Annual Report • Dec 18, 2024
Annual Report
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Cultivating opportunities Annual report and accounts for Hargreave Hale AIM VCT plc year ended 30 September 2024 1 Page Strategic report Financial highlights for the year ended 30September 2024 3 Financial calendar 3 Chair’s statement 4 The Company and its business model 10 Investment objectives, policy and strategy 11 Key performance indicators 14 Section172 statement 17 Principal and emerging risks and uncertainties 21 Long-term viability statement 23 Other matters 24 Summary of VCT regulations 25 The Investment Manager and the Administrator 26 Investment Manager’s report 28 Investment portfolio summary 32 Top ten investments 36 Governance Board of Directors 40 Directors’ report 41 Directors’ remuneration report 45 Corporate governance 50 Report of the Audit Committee 56 Report of the Management and Service Provider Engagement Committee 59 Statement of Directors’ responsibilities 60 Financial statements Independent Auditor’s report 63 Income statement 71 Balance sheet 72 Statement of changes in equity 73 Statement of cash ows 75 Notesto the nancial statements 76 Alternative performance measures 92 Glossary of terms 94 Shareholder information 98 Company information 100 Notice of Annual General Meeting 101 Contents Strategic report 2 Highlights 3 The report has been prepared by the Directors in accordance with the requirements of Section414A of the Companies Act2006. Financial highlights for the year ended 30September 2024 Net asset value (“NAV”) per share NAV total return Tax free dividends paid in the period Share price total return Ongoing charges ratio (“OCR”) 40.55p -3.86% (1) 4.00p 0% (1) 2.43% (1) ● £9.2million invested in Qualifying Companies in the year. ● 100% invested by VCT tax value in Qualifying Investments at 30September 2024. ● Final dividend of 1.25pence per share proposed for the year end and special dividend of 1.50pence per share approved by the Board. ● Oer for subscription closed having raised £20.3million. The Board decided to utilise the over-allotment facility only to the extent that valid applications were received by 5pm on 22March 2024. ● New Oer for subscription launched on 9October 2024 to raise up to £20million. Summary nancial data 2024 2023 NAV (£m) 148.01 151.92 NAV per share (p) 40.55 46.34 NAV total return (%) (1) -3.86 -14.70 Market capitalisation (£m) 142.34 140.96 Share price (p) 39.00 43.00 Share price discount to NAV per share (%) (1) -3.82 -7.21 Share price 5year average discount to NAV per share (%) (1) -5.79 -5.64 Share price total return (%) (1) 0.00 -23.51 Loss per share for the year (p) -1.86 -9.32 Dividends paid per share (p) 4.00 5.00 Ongoing charges ratio (%) (1) 2.43 2.24 (1) Alternative performance measure denitions and illustrations can be found on pages 92 to 93. Financial calendar Record date for nal dividend 3January2025 Payment of nal and special dividends 14February2025 Annual General Meeting 6February 2025 Announcement of half-yearly results for the six months ending 31March 2025 June2025 Payment of interim dividend (subject to Board approval) July2025 Chair’s statement 4 Introduction Once again, I would like to welcome Shareholders who joined us as a result of the recent oers for subscription. As always, we are grateful to new and existing Shareholders who continue to support the VCT, despite the dicult times we continue to live through. For much of the 2024 nancial year, investor sentiment improved as UK ination (Consumer Price Index) returned to the Bank of England’s target of 2%, drawing to a close a 3-year ination cycle that was very dicult for UK consumers and households and bringing with it hope that the United Kingdom can nally move on from the cost-of-living crisis. The economy has withstood the pressure better than many had predicted. All the same, businesses and households had to navigate an immensely dicult period of high ination and stagnating economic activity. With ination now on target and the Bank of England starting to reduce interest rates, many businesses and households can look forward to reduced borrowing costs. Although the Investment Association continues to report sustained outows from UK equity funds, there was an improvement in the ow dynamic within UK small companies after the UK economy returned to growth in early 2024 and UK ination returned to target. More recent updates highlight a deteriorating trend in the run up to the 2024 Autumn Budget as markets responded to the Government’s very negative messaging and potential changes to scal policy. It is premature to take a denitive position on the impact of the Government’s 2024 Autumn Budget on our portfolio companies. Clearly, changes to National Insurance Contributions are going to weigh heavily on certain companies, particularly those in high service, low margin industries such as those in leisure and hospitality. There are a number of portfolio companies that will feel the impact. However, their response is likely to include price increases, less employment and downward pressure on wages as companies look to mitigate the additional tax burden. However, for most our investments, the change will not signicantly impact performance. As ever, prots and losses will (for the most part) be determined by the success of management teams as they seek to develop and then commercialise new products and services. After a period of improving economic activity, the economy notably softened through the summer with economic indicators and news ow clearly signalling that we were working our way through a soft patch. Falls in business and consumer condence ahead of the budget gave an early indication of the likely impact of higher taxation. That having been said, the signicant increase in Government spending announced at the budget is expected to lift the economy in 2025 and 2026, albeit at a cost. Consistent with our updates of the last few years, generating performance remains very dicult in the shortterm. Whilst we entered the second half of the nancial year with grounds for optimism, the uncertainty created by the election, the potential for a radically dierent approach to scal policy by the new Government and its stark messaging again undermined condence in UK small companies. Whilst we believe investors still recognise the value opportunity within the UK stock market, and specically within small companies, many adopted a wait and see approach pending the outcome of the 2024 Autumn Budget. Three years of outows from UK funds have weighed heavily on performance. We continue to believe that the sector is in deep value territory. There is a saying within the stock market that ‘value will out’; unfortunately, it is proving very dicult to forecast when that might happen. For the time being, we will need to remain patient. The fog of uncertainty that hung over the UK markets ahead of the 2024 Autumn Budget continues to weigh on the primary markets through which companies raise new capital. With valuations so depressed and very little capital available for investment (away from VCTs), very few companies have undertaken an initial public oering (“IPO”). On AIM there were just two VCT qualifying IPOs within the year. Ironically, neither IPO succeeded in raising any funds from the established AIM VCTs. After a dicult third quarter, we are pleased to report a stronger nal quarter in which we deployed capital into VCT qualifying companies in line with our revised budget. The improved activity levels have continued into the new nancial year and the Investment Manager reports that its network of investment banks and corporate advisers are signalling that interest in IPOs is starting to recover and activity is expected to pick up in 2025. Performance As described in more detail in the Investment Manager’s report, this has been a third year of dicult performance. After notable rallies in UK small companies (including those on AIM) in late 2023 and the early summer of 2024, the tone in the market changed in late May with the calling of the UK General Election. The nal quarter was a dicult one for companies on AIM, in particular those favoured by 5 investors looking for Business Property (IHT) Relief or where investors had accumulated signicant gains. Trading volumes on AIM increased by 99% in the 3months to 30September 2024 when compared to the same period in 2023 as many investors chose to exit the market. This selling pressure weighed on our portfolio of AIM investments in the nal quarter of the nancial year and, as a result, we are disappointed to report small losses across the year from that element of the portfolio. There was also a slight downward adjustment to the value of the qualifying investments held in private companies; however, this was not a signicant factor in performance more broadly. The portfolio of investments in private companies is quite heavily skewed towards the UK consumer discretionary sector, where peer group valuations remain low. At 30September 2024, the NAV per share was 40.55pence which, after adjusting for the dividends paid in the year of 4.00pence, gives a NAV total return for the year of -3.86% (1) which compares with +3.90% in the FTSE AIM All-Share Index Total Return (calculated on a dividends Index reinvested basis). The Directors consider this to be the most appropriate benchmark from a Shareholder’s perspective, however, due to the range of assets held within the investment portfolio and the investment restrictions placed on a VCT it is not wholly comparable. The earnings per share total return for the year was a loss of 1.86pence (comprising a revenue prot of 0.20pence and a capital loss of 2.06pence). Revenue income increased by 8.9% to £2.9m as a result of a full-year contribution from the non-qualifying investment grade corporate bonds, unit trust accumulations and bank interest. There was a reduction in the interest accrued on loan noteinstruments after the Investment Manager (acting on behalf of the VCT) agreed to convert some of the outstanding Kidly loan notesand reduce the balance of accrued interest in exchange for new preference shares in Kidly as part of a renancing plan. Income received into the revenue account exceeded expenses, resulting in a revenue prot for the year of 0.20pence per share (FY23:0.27pence per share). The share price decreased from 43.00pence to 39.00pence over the reporting period which, after adjusting for dividends paid of 4.00pence per share, gives a share price total return of nil (1) . Investments The Investment Manager invested £9.2million into seven Qualifying Companies during the period. The fair value of Qualifying Investments at 30September 2024 was £82.8million (56.0% of NAV) invested in 55 AIM companies and 8 (2) unquoted companies. At the year end, the fair value of non-qualifying equities, the IFSL Marlborough UK Micro-Cap Growth Fund and the IFSL Marlborough Special Situations Fund were £12.0million (8.1% of NAV), £10.4million (7.0% of NAV) and £9.4million (6.3% of NAV) respectively, with most of the non-qualifying equities listed within the FTSE350 and oering good levels of liquidity should the need arise. £19.1million (12.9% of NAV) was held in short-dated investment grade corporate bonds, £0.7million (0.4% of NAV) was invested in VanEck Gold Miners UCITS exchange traded fund and £13.7million (3) (9.3% of NAV) held in cash at the period end (including £8.8m held with the Custodian). Further information can be found in the Investment Manager’s report. Dividend The Directors continue to maintain their policy of targeting a tax free dividend yield equivalent to 5% of the year end NAV per share (see page 24 for the full policy). In the 12-month period to 30September 2024, the Company paid dividends totalling 4.00pence (2023:5.00pence). A nal dividend of 1.50pence (2022:2.00pence) in respect of the 2023 nancial year was paid on 15February 2024 and an interim dividend of 1 penny along with a special dividend of 1.50pence (2023:1 penny) was paid on 26July 2024. The payment of the special dividend reected the receipt of proceeds from the sale of Abcamplc and Instemplc. A nal dividend of 1.25pence is proposed (2023:1.50pence) which, subject to Shareholder approval at the forthcoming AGM, will be paid on 14February2025 to ordinary Shareholders on the register on 3January2025. A special dividend of 1.50pence per share has been approved by the Board. The distribution will return to Shareholders the proceeds from various exits and disposals. The special dividend will be paid together with the nal dividend on 14February 2025. (1) Alternative performance measure denitions and illustrations can be found on pages 92 to 93. (2) Excluding companies in administration or at risk of administration with zero value. (3) Net of prepayments and accruals. 6 Dividend re-investment scheme (“DRIS”) Shareholders may elect to reinvest their dividend by subscribing for new shares in the Company. Further information can be found in the Shareholder Information section on pages98 to 99. On 15February 2024, 1,100,783 ordinary shares were allotted at a price of 44.58pence per share, which was calculated in accordance with the terms and conditions of the DRIS, on the basis of the last reported NAV per share as at 26January 2024, to shareholders who elected to receive shares as an alternative to the nal dividend for the year ended 30September 2023 announced on 19December 2023. On 26July 2024, 2,235,192 ordinary shares were allotted at a price of 42.49pence per share, which was calculated in accordance with the terms and conditions of the DRIS, on the basis of the last reported NAV per share as at 5July 2024, to Shareholders who elected to receive shares as an alternative to the interim and special dividend for the year ended 30September 2024. Share buybacks To maintain compliance with the discount control and management of share liquidity policy, the Company purchased through share buybacks 10,657,350 ordinary shares (nominal value £106,574) during the 2024 nancial year at a cost of £4,472,418 (average price: 41.97pence per share). As at 17December2024, a further 3,559,262 shares have been repurchased post the year end at a cost of £1,361,156 (average price: 38.24pence per share). Share price discount The Company aims to improve liquidity and to maintain a discount of approximately 5per cent. to the last published NAV per share (as measured against the mid-price) by making secondary market purchases of its shares in accordance with parameters set by the Board (see page 24 for the full policy). We continued to operate the discount control and management of share liquidity policy eectively during the period. As at 30September 2024, the Company had one and veyear average share price discounts of 5.46% (1) and 5.79% (1) respectively. The Company’s share price was trading at a discount of 3.82% (1) as at 30September 2024 compared to a discount of 7.21% (1) as at 30September 2023, this being calculated using the closing mid-price of the Company’s shares on 30September 2024 as a percentage of the year end NAV per share, as published on 10October 2024. As at 17 December2024, the discount to NAV was 4.69% of the last published NAV per share. Oer for subscription The Directors of the Company announced on 7September 2023 the launch of an oer for subscription for shares to raise up to £20million, together with an over-allotment facility of up to a further £20million. On 22March 2024, the Company announced it had received valid applications of approximately £20million. The Board decided to utilise the over-allotment facility only to the extent that valid applications under the oer were received by 5pm on 22March 2024. The oer closed on 22March 2024 at 5pm. The oer resulted in gross funds being received of £20.3million and the issue of 44.5million shares. New oer for subscription The Directors of the Company announced on 9October 2024 the launch of a new 2024/2025 oer for subscription for shares to raise up to £20million. The oer was approved by shareholders of the Company at a general meeting on 12November 2024. By 17December 2024, the Company had allotted 5.9million shares raising gross proceeds of £2.4million. As at the date of this document, the Company has received valid applications for a further £0.2million. Cost eciency The Board reviews costs incurred by the Company on a regular basis and is focused on maintaining a competitive OCR. The year end OCR was 2.43% (1) (FY23:2.24% (1) ) when calculated in accordance with the Association of Investment Companies’ (“AIC”) “Ongoing Charges” methodology. The increase in the OCR is principally driven by the fall in the average net assets across the year that followed the drop in the NAV per share and the payment of special dividends. Other material factors include increases in some of the xed costs of the Company such as the administration, auditor and company secretarial fees, and the increased investment in the IFSL Marlborough UK Micro-Cap Growth Fund and the IFSL Marlborough Special Situations Funds. The Ongoing Charges methodology divides ongoing expenses by average net assets. (1) Alternative performance measure denitions and illustrations can be found on pages92 to 93. 7 Board remuneration Following a review of Board remuneration, and taking into account peer group analysis and ination, the Board has agreed to increase its remuneration by 3.2%, eective from 1October 2024. The annual remuneration of the Chair will increase to £42,500, the independent non-executive directors to £33,000 and the non-independent non-executive director, Oliver Bedford, to £30,500. An additional fee of £1,500 will continue to be paid to the Chair of the MSPEC. The Chair of the Audit Committee will continue to receive an additional fee of £3,000. Annual General Meeting Shareholders are invited to attend the Company’s AGM to be held at 12.30pm on 6February 2025 at 88Wood Street, London,EC2V7QR. The AGM notice is set out on pages101 to 105. Those Shareholders who are unable to attend the AGM in person are encouraged to raise any questions in advance with the Company Secretary at [email protected]. The deadline for the advance submission of questions is 5.00p.m. on 30January 2025. Answers will be published on the Company’s website on 6February 2025. Angela Henderson has notied the Board of her intention not to seek re-election as an Independent Non-Executive Director of the Company at the forthcoming AGM. I wish to take this opportunity to thank Angela for her valuable contribution over the years. The Company has decided that, due to the current size of the Board, there is no intention to appoint an additional Non-Executive Director at the present time. Shareholder engagement Shareholder engagement is given a high priority by the Board. The Company provides a signicant amount of information, including recorded content, about its activities and performance through its website (www.hargreaveaimvcts.co.uk). The website also allows Shareholders to request (by email) updates on Shareholder events, the performance of the fund (interim management statements, fact sheets and video updates) and information on the Company’s fundraising activities. Reecting our wish to improve the ow of information to our Shareholders whilst simultaneously reducing costs and waste, we launched a major drive to upgrade and expand our database of Shareholders who opt in for email and digital communications. Please do register your consent with us through the website. Whilst the Board strongly encourages Shareholders to make use of everything the website has to oer, the Directors recognise that it is not for everyone. Should you prefer, you can of course continue to communicate with the Chair, any other member of the Board or the Investment Manager by writing to the Company, for the attention of the Company Secretary at the address set out on page100 of this document or by email to [email protected]. The Board also wants to provide Shareholders with regular opportunities to meet directly with the Directors and the CGAM VCT investment management team. As a result, the Company held four in-person events (including the 2024 Annual General Meeting) and a webinar in the 12months to 30September 2024. The rst of these was our annual Shareholder event on 28November 2024, once again held at Everyman Cinema Broadgate, City of London. The event included a presentation by the Investment Manager covering the 12months to 30September 2024, along with presentations, pre-recorded interviews and a panel discussion with several guest speakers and a number of portfolio companies. The event concluded with the screening of a feature lm. Summary recordings of the Investment Manager’s presentations are available toview on the Company’s website (www.hargreaveaimvcts.co.uk). In the new nancial year, we expect to hold 3 in- person events (including the Annual General Meeting) and two webinars. The next Shareholder events include the forthcoming AGM to be held at the Investment Manager’s oces at 88 Wood Street, LondonEC2V7QR at 12.30pm on 6February 2025 and a separate Shareholder webinar at 4.30pm on Monday10February 2025. Shareholders are asked to register their interest in attending Shareholder events through the Company’s website (www.hargreaveaimvcts.co.uk) or by emailing [email protected]. Electronic communications and digital dividends As ever, we are asking Shareholders to opt into electronic communications and update their dividend payment preference from cheque to bank transfer. With this in mind, we intend to bring to a close the use of bank cheques for the payment of dividends. The last dividend payment by bank cheque will be in July 2025. Thereafter, all future dividends will be paid by bank transfer. We are therefore asking all Shareholders currently receiving dividends by bank 8 cheque to provide their bank account details ahead of the payment of the nal dividend in respect of the year to 30 September 2025, due in February 2026. Switching to the digital delivery of Shareholder communications and dividend distributions is more cost ecient, secure and faster whilst also helping to reduce our environmental footprint. The Company no longer prints and distributes interim reports to Shareholders. The interim results continue to be available for download on the Company’s website (www.hargreaveaimvcts.co.uk) and a summary of the results are published via a Regulatory Information Service on the London Stock Exchange. Where necessary, the Administrator can produce and send out a hard copy. Shareholders are also encouraged to make use of the shareview portal operated by the Registrar, which can be used to monitor their investment, review their transaction history, see information on dividend payments and update their communication preferences. Electronic voting Electronic proxy voting is available for Shareholders to register the appointment of a proxy and voting instructions for any general meeting of the Company once notice has been given. This service assists the Company to make further printing and production cost savings, reduce our environmental footprint and streamline the voting process for investors. Regulatory update There were no major changes to VCT legislation during the period under review. Through the Finance Act2024, the Government extended the sunset clause for the VCT scheme from 5April 2025 to 5April 2035, allowing investors to claim income tax relief for subscriptions for new VCT shares for a further 10years. The Treasury Order was laid before Parliament on 3September 2024, meaning the sunset clause has now been ocially extended to 5April 2035. Administration agreement With eect from 1October 2024, the administration agreement was novated from CGWL to CGAM. Under the terms of the novation agreement, the administration fees paid by the Company were unchanged at £250,000 (plus VAT). Notwithstanding the novation, CGWL will continue to receive a fee of £30,000 per annum in relation to its appointment as the Custodian. Any future initial or trail commissions paid to Financial Intermediaries will be paid by CGAM. Consumer duty The Consumer Duty regulation is designed to improve the standard of care provided by rms that are involved in the manufacture or supply of products and services to retail clients. As the Company is not regulated by the FCA, it falls outside of the Consumer Duty regulation. However, CGAM and CGWL are regulated companies and were in scope, respectively as the designated manufacturer and distributor of the Company during the nancial year. In its capacity as manufacturer, CGAM has conducted a fair value assessment and a target market assessment. Having reviewed both reports, the Board is satised that CGAM and CGWL continued to comply with their obligations throughout the period. As a consequence of the novation of the administration agreement, CGAM became both the designated manufacturer and distributor of the Company with eect from 1October 2024. VCT status I am pleased to report that the Company continues to perform well against the requirements of the VCT Rulesand at the period end, the investment test was 100% (2023:91.65%) against an 80% requirement when measured using HMRC’s methodology. The increase in the investment test percentage reects progress made in deploying capital into Qualifying Companies and the return of capital to Shareholders through the payment of a 1.50pence per share special dividend on 26July 2024 following receipt of proceeds from the sale of Abcamplc and Instemplc. The Company satised all other tests relevant to its status as a Venture Capital Trust. Further information on these tests can be found on page25. Key information document (“KID”) In accordance with the PRIIPs regulations, the Company’s KID is published on the Company’s website at www.hargreaveaimvcts.co.uk/ document-library/. Risk review The Board has reviewed the risks facing the Company. Further detail can be found in the principal and emerging risks and uncertainties section on pages21 to22. Outlook Once again, we have endured a dicult start to the nancial year, albeit for very dierent reasons. The Government’s unhelpfully stark messaging in the run up to the budget has weighed on economic activity 9 with GDP data and PMI surveys both highlighting a notable softening in UK economy through the late Summer and Autumn. Measures of UK consumer and business condence both dipped, suggesting that households and companies were becoming increasingly cautious ahead of and subsequent to the Autumn 2024 Budget. However, in large part due to the very signicant increase in public spending expected next year, we expect to see economic activity pick up as we head into next year. The Oce for Budget Responsibility forecasts GDP to increase from 1.1% in 2024 to 2.0%in 2025. The FTSE AIM All-Share Index has been noticeably weak post period end with potential changes to Business Property Relief weighing heavily on the index ahead of the Autumn 2024 Budget. In the end, when viewed through the narrow lens that we apply to the VCT, the budget was substantially better than many had feared. That is not to downplay the pain that many households and businesses will feel. However, the changes to National Insurance Contributions (“NICs”), the source of much post- budget commentary, is unlikely to be a major factor in shaping the outcomes for many of our investments with the impact muted by the spread of investments we hold. We are pleased to report that deal ow has started to improve. Post period end, we have invested £1.8million across 3 qualifying investments. Weare active on a large number of deals across both public and private markets, including a limited number of IPOs. It is too early to say that the tide has turned decisively but we can see clear evidence that green shoots might nally start toemerge. David Brock Chair 17 December2024 The Company and its business model 10 The Company was incorporated and registered in England and Wales on 16August 2004 under the Companies Act1985, registered number 05206425. The Company has been approved as a Venture Capital Trust by HMRC under Section259 of the Income Taxes Act2007. The shares of the Company were rst admitted to the Ocial List of the UKListing Authority and trading on the London Stock Exchange on 29October 2004 and can be found under the TIDM code “HHV”. The Company is premium listed. In common with many other VCTs, the Company revoked its status as an investment company, as dened in Section266 of the Companies Act1985, on 23May 2006 to facilitate the payment of dividends out of capital prots. The Company’s principal activity is to invest in a diversied portfolio of qualifying small UK based companies, primarily trading on AIM, with a view to generating capital returns and income from its portfolio and to make distributions from capital and income to Shareholders whilst maintaining its status as a VCT. The Company is registered as a small UK AIFM with a Board comprising six non-executive directors, ve of whom are independent. CGAM acts as Investment Manager and (from 1October 2024) Administrator, whilst CGWL acts as Custodian (and, until 30September 2024, the Administrator) of the Company. JTC (UK) Limited is engaged as the Company Secretary. The Board has overall responsibility for the Company’s aairs including the determination of its investment policy. However, the Board exercises these responsibilities through delegation to the Investment Manager, the Administrator, the Custodian and the Company Secretary as it considers appropriate. The Directors have managed and continue to manage the Company’s aairs in such a manner as to comply with Section259 of the Income Taxes Act2007. Investors: Aged over 18 Pay tax in the UK Capital Dividend distributions and share buybacks Hargreave Hale AIM VCT plc Board of Non-Executive Directors Operations outsourced Operations outsourced Information Investee Companies Predominantly AIM Quoted Display characteristics set out in investment policy Responsible for setting and monitoring investment and other key policies Administrator (Canaccord Genuity Asset Management Ltd) Custodian (Canaccord Genuity Wealth Ltd) Company Secretary (JTC (UK) Ltd) Registrars (Equiniti Ltd) VCT Tax Adviser (Philip Hare and Associates LLP) Investment Manager (Canaccord Genuity Asset Management L td) Responsible for implementing the investment policy Investment objectives, policy and strategy 11 Investment objectives The investment objectives of the Company are to generate capital gains and income from its portfolio and to make distributions from capital or income to Shareholders whilst maintaining its status as a Venture Capital Trust. Investment policy The Company intends to achieve its investment objectives by making Qualifying Investments in companies listed on AIM, private companies and companies listed on the AQSE Growth Market, as well as Non-Qualifying Investments as allowed by the VCT Rules. Qualifying Investments The Investment Manager will maintain a diversied portfolio of Qualifying Investments which may include equities and xed income securities as permitted by the VCT Rules. Investments will primarily be made in companies listed on AIM but may also include private companies that meet the Investment Manager’s criteria and companies listed on the AQSE Growth Market. These small companies have a permanent establishment in the UK and, whilst of high risk, will have the potential for signicant capital appreciation. To maintain its status as a VCT, the Company must have 80per cent. by value, as measured by the VCT Rules,of all of its investments in Qualifying Investments throughout accounting periods of the VCT beginning no later than three years after the date on which those shares are issued. To provide some protection against an inadvertent breach of this rule, the Investment Manager targets a threshold of approximately 85per cent. Non-Qualifying Investments Non-Qualifying Investments must be permitted by the VCT Rulesand may include equities and exchange traded funds listed on the main market of the London Stock Exchange, xed income securities, bank deposits that are readily realisable, the IFSL Marlborough Special Situations Fund and the IFSL Marlborough UK Micro-Cap Growth Fund. Subject to the investment controls below, the allocation to each of these investment classes will vary to reect the Investment Manager’s view of the market environment and the deployment of funds into Qualifying Companies. The market value of the Non-Qualifying Investments (excluding bank deposits) will vary between nil and 50per cent. of the net assets of the Company. The value of funds held in bank deposits will vary between nil and 30per cent. of the net assets of the Company. Investment controls The Company may make co-investments in investee companies alongside other funds, including other funds managed by the Investment Manager. Other than bank deposits, no individual investment shall exceed 10per cent. of the Company’s net assets at the time of investment. Borrowings The Articles permit the Company to borrow up to 15per cent. of its adjusted share capital and reserves (as dened in the Articles). However, it is not anticipated that the Company will have any borrowings in place and the Directors do not intend to utilise this authority. To the extent that any future changes to the Company’s investment policy are considered to be material, Shareholder consent to such changes will be sought. Such consent applies to the formal investment policy described above and not the investment process set out below. Investment process and strategy The Investment Manager follows a stock specic investment approach based on fundamental analysis of the investee company. The Investment Manager’s fund management team has signicant reach into the market and meets with large numbers of companies each week. These meetings provide insight into investee companies, their end markets, products and services, and competition. Investments are monitored closely and the Investment Manager usually meets or engages with their senior leadership team at least twice each year. Where appropriate, the Company may co-invest alongside other funds managed by the Investment Manager. The key selection criteria used in deciding which investments to make include, inter alia: ● the strength and depth of the management team; ● the business strategy; ● a prudent approach to nancial management and forecasting; ● a strong balance sheet; ● prot margins, cash ows and the working capital cycle; 12 ● barriers to entry and the competitive landscape; and ● the balance of risk and reward over the medium and long term. Qualifying Investments Investments are made to support the growth and development of a Qualifying Company. The Investment Manager will maintain a diversied portfolio that balances opportunity with risk and liquidity. Qualifying Investments will primarily be made in companies listed on AIM but may also include private companies and companies listed on the AQSE Growth Market. Seed funding is rarely provided and only when the senior leadership team includes proven business leaders known to the Investment Manager. Working with advisers, the Investment Manager will screen opportunities, often meeting management teams several times prior to investment to gain a detailed understanding of the company. Investments will be sized to reect the risk and opportunity over the medium and long term. In many cases, the Investment Manager will provide further funding as the need arises and the investment matures. When investing in private companies, the Investment Manager will shape the investment to meet the investee company’s needs whilst balancing the potential for capital appreciation with risk management. Investments will be held for the long term unless there is a material adverse change, evidence of structural weakness, or poor governance and leadership. Partial realisations may be made where necessary to balance the portfolio or, on occasion, to capitalise on signicant mispricing within the stock market. Non-Qualifying Investments The Investment Manager’s VCT team works closely with the Investment Manager’s wider fund management team to deliver the investment strategy when making Non-Qualifying Investments, as permitted by the VCT Rules. The Investment Manager will vary the exposure to the available asset classes to reect its view of the equity markets, balancing the potential for capital appreciation with risk management, liquidity and income. The Non-Qualifying Investments will typically include a focused portfolio of direct investments in companies listed on the main market of the London Stock Exchange. The portfolio will mix long term structural growth with more tactical investment to exploit short term mispricing within the market. The use of the IFSL Marlborough Special Situations Fund and the IFSL Marlborough UK Micro-Cap Fund enables the Company to maintain its exposure to small UK companies whilst the Investment Manager identies opportunities to invest the proceeds of fundraisings into Qualifying Companies. The Investment Manager may use certain exchange traded funds listed on the Main Market of the London Stock Exchange to gain exposure to asset classes not otherwise accessible to the Company. Environmental, social and governance considerations Approach The Company regards the development of a clearly dened and integrated ESG management system as an important pillar for the long-term success of its business, as well as for its investee companies. The Investment Manager believes that companies with strong governance, durable business models and balanced workforces are more likely to create value over the long term whilst reducing investment risk, beneting the wider UK economy and society and generating positive Shareholder returns. ESG in the investment process Holding meaningful stakes in investee companies provides the Investment Manager with the opportunity and responsibility to positively inuence investee company behaviour, both at the point of investment and during the time in which the Company is a shareholder. Due diligence The Investment Manager assesses ESG factors across the portfolio. For Qualifying Companies, the Investment Manager will use the information provided to develop, over time, an individualised ESG risk map to identify issues and track behavioural themes. The Investment Manager regularly engages with senior management teams and boards to identify and raise issues of note, provide a forum for positive feedback and promote change where necessary. Engagement, exclusions and divestment policies As part of its investment strategy, the Company has adopted policies covering exclusions and divestment to describe behaviours that fall outside of the Company’s expectations of investee companies. The Investment Manager has adopted an engagement policy to create a clear framework that denes how it will interact with investee companies. 13 The Investment Manager The Investment Manager adheres to its own ESG investment and stewardship policies. These include an ESG Policy, an Engagement Policy, a Conicts of Interest Policy and a Stewardship Policy that, together with the investment mandate and the Company’s ESG approach, inform the Company’s approach. CGAM is a signatory of the United Nations Principles of Responsible Investment and HM Treasury’s Women in Finance Charter. Risk management The structure of the Company’s investment portfolio and its investment strategy has been developed to mitigate risk where possible. Key risk mitigation strategies are as follows: ● The Company has a broad portfolio of investments to reduce stock specic risk; ● Flexible allocations to non-qualifying equities, exchange traded funds listed on the Main Market of the London Stock Exchange, xed income securities, bank deposits that are readily realisable, the IFSL Marlborough Special Situations Fund and the IFSL Marlborough UK Micro-Cap Fund allow the Investment Manager to adjust portfolio risk without compromising liquidity; ● Regular meetings with investee companies aid the close monitoring of investments to identify potential risks and allow corrective action where possible; and ● Regular Board meetings and dialogue with the Directors, along with policies to control conicts of interest and co-investment with the IFSL Marlborough fund mandates support strong governance. Further information can be found on page 21. Key performance indicators 14 The Directors consider the following KPIs to assess whether the Company is achieving its strategic objectives. The Directors believe these measures help Shareholders assess how eectively the Company is applying its investment policy and are satised the results give a fair indication of whether the Company is achieving its investment objectives and policy. The KPIs are established industry measures. Further commentary on the performance of these KPIs has been provided in the Chair’s statement and Investment Manager’s report on pages4 to 9 and 28 to31 respectively. 1 NAV and share price total returns The Board monitors NAV and share price total return to assess how the Company is meeting its objective of generating capital gains and income from its portfolio and making distributions to Shareholders. The NAV per share decreased from 46.34pence to 40.55pence resulting in a loss to ordinary Shareholders of -1.79pence per share (-3.86%) (1) after adjusting for dividends paid in the year. - 25 50 75 100 125 150 175 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23 Sep-24 Pence per share NAV and cumulative dividends NAV per share Cumulative dividends paid The Board considers peer group and benchmark comparative performance. Due to the very low number of AIM VCTs, the Board reviews performance against the generalist VCTs as well as the AIM VCTs to provide a broader peer group for comparison purposes. Performance is also measured against the FTSE AIM All-Share Index Total Return. With 48.3% of the NAV in companies listed on AIM, the Directors consider this to be the most appropriate benchmark. However, HMRC derived investment restrictions and investments in private companies, main market listed companies and bonds mean that the index is not a wholly comparable benchmark for performance. Rolling Returns to end Sep 2024 1Y 3y 5y 10y NAV total return (1) -3.86% -44.02% -7.08% 8.33% Share price total return 0.00% -41.24% -3.68% 13.18% NAV total return (dividends reinvested) (2) -4.21% -48.03% -16.53% -3.23% Share price total return (dividends reinvested) (2) -0.18% -46.69% -12.94% 2.41% FTSE AIM All-Share Index Total Return 3.90% -39.74% -9.13% 13.40% Source:CGAM (1) Reecting the signicant return of capital through regular and special dividends in recent years, which materially exceeds the dividends paid by the FTSE AIM All-Share Index, the Board is of the view that it is more accurate to report performance against the benchmark on a (simple) total return basis rather than on a dividends re-invested basis. The Board also notes that approximately 90% of Shareholders do not participate in the Company’s DRIS scheme, making the simple total return (without dividends reinvested) more reective of Shareholder returns as experienced by the vast majority of Shareholders. The denition and illustration of this alternative performance measure can be found on pages 92 to 93. (2) The NAV total return (dividends reinvested) and share price total return (dividends reinvested) measures have been included to improve comparability with the FTSE AIM All-Share Index Total Return which is also calculated on that basis. The denitions and illustrations of these alternative performance measures can be found on pages92 to 93. Reecting the dicult market conditions that continued to weigh on the NAV through the nancial year, and in common with the AIM VCT peer group, the Company reported a modest reduction in the NAV per share. The NAV total return fell behind the benchmark over one and three years; however, it remains ahead of the benchmark 15 over ve years but behind the average of the AIM VCT peer group over the same time horizons. The steep falls in valuations of companies listed on AIM, which have heavily impacted the performance of the Company and its AIM VCT peers, have not been mirrored in the Generalist VCT sector, which has reported an average gain of +3.47% over the period under review (source:Morningstar). The divergence of performance across the two peer groups is particularly notable across the three years since the start of the bear market with the AIM VCT sector returning an average loss of -42.9% against the average gain within the Generalist VCT sector of+3.35%. AIM has fallen by -39.7% over the same three-year period. It is dicult to account for the strongly divergent performance although the possible use of preferred investment structures not accessible to investors in public companies may account for some of the dierence. The steady sell-o of investments on AIM ahead of the 2024 Autumn Budget will have also been a factor. Further detailed information on peer group performance is available through Morningstar (https://www.morningstar.co.uk) and the AIC (https://www.theaic.co.uk/aic/nd-compare-investment-companies). 2. Share price discount to NAV per share The Company uses secondary market purchases of its shares to improve the liquidity in its shares and support the discount. The discount to NAV per share is an important inuence on a selling Shareholder’s eventual return. The Company aims to maintain a discount of approximately 5per cent. to the last published NAV per share (as measured against the mid-price). The Company’s shares traded at a discount of 3.82% (1) as at 30September 2024 (2023:7.21% (1) ) when calculated with reference to the 30September 2024 NAV per share. The one and veyear average share price discounts were 5.46% (1) and 5.79 (1) respectively. The Company’s shares are priced against the last published NAV per share with the market typically adjusting the price to reect the NAV after its publication. In line with the Company’s valuation policy, the Company aims to publish the quarter end NAV per share within seven business days of the period end to allow time for the Investment Manager and Board to review and agree the valuation of the private companies held within the investment portfolio. The Company’s share price on 30September 2024 reected the last published NAV per share prior to the year end, which was released on 1October 2024. The 30September 2024 NAV was reported on 10October 2024, following the review of the valuations of the private companies. As at 17December 2024, the discount to NAV was 4.69% of the last published NAV per share. (18.0% ) (16.0% ) (14.0% ) (12.0% ) (10.0% ) (8.0%) (6.0%) (2.0%) 0.0% 2.0% 4.0% 6.0% Sep-19 Sep-20 Sep-21 Sep-22 Sep-23 Sep-24 Share price discount to NAV (4.0%) 3. Ongoing charges ratio The ongoing charges of the Company were 2.43% (1) (2023:2.24% (1) ) of the average net assets of the Company during the nancial year to 30September 2024. The increase in the OCR is principally driven by the fall in the average net assets across the year that followed the drop in the NAV per share and the payment of special dividends. Other material factors include increases in some of the xed costs of the Company such as administration, auditor and company secretarial fees, along with (1) Alternative performance measure denitions and illustrations can be found on pages92 to 93. 16 the increased investment in the IFSL Marlborough UK Micro-Cap Growth Fund and the IFSL Marlborough Special Situations Funds. The Ongoing Charges methodology divides ongoing expenses by average net assets. The Company’s OCR remains competitive against the wider VCT industry but marginally higher than the other AIM VCTs. This ratio is calculated using the AIC’s “Ongoing Charges” methodology and, although based on historical information, it provides Shareholders with an indication of the likely future cost of managing the fund. Cost control and eciency continues to be a key focus for the Board. Although the OCR increased within the year, the Board is pleased to report that the Company’s expenses incurred within the year were below budget. 4. Dividends per share The Company’s policy is to target a tax free dividend yield equivalent to 5% of the year end NAV per share. The Board remains committed to maintaining a steady ow of dividend distributions to Shareholders. A total of 4.00pence per share (2023:5.00pence) of dividends was paid during the year, comprising a nal dividend of 1.50pence in respect of the previous nancial year (2022:2.00pence) paid on 15February 2024, a special dividend of 1.50pence per share paid on 26July 2024 and an interim dividend of 1penny (2023:1penny) also paid on 26July 2024. A nal dividend of 1.25pence per share will be proposed at the forthcoming AGM. If approved by Shareholders, the payment of the interim, nal and special dividends in respect of the nancial year to 30September 2024 would represent a distribution to Shareholders of 9.2% of the 30September 2024 NAV per share. A special dividend of 1.50pence per share has been approved by the Board. The distribution will return to Shareholders proceeds from various exits and disposals. The special dividend will be paid together with the nal dividend on 14February 2025. The below table demonstrates how the Board has been able to consistently pay dividends in line with the 5%target and the Company’s dividend policy. Dividends paid/payable by nancial year Year Year end NAV Dividends Yield Additional informationpence per share 2010/11 61.14 4.00 6.5% 2011/12 61.35 3.25 5.3% 2012/13 71.87 3.75 5.2% 2013/14 80.31 4.25 5.3% 2014/15 74.64 4.00 5.4% 2015/16 75.93 4.00 5.3% 2016/17 80.82 4.00 4.9% 2017/18 87.59 5.40 6.2% Including special dividend of 1 penny. 2018/19 70.60 3.75 5.3% 2019/20 73.66 5.40 7.3% Including a special dividend of 1.75pence. 2020/21 100.39 7.40 7.4% Including a special dividend of 2.50pence. 2021/22 60.19 3.00 5.0% 2022/23 46.34 4.50 9.7% Including a special dividend of 2.00pence. 2023/24 40.55 3.75 9.2% Including a special dividend of 1.50pence and proposed nal dividend of 1.25pence. 5. Compliance with VCT Rules A VCT must be approved by HMRC at all times and, in order to retain its status, the Company must meet a number of tests as set out by the VCT Rules, a summary of which can be found on page25. Throughout the year ended 30September 2024 the Company continued to meet these tests. The investment test increased from 91.65% to 100% in the nancial year. The increase in the investment test percentage reects progress made in deploying capital into Qualifying Companies and the return of capital to Shareholders through the payment of a 1.50pence per share special dividend on 26July 2024 following receipt of proceeds from the sale of Abcamplc and Instemplc. The investment test remains comfortably ahead of the 80% threshold that applies to the Company and ahead of the target of 85% as set out in the Company’s investment policy. The Company invested £9.2million into seven Qualifying Companies, three of which were investments into new Qualifying Companies. The Board believes that the Company will continue to meet the HMRC dened investment test and other qualifying criteria on an ongoing basis. For further details please refer to the Investment Manager’s report on pages28 to31. Section 172 statement 17 Under Section172, the Directors have a duty to promote the success of the Company for the benet of its Shareholders as a whole, and in doing so to have regard to a number of matters including the interests of its employees, suppliers and customers and the impact of the Company’s operations on the community and the environment. This section sets out how the Directors meet their obligations under Section172. It provides a summary of how the Directors build and maintain strong relationships with the Company’s key stakeholders, how they understand their interests and concerns and how the strength of these relationships is contributing to the Company’s success. Within the reporting year, the Board continued to engage with its key stakeholders. In 2023, the Board reviewed and identied its key stakeholders, being shareholders, the Investment Manager, investee companies, key suppliers and professional advisers, distributors, and government agencies, regulators and industry associations. These stakeholders did not change during the nancial period. The Company continues not to have any employees or customers. This Section172 statement should be read with the other contents of the Strategic Report on pages3to38. Purpose Hargreave Hale AIM VCT plc aims to support UK investors to full their longer-term nancial goals through the eective delivery of its investment objectives, namely by providing nancial capital to support growing, innovative businesses across theUK. Shareholders The Board remains strongly committed to prioritising Shareholders and considers active Shareholder engagement as being central to its understanding of Shareholder interests and concerns, in order to ensure their continued support of and investment in the Company. As a result, the Board seeks to have an open, ongoing and positive dialogue with Shareholders. Reecting Shareholder requests to increase access for those unable to travel to London for in-person events or attend during the working day, the Investment Manager increased the number of Shareholder events to four, including a rst event outside of London, two evening events and the rst Shareholder webinar. With the Shareholder webinar reaching a wider audience at a substantially lower cost than the event in Manchester, the Investment Manager plans to hold two in-person events in London (one at the Investment Manager’s oce and one at Everyman Cinema Broadgate, London) and two webinars over the course of the 2025 nancial year. Additional Shareholder updates, CEO interviews and other economic updates were produced with members of the Investment Manager’s team and have been posted on the Company’s website. During the year, the Company also provided Shareholders with regular reports on performance, investment activity, governance, and compliance with HMRC legislation through weekly NAV announcements, monthly factsheets, quarterly interim management statements, the interim report and the audited annual report. These reports, together with further background information regarding the Company, can be found on the Company’s website. In addition, Shareholders had several channels through which they could ask questions of, or raise matters with, the Investment Manager, the Board, the Administrator, the Company Secretary or the Registrar (details can be found on the Company’s website). Enquiries were addressed internally or via escalation to the Board, as necessary. The Board continued last year’s focus to make the Company’s processes more ecient, minimise costs for Shareholders and reduce its environmental footprint associated with the production of the annual reports, circulars, and prospectuses. Post year end, the Company ran a campaign (‘more informed, less waste’) to encourage Shareholders to elect (through the website) to receive electronic communications from the Company. Currently, about one third of Shareholders have signed up. Key decisions: ● close the 2023/2024 Oer for subscription having successfully raised £20.3m; ● payment of dividends totalling fourpence per share; ● continue the share buy-back programme in support of the discount control policy and to improve liquidity in the Company’s shares; ● increase Shareholder access to the Investment Manager and the Board; and ● run a campaign to improve the adoption of digital communications. 18 Impacts: ● support the delivery of the Company’s purpose, investment objectives and key policies as set out in this report and elsewhere; ● increase Shareholder engagement, transparency, accountability and understanding; and ● substantially reduce the costs and environmental footprint. Investment Manager The Investment Manager is responsible for the successful delivery of the Company’s investment policy under a discretionary mandate. A transparent and open working relationship between the Board and the Investment Manager is, therefore, fundamental to the successful operation of the Company. During the year, the Board and its sub-committees maintained close and frequent contact with the CGAM VCT fund management team. Oliver Bedford is a Board member, the lead fund manager, and an employee of CGAM and a key link between the Company and the Investment Manager and the Administrator. He and other representatives of the Investment Manager attended all Board meetings and sub-committee meetings, where appropriate, thus ensuring a regular and constructive dialogue on issues of a strategic and material nature. Less formal communications were adopted for more operational issues or those that required the Board’s immediate attention. The Board retains overall responsibility for the Company’s portfolio of investments and risk management. Throughout the reporting period, the Board received detailed reports from the Investment Manager, including commentary on portfolio performance and positioning, which enabled the Directors to oversee the delivery of the Company’s investment policy and upon which it relied to make its key decisions. Through the MSPEC, the Board undertakes an annual review of the Investment Manager. The most recent review was held on 12November2024 to cover the nancial year to 30September 2024. Key decisions: ● retain CGAM as the Investment Manager; and ● review the ESG features of the investment process. Impacts: Through engagement with the Investment Manager, the Board is able to: ● oversee the execution of the Company’s key policies; ● monitor progress with the deployment of capital into qualifying companies; ● review the valuation of the Company’s investments in unquoted assets; ● receive updates on the key drivers of performance; ● monitor compliance with VCT Rulesand FCA regulations, including the Consumer Duty; ● receive updates on regulatory, governance and public aairs matters; and ● identify, monitor and (where applicable) mitigate other risk factors that may impact the Company. Investee companies The Company’s performance is directly linked to the performance of its underlying investee companies. Through the IMA, the Board has delegated the monitoring of its portfolio companies to the Investment Manager, which directly engages with senior management teams and boards of investee companies through meetings, updates, site visits and through other diligence work. As a signicant shareholder in investee companies with a delegated authority to vote on shareholder resolutions, the Investment Manager is able to engage with and positively inuence investee company behaviour, both at the point of investment and during the time in which the Company is a shareholder. This allows the Investment Manager to identify and raise issues of note, provide a forum for positive feedback, and promote change where necessary. The Investment Manager has a strong record of voting on shareholder resolutions on behalf of the Company. Within the year under review, the Investment Manager voted on more than 98% of the available resolutions. The Board believes that responsible investment, executed through constructive and appropriately calibrated engagement with investee companies, underpins the successful delivery of the investment policy over the long-term. During the reporting period, the Board received regular updates from the Investment Manager on its engagement with investee companies. The Board accompanied the 19 Investment Manager on site visits to two of the portfolio companies (Gousto and Science in Sport). Key decisions: ● delegate authority to vote on shareholder decisions to the Investment Manager. Impacts: Active engagement programmes create the forum for: ● active monitoring of governance in investee companies; ● promoting good corporate behaviours in investee companies; and ● advocating for ESG-related initiatives where they are seen to be value accretive or reducing risk. Key suppliers and professional advisers As the Company does not have any employees or premises of its own, it depends on outsourcing its operations to key third party suppliers and for those suppliers to run ecient operations on its behalf. Given this reliance, the Board seeks to have an open and constructive relationship with all service providers. Responsibility for the management of the Company’s key suppliers is led by the MSPEC, which meets bi-annually. Throughout the year, the Board received a comprehensive overview of the support functions provided by its service providers through a combination of written reports and attendance at MSPEC meetings. In particular, the MSPEC reviewed information provided by key suppliers conrming that they appropriately manage cyber risks, data protection and business continuity programs, together with reviewing information on their governance structures, insurance cover, controls and culture. In addition, the Board approved a new Procurement Procedure which included introducing standardised due diligence and risk assessments for engaging all new third-party suppliers. Following advice from the Company’s legal advisers, the Board approved and refreshed the Company’s Privacy Notice which sets out how the Company processes personal information. The most up-to- date notice can be found on the Company’s website. The Board also reviewed the Company’s corporate and operating policies as part of an annual review. The Company operates within a complex legal, nancial, tax and regulatory environment. Engaging specialist, professional advisers provides the Board with appropriate support as it considers complex and technical factors, designs and implements the Company’s policies and monitors compliance with its regulatory obligations. During the year, the Board and Investment Manager received quarterly in- person updates and ad hoc advice, as appropriate, compliance status reports and annual training from the Company’s professional advisers. During the year, the Board visited the Administrator in Blackpool and approved the transfer of the administration team from CGWL to CGAM and related novation of the Administration Agreement. Key decisions: ● retain CGWL as the Administrator (subsequently novated to CGAM); ● introduce a new Procurement Procedure for all new third-party suppliers; ● refresh the Privacy Notice; ● retain Philip Hare & Associates LLP as the Company’s tax adviser; and ● appoint Howard KennedyLLP as the Company’s sponsor and legal adviser in advance of the prospective 2024/25 Oer. Impacts: Through the review process, the MSPEC is able to: ● evolve policies to reect regulatory changes; ● monitor service level agreements; and ● review contracts to ensure they provide value for money to Shareholders. Specialist professional advice supports positive compliance outcomes and informs decision making. Distributors Working alongside the Investment Manager and the Receiving Agent, the Company’s distributors promote the Company to nancial intermediaries and investors when the Company is raising funds for investment through oers for subscription. Through the IMA and, where applicable, an Oer Agreement, the Board delegates responsibility for this to the Investment Manager and Receiving Agent. The Investment Manager maintained close contact with key distributors throughout the year, provided in-person performance updates and listened to feedback. The Investment Manager reported this feedback to the Board, along with any recommendations. The Board also received an update on the impact of compliance with the Consumer Duty principle. 20 Key decisions: ● review the implementation of Consumer Duty by CGAM and CGWL. Impacts: ● improved understanding of costs and value within the distribution chain; ● improved understanding of services provided by distributors; and ● provided more opportunities for feedback from Shareholders and their advisers. Government agencies, regulators and industry associations Governments, regulators, and industry associations determine legislation and shape the business and policy environment the Company operates in. The Board is committed to having an open, cooperative, and constructive relationship with regulators and Government agencies, supporting relevant industry associations, providing evidence to support the VCT scheme and engaging in policy reviews and initiatives to improve the operation of the scheme. The Company is a member of the AIC and the VCTA and attended events held by both bodies. Oliver Bedford is a member of the VCTA Policy Committee. The Company is also represented on the VCTA Marcomms Committee. In particular, representations were made through the AIC and VCTA to Government agencies to advocate for the extension of the ‘sunset clause’ to 2035 (now adopted into UK legislation). Key decisions: ● continue to actively engage with policymakers through memberships of industry associations. Impacts: Our involvement: ● assisted the industry in successfully achieving the extension of the VCT ‘sunset clause’ to 2035; and ● helped to maintain support for VCTs from within government departments, including HMRC and HMT, and industry associations. Principal and emerging risks and uncertainties 21 The Directors acknowledge that they are responsible for the eectiveness of the Company’s risk management and internal controls and periodically review the principal risks faced by the Company. The Board may full these responsibilities through delegation to CGAM and CGWL as it considers appropriate. The principal risks facing the Company, together with mitigating actions taken by the Board, are set out below: Risk Potential consequence How the Board mitigates risk Changes during the year Venture Capital Trust approval risk. The Company operates in a complex regulatory environment and faces a number of related risks. A breach of Section259 of the Income Taxes Act2007 could result in the disqualication of the Company as a VCT. Loss of VCT approval could lead to the Company losing its exemption from corporation tax on capital gains, Shareholders losing their tax reliefs and, in certain circumstances, being required to repay the initial tax relief on their investment. To reduce this risk, the Board has appointed an Investment Manager with signicant experience in the management of venture capital trusts. The Investment Manager regularly provides the Board with written and verbal reports. The Board also appointed Philip Hare& AssociatesLLP to monitor compliance with regulations and provide half-yearly compliance reports to the Board. No change. Investment risk. Many of the Company’s investments are held in small, high risk companies which are either listed on AIM or privately held. Investment in poor quality companies could reduce the capital and income return to Shareholders. Investments in small companies are often illiquid and may be dicult to realise. The Board has appointed the Investment Manager which has signicant experience of investing in small companies. The Investment Manager maintains a broad portfolio of investments across a wide range of industries and sectors. Individual Qualifying Investments rarely exceed 5% of net assets. The Investment Manager holds regular company meetings to monitor investments and identify potential risk. The VCT’s liquidity is monitored on a regular basis by the Investment Manager and reported to the Board quarterly and as necessary. No change. The UK economy is forecast to grow by 2.0% in 2025 (source:Oce for Budget Responsibility). The Bank of England is expected to continue to reduce interest rates. In both cases, this should improve consumer and business condence and encourage investment into growth. Osetting this, the Autumn Budget 2024 introduced a signicantly tighter scal policy that will increase the cost of employment, limit private sector wage growth, depress protability and reduce investment by the private sector. Whilst changes to Business Property Relief may make AIM less attractive to investors seeking to mitigate Inheritance Tax, the Budget and the recent extension of Sunset Clause conrmed the Government’s support for two important groups of investors on AIM. Compliance risk. The Company is required to comply with the FCA UK Listing Rulesand the Disclosure Guidance and Transparency Rules, the Companies Act 2006, Accounting Standards, the General Data Protection Regulation and other legislation. The Company is also a small registered UK AIFM and has to comply with the requirements of the AIFM Directive. Failure to comply with these regulations could result in a delisting of the Company’s shares, nancial penalties, a qualied audit report and/or loss of Shareholder trust. Board members have considerable experience of operating at senior levels within quoted businesses. They have access to a range of advisers including solicitors, accountants and other professional bodies and take advice when appropriate. CGWL provides compliance oversight to both the Administrator and the Investment Manager and reports to the Board on a quarterly basis. No change. Operational risk and outsourcing. Failure in the Investment Manager, Administrator, Custodian, Company Secretary or other appointed third-party systems and controls or disruption to their respective businesses as a result of operational failure, environmental hazards or cyber security attacks. Failures could put the assets of the Company at risk or result in reduced or inaccurate information being passed to the Board or Shareholders. Quality standards may be reduced through lack of understanding or loss of control. The Company has in place a risk matrix and a set of internal policies which are reviewed on a regular basis. It has written agreements in place with its third-party service providers. The Board receives regular reports from the Investment Manager, Administrator and Custodian to provide assurance that they operate appropriate control and oversight systems No change. 22 Risk Potential consequence How the Board mitigates risk Changes during the year and have in place training and other defence measures to mitigate the risk of cyber attack. Additionally, the Board receives a control report from the Registrars on an annual basis. Where tasks are outsourced to other third parties, reputable rms are used and performance is reviewed periodically by the MSPEC. Key personnel risk. A change in the key personnel involved in the management of the portfolio. Potential impact on investment performance. The Board discusses key personnel risk and resourcing with the Investment Manager periodically. To mitigate this risk, the VCT team within the Investment Manager has a large team comprising two fund managers, a portfolio manager, an investment analyst and a legal counsel. No change. Exogenous risks such as economic, political, geopolitical nancial, climate change and health. Economic risks include recession and sharp changes in interest rates. Political risks include a change in government policy causing the VCT scheme to be brought to an end, changes to economic or scal policy or the introduction of taris or other restrictions that might impact upon a company’s operational model, reduce revenues, depress prot margins and increase the cost of capital. Geopolitical risks include the impact of wars or conicts. Climate change presents environmental, geopolitical, regulatory and economic risks. Health risks include the possibility of another pandemic. Instability or changes arising from these risks could have an impact on stock markets and the value of the Company’s investments so reducing returns to Shareholders. Companies may face restrictions on emissions, water consumption and increased risk of environmental hazards. Regular dialogue with the Investment Manager provides the Board with assurance that the Investment Manager is following the investment policy agreed by the Board and appraises the Board of the portfolio’s current positioning in the light of prevailing market conditions. The Company’s investment portfolio is well diversied and the Company has no gearing. The Board regularly reviews investment test forecasts and liquidity analysis, including under stress scenarios, to monitor current and anticipate future performance against HMRC legislation and to ensure the Company has, and will continue to have, access to sucient liquidity and distributable reserves to maintain compliance with its key policies. The Board keeps abreast of current thinking through contact with industry associations and its advisers. The Investment Manager undertakes a review of ESG factors as part of the investment process. Climate change, or the need to limit its impact, will result in technological innovation as young companies seek to develop solutions and create opportunities for value creation for existing or new Qualifying Companies. No change. On 3September 2024, a Treasury Order was laid before Parliament extending the sunset clause until 5April 2035. The Bank of England has started to reduce interest rates, decreasing the cost of debt for companies and households. Interest rates are expected to fall further during 2025. However, the wars in Ukraine and the Middle East present a range of risks that may have profound economic and social consequences if they impact access to certain commodities or much higher prices. The incoming US administration may adjust US trade policy, including the introduction of new taris on countries exporting goods and services into the US, impacting revenues and protability. Additional risks and further details of the above risks and how they are managed are explained in note15 of the nancial statements. Trends aecting future developments are discussed in the Chair’s statement on pages4 to9 and the Investment Manager’s report on pages28 to31. Long-term viability statement 23 In accordance with provision 36 of the AIC Code, the Directors have carried out a robust assessment of the Company’s current position and its emerging and principal risks, further details can be found in the principal and emerging risks and uncertainties section on pages21 to22. This assessment has been carried out over a longer period than the 12months required by the ‘Going Concern’ provision. The Board conducted this review for a period of ve years, which was selected because it: ● is consistent with investors’ minimum holding period to retain the 30% income tax relief; ● exceeds the time allowed to deploy funds raised under the current oer in accordance with the VCT Rules; and ● is challenging to forecast beyond ve years with sucient accuracy to provide actionable insight. The Board considers the viability of the Company as part of its continuing programme of monitoring risk. The Company has a detailed risk control framework, documented procedures and forecasting model in place to reduce the likelihood and impact of risk taking that exceeds the levels agreed by the Board. These controls are reviewed by the Board and Investment Manager on a regular basis. The Board has considered the Company’s nancial position and its ability to meet its liabilities as they fall due over the next ve years. Forecasts and stress tests have been used to support their assessment and the following factors have been considered in relation to the Company’s future viability: ● the Company maintains a highly diversied portfolio of Qualifying Investments; ● the Company is well invested against the HMRC investment test (100% at 30September 2024) and the Board believes the Investment Manager will continue to have access to sucient numbers of investment opportunities to maintain compliance with the HMRC investment test; ● the Company held £13.6million in cash at the year end (includes £8.8m held with the Custodian); ● the Company has distributable reserves of £106.6million at 30September 2024, equivalent to 29pence per share; ● the Company has a portfolio of Non-Qualifying Investments, most of which are listed in the FTSE350 and oer good levels of liquidity should the need arise; ● the nancial position of the Company at 30September 2024 was strong with no debt or gearing; ● the oer for subscription launched on 9October 2024 has provided further liquidity for deployment in line with the Company’s policies and to meet future expenses; ● the OCR of the Company at the year end was 2.43%; ● the Company has procedures and forecast models in place to identify, monitor and control risk, portfolio liquidity and other factors relevant to the Company’s status as a VCT; and ● the Investment Manager and the Company’s other key service providers have contingency plans in place to manage operational disruptions. In assessing the Company’s future viability, the Board has assumed that investors will wish to continue to have exposure to the Company’s activities, that performance will be satisfactory and the Company will continue to have access to sucient capital. Based on this assessment, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the next ve years. Other matters 24 Dividend policy The Company’s dividend policy is to target a tax free dividend yield equivalent to 5per cent. of the year end NAV per share. The ability to pay dividends is dependent on the Company’s available distributable reserves and cash resources, the Companies Act 2006, the UK Listing Rulesand the VCT Rules. The policy is non-binding and at the discretion of the Board. Dividend payments may vary from year to year in both quantum and timing. The level of dividend paid each year will depend on the performance of the Company’s portfolio. In years where there is strong investment performance, the Directors may consider a higher dividend payment, including the payment of special dividends. In years where investment performance is not as strong, the Directors may reduce or even pay no dividend. Discount control policy and management of share liquidity The Company aims to improve liquidity and to maintain a discount of approximately 5per cent. to the last published NAV per share (as measured against the mid-price) by making secondary market purchases of its shares in accordance with parameters set by the Board. This policy is non-binding and at the discretion of the Board. Its operation depends on a range of factors including the Company’s liquidity, Shareholder permissions, market conditions and compliance with all laws and regulations. These factors may restrict the eective operation of the policy and prevent the Company from achieving its objectives. Diversity The Board comprises three male non-executive directors and three female non-executive directors with a diverse range of experience, skills, length of service and backgrounds. The Board will always appoint the best person for the job. However the Board considers diversity when reviewing Board composition and has made a commitment to consider diversity when making future appointments. It will not discriminate on the grounds of gender, race, ethnicity, religion, sexual orientation, age or physical ability. Environmental Social and Governance (“ESG”) and Considerations The Board seeks to maintain high standards of conduct with respect to ESG issues and to conduct the Company’s aairs responsibly. The Company does not have any employees or oces and so the Board does not maintain any specic policies regarding employee, human rights, social and community issues but does expect the Investment Manager to consider them when fullling its role. The Company qualies for an exemption from the Streamlined Energy and Carbon Reporting requirements as a low energy use company with regards to greenhouse gas emissions (producing less than 40,000kWh of energy per year) and, therefore, is not obliged to report emissions from its operations. The Company, whilst exempt, continues to monitor and develop its approach to the recommendations of the Task Force on Climate related Financial Disclosures. The management of the Company’s investment portfolio has been delegated to its Investment Manager, CGAM. The Company has adopted specic policies on divestment and excluded activities and it expects the Investment Manager to take account of ESG considerations in its investment process for the selection and ongoing monitoring of underlying investments. The Board has also given the Investment Manager discretion to exercise voting rights on resolutions proposed by investee companies. The Investment Manager continues to strengthen its approach to ESG issues. Further detail regarding the Investment Manager’s approach to ESG issues can be found on pages12 to13. To minimise the direct impact of its activities, the Company oers electronic communications where acceptable to reduce the volume of paper it uses and uses Carbon Balanced paper manufactured at a FSC accredited mill to print its nancial reports. Vegetable based inks are used in the printing process where appropriate. Prospects The prospects and future development of the Company are discussed in detail in the outlook section of the Chair’s statement on page 8. The Strategic Report is approved, by order of the Board of Directors. David Brock Chair 17December 2024 Summary of VCT regulations 25 To maintain its status as a VCT, the Company must be approved by HMRC and comply with a number of conditions. A summary of the most important conditions are detailed below: VCTs’ obligations VCTs must: ● have 80per cent. (by VCT tax value) of all funds raised from the issue of shares invested in Qualifying Investments throughout accounting periods of the VCT beginning no later than 3years after the date on which those shares are issued; ● have at least 70per cent. by VCT tax value of Qualifying Investments in Eligible Shares which carry no preferential rights (unless permitted under VCT Rules); ● have at least 30per cent. of all new funds raised by the Company invested in Qualifying Investments within 12months of the end of the accounting period in which the Company issued the shares; ● have no more than 15per cent. by VCT tax value of its investments in a single company (as valued in accordance with the VCT Rulesat the date of investment); ● derive most of its income from shares and securities, and, must not retain more than 15per cent. of its income derived from shares and securities in any accounting period; and ● have their shares listed on the main market of the London Stock Exchange or a European regulated Stock Exchange. VCTs must not: ● make a Qualifying Investment in any company that: o has (as a result of the investment or otherwise) received more than £5million from State aid investment sources in the 12months prior to the investment (£10million for Knowledge Intensive Companies); o has (as a result of the investment or otherwise) received more than £12million from State aid investment sources in its lifetime (or £20million for Knowledge Intensive Companies); o in general has been generating commercial revenues for more than sevenyears (or tenyears for Knowledge Intensive Companies); or o will use the investment to fund an acquisition of another company (or its trade and assets). ● make any investment which is not a Qualifying Investment unless permitted by section 274 ITA; and/or ● return capital to Shareholders before the third anniversary of the end of the accounting period during which the subscription for shares occurs. Qualifying Investments A Qualifying Investment consists of new shares or securities issued directly to the VCT by a Qualifying Company that at the point of investment: ● has gross assets not exceeding £15million prior to investment and £16million post investment; ● carries out activities which are regarded as a Qualifying Trade; ● is a private company or is listed on AIM or the AQSE Growth Market; ● has a permanent UK establishment; ● is not controlled by another company; ● will deploy the money raised for the purposes of the organic growth and development of a Qualifying Trade within 2years; ● has fewer than 250 employees (or fewer than 500 employees in the case of certain Knowledge Intensive Companies); ● in general, has not been generating commercial sales for more than sevenyears (tenyears for Knowledge Intensive Companies); ● has not received more than the permitted annual and lifetime limits of risk nance State aid investment; and ● has not been set up for the purpose of accessing tax reliefs or is in substance a nancing business. The Finance Act2018 introduced a principles-based approach known as the risk to capital condition to establish whether the activities or investments of an investee company can qualify for VCT tax reliefs. This condition has two parts: ● whether the investee company has an objective to grow and develop over the long term; and ● whether there is a signicant risk that there could be a loss of capital to the investor of an amount exceeding the net return. The Investment Manager & the Administrator 26 CGAM is a wholly owned subsidiary of Canaccord Genuity Wealth Group Limited. The Investment Manager is a leading small cap UK fund manager with a team of 15 fund managers and analysts. Their combined experience aligns with the Company’s published investment policy. As at 30September 2024, the Investment Manager had more than £2.6billion of funds under management across eight unit trusts/OEICS and the Company which are managed under delegation, including approximately £1.7billion invested in small UK companies. The Investment Manager’s VCT fund management team is led by Oliver Bedford with support from Lucy Bloomeld, Abbe Martineau, Anna Salim and Archie Stirling. The VCT fund management team is supported by the wider CGAM fund management team, mainly in the delivery of the Non-Qualifying Investment Strategy through the direct investment of the Company’s capital into companies listed on the main market of the London Stock Exchange, as permitted by the VCT Rules. A short biography on the members of the Investment Manager’s VCT team is set out below. Oliver Bedford – Lead Manager Oliver Bedford graduated from Durham University with a degree in Chemistry. He served in the British Army for nine years before joining the Investment Manager in 2004. After initially working as an analyst in support of the VCT, Oliver was appointed as co-manager in 2011 and then lead manager in 2019. Lucy Bloomeld – Co-Manager Lucy Bloomeld joined the Investment Manager in August2018 as deputy fund manager, she was subsequently appointed as co-manager in 2024. Prior to this she spent eight years as an analyst and UK Small& Mid cap fund manager at BlackRock before her most recent role as a European Small& Mid-cap fund manager with Ennismore Fund Management. Lucy graduated from Durham University in 2007 with a degree in Economics and is a CFA charter holder. Abbe Martineau – Legal Counsel Abbe Martineau graduated from the University of Birmingham and went on to qualify as a lawyer in 2005. Her prior legal experience includes eight years at Freshelds, where she advised international businesses on a range of corporate matters and strategic M&A, and eight years at Prudentialplc, where she worked on delivering the group’s strategic priorities, including its rst ESG Report and the demerger of M&G. She joined the Investment Manager in 2023. Anna Salim – Portfolio Manager Anna Salim joined the Investment Manager in April2018. Her prior experience includes European lower mid-market private equity investments at Revolution Capital Group and equity research at Cormark Securities. Anna graduated from the University of Toronto and holds an MBA from University of Western Ontario. She is a CFA charter holder. 27 Archie Stirling – Investment Analyst Archie Stirling graduated from Bristol University with a BSc in Economics, joined KPMGLLP in 2013 and qualied as a chartered accountant in 2016. Archie joined the Investment Manager in September2021 following 5years working in transactional services. Nicky Warnes – Head of VCT Administration Nicky joined the administration team in 2009 and was appointed Head of VCT Administration in 2011. Nicky has been a Chartered Management Accountant since 2016. £2.6 BILLION £1.7 BILLION 26 YEAR OVER 1,800 MEETINGS of funds under management Invested in small UK companies Track record of fund management With companies (12months to 30September 2024) Source:CGAM (as at 30September 2024) The Administrator CGWL provided administration services to the Company for the year ending 30September 2024. With eect from 1October 2024, the administration agreement between the Company and CGWL was novated to CGAM. Notwithstanding the novation of the administration agreement, CGWL continues to act as the Custodian post- period end. CGWL is a subsidiary of Canaccord GenuityInc., a full service nancial services company listed on the Toronto Stock Exchange. Fees and expenses The annual running costs of the Company are capped at 3.5per cent. of the net assets of the Company. The Investment Manager has agreed to indemnify the Company in relation to all costs that exceed this cap (such costs excluding any VAT payable on the annual running costs of the Company). As at 30September 2024, the Company’s running costs were 2.43per cent. of the net assets of the Company (including irrecoverable VAT). Under the IMA, the Investment Manager receives an annual management fee of 1.7per cent. of the Net Asset Value of the Company. A maximum of 75per cent. of the annual management charge will be chargeable against capital reserves, with the remainder being chargeable against revenue. The Company does not pay the Investment Manager a performance fee. As the Investment Manager to the Company is also investment adviser to the IFSL Marlborough Special Situations Fund and the IFSL Marlborough UK Micro-Cap Growth Fund (in which the Company may, and does, invest), the Investment Manager adjusts the fee it receives under the IMA to ensure that the Company is not charged twice for its services. The Investment Manager carries out some due diligence and transaction services on potential investments internally. Upon completion of an investment, the Investment Manager is permitted under the IMA to charge private investee companies a fee equal to 1.5per cent. of the investment amount. This fee is subject to a cap of £40,000 per investment and is payable directly from the investee company to the Investment Manager. The Investment Manager may also recover external due diligence and transactional services costs directly from private investee companies. The Administrator is engaged by the Company under the terms of an administration agreement. Under the terms of this agreement, the Administrator is paid an annual fee of £250,000 (plus VAT) in relation to administration services. In addition, CGWL receives a fee of £30,000 per annum in relation to its appointment as the Custodian. Any initial or trail commissions paid to Financial Intermediaries up to 30September 2024 were paid by CGWL. Any future initial or trail commissions paid to Financial Intermediaries will be paid by CGAM. Investment Manager’s report 28 Introduction This report covers the 2023/24 nancial year, 1October 2023 to 30September 2024. The Investment Manager’s report contains references to movements in the NAV per share and NAV total return per share. Movements in the NAV per share do not necessarily mirror the earnings per share reported in the accounts and elsewhere, which convey the prot after tax of the Company within the reported period as a function of the weighted average number of shares in issue for the period. Investment performance measures contained in this report are calculated on apence per share basis and include realised and unrealised gains and losses. Investment report The UK economy bounced back strongly after experiencing a shallow recession in late 2023. For much of the year, the economy has proven to be surprisingly resilient with GDP better than expected, healthy employment markets, strongly positive real wage growth and, as a result, increasing consumer condence. The more optimistic tone that took hold in the third quarter (of the nancial year) was also showing up in measures of UK business condence and indices that measure economic data points relative to expectations. Unfortunately, more recently these same yardsticks are now signalling that the negative messaging of the new Government is starting to weigh on the economy. It has been an unusual and clumsy start for a government that is keen to promote itself as pro-growth. If there has been huge uncertainty about the outlook for US interest rates, the same has not been true for UK monetary policy. Interest rates have started to come down broadly as expected with two 25 basis point reductions in August and in November, providing relief to many households and companies. Interest rates are expected to decline further as we head through the next year, potentially down to 4.00% by September2025. We have frequently agged the impact of sustained fund outows on UK equities, which have remained negative across the year. That having been said, we and other small cap managers saw an improvement in the ow dynamic within UK small companies in the early summer. Unfortunately, the improving picture did not survive the 2024 Autumn Budget with UK equity fund ows turning more deeply negative. Although bookended by two periods of notably poor performance, for the most part the AIM All-Share Index has been on an improving trend. After a dicult start to the nancial year, positive momentum was building as the year progressed, right through to the announcement on 21May 2024 that the UK would hold a general election. Concerns about potential changes to scal policy had an immediate and strongly negative impact on AIM that continued through to year end and beyond. Although the net outcome was a gain of 3.90% in the FTSE AIM All-Share Index for the 12months to 30September 2024, the index lagged the FTSE UK Small Cap Index (excluding Investment Trusts) by 18.47% across the year, with most of that (13.07%) underperformance occurring since the 2024 General Election was called. Performance In the 12months to 30September 2024, the NAV per share decreased from 46.34pence to 40.55pence, a NAV total return to investors of -1.79pence per share after adding back the 4.00pence of dividends paid in the year, this translates to a loss of -3.86%. The qualifying investments made a net loss of -2.73pence per share whilst the non-qualifying investments made a net gain of 1.17pence per share. The -0.23pence adjusting balance was the net of running costs and investment income. 29 The contribution to NAV is split out in further detail below: 35 40 45 50 Pence per share Contribuon to NAV performance Opening NAV Qualifying Non-Qualifying Income received Fees Dividends paid Closing NAV Notwithstanding the more negative mood that has set in since the 2024 General Election, corporate news ow steadily improved as the year progressed and the economy recovered from the recession in late 2023. For many retailers and consumer facing companies, the key Christmas trading period and the months that followed were challenging. More broadly speaking, we observed an increasing number of companies reporting trading that was in line with their expectations, with fewer companies reducing their guidance. The 2024 Autumn Budget cast a long shadow over AIM, undermining performance and introducing idiosyncratic factors that have distorted valuations:the composition of the Shareholder register became an unusually important determinant of share price performance. Whilst market distortions have, in our opinion, weighed on performance within the year, they have not been a factor in those companies that have made the most signicant individual contributions to performance. As is nearly always the case, management execution has been the dominant driver of the outcome for most of the ten companies we highlight below. Looking forward, we believe that the qualifying portfolio remains well set and attractively priced. We continue to expect investor interest in small UK companies to return, following the lead of those private equity and trade investors that continue to exploit market ineciencies. There is plenty of opportunity for those able and willing to make a long term investment in UK innovation and growth. Beeks Group (+177%, +0.83pence per share) reported excellent FY24 results with strong revenue and EBITDA growth of 27% and an 18% increase in annualised committed monthly recurring revenue to £28m. The company is successfully winning large contracts for its Exchange Cloud and Proximity cloud oering. Beeks Group’s multi-year contract with one of the world’s largest exchanges received regulatory approval in August2024 and is expected to launch in FY25 and drive considerable revenue growth. The company has a strong balance sheet with net cash of £6.6m. Cohort (+93%, +0.60pence per share) issued several positive trading updates over the year and reported record April FY24 results with revenues increasing 11% to £202.5m and operating prot of £21.1m. Several contract wins, including a £135m 10-year contract from the Ministry of Defence to supply the Royal Navy with its Trainable Decoy Launcher System, contributed to a very strong order intake of £392m over the year (+78% over the prior year). The last-reported order book of £575m provides over 90% cover for April FY25 revenue forecasts as well as visibility out to 2037. Intercede (+349%, +0.45pence per share) delivered exceptionally strong results for the year to March2024 with revenue growth of 65% to £20.0m and prot before tax of £5.6m. This included a record contract with a large US Federal Agency for over $8m, which was treated as an exceptional item. This good operating momentum has continued into the current year and Intercede has announced several more contract wins for its MyID credential management system which underpin the forecasts for FY25. The company has a strong balance sheet with £16.2m net cash. Shares in Learning Technology Group (+48%, +0.40pence per share) re-rated over the early part of the year as investor sentiment towards the stock improved. Whilst the company reported that weak end markets were weighing on revenues, a strong margin performance has moderated the impact on prot guidance. Good cash generation, coupled with 30 the sale of Vector VMS, has left the company with a substantially stronger unlevered (net cash) balance sheet. In September2024, the company announced an approach by private equity rm General Atlantic with a possible cash oer at 100p alongside an option for LTGShareholders to re-invest a portion of their holding into the private acquisition vehicle. Skillcast (+137%, +0.31pence per share) reported strong 2023 results with revenues growing 15% to £11.3m. 2024 interim results showed further progress as revenues grew 24% to £6.4m and the company broke even at the EBITDA level. Annualised recurring revenues have increased by over 50% from £6.8m in December2022 to £10.3m in June2024. The balance sheet is strong, with net cash of £8.3m. Equipmake (-72%, -1.63pence per share) reported FY24 revenues of £8.1m, 60% growth on the prior year. EBITDA losses were higher and cash lower than forecast due to a revenue miss, cost overruns and working capital movements. The company has invested into a new management team over the year, appointing a more experienced COO, CFO and business development director. Revised guidance reects the pivot to a higher margin less capital intensive business model that should result in reduced losses in FY25 and bring forward the transition to prot in FY26. Equipmake has established relationships with several high-calibre original equipment manufacturer (OEM) for its components and drivetrain solutions and looks to build on this and announce further partnership deals in due course. The company raised a further £3m in October to support its working capital requirements. Surface Transforms (-99%, -0.76ppence per share) faced signicant production issues over the period as the company sought to scale-up production rates to meet customer demand. As a result, revenues were signicantly below target and costs also exceeded plans. In May2024, the company raised £8.5m of additional funding for working capital and capex in a deeply discounted fundraise that was not VCT qualifying and very dilutive to existing Shareholders. The investment was sold post period end. Engage XR (-71%, -0.49pence per share) warned in December 2023 that prots would be below expectations due to project delays. In April2024, the company reported revenues of €3.7m (-5% year on year), and an EBITDA loss of €-4.0m for the 12months to December2023. The balance sheet is strong with net cash of €7.9m following the €10.5m fundraise earlier in 2023. More recently, the company announced its rst €1m+ contract with a Middle East based education and training company through its partnership with PWC and appointed an experienced non-executive chair to the board. Children’s products and clothing retailer Kidly (-54%, -0.42pence per share) experienced a dicult trading environment through Christmas 2023 and early 2024 that was compounded by balance sheet constraints. Although revenue performance was below budget, operational eciencies resulted in signicantly lower losses. Trading improved as the year progressed. Reecting the need for additional funding, the fair value of the equity was reduced to nil and the value of the debt heavily impaired. Subsequently, Kidly secured new funding as part of a nancial restructuring that included a partial conversion of the loan noteinstrument into new preferred shares. The reduction in risk allowed a partial recovery in the fair value of the convertible loan noteinstrument. In a signicant announcement, Arecor Therapeutics (-67%, -0.23pence per share) reported that its ultra- concentrated and ultra-rapid acting insulin candidate AT278 demonstrated superiority to the current best- in-class insulins in a Phase 1 clinical trial for patients with Type 2 diabetes and high BMI. However, supply chain issues in its subsidiary Tetris Pharma negatively impacted revenues and cash ow. Despite a more challenging fundraising environment for life-sciences companies on AIM, the company successfully raised £6.4m to continue its insulin development programmes and provide working capital funding for Tetris Pharma. Reecting the very dicult market, there were no funds raised from AIM VCTs by companies undertaking an IPO on AIM in the year under review. Despite this, we invested £9.2m into seven Qualifying Companies including one new investment into a company listed on AIM, one new investment into a company listed on the AQSE APEX market, three follow on investments into existing portfolio companies listed on AIM, one follow on investment into a company listed on the AQSE APEX market and one new investment into a private company. The three new investments included Abingdon Healthplc, Oberon Investments Groupplc and QureightLtd. The follow on investments included Eden Researchplc, Equipmakeplc, PCI Pal plc and Strip Tinningplc. We reduced our investments in Blackbirdplc, Team Internet Groupplc and made complete exits from Abcamplc, Instemplc, Osiriumplc and Renalytixplc, Smooveplc and Velocysplc. BidstackGroup plc was placed into administration. Portfolio structure The VCT is comfortably above the HMRC dened investment test and ended the period at 100% invested as measured by the HMRC investment test. By market value, the weighting to qualifying 31 investments decreased from 58.7% to 56.0% following several disposals of qualifying companies. The allocation at the year end to non-qualifying equity investments decreased from 10.1% to 8.1%. In line with the investment policy, we made investments in the IFSL Marlborough Special Situations Fund and the IFSL Marlborough UK Micro-Cap Growth Fund as temporary homes for proceeds from fundraising; the allocations increased from 5.4% to 13.4% and returned +0.57pence per share in the period. The non-qualifying direct equity investments, which are mostly held in FTSE350 companies contributed +0.37pence per share. Within the period, the largest contributors to non-qualifying gains were Chemring (+32.3%, +0.12pence per share), Hollywood Bowl (+25.3%, + 0.11pence per share) and TP ICAP (+38.7%, +0.10pence per share). The largest non-qualifying losses came from XP Power (-55.4%, -0.12pence per share), Energean (-13.5%, -0.04pence per share) and Bodycote (-7.7%, -0.03pence per share). We have maintained a substantial investment in short-dated investment grade corporate bonds. Within the year, we reinvested the proceeds from the redemption of one Marks& Spencer’s bond into another Mark& Spencer’s bond, acquired a new Unilever bond which was subsequently redeemed just prior to yearend and made a small investment into a second Next bond. In the round, the allocation increased from 11.4% to 12.9%. The average yield to maturity at year end was 4.7%. Our cash weighting dropped from 12.7% to 9.3% (1) . The Company invests across all available investment sectors, although VCT Rulestends to promote investment into sectors such as technology, healthcare and consumer discretionary. In respect of the Qualifying Investment portfolio, the weightings to these three sectors changed slightly over the year as a consequence of additional investment and share price performance, taking their respective shares to 40.4%, 21.0% and 11.8%. There is also a 13.8% weighting to industrials. The HMRC investment tests are set out in Chapter3 of Part6 Income Tax Act2007, which should be read in conjunction with this investment manager’s report. Funds raised by VCTs are rst included in the investment tests from the start of the accounting period containing the third anniversary of the date on which the funds were raised. Therefore, the allocation of qualifying investments as dened by the legislation can be dierent to the portfolio weighting as measured by market value relative to the net assets of the VCT. (1) Net of prepayments and accruals. Share buy backs& discount control 10,657,350 shares were acquired in the year at an average price of 41.97pence per share. The share price decreased from 43.00p to 39.00p and traded at a discount of 6.78% following the publication of the 30September 2024 NAV on 10October 2024. Post period end update The NAV per share has decreased from 40.55pence to 40.29 pence in the period to 6December2024, a decrease of 0.6%. As at 17December2024, the share price of 38.40pence represented a discount of 4.69% to the last published NAV per share. Economic activity has noticeably slowed since the early summer with the economy growing by a meagre +0.1% in the 3 months to October 2024, having peaked at +0.7% in the 3 months to May 2024. Business and consumer condence has dipped and corporate newsow has noticeably softened, although trading continues to vary markedly by sector. However, this period of weaker activity is not expected to last and the economy should pick up momentum as we head through 2025. Whilst many businesses (and business owners) are understandably frustrated by changes to NICs, Business Property Relief and Business Asset Disposal Relief, households and consumers should at least benet from lower borrowing costs and, at least within the public sector, substantially positive real wage growth. For most portfolio companies, the outlook is not signicantly altered by the Autumn 2024 Budget. Increases in employment taxes, whilst unhelpful, are not a signicant factor within the portfolio and we remain condent that our portfolio companies can continue to build value through good execution. When and how that crystallises remains dicult to forecast in the short-term. Deal ow has improved noticeably since the Autumn 2024 budget and we are active on a large number of deals. We are also seeing signs of a recovery in the pipeline of companies looking to undertake an IPO. For further information please contact: Oliver Bedford Lead Fund Manager 17 December2024 Investment portfolio summary As at 30 September 2024 32 Net Assets % at 30.09.24 Cost £000 Cumulative movement in value £000 Valuation £000 Change in value for the year £000 (1) Market COI (2) Equity Qualifying Investments Beeks Financial Cloud Group plc 3.11 1,038 3,569 4,607 2,945 AIM Yes Cohort plc 3.04 619 3,884 4,503 2,166 AIM Ye s Learning Technologies Group plc 2.89 2,238 2,037 4,275 1,388 AIM No Eagle Eye Solutions Group plc 2.69 1,642 2,340 3,982 (563) AIM Ye s PCI-PAL plc 2.43 2,703 890 3,593 (706) AIM Ye s The Property Franchise Group plc 2.31 1,139 2,287 3,426 1,753 AIM Yes Innity Reliance Ltd (My 1st Years) (3) 2.10 2,500 607 3,107 364 Unlisted Yes Diaceutics plc 1.82 1,550 1,141 2,691 591 AIM Yes Qureight Ltd 1.69 2,500 – 2,500 – Unlisted No Equipmake Holdings plc 1.57 4,162 (1,834) 2,328 (5,803) AIM No Maxcyte Inc 1.47 1,270 905 2,175 300 AIM Ye s Intercede Group plc 1.40 305 1,767 2,072 1,611 AIM Ye s Craneware plc 1.29 125 1,786 1,911 470 AIM Ye s Skillcast Group plc 1.29 1,570 340 1,910 1,104 AIM No Aquis Exchange plc 1.21 765 1,024 1,789 – AIM Ye s Abingdon Health plc 1.14 1,823 (140) 1,683 (140) AIM No Fadel Partners, Inc 1.13 2,300 (623) 1,677 (623) AIM No Team Internet Group plc 1.05 565 997 1,562 4 AIM No XP Factory plc 1.04 4,068 (2,520) 1,548 (581) AIM Ye s Itaconix plc 1.04 3,025 (1,483) 1,542 (107) AIM No Zoo Digital Group plc 1.04 2,159 (619) 1,540 (220) AIM No Intelligent Ultrasound Group plc 0.93 1,550 (173) 1,377 (275) AIM No AnimalCare Group plc 0.91 720 630 1,350 332 AIM Yes SCA Investments Ltd (Gousto) 0.89 2,484 (1,166) 1,318 (237) Unlisted No Oberon Investments Group plc 0.85 1,461 (208) 1,253 (209) AIM No Zappar Ltd 0.81 1,600 (400) 1,200 (229) Unlisted No Tortilla Mexican Grill plc 0.81 1,125 75 1,200 (550) AIM Ye s Eden Research plc 0.80 1,855 (674) 1,181 (336) AIM No Equals Group plc 0.77 750 396 1,146 51 AIM No C4X Discovery Holdings Ltd 0.75 2,300 (1,193) 1,107 (693) Unlisted No Idox plc 0.73 135 949 1,084 (58) AIM Ye s EKF Diagnostics Holdings plc 0.61 565 335 900 96 AIM No Ilika plc 0.57 1,636 (785) 851 (259) AIM No Blackbird plc 0.56 594 238 832 (117) AIM No Globaldata plc 0.55 173 635 808 211 AIM Yes BiVictriX Therapeutics Ltd 0.58 1,600 (828) 772 (408) Unlisted No Tristel plc 0.51 543 217 760 (93) AIM No Engage XR Holdings plc 0.47 3,453 (2,762) 691 (1,727) AIM No One Media iP Group plc 0.44 1,141 (489) 652 (244) AIM Ye s Science in Sport plc 0.39 1,479 (902) 577 289 AIM Ye s Nexteq plc 0.38 1,209 (649) 560 (170) AIM No Creo Medical Group plc 0.37 2,329 (1,777) 552 (161) AIM Yes Crimson Tide plc 0.35 1,260 (735) 525 (231) AIM Ye s Tan Delta Systems plc 0.33 504 (20) 484 19 AIM No Verici DX plc 0.31 1,939 (1,476) 463 (71) AIM No Arecor Therapeutics plc 0.27 1,687 (1,290) 397 (819) AIM No Rosslyn Data Technologies plc 0.27 1,345 (951) 394 (322) AIM Ye s Faron Pharmaceuticals Oy 0.25 1,133 (763) 370 (125) AIM No Hardide plc 0.23 3,566 (3,218) 348 (290) AIM Ye s Everyman Media Group plc 0.16 600 (369) 231 25 AIM No K3 Business Technology Group plc 0.14 270 (60) 210 (120) AIM Ye s Eneraqua Technologies plc 0.14 1,401 (1,194) 207 (298) AIM No Strip Tinning Holdings plc 0.13 1,054 (866) 188 (154) AIM No Angle plc 0.12 1,158 (974) 184 (149) AIM No Crossword Cybersecurity plc 0.09 2,039 (1,906) 133 (573) AIM No Polarean Imaging plc 0.07 2,081 (1,978) 103 (587) AIM No Mycelx Technologies Corporation 0.05 361 (282) 79 (51) AIM Ye s 33 Net Assets % at 30.09.24 Cost £000 Cumulative movement in value £000 Valuation £000 Change in value for the year £000 (1) Market COI (2) Trakm8 Holdings plc 0.03 486 (432) 54 (80) AIM No Surface Transforms plc 0.02 1,744 (1,709) 35 (2,639) AIM No Fusion Antibodies plc 0.02 624 (597) 27 (9) AIM No Gnity plc – 2,026 (2,021) 5 (23) AIM No Bidstack Group plc – 2,733 (2,733) – (314) Unlisted No Kidly Ltd (3) – 2,660 (2,660) – (326) Unlisted No Laundrapp Ltd (3) – 2,450 (2,450) – – Unlisted No Airportr Technologies Ltd (3) – 1,888 (1,888) – – Unlisted No Mporium Group plc – 33 (33) – – Unlisted No Flowgroup plc – 26 (26) – – Unlisted No Infoserve Group plc (4) – – – – – Unlisted No Total – equity Qualifying Investments 53.41 101,836 (22,807) 79,029 (7,971) Qualifying xed income investments Strip Tinning Holdings plc (convertible loan notes) 1.45 2,000 158 2,158 158 Unlisted No Kidly Ltd (convertible loan notes) 0.85 1,400 (138) 1,262 (1,138) Unlisted No Rosslyn Data Technologies plc (convertible loan notes) 0.24 300 58 358 58 Unlisted No Total qualifying xed income investments 2.54 3,700 78 3,778 (922) Total Qualifying Investments 55.95 105,536 (22,729) 82,807 (8,893) Non-qualifying funds IFSL Marlborough UK Micro-Cap Growth fund 7.01 9,339 1,044 10,383 1,044 Unlisted No IFSL Marlborough Special Situations fund 6.34 9,833 (448) 9,385 1,001 Unlisted No Vaneck Gold Miners UCITS ETF 0.44 634 22 656 22 Main No Total non-qualifying funds 13.79 19,806 618 20,424 2,067 Equity non-qualifying investments Hollywood Bowl Group plc 1.26 1,566 294 1,860 375 Main Ye s Bodycote plc 0.91 1,534 (179) 1,355 (114) Main No National Grid plc 0.90 1,229 101 1,330 162 Main No TP ICAP Group plc 0.89 1,022 300 1,322 369 Main Ye s Chemring Group plc 0.84 1,023 217 1,240 405 Main Ye s WH Smith plc 0.79 1,220 (54) 1,166 91 Main Ye s Rotork plc 0.63 944 (10) 934 59 Main No BAE Systems plc 0.63 593 334 927 246 Main Ye s Wickes Group plc 0.59 950 (75) 875 167 Main Ye s Shell plc 0.49 804 (77) 727 (77) Main No Tortilla Mexican Grill plc 0.09 161 (30) 131 (60) AIM Ye s Mycelx Technologies Corporation 0.06 298 (206) 92 (60) AIM Ye s Genagro Services Ltd – – – – 2 Unlisted Ye s Total – equity non-qualifying investments 8.08 11,344 615 11,959 1,565 Non-qualifying xed income – bonds British Telecommunications 5.75% SNR BDS 07/12/2028 2.12 3,130 2 3,132 174 Main No Marks and Spencer plc 3.75% SNR EMTN 19/05/2026 2.06 3,032 17 3,049 17 Main No Natwest Markets plc 6.375% SNR EMTN 08/11/2027 2.05 3,017 18 3,035 140 Main No Royal Bank of Canada 5% SNR NTS 24/01/2028 2.05 3,036 (8) 3,028 153 Main No Next Group plc 4.375% SNR BDS 02/10/2026 2.01 2,987 (12) 2,975 96 Main No 34 Net Assets % at 30.09.24 Cost £000 Cumulative movement in value £000 Valuation £000 Change in value for the year £000 (1) Market COI (2) Barclays plc 3.25% SNR NTS 12/02/2027 1.95 2,912 (25) 2,887 145 Main No Next Group plc 3% GTD SNR BDS 26/08/2025 0.66 969 12 981 13 Main No Total non-qualifying xed income – bonds 12.90 19,083 4 19,087 738 Total – non-qualifying investments 34.77 50,233 1,237 51,470 4,370 Total investments 90.72 155,769 (21,492) 134,277 (4,523) Cash at bank 3.2 4,766 Funds held with Custodian 6.0 8,846 Prepayments & accruals 0.08 120 Net assets 100.00 148,009 (1) The change in fair value has been adjusted for additions and disposals in the year and as such does not reconcile to the unrealised total in note7. The dierence is £0.8million which is the total of 17 full investment disposals in the year. (2) COI – Co investments with other funds managed by the Investment Manager at 30September 2024. (3) Dierent classes of shares held in unlisted companies within the portfolio have been aggregated. (4) Impaired fully through the prot and loss account and therefore shows a zero cost. The investments listed below are either listed, headquartered or registered outside the UK: Listed Headquartered Registered Listed Investments: Fadel Partners, Inc UK USA USA Faron Pharmaceuticals Oy UK/Finland Finland Finland Itaconix plc UK USA UK Maxcyte Inc UK/USA USA USA Mycelx Technologies Corporation UK USA USA Polarean Imaging plc UK USA UK Unlisted private companies: Genagro Ltd (1) – UK Jersey (1) Companies awaiting liquidation. 35 35.3% 18.4% 14.6% 16.8% 0.7% 4.6% 3.2% 3.6% 0.6% 0.8% 1.4% Total Investments by market sector as at 30 September 2024 Information Technology Health Care Consumer Discretionary Industrials Communication Services Financial Services Materials Real Estate Consumer Staples Energy Utilities 33.1% 17.6% 15.8% 21.4% 1.2% 2.6% 3.2% 2.1% 0.3% 1.8% 0.9% Total Investments by market sector as at 30 September 2023 Information Technology Health Care Consumer Discretionary Industrials Communication Services Financial Services Materials Real Estate Consumer Staples Energy Utilities Top ten investments As at 30 September 2024 (by market value) 36 The top ten investments are shown below. Each investment is valued by reference to the bid price or, in the case of unquoted companies, the IPEV guidelines using one or more valuation techniques according to the nature, facts and circumstances of the investment. Forecasts, where given, are drawn from a combination of broker research and/or Bloomberg consensus forecasts and exclude amortisation, share based payments and exceptional items. Forecasts are in relation to a period end for which the company results are yet to be released. Published accounts are used for private companies or public companies with no published broker forecasts. The net asset gures and net cash values are from published accounts in most cases. Beeks Financial Cloud Groupplc Share Price: 244.0p Investment date November 2017 Forecasts for the year to June 2025 Equity held 2.84% Turnover (£’000) 39,600 Av. Purchase Price 55.0p Prot before tax (£’000) 6,100 Cost (£’000) 1,038 Net cash June 2024 (£’000) 7,100 Valuation (£’000) 4,607 Net assets June 2024 (£’000) 37,495 Company description Beeks Financial Cloud Group plc is a cloud-based connectivity provider of technology solutions to the nancial services sector. The company’s Infrastructure-as-a-Service model is optimised for low-latency private cloud compute, connectivity and analytics, providing the exibility to deploy and connect to exchanges, trading venues and public cloud for a true hybrid cloud experience. The company serves over 1,000 enterprise clients from its global network of data centres. Cohort plc Share Price: 948.0p Investment date February 2006 Forecasts for the year to April 2025 Equity held 1.14% Turnover (£’000) 241,200 Av. Purchase Price 130.2p Prot before tax (£’000) 25,800 Cost (£’000) 619 Net cash October 2024 (£’000) 37,900 Valuation (£’000) 4,503 Net assets October 2024 (£’000) 111,203 Company description Cohort provides electronic and surveillance technology solutions. The company oers electronic warfare operational support, secure communication systems and networks, test systems and data management. Cohort serves defence and security, transport, oshore energy and other commercial markets. Learning Technologies Group plc Share Price: 95.0p Investment date July 2015 Forecasts for the year to December 2024 Equity held 0.57% Turnover (£’000) 477,000 Av. Purchase Price 49.7p Prot before tax (£’000) 77,000 Cost (£’000) 2,238 Net (debt) June 2024 (£’000) (57,524) Valuation (£’000) 4,275 Net assets June 2024 (£’000) 443,743 Company description Learning Technologies Group provides workplace digital learning and talent management software and services to corporate and government clients. The group oers end-to-end learning and talent solutions ranging from strategic consultancy, through a range of content and platform solutions to analytical insights that enable corporate and government clients to meet their performance objectives. 37 Eagle Eye Solutions Group plc Share Price: 460.0p Investment date April 2014 Forecast for the year to June 2025 Equity held 2.92% Turnover (£’000) 55,500 Av. Purchase Price 189.7p Prot before tax (£’000) 6,200 Cost (£’000) 1,642 Net cash June 2024 (£’000) 10,404 Valuation (£’000) 3,982 Net assets June 2024 (£’000) 34,056 Company description Eagle Eye is a SaaS technology company that creates digital connections enabling personalised, real-time marketing solutions for large retailers. Through Eagle Eye AIR, the company’s loyalty and promotions omnichannel SaaS platform, companies connect all aspects of the customer journey in real time, unlocking the capability to deliver personalisation, streamline marketing execution and open up new revenue streams through promotions, loyalty apps, subscriptions and gift services. PCI Pal plc Share price: 46.80p Investment date January 2018 Forecast for the year to June 2025 Equity held 10.58% Turnover (£’000) 22,400 Av. Purchase Price 35.2p Prot before tax (£’000) 800 Cost (£’000) 2,703 Net (debt) June 2024 (£’000) 4,332 Valuation (£’000) 3,593 Net (liabilities) June 2024 (£’000) (1,970) Company description PCI PAL plc is a provider of SaaS solutions that allows companies to take payments from their customers securely. Its products secure payments and data in any business communications environment including voice, chat, social, email, and contact centre and is integrated to, and resold by, business communications vendors and payment service providers. The Property Franchise Group plc Share price: 415.0p Investment date December 2013 Forecast for the year to December 2024 Equity held 2.56% Turnover (£’000) 68,700 Av. Purchase Price 138.0p Prot before tax (£’000) 22,300 Cost (£’000) 1,139 Net (debt) June 2024 (£’000) (14,302) Valuation (£’000) 3,426 Net assets June 2024 (£’000) 143,972 Company description The Property Franchise Group is the UK’s largest property franchise business and manages the second largest estate agency network and portfolio of lettings properties in the UK. The group has 1,946 outlets, manages more than 152k tenanted properties and is expected to sell in excess of 28k properties per annum. The group also includes an established nancial services business. Innity Reliance Ltd (My First Years) Unquoted Investment date May 2018 Results for the year to December 2023 Voting rights held 9.66% Turnover (£’000) 20,973 Av. Purchase Price 4,670.4p Prot before tax (£’000) 2,885 Cost (£’000) 2,500 Net cash December 2023 (£’000) 6,221 Valuation (£’000) 3,107 Net assets December 2023 (£’000) 9,121 Income recognised in period (£) – Company description My 1st Years is a European retail platform that focusses on the sale of personalised baby and children’s gifts primarily through e-commerce channels. The product range includes bespoke presents for newborn babies to seven year olds, for christenings, birthdays and Christmas. 38 Diaceutics plc Share price: 132.0p Investment date July 2019 Forecast for the year to December 2024 Equity held 2.41% Turnover (£’000) 30,100 Av. Purchase Price 76.0p (Loss) before tax (£’000) (2,800) Cost (£’000) 1,550 Net cash June 2024 (£’000) 16,749 Valuation (£’000) 2,691 Net assets June 2024 (£’000) 38,740 Company description The Diaceutics proprietary diagnostic commercialisation platform (“DXRX”) integrates real-world diagnostic testing data from a global network of laboratories to enable the supply of precision medicine therapeutics to patients. The company provides its solutions to leading pharmaceutical and biotech companies in Europe and theUSA. Qureight Ltd Unquoted Investment date March 2024 Results for the year to December 2023 Voting rights held 15.10% Turnover (£’000) (1) – Av. Purchase Price 7,394.0p Prot/(loss) before tax (£’000) (1) – Cost (£’000) 2,500 Net cash December 2023 (£’000) 380 Valuation (£’000) 2,500 Net assets December 2023 (£’000) 846 Income recognised in period (£) – (1) Company has total exemption from full accounts. Company description Qureight’s proprietary technology uses articial intelligence to analyse medical images of the respiratory system through its innovative approach to clinical data curation and articial intelligence-powered digital biomarkers. This approach enables researchers and scientists to analyse disease progression and drug responses in patients across a range of complex conditions. Strip Tinning Holdings plc (1) Share price: 33.0p Investment date February 2022 Forecast for the year to December 2024 Equity held 3.13% Turnover (£’000) 9,000 Av. Purchase Price 118.8p (Loss) before tax (£’000) (3,700) Cost (£’000) 3,054 Net (debt) June 2024 (£’000) (2,247) Valuation (£’000) 2,346 Net assets June 2024 (£’000) 4,240 (1) Holding inclusive of equity and convertible loan note investments. Company description Strip Tinning manufactures specialist exible electrical connectors related primarily to heating and antennae systems embedded within automotive glazing and to the connection of the cells within electric vehicle battery packs, increasingly using exible and lightweight printed circuit technology. For further information please contact: Oliver Bedford Lead Fund Manager 17 December 2024 Governance 39 Board of Directors 40 David Brock (Chair) Date of Appointment: 28 September 2010 David Brock is an experienced company chair in both private and public companies and a former main board director of MFI Furniture Group plc. David is chair of Molten Ventures VCT plc and ECS Global GroupLtd. David was appointed as Chair of the Board on 4February 2020. Oliver Bedford Date of Appointment:13December 2016 Oliver Bedford sits on the Board as part of his role as lead fund manager at the Company’s Investment Manager. Angela Henderson (MSPEC Chair) Date of Appointment:29October 2019 Angela Henderson is a non-executive director at Macquarie Capital (Europe) Limited, Wells Fargo Securities International Limited and Polar Capital Global Financials Trustplc, following an executive career in nancial services. She has invested in early-stage technology companies and held non-executive board seats in the asset management sector. Previously, she has served on the governing body of a London hospital and a healthcare charity. She is a solicitor of the Senior Courts of England& Wales. Megan McCracken Date of Appointment:1June 2022 Megan McCracken is chair of State Street Trustees Limited and a non-executive director and chair of the remuneration and nomination committees of Folk2Folk. She was awarded the Institute of Directors’ Chair’s Award. Megan held executive roles at HSBC and Citibank, was a PwC consultant and a Boeing Satellite Systems engineer. She was previously the senior independent director of GB Bank and has an MBA from MIT Sloan and a Bachelor of Science in Aerospace Engineering. Busola Sodeinde Date of Appointment:1June 2022 Busola Sodeinde is a qualied Chartered Accountant and has spent most of her executive career in nancial services. She is a non-executive director and chair of the Audit Committee of TR Property Investment Trust plc, a non-executive director and chair of the Audit and Governance Committee of Railpen Limited, a member of the Board of Governors for Church Commissioners, is a non-executive director at The Ombudsman Services and a Trustee of The Scouts. Busola is the founder of a social start up and is also an activator supporting women-led ventures. Justin Ward (Audit Committee Chair) Date of Appointment:1November 2020 Justin Ward is a qualied Chartered Accountant. He is a non-executive director and chair of the investment committee of The Income and Growth VCTplc and chair of Schroder British Opportunities Trustplc. He is also a non-executive director of School Explained Limited and has previously served on the board of a number of private companies. Justin formerly led growth equity and private equity buyout transactions at CVC Capital Partners, Hermes Private Equity and Bridgepoint Development Capital. Directors’ report For the year end 30 September 2024 41 The Directors of Hargreave Hale AIM VCTplc present their Annual Report together with the audited nancial statements of the Company for the year from 1October 2023 to 30September 2024, incorporating the corporate governance statement on pages 50 to 55. The principal activity of the Company has been outlined in the Strategic Report on page 10. The Board believes that the Annual Report taken as a whole is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Company’s position, performance, business model and strategy. Directors The Directors of the Company during the year were David Brock (Chair), Oliver Bedford, Angela Henderson, Megan McCracken, Busola Sodeinde and Justin Ward. Brief biographical details are given on page 40. Directors’ interests The Directors’ interests (including those of connected persons) in the issued share capital of the Company are outlined in the Directors’ remuneration report on page 45. There is no minimum holding requirement, in the shares of the Company, that the Directors are required to adhere to. Oliver Bedford, David Brock, Angela Henderson and Justin Ward are Shareholders in the Company. Their current shareholdings, as at the date of this Annual Report, and subsequently, are stated in the Directors’ remuneration report on page 48. Directors’ and ocers’ liability insurance Directors’ and ocers’ liability insurance cover is held by the Company in respect of the Directors. Deeds of indemnity The Company has entered into deeds of indemnity in favour of each of the Directors in order to provide additional protection to the Directors in certain liability scenarios. The deeds of indemnity give each Director the benet of an indemnity out of the assets and prots of the Company, to the extent permitted by the Companies Act2006 and subject to certain limitations against liabilities incurred by each of them in the execution of their duties and exercise of the powers as Directors of the Company. Disclosable interests No Director is under contract of service with the Company and, other than as disclosed in note14, no contract existed during or at the end of the year in which any Director was materially interested and which was signicant in relation to the Company’s business. Revenue and dividends The statutory loss for the year amounted to £6,585,156 (2023:loss £29,726,556). An interim dividend of 1 penny per ordinary share was paid on 26July 2024 (2023:1 penny per ordinary share). Aspecial dividend of 1.50pence per ordinary share was also paid on 26July 2024 (2023:0). The nal dividend of 1.25pence per ordinary share for the year ended 30September 2024 is due to be paid on 14February2025 (2023:1.50pence per ordinary share). A special dividend of 1.50pence per ordinary share has been approved by the Board. The distribution will return to Shareholders proceeds from various exits and disposals. The special dividend will be paid together with the nal dividend on 14February 2025. Capital structure The Company’s capital structure is summarised in notes1 and 11 to the nancial statements. Voting rights in the Company’s shares Each ordinary Shareholder is entitled to one vote on a show of hands and on a poll to one vote for each ordinary share held. Other than with regard to Directors not being permitted to vote on matters upon which they have an interest, there are no restrictions on the voting rights of ordinary Shareholders. Substantial holdings in the Company As at 30September 2024 and the date of this report, the Company was aware of the following shareholdings of 3% or more of the Company’s issued ordinary share capital: Shareholder Number of ordinary shares as at 30September 2024 % held Number of ordinary shares as at 13December 2024 % held Hargreaves Lansdown (Nominees) Limited 13,597,754 3.73 13,543,691 3.72 UBS Private Banking NomineesLtd 12,321,015 3.38 11,910,075 3.28 42 Share buybacks and share price discount During the year, the Company repurchased 10,657,350 ordinary shares (nominal value £106,574) at a cost of £4,472,418. The repurchased shares represent 3.25% of the ordinary shares in issue on 1October 2023. All repurchased shares were cancelled. As at 17December2024, a further 3,559,262ordinary shares (nominal value £35,593) have been purchased since the year end at a total cost of £1,361,156. The Directors believe that these share buybacks are in the best interests of all Shareholders as they provide liquidity for Shareholders looking to realise their investment whilst ensuring the shares are bought back at a discount to the NAV to the longer- term benet of remaining Shareholders. This policy is non-binding and at the discretion of the Board. Its operation depends on a range of factors including the Company’s liquidity, Shareholder permissions, market conditions and compliance with all laws and regulations. These factors may restrict the eective operation of the policy and prevent the Company from achieving its objectives. Shares issued During the year, the Company issued 44,485,284 ordinary shares of 1 penny (nominal value £444,853) in the oer for subscription launched in the year ending September2023, representing 13.57% of the opening share capital at prices ranging from 44.80p to 47.10p per share. Gross funds of £20,321,529 were received. The 3.5% premium of £711,254 payable to CGWL under the terms of the oer was reduced by £264,162, being the discount awarded to investors in the form of additional shares. A further reduction of £470 representing an introductory commission was made resulting in fees payable to CGWL of £446,622 which were used to pay other costs associated with the prospectus, relating to the oer, and marketing. In accordance with the oer agreement, the Company was entitled to a rebate of £100,000 from CGWL reducing the net fees payable to CGWL to £346,622. On 15February 2024, 1,100,783 ordinary shares were allotted at a price of 44.58pence per share, which was calculated in accordance with the terms and conditions of the DRIS on the basis of the last reported NAV per share as at 26January 2024, to Shareholders who elected to receive shares under the DRIS as an alternative to a cash payment of the nal dividend for the year ended 30September 2023. On 26July 2024, 2,235,192 ordinary shares were allotted at a price of 42.49pence per share, which was calculated in accordance with the terms and conditions of the DRIS on the basis of the last reported NAV per share as at 5July 2024, to Shareholders who elected to receive shares under the DRIS as an alternative to a cash payment of the interim dividend for the year ended 30September 2024. Financial instruments The Company’s nancial instruments and principal risks are disclosed in note15 to the nancial statements. VCT status monitoring The Company has appointed Philip Hare& AssociatesLLP as advisers on, inter alia, compliance with the VCT Rules. The Directors monitor the Company’s VCT status through regular reports from Philip Hare& AssociatesLLP. Auditors A resolution proposing the reappointment of BDOLLP as auditors to the Company and authorising the Directors to determine their remuneration will be proposed at the forthcoming AGM. Greenhouse gas emissions As a UK quoted company, the Company would ordinarily be required to report on its greenhouse gas emissions. However, the Company outsources all of its activities to third parties and does not have any physical assets, property, employees or operations. The Company has no direct greenhouse gas emissions to report from its operations and is exempt from reporting under the Streamlined Energy and Carbon Reporting requirements. It is not required to report on any other emissions under the Companies Act2006 (Strategic Report and Directors’ Reports) Regulations 2013. Amendments to the Articles of Association The Company’s Articles of Association may be amended by the members of the Company by special resolution (requiring a majority of at least 75% of the persons voting on the relevant resolution). At the Company’s General Meeting held on 12November 2024, a resolution to adopt amended Articles of Association which, provided that the Company’s next continuation vote would be held in 2031 rather than 2030, was passed, with 95.45% votes in favour. Post balance sheet events Post balance sheet events are disclosed in note17 to the nancial statements on page90. 43 Future developments Consideration of the Company’s future development and prospects are contained in the Chair’s statement, long term viability statement and Investment Manager’s report on pages 4 to 9, 23 and 28 to 31 respectively. Going concern The Company’s business activities and the factors aecting its future development are set out in the Chair’s statement on pages 4 to 9 and the Investment Manager’s report on pages 28 to 31. The Company’s principal and emerging risks are set out in the Strategic Report on pages 21 to 22. The Board receives regular reports from the Investment Manager and Administrator and reviews the nancial position, performance and liquidity of the Company’s investment portfolio. Revenue forecasts and expense budgets are prepared at the start of each nancial year and performance against plan is reviewed by the Board. Cash forecasts are prepared and reviewed by the Board as part of the HMRC investment test compliance monitoring. The Directors have assessed the Company’s ability to continue as a going concern and are satised that the Company has adequate resources to continue in operational existence for a period of 12months from the date these nancial statements were approved. The Company has sucient cash at bank, funds held with the Custodian (£4.8 million and £8.8 million respectively at 30September 2024) and liquid assets held across a diversied portfolio of investments in listed companies to meet obligations as they fall due. The Company is a closed-ended fund, where assets are not required to be liquidated to meet day-to- day redemptions. The major driver of cash outows (dividends, buybacks and investments) are managed in accordance with the Company’s key policies at the discretion of the Board or, in the case of the Company’s investments, the Investment Manager. The Board has reviewed forecasts and stress tests to assist them with their going concern assessment. These tests have included the modelling of a 15% reduction in NAV, whilst also considering ongoing compliance with the VCT investment test. It was concluded that in a plausible downside scenario the Company would continue to meet its liabilities. The Directors have carefully considered the principal risk factors facing the Company, as described on pages 21 to 22 and their potential impact on income into the portfolio and the NAV. The Directors are of the opinion that the Company has sucient cash and other liquid assets to continue to operate as a going concern, including under a stress scenario. The Investment Manager has a team of ve dedicated fund managers, analysts and a lawyer with multi-year experience working for the VCT. The Investment Manager and the Company’s other key service providers have contingency plans in place to manage operational disruptions. The Directors have not identied any material uncertainties related to events or conditions that may cast signicant doubt about the ability of the Company to continue as a going concern. Therefore, they are satised that the Company should continue to operate as a going concern and report its nancial statements on that basis. Annual General Meeting Shareholders are invited to attend the Company’s forthcoming AGM to be held at 12.30pm on 6February 2025 at 88 Wood Street, LondonEC2V7QR. The Company’s Notice of AGM is set out on pages 101 to 105 of this Annual Report. Shareholders who are unable to attend the AGM in person are invited to vote by proxy ahead of the AGM and submit any questions in writing to the Company Secretary at [email protected] (please include ‘HHV AGM’ in the subject heading) by 5.00p.m. on 30January 2025. Answers will be published on the Company’s website on 6February 2025. Voting at the AGM will be conducted by way of a poll to ensure that each vote cast is counted. A proxy form for the AGM is enclosed separately with Shareholders’ copies of this annual report. The proxy form permits Shareholders to disclose votes ‘for’, ‘against’ and ‘withheld’. A vote ‘withheld’ is not a vote in law and will not be counted in the proportion of the votes for and against the resolution. Shareholders who wish to appoint a proxy are recommended to appoint the Chair of the AGM as their proxy. Resolutions being proposed at the AGM There are 14 resolutions being proposed at the forthcoming AGM, 12 as ordinary resolutions, including approval of the annual accounts and re- election of the Directors, and 2 resolutions as special resolutions, requiring a simple majority of 50per cent and 75per cent, respectively, of the votes cast in order for the resolutions to pass. Resolution11 – Authority to implement any scrip dividend oer Ordinary resolution number 11 grants the Directors the necessary authority, in accordance with the terms of Article29 of the Articles, to continue to 44 oer a scrip dividend alternative in respect of future dividends made or paid in the period ending at the conclusion of the Annual General Meeting to be held in 2025. The Board believes that this continued authority oers the Company and its Shareholders a greater level of exibility in relation to dividend payments. The appendix on pages 106 to 108 of this document sets out a summary of key terms and conditions of the Company’s scrip dividend scheme.The full terms and conditions can be accessed viatheCompany’s website (www.hargreaveaimvcts.co.uk) and are available on request from the Registrar. Resolution12 – Power to allot shares Ordinary resolution number 12 will request the authority for the directors to allot up to an aggregate nominal amount of £367,326 representing approximately 10per cent. of the total share capital of the Company in issue (excluding treasury shares) as at the date of this document, generally from time to time or pursuant to Shareholders’ right to elect or participate in the DRIS operated by the Company in accordance with Article29 of the Articles. This authority is in addition to any existing authorities. The authority sought at the forthcoming AGM will expire 15months from the date that this resolution is passed, or at the conclusion of the next Annual General Meeting of the Company, whichever is earlier. Resolutions13 and 14 are being proposed as special resolutions requiring the approval of at least 75per cent. of the votes cast at the AGM. Resolution13 – Disapplication of pre-emption rights Special resolution number 13 will request the authority for the Directors to allot equity securities for cash without rst being required to oer such securities to existing Shareholders. This will include the sale on a non pre-emptive basis of any shares the Company holds in treasury for cash. The authority is limited to (i)an aggregate nominal amount of £183,663 (representing approximately 5per cent. of the issued share capital of the Company (excluding treasury shares) as at the date of this document) pursuant to the DRIS operated by the Company and (ii)for allotments generally from time to time, an aggregate nominal amount of £183,663 (representing approximately 5per cent. of the issued share capital of the Company (excluding treasury shares) as at the date of this document). This authority is in addition to any existing authorities. The authority sought at the forthcoming AGM will expire 15months from the date that this resolution is passed or at the conclusion of the next Annual General Meeting of the Company, whichever is earlier. Resolution14 – Purchase of own shares Special resolution number 14 will request the authority to purchase a maximum of 14.99per cent. of the Company’s issued ordinary share capital at the date of the passing of the resolution being approximately 55,062,233 as at the date of this document at or between the minimum and maximum prices specied in resolution 12. Shares bought back under this authority may be cancelled or held in treasury. The Board believes that it is helpful for the Company to continue to have the exibility to buy its own shares and this resolution seeks authority from Shareholders to do so. The passing of this resolution will replace and renew the buyback authority taken at the Company's last Annual General Meeting. During the nancial year under review, the Company purchased 10,657,350 ordinary shares which were then cancelled. The authority sought at the forthcoming AGM will expire 15months from the date this resolution is passed, or at the conclusion of the next Annual General Meeting of the Company, whichever is earlier. Recommendation The Directors believe that the passing of the resolutions above are in the best interests of the Company and its Shareholders as a whole and unanimously recommend that Shareholders vote in favour of these resolutions, as they intend to in respect of their own benecial shareholdings amounting to 715,067 ordinary shares. By order of the Board David Brock Chair 17December2024 Directors’ remuneration report For the year ended 30September 2024 45 The Board presents this report which has been prepared in accordance with the requirements of Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013. Shareholders are encouraged to vote on the remuneration report annually at the Annual General Meeting and on the Company’s remuneration policy at least every three years. Notwithstanding this, the Directors’ policy is to put the remuneration policy to the vote of Shareholders at each Annual General Meeting. The Company’s independent auditor is required to audit certain disclosures provided in this report. Where disclosures have been audited, they are indicated in this report. The auditor’s opinion is included in their report on pages63 to70. Statement from the Chair of the Board in relation to Directors’ remuneration matters The Board is mindful of its obligation to set remuneration at levels which attract and maintain an appropriate calibre of individuals whilst simultaneously protecting the interests of Shareholders. Following a review of the Board remuneration levels of the Company’s peers and taking into account ination, the Board has decided to increase its remuneration, eective 1October 2024. As a result of the increases, the annual remuneration of the Chair will be £42,500, the independent non-executive directors will receive £33,000 and Oliver Bedford, who is not considered independent, will receive £30,500. An additional fee of £1,500 will continue to be paid to the Chair of the MSPEC and the Chair of the Audit Committee will continue to receive an additional fee of £3,000. Remuneration responsibilities As the Board consists entirely of non-executive directors it is considered appropriate that matters relating to remuneration are considered by the Board as a whole, rather than a separate remuneration committee. All Directors are considered independent with the exception of Oliver Bedford who is an employee of the Investment Manager and is not therefore independent. The remuneration policy is set by the Board, who consider the remuneration of each of the Directors and whether the remuneration policy is fair and in line with comparable VCTs and investment trusts. The Board deals with all matters relating to the Directors’ remuneration and reporting thereon. Policy on Directors’ remuneration The Company has no employees, so the Board’s policy is that the remuneration of its Directors should be fair and reasonable in relation to the time commitment and responsibilities of the Directors and in line with the remuneration paid by other comparable listed VCTs and investment trusts. The Board aims to review Directors’ remuneration from time to time. Fees for the Directors are determined by the Board within the limits stated in the Articles. The maximum permitted by the Articles is £250,000 per annum. The Directors are not eligible for bonuses, pension benets, share options, other incentives or benets. The Directors may be reimbursed for reasonable expenses incurred. The Directors do not receive payment on loss of oce other than in lieu of notice period, if applicable. Director’s terms of appointment It is the Board’s policy that none of the Directors has a service contract. Each of the Directors has entered into an agreement with the Company when appointed. David Brock was appointed on 28September 2010, Oliver Bedford on 13December 2016, Angela Henderson on 29October 2019, Justin Ward on 1November 2020 and Busola Sodeinde and Megan McCracken on 1June 2022. Either party can terminate the agreement by giving to the other at least threemonths’ notice in writing. The terms of appointment provide that a Director shall retire and be subject to election at the rst Annual General Meeting following their respective appointments. The Articles provide that a Director may retire at any Annual General Meeting following the Annual General Meeting at which he or she last retired and was re-elected provided that he or she must retire from oce at or before the third Annual General Meeting following the Annual General Meeting at which he or she last retired and was re- elected. However, notwithstanding this, and in line with the provisions of the AIC Code, the Board agreed in July2019 that all Directors will be subject to annual re-election at the AGM. Basis of remuneration All of the Directors are non-executive and considered to be independent with the exception of Oliver Bedford, who is not independent. It is not considered appropriate to relate any portion of their remuneration to the performance of the Company and therefore performance conditions have not been set in determining their level of remuneration. As the Company has no employees, it is not possible to take 46 account of the pay and employment conditions of the employees when determining the levels of the Directors’ remuneration. The following table shows the expected maximum payment that can be received per annum by each Director for the year to 30September 2025, together with a summary of the Company’s strategy and how this is supported by the current remuneration policy. Director Role Components of pay package Expected Fees for the year to 30 September 2025 Performance Conditions Company Strategy Remuneration Policy David Brock Chair Basic Salary £42,500 N/A To generate capital gains and income from its portfolio and make distributions from capital or income to Shareholders whilst maintaining its status as a Venture Capital Trust The levels of remuneration are considered to be fair and reasonable in relation to the time committed, responsibilities of the Directors and in line with the remuneration paid by other VCTs and investment trusts Oliver Bedford Director £30,500 Angela Henderson Director and Chair of the MSPEC £12,000 (1) Megan McCracken Director £34,000 (2) Busola Sodeinde Director £33,000 Justin Ward Director and Chair of the Audit Committee £36,000 (1) Angela Henderson will not seek re-election at the forthcoming AGM. Therefore her expected fee for the year to 30 September 2025 has been calculated on a pro-rata basis. (2) Megan McCracken will replace Angela Henderson as Chair of the MSPEC. The additional fee that Megan is entitled to as MSPEC Chair from the 2025 AGM has been calculated and included within the expected fee for the year 30 September 2025 on a pro-rata basis. Annual remuneration report The purpose of this report is to demonstrate the method by which the Board has implemented the Company’s remuneration policy and provide Shareholders with specic information in respect of the Directors’ remuneration. Under s.439 of the Companies Act2006, companies are required to ask shareholders to approve the annual remuneration paid to directors every year and to formally approve the directors’ remuneration policy every three years. However, the Board’s preferred approach is to put the remuneration policy to Shareholders annually for approval. Any change to the Directors’ remuneration policy will require Shareholder approval. As in prior years, the vote on the Directors’ remuneration report is an advisory vote, whilst the vote on the Directors’ remuneration policy is binding. Accordingly, ordinary resolutions will be put to Shareholders at the forthcoming AGM to be held on 6February 2025, to receive and adopt the Directors’ remuneration report and to receive and approve the Directors’ remuneration policy. At the Annual General Meeting held on 8February 2024, the following votes were cast on the Directors’ remuneration report and the remuneration policy: Votes for % for Votes against % against Total votes cast Votes withheld Remuneration report 14,147,293 90.14 1,548,285 9.86 14,147,293 478,536 Remuneration policy 13,827,588 88.56 1,786,973 11.44 13,827,588 559,553 Company performance The Company was incorporated on 16August 2004 and commenced trading on 29October 2004. The performance chart below plots the Company’s NAV total return (dividends reinvested) (rebased to 100) and share price total return (dividends reinvested) (rebased to 100) over the last 10years compared to the FTSE AIM All-Share Index Total Return over the same period (also calculated on a dividends reinvested basis). This index was chosen for comparison purposes as it represents the closest comparable equity market index. However, HMRC derived investment restrictions, along with Qualifying Investments in private companies and xed income securities and Non-Qualifying Investments in main market listed companies, predominantly in the FTSE350, mean the index is not a wholly comparable benchmark for performance. 47 Performance against the FTSE AIM All-Share Index Total Return 50.00 70.00 90.00 110.00 130.00 150.00 170.00 190.00 210.00 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23 Sep-24 FTSE AIM All-Share Total Return Index Share price total return (dividends reinvested) NAV total return (dividends reinvested) Source: Bloomberg Directors’ emoluments for the year (audited) The total emoluments of each person who served as a Director during the year are set out in the table below. David Brock is entitled to a higher fee due to his role as Chair of the Board, Justin Ward is entitled to a higher fee due to his role as Chair of the Audit Committee and Angela Henderson is entitled to a higher fee due to her role as Chair of the MSPEC. 2024 Fees £ 2024 Taxable Expenses £ 2024 Total £ 2023 Fees £ 2023 Taxable Expenses £ 2023 Total £ David Brock (Chair) 41,000 – 41,000 39,000 532 39,532 Oliver Bedford 29,500 – 29,500 28,000 – 28,000 Angela Henderson 33,500 – 33,500 32,000 – 32,000 Megan McCracken 32,000 71 32,071 30,500 – 30,500 Busola Sodeinde 32,000 – 32,000 30,500 – 30,500 Justin Ward 35,000 – 35,000 33,500 – 33,500 Total 203,000 71 203,071 193,500 532 194,032 48 Directors’ annual percentage change in remuneration The increase in Directors’ remuneration over the last four years is set out in the table below. As the Company does not have any employees no comparisons are given for employees’ remuneration increases. Date appointed 2020-2021 2021-2022 2022-2023 2023-2024 David Brock (Chair) (1) 28 September 2010 11.9% 6.6% 6.9% 5.13% Oliver Bedford 13 December 2016 Nil Nil 7.2% 5.36% Angela Henderson (2) 29 October 2019 21.1% 7.6% 6.2% 4.69% Megan McCracken (3) 1 June 2022 N/A N /A 215.5% 4.92% Busola Sodeinde (3) 1 June 2022 N/A N /A 215.5% 4.92% Justin Ward (4) 1 November 2020 N/A 18.4% 5.8% 4.48% (1) David Brock’s annual % change 2020-2021 reects his fee increase following his appointment as Chair of the Board, eective February2020. (2) Angela Henderson received an additional £1,500 per annum with eect from 1January 2021 for her role as Chair of the Management and Service Provider Engagement Committee. (3) Megan McCracken and Busola Sodeinde were appointed with eect from 1June 2022 and their annual % change 2022- 2023 reects this. (4) Justin Ward’s annual % change 2021-2022 reects his fee increase following his appointment as Audit Chair in February 2021. Relative importance of spend on pay The table below compares Directors’ remuneration to Shareholder distributions (through dividend payments and share buybacks) in respect of the nancial year ended 30September 2024 and the preceding nancial year: Year ended 30 September 2024 £ Year ended 30 September 2023 £ Growth % Directors’ remuneration (1) 203,000 193,500 4.9 Dividends paid 14,268,141 15,717,501 -9.2 Share buybacks 4,472,418 3,636,841 23.0 (1) The gures above exclude employer’s National Insurance contributions. Within the nancial year, the Company paid interim and nal dividends totalling 2.50pence per share. The Company also paid a special dividend of 1.50pence per share on 26July 2024, taking the total cash distributions in the year to 4.00pence per share, a 20% decrease on the prior year. Including share buybacks, the Company returned £18.7million to Shareholders during the period under review. In light of the signicant time contributed by the independent non-executive Directors during the year, particularly from those with additional responsibilities as Chair of the Board and its sub committees, the Board agreed to a modest increase in the Directors’ remuneration for the year ending 30September 2025. Directors’ interests (audited) The Directors’ interests (including those of connected persons) in the issued share capital of the Company are outlined below. There is no minimum holding requirement that the Directors need to adhere to. Ordinary Shares 30 September 2023 30 September 2024 Acquired after Year end Total holding at 17 December 2024 David Brock 122,606 339,336 – 339,336 Oliver Bedford 167,790 297,890 – 297,890 Angela Henderson 8,223 9,000 – 9,000 Megan McCracken – – – – Busola Sodeinde – – – – Justin Ward 62,899 68,841 – 68,841 49 Taxable benets The Directors who served during the year received no taxable benets in the year. Variable pay The Directors who served during the year received no variable pay relating to the performance of the Company in the year. Pension benets The Directors who served during the year received no pension benets in the year. Recruitment remuneration policy The remuneration levels are designed to reect the duties and responsibilities of the roles and the value of time spent in carrying these out. The Board will obtain independent advice on this where it considers it necessary. No such advice was taken during the year under review. This policy would be used when agreeing the remuneration of any new Director. Approval The Directors’ remuneration report on pages45 to49 was approved by the Board on 17December 2024 and will be further subject to an advisory vote at the forthcoming AGM being held on the 6February 2025. Signed on behalf of the Board. David Brock Chair 17December 2024 Corporate governance For the year ended 30September 2024 50 Directors’ statement of compliance with the UK Corporate Governance Code and AIC Code Introduction The Board recognises the importance of sound corporate governance and has chosen to comply with the AIC Code. The Board believes that the Company has complied with the principles and provisions of the AIC Code in the period under review, with the exceptions of the items outlined below: ● appointment of a senior independent director; ● establishment of a separate nomination committee; and ● establishment of a separate remuneration committee. For the reasons provided in the relevant sections of this Corporate Governance Report, the Board considers these provisions are not relevant to the size, structure and business of the Company and has therefore not reported in respect of these provisions. Copies of the AIC Code can be found on the AIC’s website:https://www.theaic.co.uk. Board leadership and purpose The Board considers that the Company’s business model remains attractive because of the potential returns available from investing in small companies and the advantageous VCT tax structure. The management of the investment portfolio has been delegated to the Investment Manager and, through regular meetings with the Investment Manager, the Board seeks to ensure that the portfolio is managed in accordance with the agreed investment objectives and policy. The Company’s investment objectives and policy are shown on pages11 to13, these were reviewed during the year and deemed appropriate for the Company’s needs. The Board seeks to control risk by ensuring that appropriate policies and controls are in place and by reviewing the Company’s risk matrix every six months and taking mitigating action where necessary. A summary of the principal and emerging risks facing the Company is detailed on pages 21 to 22. The Board carries out an annual review of its own culture, practices and behaviour, the ndings from which are considered by the Board and any actions required are monitored. Shareholder relations and relations with key stakeholders The Directors have a duty to promote the success of the Company for the benet of its members and communication with Shareholders is considered a high priority by the Board. The Board also has a responsibility to consider the interests of its other key stakeholders. Please see the section 172 statement on pages17 to20 for further information. Management of conicts of interest In order to manage potential conicts of interest the Board requires that any conicts are declared at each meeting. A schedule of all the directorships held by Board members and Director shareholdings in unquoted companies in which the Company has an interest is maintained by the Company Secretary and reviewed by the Board. Where a conict arises the Board will consider what is in the best interests of the Company and whether the relevant Director’s ability to act in accordance with his or her wider duties is aected. Director responsibilities The Directors have adopted a formal Schedule of Matters Reserved for the Board which sets out the responsibilities of the Board, a copy of which is available on the Company’s website. These matters include, but are not limited to: ● approving strategic objectives and reviewing the Company’s strategy and investment policy to ensure it is consistent with the objectives of the Company; ● monitoring the performance of the Investment Manager and other key service providers; ● changes to the Company’s structure and capital, this includes capital raising and reductions, policy on share buybacks and the approval of any borrowing arrangements; ● approval of all nancial statements and any signicant changes in accounting practices or policies; ● ensuring the maintenance of a sound system of internal control and risk management; ● carrying out an annual review of the contracts in place with key service providers and approving any other materially strategic contracts; ● communication with Shareholders; ● appointment and removal of the Company Secretary; ● determining the remuneration of the Chair and other directors subject to the Articles and Shareholder approval as appropriate; and ● responsibility for all corporate governance matters. 51 The Directors have delegated the responsibility for the day to day investment management decisions of the Company to the Investment Manager. The provision of administration and custodian services were delegated to CGWL until 30September 2024. The administration services were novated from CGWL to CGAM with an eective date of 1October 2024. The following tables set out the number of scheduled Board meetings, valuation meetings, Audit Committee meetings and MSPEC meetings held during the year and the number of meetings attended by each individual Director: Number of Scheduled BoardMeetings Held Attended David Brock (Chair) 5 5 Oliver Bedford 5 5 Angela Henderson 5 5 Megan McCracken 5 5 Busola Sodeinde 5 5 Justin Ward 5 5 Approval of private company valuations Number of Board Meetings Held Attended David Brock (Chair) 4 4 Oliver Bedford 4 4 Angela Henderson 4 4 Megan McCracken 4 4 Busola Sodeinde 4 3 Justin Ward 4 4 Number of Audit Meetings Held Attended Justin Ward (Chair) 3 3 Angela Henderson 3 3 Megan McCracken 3 3 Busola Sodeinde 3 3 Number of Management and Service Provider Engagement Meetings Held Attended Angela Henderson (Chair) 2 2 David Brock 2 2 Megan McCracken 2 2 Busola Sodeinde 2 2 Justin Ward 2 2 The Board also held a number of ad-hoc meetings outside of the scheduled meeting cycle to meet business needs. Board Committees The Board has established an Audit Committee and MSPEC. The terms of reference for these committees are available on the Company’s website. Due to the size, structure and business of the Company and the experience of its Board members, separate remuneration and nomination committees have not been established. These roles are instead fullled by the Board as a whole. A statement from the Chair in relation to Directors’ remuneration matters is included in the Directors’ Remuneration Report on page 45. Audit Committee Information regarding the composition, responsibilities and activities of the Audit Committee are detailed in the report of the Audit Committee on pages 56 to 58. During the year, no fees were paid to the Company’s auditors for non-audit services (2023:nil). Management and Service Provider Engagement Committee Information regarding the composition, responsibilities and activities of the MSPEC are detailed on page 59. Board and Director independence As at 30September 2024, the Board consisted of six directors, all of whom are non-executive. The Board considers that with, the exception of Oliver Bedford, all of the Directors remain independent. David Brock, Chair of the Company, has served on the Board for 14years since his initial appointment. The Board does not have a policy of restricting the term served by Directors to a xed time limit. As part of the Board evaluation process a rigorous review was carried out on the Chair’s independence, without him present. The Directors concluded that, notwithstanding his tenure, David Brock is still considered to be independent given that he was independent upon his appointment, throughout his tenure there has been the absence of connections with the Investment Manager or any other of the Company’s advisers, he does not have any involvement in the day to day running of the Company and his experience and the range of skills that he brings to the Board, including his constructive challenge and support, continues to be benecial to the success of the Company. All new Directors are required to disclose other roles prior to their appointment and the Board requires that any new signicant additional external appointments receive prior Board approval. 52 Board induction and training On appointment to the Board, Directors are fully briefed as to their responsibilities and are kept regularly informed of industry and regulatory developments. There is no formal training schedule in place. Directors’ training needs are identied as part of the Board evaluation process and addressed on a case by case basis. Board meetings The Administrator and the Company Secretary ensure that the Directors have timely access to all relevant management, nancial and regulatory information to enable informed decisions to be made. The Board meets on a regular basis at least ve times each year, with additional meetings arranged as necessary. The Board continued to make eective use of technology to enable it to operate eciently which included holding some meetings virtually and the use of electronic board packs. The primary focus at these meetings is the review of the Company’s investment performance, progress against KPIs and corporate governance. Relationship with the Investment Manager Both the Schedule of Matters Reserved for the Board and the IMA with the Investment Manager clearly set out those areas of decision making over which the Investment Manager has discretion. The Board’s responsibility is to review the Company’s strategy and investment policy to ensure it is consistent with the objectives of the Company, and monitor the performance and investment approach of the Investment Manager. The Directors have delegated responsibility for day to day investment management decisions to the Investment Manager and a review of the investment portfolio is carried out at each Board meeting. The report produced by the Investment Manager includes information on investment performance and fund positioning, benchmarking against both indices and peers, liquidity analysis, cash management and deal ow. A formal review of the Investment Manager was carried out by the MSPEC in November2024. The Board, excluding the Investment Manager, accepted the Committee’s recommendation that the continuing appointment of the Investment Manager was in the best interests of the Company and its Shareholders. Details of the contractual arrangements with the Investment Manager can be found on page 40. Relationship with other service providers The Company maintains a schedule of the contracts that it has in place with its service providers (including the Administrator, Company Secretary, Custodian and Registrar) and the service provided by each is monitored and reviewed by the MSPEC annually. The Board has direct access to the Company Secretary, who is responsible for the timely delivery of relevant information and advising the Board on all governance matters. JTC (UK) Limited was appointed as Company Secretary on 15January 2021 and a formal agreement detailing the responsibilities of the Company Secretary to the Company is in place. The Board has access to independent professional advice from lawyers and tax advisers etc. This is obtainable at the Company’s expense where the Directors consider it necessary in order to be able to properly discharge their responsibilities. Board composition Due to the independent nature of the majority of its members, the Board does not consider it necessary to appoint a senior independent director. However, this will be kept under review. For the same reason, the Board has not established a separate nomination committee and all nomination responsibilities are therefore carried out by the Board as a whole. These responsibilities include reviewing the size, structure and skills of the Board and considering any changes necessary or new appointments. Directors are required to seek approval from the Board prior to taking on any new signicant external appointments. All Directors are subject to annual re-election. The Board considers that due to their individual skills, experience and commitment the re-election of all Directors is merited. Angela Henderson will not be standing for re-election and the remaining Directors will oer themselves for re-election. Megan McCracken will replace Angela as Chair of the MSPEC following the 2025 AGM. David Brock is a highly experienced company director with specic expertise directly relevant to investing in private companies. Oliver Bedford is the Lead Fund Manager to the Company, has strong technical knowledge covering the VCT Rulesand is an eective liaison between the Company and the Investment Manager. Megan McCracken is an experienced director and brings cross sector knowledge from her executive career. 53 Busola Sodeinde is a chartered accountant with signicant regulatory and governance experience. Justin Ward is a chartered accountant and has extensive experience in unquoted company investment. The role of the Chair The Chair leads the Board, and so is responsible for its eectiveness in directing the Company. By promoting a culture of openness and positive debate, whilst demonstrating independent and objective judgement throughout his tenure, the Chair sets the tone for the Company and enhances the Board’s performance. The Chair encourages all non- executive directors to make an eective contribution to the Board and acts to facilitate constructive Board relations. In conjunction with the Company Secretary, the Chair ensures that the Directors receive accurate and clear information on a timely basis. Board succession The Board’s policy for succession planning is that there should be forward-looking and detailed succession and refreshment plans when proposing the re-election of long-serving members. Any member of the Board who has served for nine years will be subject to a particularly rigorous review and evaluation process to determine whether they remain independent and should continue in their position. Each Board member is subject to annual re-election at each Annual General Meeting of the Company. Board tenure The Company has put in place a policy on the tenure of its Board members (the Board Tenure and Succession Planning Policy). The Board Tenure and Succession Planning Policy states that the term the Chair and other Directors serve on the Board should not be restricted to a xed time limit. The relevance of the individual length of service of the Chair and other Directors will be determined on a case by case basis. In addition to the length of service, consideration will be given to the contribution and ongoing independence of the individuals and the overall composition of the Board, including the experience and range of skills of the Directors. By adopting a rounded approach, the Board believes it is best placed, through careful succession planning, to ensure that it has appropriate levels of experience and diversity while introducing new Board members as needed. David Brock, Chair of the Company since February2020, joined the Board in 2010. David is still considered to be independent given the absence of connections with the Investment Manager, or any other of the Company’s advisers and, as a highly experienced company chair, is ideally suited to guide the Board at a time when it is enacting its succession plans. In recent years the Board has successfully added new directors with complementary skills through the appointments of Megan McCracken and Busola Sodeinde in June2022. Summary biographies of all the Directors can be found on page 40. Board evaluation The Directors recognise the importance of evaluating both the performance of the Board as a whole, individual Directors as well as the Committees. The annual Board evaluation is carried out by means of a questionnaire which includes accountability and eectiveness, culture, a Directors’ self-assessment and an appraisal of the Chair. A Board evaluation covering the year under review was carried out. Following this the Board is satised with the results and nds that the Board, the Chair and the Directors are suitably qualied to undertake their responsibilities, perform their duties in respect of managing the Company and that the Board culture remains strong. During the year, the Board also considered whether it was appropriate to have an externally facilitated Board evaluation. Following due consideration and taking into account the satisfactory results of the Board evaluation, this was not deemed necessary, but will be kept under review. Risk and internal control The Directors acknowledge that they are responsible for the Company’s systems of internal nancial and non-nancial controls. The controls are operating eectively and continue to be in place up to the date of this report. The key components of this process are as follows: ● day to day measures have been delegated to the Investment Manager, Administrator and Custodian. Written agreements are in place which dene the roles and responsibilities of these parties including the investment policy to be followed by the Investment Manager. The Board receives regular reports to provide it with assurance that appropriate oversight is in place. Additionally, the Board receives and reviews the annual internal control report published by its Registrar; 54 ● on a quarterly basis, amongst other things, the Board reviews the Company’s management accounts, KPIs and investment reports provided by the Administrator and Investment Manager; ● annual and half-yearly reports and associated announcements are reviewed and approved by the Board prior to publication; ● a detailed risk matrix is maintained, this identies each of the Company’s principal and emerging risks, assesses the potential impact and describes the controls in place to mitigate those risks. A summary of the principal and emerging risks can be found in the Strategic Report on pages 21 to 22. The risk matrix is discussed regularly at Board and Audit Committee meetings, thereby ensuring that the nature and extent of the risks facing the Company are being actively monitored; and ● the Company’s internal policies are reviewed on an annual basis, either by the Board or the Audit Committee. The Board has also reviewed a summary of the range of risk management and internal controls it has in place to satisfy itself that the overall system of controls remains appropriate. All of the Company’s management functions are performed by the Investment Manager, the Administrator and the Company Secretary, all of which have their own control systems in place. The Board receives regular reports to provide it with assurance that appropriate oversight is being applied and so has decided that the Company does not need its own internal audit function. The Board considers that the control systems in place provide reasonable, but not absolute, assurance against material misstatement or loss, and manage, rather than eliminate, the risk of failure to achieve business objectives. Diversity The Board has adopted a Diversity Policy and considers that a combination of skills, experience, knowledge, independence, race, age, gender, educational and professional background along with other relevant personal attributes provide the range of perspectives, insights and challenge needed to support good decision making. As at 30September 2024, the Board comprised six non-executive directors, three male and three female (being 50% female representation). In accordance with UK Listing Rule 6.6.6R 9, the Company is required to include a statement in the annual nancial report setting out whether it has met the following targets on Board diversity: a) at least 40% of individuals on the Board are women; b) at least one of the senior Board positions (dened by the FCA as either the Chair, SID, CEO or CFO) is held by a woman; and c) at least one individual on the Board is from a minority ethnic background. The following tables set out the composition of the Board as at 30 September 2024 and the date of this report. The information is based on voluntary self-declaration made by the Directors. Number of Board members Percentage of the Board Number of senior positions on the Board (CEO, CFO, SID and Chair) Men 3 50% Not applicable – see note.Women 3 50% Not specied/ prefer not to say – – – Number of Board members Percentage of the Board Number of senior positions on the Board (CEO, CFO, SID and Chair) White British or other White (including minority-white groups) 5 83.33% Not applicable – see note. Black/African/ Caribbean/Black British 1 16.67% * The Company is externally managed, does not have executive management functions and specically does not have a CEO, CFO or SID. Remuneration As the Company has no employees, and the Board wholly comprises non-executive Directors, the Board has not established a separate remuneration committee and all remuneration responsibilities are therefore carried out by the Board. The Company’s disclosure with regard to remuneration is included on pages 45 to 49. Going concern Under the AIC Code, the Board needs to consider whether it is appropriate to adopt the going concern basis of accounting in preparing these nancial statements. The Board continues to adopt the going concern basis and the detailed consideration is contained on pages 43 to 44. 55 Viability Statement The viability statement, under which the Directors assess the prospects of the Company over a longer period, is contained on page 23. Modern Slavery Statement As an investment company with no employees or customers and which does not provide goods or services in the normal course of business, the Company considers that it does not fall within the scope of the Modern Slavery Act2015 and it is not, therefore, obliged to make a human tracking statement. The Company’s own supply chain, which consists predominantly of professional advisers and service providers in the nancial services industry, is considered to be low risk in relation to this matter. Additional disclosures in the Directors’ Report Additional disclosures required by Schedule 7 of the Large and Medium sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended) are contained in the Directors’ Report on pages 41 to 44. For and on behalf of the Board. JTC (UK) Limited Company Secretary 17December 2024 Report of the Audit Committee 56 Composition of the Audit Committee The Audit Committee consists of four independent non-executive directors at the year-end:Justin Ward (Chair), Angela Henderson, Megan McCracken and Busola Sodeinde. The Board conrms that, in line with the recommendations of the AIC Code, at least one member of the Audit Committee has recent and relevant nancial experience. Justin Ward and Busola Sodeinde are both chartered accountants. Angela Henderson and Megan McCracken have relevant nancial experience and the Board is condent that the Committee as a whole has competence relevant to the sector in which the Company operates. Oliver Bedford and David Brock are not members of the Audit Committee due to their respective roles as Lead Fund Manager and Chair of the Board. Duties of the Audit Committee The main responsibilities of the Audit Committee are as follows: ● to monitor the integrity of the Company’s nancial statements including the interim reports, preliminary announcements and related formal statements before submission to and approval by the Board, paying particular attention to: o critical accounting policies and practices and any changes in them; o the clarity of disclosures; o compliance with accounting standards; and o compliance with stock exchange and other legal requirements. ● to review the eectiveness of the Company’s internal nancial control and risk management systems; ● to consider and make recommendations to the Board on the appointment, reappointment and removal of the external auditor; and ● to assess the independence and objectivity of the external auditors and the eectiveness of the external audit process. The external auditor is not engaged to supply any non-audit services. Meetings The Committee met three times during the year to consider the annual and half-year reports for the Company and review the audit plan. The Company Secretary attends meetings as Secretary to the Committee and representatives of the Investment Manager as well as the Company’s external Auditor, BDO LLP, are also invited to attend. The Committee’s terms of reference were reviewed during the year and are available on the Company’s website (www.hargreaveaimvcts.co.uk) and by request from the Company Secretary. Activities during the year A summary of the Audit Committee’s principal activities and key considerations for the year to 30September 2024 is provided below. Financial statements The interim and annual reports to Shareholders and the accounting policies therein were thoroughly reviewed by the Audit Committee prior to submission to the Board for approval. The Committee carried out a going concern assessment, taking into account all reasonably available information about the future nancial prospects of the Company as well as the possible outcomes of events and changes in conditions. Following this assessment, the Audit Committee considered it was appropriate to adopt the going concern basis of accounting and reviewed the going concern statement to ensure any signicant issues were described in a concise and understandable form. The Audit Committee also conducted a review of the viability statement and concluded that this was a fair representation of the Company’s future prospects and that the period of the viability statement remained appropriate. The Audit Committee is of the view that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Company’s position and performance, business model and strategy. The Investment Manager and the Auditor conrmed to the Audit Committee that they were not aware of any material misstatements to the nancial statements. Having reviewed the nancial statements and the report produced by the Auditor, the Audit Committee was satised that key areas of risks and judgement were appropriately addressed. Risk and Internal Control The Board has identied the key risks faced by the Company and these are set out in the principal and emerging risks and uncertainties section on pages21 to22. The Audit Committee (and the Board as a 57 whole) has received and reviewed periodic reports to provide it with assurance that appropriate oversight of controls is in place at its key third party providers and to highlight instances of non-compliance. The Audit Committee has sought and obtained assurance from the Investment Manager that policies are in place covering whistleblowing and to help prevent bribery, corruption and fraud. The Investment Manager has also conrmed that, during the nancial year, no instances of bribery, corruption and fraud have been detected that would have impacted the Company. The Audit Committee has received a summary of the Investment Manager’s approach to mitigating cyber security risks. The Board maintains a schedule of anti-fraud controls that is reviewed by the Audit Committee, and they are satised that the Board have sucient oversight and that adequate procedures are in place. Key areas of risk The key areas of risk identied by the Audit Committee in relation to the business activities and nancial statements of the Company are as follows: ● compliance with HMRC legislation to maintain the Company’s VCT status; ● valuation and safe custody of investments; and ● revenue recognition. These issues were discussed with the Investment Manager during the year and with the Auditor, at the time the Audit Committee reviewed and agreed the Auditor’s audit plan and when the Auditor presented its ndings at the conclusion of its year-end audit. The Audit Committee concluded: ● Venture Capital Trust Status. The Investment Manager conrmed to the Audit Committee that the conditions for maintaining the Company’s status had been complied with throughout the year. The Company’s status is also reviewed by the Company’s tax advisers Philip Hare& AssociatesLLP and further half-yearly reconciliations are carried out. These reports are reviewed by the Board as a whole, which is satised with the conclusions; ● Valuation and safe custody of investments. The valuation of investments is undertaken in accordance with the accounting policies in note1 to the nancial statements. The Investment Manager has conrmed to the Audit Committee that the basis of valuation for unquoted investments was in accordance with industry guidelines. The Auditor conrmed to the Audit Committee that they had reviewed the estimates and judgements made by the Investment Manager when valuing the unlisted companies and that the valuations proposed were acceptable. They further conrmed that there was no evidence of bias in the valuations of the investments based on the audit work performed. The Custodian provides the Company with quarterly reports conrming that reconciliations to check the safe custody of the Company’s investments have been carried out. Management accounts, including a full portfolio listing, are considered at quarterly board meetings; and ● Revenue recognition. The recognition of dividend and interest income is undertaken in accordance with accounting policy note1 to the nancial statements. Management accounts showing income received by the Company, and its categorisation, are reviewed by the Board on a quarterly basis. The Committee also considered the Auditor’s review of this area and concluded that there were no issues which needed to be addressed. Relationship with the external auditor The Audit Committee is responsible for overseeing the relationship with the Auditor, assessing the eectiveness of the external audit process and making recommendations on the appointment and removal of the Auditor, including the level of audit fees and terms of engagement. The Audit Committee meets with the Auditor as part of the audit process. The Audit Committee undertook a review of the Auditor’s performance during the 2024 audit and concluded that the Auditor: ● provided a clear explanation of the audit plan, scope and strategy; ● met the agreed audit plan; ● was appropriately resourced with sound technical knowledge and demonstrated a clear understanding of the business; ● demonstrated a proactive approach to the planning process and engaged well with the Audit Committee, Chair and other key individuals within the business; ● responded to the Audit Committee’s questions and handled key audit issues eectively; ● demonstrated that it had appropriate procedures and safeguards in place to maintain its independence and objectivity; and ● charged justiable fees in respect of the scope of services provided. 58 The Audit Committee is aware of the FRC’s Audit Quality Inspection and Supervision report published in July 2024 relating to the inspection cycle 2023/2024, where concerns were raised about the performance of BDO LLP. This was discussed in detail with the Auditor in a meeting of the Audit Committee and, particularly, the Committee sought assurance that none of the Company’s audits had been impacted by the matters raised in the report. The Committee also sought assurance on the quality and consistency of future audits whilst the Auditor implemented a remediation plan. The Committee received details on the improvement plan and was comfortable with the assurances given to their queries. The Committee was keen to keep the matter under review and the Auditor agreed to provide updates on the progress of the ongoing improvements. The Audit Committee concluded that it is satised with the standard of service received and that the re-appointment of the Auditor was in the best interest of the Company and its Shareholders and accordingly the Audit Committee has recommended to the Board that a resolution to re-appoint the Auditor is proposed to Shareholders at the forthcoming AGM. The Audit Committee undertook a tender process in 2017 in line with mandatory audit tendering legislation. In accordance with the FRC’s Ethical Standard for Auditors, rotation of the audit partner took place during the year. Subject to the Audit Committee continuing to be satised with the performance of the Auditor, the next statutory auditor rotation will take place in 2026, in line with legislative requirements for UK public entities and this is under review by the Audit Committee. Policy Reviews During the year, the Audit Committee conducted a review of certain Company policies and, where relevant, provided recommendations to the Board regarding the continued appropriateness of these policies. Minor changes were made to the policies throughout the year. Each policy is reviewed at least annually, and the Company Secretary maintains a record of when each policy is due for review by the Audit Committee or the Board. Compliance Control The Audit Committee receives a compliance control report on a quarterly basis, which details an operational update from the Administrator as well as conrmation that the Administrator, Custodian and Receiving Agent have carried out their relevant duties under the terms of their respective agreements with the Company. No compliance issues were reported during the year. Justin Ward Chair of the Audit Committee 17December 2024 Report of the Management and Service Provider Engagement Committee 59 Composition of the Management and Service Provider Engagement Committee The MSPEC comprises all the independent non-executive directors and is chaired by Angela Henderson. The MSPEC’s terms of reference were reviewed during the year and are available on the Company’s website (www.hargreaveaimvcts.co.uk) and by request from the Company Secretary. Duties of the Management and Service Provider Engagement Committee The duties of the MSPEC are to review the terms of appointment and evaluate the performance of the Investment Manager, review the performance and fees of the Administrator and other key service providers of the Company and to decide whether it is in the best interests of Shareholders, to recommend to the Board, that those appointments should continue. The Auditor is not reviewed by the MSPEC as their appointment falls under the remit of the Audit Committee. The key areas of focus for the MSPEC are: ● monitoring and evaluating the performance of the Investment Manager; ● reviewing at least annually the performance of the Investment Manager; ● reviewing at least annually the terms of appointment of the Investment Manager including but not limited to the level of fees and the notice period of the Investment Manager; and ● reviewing the performance and fees of the other key service providers to the Company. Meetings The MSPEC met twice during the year to review the performance of the Investment Manager and other key service providers. The Company Secretary attends meetings as Secretary to the MSPEC but takes no part in discussions relating to its own performance. The Investment Manager is also invited to attend the meetings as appropriate, to provide its feedback on the Company’s service providers. Activities during the year A summary of the MSPEC’s principal activities and key considerations for the year to 30September 2024 is provided below. Review of the Investment Manager The MSPEC reviewed the performance of the Investment Manager during the year. The Investment Manager was asked to provide a report detailing the Company’s performance against its key performance indicators during the current year and previous years, the contents of which were considered by the MSPEC as part of its review. The Company Secretary was also invited to provide feedback on its experience of working with the Investment Manager. The views of the MSPEC and the Company Secretary, which were positive, were subsequently provided to the Investment Manager by the Chair of the MSPEC. The MSPEC is satised that its queries and concerns have been adequately addressed throughout the remainder of the year. Following the MSPEC’s recommendation, the Board concluded that the continuing appointment of the Investment Manager was in the best interests of Shareholders and the Company. Review of Key Service Providers The MSPEC reviewed the contractual terms, fees and service levels from its other key service providers during the year. Each provider was asked to complete a questionnaire assessing its own performance and conrming it has complied with legislation and statutory requirements relating to its role. The Investment Manager, Administrator and Company Secretary each provided feedback on their experience of working alongside the other service providers. This was generally positive, with some areas for improvement being identied and fed back to each provider as appropriate. Following a detailed review of the feedback and information provided, the MSPEC concluded it is satised that the service providers currently engaged by the Company are competent to carry out their roles. Angela Henderson Chair of the MSPEC 17December 2024 Statement of directors’ responsibilities in respect of the inancial statements 60 The Directors are responsible for preparing the annual report and the nancial statements in accordance with applicable law and regulations. They are also responsible for ensuring that the annual report includes information required by the UK Listing Rulesof the Financial Conduct Authority. The Companies Act2006 (and related legislation) requires the Directors to prepare nancial statements for each nancial year. Under that law the Directors are required to prepare the nancial statements and have elected to prepare the company nancial statements in accordance with UKGAAP and the Directors must not approve the nancial statements unless they are satised that they give a true and fair view of the state of aairs of the Company and of the prot or loss for the Company for that period. In preparing these nancial statements, the Directors are required to: ● select suitable accounting policies and then apply them consistently; ● make judgements and accounting estimates that are reasonable and prudent; ● state whether they have been prepared in accordance with UKGAAP, subject to any material departures disclosed and explained in the nancial statements; ● prepare the nancial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and ● prepare a directors’ report, a strategic report and directors’ remuneration report which comply with the requirements of the Companies Act2006. The Directors are responsible for keeping adequate accounting records that are sucient to show and explain the Company’s transactions, and disclose with reasonable accuracy at any time the nancial position of the Company, and enable them to ensure that the nancial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for ensuring that the annual report and accounts, taken as a whole, are fair, balanced and understandable, and provide the information necessary for Shareholders to assess the Company’s position and performance, business model and strategy. Website publication The Directors are responsible for ensuring the annual report and the nancial statements are made available on a website. The Company’s website address is https://www.hargreaveaimvcts.co.uk. Financial statements are published on the Company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of nancial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the nancial statements contained therein. Directors’ responsibility statement pursuant to DTR4 Each of the Directors, David Brock (Chair), Oliver Bedford, Angela Henderson, Justin Ward, Megan McCracken and Busola Sodeinde, conrms to the best of their knowledge that: ● the nancial statements have been prepared in accordance with UKGAAP and give a true and fair view of the assets, liabilities, nancial position and prot and loss of the Company; and ● the annual report includes a fair review of the development and performance of the business and the nancial position of the Company, together with a description of the principal risks and uncertainties that it faces. 61 Disclosure of information to the Auditor The Directors conrm that: ● so far as each Director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and ● the Directors have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Auditor is aware of that information. For and on behalf of the Board. David Brock Chair 17December 2024 62 Financial statements Independent auditor’s report to the members of Hargreave Hale AIM VCTPLC 63 Opinion on the nancial statements In our opinion the nancial statements: ● give a true and fair view of the state of the Company’s aairs as at 30 September 2024 and of its loss for the year then ended; ● have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and ● have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the nancial statements of Hargreave Hale AIM VCT PLC (the “Company”) for the year ended 30 September 2024 which comprise the Income statement, the Balance sheet, the Statement of changes in equity, the Statement of cash ows and Notes to the nancial statements, including a summary of signicant accounting policies. The nancial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the nancial statements section of our report. We believe that the audit evidence we have obtained is sucient and appropriate to provide a basis for our opinion. Our audit opinion is consistent with the additional report to the Audit Committee. Independence Following the recommendation of the Audit Committee, we were appointed by the Board of Directors in January 2007 to audit the nancial statements for the year ended 30 September 2007 and subsequent nancial periods. The period of total uninterrupted engagement including re-tenders and reappointments is 18 years, covering the years ended 30 September 2007 to 30 September 2024. We remain independent of the Company in accordance with the ethical requirements that are relevant to our audit of the nancial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fullled our other ethical responsibilities in accordance with these requirements. The non-audit services prohibited by that standard were not provided to the Company. Conclusions relating to going concern In auditing the nancial statements of the Company, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the nancial statements is appropriate. Our evaluation of the Directors’ assessment of the Company’s ability to continue to adopt the going concern basis of accounting included: ● obtaining the VCT compliance reports during the year and as at year end and reviewing the calculations therein to check that the Company was meeting its requirements to retain VCT status; ● consideration of the Company’s expected future compliance with VCT legislation, the absence of bank debt, contingencies and commitments and any market or reputational risks; ● reviewing the forecasted cash ows that support the Directors’ assessment of going concern, challenging assumptions and judgements made in the forecasts and assessing them for reasonableness. In particular, we considered the available cash resources relative to the forecast expenditure which was assessed against the prior year for reasonableness; and ● evaluating the Directors’ method of assessing the going concern in light of market conditions. Based on the work we have performed, we have not identied any material uncertainties relating to events or conditions that, individually or collectively, may cast signicant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months from when the nancial statements are authorised for issue. In relation to the Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors’ statement in the nancial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. 64 Overview Key audit matters Valuation and ownership of investments 2024 ✓ 2023 ✓ Materiality Company nancial statements as a whole £1,350,000 (2023: £1,330,000) based on 1% of adjusted net assets. An overview of the scope of our audit Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s system of internal control, and assessing the risks of material misstatement in the nancial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most signicance in our audit of the nancial statements of the current period and include the most signicant assessed risks of material misstatement (whether or not due to fraud) that we identied, including those which had the greatest eect on: the overall audit strategy, the allocation of resources in the audit, and directing the eorts of the engagement team. These matters were addressed in the context of our audit of the nancial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter How the scope of our audit addressed the key audit matter Valuation and ownership of investments (Note 1 and Note 7 to the nancial statements) The investment portfolio comprises quoted, unit trust fund and unquoted investments held at fair value through prot and loss. Quoted and unit trust fund investments total £120.5 million (90%) of the investment portfolio and unquoted investments make up £13.7 million (10%). We considered the valuation and ownership of investments to be the most signicant audit area as investments represent the most signicant balance in the Financial Statements and underpin the principal activity of the entity. We assessed the design and implementation of controls in relation to the valuation of investments. In respect of quoted investments, we responded to this matter by testing 100% of the valuation and ownership of the portfolio. We performed the following procedures: ● Conrmed the year end bid price was used by agreeing to externally quoted prices; ● Assessed if there were contra indicators, such as liquidity considerations, to suggest bid price is not the most appropriate indication of fair value by considering the realisation period for individual holdings; ● Recalculated the valuation by multiplying the number of shares held per the statement obtained from the Custodian by the valuation per share; and ● Obtained direct conrmation from the custodian and agreed all investments held at the balance sheet date to CREST records. 65 Key audit matter How the scope of our audit addressed the key audit matter Valuation and ownership of investments (Note1 and Note7 to the nancial statements) Whilst we do not consider the valuation of the listed investments to be subject to a signicant degree of estimation or judgement, there is a risk that the prices used by the Company are not reective of the fair value of those investments as at the year end. The unlisted investments have signicant judgement involved in selecting a valuation methodology and signicant estimation uncertainty involved in determining their valuations. There is an inherent risk of management override arising from the unquoted investment valuations being prepared by the Investment Manager, who is remunerated based on a percentage of the value of the net assets of the fund, as shown in note 3 For these reasons and the materiality of the balance in relation to the Financial Statements as a whole, we considered this to be a key audit matter. We assessed the valuation and ownership of the unquoted investment portfolio that constitutes the year-end unquoted investments balance, performing the following procedures: ● Challenged whether the valuation methodology was the most appropriate in the circumstances under the IPEV Guidelines and the applicable accounting standards. ● Obtained capital tables directly from the investee companies to conrm the ownership at year end and recalculated the value attributable to the Company, having regard to the application of enterprise value across the capital structures of the investee companies; ● Challenged and corroborated the inputs to the valuation with reference to management information of investee companies, market data and our own understanding and assessed the impact of the estimation uncertainty concerning these assumptions and the disclosure of these uncertainties in the nancial statements; ● Reviewed the historical nancial statements and any recent management information available to support assumptions about maintainable revenues used in the valuation; ● Considered the multiples applied and the discounts applied by reference to observable listed company market data; ● Challenged the consistency and appropriateness of adjustments made to such market data in establishing the multiple applied in arriving at the valuations adopted, by considering the individual performance of investee companies against plan and relative to the peer group, the market and sector in which the investee company operates and other factors as appropriate; ● Challenged assumptions made in respect of the probability weighted average methodology applied to convertible loan note scenarios for example assessing the likelihood of early redemption, redemption at maturity, assumptions made in respect of sale and prot forecasts and recalculating the value of the convertible instrument; and 66 Key audit matter How the scope of our audit addressed the key audit matter Valuation and ownership of investments (Note1 and Note7 to the nancial statements) ● Where appropriate, we performed a sensitivity analysis by developing our own point estimate where we considered that alternative input assumptions could reasonably have been applied and we considered the overall impact of such sensitivities on the portfolio of investments in determining whether the valuations as a whole are reasonable and free from bias. Key Observations: Based on our procedures performed we did not identify any matters to suggest the valuation or ownership of investments was not appropriate and we are satised that the estimates and judgements made in the unquoted investment valuations are appropriate considering the level of estimation uncertainty. Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the eect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could inuence the economic decisions of reasonable users that are taken on the basis of the nancial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identied misstatements, and the particular circumstances of their occurrence, when evaluating their eect on the nancial statements as a whole. Based on our professional judgement, we determined materiality for the nancial statements as a whole and performance materiality as follows: Company Financial statements 2024 £ 2023 £ Materiality 1,350,000 1,330,000 Basis for determining materiality 1% of net assets adjusted to exclude funds raised during the year Rationale for the benchmark applied In setting materiality, we have had regard to the nature and disposition of the investment portfolio. The Company’s portfolio mainly comprises quoted investments, which are considered low risk. Since the portfolio is low risk where fair values are highly visible, we have applied a percentage of 1% of adjusted net asset value. An adjusted benchmark was used to exclude the eects of cash that has been raised from fundraising during the year. Performance materiality 1,012,000 1,000,000 Basis for determining performance materiality 75% of materiality Rationale for the percentage applied for performance materiality The level of performance materiality applied was set after having considered a number of factors including the expected total value of known and likely misstatements and the level of transactions in the year. 67 Reporting threshold We agreed with the Audit Committee that we would report to them all individual audit dierences in excess of £27,000 (2023: £26,000). We also agreed to report dierences below this threshold that, in our view, warranted reporting on qualitative grounds. Other information The Directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the nancial statements and our Auditor’s report thereon. Our opinion on the nancial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the nancial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the nancial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Corporate governance statement The UK Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specied for our review. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the nancial statements or our knowledge obtained during the audit. Going concern and longer-term viability ● The Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identied set out on page 43; and ● The Directors’ explanation as to their assessment of the Company’sprospects, the period this assessment covers and why the period is appropriate set out on page 23. Other Code provisions ● Directors’ statement on fair, balanced and understandable set out on page 60; ● Board’s conrmation that it has carried out a robust assessment ofthe emerging and principal risks set out on page 23; ● The section of the annual report that describes the review of eectiveness of risk management and internal control systems set out on page 21; and ● The section describing the work of the Audit Committee set out onpage 56. Other Companies Act 2006 reporting Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below. 68 Strategic report and Directors’ report In our opinion, based on the work undertaken in the course of the audit: ● the information given in the Strategic report and the Directors’ report for the nancial year for which the nancial statements are prepared is consistent with the nancial statements; and ● the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identied material misstatements in the Strategic report or the Directors’ report. Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. Matters on which we are required to report by exception We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: ● adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or ● the nancial statements and the part of the Directors’ remuneration report to be audited are not in agreement with the accounting records and returns; or ● certain disclosures of Directors’ remuneration specied by law are not made; or ● we have not received all the information and explanations we require for our audit. Responsibilities of Directors As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the nancial statements and for being satised that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of nancial statements that are free from material misstatement, whether due to fraud or error. In preparing the nancial statements, the Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the nancial statements Our objectives are to obtain reasonable assurance about whether the nancial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to inuence the economic decisions of users taken on the basis of these nancial statements. Extent to which the audit was capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non- compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: 69 Non-compliance with laws and regulations Based on: ● our understanding of the Company and the industry in which it operates; ● discussion with management and those charged with governance; and ● obtaining an understanding of the Company’s policies and procedures regarding compliance with laws and regulations, we considered the signicant laws and regulations to be Companies Act 2006, the UK Listing Rules and Disclosure Guidance and Transparency Rules, the principles of the UK Corporate Governance Code, industry practice represented by the SORP and the applicable nancial reporting framework. We also considered the Company’s qualication as a VCT under UK tax legislation. Our procedures in respect of the above included: ● agreement of the nancial statement disclosures to underlying supporting documentation; ● enquiries of management and those charged with governance relating to the existence of any non-compliance with laws and regulations; ● reviewing minutes of meeting of those charged with governance throughout the period for instances of non-compliance with laws and regulations; and ● obtaining the VCT compliance reports during the year and as at year end and reviewing their calculations to check that the Company was meeting its requirements to retain VCT status. Fraud We assessed the susceptibility of the nancial statement to material misstatement including fraud. Our risk assessment procedures included: ● Enquiry with management and those charged with governance regarding any known or suspected instances of fraud; ● Obtaining an understanding of the Company’s policies and procedures relating to: o Detecting and responding to the risks of fraud; and o Internal controls established to mitigate risks related to fraud; ● Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud; and ● Discussion amongst the engagement team as to how and where fraud might occur in the nancial statements. Based on our risk assessment, we considered the areas most susceptible to be management override of controls and the valuation of unquoted investments. Our procedures in respect of the above included: ● The procedures set out in the Key Audit Matters section above relating to valuation of the unquoted investments; ● Review of estimates and judgements applied by management in the nancial statements to assess their appropriateness and the existence of any systematic bias; ● Review and consideration of the appropriateness of adjustments made in the preparation of the nancial statements; and ● Review of unadjusted audit dierences, if any, for indications of bias or deliberate misstatement. We also communicated relevant identied laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non- compliance with laws and regulations throughout the audit. Our audit procedures were designed to respond to risks of material misstatement in the nancial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reected in the nancial statements, the less likely we are to become aware of it. A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor’s report. Use of our report This report is made solely to the Company’s members, as a body, in accordance with Chapter3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an Auditor’s report and 70 for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Elizabeth Hooper (Senior Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor London, UK 17 December 2024 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). 71 Income statement Year to 30September 2024 Year to 30September 2023 Note Revenue £000 Capital £000 Total £000 Revenue £000 Capital £000 Total £000 Net loss on investments held at fair value through prot or loss 7 – (5,341) (5,341) – (28,455) (28,455) Income 2 2,849 – 2,849 2,616 – 2,616 2,849 (5,341) (2,492) 2,616 (28,455) (25,839) Management fee 3 (641) (1,924) (2,565) (699) (2,098) (2,797) Other expenses 4 (1,485) (43) (1,528) (1,052) (39) (1,091) (2,126) (1,967) (4,093) (1,751) (2,137) (3,888) Prot/(loss) on ordinary activities before taxation 723 (7,308) (6,585) 865 (30,592) (29,727) Taxation 5 – – – – – – Prot/(loss) after taxation 723 (7,308) (6,585) 865 (30,592) (29,727) Basic and diluted earnings/(loss) per share 6 0.20p (2.06)p (1.86)p 0.27p (9.59)p (9.32)p The total column of these statements is the income statement of the Company. All revenue and capital items in the above statements derive from continuing operations. There was no other comprehensive income other than the loss for the year. The accompanying notesare an integral part of these nancial statements. 72 Balance sheet As at 30 September 2024 Company Registration Number 5206425 (In England and Wales) Note 2024 £000 2023 £000 Fixed assets Investments at fair value through prot or loss 7 134,277 132,120 Current assets Debtors 9 1,047 1,475 Funds held with Custodian (1) 15 8,846 8,119 Cash at bank and in hand (1) 4,766 11,112 14,659 20,706 Creditors:amounts falling due within one year 10 (927) (906) Net current assets 13,732 19,800 Total assets less current liabilities 148,009 151,920 Capital and Reserves Called up share capital 11 3,649 3,278 Share premium 21,222 286 Capital redemption reserve 379 272 Capital reserve – unrealised 16,046 13,640 Special reserve 159,022 177,762 Capital reserve – realised (50,785) (41,071) Revenue reserve (1,524) (2,247) Total Shareholders’ funds 148,009 151,920 Net asset value per share (basic and diluted) 12 40.55p 46.34p (1) Cash at bank and in hand in the Balance Sheet has been restated to show separately Funds held with Custodian for the year ended 30September2023, to conform with the requirements of the Companies Act 2006 – Statutory format of the Balance Sheet. There is no impact on other line items in the Balance Sheet nor the total net current assets. The accompanying notesare an integral part of these nancial statements. These nancial statements were approved and authorised for issue by the Board of Directors on 17December2024 and signed on its behalf by David Brock Chair 17December2024 73 Statement of changes in equity For the year ending 30 September 2024 Non-distributable reserves Distributable reserves (1) Note Share Capital £000 Share Premium £000 Capital Redemption Reserve £000 Capital Reserve Unrealised £000 Special Reserve £000 Capital Reserve Realised £000 Revenue Reserve £000 Total £000 At 1October 2023 3,278 286 272 13,640 177,762 (41,071) (2,247) 151,920 Prot and total comprehensive income for the year Realised (losses) on investments 7 – – – – – (3,570) – (3,570) Unrealised (losses) on investments 7 – – – (1,771) – – – (1,771) Management fee charged to capital 3 – – – – – (1,924) – (1,924) Transaction costs charged to capital – – – – – (33) – (33) Income allocated to capital 2 – – – – – – – – Due diligence investments costs 4 – – – – – (10) – (10) Revenue prot after taxation for the year – – – – – – 723 723 Total (loss) after taxation for the year – – – (1,771) – (5,537) 723 (6,585) Contributions by and distributions to owners Subscription share issues 11 445 19,876 – – – – – 20,321 Issue costs 11 – (347) – – – – – (347) Share buybacks 11 (107) – 107 – (4,472) – – (4,472) DRIS share issues 11 33 1,407 – – – – – 1,440 Equity dividends paid 16 – – – – (14,268) – – (14,268) Total contributions by and distributions to owners 371 20,936 107 – (18,740) – – 2,674 Other movements Capital reduction 11 – – – – – – – – Diminution in value – – – 4,177 – (4,177) – – Total other movements At 30September 2024 3,649 21,222 379 16,046 159,022 (50,785) (1,524) 148,009 Reserves available for distribution are capital reserve realised, special reserve and revenue reserve. Total distributable reserves at 30September 2024 were £106.6million, adjusted to remove £0.1million accumulation income included in the revenue reserve but not distributable (2023:£134.4million). The accompanying notesare an integral part of these nancial statements. (1) The Income Taxes Act2007 restricts distribution of capital from reserves created by the conversion of the share premium account into a special (distributable) reserve until the third anniversary of the share allotment that led to the creation of that part of the share premium account. As at 30September 2024, £108.9million of the special reserve is subject to this restriction. 74 Statement of changes in equity For the year ending 30 September 2023 Non-distributable reserves Distributable reserves (1) Note Share Capital £000 Share Premium £000 Capital Redemption Reserve £000 Capital Reserve Unrealised £000 Special Reserve £000 Capital Reserve Realised £000 Revenue Reserve £000 Total £000 At 1October 2022 2,666 93,660 201 23,935 63,931 (20,774) (3,112) 160,507 Prot and total comprehensive income for the year Realised (losses) on investments 7 – – – – – (8,245) – (8,245) Unrealised (losses) on investments 7 – – – (20,210) – – – (20,210) Management fee charged to capital 3 – – – – – (2,098) – (2,098) Income allocated to capital 2 – – – – – – – – Due diligence investments costs 4 – – – – – (39) – (39) Revenue prot after taxation for the year – – – – – – 865 865 Total (loss) after taxation for the year – – – (20,210) – (10,382) 865 (29,727) Contributions by and distributions to owners Subscription share issues 11 659 39,277 – – – – – 39,936 Issue costs 11 – (742) – – – – – (742) Share buybacks 11 (71) – 71 – (3,637) – – (3,637) DRIS share issues 11 24 1,276 – – – – – 1,300 Equity dividends paid 16 – – – – (15,717) – – (15,717) Total contributions by and distributions to owners 612 39,811 71 – (19,354) – – 21,140 Other movements Capital reduction 11 – (133,185) – – 133,185 – – – Diminution in value – – – 9,915 – (9,915) – – Total other movements At 30September 2023 3,278 286 272 13,640 177,762 (41,071) (2,247) 151,920 Reserves available for distribution are capital reserve realised, special reserve and revenue reserve. Total distributable reserves at 30September 2023 were £134.4million following the capital reduction of £133.2m (2022:£40million). The accompanying notesare an integral part of these nancial statements. (1) The Income Taxes Act2007 restricts distribution of capital from reserves created by the conversion of the share premium account into a special (distributable) reserve until the third anniversary of the share allotment that led to the creation of that part of the share premium account. As at 30September 2023, £108.9million of the special reserve is subject to this restriction. 75 Statement of cash lows Note 2024 £000 2023 £000 Total loss on ordinary activities before taxation (6,585) (29,727) Realised losses on investments 7 3,570 8,245 Unrealised losses on investments 7 1,771 20,210 Decrease/(increase) in debtors 428 (1,067) Increase/(decrease) in creditors 21 (94) Amortisation for discount/premium on bonds (129) (24) Unclaimed dividend forfeiture 4 – Non-cash distributions 2 (143) – Net cash (outow)from operating activities (1) (1,063) (2,457) Purchase of investments 7 (27,582) (57,699) Sale of investments 7 20,356 16,336 Net cash (used in) investing activities (7,226) (41,363) Share buybacks 11 (4,472) (3,637) Issue of share capital 11 20,321 39,936 Issue costs 11 (347) (742) Dividends paid 16 (12,832) (14,417) Net cash provided by nancing activities 2,670 21,140 Net (decrease) in cash and cash equivalents (5,619) (22,680) Opening cash and cash equivalents (2) 19,231 41,911 Closing cash and cash equivalents (3) 13,612 19,231 (1) The Company received cash dividends of £977,491 (2023:£1,178,059) and interest of £1,711,217 (2023:£599,735). (2) The opening cash and cash equivalents includes £8,119,302 (2023: £16,786,442) of funds held with Custodian. (3) The closing cash and cash equivalents includes £8,845,455 (2023: £8,119,302) of funds held with Custodian. The accompanying notesare an integral part of these nancial statements. 76 Notes to the inancial statements Hargreave Hale AIM VCTplc is a company incorporated in England and Wales under the Companies Act2006. The address of the registered oce is given in the company information on page 100 and the nature and principal business activities are set out in the Strategic Report. Basis of preparation The nancial statements have been prepared in accordance with UKGAAP, including FRS102 and with the Companies Act2006 and the SORP. Going Concern The nancial statements have been prepared on a going concern basis and on the basis that the company maintains its VCT status. The Directors have assessed the Company’s ability to continue as a going concern and are satised that the Company has adequate resources to continue in operational existence for a period of 12months from the date these nancial statements were approved. The Company has sucient cash at bank, funds held with Custodian (£4.8 million and £8.8 million respectively at 30 September 2024) and liquid assets held across a diversied portfolio of investments in listed companies to meet obligations as they fall due. The Company is a closed-ended fund, where assets are not required to be liquidated to meet day-to- day redemptions. The major driver of cash outows (dividends, buybacks and investments) are managed in accordance with the Company’s key policies at the discretion of the Board or, in the case of the Company’s investments, the Investment Manager. The Board has reviewed forecasts and stress tests to assist them with their going concern assessment. These tests have included the modelling of a 15% reduction in NAV, whilst also considering ongoing compliance with the VCT investment test. It was concluded that in a plausible downside scenario the Company would continue to meet its liabilities. The Directors have carefully considered the principal risk factors facing the Company, as described on pages 21 to 22 and their potential impact on income into the portfolio and the NAV. The Directors are of the opinion that the Company has sucient cash and other liquid assets to continue to operate as a going concern, including under a stress scenario. The Investment Manager has a team of four dedicated fund managers and analysts with multi- year experience working for the VCT and one dedicated legal counsel. The Investment Manager and the Company’s other key service providers have contingency plans in place to manage operational disruptions. The Directors have not identied any material uncertainties related to events or conditions that may cast signicant doubt about the ability of the Company to continue as a going concern. Therefore, they are satised that the Company should continue to operate as a going concern and report its nancial statements on that basis. Key judgements and estimates The preparation of the nancial statements requires the Board to make judgements and estimates that aect the application of policies and reported amounts of assets, liabilities, income and expenses. The most critical judgements and estimates mainly relate to the determination of the fair valuation of unquoted investments. The policies for these are set out in the notesto the nancial statements. The IPEV Guidelines describe a range of valuation techniques, as described in the “nancial instruments” section on pages 87 to 89. The nature of estimation means that the actual outcomes could dier from those estimates. Estimates and underlying assumptions are under continuous review with particular attention paid to the carrying value of the investments. Key judgements when determining the fair value of unquoted investments include: ● selecting risk factors to include in the valuation model; ● peer group selection; and ● loan noteconversion scenarios. Key estimates involved in determining the fair value of unquoted investments include: ● forecast compliance within the appropriate nancial metric; ● future working capital requirements; ● liquidity risk; ● determining the appropriate discount to apply to peer group selection; and ● the probabilities applied to the loan note conversion scenarios. Further areas requiring judgement are the allocation of income and expenses, recognition and classication of unusual or special dividends as either capital or revenue in nature, the permanent impairment of investments and categorisation of public companies between level 1 and level 2 of the fair value hierarchy. 77 1. Accounting policies A summary of the principal accounting policies, all of which have been applied consistently throughout the year, is set out below: Financial instruments All investments are classied as fair value through prot or loss. Investments are measured initially and subsequently at fair value which is deemed to be market bid prices for listed investments and investments traded on AIM. Unquoted investments are valued using the most appropriate methodology recommended by the IPEV Guidelines published in December2022. Investments deemed to be associates due to the shareholding and level of inuence exerted over the portfolio company are measured at fair value using a consistent methodology to the rest of the trust’s portfolio as permitted by FRS102 and Para. 32 of the SORP. Where no active market exists for the particular asset, the Company holds the investment at fair value as determined by the Investment Manager and approved by the Board. Valuations of unquoted investments are reviewed on a quarterly basis and more frequently if events occur that could have a material impact on the investment. In estimating fair value for an unquoted investment, the Investment Manager will apply one or more valuation techniques according to the nature, facts and circumstances of the investment. The Investment Manager will use reasonable current market data and inputs combined with market participant assumptions. The assessment of fair value will reect the market conditions at the measurement date irrespective of which valuation technique is used. The IPEV Guidelines describe a range of valuation techniques, including but not limited to relevant observable market multiples, independent arms-length transactions, income, discounted cash ows and net assets. The fair value of convertible loan notesis estimated by aggregating the Net Present Value of the bond component and the derivative value of the option to convert into equity. The derivative value of the option to convert a particular loan noteis the probable weighted average of the present value of each conversion scenario described in the loan noteinstrument as calculated using the Black Scholes option pricing model. Investments are recognised and derecognised at trade date where a purchase or sale is under a contract whose terms require delivery within the time frame established by the market concerned. Purchases and sales of unlisted investments are recognised when the contract for acquisition or sale becomes unconditional. Until 30September 2023, transaction costs were included in the initial cost or deducted from the disposals proceeds of investments. However, from 1October 2023 transaction costs in relation to the purchase or sale of investments have been recognised as a capital expense. These investments will be managed and their performance evaluated on a fair value basis in accordance with a documented investment strategy and information about them is provided internally on that basis to the Board. Gains and losses arising from changes in fair value (realised and unrealised) are included in the net prot or loss for the period as a capital item in the income statement and are taken to the unrealised capital reserve or realised capital reserve as appropriate. If an investment has been impaired such that there is no realistic expectation that there will be a full return from the investment, the loss is treated as a diminution in value and transferred to the capital reserve realised. The Company conducts impairments reviews on a quarterly basis. In the case of equity investments, impairment reviews are triggered when unrealised losses exceed 50% of book cost, or if the loss when realised would lead to a material reduction in the Company’s distributable reserves. Fixed income investments are reviewed for impairment if the issuing company’s ability to repay is uncertain unless there are reasonable grounds to believe that the loan could be recovered through the sale of the company or its trading assets. Other nancial assets and liabilities comprise receivables, payables and cash and cash equivalents which are measured at amortised cost. There are no nancial liabilities other than payables. Cash at bank and in hand For the purposes of the Balance Sheet, cash at bank and in hand is cash held in bank accounts subject to immediate access. Funds held with Custodian For the purposes of the Balance Sheet, funds held with Custodian is cash held at CGWL (see note 15). Cash held with CGWL is to meet short term liquidity requirements and is available on demand with no restrictions or penalties. 78 For the purposes of the Statement of Cash Flows, cash comprises cash at bank and in hand and funds held with Custodian as dened above. Income Equity dividends are analysed to consider if they are revenue or capital in nature on a case-by-case basis and are taken into account on the ex-dividend date, net of any associated tax credit. Fixed returns on non-equity shares and debt securities are recognised on a time apportionment basis so as to reect the eective yield, provided there is no reasonable doubt that payment will be received in due course. All other income is recognised on an accruals basis. Other income is treated as a repayment of capital or revenue depending on the facts of each particular case. Expenditure All expenditure is accounted for on an accruals basis. Where a clear connection with the maintenance or enhancement of value of the investments can be demonstrated, expenses are allocated to capital. Accordingly, of investment management fees, 75% are allocated to the capital reserve realised and 25% to the revenue account in line with the Board’s expected long-term split of investment returns in the form of capital gains to the capital column of the income statement. Due diligence costs incurred for prospective private company purchases and transaction costs in relation to the purchase and sale of investments are charged to capital. Prior to 1October 2023, transaction costs were included within the cost and/or deducted from disposal proceeds of investment. All other expenditure is charged to the revenue account. Capital reserves Realised prots and losses on the disposal of investments, due diligence costs, income that is capital in nature, losses realised on investments considered to be diminished in value and 75% of investment management fees are accounted for in the capital reserve realised. Increases and decreases in the valuation of investments held at the year end are accounted for in the capital reserve unrealised. Operating segments There is considered to be one operating segment being investment in equity and debt securities. Taxation Deferred tax is recognised in respect of all timing dierences that have originated but not yet reversed at the balance sheet date. Deferred tax assets are only recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable prots. Current tax is expected tax payable on the taxable prot for the period using the current tax rate and laws that have been enacted or substantially enacted at the reporting date. The tax eect of dierent items of income and expenditure is allocated between capital and revenue on the same basis as the particular item to which it relates. Approved VCTs are exempt from tax on capital gains from the sale of xed asset investments. The Directors intend that the Company will continue to conduct its aairs to maintain its VCT status, no deferred tax has been provided in respect of any capital gains or losses arising from the revaluation or disposal of investments. Dividends Only dividends recognised during the year are deducted from revenue, capital or special reserves. Equity dividends are recognised in the accounts when they become legally payable. Interim dividends are approved by the Board of Directors and may be varied or rescinded at any time before payment, therefore the liability is only established when the dividend is actually paid. Final dividends are subject to approval at the AGM. Where a dividend is stated to be payable on a future date, the liability is established on that date. Functional currency The Company is required to nominate a functional currency, being the currency in which the Company predominantly operates. The Board has determined that sterling is the Company’s functional currency. Sterling is also the currency in which these accounts are presented. Capital structure Share Capital Ordinary shares are classed as equity. The ordinary shares in issue have a nominal value of one penny and carry one vote each. Substantial holdings in the 79 Company are disclosed in the Directors’ Report on page 41. Share Premium This reserve represents the dierence between the issue price of shares and the nominal value of shares at the date of issue, net of related issue costs. Capital Redemption Reserve This reserve is used for the cancellation of shares bought back under the buyback facility. Special Reserve Distributable reserve used to pay dividends and re- purchase shares under the buyback facility. Capital Reserve Realised Gains/losses on disposal of investments, due diligence and transaction costs, income that is capital in nature, diminishment of nancial assets and 75% of the investment management fee are accounted for in the capital reserve realised. Capital Reserve Unrealised Unrealised gains and losses on investments held at the year end arising from movements in fair value are taken to the capital reserve unrealised. Revenue Reserve Net revenue prots and losses of the Company. 2. Income 2024 £000 2023 £000 Income from investments: Revenue: Dividend income 973 1,247 Interest from bonds 1,031 579 Interest from loan notes 171 (1) 288 Bank interest 531 502 Accumulation fund income 143 (2) – Total revenue income 2,849 2,616 (1) The amount of loan stock interest recognised in the period is lower than prior year, largely because of the Kidly loan interest being fully impaired in the period. (2) Accumulation income from the IFSL Marlborough Special Situations and Marlborough UK Micro-Cap Growth funds (2023: nil). No capital income was recognised in the year (2023:nil). 3. Management fees 2024 Revenue £000 2024 Capital £000 2024 Total £000 2023 Revenue £000 2023 Capital £000 2023 Total £000 Management fees 641 1,924 2,565 699 2,098 2,797 The IMA terminates on 12months’ notice, subject to earlier termination in certain circumstances. In the event of termination by the Company on less than the agreed notice period, compensation may be payable to the Investment Manager in lieu of the unexpired notice period. No notice had been given by the Investment Manager or by the Board to terminate the agreement as at the date of approval of these accounts. The Investment Manager receives an investment management fee of 1.7% per annum of the NAV of the Company, calculated and payable quarterly in arrears. At 30September 2024, £615,231 (2023:£645,397) was owed in respect of management fees. The Company receives a reduction to the annual management fee for investments in other funds managed by the Investment Manager, being any investment in the IFSL Marlborough Special Situations Fund and/or the IFSL Marlborough UK Micro-Cap Growth Fund so the Company is not charged twice for these services. This amounted to £75,184 for the year to 30September 2024 (2023:£49,931). The Investment Manager has agreed to indemnify the Company against annual running costs exceeding 3.5% of its net assets. No fees were waived between 1October 2023 and 30September 2024 and no fees were waived between 1October 2022 and 30September 2023 under the indemnity. 80 4. Other expenses 2024 £000 2023 £000 Other revenue expenses: Administration fee 250 195 Directors’ fees 216 205 Legal& professional 27 39 London Stock Exchange fees 83 84 Registrar’s fee 46 47 Website and marketing 36 60 Printing, postage and stationary 42 40 Auditors’ remuneration – for audit services 63 55 VCT monitoring fees 14 15 Company secretarial fees 73 57 Custody fee 30 30 Directors’ and ocers’ liability insurance 27 36 Broker’s fee 5 5 VAT 128 115 Other expenses (1) 76 104 Provision against income receivable 368 (2) (35) Total other revenue expenses 1,485 1,052 Other capital expenses: Due diligence costs 9 32 VAT on due diligence costs 1 7 Transaction costs on investment transactions charged to capital (3) 33 – Total other capital expenses 43 39 Total other expenses 1,528 1,091 (1) Other expenses include FCA fees, AIC membership fees, VCT Association fees, recruitment costs, professional subscriptions, license costs, Shareholder event costs and other nominal expenses. (2) Kidly loan stock interest impairment of £362,795 and XP Powerplc cancelled dividend of £5,700. (3) During the year the Company incurred transaction costs of £23,907 (2023:£97,493) and £9,439 (2023:£15,710) on purchases and sales respectively. These amounts are included in capital expenses; (2023:included in the losses on investments as disclosed in the income statement. The Directors’ remuneration above includes national insurance contributions. Directors’ remuneration excluding employer’s national insurance contributions is detailed in the directors’ remuneration report on page 45. The maximum aggregate directors’ emoluments authorised by the Articles are detailed in the Directors’ Remuneration Report on page 45. 5. Tax on ordinary activities The tax charge for the year is based on the standard rate of UK Corporation Tax of 25% (2023:22% (1) ). 2024 Total £000 2023 Total £000 Loss on ordinary activities before taxation (6,585) (29,727) UK Corporation Tax:25% (2023:22%) (1,646) (6,540) Eect of non taxable losse s on investments 1,335 6,260 Eect of non taxable UK dividend income (242) (274) Eect of disallowed costs 8 – Deferred tax not recognised 545 554 Current tax charge – – (1) Average rate of corporation tax applicable for the period. At the 30September 2024 the Company had tax losses carried forward of £26,556,949 (2023:£24,379,001). It is unlikely that the Company will generate enough taxable income in the future to use these expenses to reduce future tax charges and therefore no deferred tax asset has been recognised. There is no taxation charge in relation to capital gains or losses. No asset or liability has been recognised in relation to capital gains or losses on revaluing investments. The Company is exempt from such tax as a result of its intention to maintain its status as a Venture Capital Trust. 81 6. Basic and diluted earnings/(loss) per share 2024 Revenue £000 2024 Capital £000 2024 Total £000 2023 Revenue £000 2023 Capital £000 2023 Total £000 Return (£) 723 (7,308) (6,585) 865 (30,592) (29,727) Earnings/(loss) per ordinary share 0.20p (2.06)p (1.86)p 0.27p (9.59)p (9.32)p The earnings per share is based on 353,964,930 ordinary shares (2023:318,946,009), being the weighted average number of shares in issue during the year. 7. Investments Quoted investments (1) 2024 £000 Unquoted investments 2024 £000 Total investments 2024 £000 Quoted investments (1) 2023 £00 Unquoted investments 2023 £000 Total investments 2023 £000 Opening Valuation 122,567 9,553 132,120 108,630 10,558 119,188 Purchases at cost 23,082 4,500 27,582 56,199 1,500 57,699 Non-cash distribution 143 – 143 – – – Sale proceeds (19,554) (802) (20,356) (16,336) – (16,336) Realised gains/(losses) (471) (3,099) (3,570) (2) (8,245) – (8,245) Unrealised losses (2,106) 335 (1,771) (2) (17,705) (2,505) (20,210) Amortisation for discount/ premium on bonds 129 – 129 24 – 24 Re-Classication Adjustment (3,294) 3,294 – – – – Closing valuation 120,496 13,781 134,277 122,567 9,553 132,120 Cost at 30September 129,295 26,474 155,769 132,600 19,241 151,841 Unrealised gains/(losses) 16,845 (799) 16,046 14,981 (1,341) 13,640 Diminution in value (3) (25,644) (11,894) (37,538) (25,014) (8,347) (33,361) Closing valuation 120,496 13,781 134,277 122,567 9,553 132,120 (1) Includes the IFSL Marlborough Special Situations Fund and the IFSL Marlborough UK Micro-Cap Fund with valuations of £9.4m (2023:£8.3m) and £10.4m (2023:nil) respectively as at 30September 2024. Whilst unlisted, the two investments are UCITS funds with daily dealing and daily published pricing. (2) The net loss on investments held at fair value through prot or loss in the income statement of £5,341k (2023:loss£28,455k) is the sum of the realised and unrealised losses for the year as detailed in the table above. (3) Diminishments of £11,899,074 (2023:£14,762,893) were made in the year. Once adjusted for disposals/dissolutions (£7,373,105) (2023:£4,617,026) and diminishment reversals (£349,248) (2023:£230,000) the net movement for the year is £4,176,721 (2023:£9,915,867). Diminishments carried forward are £37,538,163 (2023: £33,361,442). Transaction Costs During the year the Company incurred transaction costs of £23,907 (2023:£97,493) and £9,439 (2023:£15,710) on purchases and sales respectively. These amounts are included in capital expenses; (2023:included in the losses on investments as disclosed in the income statement). Fair Value Measurement Hierarchy The table below sets out fair value measurements using FRS102 (appendix to section 2 fair value measurement) fair value hierarchy. The Company has one class of assets, being at fair value through prot or loss. ● Level 1:Quoted prices (unadjusted) in active markets for identical assets or liabilities. ● Level 2:Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e.as prices) or indirectly (i.e.derived from prices). ● Level 3:Valued by reference to valuation techniques using inputs that are not based on observable market data. 2024 Level 1 £’000 2024 Level 2 £’000 2024 Level 3 £’000 2024 Total £’000 2023 Level 1 £’000 2023 Level 2 £’000 2023 Level 3 £’000 2023 Total £’000 Investments 91,496 29,000 13,781 134,277 82,565 40,002 9,553 132,120 Transfers between level 3 and level 1 occur when a previously unquoted investment undertakes an initial public oering, resulting in its equity becoming quoted on an active market. There have been no instances in the current period (2023:none). Transfers between level 1 and/or 2 and 3 would occur when a quoted investment’s market becomes inactive, or the portfolio company elects to delist. There has been one transfer from level 1 to level 3 in 82 the current year for £1.1m in relation to C4X DiscoveryHoldings Ltd (2023:none) and one transfer from level 2 to level 3 for £0.8m in relation to BiVictriX Therapeutics Ltd (2023:none). Transfer values at 30 September 2024. There were transfers of £53.6k between level 1 and level 2 in the current period where the investments market is not suciently active (2023:£20.2m). There were transfers between level 2 and level 1 of £3.8m (2023:none). Transfer values at 30 September 2024. Level 3 nancial assets 2024 Equity shares £’000 2024 Preference shares £’000 (1) 2024 Loan notes £’000 2024 Total £’000 2023 Equity shares £’000 2023 Preference shares £’000 (1) 2023 Loan notes £’000 2023 Total £’000 Opening balance 2,984 3,069 3,500 9,553 4,740 3,861 1,957 10,558 Transfer from Level1 and 2 3,294 (2) – – 3,294 – – – – Purchases at cost – 2,500 2,000 4,500 – – 1,500 1,500 Sale proceeds (2) – (800) (802) – – – – Realised (losses) (3) (2,199) (600) (300) (3,099) – – – – Unrealised (losses)/gains 319 638 (622) 335 (1,756) (792) 43 (2,505) Closing valuation 4,396 5,607 3,778 13,781 2,984 3,069 3,500 9,553 (1) The preference shares held are in the nature of equity. (2) BiVictriX Therapeutics Ltd and C4X Discovery HoldingsLtd delisted on 11September 2024 and 26April 2024 respectively. Bidstack Groupplc was placed into administration and delisted on 23April 2024. The transfer value of the delisted investments included in the table is the brought forward value as at 30 September 2023. (3) Honest Brew Limited was dissolved on 19September 2024. The following table sets out the basis of valuation for the material Level 3 investments and those where the value has materially changed during the year, held within the portfolio at 30September 2024. In assessing fair value, the Investment Manager considered a range of valuation methodologies including EV/ Sales, and EV/EBITDA multiples for the current and next nancial year. Where appropriate, the Investment Manager also assessed value using discounted cash ow analysis. Where observable market multiples were available, these were used as part of peer group analysis. Market based multiples were taken as reference points with discounts applied (where appropriate) to reect liquidity and forecast risk. The manager also undertook sensitivity analysis to consider the impact of a 30% movement in the peer group multiples, both higher and lower. The use of alternative investment structures such as convertible loan stock by the Company or other investors can lead to asymmetric movements in value in response to dierent upside and downside scenarios. For further information on sensitivities, please see note15. Level 3 Unquoted Investments Innity RelianceLtd (My 1st Years) Trading continues to be positive with the company reporting revenue growth despite the weaker consumer environment. EBITDA growth in 2024 will be limited by investments designed to increase the addressable market in the medium term. The fair value of the investment increased as the valuation rolled forward into the nancial year ending December2024. The valuation was reviewed against EV/Sales multiples across a peer group of listed companies which was broadly static. BiVictriX Therapeutics Ltd On 12August 2024, BiVictriX announced the proposed cancellation of admission of its ordinary shares to trading on AIM and re-registration as a private limited company after the directors concluded that the company’s market capitalisation did not fully reect the positive achievements nor the underlying prospects of the business and was a potential barrier to future growth and funding, as well as potential partnership and licensing opportunities. The directors believe that, as a private company, BiVictriX would be able to access a greater pool of investors who are more likely to support clinical development. The company has engaged a US healthcare investment bank with signicant experience in the antibody drug-conjugate (“ADC”) space to assist the company in securing additional capital. The cancellation took eect from 11September 2024. Given the short period since the delisting the investment is held at the closing bid price on the last day of trading on AIM. Bidstack Group plc Following a protracted period of underperformance, failed fundraising eorts, and a strategic review which also failed to solicit a buyer for the company’s assets, Bidstack entered administration on 22March 2024. Following this, shares in the company were cancelled from trading on AIM on 23April 2024. 83 Level 3 Unquoted Investments C4X DiscoveryHoldings Ltd On 27March 2024, C4X Discovery announced the proposed cancellation of admission of its ordinary shares to trading on AIM and re-registration as a private limited company. Having reviewed the company’s opportunities for value creation and optimal capital structure, the directors determined that, as a private company, C4X would have access to a larger quantum of funding than has historically been available through its AIM listing and that would allow it to pursue a greater number of opportunities to key value inexion points. The cancellation took eect from 26April 2024. The valuation of the investment is taken from the closing bid price on the last day of trading on AIM; however, it was also tested against a composite valuation that included the closing bid price prior to delisting and a risked net present value analysis of the company’s balance sheet cash and partnered drug development assets. KidlyLtd A dicult trading environment through Christmas 2023 and early 2024 was compounded by balance sheet constraints. Although revenue performance was below budget, operational eciencies resulted in signicantly lower losses. Trading has improved as the year progressed. Reecting the need for additional funding, the fair value of the equity was reduced to nil and the value of the debt heavily impaired. Subsequently, Kidly secured new funding as part of a nancial restructuring that included a partial conversion of the loan noteinstrument into new preferred shares. The reduction in risk allowed a partial recovery in the fair value of the convertible loan note instrument. The value of the conversion options and equity remain nil. The outstanding principal of the convertible loan note instrument is valued according to an assessment of recovery. There is no value attributed to the conversion option, which is valued using the Black Scholes option pricing model. QureightLtd The investment into QureightLtd completed on 19March 2024. The valuation was set with reference to FY25 EV/Sales multiples and assessed against listed peers. SCA InvestmentsLtd (Gousto) The company closed 2023 strongly with EBITDA ahead of budget. EBITDA and cash ow generation improved signicantly over the course of the year. Margin growth is expected to support further increases in EBITDA and cash ow in 2024. The fair value of the investment was reduced slightly within the period we moved away from EV/Sales to EV/EBITDA as the primary valuation metric and several members of the peer group reported dicult trading, leading to a reduction in peer group multiples. ZapparLtd Trading conditions remained challenging over the period as the arrival of new headset technologies sparked increased interest in immersive experiences at the expense of augmented reality. Weakness in the US digital marketing sector provided an additional headwind and revenues and prots were below budget. The valuation of the investment was reviewed against listed peers using EV/Sales multiple, and was reduced to reect the weaker outlook. The investment was valued on a composite basis that took into account both the assessment of value on an ongoing basis as an independent company (based upon peer group EV/Sales multiples) and the potential sale of the company to Innite Reality. Despite the potential acquisition of the company the fair value assessment was reduced slightly to reect the more dicult trading environment. Rosslyn Data Technologiesplc – convertible loan note Rosslyn Data Technologies experienced challenging trading conditions in FY24 predominantly due to extended sales cycles for sizable new clients. However, on 21August 2024 the company announced a material contract win with a leading global technology company. Post period end, Rosslyn Data Technologies secured additional equity and convertible loan notefunding. As part of this fundraise, the Company committed to converting the current 2023 convertible loan noteinto equity and investing into a new 2024 convertible loan note. There was a non-material change to the fair value of the convertible loan notes with the value of the conversion option calculated using the Black-Scholes option pricing model. Strip Tinningplc – convertible loan note On 17January 2024, Strip Tinning completed a £5.1m fundraising through the issue of new shares and convertible loan notesto fund its EV growth strategy. As part of the funding round, the Company invested £2.0m through the new convertible loan notes. Whilst there have been short-term trading challenges in the automotive sector, the company has announced two record contract wins to supply Smart Glass Connectors for new EV platforms and a £43m strategic nomination for the supply of a cell contacting system for the battery pack of an autonomous vehicle being developed by one of the world’s largest corporations, based in the USA. The fair value of the convertible loan noteshave increased modestly since the investment with the value of the conversion option calculated using the Black-Scholes option pricing model. 84 8. Signicant interests At the year end the Company held 3% or more of the issued share capital of the following investments: Investment Holding % Investment Holding % Rosslyn Data Technologiesplc 20.27% Tortilla Mexican Grillplc 6.47% Engage XR Holdingsplc 16.45% Crimson Tideplc 6.39% Abingdon Healthplc 14.76% Oberon Investmentsplc 6.08% PCI-PALplc 10.58% Eden Researchplc 5.44% Equipmake Holdingsplc 9.13% Skillcast Groupplc 4.74% Itaconixplc 8.80% Intelligent Ultrasound Groupplc 4.21% Fadel Partners Inc 7.89% Zoo Digital Groupplc 3.37% XP Factoryplc 7.39% Strip Tinning Holdingsplc 3.13% One Media iP Groupplc 7.33% Blackbirdplc 3.07% 9. Debtors 2024 £000 2023 £000 Prepayments 29 40 Accrued income 949 1,430 Other debtors 69 5 1,047 1,475 10. Creditors:amounts falling due within one year 2024 £000 2023 £000 Trade Creditors 12 21 Accruals 915 885 927 906 11. Called up share capital 2024 £000 2023 £000 Allotted, called-up and fully paid:364,977,848 (2023:327,813,939) ordinary shares of 1p each. 3,650 3,278 During the year 10,657,350 (2023:7,183,338) ordinary shares were purchased through the buyback facility at a cost of £4,472,418 (2023:£3,636,841). The repurchased shares represent 3.25% (2023:2.7%) of ordinary shares in issue on 1October 2023. The acquired shares have been cancelled. During the year, the Company issued 44,485,284 ordinary shares of 1 penny (nominal value £444,853) in an oer for subscription, representing 13.57% of the opening share capital at prices ranging from 44.80p to 47.10p per share. Gross funds of £20,321,529 were received. The 3.5% premium of £711,254 payable to CGWL under the terms of the oer was reduced by £264,162, being the discount awarded to investors in the form of additional shares. A further reduction of £470 introductory commission was made resulting in fees payable to CGWL of £446,622 which were used to pay other costs associated with the prospectus and marketing. In accordance with the oer agreement, the Company was entitled to a rebate of £100,000 from CGWL reducing the net fees payable to CGWL to £346,622. On 15February 2024, 1,100,783 ordinary shares were allotted at a price of 44.58pence per share, which was calculated in accordance with the terms and conditions of the DRIS, on the basis of the last reported NAV per share as at 26January 2024, to Shareholders who elected to receive shares under the DRIS as an alternative to the nal dividend for the year ended 30September 2023. On 26July 2024, 2,235,192 ordinary shares were allotted at a price of 42.49pence per share, which was calculated in accordance with the terms and conditions of the DRIS, on the basis of the last reported NAV per share as at 5July 2024, to Shareholders who elected to receive shares under the DRIS as an alternative to the interim dividend for the year ended 30September 2024. Further details of the Company’s capital structure can be seen in note1. 85 Income entitlement The revenue earnings of the Company are available for distribution to holders of ordinary shares by way of interim, nal and special dividends (if any) as may from time to time be declared by the Directors. Capital entitlement The capital reserve realised and special reserve of the Company are available for distribution to holders of ordinary shares by way of interim, nal and special dividends (if any) as may from time to time be declared by the Directors. Voting entitlement Each ordinary Shareholder is entitled to one vote on a show of hands and on a poll to one vote for each ordinary share held. Notices of meetings and proxy forms set out the deadlines for valid exercise of voting rights and other than with regard to Directors not being permitted to vote on matters upon which they have an interest, there are no restrictions on the voting rights of ordinary Shareholders. Transfers There are no restrictions on transfers except dealings by Directors, persons discharging managerial responsibilities and their persons closely associated which may constitute insider dealing or is prohibited by the rules of the FCA. The Company is not aware of any agreements with or between Shareholders which restrict the transfer of ordinary shares, or which would take eect or alter or terminate in the event of a change of control of the Company. 12. Net asset value per ordinary share 30September 2024 30September 2023 Net assets (£’000) 148,009 151,920 Shares in issue 364,977,848 327,813,939 NAV per share (p) 40.55 46.34 There are no potentially dilutive capital instruments in issue and as such, the basic and diluted NAV per share are identical. 13. Contingencies, guarantees and nancial commitments There were no contingencies, guarantees or nancial commitments of the Company at the year end (2023:nil). 14. Related party transactions and conicts of interest The remuneration of the Directors, who are key management personnel of the Company, is disclosed in the Directors’ Remuneration Report on page 41 and in note4 on page 80. Transactions with the Investment Manager As the Company’s Investment Manager, CGAM is a related party to the Company for the purposes of the UKListing Rules. As CGAM and CGWL are part of the same CGWL group, CGWL also falls into the denition of related party. Oliver Bedford, a non-executive director of the Company is also an employee of the Investment Manager which received fees of £29,500 for the year ended 30September 2024 in respect of his position on the Board (2023:£28,000). Of these fees £7,375 was still owed at the year end. Oliver Bedford’s non-executive directorship fees will increase to £30,500 per annum, with eect from 1October 2024. CGWL acted as Administrator and Custodian for the year ended 30September 2024. On 7September 2023, the Company entered into an amended administration agreement with CGWL. Under the terms of the agreement the fees to be paid to CGWL were increased to £250,000 per annum (previously £195,000) with eect from 1October 2023. With eect from 1October 2024, the administration agreement between the Company and CGWL was novated to CGAM. Under the terms of the novation agreement, the administration fees paid by the Company were unchanged at £250,000 (plus VAT). Notwithstanding the novation, CGWL will continue to receive a fee of £30,000 per annum in relation to its appointment as the Custodian. Any future initial or trail commissions paid to Financial 86 Intermediaries will be paid by CGAM. For the year ended 30September 2024, CGWL received fees for the support functions as follows: 30September 2024 30September 2023 Custody 30,000 30,000 Administration 250,000 195,000 Total 280,000 225,000 Still owed at the year end 69,585 55,765 Under an oer agreement dated 7September 2023, CGWL was appointed by the Company to administer an oer for subscription in the 2023/24 tax year and acted as receiving agent in relation to the oer. Under the terms of the agreement CGWL received a fee of 3.5per cent. of the gross proceeds of the oer for providing these services. The Administrator agreed to discharge commissions payable to nancial advisers in respect of accepted applications for oer shares submitted by them, including any trail commission. The Administrator also agreed to discharge and/or reimburse all costs and expenses of and incidental to the oer and the preparation of the prospectus, including without limitation to the generality of the foregoing, FCA vetting fees in relation to the prospectus, sponsor and legal fees, expenses of the Company and CGWL, the Company’s tax adviser’s fees and expenses, registrar’s fees, costs of printing, postage, advertising, publishing and circulating the prospectus and marketing the oer, including any introductory commission and discounts to potential investors. However, the Administrator was not responsible for the payment of listing fees associated with the admission of the ordinary shares to the premium segment of the Ocial List and to trading on the main market of the London Stock Exchange. During the year, the Company issued 44,485,284 ordinary shares of 1 penny (nominal value £444,853) in an oer for subscription, representing 13.57% of the opening share capital at prices ranging from 44.80p to 47.10p per share. Gross funds of £20,321,529 were received. The 3.5% premium of £711,254 payable to CGWL under the terms of the oer was reduced by £264,162, being the discount awarded to investors in the form of additional shares. A further reduction of £470 introductory commission was made resulting in fees payable to CGWL of £446,622 which were then used to pay other costs associated with the prospectus and marketing. In accordance with the oer agreement, the Company was entitled to a rebate of £100,000 from CGWL reducing the net fees payable to CGWL to £346,622. CGAM is appointed as Investment Manager to the Company and receives an investment management fee of 1.7% per annum. Investment management fees for the year are £2,565,844 (2023:£2,797,377) as detailed in note3. Of these fees £615,231 (2023:£645,397) were still owed at the year end. As the Investment Manager to the Company and the investment adviser to the IFSL Marlborough Special Situations Fund and the IFSL Marlborough UK Micro-Cap Fund (in which the Company may and does invest), the Investment Manager makes an adjustment as necessary to its investment management fee to ensure the Company is not charged twice for their services. Upon completion of an investment, the Investment Manager is permitted under the IMA to charge private investee companies a fee equal to 1.5per cent. of the investment amount. This fee is subject to a cap of £40,000 per investment and is payable directly from the investee company to the Investment Manager. The Investment Manager may also recover external due diligence and transaction services costs directly from private investee companies. Fees of £37,502 (2023:nil) were charged to investee companies in the year under this agreement. Total commission of £31,925 was paid to CGWL in the year for broker services (2023:£63,318). The Investment Manager has agreed to indemnify the Company and keep indemnied the Company in respect of the amount by which the annual running costs of the Company exceed 3.5per cent. of the net assets of the Company, such costs shall exclude any VAT payable thereon and any payments to nancial intermediaries, the payment of which is the responsibility of the Company. No fees were waived by the Investment Manager in the nancial year under the indemnity. The Company also held £8,845,455 in the client account held at CGWL at 30September 2024 (2023:£8,119,302). 87 15. Financial instruments Risk management policies and procedures The investment objectives of the Company are to generate capital gains and income from its portfolio and to make distributions from capital or income to Shareholders whilst maintaining its status as a Venture Capital Trust. The Company intends to achieve its investment objectives by making Qualifying Investments in companies listed on AIM, private companies and companies listed on the AQSE Growth Market, as well as Non-Qualifying Investments as allowed by the VCT Rules. At least 80% of the Company’s funds have been invested in qualifying holdings during the year under the HMRC investment test denition. The balance of the Company’s funds were invested in liquid assets (such as non- qualifying equities, xed income securities and bank deposits). The Company is managed as a VCT in order that Shareholders may benet from the tax relief available. This strategy exposes the Company to certain risks, which are summarised below. The structure in place to manage these risks is set out in the Corporate Governance Report on pages 50 to 55 of the Annual Report. A detailed review of the investment portfolio is contained in the Chair’s Statement and Investment Manager’s Report on pages 4 to 9 and 28 to 31 respectively. Classication of nancial instruments The investments at year end comprise two types of nancial instruments. The basis of valuation is set out below: ● Equities – fair value through the prot and loss account. ● Fixed income securities – fair value through the prot and loss account Other nancial assets comprise cash at bank and in hand of £4,766,381 (2023: £11,111,865), funds held with Custodian of £8,845,455 (2023: £8,119,302), accrued income and debtors of £1,017,944 (2023:£1,434,688), which is classied as ‘loans and receivables measured at amortised cost’. Financial liabilities consist of trade creditors and accruals of £926,784 (2023:£905,897) which are classied as ‘nancial liabilities measured at amortised cost’. Market risk Market price risk arises from any uctuations in the value of investments held by the Company. Adherence to investment policies mitigates the risk of excessive exposure to any particular type of security or issuer. In particular, other than bank deposits, no individual investment shall exceed 10per cent. of the Company’s net assets at the time of investment. However, many of the investments are in small companies traded on the AIM market which by virtue of their size carry more risk than investments in larger companies listed on the main market of the London Stock Exchange. Market risk is monitored by the Board on a quarterly basis and on an ongoing basis, through the Investment Manager. The following table summarises exposure to price risk by asset class at year end date: Change in Fair Value of Investments Asset class 30% market increase 2024 £’000 30% market decrease 2024 £’000 Aggregate value 2024 £’000 Aggregate value 2023 £’000 AIM Qualifying Investments (1) 13,234 -12,993 71,541 80,673 Unquoted Qualifying Investments (2) 1,450 -2,389 11,265 8,453 Quoted Non-Qualifying Investments 3,613 -3,613 11,959 17,366 Authorised unit trusts 2,125 -2,125 19,768 8,268 Quoted Non-Qualifying xed income securities 338 -338 19,087 17,360 Vaneck Gold Miners UCITS ETF 229 -229 656 – 20,989 -21,687 134,277 132,120 (1) Includes variances in the value of CLN issued by Rosslyn Data Technologiesplc and Strip Tinningplc. (2) Including variances in the value of CLNs issued by KidlyLtd. If market prices had been 30% higher or lower while all other variables remained unchanged the return attributable to ordinary Shareholders for the year ended 30September 2024 would have increased by £20,988,954 (2023:£22,164,436) or decreased by £21,686,392 (2023:£22,671,676) respectively. 88 The assessment of market risk is based on the Company’s equity and xed income portfolio including private company investments, as held at the year end. The assessment uses the AIM All-Share Index and the FTSE250 Index as proxies for the AIM Qualifying Investments and quoted Non-Qualifying Investments and illustrates, based on historical price movements and their relationship to movements in the FTSE100 index, their potential change in value in relation to change in value of the reference index. The review has also examined the potential impact of a 30% move in the market on the convertible loan note investments held by the Company, whose values will vary according to the price of the underlying security into which the loan noteinstrument has the option to convert. Currency risk The Company is not directly exposed to currency risk and does not invest in currencies other than sterling. There are indirect exposures through movements in the foreign exchange market as a consequence of investments held in companies who report in foreign currencies, the impact of such exposure would be insignicant. Interest rate risk The Company is fully funded through equity and has no debt; therefore, interest rate risk is not considered a material risk. The Company’s nancial assets and liabilities are denominated in sterling as follows: 30September 2024 Fixed Rate £000 Variable Rate £000 Non-Interest Bearing £000 Total £000 Investments 22,866 – 111,411 134,277 Cash at bank and in hand – 4,766 – 4,766 Funds held with Custodian – 8,846 – 8,846 Other current assets (net) 823 – 224 (1) 1,047 Other current liabilities (net) – – (927) (927) Net assets 23,689 13,612 110,708 148,009 30September 2023 Fixed Rate £000 Variable Rate £000 Non-Interest Bearing £000 Total £000 Investments 20,860 – 111,260 132,120 Cash at bank and in hand – 11,112 – 11,112 Funds held with Custodian – 8,119 – 8,119 Other current assets (net) 1,293 – 182 (2) 1,475 Other current liabilities (net) – – (906) (906) Net assets 22,153 19,231 110,536 151,920 (1) Includes prepayments of £29k which is not considered a nancial asset. (2) Includes prepayments of £40k which is not considered a nancial asset. Interest rate risk exposure relates to cash and cash equivalents (bank deposits) where interest income is primarily linked to bank base rates. Interest rate risk exposure on debt instruments is reected in the market risk and since these securities are valued at fair value, no additional disclosure is made in this respect. Movements in interest rates on cash and cash equivalents are not considered a material risk. Liquidity risk Liquidity risk is the risk that the Company is unable to meet obligations as they fall due. The Company has no debt and maintains sucient investments in cash or cash equivalents, or readily realisable securities to pay trade creditors and accrued expenses (£926,784 as at 30September 2024). Liquidity risk is not considered material. As at 30September 2024 the Company held £13,611,835 in cash or cash equivalents. Credit risk Credit risk relates to the risk of default by a counterparty. The Company may have credit risk through investments made in unsecured loan stock issued by Qualifying Companies or through Non-Qualifying Investments in xed income securities and exchange traded funds. No assets are past the due date for payment. 89 An investment will be impaired if the investee company is loss making and does not have sucient funds available to transition into prot and in the opinion of the Investment Manager may fail to secure sucient equity or debt funding to transition into prot, or if the borrower defaults or is expected to default on payment of accrued interest or repayment of the principal sum. The maximum credit risk exposure equates to the carrying value of assets at the balance sheet date: 2024 £000 2023 £000 Fixed income securities; Qualifying Investments (convertible loan notes) 3,778 3,500 Non-qualifying investments (investment grade corporate bonds) 19,088 17,361 Non-qualifying investments (UK gilt exchange traded fund) – 1,978 Total xed income securities 22,866 22,839 (1) Cash at bank and in hand 4,766 11,112 Funds held at Custodian 8,846 8,119 Other assets 1,047 1,475 37,525 43,545 (1) Includes UK gilt exchange traded fund as underlying investments are xed income securities. Cash held with Custodian comprises bank deposits held through CGWL (trading as CGWM) of £8.8million (2023:£8.1million) . Funds are held with banks that are authorised and regulated to carry on banking or deposit- taking business. All these meet the requirements of the UK’s FCA CASS rules. Through its treasury function, CGWM uses a tiered level approach to counterparty selection to reect dierent maturities of cash held on deposit. Funds held on deposit through CGWL, are pooled with cash deposits from other clients of CGWL and diversied across a specied panel of banks. CGWM’s treasury function reviews panel members ahead of selection and prioritises the safety of client assets with the panel selection process placing an emphasis on quality and security. Participating banks must be rated as investment grade by at least two international credit rating agencies. CGWM will also consider the expertise and market reputation of the bank; review a bank’s nancial statements and consider its capital and deposit base; consider the geographical location of the parent; monitor a bank’s credit default swaps; and ask the bank to complete a due diligence questionnaire. The CGWM treasury function maintains regular contact with panel banks, typically meeting them every 6months or so. There are no withdrawal restrictions on the Company’s cash held with CGWL. Fair value of nancial assets and nancial liabilities Equity investments are held at fair value. No investments are held for trading purposes only. Capital management policies and procedures The current policy is to fund investments through equity. No future change to this policy is envisaged. As a public limited company, the Company is required to hold a minimum £50,000 share capital. The Company’s capital is summarised in notes1 and 11 to these accounts. The Company has no debt and is fully funded by equity. 90 16. Dividends 2024 Ord £000 2023 Ord £000 Paid per share: Special capital dividend of 2.00pence for the year ended 30September 2023 – 6,216 Paid per share: Final capital dividend of 2.00pence for year ended 30September 2022 – 6,216 Paid per share: Interim capital dividend of 1.00 penny for year ended 30September 2023 – 3,298 Paid per share: Final capital dividend of 1.50pence for the year ended 30September 2023 5,149 – Paid per share: Interim capital dividend of 1 penny for year ended 30September 2024 3,649 – Paid per share: Special capital dividend of 1.50pence for year ended 30September 2024 5,474 – Dividends unclaimed (4) (2) (13) (2) 14,268 (1) 15,717 (3) Proposed per share: Final capital dividend of 1.25pence for the year ended 30September 2024 4,591 – Proposed per share: Special capital dividend of 1.50pence for the year ended 30September 2025 5,510 – Paid per share: Final capital dividend of 1.50pence for the year ended 30September 2023 – 5,151 (1) The dierence between total dividends paid for the period ending 30September 2024 and the cash ow statement is £1,436,000 which reects the amount of dividends reinvested under the DRIS of £1,440,000 less the £4,000 due to the Company for unclaimed dividends for a period over 12years. (2) Unclaimed dividends for a period of 12years due/reverted to the Company. (3) The dierence between total dividends paid for the period ending 30September 2023 and the cash ow statement is £1,300,000 which reects the amount of dividends reinvested under the DRIS. 17. Post balance sheet events Share buybacks As at 17December2024, 3,559,262 ordinary shares have been purchased at an average price of 38.24pence per share and a total cost of £1,361,156. Oer for subscription and shares issued Under an oer agreement dated 9October 2024, CGAM was appointed by the Company to administer a new oer for subscription for the 2024/25 tax year and act as receiving agent in relation to the oer. Under the terms of the agreement CGAM will receive a fee of 3.5per cent. of the gross proceeds of the oer for providing these services. The Administrator has agreed to discharge commissions payable to nancial advisers in respect of accepted applications for Oer Shares submitted by them, including any trail commission. The Administrator has also agreed to discharge and/or reimburse all costs and expenses of and incidental to the oer and the preparation of the prospectus, including without limitation to the generality of the foregoing, FCA vetting fees in relation to the prospectus, sponsor and legal fees, expenses of the Company and CGAM, the Company’s tax adviser’s fees and expenses, registrar’s fees, costs of printing, postage, advertising, publishing and circulating the prospectus and marketing the oer, including any introductory commission and discounts to potential investors. However, the Administrator will not be responsible for the payment of listing fees associated with the admission of the Oer Shares to the premium segment of the Ocial List and to trading on the main market of the London Stock Exchange. If following the nal admission under the oer, the aggregate fee that has been paid to CGAM exceeds the costs and expenses referred to above by more than £25,000, then CGAM will rebate any surplus to the Company subject to a maximum rebate of £100,000. As at 17December2024, 5,907,854Oer Shares have been issued through the oer for subscription raising gross proceeds of £2,411,037. 91 New investments The Company has made the following investments since the period end: Amount invested £000 Investment into existing company Qualifying Investments Feedback plc 750 No Ixico plc 710 No Rosslyn Data Technologiesplc 10% unsecured loan notes2029 400 Yes Non-Qualifying Investments Disposals The Company has made the following full disposals since the period end: Proceeds £000 Qualifying Investments Gnity plc 5 Surface Transforms plc 24 Non-Qualifying Investments Bodycote plc 1,248 Corporate Actions On 25 October 2024, the Company invested a further £400,000 into a new 2029 convertible loan note instrument whilst also converting £300,000 (plus accrued interest) of the 2028 convertible loan note instrument into new ordinary shares in Rosslyn Data Technologies plc. On 11 November 2024, Aquis Exchange plc announced a recommended cash oer by SIX Exchange Group AG for 727 pence per share in cash. The acquisition remains subject to approval by a majority of shareholders. On 4 December 2024, Learning Technologies Group plc announced a recommended cash oer by General Atlantic (through Leopard UK Bidco Ltd) for 100 pence per share in cash. The acquisition remains subject to approval by a majority of shareholders. On 3 December 2024, Zappar Ltd announced that its acquisition by Innite Reality had not completed. 92 Alternative performance measures Alternative performance measures An APM is a nancial measure of the Company’s historic or future nancial performance, nancial position or cash ows which is not dened or specied in the applicable nancial reporting framework. The Directors assess the Company’s performance against a range of criteria which are viewed as particularly relevant for a VCT. The denition of each APM is in the glossary of terms on pages 94 to 97. Where the calculation of the APM is not detailed within the nancial statements, an explanation of the methodology employed is below: NAV total return 30September 2024 30September 2023 Opening NAV per share A 46.34p 60.19p Special dividend paid B 1.50p 2.00p Final dividend paid C 1.50p 2.00p Interim dividend paid D 1.00p 1.00p Closing NAV per share E 40.55p 46.34p NAV total return ((B+C+D+E-A)/A)100 -3.86% -14.70% NAV total return (dividends reinvested) 30September 2024 % Return Opening NAV per share (30September 2023) A 46.34p Closing NAV per share (30September 2024) 40.55p Final dividend for year paid February2024 1.50p Interim dividend July2024 1.00p Special dividend July2024 1.50p Total dividend payments 4.00p Closing NAV per share plus dividends paid 44.55p -3.86% (-14.70% 30September 2023) In year performance of reinvested dividends -0.16p NAV total return (dividends reinvested) ((B-A)/A)100 B 44.39p -4.21% (-15.93% 30September 2023) Share price total return 30September 2024 30September 2023 Opening share price A 43.00p 62.75p Special dividend paid B 1.50p 2.00p Final dividend paid C 1.50p 2.00p Interim dividend paid D 1.00p 1.00p Closing share price E 39.00p 43.00p Share price total returns ((B+C+D+E-A)/A)100 0.00% -23.51% 93 Share price total return (dividends reinvested) 30September 2024 % Return Opening share price (30September 2023) A 43.00p Closing share price (30September 2024) 39.00p Final dividend for year paid February2024 1.50p Interim dividend July2024 1.00p Special dividend July2024 1.50p Total dividend payments 4.00p Closing share price plus dividends paid 43.00p 0.00% (-23.51% 30September 2023) In year performance of reinvested dividends -0.08p Share price total return (dividends reinvested) ((B-A)/A)100 B 42.92p -0.18% (-24.80% 30September 2023) Ongoing charges ratio The OCR has been calculated using the AIC’s “Ongoing Charges” methodology. 30September 2024 £000 30September 2023 £000 Investment management fee 2,565 2,797 Other expenses 1078 (1) 1,035 VCT proportion of IFSL Marlborough funds expenses 153 65 Ongoing charges A 3,796 3,897 Average net assets B 156,509 174,334 Ongoing charges ratio (A/B)100 2.43% 2.24% (1) Other expenses exclude London Stock Exchange fees of £49,110 for admission of shares under the oer for subscription and prior year recognised loan stock interest and dividends not receivable of £368,495 expensed through the income statement as the Board do not consider these costs to be ongoing costs to the fund. As per the AIC’s “Ongoing Charges” methodology, transaction costs are also excluded. Share price discount 30September 2024 30September 2023 Share price A 39.00p 43.00p Net asset value per share B 40.55p 46.34p Discount ((A/B)-1)100 -3.82% -7.21% The 1-year average discount of -5.46% is calculated by taking the average of the share price discount at each month end between 1October 2023 and 30September 2024. The 5-year average discount of -5.79% is calculated by taking the average of the share price discount at each month end between 1October 2019 and 30September 2024. 94 Glossary of terms Administrator Canaccord Genuity Wealth Limited (“CGWL”) until 30September 2024 and CGAM from 1October 2024. AGM The Company’s Annual General Meeting to be held at 12:30pm on 6February 2025 at 88 Wood Street, London,EC2V7QR. AIC The Association of Investment Companies. AIC Code The AIC Code of Corporate Governance. AIFM Alternative Investment Fund Manager. AIM The Alternative Investment Market operated by the London Stock Exchange. Annual Report This annual report of the Company for the nancial year 1 October 2023 to 30 September 2024. Articles The articles of association of the Company from time to time. AQSE Growth Market The Growth Market of the Aquis Stock Exchange, a recognised investment exchange for growth companies operated by Aquis Exchangeplc. Auditor The independent auditor of the Company, BDO LLP. Board The board of directors of the Company, from time to time. CGWM In the UK& Europe, Canaccord Genuity Wealth Management (“CGWM”) is a trading name of CGWL, CG Wealth Planning Limited (“CGWPL”), CGAM, Intelligent CapitalLtd (“ICL”) and Canaccord Genuity Wealth (International) Limited (“CGWIL”), which are all subsidiaries of Canaccord Genuity GroupInc. In Scotland, Adam& Company is a trading name of Canaccord Genuity Wealth Limited (“CGWL”), CG Wealth Planning Limited (“CGWPL”) and Intelligent Capital Limited (“ICL”). Company Hargreave Hale AIM VCTplc. Company Secretary JTC (UK) Limited. Custodian Canaccord Genuity Wealth Limited (“CGWL”). Director A director of the Company. DRIS The dividend reinvestment scheme operated by the Company. Earnings per share total return Total prot/(loss) for the reporting period divided by the weighted average number of shares in issue. 95 Eligible Shares Shares in Qualifying Companies which do not carry preferential rights to dividends and/or assets on a winding-up or redemption. FCA The Financial Conduct Authority. FTSE AIM All-Share Index Total Return Measures the total return of the underlying FTSE AIM All-Share index combining both capital performance and income. Calculated on a dividends re-invested basis. FTSE All-Share Index Total Return Measures the total return of the underlying FTSE All-Share index combining both capital performance and income. Calculated on a dividends re-invested basis. IMA Investment management agreement between the Company and CGAM dated 7September 2023. Investment Manager Canaccord Genuity Asset Management Limited (“CGAM”). IPEV Guidelines International Private Equity and Venture Capital Valuation guidelines. IPO The process by which a company obtains a rst listing or quotation for securities on an investment exchange and oers securities to the public for the rst time. ISAs (UK) International Standards on Auditing (UK). ITA Income Tax Act2007, as amended. KID The Company’s Key Information Document. Knowledge Intensive Companies A company satisfying the conditions in Section331(A) of Part6 ITA. KPIs Key performance indicators. MSPEC The Management and Service Provider Engagement Committee of the Board. Non-Qualifying Company or Non-Qualifying Investment An investment made by the Company which is not a Qualifying Investment and is permitted under the VCT Rules. Oer Shares New ordinary shares of 1 penny each in the capital of the Company issued or to be issued pursuant to the Oer for Subscription of Ordinary Shares in Hargreave Hale AIM VCTplc launched on 9October 2024. PRIIPs (Retained EU legislation) Regulation (EU) No 1286/2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs). Qualifying Company or Qualifying Investment An investment made by a venture capital trust in a trading company which comprises a qualifying holding under Chapter4 of Part6 ITA. 96 Qualifying Trade A trade complying with the requirements of section 300 ITA. Receiving Agent Canaccord Genuity Asset Management Limited (or “CGAM”). Registrar Equiniti Limited. SaaS Software-as-a-Service. Section 172 Section 172 of the Companies Act 2006. Shareholders Holders of ordinary shares of 1pence each in the capital of the Company, from time to time. SORP Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts (2022). State aid State aid received by a company as dened in Section280B (4) of ITA. UK GAAP United Kingdom Generally Accepted Accounting Practice and applicable law. VCT or Venture Capital Trust Venture capital trust as dened in section 259 ITA. VC TA The VCT Association. VCT Rules All legislation, rules and regulations that apply to VCTs from time to time, including the ITA. Alternative performance measures (or “APMs”) An alternative performance measure is a nancial measure of the Company’s historic or future nancial performance, nancial position or cash ows which is not dened or specied in the applicable nancial reporting framework. The Company uses the following alternative performance measures: Net asset value (“NAV”) The value of the Company’s assets, less its liabilities. NAV per share The net asset value divided by the total number of shares in issue at the year end. NAV total return The NAV total return shows how the NAV per share has performed over a period of time in percentage terms taking into account both capital returns and dividends paid. We calculate this by adding the dividends paid in the period to the closing NAV per share and measuring the percentage change relative to the opening NAV per share. NAV total return since inception The sum of the published NAV per share plus all dividends paid per share over the lifetime of the Company. NAV total return (dividends reinvested) The NAV total return (dividends reinvested) shows the percentage movement in the NAV Total Return per share 97 over time taking into account both capital returns and dividends paid assuming dividends are re-invested into new shares. To be consistent with industry standard practice, the allotment price of the new shares issued in place of the cash dividend is assumed to be the prevailing ex-dividend NAV per share on the day the shares go ex-dividend. This diers from the methodology followed by the registrar when issuing shares under the Company’s dividend re-investments scheme. Ongoing charges ratio (or “OCR”) The ongoing costs of managing and operating the Company divided by its average net assets. Calculated in accordance with AIC guidance, this gure excludes ‘non-recurring costs’. Share price discount As stock markets and share prices vary, a VCT’s share price is rarely the same as its NAV. When the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, this situation is called a premium. Share price total return The share price total return shows performance over a period of time in percentage terms by reference to the mid-price of the Company’s shares taking into account dividends paid and payable having past the ex-dividend date in the period and any return of capital if applicable. We calculate this by adding the dividends paid and payable having past the ex-dividend date in the period to the closing mid-price and measuring the percentage change relative to the opening mid-price. Share price total return (dividends reinvested) The performance of the Company’s share price on a total return basis assuming dividends are reinvested in new shares at the mid-price of the shares on the ex-dividend date. 98 Shareholder information The Company’s ordinary shares (Code:HHV) are listed on the London Stock Exchange. Shareholders can visit the London Stock Exchange website, www.londonstockexchange.com, for the latest news and share prices of the Company. Further information for the Company can be found on its website at www.hargreaveaimvcts.co.uk. Net asset value per share The Company’s NAV per share as at 6December2024 was 40.29pence per share. The Company publishes its unaudited NAV per share on a weekly basis. Dividends Subject to approval at the forthcoming AGM on 6February 2025, the Board has proposed the payment of a nal dividend of 1.25pence in respect of the nancial year ending 30September 2024. A special dividend of 1.50pence per share has also been approved by the Board. Shareholders who wish to have future dividends paid directly into their bank account rather than sent by cheque to their registered address can complete a mandate for this purpose. Mandates can be obtained by contacting the Registrar. Alternatively, bank details can be updated through the Registrar’s Shareview system. Dividend reinvestment scheme The Company oers a DRIS scheme allowing Shareholders to elect to receive all of their dividends from the Company in the form of new ordinary shares. Shareholders may elect to join the DRIS at any time by completing a DRIS mandate form. Mandates can be obtained by contacting the Registrar or by visiting the Company’s website at www.hargreaveaimvcts.co.uk. As new ordinary shares will be issued, Shareholders are also able to claim tax relief on the shares, including 30per cent. income tax relief on their investment (subject to the terms of the VCT Rulesand the personal circumstances of the Shareholder). To exit the DRIS, a revoke form must be completed and returned to the Registrar. Revoke forms can be obtained by contacting the Registrar or by visiting the Company’s website at www.hargreaveaimvcts.co.uk. Please notethat completing a bank mandate form or adding bank details to your account through Shareview in isolation will not remove you from the DRIS scheme. Selling your shares The Company aims to improve the liquidity in its ordinary shares and to maintain a discount of approximately 5% to the last published NAV per share (as measured against the mid-price of the shares) by making secondary market purchases. This policy is non-binding and at the discretion of the Board. The eective operation of the policy is dependent on a range of factors which may prevent the Company from achieving its objectives. As a result there is no guarantee you will be able to sell your shares or of the discount to NAV per share at which they will be sold. VCT share disposals are exempt of capital gains tax when the disposal is made at arms’ length, which means a Shareholder should sell their shares to a market maker through a stockbroker or another share dealing service. In practice, this means that the price achieved in a sale is likely to be below the mid-price of the Company’s shares and, therefore, the discount is likely to be more than 5% to the last published NAV per share. VCT share disposals settle two business days post trade if the shares are already dematerialised or placed into CREST ahead of the trade, or ten days post trade if the stock is held in certicated form. Investors who sell their VCT shares before the fth anniversary of the share issue are likely to have to repay their income tax relief. CGWM can facilitate the sale of the Company’s shares and is able to act for Shareholders who wish to sell their shares. However, you are free to nominate any stockbroker or share dealing service to act for you. If you would like further information from CGAM please contact the VCT administration team at aimvct@ canaccord.com or call 01253 376622. Please notethat CGAM will need to be in possession of the share certicate and a completed CREST transfer form before executing the sale. If you have lost your share certicate, then you can request a replacement certicate from the Registrar. The Registrar will send out an indemnity form, which you will need to sign. The indemnity form will also need to be countersigned by a UK insurance company or bank that is a member of the Association of British Insurers. Since indemnication is a form of insurance, the indemnifying body will ask for a payment to reect their risk. Fees will reect the value of the potential liability. Shareholder enquiries: For general Shareholder enquiries, please contact the administration team at CGAM on 01253 376622 or by 99 e-mail to [email protected]. For enquiries concerning the performance of the Company, please contact the Investment Manager on02075234837 or by e-mail to [email protected]. Electronic copies of this report and other published information can be found on the Company’s website at www. hargreaveaimvcts.co.uk. Change of address To notify the Company of a change of address please contact the Registrar at the address on page100. Alternatively, address details can be updated through the Registrar’s Shareview system. 100 Company information Directors David Brock, Chair Oliver Bedford Angela Henderson Megan McCracken Busola Sodeinde Justin Ward Investment Manager and Administrator Canaccord Genuity Asset Management Limited 88 Wood Street London EC2V 7QR Custodian Canaccord Genuity Wealth Limited c/o Talisman House Boardmans Way Blackpool FY4 5FY Company Secretary JTC (UK) Limited The Scalpel 18th Floor 52 Lime Street London EC3M 7AF VCT Status Adviser Philip Hare& AssociatesLLP 6 Snow Hill London EC1A 2AY Registrars Equiniti Limited Aspect House Spencer Road Lancing West Sussex BN99 6DA Auditors BDOLLP 55 Baker Street London W1U 7EU Brokers Singer Capital Markets Securities Limited One Bartholomew Lane London EC2N 2AX Company Registration Number 05206425 in England and Wales Registered oce Talisman House Boardmans Way Blackpool FY4 5FY Solicitors Howard KennedyLLP 1 London Bridge London SE1 9BG 101 Notice of Annual General Meeting NOTICE IS HEREBY GIVEN that the ANNUAL GENERAL MEETING of Hargreave Hale AIM VCTplc (the“Company”) (the “AGM”) will be held at 88 Wood Street, LondonEC2V7QR on Thursday6February 2025 at 12.30pm for the purposes of considering and if thought t, passing the following resolutions, of which resolutions 1 to 12 (inclusive) will be proposed as ordinary resolutions and resolutions 13 and 14 as special resolutions: Ordinary Resolutions 1. To receive and adopt the reports of the directors and auditor and the audited nancial statements for the year ended 30September 2024. 2. To receive and approve the directors’ remuneration report for the year ended 30September 2024. 3. To approve the directors’ remuneration policy, the full text of which is contained in the directors’ remuneration report for the year ended 30September 2024. 4. To reappoint BDOLLP as auditors to the Company and to authorise the directors of the Company to determine their remuneration. 5. To re-elect David Brock as a director of the Company. 6. To re-elect Oliver Bedford as a director of the Company. 7. To re-elect Justin Ward as a director of the Company. 8. To re-elect Megan McCracken as a director of the Company. 9. To re-elect Busola Sodeinde as a director of the Company. 10. To approve a nal dividend of 1.25pence per ordinary share in respect of the year ended 30September 2024. 11. To authorise the directors of the Company (the “Directors”), in addition to any existing power and authority granted to the Company pursuant to Article29 of the Company’s articles of association (the “Articles”), to exercise the power conferred on them by Article29 of the Articles to oer holders of ordinary shares in the capital of the Company the right to elect to receive ordinary shares of 1 penny each in the capital of the Company (“Ordinary Shares”) credited as fully paid, instead of cash, in respect of the whole (or some part to be determined by the Directors) of dividends declared, made or paid during the period starting with the date of this resolution and ending at the conclusion of the next annual general meeting of the Company following the date of this resolution and to authorise the Directors to do all acts and things required or permitted to be done in accordance with the Articles in connection therewith. 12. THAT, in addition to all existing authorities, the Directors be and are hereby generally and unconditionally authorised in accordance with section 551 of the Companies Act2006 (the “Act”) to exercise all the powers of the Company to allot Ordinary Shares and to grant rights to subscribe for, or to convert any security into, Ordinary Shares (“Rights”), up to an aggregate nominal value of £367,326 (being equal to approximately 10per cent. of the Company’s issued share capital (excluding treasury shares) as at 17December2024 generally from time to time or pursuant to Shareholders’ right to elect to participate in the dividend reinvestment scheme operated by the Company in accordance with Article29 of the Articles on such terms as the Directors may determine, such authority to expire on the earlier of the conclusion of the Annual General Meeting of the Company to be held in 2026 and the expiry of 15months from the passing of this resolution (unless previously renewed, varied or revoked by the Company in a general meeting), but so that this authority shall allow the Company to make, before the expiry of this authority oers or agreements which would or might require Shares to be allotted or Rights to be granted after such expiry and the Directors shall be entitled to allot Shares or grant Rights pursuant to any such oers or agreements as if the power conferred by this resolution had not expired. Special Resolutions 13. THAT, in addition to all existing authorities and subject to the passing of Resolution12 set out in this notice of meeting, the Directors be and are hereby empowered, pursuant to sections 570 and 573 of the Act to allot equity securities (within the meaning of section 560 of the Act) for cash pursuant to the authority given pursuant to Resolution12 set out in the notice of this meeting, or by way of a sale of treasury shares, as if section 561(1) of the Act did not apply to any such allotment or sale, provided that this power: (i) shall be limited to the allotment of equity securities and the sale of treasury shares for cash up to an aggregate nominal amount of £183,663 (representing approximately 5per cent. of the issued share capital of the Company (excluding treasury shares) as at 17December2024) pursuant to the dividend reinvestment scheme operated by the Company; 102 (ii) shall be limited to the allotment of equity securities and the sale of treasury shares for cash (otherwise than pursuant to sub-paragraph(i) above), up to an aggregate nominal amount of £183,663 (representing approximately 5per cent. of the issued share capital of the Company (excluding treasury shares) as at 17December2024); and (iii) expires on the earlier of the conclusion of the Annual General Meeting of the Company to be held in 2026 and the expiry of 15months from the passing of this resolution (unless previously renewed, varied or revoked by the Company in a general meeting), save that the Company may before such expiry make an oer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of such an oer or agreement as if the power conferred by this resolution had not expired. 14. THAT, in substitution for any existing authority but without prejudice to the exercise of any such authority prior to the date hereof, the Company be generally and unconditionally authorised, in accordance with section 701 of the Act, to make one or more market purchases (within the meaning of section 693(4) of the Act) of its Ordinary Shares on such terms and in such manner as the directors may determine (either for cancellation or for retention as treasury shares for future re-issue, resale, transfer or cancellation) provided that: a) the maximum aggregate number of Ordinary Shares hereby authorised to be purchased is 55,062,233Ordinary Shares or, if less, the number representing approximately 14.99per cent. of the issued share capital of the Company as at the date of the passing of this resolution; b) the maximum price (excluding expenses) which may be paid for any Ordinary Share purchased pursuant to this authority shall not be more than the higher of: (i) 105per cent. of the average of the middle market quotations of an Ordinary Share in the Company, as derived from the London Stock Exchange Daily Ocial List, for the ve business days immediately preceding the date of purchase; and (ii) the higher price of the last independent trade of an Ordinary Share and the highest current independent bid for such a share on the London Stock Exchangeplc; c) the minimum price (excluding expenses) which may be paid for an Ordinary Share shall be 1 penny (the nominal value thereof); and d) unless previously varied, revoked or renewed by the Company in general meeting, the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2026 or on the expiry of 15months following the passing of this resolution, whichever is the earlier, save that the Company may, prior to the expiry of such authority, enter into a contract or contracts to purchase ordinary shares under such authority which will or might be completed or executed wholly or partly after the expiration of such authority and may make a purchase of Ordinary Shares pursuant to any such contract or contracts as if the power conferred by this resolution had not expired. By order of the Board of Directors. JTC (UK) Limited Company Secretary Registered Oce: The Scalpel 18th Floor 52 Lime Street London EC3M 7AF 17December2024 A member entitled to attend and vote at this meeting may appoint a proxy or proxies to attend and vote on their behalf. A proxy need not also be a member of the Company, however Shareholders who wish to appoint a proxy are recommended to appoint the Chair of the AGM as their proxy. To be eective, forms of proxy together with the power of attorney or other authority, if any, under which it is signed, or a notorially certied copy or a copy 103 certied in accordance with the Powers of Attorney Act1971 of that power or authority must be lodged with the Company’s Registrar, Equiniti Limited, Aspect House, Spencer Road, Lancing, West SussexBN996DA (the “Registrar”) not less than 48hours (excluding non-working days) before the time appointed for holding the meeting or any adjourned meeting. A member may appoint more than one proxy, provided each proxy is appointed to exercise rights attached to dierent shares. Members may not appoint more than one proxy to exercise rights attached to any one ordinary share. The return of a completed proxy form or other instrument of proxy will not prevent you attending the AGM and voting in person if you wish. The right to appoint a proxy does not apply to persons whose shares are held on their behalf by another person and who have been nominated to receive communications from the Company in accordance with Section146 of the Companies Act2006 (nominated persons). Nominated persons may have a right under an agreement with the member who holds the shares on their behalf to be appointed (or to have someone else appointed) as a proxy. Alternatively, if nominated persons do not have such a right, or do not wish to exercise it, they may have a right under such an agreement to give instructions to the person holding the shares as to the exercise of voting rights. The Company, pursuant to Regulation 41 of the Uncertied Securities Regulations 2001 species that only those members registered in the register of members of the Company as at 6.30pm on 4February 2025 or, in the event that the meeting is adjourned, on the register of members at 6.30pm on the day two days (excluding non-working days) prior to the reconvened meeting, shall be entitled to attend or vote at the aforesaid annual general meeting in respect of the number of shares registered in their name at that time. Changes to entries on the relevant register of members after 6.30pm on 4February 2025 (or in the event that the meeting is adjourned, as at 6.30pm two days (excluding non-working days) prior to the adjourned meeting) shall be disregarded in determining the rights of any person to attend or vote at the meeting notwithstanding any provisions in any enactment, the Articles of Association of the Company or any other instrument to the contrary. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual (www.euroclear.com). CREST personal members or other CREST sponsored members who have appointed a voting service provider(s) should refer to their CREST sponsor or voting service provider(s), who will be able to take appropriate action on their behalf. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a “CREST proxy instruction”) must be properly authenticated in accordance with Euroclear’s specications and must contain the information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by the Registrar (ID RA19), not later than 48hours (excluding non-working days) before the time appointed for the meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the Registrar is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. CREST members and where applicable their CREST sponsors or voting service provider(s) should notethat Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST proxy instructions. It is the responsibility of the CREST member concerned to take (or if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that their CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and where applicable, their CREST sponsors or voting service provider(s) are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST proxy instruction in the circumstances set out in Regulation 35(5)(a) of the Uncerticated Securities Regulations 2001. If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 12.30pm on 4February 2025 in order to be considered valid. Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s associated terms and conditions. It is important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your proxy. 104 It is possible for you to submit your proxy votes online by going to the Registrar’s Shareview website, www.shareview.co.uk, and logging in to your Shareview Portfolio. Once you have logged in, simply click ‘View’ on the ‘My Investments’ page and then click on the link to vote and follow the on-screen instructions. If you have not yet registered for a Shareview Portfolio, go to www.shareview.co.uk and enter the requested information. It is important that you register for a Shareview Portfolio with enough time to complete the registration and authentication processes. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, the proxy will vote or abstain from voting at his or her discretion. The proxy will vote (or abstain from voting) as he or she thinks t in relation to any other matter which is put before the meeting. Information regarding the AGM, including the information required by section 311A of the Companies Act2006, is available from https://www.hargreaveaimvcts.co.uk. Under section 319A of the Companies Act2006, the Company must answer at the AGM any question a member asks relating to the business being dealt with at the AGM unless: ● answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of condential information; ● the answer has already been given on a website in the form of an answer to a question; or ● it is undesirable in the interests of the Company or the good order of the meeting that the question be answered. In accordance with Section311A of the Companies Act2006, the contents of this notice of meeting, details of the total number of shares in respect of which members are entitled to exercise voting rights at the AGM and if applicable, any members’ statements, members’ resolutions or members’ matters of business received by the Company after the date of this notice will be available on the Company’s website https://www.hargreaveaimvcts. co.uk. Members satisfying the thresholds in Section527 of the Companies Act2006 can require the Company to publish a statement on its website setting out any matter relating to the audit of the Company’s accounts (including the auditor’s report and the conduct of the audit) that are to be laid before the AGM that the members propose to raise at the meeting. The Company cannot require the members requesting the publication to pay its expenses. Any statement required to be placed on the website must also be sent to the Company’s auditor no later than the time it makes its statement available on the website. The business which may be dealt with at the meeting includes any statement that the Company has been required to publish on its website. Members representing 5per cent. or more of the total voting rights of all members or at least 100 persons (being either members who have a right to vote at the AGM and hold shares on which there has been paid up an average sum, per member, of £100, or persons satisfying the requirements set out in s.153(2)of the Companies Act 2006) may: a) require the Company, under s.338 of the Companies Act2006, to give notice of a resolution which may properly be moved at the AGM. Any such request, which must comply with s.338(4)of the Companies Act2006, must be received by the Company no later than 6 weeks before the date xed for the AGM; and b) require the Company, under s.338A of the Companies Act2006 to include any matter (other than a proposed resolution) in the business to be dealt with at the AGM. Any such request, which must comply with s.338A of the Companies Act2006, must be received by the Company no later than 6 weeks before the date xed for the AGM. Any person holding 3per cent. or more of the total voting rights of the Company who appoints a person other than the Chair of the meeting as his/her proxy will need to ensure that both he/she and his/her proxy complies with their respective disclosure obligations under the UK Disclosure Guidance and Transparency Rules. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that they do not do so in relation to the same shares. Shareholders (and any proxy or representatives they appoint) agree, by attending the meeting, that they are expressly requesting that they are willing to receive any communications (including communications relating to the Company’s securities) made at the meeting. 105 Members who have general queries about the meeting should contact the Registrar on +44(0)3713842714, ifcalling from outside the UK, please ensure the country code is used, or contact them via their website www.shareview.co.uk. Lines are open 8.30am to 5.30pm Monday to Friday (excluding public holidays in England and Wales), (no other methods of communication will be accepted). You may not use any electronic address provided either in this notice of meeting or any related documents (including the form of proxy) to communicate with the Company for any purpose other than those expressly stated. Note: 1. The following documents will be available for inspection at the registered oce of the Company, Talisman House, Boardmans Way, Blackpool, England,FY45FY, during usual business hours on a weekday (except Saturdays, Sundays and Public Holidays) until the date of the meeting and at the place of the meeting for a period of 15 minutes up to and during the meeting; a) copies of the Directors’ letters of appointment; b) the Articles of Association of the Company; and c) the register of Directors’ interests in the shares of the Company. 2. As at 17December2024 (being the latest business day prior to the publication of this Notice), the Company’s issued share capital consists of 367,326,440Ordinary Shares, carrying one vote each. Therefore, the total voting rights in the Company are 367,326,440. 106 Appendix - Scrip dividend scheme SUMMARY TERMS AND CONDITIONS General The Company operates, through the Registrar, a DRIS whereby Shareholders can elect to have relevant dividends reinvested in new Ordinary Shares. The Company seeks to renew its DRIS by virtue of Resolution11 set out in the Notice of AGM. If Resolution11 is passed, the DRIS will apply to any subsequent interim or nal dividend of the Company in respect of which a scrip dividend alternative is oered and this Shareholder authority will expire at the AGM to be held in 2026. When a future dividend is announced, the Company will advise if the DRIS applies to that dividend, together with the relevant details for that dividend. The details (including the timetable, price etc.) for each relevant dividend to which the DRIS will apply along with the full terms and conditions of the DRIS, will be/are available on the Company’s website at https://www.hargreaveaimvcts.co.uk. Information regarding future scrip dividend alternatives will also be provided via a Regulatory Information Service. Shareholders can also contact the Registrar on their helpline at03713842714 (or from overseas on +441214157047) if they have any questions about the operation of the DRIS in respect of any relevant dividend. Whether or not you should elect to receive new Ordinary Shares instead of cash in respect of any future relevant dividends may depend on your own personal tax circumstances. Please note, the tax treatment may change during the period for which the Scrip Dividend Scheme is available. For the avoidance of doubt, if you currently participate in the Company’s DRIS and do not wish to cancel your standing mandate, there is no need to complete a new Mandate Form as your existing mandate will stand. For general enquiries about the DRIS please contact the Registrar on03713842714 (or from overseas on +441214157047) or contact them via their website www.shareview.co.uk. Lines are open from 8:30a.m. to 5:30p.m. Monday to Friday (except UK public holidays). Calls to the helpline from outside the UK will be charged at applicable international rates. Calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the DRIS nor give any personal nancial, legal or tax advice. Summary terms and conditions of the DRIS For the avoidance of doubt, unless the context otherwise requires, all dened terms used in this Appendixhave the same meanings as set out in the ‘DRIS Terms and Conditions’ available on the Company’s website at https://www.hargreaveaimvcts.co.uk. 1. Participation in the DRIS a. Applicants may join the DRIS by giving notice in writing to the DRIS Manager. The Company, acting through the DRIS Manager, shall have absolute discretion to accept or reject applications to participate in the DRIS. An Applicant shall become a member of the DRIS upon acceptance of his or her application by the DRIS Manager on the Company’s behalf. The DRIS Manager will provide written notication if an application is rejected. Only Shareholders or their applicable Nominee Shareholder may join the DRIS. b. In order to participate in the DRIS in relation to a certain Investment Date an Applicant must have notied the DRIS Manager of their intention to participate in the DRIS at least ten Business Days prior to the relevant Investment Day. c. The Company shall not be obliged to accept any application or issue Ordinary Shares hereunder if the Directors so decide in their absolute discretion. The Company may do or refrain from doing anything which, in the reasonable opinion of the Directors, is necessary to comply with the law of any jurisdiction or any rules, regulations or requirement of any regulatory authority or other body which is binding upon the Company or the DRIS Manager. d. The Company and the DRIS Manager shall be entitled, at their absolute discretion at any time and from time to time, to suspend the operation of the DRIS and/or to terminate the DRIS without notice to the Applicants and/or to resolve to pay dividends to Applicants partly by way of cash and partly by way of new Ordinary Shares and/or to refuse to invest dividends due on Ordinary Shares held by a Nominee Shareholder where the DRIS Manager is unable to obtain conrmation of the identity and shareholdings of the relevant Benecial Shareholder. In the event of termination, the Company shall, subject to the terms and conditions, pay to each Applicant all of the monies held by the Company on his or her behalf under the DRIS. 107 e. Applicants who are not Shareholders may join the DRIS in respect of the number of Ordinary Shares of the Company specied as Nominee Shareholdings and notied to the DRIS Manager by the Applicant and the Shareholder in whose name the Ordinary Shares are held. f. The number of Ordinary Shares held by any such Applicant which are mandated to the DRIS shall be altered immediately following any change to the number of Ordinary Shares in respect of which such Shareholder is the registered holder as entered onto the share register of the Company from time to time. g. Applicants who hold their Ordinary Shares through a Nominee may join the DRIS in respect of the number of Ordinary Shares of the Company specied as Nominee Shareholdings and notied to the DRIS Manager by the Applicant and the Shareholder in whose name the Ordinary Shares are held. 2. Issue of Ordinary Shares under the DRIS a. On an Investment Day, dividends paid, or to be paid, on Ordinary Shares held by, or on behalf of, Applicants who have elected to participate in the DRIS in relation to those Ordinary Shares shall be transferred by the Company to the DRIS. b. On or as soon as practicable after an Investment Day, the funds held within the DRIS on behalf of an Applicant shall be applied on behalf of that Applicant in the subscription for the maximum number of whole new Ordinary Shares as can be acquired with those funds. c. The number of new Ordinary Shares to be allotted to an Applicant shall be calculated by dividing the funds held within the DRIS on behalf of the Applicant by the greater of: I. the latest published net asset value per Ordinary Share (net of all unpaid dividends declared on or before an Investment Day); II. the nominal value per Ordinary Share; and III. the mid-market price per Ordinary Share as quoted on the London Stock Exchange, each at the close of business on the tenth Business Day preceding the date of issue of such Ordinary Shares. Fractions of new Ordinary Shares will not be allotted to Applicants and their entitlement will be rounded down to the nearest whole number of new Ordinary Shares. d. Any balance of cash remaining within the DRIS for the account of an Applicant after an issue of Ordinary Shares is made shall be held by the Company on behalf of the relevant Applicant and added to the cash available in respect of that Applicant for the subscription of Ordinary Shares on the next Investment Day. No interest shall accrue or be payable in favour of any Applicant on any such cash balances carried forward. All cash balances held by the Company will be held as banker and not trustee and as a result will not be held in accordance with any client money rules made by the Financial Conduct Authority from time to time. e. The new Ordinary Shares will rank equally with all existing Ordinary Shares. f. The issue of Ordinary Shares under the DRIS shall be conditional on the following: I. the Company having the requisite Shareholder authorities to allot Ordinary Shares under the DRIS; and II. the Company having not issued Ordinary Shares representing more than 10per cent. of its issued share capital under the DRIS in the 12months immediately preceding the Investment Date, and if this limit is reached in relation to Ordinary Shares to be issued on an Investment Date, the entitlements of each Applicant in relation to that Investment Date will be scaled back on a pro-rata basis. g. The Company shall immediately after the issue of Ordinary Shares under the DRIS take all necessary steps to ensure that those Ordinary Shares shall be admitted to the Ocial List and to trading on the premium segment of the main market of the London Stock Exchange, provided that at the time of such issue the existing Ordinary Shares in issue are so admitted to the Ocial List and to trading on the premium segment of the main market of the London Stock Exchange. h. The DRIS Manager shall as soon as practicable after the issue of Ordinary Shares take all necessary steps to ensure that the Applicants (or, where an Applicant is not a Shareholder, the Shareholder on whose behalf the Ordinary Shares mandated to the DRIS are held) are entered onto the share register of the Company as the registered holders of the Ordinary Shares issued to them in accordance with the DRIS, and that share certicates (unless such Ordinary Shares are to be uncerticated in which case the new Ordinary Shares will be credited to the Applicant’s CREST account) in respect of such Ordinary Shares are issued and delivered to Applicants at their own risk 108 Applicants (or such other person as aforesaid) will receive with their share certicates (if any) a statement detailing: I. the total number of Ordinary Shares held at the Investment Day in respect of which a valid election to participate in the DRIS was made; II. the amount of the dividend available for investment and participation in the DRIS; III. the price at which each Ordinary Share was issued under the DRIS; IV. the number of Ordinary Shares issued and the date of issue; and the amount of cash to be carried forward for investment on the next Investment Day. 3. Terminating and amending participation in the DRIS a. An Applicant may at any time by completing a Mandate Form and sending it to the DRIS Manager, terminate his or her participation in the DRIS and withdraw any monies held by the Company on his or her behalf in relation thereto. b. If an Applicant who is a Shareholder shall at any time cease to hold Ordinary Shares, he or she shall be deemed to have submitted a Mandate Form under paragraph3(a) above in respect of his or her participation in the DRIS. Whenever a Nominee Shareholder sells Ordinary Shares on behalf of the Benecial Shareholder, the Nominee Shareholder agrees to notify the DRIS Manager of the full details of the sale as soon as practicable. Neither the Company nor the DRIS Manager shall be responsible for any loss or damage as a result directly or indirectly of a failure by a Nominee Shareholder to comply with such obligation. If a Shareholder in whose name Ordinary Shares are held on behalf of an Applicant shall at any time cease to hold any Ordinary Shares on behalf of that Applicant, he or she shall be deemed to have submitted a Mandate Form under paragraph3(a) above in respect of his or her participation in the DRIS. If notice of termination is served or deemed to have been served, all of the monies held by the Company on the Applicant’s behalf shall be delivered to the Applicant as soon as reasonably practicable at the address set out in the Mandate Form, subject to any deductions which the Company may be entitled or bound to make. Any Mandate Form submitted or deemed to have been submitted as set out above shall not be eective in respect of the next forthcoming Investment Day unless it is received by the DRIS Manager at least ten Business Days prior to such Investment Day. c. Cash balances of less than £1 held on behalf of Applicants who have withdrawn from, or otherwise cease to participate in, the DRIS will not be repaid, but will be donated to a recognised registered charity at the discretion of the Company. 4. Notices All Mandate Forms and any other notices and instructions to be given to the DRIS Manager shall be in writing and delivered or posted to Equiniti Limited, Aspect House, Spencer Road, LancingBN996DA. Produced by [email protected] www.blackandcallow.com 020 3794 1720 Printed on FSC ® certified paper. The print factory works to the EMAS standard and its Environmental Management System is certified to ISO 14001. This publication has been manufactured using 100% offshore wind electricity sourced from UK wind. 100% of the inks used are vegetable oil based, 95% of press chemicals are recycled for further use and, on average 99% of any waste associated with this production will be recycled and the remaining 1% used to generate energy. This document is printed on Revive 100 Silk paper containing 100% recycled fibre. The FSC ® label on this product ensures responsible use of the world’s forest resources. Hargreave Hale AIM VCT plc (Incorporated in England and Wales under the companies act 1985 with registered number 05206425)
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