ordinary shares were allotted at a price of 94.09 pence per share, which was calculated in accordance with the terms and conditions of the DRIS, on the basis of the last reported NAV per share NAV per share as at 8 October 2021, to shareholders who elected to receive shares as an alternative to the special dividend announced on 23 September 2021.

On 10 February 2022, 624,916 ordinary shares were allotted at a price of 86.69 pence per share, which was calculated in accordance with the terms and conditions of the DRIS, on the basis of the last reported NAV per share as at 21 January 2022, to shareholders who elected to receive shares under the DRIS as an alternative to the final dividend for the year ended 30 September 2021.

On 29 July 2022, 285,870 ordinary shares were allotted at a price of 65.65 pence per share, which was calculated in accordance with the terms and conditions of the DRIS, on the basis of the last reported NAV per share as at 8 July 2022, to shareholders who elected to receive shares under the DRIS as an alternative to the interim dividend for the year ended 30 September 2022.

Buybacks
In total, 4,307,731 shares (nominal value £43,077) were repurchased during the year at a cost of £3,243,492 (average price: 75.29 pence per share). As at 16 December 2022, a further 740,562 shares have been repurchased post the year end at a cost of £431,538 (average price: 58.27 pence per share).

Share price discount
The Company aims to improve liquidity and to maintain a discount of approximately 5 per cent. to the last published NAV per share (as measured against the mid-price) by making secondary market purchases of its shares in accordance with parameters set by the Board.

We continued to operate the discount control and management of share liquidity policy effectively during the period. The Company has 1 and 5 year average share price discounts of 2.84% and 5.65% respectively.

The Company’s share price was trading at a premium of 4.25% as at 30 September 2022 compared to a discount of 5.00% as at 30 September 2021, this being calculated using the closing mid-price of the Company’s shares on 30 September 2022 as a percentage of the year end net asset value per share, as published on 10 October 2022.

As at 16 December 2022, the discount to NAV was 6.59% of the last published NAV per share.

Offer for subscription
The Directors of the Company announced on 2 September 2021 the launch of an offer for subscription for shares to raise up to £20 million, together with an over-allotment facility of up to a further £20 million. On 22 October 2021, the Company announced the offer for subscription was closed to further applications. The offer resulted in gross funds being received of £40 million and the issue of 41.6 million shares.

New Offer for subscription
The Directors of the Company announced on 5 September 2022 the launch of a new offer for subscription for shares to raise up to £20 million, together with an over-allotment facility of up to a further £30 million. The offer was approved by shareholders of the Company at a general meeting on 7 October 2022. Through separate updates, the Company subsequently announced that it intended to utilise up to £20 million of the over-allotment facility. The Board reserves its right to further expand its use of the over-allotment facility, subject to investor demand and the deployment of capital into VCT qualifying companies.

On 16 December 2022, the Company had allotted 45.0 million shares raising gross proceeds of £28.1 million. The Company has also received valid applications for a further £2.0 million.

Cost efficiency
Your Board reviews costs incurred by the Company on a regular basis and is focused on maintaining a competitive ongoing charges ratio. The year end ongoing charges ratio was 2.06% (FY21: 2.12%) when calculated in accordance with the AIC’s “Ongoing Charges” methodology. The decrease reflects a modest reduction in the running costs of the Company and the increase in net assets that occurred in the first quarter of the financial year as a result of the 2021 offer for subscription. The Ongoing Charges methodology divides ongoing expenses by average net assets.

Board and committee composition
Ashton Bradbury retired from his role as non-executive director at the Annual General Meeting in February 2022. We are grateful to Ashton for his support and advice since joining the Board in May 2018. His contribution, commitment and wise counsel both to the Board and the Company has been greatly appreciated and valued. The Board wishes Ashton all the best for the future.

On 1st June 2022, Megan McCracken and Busola Sodeinde joined the Board as independent non-executive directors of the Company.

Megan McCracken has extensive board experience across State Street Trustees Limited, GB Bank, the Fidelity China Special Situations Fund, the Massachusetts Institute of Technology and Folk2Folk, for which she earned the Institute of Directors Chair’s Award. Megan began her career at Boeing Satellite Systems in the USA, before management consulting led her to London and financial services. Megan held senior executive roles in strategy at Citi and HSBC and has expertise across banking, asset management and trading.

Busola Sodeinde is a highly experienced financial services professional with significant regulatory and governance experience from her appointments as CFO of State Street Global Markets and a Finance Director to the Corporate Finance team of Deutsche Bank Capital Markets. Busola is a non-executive director of Ombudsman Services, a board member of the Church Commissioners for England and Trustee of The Scout Association.

Both Megan and Busola have a strong focus on and passion for environmental, social and governance issues and entrepreneurial enterprise. The Board is looking forward to incorporating their diversity of thought and approach in its work for your Company.

Following a review of board remuneration and taking into account peer group analysis and inflation, the Board has agreed to increase its remuneration by 5.00%, effective from 1 October 2022. The annual remuneration of the Chairman will increase to £39,000, the independent non-executive directors to £30,500 and the non-independent non-executive director, Oliver Bedford, to £28,000. An additional fee of £1,500 will continue to be paid to the Chairman of the Management and Service Provider Engagement Committee. The Chairman of the Audit Committee will continue to receive an additional fee of £3,000.

Investment Manager
On 2 November 2022, the Company’s Investment Manager changed its name from Hargreave Hale Limited (trading as Canaccord Genuity Fund Management) to Canaccord Genuity Asset Management Limited (‘CGAM’).

Related party transactions
The Company’s Investment Manager is a related party to the Company for the purposes of the Listing Rules. As noted above and announced on 2 September 2022, Oliver Bedford’s non-executive directorship fees (paid directly to the Investment Manager) will increase from £26,500 to £28,000 with effect from 1 October 2022. Once aggregated with previous related party transactions between the Company and the Investment Manager’s group in the last 12 months, this fee increase constitutes a smaller related party transaction under Listing Rule 11.1.10R.

Annual General Meeting
Shareholders are invited to attend the Company’s Annual General Meeting (AGM) to be held at 10.30 am on 2 February 2023 at 88 Wood Street, London, EC2V 7QR.

Those shareholders who are unable to attend the AGM in person are encouraged to raise any questions in advance with the Company Secretary at HHV.CoSec@jtcgroup.com. The deadline for the advance submission of questions is 5.00 p.m. on 26 January 2023. Answers will be published on the Company’s website on 2 February 2023.

Shareholder event
Both your Board and the Investment Manager are keen to improve interaction with our shareholders. On the 24 November 2021 and 23 November 2022, the Company held well attended shareholder events at Everyman Cinema, Broadgate, City of London. The events included presentations from several portfolio companies, a panel discussion and a presentation from the Investment Manager’s VCT team before concluding with the screening of a feature film.

Electronic communications
As ever, we are respectfully asking shareholders to opt into electronic communications as we continue to look for savings in our printing and production costs and to reduce our environmental footprint. If you are interested in making the transition, please email us at aimvct@canaccord.com and we will arrange for the form of election to be sent to you by Equiniti, the Company’s registrar.

On a similar note, we would also be grateful if shareholders would consider updating their dividend payment preference from cheque to bank transfer, helping us to further reduce costs and paper usage. Cheques are highly susceptible to fraud and cheque fraud is one of the most common forms of financial crime. It is becoming increasingly difficult to deposit cheques safely with the growing number of branch closures and charges may apply to re-issue lost or expired cheques.

In line with our wish to encourage the use of electronic communications and the practice of many companies, with effect from the interim results to be published in 2023, the Company will no longer print and distribute Interim Reports to shareholders.  The interim results will continue to be available for download on our website https://www.hargreaveaimvcts.co.uk and a summary of the results is also published via a Regulatory Information Service on the London Stock Exchange.

Electronic tax vouchers are also available in place of paper tax vouchers to those shareholders who have opted in to electronic communications and registered with Equiniti’s Shareview system.

Electronic Voting
Electronic proxy voting is available for shareholders to register the appointment of a proxy and voting instructions for any general meeting of the Company once notice has been given. This service assists the Company to make further printing and production cost savings, reduce our environmental footprint and streamline the voting process for investors.

Regulatory update
There were no major changes to VCT legislation during the period under review.

On 23 September 2022, the Government announced that it intended to extend the sunset clause that, if not otherwise repealed or extended, would result in the withdrawal of the upfront 30% income tax relief for new investment into VCTs from 6 April 2025.

The sunset clause, introduced as part of the 2015 EU State aid review, does not affect the Capital Gains Tax relief or tax free dividend payments, nor does it affect investors’ income tax relief on VCT investments made before 6 April 2025.

The extension of the sunset clause will require legislation to be laid before parliament.

VCT status
I am pleased to report that we continue to perform well against the requirements of the legislation and at the period end, the investment test was 84.85% (2021: 98.7%) against an 80% requirement when measured using HMRC’s methodology. The decline in the investment test percentage reflects the introduction to the investment test of funds raised through the 2019 Offer for Subscription, and qualifying disposals made in the previous financial year. The Company satisfied all other tests relevant to its status as a Venture Capital Trust.

Key information document

In accordance with the Packaged Retail Investment and Insurance Products (PRIIPs) regulations, the Company’s Key Information Document (KID) is published on the Company’s website at https://www.hargreaveaimvcts.co.uk.

Investors’ attention is drawn to the March 2022 policy statement published by the FCA in relation to amendments to the KID produced by VCTs in accordance with UK PRIIPs Laws. The policy addresses concerns that the current methodology for calculating the Summary Risk Indicator (SRI) results in an inappropriately low SRI being applied for VCTs and now mandates that KIDs issued by VCTs must be assigned an SRI of no lower than 6. The policy statement also replaces the requirements and methodologies for presentation of performance scenarios in the KID with a requirement for narrative information to be provided. The handbook rules and Regulatory Technical Standard came into force on 25 March 2022, with a transitional period which will end on 31 December 2022.

The 30 September 2022 KID has been prepared using the new methodology prescribed in the UK PRIIPS regulation.

Risk review
Your Board has reviewed the risks facing the Company. Further detail can be found in the principal and emerging risks and uncertainties section.

Outlook
Recessions spawn innovation and create opportunity.  Growth companies will continue to require capital for investment into research, infrastructure, people and working capital.

We do not expect the falls endured last year to translate to permanent loss of value. At some point in 2023, we will be able to look forward to better times.  As we emerge from recession, fundamentals will improve and markets will recover their poise.   In the meantime, with your continued support, we will work tirelessly to invest in tomorrow’s success stories, laying the foundations for future performance.

David Brock
Chairman
16 December 2022

The Company and its business model

The Company was incorporated and registered in England and Wales on 16 August 2004 under the Companies Act 1985, registered number 05206425.

The Company has been approved as a Venture Capital Trust by HMRC under Section 259 of the Income Taxes Act 2007. The shares of the Company were first admitted to the Official List of the UK Listing Authority and trading on the London Stock Exchange on 29 October 2004 and can be found under the TIDM code “HHV”. The Company is premium listed.

In common with many other VCTs, the Company revoked its status as an investment company as defined in Section 266 of the Companies Act 1985 on 23 May 2006 to facilitate the payment of dividends out of capital profits.

The Company’s principal activity is to invest in a diversified portfolio of qualifying small UK based companies, primarily trading on AIM, with a view to generating capital returns and income from its portfolio and to make distributions from capital and income to shareholders whilst maintaining its status as a VCT.

The Company is registered as a small UK Alternative Investment Fund Manager (AIFM) with a Board comprising of six non-executive directors, five of whom are independent. Canaccord Genuity Asset Management Limited acts as investment manager whilst Canaccord Genuity Wealth Limited (CGWL) acts as administrator and custodian. JTC (UK) Limited provides company secretarial services.

The Board has overall responsibility for the Company’s affairs including the determination of its investment policy. However, the Board exercises these responsibilities through delegation to Canaccord Genuity Asset Management Limited, Canaccord Genuity Wealth Limited and JTC (UK) Limited as it considers appropriate.

The Directors have managed and continue to manage the Company’s affairs in such a manner as to comply with Section 259 of the Income Taxes Act 2007.

Investment objectives, policy and strategy

Investment objectives

The investment objectives of the Company are to generate capital gains and income from its portfolio and to make distributions from capital or income to shareholders whilst maintaining its status as a Venture Capital Trust.

Investment policy

The Company intends to achieve its investment objectives by making Qualifying Investments in companies listed on AIM, private companies and companies listed on the AQSE Growth Market, as well as Non-Qualifying Investments as allowed by the VCT Rules.

Qualifying investments

The Investment Manager will maintain a diversified portfolio of Qualifying Investments which may include equities and fixed 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 will be UK based or have a UK presence and, whilst of high risk, will have the potential for significant capital appreciation.

To maintain its status as a VCT, the Company must have 80 per cent. of all funds raised from the issue of shares invested in Qualifying Investments throughout accounting periods of the VCT beginning no later than three years after the date on which those shares are issued. To provide some protection against an inadvertent breach of this rule, the Investment Manager targets a threshold of approximately 85 per cent.

Non-Qualifying Investments

The Non-Qualifying Investments must be permitted by the VCT Rules and may include equities and exchange traded funds listed on the main market of the London Stock Exchange, fixed income securities, bank deposits that are readily realisable and the Marlborough Special Situations Fund. Subject to the investment controls below, the allocation to each of these investment classes will vary to reflect the Investment Manager’s view of the market environment and the deployment of funds into Qualifying Companies. The market value of the Non-Qualifying Investments (excluding bank deposits) will vary between nil and 50 per cent. of the net assets of the Company. The value of funds held in bank deposits will vary between nil and 30 per cent. of the net assets of the Company.

Investment controls

The Company may make co-investments in investee companies alongside other funds, including other funds managed by the Investment Manager. Other than bank deposits, no individual investment shall exceed 10 per cent. of the Company’s net assets at the time of investment.

Borrowings

The Articles permit the Company to borrow up to 15 per cent. of its adjusted share capital and reserves (as defined 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 specific investment approach based on fundamental analysis of the investee company.

The Investment Manager’s fund management team has significant 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, or the 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: 

Qualifying Investments
Investments are made to support the growth and development of a Qualifying Company. The Investment Manager will maintain a diversified 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 reflect 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 significant 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 reflect its view of the equity markets, balancing the potential for capital appreciation with risk management, liquidity and income.

The Non-Qualifying Investments will typically include a focused portfolio of direct investments in companies listed on the main market of the London Stock Exchange. The portfolio will mix long term structural growth with more tactical investment to exploit short term mispricing within the market. The use of the Marlborough Special Situations Fund enables the Company to maintain its exposure to small UK companies whilst the Investment Manager identifies 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
The Investment Manager has strengthened its approach to environmental, social and governance (ESG) issues. It has integrated a review of ESG issues as part of its investment decision-making process for investments in Qualifying Companies that seeks to identify material issues in the following areas: 

The Investment Manager seeks to engage and influence companies on any areas of improvement identified through due diligence and material ESG issues that arise during the term of the investment. The Investment Manager has published ESG,
Engagement and Stewardship policies on its website which can be found at https://www.canaccordgenuity.com/fund-management-uk/.

Risk management
The structure of the Company’s investment portfolio and its investment strategy has been developed to mitigate risk where possible.

Key performance indicators

The Directors consider the following Key Performance Indicators (KPIs) to assess whether the Company is achieving its strategic objectives. The Directors believe these measures help shareholders assess how effectively the Company is applying its investment policy and are satisfied the results give a good indication of whether the Company is achieving its investment objectives and policy. The KPIs are established industry measures.

Further commentary on the performance of these KPIs has been discussed in the Chairman’s statement and Investment Manager’s report.

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 100.39 pence to 60.19 pence resulting in a loss to ordinary shareholders of -33.55 pence per share (-33.42%) after adjusting for dividends paid in the year.

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 Total Return Index. With 59% of the net assets invested in companies listed on AIM or the AQSE Growth Market, the Directors consider this to be the most appropriate benchmark. However, HMRC derived investment restrictions, along with Qualifying Investments in private companies and fixed income securities, and Non-Qualifying Investments in main market listed companies, predominantly in the FTSE 350, mean the index is not a wholly comparable benchmark for performance.

Rolling Returns to end Sep 2022 1Y 3y 5y 10y
NAV total return -33.42% 7.99% 5.65% 70.97%
Share price total return -28.06% 18.50% 15.72% 85.26%
NAV total return (dividends reinvested) (1) -35.47% 3.47% 1.53% 73.85%
Share price total return (dividends reinvested) (1) -28.98% 15.97% 14.71% 97.28%
FTSE AIM All-Share Total Return Index -34.34% -4.65% -14.86% 28.74%

Source: Canaccord Genuity Asset Management Ltd

(1) The NAV total return (dividends reinvested) and share price total return (dividends reinvested) measures have been included to improve comparability with the FTSE AIM All-Share Total Return Index which is also calculated on that basis..

Reflecting the difficult market conditions and deteriorating economic outlook that persisted for much of the financial year, and in common with the AIM VCT peer group, the Company reported a significant reduction in the NAV per share. The NAV total return (dividends reinvested) for the year is ahead of its benchmark over all time horizons but lower than the average return for the AIM VCT peer group over the same time horizons. As the AIM VCT Sector consists of only a very small number of companies, the Directors also consider performance against the much broader Generalist VCT Sector. The steep falls in NAV per share reported by the Company and its AIM VCT peers is not mirrored in the Generalist VCT sector, which has reported a modest average decline of -2.0%. The divergence of performance across the two peer groups is notable, possibly reflecting the speed at which information (macro and company specific) is assimilated into the share prices of listed companies. The Company has underperformed the average NAV total return (dividends reinvested) for the Generalist Sector over all time horizons to 30 September 2022.

The Investment Manager reports that corporate news flow remains resilient. With 60% of the qualifying portfolio invested in companies developing new healthcare and technology products and services, sometimes referred to as long duration assets, the portfolio is sensitive to investor sentiment and the outlook for long term interest rates. Changes in monetary policy can materially impact the present value of these assets, even if they do not directly impact upon the opportunity for value creation. The Investment Manager will continue to deploy capital in pursuit of the Company’s investment objectives.

Further detailed information on peer group performance is available through Morningstar (https://www.morningstar.co.uk) and the AIC (https://www.theaic.co.uk/aic/statistics).

2. Share price discount to NAV per share
The Company uses secondary market purchases of its shares to improve the liquidity in its shares and support the discount. The discount to NAV per share is an important influence on a selling shareholder’s eventual return. The Company aims to maintain a discount of approximately 5 per cent. to the last published NAV per share (as measured against the mid-price).

The Company’s shares traded at premium of 4.25% as at 30 September 2022 (2021: 5.00% discount) when calculated with reference to the 30 September 2022 NAV per share. The 1 and 5 year average share price discounts were 2.84% and 5.65% respectively.

The Company’s shares are priced against the last published NAV per share with the market typically adjusting the price to reflect the NAV after its publication. In line with the Company’s valuation policy, the Company aims to publish the quarter end NAV per share within 5 business days of the period end to allow time for the manager and Board to review and agree the valuation of the private companies held within the investment portfolio.

The Company’s share price on 30 September 2022 reflected the last published NAV per share prior to the year end, which was released on 27 September 2022. The 30 September 2022 NAV was reported on 10 October 2022, following the review of the valuations of the private companies.

As at 15 December 2022, the discount to NAV was 6.59% of the last published NAV per share.

3. Ongoing charges ratio

The ongoing charges of the Company were 2.06% (2021: 2.12%) of the average net assets of the Company during
the financial year to 30 September 2022, broadly in line with the prior year. The decrease reflects a modest reduction in the running costs of the Company and the increase in net assets that occurred in the first quarter of the financial year as a result of the 2021 Offer for Subscription.

The Company’s ongoing charges ratio remains competitive against the wider VCT industry and similar to other AIM VCTs. This ratio is calculated using the AIC’s “Ongoing Charges” methodology and, although based on historical information, it provides shareholders with an indication of the likely future cost of managing the fund.

Cost control and efficiency continues to be a key focus for your Board. The Board is satisfied with the costs for the year, which were in line with the Company’s 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 flow of dividend distributions to shareholders.

A total of 6.65 pence per share (2021: 4.40 pence) of dividends was paid during the year, comprised of a special dividend of 2.50 pence per share paid on 29 October 2021, a final dividend of 3.15 pence in respect of the previous financial year (2020: 2.65 pence) paid on 10 February 2022 and an interim dividend of 1.00 pence (2021: 1.75 pence) paid on 29 July 2022.

A final dividend of 2.00 pence per share will be proposed at the Annual General Meeting. If approved by shareholders, the payment of the interim and final dividends in respect of the financial year to 30 September 2022 would represent a distribution to shareholders of 5.00% of the 30 September 2022 NAV per share.

A special dividend of 2.00 pence per share has been approved by the Board. The distribution will return to shareholders profits arising from the cash acquisition of Ideagen plc by funds managed by Hg Capital in July 2022. The special dividend will be paid together with the final dividend on 10 February 2023.

The below table demonstrates how the Board has been able to consistently pay dividends in line with the 5% target and dividend policy.

Dividends paid/payable by financial year      
Year

  		Year end NAV Dividends Yield

  		Additional information
pence per share
2010/11 61.14 4.00 6.5%  
2011/12 61.35 3.25 5.3%  
2012/13 71.87 3.75 5.2%  
2013/14 80.31 4.25 5.3%  
2014/15 74.64 4.00 5.4%  
2015/16 75.93 4.00 5.3%  
2016/17 80.82 4.00 4.9%  
2017/18 87.59 5.40 6.2% Including special dividend of 1 penny.
2018/19 70.60 3.75 5.3%  
2019/20 73.66 5.40 7.3% Including a special dividend of 1.75 pence.
2020/21 100.39 7.40 7.4% Including a special dividend of 2.50 pence.
2021/22 60.19 3.00 5.0% Proposed final dividend of 2.00 pence.
2022/23 - 2.00 - Special dividend of 2.00 pence.

5. Compliance with VCT regulations

A VCT must be approved by HMRC at all times, and in order to retain its status, the Company must meet a number of tests as set out by the VCT legislation. Throughout the year ended 30 September 2022 the Company continued to meet these tests.

The investment test decreased from 98.7% to 84.85% in the financial year. The decline in the investment test percentage reflects the introduction to the investment test of funds raised through the 2019 offer for subscription, and qualifying disposals made in the previous financial year. The investment test remains comfortably ahead of the 80% threshold that applied to the Company with effect from 1 October 2019 and within an acceptable range of the target of 85% as set out in the Company’s investment policy.

The Company invested £14.7 million into 11 Qualifying Companies, 4 of which were investments into new Qualifying Companies. The Board is pleased with the level of new Qualifying Investment, which was ahead of expectations.

The Board believes that the Company will continue to meet the HMRC defined investment test and other qualifying criteria on an ongoing basis.

For further details please refer to the Investment Manager’s report.

Principal and emerging risks and uncertainties
The Directors acknowledge that they are responsible for the effectiveness of the Company’s risk management and internal controls and periodically review the principal risks faced by the Company at Board meetings. The Board may fulfil these responsibilities through delegation to Canaccord Genuity Asset Management Limited and Canaccord Genuity Wealth Limited as it considers appropriate. The principal risks facing the Company, together with mitigating actions taken by the Board, are set out below:

Risk Potential consequence How the Board mitigates risk Changes During the Year
Venture Capital Trust approval risk.  The Company operates in a complex regulatory environment and faces a number of related risks. A breach of Section 259 of the Income Taxes Act 2007 could result in the disqualification 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 significant experience in the management of venture capital trusts.  The Investment Manager regularly provides the Board with written and verbal reports.  The Board also appointed Philip Hare & Associates LLP to monitor compliance with regulations and provide half-yearly compliance reports to the Board.

 


 
  No change.
Investment risk.  Many of the Company’s investments are held in small, high risk companies which are either listed on AIM or privately held.

  		Investment in poor quality companies could reduce the capital and income return to shareholders. Investments in small companies are often illiquid and may be difficult to realise  The Board has appointed an investment manager with significant 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. Increased.
Changes in monetary or fiscal policy have undermined consumer, business and investor confidence with negative impacts on profitability, investment and stock market performance.
Compliance risk.  The Company is required to comply with the rules of the UK Listing Authority, the Companies Act, Accounting Standards, the General Data Protection Regulation and other legislation. The Company is also a small registered Alternative Investment Fund Manager (AIFM) and has to comply with the requirements of the AIFM Directive. Failure to comply with these regulations could result in a delisting of the Company’s shares, financial penalties, a qualified audit report or loss of shareholder trust  Board members have considerable experience of operating at senior levels within quoted businesses. They have access to a range of advisors including solicitors, accountants and other professional bodies and take advice when appropriate.

 

CGWL provides compliance oversight to both the Administrator and the Investment Manager and reports to the Board on a quarterly basis.

 
  No change.
Operational risk and outsourcing.  Failure in the Investment Manager, Administrator, Custodian, Company Secretary or other appointed third party systems and controls or disruption to its business. Failures could put the assets of the Company at risk or result in reduced or inaccurate information being passed to the Board or shareholders.

Quality standards may be reduced through lack of understanding or loss of control. 		The Company has in place a risk matrix and a set of internal policies which are reviewed on a regular basis. It has written agreements in place with its third-party service providers. The Board, through the Management and Service Provider Engagement Committee, receives regular reports from the Investment Manager, Administrator and custodian to provide assurance that appropriate oversight is in place. Additionally, the Board receives a control report from the Company’s registrars on an annual basis. Where tasks are outsourced to other third parties, reputable firms are used and performance is reviewed periodically by the Management and Service Provider Engagement Committee. No change.
Key personnel risk.  A change in the key personnel involved in the management of the portfolio   Potential impact on investment performance. The Board discusses key personnel risk and resourcing with the Investment Manager periodically. The VCT team within the Investment Manager comprises two fund managers and two investment analysts, which helps mitigate this risk.


  		No change.


 

Exogenous risks such as economic, political, financial, climate change and health.  Economic risks include recession and sharp changes in interest rates.  Political risks include the terms of the UK’s exit from the European Union or a change in government policy causing the VCT scheme to be brought to an end. A condition of the European Commission’s State aid approval of the UK’s VCT and EIS schemes in 2015 was the introduction of a  retirement date for the current schemes at midnight on 5 April 2025 (the ‘Sunset Clause’). On 23 September 2022, the Government announced that it intended to extend the Sunset Clause. The extension will require new regulations to be laid before Parliament. If the relevant legislation is not renewed or replaced with similar or equivalent legislation, new investors will not be able to claim income tax relief for investments into new shares issued by VCTs after 5 April 2025.

Climate change presents environmental, geopolitical, regulatory and economic risks. In the long term, some companies may have restrictions imposed on their operational model that reduce revenues and profit margins and increases their cost of capital 		Potential impact on investment performance. Regular dialogue with the manager provides the Board with assurance that the Investment Manager is following the investment policy agreed by the Board and appraises the Board of the portfolio’s current positioning in the light of prevailing market conditions. The Company’s investment portfolio is well diversified 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 sufficient liquidity and distributable reserves to maintain compliance with its key policies.

 

The Board keeps abreast of current thinking through contact with industry associations and its advisors.

 

The Investment Manager undertakes a review of ESG factors as part of the investment process. Climate change, or the need to limit its impact, will result in technological innovation as young companies seek to develop solutions and create opportunities for value creation for existing or new Qualifying Companies. 		Increased.

 

The Bank of England, along with several respected institutions (the OBR, the IFS and the OECD), expect the UK to be in an extended period of GDP contraction in 2023 and possibly beyond, with negative implications for many companies, particularly those providing goods or services to the UK consumer.

 

The Bank of England increased base rates to 2.25% within the financial year. Interest rates are expected to peak at greater than 4% in 2023, increasing the cost of capital for companies and potentially depressing UK household wealth.

On 23 September 2022, the Government announced its intention to extend the VCT scheme beyond 2025. Whilst a positive development, the basis on which the scheme will be extended remains subject to confirmation. 

The war in Ukraine presents challenges to the European security order and may have further profound economic consequences if restricted access to certain commodities over time limits the ability of energy intensive businesses to operate without interruption.

Additional risks and further details of the above risks and how they are managed are explained in note 15 of the financial statements. Trends affecting future developments are discussed in the Chairman’s statement and the Investment Manager’s report.

Long term viability statement

In accordance with provision 28 of the UK Corporate Governance Code, the Directors have carried out a robust assessment of the Company’s emerging and principal risks, further details can be found in the principal and emerging risks and uncertainties section. This assessment has been carried out over a longer period than the 12 months required by the ‘Going Concern’ provision. The Board conducted this review for a period of five years, which was selected because it:

The Board has considered the Company’s financial position and its ability to meet its liabilities as they fall due over the next five 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: 

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 sufficient 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 five years.

Other matters

Dividend policy
The Company’s dividend policy is to target a tax free dividend yield equivalent to 5% of the year end NAV per share. The ability to pay dividends is dependent on the Company’s available distributable reserves and cash resources, the Act, the Listing Rules and the VCT Rules. The policy is non-binding and at the discretion of the Board. Dividend payments may vary from year to year in both quantum and timing. The level of dividend paid each year will depend on the performance of the Company’s portfolio. In years where there is strong investment performance, the Directors may consider a higher dividend payment, including the payment of special dividends. In years where investment performance is not as strong, the Directors may reduce or even pay no dividend.

Discount control and management of share liquidity policy
The Company aims to improve liquidity and to maintain a discount of approximately 5 per cent. to the last published NAV per share (as measured against the mid-price) by making secondary market purchases of its shares in accordance with parameters set by the Board.

This policy is non-binding and at the discretion of the Board. Its operation depends on a range of factors including the Company’s liquidity, shareholder permissions, market conditions and compliance with all laws and regulations. These factors may restrict the effective operation of the policy and prevent the Company from achieving its objectives.

Diversity
The Board comprises three male non-executive directors and three female non-executive directors with a diverse range of experience, skills, length of service and backgrounds. The Board considers diversity when reviewing Board composition and has made a commitment to consider diversity when making future appointments. The Board will always appoint the best person for the job. It will not discriminate on the grounds of gender, race, ethnicity, religion, sexual orientation, age or physical ability.

Environmental Social and Governance (ESG) and Considerations
The Board seeks to maintain high standards of conduct with respect to environmental, social and governance issues and to conduct the Company’s affairs responsibly.

The Company does not have any employees or offices and so the Board does not maintain any specific policies regarding employee, human rights, social and community issues but does expect the Investment Manager to consider them when fulfilling their role. As the Company used less than 40MWh of energy during the period it is exempt from the Streamlined Energy and Carbon Reporting requirements.

The Company, whilst exempt, continues to monitor and develop its approach to the recommendations of the Task Force on Climate related Financial Disclosures.

The management of the Company’s investment portfolio has been delegated to its Investment Manager Canaccord Genuity Asset Management Ltd. The Company has not instructed the Investment Manager to include or exclude any specific types of investment on ESG grounds. However, 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.

To minimise the direct impact of its activities the Company offers 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 financial 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 Chairman’s statement.

The strategic report is approved, by order of the Board of Directors.

David Brock
Chairman
16 December 2022

Summary of VCT regulations
To maintain its status as a VCT, the Company must be approved by HMRC and comply with a number of conditions. A summary of the most important conditions are detailed below:

VCTs’ obligations
VCTs must:

VCTs must not: 

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:

The Finance Act 2018 introduced a principles-based approach known as the risk to capital condition to establish whether the activities or investments of an investee company can qualify for VCT tax reliefs. This condition has two parts: 

Investment Manager’s report 
Introduction
This report covers the 2021/22 financial year, 1 October 2021 to 30 September 2022. 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 profit after tax of the Company within the reported period as a function of the weighted average number of shares in issue for the period.

Investment performance measures contained in this report are calculated on a pence per share basis and include realised and unrealised gains and losses.

Investment report
Although strong levels of UK economic growth and high levels of employment made for a positive backdrop to the start of the financial year, the markets became increasingly difficult as the year progressed as it became clear that issues with labour market liquidity, supply chain disruption and rising input prices were weighing on corporate earnings and likely to remain a factor deep into 2022. The emergence of the Omicron variant added further downside risk towards the end of the first quarter; however, evidence quickly emerged that the impact was likely to be less profound than initially feared, allowing markets to move higher as the calendar year drew to a close.

The war in Ukraine further undermined the macro-economic environment, adding a new and deeply disturbing dimension to the geopolitical overlay. The introduction of severe financial sanctions on the Russian economy, both mandatory and self-imposed (in the case of many corporates) added further stress to disrupted supply chains. Commodity prices soared, further fuelling a difficult inflationary environment that central banks were already struggling to contain. In the UK, the Consumer Prices Index (CPI) rose to 10.1% in the 12 months to September 2022.

The Bank of England (BoE), in its August 2022 Monetary Policy Report, forecast CPI to peak at 13% in October 2022, before slowly returning to its 2% target thereafter, in part helped by the UK Government’s policies to provide financial support to offset exceptionally high energy bills through to March 2023.

Against low expectations, the UK economy modestly outperformed through the second half of the year. Offsetting this was an increasingly challenging outlook as inflation continued to climb, heaping more pressure on household finances. UK consumer confidence began a precipitous decline, plunging to new lows not seen even in the global financial crisis or at the height of coronavirus pandemic. Confounding the generally gloomy disposition sweeping through markets, the UK continued to post very healthy employment data with employment market participation rates edging higher, unemployment remaining very low. Private sector wage growth (including bonuses) was robust (albeit less than inflation) helping many households at least in part confront rising prices. Of course, what is good for the individual is not necessarily good for the collective and many corporates saw margins come under pressure from increased cost of goods and wage inflation.

With supply-side constraints (energy, labour, components) continuing to drive inflation higher, the BoE responded to the rising inflation with several rate rises to bring the base rate to 2.25% in September. A difficult year was rounded off by the UK Government’s much criticised mini-budget, interventions by the Bank of England to maintain financial stability and sharp rises in UK borrowing costs.

Whilst the outlook for inflation within the UK is relevant to our portfolio companies, it is the outlook in the US that has shaped the markets. There, too, inflation remained high and employment strong, prompting some aggressive increases in interest rates by the Federal Reserve and a very rapid repricing of the US Treasury market. This rippled through global equity markets and was a key driver of the fall in global stock markets and, in particular, long duration assets such as investments in healthcare and technology companies.

As sentiment soured, investors increasingly favoured larger more established companies over smaller, higher risk and less liquid companies. AIM underperformed the FTSE 100 and FTSE 250 indices.

In the face of this negative outlook, we note that the portfolio is heavily weighted to small UK companies which by their size and maturity are dependent less on the dynamics of the broader economy in the long term and more on their unique circumstances and development. All the same, small high risk investments with limited liquidity are rarely popular when uncertainty and volatility spike.

Compositional biases in favour of energy and mining, drove a small gain on the FTSE 100 of 0.8% in the period. This return was very strong in the context of moves in other leading indices. The relative strength of the FTSE 100 benefitted the FTSE All-Share, which posted a modest 4.1% decline. UK small caps remain heavily out of favour, with the FTSE AIM All-Share Total Return Index falling by 34.3% in the period.

Performance
In the 12 months to 30 September 2022, the audited NAV per share decreased from 100.39 pence to 60.19 pence, a NAV total return to investors of -33.55 pence per share which, after adding back the 6.65 pence of dividends paid in the year, translates to a loss of 33.42%.

The Qualifying Investments made a net loss of -26.35 pence per share whilst the Non-Qualifying Investments loss was -5.62 pence per share. The -1.58 pence adjusting balance was the net running costs and investment income.

We track and measure corporate news flow. Although the NAV decline would suggest otherwise, a significant majority of the updates have been in line with or better than expectations. A broad based de-rating has been the most significant detractor to performance. Whilst this has been most acutely felt in growth companies it has also led to declines in other strategies.

Equipmake, which manufactures electric powertrains for the automotive, transport and aerospace industries, listed on the Aquis Stock Exchange Growth Market in July 2022. The company was the top performing investment (+47.1%, +0.59 pence per share) after a solid debut that included a £10.0m raise. Post period end, the company provided a first positive update since listing.

The acquisition of Ideagen (+11.1%, +0.32 pence per share) by funds managed by HG Capital was a bittersweet moment. The offer price was generous, valuing the company at £1.06bn, equivalent to 349 pence per share. Upon completion, the VCT realised a gain of £8.4m (+1,400%). As a provider of governance, risk and compliance solutions, the company had a resilient business model supported by high levels of recurring revenues. It was unfortunate to lose such a successful and well managed company from the qualifying portfolio.

Bidstack (+42.9%, +0.29 pence per share) signed a number of key partnerships over the period, including a two-year partnership with digital media platform Azerion and a multi-year deal with a leading global AAA game publisher. As a result, the company has secured a minimum of $30m guaranteed advertising spend over the next 2 years, which underpins their ambitious growth forecasts for 2022 and 2023. Post period end, the company reported a contractual dispute with Azerion.

Cloudcall (+43.0%, +0.27 pence per share) was another investment lost to private equity following a bid that valued the company at £39.9m or 81.5 pence per share, a 44% premium to the average share price in for the previous 3 months and in line with its March 2021 fundraising. Whilst it was disappointing to exit the investment at a loss at a time when revenues were growing and the outlook improving, analyst’s forecasts indicated a requirement for further funding amidst waning support from shareholders.

Zoo Digital (+11.1%, +0.23 pence per share) upgraded forecasts several times on the back of strong demand from clients for its cloud software-based subtitling, dubbing and media localisation services to content creators and streaming platforms. The company is growing rapidly, has a strong balance sheet and a large addressable market to target.

Gousto (-82.4%, -4.89 pence per share), for so long a source of positive performance, was the biggest detractor within the period as several factors came together to materially reduce the company’s valuation. Trading became more challenging as the year progressed as consumers increased spending on out of home activities such as dining out, travel and leisure. More recently, the decline in UK consumer confidence and real wages weighed on demand from new and existing customers. The fair value of the investment was decreased following forecast revisions to the current year and FY23 and very significant declines in the valuations within the company’s peer group. Some of these factors may prove to be temporary as consumers rebalance their spend away from out of home activities and travel. The company continues to introduce further service enhancements, which we expect to strengthen its competitive advantage.

Learning Technologies Group (-51.3%, -1.87 pence per share) was not immune to the sell-off in technology companies. The company has continued to trade in line with expectations and recently released new revenue and profit targets for 2025 that were ahead of prior guidance. The 2021 acquisition of GP Strategies introduced a significant revenue mix shift away from software and platform revenues and an increased exposure to more cyclical content and services revenues, although the company highlights that many of its consulting contracts are long term in nature and afford it similar levels of revenue visibility. The integration of GP strategies is progressing ahead of plan.

Polarean (-59.2%, -1.68 pence per share) announced in October 2021 that the U.S. Food and Drug Administration (FDA) had not approved the New Drug Application (NDA) for its drug device combination product using hyper-polarised xenon for enhanced magnetic resonance imaging (MRI) in pulmonary lung medicine. The issues were considered to be relatively minor and largely related to manufacturing; the company subsequently re-submitted the NDA in April 2022 for approval. The FDA has since asked for further information about the third-party manufacture of the xenon gas and has granted a 90-day extension to the review process.  The company remains well funded with a net cash balance of $22.7m as of 30 June 2022.

Ilika (-60.9%, -1.18 pence per share) reported that performance issues, now resolved, arose during the commissioning of its new Stereax manufacturing facility, leading to a short delay to the start of commercial production. This, along with an updated pipeline of customers that now mostly consists of medical device applications with longer commercialisation programmes, led to a large reduction in forecast FY23 revenues. Although the company reported during the period under review that Goliath, Ilika's programme to develop large format battery for electric vehicles (EVs) and consumer appliances, remained on track, more recent updates have highlighted some delay to the development programme. The balance sheet remains strong with cash of £18.6m at 31 October 2022.

Creo Medical (-69.2%, -1.03 pence per share) continues to commercialise its innovative range of electrosurgical endoscopic devices. With the healthcare systems globally normalising, the company has been able to expand its pioneer programme to recruit and train clinicians and expand its user base, this having been held back during the pandemic. In parallel, the company advanced plans to commercialise its intellectual property through licensing and royalty agreements with robotics companies. A first collaboration agreement was signed within the period whilst a first licensing and royalty agreement was signed post period end. Although the company had cash of £26.1m at 30 June 2022, it is significantly loss making and will require further funding.

Having been very strong through 2021, the IPO market became increasingly subdued as we moved through the year. Despite this, we invested £14.7m into 11 Qualifying Companies including 4 IPOs and 7 follow on investments into existing portfolio companies. The most significant new investments included Equipmake, Eneraqua and Skillcast. We reduced our investments in Rosslyn Data, Yourgene and Bidstack and made complete exits from DP Poland, e-therapeutics, Trellus Health, KRM22, Mirriad Advertising, Vertu, Cloudcall, Reneuron and Synairgen.

Portfolio structure
The VCT is comfortably through the HMRC defined investment test and ended the period at 84.85% invested as measured by the HMRC investment test. By market value, the VCT had a 64.5% weighting to Qualifying Investments at year-end.

The allocation to non-qualifying equity investments decreased from 11.2% to 7.7% within the year. In line with the investment policy, we made investments in the Marlborough Special Situations Fund as a temporary home for proceeds from fundraising; the allocation increased modestly from 1.6% to 2.1% and returned -1.05 pence per share in the period.

The non-qualifying direct equity investments, which are mostly held in FTSE 350 companies contributed -4.57 pence per share. Within the period, Diversified Energy returned +16.0% (+0.03 pence per share), Glencore returned +6.8% (+0.03 pence per share) and BAE Systems returned +8.1% (+0.01 pence per share). The largest losses from within the non-qualifying portfolio came from S4 Capital (-68.1%, -0.49 pence per share) and Future (-64.3%, -0.45 pence per share). The period ended with no non-qualifying fixed income investments and a significant increase in the cash weighting from 11.8% to 26.1%, higher than normal, reflecting an underweight allocation to non-qualifying equities and fixed income.

The Company invests across all available investment sectors, although VCT legislation tends to promote investment into sectors such as technology, healthcare and consumer discretionary. 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 32.3%, 27.3% and 16.3%.

The HMRC investment tests are set out in Chapter 3 of Part 6 Income Tax Act 2007, which should be read in conjunction with this investment manager’s report. Funds raised by VCTs are first included in the investment tests from the start of the accounting period containing the third anniversary of the date on which the funds were raised. Therefore, the allocation of qualifying investments as defined by the legislation can be different to the portfolio weighting as measured by market value relative to the net assets of the VCT.

Share Buy Backs & Discount Control
4,307,731 shares were acquired in the year at an average price of 75.29 pence per share. The share price declined by 3.6% and traded at a premium of 0.52% following the publication of the 30 September 2022 NAV on 10 October 2022.

Post period end update
The NAV per share has increased from 60.19 pence to 61.02 pence in the period to 9 December 2022, a gain of 1.4 %.

As at 16 December 2022, the share price of 57.00 pence represented a discount of 6.6% to the last published NAV per share.

The final weeks of the financial year were dominated by political instability which, at the time threatened to push the UK economy into deep recession in 2023.  Borrowing costs were rising rapidly, with profound implications for households and companies.  The appointment of a new Chancellor, the election of a new Prime Minister, a second Autumn statement and interventions from the BoE, helped to stabilise markets and led to a fall in borrowing costs.  When viewed against the chaos that preceded the resignation of the former Prime Minister, then the outlook is much improved.  Unfortunately, a much improved outlook does not translate into a positive one and we still expect a UK recession throughout 2023.  Our expectations align with consensus.  However, there are some notable differences across the independent forecasting bodies (IFS, OECD, OBR, BoE) in their predictions for the depth and duration of the recession.  The BoE was quite stark in its outlook whilst others are more sanguine.  The extent to which UK households draw down on excess savings accumulated during the pandemic is an important factor in this and the subject of some debate.

We have completed 3 new qualifying investments post period end.  Deal flow on AIM remains subdued, although we expect this to progressively improve as we move through the financial year.  In the meantime, we continue to review large numbers of investment opportunities in private companies.

For further information please contact:

 

Oliver Bedford
Lead Fund Manager
 

16 December 2022

Investment portfolio summary

As at 30 September 2022 

 

  		Net Assets % at 30.09.22

  		Cost £000

 

  		Cumulative Movement in value £000

  		Valuation £000

  		Change in    
Value for the Year £000(1) Market COI(2)
Qualifying Investments              
Zoo Digital Group plc 3.74 2,266 3,739 6,005 600 AIM Yes
Equipmake Holdings plc 3.06 3,340 1,572 4,912 1,571 AIM No
Learning Technologies Group plc 2.94 2,238 2,482 4,720 (4,963) AIM Yes
Eagle Eye Solutions Group plc 2.94 1,642 3,076 4,718 (43) AIM Yes
Maxcyte Inc 2.62 1,270 2,930 4,200 (2,475) AIM Yes
Surface Transforms plc 2.41 1,744 2,118 3,862 (2,574) AIM Yes
Tortilla Mexican Grill Plc 2.26 1,125 2,500 3,625 (447) AIM Yes
PCI-PAL plc 1.98 2,280 904 3,184 (1,315) AIM Yes
Polarean Imaging plc 1.86 2,081 906 2,987 (4,338) AIM No
SCA Investments Ltd (Gousto) 1.73 2,484 299 2,783 (13,065) Unlisted Yes
Infinity Reliance Ltd (My 1st Years)(3) 1.71 2,500 243 2,743 (1,151) Unlisted Yes
Beeks Financial Cloud Group plc 1.61 1,038 1,549 2,587 (1,038) AIM Yes
Bidstack Group plc 1.54 1,983 496 2,479 779 AIM No
Abcam plc 1.38 55 2,164 2,219 (250) AIM No
Cohort plc 1.36 619 1,566 2,185 (456) AIM Yes
C4X Discovery Holdings plc 1.25 2,300 (301) 1,999 (1,152) AIM No
Ilika plc 1.24 1,636 361 1,997 (3,106) AIM No
Craneware plc 1.17 125 1,757 1,882 (490) AIM Yes
Blackbird plc 1.15 615 1,230 1,845 (2,337) AIM No
Velocys plc 1.07 2,220 (495) 1,725 (459) AIM No
Diaceutics plc 1.02 1,550 81 1,631 (591) AIM Yes
Crossword Cybersecurity plc 0.98 2,039 (468) 1,571 (586) AIM Yes
Eneraqua Technologies plc 0.97 1,955 (402) 1,553 (402) AIM No
Escape Hunt plc 0.96 4,067 (2,519) 1,548 (2,519) AIM Yes
Arecor Therapeutics Plc 0.96 1,687 (151) 1,536 (699) AIM No
Angle plc 0.94 1,158 356 1,514 (1,537) AIM No
Zappar Ltd 0.89 1,600 (171) 1,429 (1,351) Unlisted No
AnimalCare Group plc 0.89 720 705 1,425 (959) AIM Yes
CentralNic Group plc 0.88 588 824 1,412 12 AIM Yes
Aquis Exchange plc 0.87 765 626 1,391 (1,937) AIM Yes
Belvoir Group plc 0.79 762 509 1,271 (211) AIM Yes
Creo Medical Group plc 0.76 2,329 (1,110) 1,219 (2,737) AIM Yes
Bivictrix Therapeutics Plc 0.75 1,200 - 1,200 120 AIM No
EKF Diagnostics Holdings plc 0.74 565 629 1,194 (1,308) AIM Yes
Idox plc 0.72 135 1,028 1,163 (97) AIM Yes
OneMedia iP Group plc 0.71 1,141 - 1,141 32 AIM Yes
Intelligent Ultrasound Group plc 0.71 1,150 (17) 1,133 (283) AIM No
Kidly Ltd 0.70 1,660 (542) 1,118 (1,137) Unlisted No
Eden Research plc 0.66 1,355 (294) 1,061 (745) AIM No
Verici DX plc 0.62 1,939 (941) 998 (2,451) AIM Yes
Instem plc 0.61 297 689 986 (527) AIM Yes
Quixant plc 0.61 1,209 (229) 980 (140) AIM No
The Property Franchise Group plc 0.58 377 551 928 10 AIM Yes
Hardide plc 0.54 3,566 (2,696) 870 (869) AIM Yes
Skillcast Group plc 0.53 1,570 (721) 849 (721) AIM No
Equals Group plc 0.52 750 92 842 192 AIM Yes
Crimson Tide Plc 0.47 1,260 (504) 756 (378) AIM Yes
Tristel plc 0.37 543 58 601 (562) AIM No
Diurnal Group plc 0.35 672 (107) 565 (695) AIM No
Globaldata plc 0.35 173 384 557 (250) AIM Yes
Airportr Technologies Ltd(3) 0.33 1,888 (1,359) 529 528 Unlisted No
Everyman Media Group plc 0.24 600 (208) 392 (177) AIM Yes
Intercede Group plc 0.24 305 85 390 (533) AIM Yes
Science in Sport plc 0.24 1,479 (1,094) 385 (1,442) AIM No
K3 Business Technology Group plc 0.23 270 99 369 (159) AIM Yes
Faron Pharmaceuticals Oy 0.22 1,374 (1,024) 350 (380) AIM No
Fusion Antibodies plc 0.20 624 (308) 316 (507) AIM No
Strip Tinning Holdings PLC 0.20 1,054 (741) 313 (740) AIM No
Gfinity plc 0.18 2,026 (1,732) 294 (881) AIM Yes
Smoove Plc 0.18 770 (478) 292 (370) AIM No
Yourgene Health plc 0.14 472 (252) 220 (496) AIM No
Rosslyn Data Technologies plc 0.11 500 (330) 170 (307) AIM Yes
Trakm8 Holdings plc 0.09 486 (334) 152 (17) AIM No
In the Style Group plc 0.09 1,667 (1,525) 142 (883) AIM No
MYCELX Technologies Corporation 0.04 361 (303) 58 (21) AIM Yes
Renalytix AI plc 0.02 82 (45) 37 (435) AIM Yes
Osirium Technologies plc 0.01 858 (840) 18 (103) AIM No
Flowgroup plc - 26 (26) - - Unlisted No
Honest Brew Ltd(3) - 2,800 (2,800) - (276) Unlisted No
Laundrapp Ltd(3) - 2,450 (2,450) - - Unlisted No
Mporium Group plc - 33 (33) - - Unlisted No
Infoserve Group Plc(4) - - - - - Unlisted No
               
Total - equity Qualifying Investments 63.23 92,468 9,058 101,526 (67,234)    
               
Qualifying Fixed Income Investments              
Kidly Ltd (Loan Notes) 0.75 1,200 - 1,200 (1,191) Unlisted No
Osirium Technologies plc (Loan Notes) 0.47 800 (44) 756 (256) AIM No
Honest Brew Ltd (Loan Notes) - 300 (300) - (300) Unlisted No
               
Total qualifying fixed income
investments 		1.22 2,300 (344) 1,956 (1,747)    
               
Total Qualifying Investments 64.45 94,768 8,714 103,482 (68,981)    
               
Non qualifying investments              
Marlborough Special Situations Fund 2.06 4,610 (1,301) 3,309 (2,814)   No
 

Total unit trusts

  		2.06 4,610 (1,301) 3,309 (2,814)    
               
Bytes Technology Group plc 0.72 842 320 1,162 (240) Main Yes
SThree plc 0.72 1,687 (534) 1,153 (777) Main Yes
NCC Group plc 0.60 985 (24) 961 (169) Main Yes
JD Sports Fashion plc 0.48 1,421 (655) 766 (763) Main Yes
WH Smith plc 0.46 948 (208) 740 (321) Main Yes
Trifast Group plc 0.45 1,318 (598) 720 (688) Main Yes
The Watches of Switzerland Group plc 0.42 975 (302) 673 (310) Main Yes
Future plc 0.41 599 60 659 (1,188) Main Yes
Hilton Food Group plc 0.40 1,262 (621) 641 (781) Main Yes
Bodycote plc 0.39 990 (362) 628 (556) Main No
Diversified Energy Company plc 0.36 505 77 582 77 Main Yes
Hollywood Bowl Group plc 0.33 797 (274) 523 (274) Main Yes
Rotork plc 0.31 737 (246) 491 (241) Main No
Shaftesbury plc 0.29 761 (295) 466 (306) Main No
Workspace Group plc 0.29 1,025 (567) 458 (489) Main No
Tortilla Mexican Grill Plc 0.25 161 233 394 (48) AIM Yes
BAE Systems plc 0.23 346 25 371 25 Main No
Chemring Group plc 0.19 358 (54) 304 (54) Main Yes
Wickes Group plc 0.19 585 (283) 302 (282) Main Yes
On the Beach Group plc 0.14 868 (642) 226 (635) Main Yes
Seraphine Group plc 0.07 1,853 (1,743) 110 (1,064) Main Yes
MYCELX Technologies Corporation 0.04 298 (231) 67 (24) AIM Yes
               
Total - Equity non-qualifying investments 7.74 19,321 (6,924) 12,397 (9,108)    
               
Total - Non-qualifying investments          
9.80 		23,931 (8,225) 15,706 (11,922)    
               
Total investments 74.25 118,699 489 119,188 (80,903)    
Cash at bank 26.11     41,911      
Prepayments & accruals (0.36)     (591)      
Net assets 100.00     160,508      

(1) The change in fair value has been adjusted for additions and disposals in the year and as such does not reconcile to the unrealised total in note 7. The difference is £4.3 million which is the total of 20 full investment disposals in the year.
(2) COI – Co investments with other funds managed by the Investment Manager at 30 September 2022.
(3) Different classes of shares held in unlisted companies within the portfolio have been aggregated.
(4) Impaired fully through the profit and loss account and therefore shows a zero cost.

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

  Listed Headquartered Registered
Listed Investments:      
Abcam plc UK/USA UK UK
Bytes Technology Group plc UK/South Africa UK UK
Crimson Tide UK/Republic of Ireland UK UK
Craneware plc UK UK/USA UK
Diversified Energy Company plc UK USA UK
Faron Pharmaceuticals Oy UK/Finland Finland Finland
Maxcyte Inc UK/USA USA USA
Mycelx Technologies Corporation plc UK USA USA
Polarean Imaging plc UK USA UK
Renalytix AI plc UK/USA USA UK
Verici DX plc UK UK/USA UK
       
Unlisted private companies:      
Genagro Ltd(1) - UK Jersey

 (1)  Companies awaiting liquidation.

Top ten investments
As at 30 September 2022 (by market value)

The top 10 investments are shown below. Each investment is valued by reference to the bid price or, in the case of unquoted companies, the IPEV guidelines using one or more valuation techniques according to the nature, facts and circumstances of the investment. Forecasts, where given, are drawn from a combination of broker research and/or Bloomberg consensus forecasts and exclude amortisation, share based payments and exceptional items. Forecasts are in relation to a period end for which the company results are yet to be released. Published accounts are used for private companies or public companies with no published broker forecasts. The net asset figures and net cash values are from published accounts in most cases.

Zoo Digital Group plc Share Price: 130.0p
Investment date Apr-17 Forecasts for the year to March 2023
Equity held 5.28% Turnover ($’000) 95,000
Av. Purchase Price 49.1 Profit/(loss) before tax ($’000) 6,900
Cost (£’000) 2,266 Net cash/(debt) September 2022 ($’000) 1,498
Valuation (£’000) 6,005 Net assets September 2022 ($’000) 30,690

 

Company description
Zoo Digital is a provider of cloud-based dubbing, subtitling, localisation and distribution services for the global entertainment industry. Zoo’s clients are some of the best-known brands in the world including major Hollywood studios, global broadcasters and independent distributors. Zoo’s point of difference in the marketplace is its development and use of innovative cloud technology that ensures that content is localised in any language and delivered to all the major online platforms such as Amazon, iTunes, Google and Hulu with reduced time to market, higher quality and lower costs.


Equipmake plc Share Price: 6.25p
Investment date Jul-22 Forecasts for the year to May 2023
Equity held 9.54% Turnover (£’000) 4,800
Av. Purchase Price 4.3 Profit/(loss) before tax (£’000) (4,400)
Cost (£’000) 3,340 Net cash/(debt) May 2022 (£’000) 1,876
Valuation (£’000) 4,912 Net assets May 2022 (£’000) 5,602
 
 

Company description
Equipmake is a UK based technology company, which has developed a range of electrification products for the provision of electric vehicle (EV) drivetrains to meet the needs of the automotive, aerospace and other sectors in support of the transition from fossil-fuelled to zero emission powertrains. Equipmake products can be applied in a variety of other vehicle electrification contexts, including hybrid, fully electric and fuel cell vehicles. Equipmake provides individual components to full turnkey systems.


Learning Technologies plc Share Price: 104.9p
Investment date Jul-15 Forecasts for the year to December 2022
Equity held 0.57% Turnover (£’000) 531,000
Av. Purchase Price 49.7 Profit/(loss) before tax (£’000) 83,600
Cost (£’000) 2,238 Net cash/(debt) June 2022 (£’000) (145,279)
Valuation (£’000) 4,721 Net assets June 2022 (£’000) 417,271
 
Company description
Learning Technologies Group provides workplace digital learning and talent management software and services to corporate and government clients. The group offers 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.


Eagle Eye Solutions Group plc Share Price: 545.0p
Investment date Apr-14 Forecast for the year to June 2023
Equity held 3.28% Turnover (£’000) 35,100
Av. Purchase Price 189.7 Profit/(loss) before tax (£’000) 3,000
Cost (£’000) 1,642 Net cash/(debt) June 2022 (£’000) 3,632
Valuation (£’000) 4,718 Net assets June 2022 (£’000) 8,567
 
Company description
Eagle Eye is a Software-as-a-Service (SaaS) technology company that creates digital connections enabling personalised, real-time marketing solutions for large retailers. Through Eagle Eye AIR, the company’s loyalty and promotions omnichannel SaaS platform, companies connect all aspects of the customer journey in real time, unlocking the capability to deliver personalisation, streamline marketing execution and open up new revenue streams through promotions, loyalty, apps, subscriptions and gift services.


Maxcyte Inc Share price: 560.0p
Investment date Mar-16 Forecast for the year to December 2022
Equity held 0.74% Turnover ($’000) 43,800
Av. Purchase Price 169.3 Profit/(loss) before tax ($’000) (19,500)
Cost (£’000) 1,270 Net cash/(debt) June 2022 ($’000) 109,168
Valuation (£’000) 4,200 Net assets June 2022 ($’000) 257,223
 
Company description
Leading, cell-engineering focused company providing enabling platform technologies to advance the discovery, development and commercialization of next-generation cell therapeutics.


Surface Transforms plc Share price: 39.0p
Investment date Mar-16 Forecast for the year to December 2022
Equity held 5.07% Turnover (£’000) 12,500
Av. Purchase Price 17.6 Profit/(loss) before tax (£’000) (594)
Cost (£’000) 1,744 Net cash/(debt) June 2022 (£’000) 5,454
Valuation (£’000) 3,862 Net assets June 2022 (£’000) 18,842

Company description
Surface Transforms develops and produces carbon‐ceramic brake discs serving customers that include major OEMs in the global automotive markets. Surface Transforms interweaves continuous carbon fibre to form a 3D multi-directional matrix, producing a stronger, lighter and more durable product with 3x the heat conductivity compared to standard production components.

Tortilla Mexican Grill plc Share price: 145.0p
Investment date Oct-09 Forecasts for the year to December 2022
Equity held 7.17% Turnover (£’000) 58,400
Av. Purchase Price 46.4 Profit/(loss) before tax (£’000) 700
Cost (£’000) 1,286 Net cash/(debt) July 2022 (£’000) 3,163
Valuation (£’000) 4,019 Net assets July 2022 (£’000) 4,205


Company description
Tortilla is the UK’s largest fast-casual Mexican restaurant brand, offering a California-style Mexican menu. Founded in October 2007, Tortilla operates a multichannel order strategy across dine in, take away, click and collect and delivery options. The current estate includes more than 60 Tortilla restaurants across the UK, 10 sites in Dubai and Saudi Arabia, a cloud kitchen estate and exclusive delivery partnership with Deliveroo. Following the acquisition of Chilango Ltd in May 2022, the company operates 8 sites across the UK under the Chilango brand.

PCI PAL plc Share price: 46.0p
Investment date Jan-18 Forecast for the year to June 2023
Equity held 10.41% Turnover (£’000) 14,500
Av. Purchase Price 32.9 Profit/(loss) before tax (£’000) (2,200)
Cost (£’000) 2,280 Net cash/(debt) June 2022 (£’000) 4,888
Valuation (£’000) 3,184 Net assets June 2022 (£’000) 185

Company Description
PCI Pal plc is a provider of Software-as-a-Service (SaaS) solutions that allows companies to take payments from their customers securely. Its products secure payments and data in any business communications environment including voice, chat, social, email, and contact centre and is integrated to, and resold by, business communications vendors and payment service providers. 

Polarean Imaging plc Share price: 42.0p
Investment date Apr-20 Forecast for the year to December 2022
Equity held 3.34% Turnover ($’000) 1,500
Av. Purchase Price 29.3 Profit/(loss) before tax ($’000) (17,700)
Cost (£’000) 2,081 Net cash/(debt) June 2022 ($’000) 22,690
Valuation (£’000) 2,987 Net assets June 2022 ($’000) 25,680
 
Company description
Polarean Imaging specialises in the use of hyperpolarised Xenon gas as an imaging agent and has developed equipment that enables existing Magnetic Resonance Imaging (MRI) systems to achieve improved imaging of pulmonary function. Current investigational uses include identifying early diagnoses of respiratory diseases as well as monitoring progression and therapeutic response.

 
SCA Investments Ltd (Gousto) Unquoted  
Investment date Jul-17 Results for the year to December 2021  
Voting rights held 1.31% Turnover (£’000) 315,281  
Av. Purchase Price 3711.0 Profit/(loss) before tax (£’000) (19,984)  
Cost (£’000) 2,484 Net cash/(debt) December 2021 (£’000) 89,955  
Valuation (£’000) 2,783 Net assets December 2021 (£’000) 176,242  
Income recognised in period (£) 0      
   
Company description  
Founded in February 2012, Gousto is an e-commerce company offering recipe kit boxes which include fresh ingredients for step-by-step chef designed recipes to be made at home. Shoppers select meals from a variety of options on Gousto’s e-commerce platform.  

For further information please contact:
Oliver Bedford
Lead Fund Manager

Canaccord Genuity Asset Management Limited
88 Wood Street
London
EC2V 7QR
0207 523 4837

aimvct@canaccord.com

Statement of directors’ responsibilities
In respect of the financial statements

The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations. They are also responsible for ensuring that the annual report includes information required by the Listing Rules of the Financial Conduct Authority.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the financial statements and have elected to prepare the company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (UK GAAP) (United Kingdom Accounting Standards and applicable law). Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss for the Company for that period.

In preparing these financial statements, the Directors are required to:

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions, and disclose with reasonable accuracy at any time the financial position of the Company, and enable them to ensure that the financial 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 financial statements are made available on a website. The Company’s website address is https://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 financial 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 financial statements contained therein.

Directors’ responsibility statement pursuant to DTR4
David Brock (Chairman), Oliver Bedford, Angela Henderson, Justin Ward, Megan McCracken and Busola Sodeinde, the Directors confirm to the best of their knowledge that:

Disclosure of information to the Auditor

The Directors confirm that:

For and on behalf of the Board

David Brock
Chair
16 December 2022

Income statement

    Year to 30 September 2022 Year to 30 September 2021
  Revenue
£000

  		Capital
£000

  		Total
£000

  		Revenue
£000

  		Capital
£000

  		Total
£000
Note
Net (loss)/gain on investments held at fair value through profit or loss  

7 		- (85,203) (85,203) - 71,337 71,337
Income 2 975 13 988 894 141 1,035
    975 (85,190) (84,215) 894 71,478 72,372
Management fee 3 (835) (2,505) (3,340) (908) (2,722) (3,630)
Other expenses 4 (1,093) (22) (1,115) (850) (21) (871)
    (1,928) (2,527) (4,455) (1,758) (2,743) (4,501)
(Loss)/profit on ordinary activities before taxation   (953) (87,717) (88,670) (864) 68,735 67,871
Taxation 5 - - - - - -
(Loss)/profit after taxation   (953) (87,717) (88,670) (864) 68,735 67,871
Basic and diluted (loss)/earnings per share 6 (0.36)p (33.06)p (33.42)p (0.39)p 30.84p 30.45p

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 gain for the year.

The accompanying notes are an integral part of these financial statements.

Balance sheet                        
As at 30 September 2022        
                                        

  Note 2022
£000 		2021
£000
       
Fixed assets      
Investments at fair value through profit or loss 7 119,188 202,800
       
Current assets      
Debtors 9 408 330
Cash and cash equivalents   41,911 27,016
    42,319 27,346
       
Creditors: amounts falling due within one year 10 (1,000) (1,183)
Net current assets   41,319 26,163
Total assets less current liabilities   160,507 228,963
       
Capital and Reserves      
Called up share capital 11 2,666 2,280
Share premium   93,660 53,802
Capital redemption reserve   201 158
Capital reserve – unrealised   23,935 102,311
Special reserve   63,931 84,004
Capital reserve – realised   (20,774) (11,433)
Revenue reserve   (3,112) (2,159)
Total shareholders’ funds   160,507 228,963
       
Net asset value per share (basic and diluted) 12 60.19p 100.39p

These financial statements were approved and authorised for issue by the Board of Directors on 16 December 2022 and signed on its behalf by

David Brock
Chairman
16 December 2022

The accompanying notes are an integral part of these financial statements.

Statement of changes in equity
For the year ending 30 September 2022

 

  		  Non-distributable reserves  

Distributable reserves (1) 		 
   

Note 		 

Share
Capital 		 

Share
Premium 		Capital Redemption Reserve Capital
Reserve Unrealised 		 

Special
Reserve 		Capital
Reserve Realised 		 

Revenue Reserve 		 

Total
    £000 £000 £000 £000 £000 £000 £000 £000
At 1 October 2021   2,280 53,802 158 102,311 84,004 (11,433) (2,159) 228,963
                   
Profit and total comprehensive income for the year                  
Realised gains on investments 7 - - - - - 2,056 - 2,056
Unrealised (losses) on investments 7 - - - (87,259) - - - (87,259)
Management fee charged to capital 3 - - - - - (2,505) - (2,505)
Income allocated to capital 2 - - - - - 13 - 13
Due diligence investments costs 4 - - - - - (22) - (22)
Revenue (loss) after taxation for the year   - - - - - - (953) (953)
Total (loss) after taxation for the year         (87,259)   (458) (953) (88,670)
                   
Contributions by and distributions to owners                  
Subscription share issues 11 416 39,579           39,995
Issue costs 11   (746)           (746)
Share buybacks 11 (43)   43   (3,243)     (3,243)
DRIS share issues 11 13 1,025           1,038
Equity dividends paid 16         (16,830)     (16,830)
Total contributions by and distributions to owners   386 39,858 43   (20,073)     20,214
                   
Other movements                  
Diminution in value         8,883   (8,883)   -
Total other movements         8,883   (8,883)    
At 30 September 2022   2,666 93,660 201 23,935 63,931 (20,774) (3,112) 160,507

Reserves available for distribution are capital reserve realised, special reserve and revenue reserve. Total distributable reserves at 30 September 2022 were £40 million (2021: £70.4 million). The accompanying notes are an integral part of these financial statements.

(1) The Income Taxes Act 2007 restricts distribution of capital from reserves created by the conversion of the share premium account into a special (distributable) reserve until the third anniversary of the share allotment that led to the creation of that part of the share premium account. As at 30 September 2022, none of the special reserve is subject to this restriction.

Statement of changes in equity
For the year ending 30 September 2021

 

  		  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 1 October 2020   1,995 24,238 91 46,580 99,785 (24,437) (1,295) 146,957
                   
Profit and total comprehensive income for the year                  
Realised gains on investments 7 - - - - - 13,189 - 13,189
Unrealised gains on investments 7