Regulatory Filings • Feb 12, 2018
Regulatory Filings
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REGISTRATION DOCUMENT
ISSUE BY HARGREAVE HALE AIM VCT 1 PLC OF SCHEME SHARES IN CONNECTION WITH THE ACQUISITION OF THE ASSETS AND LIABILITIES OF HARGREAVE HALE AIM VCT 2 PLC
AND
OFFER FOR SUBSCRIPTION OF ORDINARY SHARES OF 1P EACH IN HARGREAVE HALE AIM VCT 1 PLC TO RAISE UP TO £20,000,000, WITH AN OVER-ALLOTMENT FACILITY OF UP TO A FURTHER £10,000,000
If you are in any doubt about the action to be taken, you should immediately consult your bank manager, stockbroker, solicitor, accountant or other independent financial adviser authorised pursuant to the Financial Services and Markets Act 2000, as amended ("FSMA").
If you have sold or otherwise transferred all of your shares in Hargreave Hale AIM VCT 1 plc (the "Company"), please send this document and accompanying documents, as soon as possible, to the purchaser or transferee or to the stockbroker, independent financial adviser or other person though whom the sale or transfer was effected for delivery to the purchaser or transferee.
This document, which constitutes a registration document (the "Registration Document") relating to the Company, has been prepared in accordance with the Prospectus Rules made by the Financial Conduct Authority pursuant to Part VI of FSMA. Additional information relating to the Company is contained in a securities note issued by the Company (the "Securities Note"). This Registration Document, the Securities Note and a summary (the "Summary") have been approved by the Financial Conduct Authority (the "FCA") in accordance with FSMA and constitute a prospectus ("Prospectus") issued by the Company dated 12 February 2018. The Prospectus has been filed with the FCA in accordance with the Prospectus Rules and you are advised to read the Prospectus in full.
Each of the directors of the Company, whose names are set out on page 7 of this document and the Company, accept responsibility for the information contained in this document. To the best of the knowledge of the Directors and the Company (who have taken all reasonable care to ensure that such is the case) the information contained in this document is in accordance with the facts and contains no omission likely to affect the import of such information.
Howard Kennedy Corporate Services LLP (the "Sponsor"), which is authorised and regulated by the Financial Conduct Authority, is acting as sponsor for the Company and is not advising any other person or treating any other person and will not be responsible to any such person for providing the protections afforded to customers of the Sponsor (subject to the responsibilities and liabilities imposed by FSMA and the regulatory regime established thereunder) or for providing advice in connection with any of the matters referred to herein. The Sponsor does not give any representation, warranty or guarantee express or implied as to the content of this document or that the Company will qualify as Venture Capital Trusts or that investors will obtain any tax relief in respect of their investment.
The whole of this document should be read. In particular, your attention is drawn to the risk factors on pages 4 to 6 of this document. ____________________________________________________________________________
(Incorporated in England and Wales under the Companies Act 1985 with registered number 05206425)
*If the Offer is oversubscribed, the maximum subscription may be increased at the discretion of the Board in accordance with the Over-allotment Facility.
____________________________________________________________________________
The existing Shares issued by the Company are listed on the premium segment of the Official List of the UK Listing Authority (UKLA) and traded on the London Stock Exchange's main market for listed securities. Application has also been made to the UKLA and the London Stock Exchange for the Offer Shares to be admitted to the premium segment of the Official List of the UKLA and to trading on the London Stock Exchange's market for listed securities. It is expected that such admission will become effective and that dealings will commence on 26 March 2018 in respect of the Scheme Shares and within 10 business days of their allotment in respect of the Offer Shares.
The subscription list for those Offer Shares which are being offered to the public under the Offer will open on 12 February 2018 and may be closed at any time thereafter but, in any event, not later than 12.00 p.m. on 5 April 2018 for the 2017/18 tax year and 12.00 p.m. on 31 January 2019 for the 2018/19 tax year, unless closed prior to that date. All subscription monies will be payable in full in cash on application.
The distribution of this document in jurisdictions other than the UK may be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe any of these restrictions. Any failure to comply with any of those restrictions may constitute a violation of the securities laws of any such jurisdiction. Accordingly, no person receiving a copy of this document in any territory other than the UK may treat the same as constituting an offer or invitation to him to subscribe for or purchase Offer Shares unless, in such territory, such offer or invitation could lawfully be made.
| Page | |
|---|---|
| Risk Factors | 4 |
| Directors, Investment Manager and Advisers | 7 |
| PART I | 9 |
| A. The Directors | 9 |
| B. The Company's Investment Manager: Hargreave Hale Limited |
10 |
| C. Investment Policy of the Company | 11 |
| D. Management of the Investment Policy | 12 |
| E. Dividend History and Policy | 14 |
| F. Risk Management | 15 |
| G. Investments of Hargreave Hale AIM VCT 1 and Hargreave Hale AIM VCT 2 | 16 |
| H. Life of the Company and Annual Accounts | 18 |
| I. VCT Status and monitoring |
18 |
| PART II | 19 |
| Pro Forma Financial Information | 21 |
| PART III | 24 |
| Financial Information on the Company and Hargreave Hale AIM VCT 2 |
24 |
| PART IV | 27 |
| Taxation and Conditions to be met by Venture Capital Trusts | 27 |
| PART V | 30 |
| Additional Information | 30 |
| PART VI | 54 |
| Definitions | 54 |
The following are those risk factors which are material to the Company and of which the Directors are aware. Material risk factors relating to the Shares are set out in the Securities Note. If any of the risks described below were to occur, it could have a material effect on the Company's businesses, financial condition or results of operations. Additional risks and uncertainties not presently known to the Directors or that the Directors currently deem immaterial, may also have an effect on the Company's business financial condition or results of operations.
A VCT cannot return share capital to an investor that does not represent profits made on investments. The restriction applies until the third anniversary of the end of the accounting period in which investment funds are raised. If the VCT infringes the restriction, it will have its approved status withdrawn. The restriction does not apply to funds raised on or before 5 April 2014 and does not limit the VCT's ability to pay dividends from realised profits; nor does it apply to funds used to redeem or repurchase shares or to assets distributed in the course of a winding up.
The conditions determining whether an investment of the Company is a Qualifying Investment under the VCT rules may change and such changes could limit the types of investments available to the Company.
how the eventual terms will affect positively or negatively the business model, business operations and financial results or impact sales demand, material and labour costs, availability and cost of finance for the Company or an underlying investee company.
Investment in unquoted companies, by its nature, involves a higher degree of risk than investment in companies listed on the Official List. In particular, small companies often have limited product lines, markets or financial resources and may be dependent for their management on a small number of key individuals and may be more susceptible to political, exchange rate, taxation and other regulatory changes. In addition, the market for securities in smaller companies is usually less liquid than that for securities in larger companies, bringing with it potential difficulties in acquiring, valuing and disposing of such securities. Investment returns will, therefore, be uncertain and involve a higher degree of risk than investment in a company listed on the Official List.
Sir Aubrey Thomas Brocklebank Bt. David Michael Brock Oliver Bedford
Stuart Brookes Talisman House Boardmans Way Blackpool FY4 5FY
Equiniti Aspect House Spencer Road Lancing West Sussex BN99 6DA
Hargreave Hale Limited Talisman House Boardmans Way Blackpool FY4 5FY
The Royal Bank of Scotland plc 5th Floor Kirkstane House 139 St Vincent Street Glasgow G2 5JF
Philip Hare & Associates LLP 4 – 6 Staple Inn High Holborn London WC1V 7QH
41 Lothbury London EC2R 7AE
Hargreave Hale Limited Talisman House Boardmans Way Blackpool FY4 5FY
Hargreave Hale Limited Talisman House Boardmans Way Blackpool FY4 5FY
Howard Kennedy Corporate Services LLP No. 1 London Bridge London SE1 9BG
Howard Kennedy LLP No. 1 London Bridge London SE1 9BG
Nplus 1 Singer Advisory LLP 1 Bartholomew Lane London EC2N 2AX
Portunus Investment Solutions Suite 4, 52-54 Broadwick Street London W1F 7AH
Scott-Moncrieff Exchange Place 3 Semple Street Edinburgh EH3 8BL
BDO LLP 55 Baker Street London W1U 7EU
RSM Central Square 5 th Floor 29 Wellington Street Leeds LS1 4DL
The Board comprises three Directors, two of whom are independent of the Investment Manager. The Directors operate in a non-executive capacity and are responsible for overseeing the investment strategy of the Company and ensuring high levels of corporate governance. The Board has a wide range of investment experience and is actively engaged in the management of VCTs. Whilst the Investment Manager operates under a discretionary fund management mandate, it will, where possible, disseminate an investment report for a proposed Qualifying Investment to the Board for consideration before making an investment. The Investment Manager will not commit to an investment into a private company with no firm intention to float without the prior approval of the Board.
Following a career in corporate finance and venture capital, Aubrey assumed his first role within the VCT industry in 1997. Since then he has gone on to become one of the most experienced directors within the industry. Aubrey maintains a wide range of business interests and has been a director of six AIM listed companies. He is the senior independent director of Downing FOUR VCT plc.
An experienced company chairman in both private and public companies, and a former main board director of MFI Furniture Group plc, David joined the Board of Hargreave Hale AIM VCT 1 plc in September 2010. David is chairman of Episys Group Limited Global and Elderstreet VCT plc and a non-executive director of Puma VCT 12 plc.
Oliver Bedford graduated from Durham University in 1995 with a degree in Chemistry. He served in the British Army for 9 years before joining Hargreave Hale in 2004. Oliver co-manages the Company with Giles Hargreave and supports the other unit trusts through the investment committee. Oliver is also a director of Hargreave Hale AIM VCT 2 plc.
The Company's investment manager is Hargreave Hale Limited who have been managing investments in UK Small and Micro Cap companies for 19 years and VCTs for 13 years. Hargreave Hale has a long-established reputation as a substantial investor in and a supporter of small British Companies through the main market of the London Stock Exchange and AIM. As well as the two Venture Capital Trusts, the investment team manages 6 unit trusts including the Marlborough Special Situations Fund, the Marlborough UK Micro-Cap Growth Fund and the Marlborough Multi-Cap Income Fund. The investments of the Company are co-managed by Giles Hargreave and Oliver Bedford with support from the rest of the firm's investment team. The breadth of the investment team, the scale of investment into small companies and the investment manager's track record help attract deal flow. In accordance with their investment policies, both the Company and Hargreave Hale AIM VCT 2 have made investments in the Marlborough Special Situations Fund, which has returned 3070% (to 31 January 2018) since Giles Hargreave took responsibility for it in July 1998.
Hargreave Hale Limited provides discretionary investment management and advisory services to the Company in respect of its portfolio of Qualifying Investments and Non-Qualifying Investments.
The Investment Manager receives investment management fees equal to 1.5% per annum of the Net Asset Value of the Company and a Performance Incentive Fee. The Investment Manager is in discussions with the Company to increase its annual investment management fees to an amount equal to 1.7% per annum of the Net Asset Value of the Company, subject to compliance with the Listing Rules. If agreement is reached, such increase would not take place before 31 March 2019 and shareholders will be updated by an announcement in due course.
The appointment may be terminated on 12 calendar months' notice by either party.
In line with normal VCT practice, a performance related incentive fee will be payable subject to certain criteria. This will be payable at the rate of 20% of any dividends paid to Ordinary Shareholders in excess of 6p per Ordinary Share per annum, provided that the Net Asset Value per Ordinary Share is at least 95p, with any cumulative shortfalls below 6p per Ordinary Share having to be made up in subsequent years.
A maximum of 75% of the Investment Manager's annual fee (plus irrecoverable VAT, but excluding any incentive fee) will be chargeable against capital reserves, with the remainder of the Investment Manager's annual fee being chargeable against revenue.
Hargreave Hale Limited (a company incorporated with limited liability in England under the Act with registered number 03146580 having its registered office at Talisman House, Boardmans Way, Blackpool, FY4 5FY and telephone number +44 (0) 1253 754700) acts as custodian to the Company and, in that capacity, is responsible for ensuring safe custody and dealing with settlement arrangements in respect of the Company's equity and fixed income assets, and certain cash deposits in a client deposit account. All other assets, including cash, are held by the Company directly. Hargreave Hale Limited is authorised and regulated by the FCA.
The Company's investment objectives are:
The Company will have a range of investments in three distinct asset classes:
The Investment Manager will maintain a diversified and fully invested portfolio of Qualifying Investments. The primary purpose of the investment strategy is to ensure the Company maintains its status as a VCT. To achieve this, the Company must have 70% (80% after 6 April 2019) of all funds raised from the issue of shares invested in Qualifying Investments throughout accounting periods of the VCT beginning no later than three years after the date on which those shares are issued.
Although VCTs are required to invest and maintain a minimum of 70% (80% after 6 April 2019) of their funds invested in Qualifying Investments as measured by the VCT rules, it is likely that the Investment Manager will target a higher threshold of approximately 80% (85% after 6 April 2019) in order to provide some element of protection against an inadvertent breach of the VCT rules. The Company's maximum exposure to a single Qualifying Investment is limited to 15% of net assets.
The key selection criteria used by the Investment Manager in deciding which Qualifying Investments to make include, inter alia:
The Investment Manager will follow a stock specific, rather than sector specific, investment approach and is more likely to provide growth and development capital than seed capital.
The Investment Manager will primarily focus on investments in companies with a quotation on AIM. The Investment Manager will also invest in private companies or those planning to trade on AIM. The Investment Manager prefers to participate in secondary issues of companies as such companies have an established track record that can be more readily assessed and greater disclosure of financial performance. Secondary issues are often priced at an attractive discount to the market price.
The Company will have non-qualifying equity exposure to UK and international equities through targeted investments made on an opportunistic basis. This will vary in accordance with the Investment Manager's view of the equity markets and may fluctuate between nil and 30% of the net assets of the Company. The Investment Manager will also invest in fixed income securities and cash. The Investment Manager will invest up to 75% of the net proceeds of any issue of new shares into the Marlborough Special Situations Fund subject to a maximum of 20% of the gross assets of the Company. This will enable the Company to maintain their exposure to small companies indirectly, whilst the Investment Manager identifies opportunities to invest directly into small UK companies through a suitable number of Qualifying Investments.
The allocation between asset classes in the non-qualifying portfolio will vary depending upon opportunities that arise with a maximum exposure of 100% of the non-qualifying portfolio to any individual asset class.
To the extent that any future changes to the Company's investment policies are considered to be material, Shareholder consent to such changes will be sought.
It is not the Company's intention to have any borrowings. The Company does, however, have the ability to borrow a maximum amount up to 15% of the "Adjusted Capital and Reserves" amount (as such term is defined in the Articles of Association of the Company), which is effectively the aggregate of the nominal capital of the Company's issued and paid up and the amount standing to the credit of the consolidated reserves of the Company, less specified adjustments, exclusions and deductions. There are no plans to utilise this ability at the current time.
The breadth of the investment team, the scale of investment in small companies and the
Investment Manager's track record and many years of investing in AIM and NEX-quoted (formerly ISDX) companies and, more recently, private companies, help attract deal flow.
The investment team has regular meetings, typically 37 per week, with small companies, a number of which would be suitable for investment by the Funds. These relationships, along with the ability to co-invest alongside the other funds managed by the Investment Manager, should increase the quality and quantity of the investment pipeline.
In the 12 months prior to the date of this document, the Company made 23 Qualifying Investments totalling £7.5 million of which £5.3 million was in AIM quoted companies and £2.2 was in private unquoted companies.
The Investment Manager monitors each investment closely and usually expects to meet with the management of investee companies twice a year.
As the values of underlying investments increase, the Investment Manager will monitor opportunities for the Company to realise a proportion of the capital gain, and to make tax-free distributions to Shareholders.
The Investment Manager manages other funds that can invest in the same companies as the Company, including the Marlborough Special Situations Fund and the Marlborough UK Micro Cap Growth Fund. Therefore, in appropriate circumstances, the Company will invest alongside other funds managed by the Investment Manager. When contemplating a co-investment, the Investment Manager will first consider factors such as the risk profiles and investment strategies of the participating funds, the size of the fund raising and anticipated allocations when deciding on how much each fund will subscribe for. Any scaling back of applications made by the Investment Manager for shares in investee companies, on behalf of the different funds it manages, will be pro rata to the amount originally applied for by each fund.
Where the Company intends to invest in the same companies as other funds managed by the Investment Manager, any such investment must first be approved by at least one Director of the Board who is independent of the Investment Manager, unless the investment is made either at the same time and on the same terms, or there is insufficient time to gain prior approval, or the investment is made in accordance with a pre-existing agreement between the Company and the Investment Manager.
When the investee company has listed as a shareholder a unit trust or another fund also managed by the Investment Manager, and the Investment Manager does not intend to make a further investment into the investee company through that unit trust or other fund, the Investment Manager is to inform a Director of the Company who is independent of the Investment Manager of the proposed investment and the potential conflict of interest prior to making the investment. Where possible, this will be the Chairman. The Investment Manager will notify the Chairman of his obligations as someone who is in possession of inside information and pass his name to the Investment Manager's compliance department to be entered into the register of insiders under MAR. The Chairman will not pass on details of the proposed investment to other members of the Board.
The Chairman will notify the Investment Manager of his decision. If, in his opinion, the proposed investment requires further discussion with other members of the Board and there is sufficient time, the Chairman will ask the Investment Manager to convene a Board meeting to discuss the proposed investment. The Investment Manager will circulate the details of the Board Meeting and will notify the remaining Directors of the proposed investment, along with their obligations as persons who are in possession of inside information. The Investment Manager will notify its compliance department of those additional Directors who are to be entered into the register of insiders under MAR.
It is the responsibility of the Investment Manager to notify the Board, depending on the circumstances, and seek prior approval for the co-investment.
It is the responsibility of the Board to monitor compliance with this co-investment policy on a quarterly basis.
The Company has a well established track record of paying out tax free dividends to its Shareholders. The table below shows the cumulative dividend distributions paid to date to holders of Ordinary Shares. The yields listed are calculated with reference to the closing Net Asset Value per Share in the financial year to which the dividends relate.
| Financial Year |
Dividends Paid |
Year End NAV Yield |
Cumulative Total |
Comments |
|---|---|---|---|---|
| 2005/6 | 5p | 4.7% | 5p | First full financial year |
| 2006/7 | 5p | 4.8% | 10p | |
| 2007/8 | 5p | 7.6% | 15p | |
| 2008/9 | 2p | 3.1% | 17p | No final dividend was paid in January 2010 in respect of the financial year ended 30 September 2009 |
| 2009/10 | 4p | 6.4% | 21p | |
| 2010/11 | 4p | 6.5% | 25p | |
| 2011/12 | 3.25p | 5.3% | 28.25p | |
| 2012/13 | 3.75p | 5.2% | 32p | |
| 2013/14 | 4.25p | 5.3% | 36.25p | |
| 2014/15 | 4p | 5.4% | 40.25p | |
| 2015/16 | 4p | 5.3% | 44.25p | |
| 2016/17 | 4p | 4.9% | 48.25p |
Hargreave Hale AIM VCT 1 Ordinary Shareholders
The intention is to continue the existing policy of targeting a 5% distribution yield (referenced to the Net Asset Value), although the ability to pay dividends will clearly be influenced by the underlying investment performance of the Ordinary Shares and the available reserves, cash resources the Act and the Listing Rules. In good years, the Directors may consider a higher dividend payment; in poor years, the Directors may reduce or even pay no dividend. Past performance and payment of dividends is not a reliable indicator of future results and may not be repeated.
Investments in AIM and NEX-quoted (formerly ISDX) shares will be valued at the prevailing bid price.
All other investments will be valued in accordance with EVCA guidelines.
The structure of the Company's investment portfolio and its investment strategy, has been developed to mitigate risk where possible.
A typical investor for whom the Offer is designed is an individual who is a UK income taxpayer over 18 years of age with an investment range of between £5,000 and £200,000 per tax year who considers the investment policy as detailed in Paragraph C of Part I of this document to be attractive and can accept the high level of risk associated with an investment into a VCT. Investment in a VCT will not be suitable for every type of Investor and should be considered as a medium to long term investment with a minimum holding period of five years.
Before deciding whether to subscribe for Offer Shares, Investors are strongly encouraged to consult an independent adviser authorised under FSMA and to carefully consider the suitability of an investment into the Company in light of their personal circumstances.
As at 31 January 2018, the unaudited NAV per Ordinary Share of Hargreave Hale AIM VCT 1 was 83.29p.
Set out below are those investments of Hargreave Hale AIM VCT 1 as at the date of this document (the values being at 31 January 2018) which have an aggregate value of at least 50 per cent. of its net assets (all of which information is unaudited). There has been no material change to the aggregate value of Hargreave Hale AIM VCT 1's investment portfolio since 31 January 2018. All of the investments listed below are located in the United Kingdom
| Sector | Cost £000 | (Unaudited) Valuation £000 |
(Unaudited) Valuation % |
|
|---|---|---|---|---|
| Qualifying Investments | ||||
| Learning Technologies Group plc | Information Technology | 663 | 2,526 | 3.8% |
| Zoo Digital Group plc | Information Technology | 309 | 2,259 | 3.4% |
| Abcam plc | Health Care | 55 | 2,029 | 3.0% |
| Craneware plc | Health Care | 125 | 1,818 | 2.7% |
| Cohort plc | Industrials | 619 | 1,624 | 2.4% |
| Quixant plc | Consumer Discretionary | 160 | 1,513 | 2.3% |
| SCA Investments Ltd (Gousto) | Consumer Discretionary | 1,002 | 1,484 | 2.2% |
| Ideagen plc | Information Technology | 410 | 1,484 | 2.2% |
| Animal care Group plc | Health Care | 220 | 1,140 | 1.7% |
| Faron Pharmaceuticals Oy | Health Care | 670 | 1,088 | 1.6% |
| Hardide plc | Materials | 863 | 1,071 | 1.6% |
| Science in Sport plc | Consumer Discretionary | 778 | 1,053 | 1.6% |
| Eagle Eye Solutions Ltd | Information Technology | 967 | 983 | 1.5% |
| DP Poland plc | Consumer Discretionary | 594 | 947 | 1.4% |
| Zappar Ltd | Information Technology | 902 | 900 | 1.3% |
| Other Qualifying Investments | 18,933 | 20,242 | 30.2% | |
| Non Qualifying Investments MFM Special Situations Fund |
9,211 4,048 |
12,361 5,153 |
18.4% 7.7% |
|
| Cash Accrued Charges and Income |
7,579 | 7,579 (234) |
11.3% (0.3%) |
|
| Portfolio Breakdown (by Asset Class) | Qualifying Investments by Sector (GICS) |
| Qualifying Investments | 63% |
|---|---|
| Non-Qualifying Investments | 18% |
| Marlborough Special Situations | 8% |
| Net Cash | 11% |
| Total: | 100.0% | Real Estate Total |
100.0% | 1% |
|---|---|---|---|---|
| Energy | 1% | |||
| Telecommunication Services | 1% | |||
| Financials | 2% | |||
| Net Cash | 11% | Materials | 3% | |
| Marlborough Special Situations | 8% | Industrials | 7% | |
| Non-Qualifying Investments | 18% | Consumer Discretionary | 20% | |
| Qualifying Investments | 63% | Health Care | 23% | |
| Information Technology | 42% |
As at 31 January 2018, the unaudited NAV per Ordinary Share of Hargreave Hale AIM VCT 2 was 123.76p.
Set out below are those investments of Hargreave Hale AIM VCT 2 as at the date of this document (the values being at 31 January 2018) which have an aggregate value of at least 50 per cent. of its net assets (all of which information is unaudited). There has been no material change to the aggregate value of Hargreave Hale AIM VCT 2's investment portfolio since 31 January 2018. All of the investments listed below are located in the United Kingdom
| Sector | Cost £000 | (Unaudited) Valuation £000 |
(Unaudited) Valuation % |
|
|---|---|---|---|---|
| Qualifying Investments | ||||
| Learning Technologies Group plc | Information Technology | 534 | 2,034 | 3.5% |
| Zoo Digital Group plc | Information Technology | 273 | 1,995 | 3.4% |
| Ideagen plc | Information Technology | 190 | 1,692 | 2.9% |
| SCA Investments Ltd (Gousto) | Consumer Discretionary | 1,002 | 1,484 | 2.5% |
| Quixant plc | Consumer Discretionary | 120 | 1,135 | 1.9% |
| Faron Pharmaceuticals Oy | Health Care | 670 | 1,088 | 1.9% |
| DP Poland plc | Consumer Discretionary | 574 | 938 | 1.6% |
| Mexican Grill Ltd | Consumer Discretionary | 308 | 920 | 1.6% |
| Hardide plc | Materials | 302 | 918 | 1.6% |
| Laundrapp Ltd | Information Technology | 802 | 884 | 1.5% |
| Eagle Eye Solutions Ltd | Information Technology | 811 | 809 | 1.4% |
| Other Qualifying Investments | 14,774 | 17,029 | 29.2% | |
| Non Qualifying Investments | 8,784 | 11,827 | 20.3% | |
| Fixed Income | 154 | 154 | 0.3% | |
| MFM Special Situations Fund | 5,742 | 8,018 | 13.8% | |
| Cash | 7,553 | 7,553 | 13.0% | |
| Accrued Charges and Income | (210) | (0.4%) |
| Qualifying Investments | 53% | Information Technology | 46% |
|---|---|---|---|
| Non-Qualifying Investments | 20% | Consumer Discretionary | 22% |
| Corporate Bond | 0% | Health Care | 16% |
| Marlborough Special Situations | 14% | Industrials | 4% |
| Net Cash | 13% | Materials | 4% |
| Total: | 100.0% | Total | 100.0% |
|---|---|---|---|
| Real Estate | 1% | ||
| Financials | 1% | ||
| Utilities | 2% | ||
| Consumer Staples | 2% | ||
| Telecommunication Services | 2% | ||
| Net Cash | 13% | Materials | 4% |
| Marlborough Special Situations | 14% | Industrials | 4% |
| Corporate Bond | 0% | Health Care | 16% |
| Non-Qualifying Investments | 20% Consumer Discretionary |
22% | |
| Qualifying Investments | 53% | Information Technology | 46% |
Hargreave Hale AIM VCT 1's annual report and accounts are made up to 30 September in each year and are normally sent to Shareholders in December of each year. It is the current intention of the Directors that the first annual report to be sent to Investors after the close of the Offer will be the audited annual accounts for the year ending 30 September 2019.
It is intended that Hargreave Hale AIM VCT 1 should have an unlimited life, but the Directors consider that it is desirable for Shareholders to have the opportunity to review the future of the Company at appropriate intervals. Hargreave Hale AIM VCT 1's Articles of Association require the Directors to put a proposal to Shareholders concerning the continuation of that company at the annual general meeting in 2023 and, if passed, at every fifth anniversary thereafter. As there is a risk for new Shareholders under the Offer that if the continuation vote is passed in favour of discontinuance, they will thereby be deemed to have disposed within their five year holding period, it is proposed that Shareholder approval will be sought at the Company's General Meeting to delay the continuation vote until 2025 and to adopt new articles of association accordingly.
Hargreave Hale AIM VCT 1 has appointed Philip Hare & Associates LLP to advise on tax matters generally and, in particular, on the maintenance of VCT status. HMRC has confirmed that the Company qualifies as a VCT. Philip Hare & Associates LLP will assist the Investment Manager in establishing the status of investments as Qualifying Investments and monitoring these investments and will report directly to the Board. In order to continue to comply with VCT requirements, the Company must have 70% of all net funds raised from the issue of shares invested in Qualifying Investments throughout accounting periods beginning no later than three years after the date on which those shares are issued.
As at 31 January 2018 the Company was 90.10% invested in Qualifying Investments (as defined in the ITA 2007).
The Directors
12 February 2018
Hargreave Hale AIM VCT 1 plc 41 Lothbury London EC2R 7AE
Howard Kennedy Corporate Services LLP No 1 London Bridge London SE1 9BG
Dear Sirs
We report on the pro forma financial information (the "Pro Forma Financial Information") set out in Part A and Part B of Part II of the prospectus dated 12 February 2018 (the "Prospectus") of Hargreave Hale AIM VCT 1 plc, which has been prepared on the basis described in the notes to the Pro Forma Financial Information, for illustrative purposes only, to provide information about how the Merger and the Offer (as defined in the Prospectus) might have affected the financial information presented on the basis of the accounting policies adopted by the Company in preparing the financial statements for the financial year ended 30 September 2017. This report is required by item 20.2 of Annex I of the Commission Regulation (EC) No. 809/2004 (the "PD Regulation") and is given for the purpose of complying with that item and for no other purpose.
Save for any responsibility arising under paragraph 20.2 of Annex I of Appendix 3.1.1 of the Prospectus Rules to any person as and to the extent there provided, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, and given solely for the purposes of complying with paragraph 20.2 of Annex I of Appendix 3.1.1 of the Prospectus Rules, or consenting to its inclusion in the Prospectus.
It is the responsibility of the directors of the Company (the "Directors") to prepare the Pro Forma Financial Information in accordance with item 20.2 of Annex I of the PD Regulation.
It is our responsibility to form an opinion, as required by item 7 of Annex II of the PD Regulation, as to the proper compilation of the Pro Forma Financial Information and to report that opinion to you.
Save for any responsibility arising under Prospectus Rule 5.5.3R(2)(f) to any person as and to the extent there provided, to the fullest extent permitted by the law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, which are included, in the form and context in which they are included, with our consent and with our having authorised the contents of this Part II, required by and given solely for the purposes of complying with item 23.1 of annex 1 of the PD Regulation.
In providing this opinion we are not updating or refreshing any reports or opinions previously made by us on any financial information used in the compilation of the Pro Forma Financial Information, nor do we accept responsibility for such reports or opinions beyond that owed to those to whom those reports or opinions were addressed by us at the dates of their issue.
We conducted our work in accordance with the Standards for Investment Reporting issued by the Financial Reporting Council in the United Kingdom. The work that we performed for the purpose of making this report, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the Pro Forma Financial Information with the directors of the Company.
We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the Pro Forma Financial Information has been properly compiled on the basis stated and that such basis is consistent with the accounting policies of the Company.
Our work has not been carried out in accordance with auditing or other standards and practices generally accepted in any jurisdictions other than the United Kingdom and accordingly should not be relied upon as if it had been carried out in accordance with those other standards and practices.
In our opinion:
For the purposes of Prospectus Rule 5.5.3R(2)(f) we are responsible for this report as part of the Prospectus and declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the Prospectus in compliance with item 1.2 of Annex I and item 1.2 of Annex III of Appendix 3.1.1 of the Prospectus Rules.
The following unaudited pro forma statement of earnings of the Enlarged Company has been prepared to illustrate the effect of the Merger and the Offer on the earnings of the Company for the financial year ended 30 September 2017 as if the Merger and the Offer had occurred at the start of the period, 1 October 2016. The earnings for Hargreave Hale AIM VCT 2 plc are for the six month period ended 31 August 2017.
The unaudited pro forma statement of earnings has been prepared for illustrative purposes only and, because of its nature, addresses a hypothetical situation and does not, therefore, represent Hargreave Hale AIM VCT 1's actual financial position or results nor is it indicative of the results that may or may not be expected to be achieved in the future.
The unaudited pro forma statement of earnings is based on the earnings of Hargreave Hale AIM VCT 1 for the financial year ended 30 September 2017, as set out in the report of the Company for the financial year ended 30 September 2017 which is incorporated by reference in Part III of this document and has been prepared in a manner consistent with the accounting policies adopted by Hargreave Hale AIM VCT 1 in preparing such information and on the basis set out in the notes set out below.
| Hargreave Hale AIM VCT 1 |
Hargreave Hale AIM VCT 2 |
Merger Costs |
Pro forma | |
|---|---|---|---|---|
| (Note 1) | (Note 2) | (Note 3) | total | |
| £'000 | £'000 | £'000 | £'000 | |
| Realised gain on disposal of fixed asset investments |
(237) | 626 | - | 389 |
| Fixed asset investment holding gains | 7,586 | 3,936 | - | 11,522 |
| Current asset investment holding gains | - | - | - | - |
| Investment income | 461 | 184 | - | 645 |
| Investment management fees | (864) | (373) | - | (1,237) |
| Other expenses | (374) | (185) | (384) | (943) |
| Return on ordinary activities before tax | 6,572 | 4,188 | (384) | 10,376 |
| Taxation on return of ordinary activities | - | - | - | - |
| Return on ordinary activities after tax |
6,572 | 4,188 | (384) | 10,376 |
The net assets of Hargreave Hale AIM VCT 2 as at 31 August 2017 have been extracted without material adjustment from the unaudited half yearly report of Hargreave Hale AIM VCT 2 for the six months period ended 31 August 2017 which is incorporated by reference in Part III of this document. This adjustment is expected to have a continuing impact on the earnings of the Company.
The following unaudited pro forma statement of net assets of the Enlarged Company has been prepared to illustrate the effect on the net assets of Hargreave Hale AIM VCT 1 as if the Merger and the Offer had taken place on 1 October 2016. The unaudited net assets of Hargreave Hale AIM VCT 2 are stated as at 31 August 2017.
The unaudited pro forma statement of net assets has been prepared for illustrative purposes only and, because of its nature, addresses a hypothetical situation and does not, therefore, represent the Company's actual financial position or results.
The unaudited pro forma statement of net assets is based on the net assets of the Company as at 30 September 2017, as set out in the audited annual report of the Company for the financial year ended 30 September 2017 which is incorporated by reference in Part III of this document and has been prepared in a manner consistent with the accounting policies adopted by the Company in preparing such information and on the basis set out in the notes set out below.
| Unaudited pro forma statement of net assets | Hargreav e Hale AIM VCT 1 (Note 1) £'000 |
Hargreave Hale AIM VCT 2 (Note 2) £'000 |
Fundraising (Note 3) £'000 - |
Merger Costs (Note 3) £'000 |
Pro forma total £'000 |
|---|---|---|---|---|---|
| Fixed asset investments |
58,125 | 45,061 | - | 103,186 | |
| Current assets: | - | - | - | - | - |
| Money market funds | - | - | - | - | - |
| Debtors | 63 | 68 | - | - | 131 |
| Cash at bank | 8,007 | 5,773 | 19,300 | (384) | 32,696 |
| 8,070 | 5,841 | 19,300 | (384) | 32,827 | |
| Creditors | (206) | (254) | - | - | (460) |
| Net current assets | 7,864 | 5,587 | 19,300 | (384) | 32,367 |
| Net assets | 65,989 | 50,648 | 19,300 | (384) | 135,553 |
Full audited financial information on the Company for the accounting years ended 30 September 2015, 30 September 2016 and 30 September 2017 are available free of charge at the Company's registered office or can be downloaded at www.hargreaveaimvcts.co.uk.
The annual reports for the years ended 30 September 2015, 30 September 2016 and 30 September 2017 were audited by BDO LLP of 55 Baker Street, London W1U 7EU. All audit reports were unqualified under the Act.
The annual reports for the years ended 30 September 2015 were prepared in accordance with UK generally accepted accounting practice (GAAP). The annual reports for the years ended 30 September 2016 and 30 September 2017 were prepared in accordance with Financial Reporting Standard 102. In all cases the annual reports referred to above were prepared in accordance with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies'. The annual reports contain a description of the relevant Company's financial condition, changes in financial condition and results of operation for each relevant financial year, as well as further information in relation to the Company's investments, and are being incorporated by reference and can be accessed at the following website:
www.hargreaveaimvcts.co.uk.
Where these documents make reference to other documents, such other documents are not incorporated into and do not form part of this document. The non-incorporated parts of these annual reports and accounts are either not relevant to investors or covered elsewhere in this document.
The information indicated below is incorporated by reference into this document (excluding such other information as may be included in those documents):
| Audited financial statements for the period ended 30 September 2015 |
Audited financial statements for the period ended 30 September 2016 |
Audited financial statements for the period ended 30 September 2017 |
|
|---|---|---|---|
| Page numbers | Page numbers | Page numbers | |
| Income statements | 38 | 43 | 40 |
| Statement of changes in equity | 40-41 | 45 | 42 |
| Balance sheets | 39 | 44 | 41 |
| Cash flow statements | 40 | 46 | 43 |
| Accounting policies | 42-43 | 47-49 | 44-46 |
| Notes to the accounts | 42-52 | 47-58 | 44-54 |
| Independent auditor's report | 34-37 | 39-42 | 35 - 39 |
| Audited financial statements for the period ended 30 September 2015 |
Audited financial statements for the period ended 30 September 2016 |
Audited financial statements for the period ended 30 September 2017 |
|
|---|---|---|---|
| Page numbers | Page numbers | Page numbers | |
| Chairman's statement | 3-4 | 3-4 | 3-4 |
| Investment Manager's report | 10-11 | 14-15 | 13-14 |
This information in the annual reports for the years ended 30 September 2016 and 30 September 2017 has been prepared in a form consistent with that which will be adopted in the Company's next published annual financial statements having regard to accounting standards and policies and legislation applicable to those financial statements (which will be prepared under Financial Reporting Standard 102).
As at 30 September 2017, the date to which the most recent audited financial statements of the Company have been drawn up, the Company had net assets of £66 million or 80.82 pence per Ordinary Share.
As at the date of this document, there has been no significant change in the financial or trading position of Hargreave Hale AIM VCT 1 since 30 September 2017 (being the date on which audited financial information was last published).
Full audited financial information on the Company for the accounting years ended 28 February 2015, 29 February 2016 and 28 February 2017 and unaudited information for the half-year accounts for the six months ended 31 August 2016 and 31 August 2017 are available free of charge at the Company's registered office or can be downloaded at www.hargreaveaimvcts.co.uk.
The annual reports for the years ended 28 February 2015, 29 February 2016 and 28 February 2017 were audited by BDO LLP of 55 Baker Street, London W1U 7EU. All audit reports were unqualified under the Act.
The annual reports for the years ended 28 February 2015 were prepared in accordance with UK generally accepted accounting practice (GAAP) The annual reports for the year ended 29 February 2016 and 28 February 2017 were prepared in accordance with Financial Reporting Standard 102. In all cases the annual reports referred to above were prepared in accordance with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies'. The annual reports and half-yearly accounts contain a description of the relevant Company's financial condition, changes in financial condition and results of operation for each relevant financial year, as well as further information in relation to the Company's investments, and, together with the half-yearly reports referred to, are being incorporated by reference into this document and can be accessed at the following website: www.hargreaveaimvcts.co.uk.
Where these documents make reference to other documents, such other documents are not incorporated into and do not form part of this document. The non-incorporated parts of these annual and half-yearly reports and accounts are either not relevant to investors or covered elsewhere in this document.
The information indicated below is incorporated by reference into this document (excluding such
other information as may be included in those documents):
| Audited financial statements for the period ended 28 February 2015 |
Audited financial statements for the period ended 29 February 2016 |
Unaudited half yearly financial statements for the six months ended 31 August 2016 |
Audited financial statements for the period ended 28 February 2017 |
Unaudited half yearly financial statements for the six months ended 31 August 2017 |
|
|---|---|---|---|---|---|
| Page numbers | Page numbers | Page numbers | Page numbers | Page numbers | |
| Income statements | 35 | 38 | 17-18 | 42 | 16–17 |
| Statement of changes in equity | 37-38 | 40 | 20-21 | 44 | 19-20 |
| Balance sheets | 36 | 39 | 19 | 43 | 18 |
| Cash flow statements | 37 | 41 | 22 | 46 | 21 |
| Accounting policies | 39-40 | 42-43 | 23-27 | 47-49 | 22-26 |
| Notes to the accounts | 39-49 | 42-52 | 23-29 | 47-58 | 22-29 |
| Independent auditor's report | 32-34 | 34-37 | n/a | 38-41 | n/a |
| Audited financial statements for the period ended 28 February 2015 |
Audited financial statements for the period ended 29 February 2016 |
Unaudited half yearly financial statements for the six months ended 31 August 2016 |
Audited financial statements for the period ended 28 February 2017 |
Unaudited half yearly financial statements for the six months ended 31 August 2017 |
|
|---|---|---|---|---|---|
| Page numbers | Page numbers | Page numbers | Page numbers | Page numbers | |
| Chairman's statement | 4-5 | 3-4 | 3-4 | 3-4 | 3-4 |
| Investment Manager's report | 10-11 | 10-11 | 5-7 | 13-14 | 5-6 |
This information in the annual reports for the years ended 28 February 2015, 29 February 2016 and 28 February 2017 has been prepared in a form consistent with that which will be adopted in the Company's next published annual financial statements having regard to accounting standards and policies and legislation applicable to those financial statements (which will be prepared under Financial Reporting Standard 102) in so far as there are no material differences between the financial statements for these years prepared under these two accounting frameworks.
As at 28 February 2017, the date to which the most recent audited financial statements of the Company have been drawn up, the Company had net assets of £45.4 million or 109.86 pence per Ordinary Share. As at 31 August 2017, the date to which the most recent unaudited half yearly financial statements for the Company have been drawn, the Company had net assets of £50.6 million or 115.47 pence per Ordinary Share.
As at the date of this document, there has been no significant change in the financial or trading position of Hargreave Hale AIM VCT 2 since 31 August 2017 (being the date on which unaudited financial statements were last published).
The following paragraphs, which are intended as a general guide only and are based on current legislation and HMRC practice, summarise advice received by the Directors as to the position of the Shareholders who hold shares other than for trading purposes. Any person who is in any doubt as to their taxation position or is subject to taxation in any jurisdiction other than the United Kingdom should consult their professional advisers.
The Company have to satisfy a number of tests to qualify as VCTs. A summary of these tests is set out below.
To qualify as a VCT, a company must be approved as such by HMRC. To obtain such approval it must:
than a VCT or a company which would, if its shares were listed, qualify as a VCT);
Conditions (i), (k), (l) and (m) do not apply to investments in certain money market securities, or shares and securities listed on a recognised stock exchange.
A Qualifying Investment consists of shares or securities first issued to the VCT (and held by it ever since) by a company satisfying certain conditions. The conditions are detailed but include that the company must be a Qualifying Company, have gross assets not exceeding £15 million immediately before and £16 million immediately after the investment, apply the money raised for the purposes of a qualifying trade within a certain time period and not be controlled by another company. In any twelve month period the company can receive no more than £5 million from VCT funds and Enterprise Investment Schemes, and any other European Stateaided risk finance source (from 6 April 2018 this limit is increased to £10 million for a "knowledge intensive company"). A company may not receive a total of more than £12 million of State-aided risk finance (£20 million for a "knowledge intensive company"). The company must have fewer than 250 full time (or equivalent) employees at the time of making the investment. VCT funds cannot be used by a Qualifying Company to fund the purchase of a trade or business, or of shares in another company.
There is also a 'no disqualifying arrangements' requirement under which an investment will not be a Qualifying Investment if the investee company has been set up for the purpose of accessing tax reliefs or is in substance a financing business, although the Boards believe that these measures are unlikely to affect the Company.
With effect from Royal Assent to the Finance (No.2) Bill 2017-19, which is expected in Spring 2018, the question of whether a company's activities or investments can be considered as lower risk so as to enable the company to qualify for VCT tax reliefs will be considered using a 'principles based approach' known as the 'risk-to-capital' condition. This condition has two parts, namely:-
of an amount exceeding the net return.
A Qualifying Company must be unquoted (for VCT purposes this includes companies whose shares are traded on certain NEX (formally PLUS) markets and AIM) and must carry on a qualifying trade. For this purpose certain activities are excluded (such as dealing in land or shares or providing financial services). The qualifying trade must either be carried on by, or be intended to be carried on by, the Qualifying Company or by a relevant qualifying subsidiary (see below) at the time of the issue of shares or securities to the VCT (and at all times thereafter). The company's first commercial sale must be no more than 7 years before the VCT's investment (10 years for a "knowledge intensive company") prior to the date of investment, except where previous Risk Finance State Aid was received by the company within 7 years or where a turnover test is satisfied. A Qualifying Company must have a permanent establishment in the UK. A company intending to carry on a qualifying trade must begin to trade within two years of the issue of shares or securities to the VCT and continue it thereafter.
A Qualifying Company may have no subsidiaries other than qualifying subsidiaries, which must be more than 50% owned.
A relevant qualifying subsidiary must be a 90% directly held subsidiary of the company invested in, its wholly owned subsidiary, or a wholly owned subsidiary of a 90% directly held subsidiary.
A VCT must be approved at all times by HMRC. Approval has effect from the time specified in the approval.
A VCT cannot be approved unless the tests detailed above are met throughout the most recent complete accounting period of the VCT and HMRC is satisfied that they will be met in relation to the accounting period of the VCT which is current when the application is made. However, in order to facilitate the launch of a VCT, HMRC may approve a VCT notwithstanding that certain of the tests are not met at the time of application, provided HMRC is satisfied that the tests will be met within certain time limits. In particular, in the case of the tests described at (d) and (e) under the heading "Qualification as a VCT" above, approval may be given if HMRC is satisfied that these will be met throughout an accounting period of the VCT beginning no more than three years after the date on which approval takes effect.
The Directors intend to conduct the affairs of the Company so that they satisfy the conditions for approval as VCTs and that such approval will be maintained. HMRC has granted the Company approval under section 274 ITA as VCTs. The Company intend to comply with section 274 ITA and have retained Philip Hare & Associates LLP to advise them on VCT taxation matters.
Approval of a VCT may be withdrawn by HMRC if the various tests set out above are not satisfied. Withdrawal of approval generally has effect from the time when notice is given to the VCT but, in relation to capital gains of the VCT only, can be backdated to not earlier than the first day of the accounting period commencing immediately after the last accounting period of the VCT in which all of the tests were satisfied.
Clearance has been requested from HMRC in respect of the Scheme under Section 701 ITA 2007 confirming that the receipt of Scheme Shares should not, except in the case of dealers, be regarded as an income receipt for the purposes of UK taxation.
Clearance has been requested from HMRC to confirm that the Scheme meets the requirements of the Merger Regulations and as such the receipt by Hargreave Hale AIM VCT 2 Shareholders of Scheme Shares should not prejudice tax reliefs obtained by the Hargreave Hale AIM VCT 2 Shareholders on existing Hargreave Hale AIM VCT 2 Shares and should not be regarded as a disposal.
The implementation of the Scheme should not affect the VCT reliefs obtained by Shareholders on subscription for existing Shares. The implementation of the Scheme should not affect the status of the Company as a VCT. It is the intention of the Board to continue to comply with the requirements of ITA 2007 so as to continue to qualify as a VCT.
The above is only a summary of the conditions to be satisfied for a company to be treated as a VCT.
passed to:
3.9 At 9 February 2018 (being the latest practical date prior to the publication of this document) the issued fully paid share capital of the Company is:
| Class of shares | Nominal value | Issued (fully paid) | |
|---|---|---|---|
| £ | number | ||
| Ordinary Shares | £0.01 | 804,515 | 80,451,479 |
3.10 The issued fully paid share capital of the Company immediately after the Offer has closed (assuming the Offer is fully subscribed and the Over-allotment Facility is utilised in full, and that 69,953,074 Scheme Shares are issued pursuant to the Merger) will be as follows:
| Class of shares | Nominal value Issued (fully paid)* |
||
|---|---|---|---|
| £ | number | ||
| Ordinary Shares | £0.01 | 1,851,630 | 185,162,981 |
* using an Offer Price based on the NAV as at 31 January 2018
3.19 The Ordinary Shares will be in registered form. No temporary documents of title will be issued and prior to the issue of definitive certificates, transfers will be certified against the register. It is expected that definitive share certificates for the Ordinary Shares will be posted to allottees as soon as practicable following allotment of the Ordinary Shares.
3.20 The ISIN and SEDOL Code of Hargreave Hale AIM VCT 1 Ordinary Shares are GB00B02WHS05 and B02WHS0, respectively. The Legal Entity Identifier code of Hargreave Hale AIM VCT 1 is 213800LRYA19A69SIT31.
| Allotment date | Shares issued (all Ordinary |
Issue price (p) per |
|---|---|---|
| Shares) | Ordinary Share | |
| 11 November 2014 | 1,055,225 | 80.04 |
| 25 November 2014 | 1,188,746 | 81.18 |
| 5 December 2014 | 777,137 | 82.81 |
| 23 December 2014 | 869,831 | 80.19 |
| 13 January 2015 | 1,673,429 | 78.64 |
| 20 January 2015 | 1,535,989 | 77.48 |
| 27 February 2015 | 1,032,384 | 77.84 |
| 20 March 2015 | 1,179,215 | 78.00 |
| 31 March 2015 | 1,313,477 | 78.07 |
| 2 April 2015 | 759,947 | 77.77 |
| 7 April 2015 | 12,986 | 77.77 |
| 8 April 2015 | 511,856 | 77.42 |
| 5 May 2015 | 124,803 | 78.09 |
| 4 June 2015 | 203,908 | 80.68 |
| 30 June 2015 | 78,509 | 79.43 |
| 18 August 2015 | 534,964 | 79.95 |
| 22 December 2015 | 994,829 | 78.76 |
| 30 December 2015 | 664,075 | 78.66 |
| 19 January 2016 | 1,384,765 | 75.66 |
| 2 February 2016 | 3,101,290 | 73.79 |
| 25 February 2016 | 942,014 | 73.54 |
| 15 March 2016 | 1,707,644 | 74.42 |
| 4 April 2016 | 3,249,234 | 76.59 |
| 5 April 2016 | 538,704 | 76.59 |
| 6 April 2016 | 575,160 | 76.59 |
| 5 May 2016 | 163,852 | 77.97 |
| 25 May 2016 | 529,259 | 77.61 |
| 23 June 2016 | 327,931 | 73.64 |
| 4 August 2016 | 235,855 | 75.45 |
| 31 August 2016 | 314,487 | 77.39 |
| 30 September 201 | 320,187 | 78.09 |
| 19 October 2016 | 697,299 | 79.10 |
| 17 November 2016 | 876,072 | 77.41 |
| 5 January 2017 | 635,619 | 76.82 |
| 12 January 2017 | 879,241 | 78.32 |
| 2 February 2017 | 2,986,033 | 79.43 |
| 14 February 2017 | 2,794,135 | 80.12 |
| 27 February 2017 | 1,711,449 | 80.23 |
| 20 March 2017 | 9,113,668 | 80.82 |
| 6 April 2017 | 844,468 | 80.95 |
| Buyback date | Shares bought (all Ordinary |
Purchase price (p) |
| Shares) | per Ordinary Share | |
| 14 October 2014 | 25,000 | 73.6 |
| 6 November 2014 | 79,377 | 73.31 |
| 12 November 2014 | 26,000 | 73.38 |
| 14 November 2014 | 62,533 | 73.38 |
| 11 December 2014 | 37,258 | 75.43 |
| 5 February 2015 | 255,306 | 70.03 |
| 17 February 2015 | 59,944 | 70.48 |
| 18 March 2015 | 24,787 | 71.51 |
|---|---|---|
| 18 March 2015 | 8,962 | 71.51 |
| 24 March 2015 | 3,773 | 70.98 |
| 9 April 2015 | 67,613 | 70.97 |
| 17 April 2015 | 73,649 | 71.43 |
| 11 May 2015 | 34,787 | 71.60 |
| 15 May 2015 | 37,127 | 71.93 |
| 22 May 2015 | 60,000 | 73.40 |
| 19 June 2015 | 56,079 | 72.64 |
| 24 July 2015 | 40,570 | 72.85 |
| 31 July 2015 | 95,000 | 72.276 |
| 7 August 2015 | 88,468 | 72.409 |
| 14 August 2015 | 37,026 | 73.14 |
| 2 October 2015 | 43,000 | 71.50 |
| 30 October 2015 | 49,662 | 73.29 |
| 6 November 2015 | 80,135 | 73.43 |
| 11 December 2015 | 41,245 | 74.40 |
| 24 December 2015 | 15,000 | 72.20 |
| 15 January 2016 | 15,690 | 71.77 |
| 29 January 2016 | 227,913 | 67.74 |
| 26 February 2016 | 17,489 | 67.42 |
| 18 March 2016 | 412,160 | 68.23 |
| 8 April 2016 | 53,244 | 70.21 |
| 22 April 2016 | 20,299 | 71.88 |
| 6 May 2016 | 32,836 | 71.478 |
| 10 June 2016 | 84,392 | 69.14 |
| 29 July 2016 | 35,352 | 68.80 |
| 9 September 2016 | 32,770 | 71.45 |
| 23 September 2016 | 45,106 | 70.95 |
| 13 January 2017 | 42,698 | 71.8 0 |
| 27 January 2017 | 14,810 | 72.675 |
| 10 February 2017 | 17,647 | 73.18 |
| 17 February 2017 | 17,908 | 73.45 |
| 10 March 2017 | 135,196 | 74.07 |
| 24 March 2017 | 58,835 | 74.22 |
| 31 March 2017 | 31,127 | 73.93 |
| 12 April 2017 | 93,867 | 75.47 |
| 21 April 2017 | 35,000 | 76.06 |
| 5 May 2017 | 78,000 | 76.80 |
| 24 May 2017 | 94,749 | 77.47 |
| 2 June 2017 | 75,381 | 78.28 |
| 16 June 2017 | 72,000 | 75.00 |
| 30 June 2017 | 20,000 | 74.94 |
| 14 Jul 2017 | 14,000 | 74.44 |
| 28 July 2017 4 August 2017 |
28,822 33,000 |
75.36 75.39 |
| 11 August 2017 | 17,000 | 75.48 |
| 13 October 2017 | 3,185 | 78.25 |
| 27 October 2017 | 31,123 | 78.81 |
| 3 November 2017 | 6,000 | 79.55 |
| 10 November 2017 | 889,075 | 79.65 |
| 15 December 2017 | 127,500 | 76.78 |
| 29 December 2017 | 50,000 | 76.08 |
| 5 January 2018 | 31,847 | 77.05 |
| 12 January 2018 | 31,009 | 77.63 |
| 19 January 2018 | 21,000 | 78.7 0 |
| 2 February 2018 | 11,000 | 79.515 |
Subject to any special terms as to voting on which any Shares may be issued, on a show of hands every member present in person (or being a corporation, present by authorised representative) shall have one vote and, on a poll, every member who is present in person or by proxy shall have one vote for every Share of which he is the holder. The Shares shall rank pari passu as to rights to attend and vote at any general meeting of the Company.
4.4 Transfer of Shares
The Shares are in registered form and will be freely transferable. All transfers of Shares must be effected by a transfer in writing in any usual form or any other form approved by the Directors. The instrument of transfer of a Share shall be executed by or on behalf of the transferor and, in the case of a partly paid share by or on behalf of the transferee. The Directors may refuse to register any transfer of a partly paid Share, provided that such refusal does not prevent dealings taking place on an open and proper basis and may also refuse to register any instrument of transfer unless: it is in respect of a fully paid share; it is in respect of shares on which the company does not have a lien; it is in respect of only one class of share; and the transferees do not exceed four in number.
The Company may in general meeting declare dividends in accordance with the respective rights of the members, provided that no dividend shall be payable in excess of the amount recommended by the Directors. The Directors may pay such interim dividends as appear to them to be justified. No dividend or other monies payable in respect of a Share shall bear interest as against the Company. There are no fixed dates on which entitlement to a dividend arises. Such distributions shall be made in accordance with the class rights set out in paragraph 4.18 below.
All dividends unclaimed for a period of twelve years after being declared or becoming due for payment shall be forfeited and shall revert to the relevant Company.
If any member or other person appearing to be interested in shares of the Company is in default in supplying within 42 days (or 28 days where the shares represent at least 0.25% of its the share capital) after the date of service of a notice requiring such member or other person to supply to the Company in writing all or any such information as is referred to in section 793 of the Act, the Directors may, for such period as the default shall continue, impose restrictions upon the relevant shares.
The restrictions available are the suspension of voting or other rights conferred by membership in relation to meetings of the Company in respect of the relevant shares and additionally in the case of a shareholder representing at least 0.25% by nominal value of any class of shares of the Company then in issue, the withholding of payment of any dividends on, and the restriction of transfer of, the relevant shares.
On a winding-up any surplus assets of the Company will be divided amongst the holders of its Shares according to the respective numbers of Shares held by them in the relevant Company and in accordance with the provisions of the Act, subject to the rights of any shares which may be issued with special rights or privileges. The Articles of Association provide that the liquidator may, with the sanction of a resolution and any other sanction required by the Act, divide amongst the members in specie the whole or any part of the assets of the Company in such manner as he may determine.
Whenever the capital of the Company is divided into different classes of shares, the rights attached to any class may (unless otherwise provided by the terms of issue of that class) be varied or abrogated either with the consent in writing of the holders of not less than three-fourths of the nominal amount of the issued shares of the class or with the sanction of a special resolution passed at a separate meeting of such holders.
4.10 Directors
Unless and until otherwise determined by the Company in General Meeting the number of Directors shall not be less than two nor more than ten. The continuing Directors may act notwithstanding any vacancy in their body, provided that if the number of the Directors be less than the prescribed minimum the remaining Director or Directors shall forthwith appoint an additional Director or additional Directors to make up such minimum or shall convene a General Meeting of the Company for the purpose of making such appointment.
Any Director may in writing under their hand appoint (a) any other Director, or (b) any other person who is approved by the Board of Directors as hereinafter provided to be their alternate. A Director may at any time revoke the appointment of an alternate appointed by them. Every person acting as an alternate Director shall be an officer of the Company, and shall alone be responsible to the Company for their own acts and defaults, and they shall not be deemed to be the agent of or for the Director appointing them.
Subject to the provisions of the Act, the Directors may from time to time appoint one or more of their body to be Managing Director or Joint Managing Directors of the Company or to hold such other executive office in relation to the management of the business of the Company as they may decide.
A Director of the Company may continue or become a Director or other officer, servant or member or any company promoted by the Company or in which it may be interested as a vendor shareholder, or otherwise, and no such Director shall be accountable for any remuneration or other benefits derived as director or other officer, servant or member of such company.
The Directors may from time to time appoint a President of the Company (who need not be a Director of the Company) and may determine their duties and remuneration and the period for which he is to hold office.
The Directors may from time to time provide for the management and transaction of the affairs of the Company in any specified locality, whether at home or abroad, in such manner as they think fit.
appointment.
A Director shall also retire from office at or before the third annual general meeting following the annual general meeting at which he last retired and was re-elected. A retiring Director shall be eligible for re-election. A Director shall be capable of being appointed or re-appointed a Director despite having attained any particular age.
4.14 Borrowing powers
Subject as provided below, the Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital.
The Directors shall restrict the borrowings of the Company and exercise all voting and other rights or powers of control over its subsidiary undertakings (if any) so as to secure that the aggregate amount at any time outstanding in respect of money borrowed by the group, being the Company and its subsidiary undertakings for the time being (excluding intra-group borrowings), shall not without the previous sanction of an ordinary resolution of the Company exceed a sum equal to 15% of the aggregate total amount received from time to time on the subscription of shares of the Company.
At any time when the Company has given notice in the prescribed form (which has not been revoked) to the Registrar of Companies of its intention to carry on business as an investment company ("a Relevant Period") the distribution of the Company's capital profits (within the meaning of section 833 of the Act) shall be prohibited. The Board shall establish a reserve to be called the capital reserve. During a Relevant Period, all surpluses arising from the realisation or revaluation of investments and all other monies realised on or derived from the realisation, payment or other dealing with any capital asset in excess of the book value thereof and all other monies which are considered by the Board to be in the nature of accretion to capital shall be credited to the capital reserve. Subject to the Act, the Board may determine whether any amount received by the relevant Company is to be dealt with as income or capital or partly one way and partly the other. During a Relevant Period, any loss realised on the realisation or payment or other dealing with investments, or other capital losses, and, subject to the Act, any expenses, loss or liability (subscription therefore) which the Board considers to relate to a capital item or which the Board otherwise considers appropriate to be debited to the capital reserve shall be carried to the debit of the capital reserve. During a Relevant Period, all sums carried and standing to the credit of the capital reserve may be applied for any of the purposes for which sums standing to any revenue reserve are applicable except and provided that during a Relevant Period no part of the capital reserve or any other money in the nature of accretion to capital shall be transferred to the revenue reserves of the Company or be regarded or treated as profits of the Company available for distribution (as defined in section 829 of the Act) or be applied in paying dividends on any shares in the Company. In periods other than a Relevant Period, any amount standing to the credit of the capital reserve may be transferred to the revenue reserves of the Company or be regarded or treated as profits of the Company available for distribution (as defined by section 829 of the Act) or applied in paying dividends on any shares in the Company.
Annual general meetings shall be held at such time and place as may be determined by the Directors and within a period of six months beginning on the day following the Company's accounting reference date.
The Directors may, whenever they think fit, convene a general meeting of the Company, and general meetings shall also be convened on such requisition or in default may be convened by such requisitionists as are provided by the Act. Any meeting convened under this Article by requisitionists shall be convened in the same manner as near to as possible as that in which meetings are to be convened by the Directors.
An annual general meeting shall be called by not less than twenty-one days' notice in writing, and all other general meetings of the Company shall be called by not less than fourteen days' notice in writing. The notice shall be exclusive of the day on which it is given and of the day of the meeting and shall specify the place, the day and hour of meeting, and in case of special business the general nature of such business. The notice shall be given to the members, other than those who, under the provisions of the articles or the terms of issue of the shares they hold, are not entitled to receive notice from the Company, to the Directors and to the Auditors. A notice calling an annual general meeting shall specify the meeting as such and the notice convening a meeting to pass a special resolution or an ordinary resolution as the case may be shall specify the intention to propose the resolution as such.
In every notice calling a meeting of the Company or any class of the members of the Company there shall appear with reasonable prominence a statement that a member entitled to attend and vote is entitled to appoint one or more proxies to attend and, on a poll, vote instead of them, and that a proxy need not also be a member.
If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened by or upon the requisition of members, shall be dissolved. In any other case it shall stand adjourned to such time and at such place as the Chairman shall appoint. At any such adjourned meeting the member or members present in person or by proxy and entitled to vote shall have power to decide upon all matters which could properly have been disposed of at the meeting from which the adjournment took place. The Company shall give not less than seven clear days' notice of any meeting adjourned for the want of a quorum and the notice shall state that the member or members present as aforesaid shall form a quorum.
The Chairman may, with the consent of the meeting (and shall, if so directed by the meeting) adjourn any meeting from time to time and from place to place. No business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.
The Directors shall put an ordinary resolution to the annual general meeting of the Company in 2025 (subject to approval at the General Meeting) and, if passed, to every fifth subsequent annual general meeting, proposing that the Company should continue as a Venture Capital Trust for a further five year period. If any such resolution is not passed, the Directors shall draw up proposals for the reorganisation, reconstruction or voluntary winding up of the Company for submission to the members of the Company at an extraordinary general meeting to be convened by the Directors on a date not more than 9 months after such annual general meeting. The Directors shall use all reasonable endeavours to ensure that the proposals for the reorganisation, reconstruction or voluntary winding up of the Company as are approved by special resolution are implemented as soon as is reasonably practicable after passing of such a resolution.
For the purposes of this, an ordinary resolution will not have been carried only if those members in person or by proxy who vote against such resolution hold in aggregate not less than twenty five per cent. of the issued share capital of the Company at such time entitled to attend and vote at such a meeting.
The capital and assets of the Company attributable to the Ordinary Shares shall on a winding up or on a return of capital be distributed amongst the Ordinary Shareholders, pro rata according to the nominal capital paid up on their holdings of Ordinary Shares.
CREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by a certificate and transferred otherwise than by a written instrument.
6.1 As at the date of this document the interests of the Directors and their immediate families (all of which are beneficial) in the share capital of the Company which (i) are or will be notified to the Company in accordance with rule 3 of the Disclosure Guidance and Transparency Rules ("DTR 3") by each Director; or (ii) are interests of a connected person (within the meaning in DTR 3) of a Director which are or will be required to be disclosed under DTR 3 and the existence of which is known to or could with reasonable diligence be ascertained by that Director; are or are expected to be as follows:
| As at 9 February 2018 (being the latest practical date prior to the publication of this document) |
After the Offer has closed* | |||
|---|---|---|---|---|
| Director | Number of Ordinary Shares |
Percentage of issued share capital |
Number of Ordinary Shares |
Perce ntage of issued share capital |
| Aubrey Brocklebank | 4,845 | 0.01% | 4,845 | 0.00% |
| David Brock | 42,170 | 0.05% | 42,170 | 0.02% |
| Oliver Bedford | 9,185** | 0.01% | 18,907*** | 0.01% |
* assuming that the Maximum Subscription is achieved in relation to the Offer Shares , taking account of the Over-allotment Facility, and that all the allotments are made on the basis of the NAV per Ordinary Share as at 31 January 2018, and that the Merger proceeds on the basis of the latest published unaudited NAVs of the Companies as at the date of this document (being 83.29p and 123.76p for the Company and HH2 respectively), resulting in 69,953,074 Scheme Shares being issued.
** Includes 3,185 Ordinary Shares in Hargreave Hale AIM 1 held by Catherine Bedford.
*** Includes 6,595 Ordinary Shares in Hargreave Hale AIM 1 held by Catherine Bedford.
6.2 As at 9 February 2018 (being the latest practical date prior to the publication of this document) and after the Offer has closed, the Company is aware of the following persons who hold or will hold, directly or indirectly, voting rights representing 3% or more of the issued share capital of the Company to which voting rights are attached (assuming that the Offer is fully subscribed):
| As at the date of this Document | After the Offer has closed | |||
|---|---|---|---|---|
| Name | Number of Ordinary Shares |
Percentage of voting rights |
Number of Ordinary Shares* |
Percent age of voting rights of the Ordinary Shares* |
| Hargreave Hale Nominees |
3,410,703 | 4.24% | 6,427,219 | 3.47% |
| Hargreaves Lansdowne Nominees Limited |
4,659,055 | 5.79% | 9,424,208 | 5.09% |
* assuming that the Maximum Subscription is achieved, taking account of the Over-allotment Facility, that all the Shareholders listed above do not subscribe for any shares under the Offer, that all the allotments are made on the basis of the NAV per Ordinary Share as at 31 January 2018, and that the Merger proceeds on the basis of the latest published unaudited NAVs of the Companies as at the date of this document (being 83.29p and 123.76p for the Company and HH2 respectively), resulting in 69,953,074 Scheme Shares being issued.
| Name | Current Directorships/Partnership Interests |
Past Directorships/ Partnership Interests |
|---|---|---|
| Sir Aubrey Brocklebank | Aubrey Brocklebank & Associates Limited | Downing Distribution VCT 1 Plc |
| Grasshopper Management LLP (dissolved) | ||
| Hargreave Hale AIM VCT 1 Plc | Octopus Second AIM VCT Plc (dissolved) | |
| Pennine AIM VCT VI Plc (dissolved) | ||
| Puma VCT Plc (dissolved) | ||
| Puma VCT II Plc (dissolved) | ||
| Puma VCT III Plc (in members' voluntary liquidation) |
||
| NGS Corporation Plc | Puma VCT IV plc (in members' voluntary liquidation) |
|
| Top Ten Holdings Plc | ||
| Salt International Limited (In Liquidation) | Urban and Country Leisure Limited | |
| Downing FOUR VCT plc | Premier Fireserve Engineering Ltd (in administration) |
|
| Mast Investment Holdings Ltd (Guernsey) | Premier Fireserve Ltd (in administration) | |
| Continental Shelf 547 Limited (dissolved) | ||
| Continental Shelf 548 Limited (dissolved) | ||
| AB and A Investments Limited (dissolved) |
| The Media Vehicle Group Limited (dissolved) |
||
|---|---|---|
| Inventive Property Holdings Limited | ||
| Epiquestlive Inc | ||
| Epiquestlive UK Limited | ||
| Puma VCT 8 Plc (in members' voluntary liquidation) |
||
| The Classic 2CV Racing Club Limited | ||
| Oliver Bedford | Hargreave Hale AIM VCT 1 Plc | |
| Hargreave Hale AIM VCT 2 Plc | ||
| David Michael Brock | Elderstreet VCT Plc | Ossian Retail Group Limited (dissolved) |
| Episys Limited | Puma VCT Plc (dissolved) | |
| Hargreave Hale AIM VCT 1 Plc | Puma VCT II Plc (dissolved) | |
| Puma VCT 12 Plc | Puma VCT III Plc (in members' voluntary liquidation) |
|
| Park Regis Birmingham LLP | Puma VCT IV Plc (in members' voluntary liquidation) |
|
| Leeson Limited | Puma VCT 8 Plc (in members' voluntary liquidation) |
The business address of all the Directors and Proposed Director is: 41 Lothbury London EC2R 7AE .
7.1 In the financial year ended 30 September 2017, the total remuneration of the Directors from Hargreave Hale AIM VCT 1 was £58,500 (exclusive of VAT if any). From this, Oliver Bedford and David Brock each received £18,000 per annum (exclusive of VAT, if any), and Sir Aubrey Brocklebank Bt. received £22,500 per annum (exclusive of VAT, if any). Payments in respect of Olive Bedford as Non-Executive Director were paid to the Investment Manager, Hargreave Hale Limited. The total amount expected to be payable to the Directors of Hargreave Hale AIM VCT 1 for the year ending 30 September 2018, is £58,500 (exclusive of VAT if any).
The Company does not have any subsidiaries.
The following are the only contracts (not being contracts entered into in the ordinary course of business) which have been entered into by the Company in the two years immediately preceding the date of this document or which are expected to be entered into prior to Admission and which are, or may be, material or which have been entered into at any time by the Company and which contain any provision under which either Company has any obligation or entitlement which is, or may be, material to the relevant Company at the date of this document:
September 2009 between the same parties, and as subsequently varied, provides that, conditional upon the Merger proceeding, the fees payable to the Investment Manager for providing administrative services to Hargreave Hale AIM VCT 1 shall be increased to an annual fee of £110,000 (plus VAT).
9.3 Under an offer agreement dated on 14 December 2016 (the "2016 Offer Agreement") and made between the Company and HH2 (1), the Directors (2), the Sponsor (3), and the Investment Manager (4), whereby the Sponsor agreed to act as sponsor to the share offers in 2016 (the "2016 Offers") and the Investment Manager undertook as agent of the Company to use its reasonable endeavours to procure subscribers under the 2016 Offers. Under the 2016 Offer Agreement, the Company agreed to pay the Investment Manager a commission of 3.5% of the aggregate value of accepted applications for Ordinary Shares received pursuant to the 2016 Offers. Out of this fee, the Investment Manager paid all other costs and expenses of or incidental to the 2016 Offers.
Under the 2016 Offer Agreement, which may be terminated by the parties in certain circumstances, the Investment Manager, the companies and the Directors have given certain warranties and indemnities to the Sponsor. Warranty claims must be made by no later than 3 months after the second annual general meeting of the relevant company following the closing date of the 2016 Offers at which Shareholders approve the relevant company's accounts or by the date the relevant company is subject to a takeover. The warranties and indemnities were in usual form for a contract of this type and the warranties are subject to limits of the lesser of (i) £10 million or (ii) the total proceeds of the 2016 Offers for the Investment Manager and in respect of the Directors one year's director fees for each Director. The companies also agreed to indemnify the Sponsor in respect of its role as Sponsor and under the 2016 Offer Agreement. The 2016 Offer Agreement could be terminated, inter alia, if any statement in the Prospectus for the 2016 Offer was untrue, any material omission from that prospectus arose or any breach of warranty occurred.
Under the 2015 Offer Agreement, which could be terminated by the parties in certain circumstances, the Investment Manager, the Companies and the Directors gave certain warranties and indemnities to the Sponsor. Warranty claims must be made by no later than 3 months after the second annual general meeting of the relevant company following the closing date of the 2015 Offers at which Shareholders approve the relevant company's accounts or by the date the relevant company is subject to a takeover. The warranties and indemnities are in usual form for a contract of this type and the warranties
are subject to limits of the lesser of (i) £10 million or (ii) the total proceeds of the 2015 Offers for the Investment Manager and in respect of the Directors one year's director fees for each Director. The Companies also agreed to indemnify the Sponsor in respect of its role as Sponsor and under the 2015 Offer Agreement. The 2015 Offer Agreement may be terminated, inter alia, if any statement in the prospectus for the 2015 Offers was untrue, any material omission from such prospectus arises or any breach of warranty occurs.
9.6 Under an offer agreement dated 2 October 2014 (the "2014 Offer Agreement") made between the Companies (1), the Directors (2), Nplus 1 Singer Advisory LLP, (3), and the Investment Manager (4), Nplus 1 Singer Advisory LLP agreed to act as sponsor to the share offers in 2014 (the "2014 Offers") and the Investment Manager undertook as agent of the Companies to use its reasonable endeavours to procure subscribers under the 2014 Offers. Under the 2014 Offer Agreement, the Companies each paid the Investment Manager a commission of 3.5% of the aggregate value of accepted applications for Ordinary Shares received pursuant to the 2014 Offers.
Out of this fee, the Investment Manager paid all other costs and expenses of or incidental to the 2014 Offers. Under the 2014 Offer Agreement, the Investment Manager, the Companies and the Directors gave certain warranties and indemnities to Nplus 1 Singer Advisory LLP. Warranty claims must be made by no later than 3 months after the second annual general meeting of the relevant company following the closing date of the Offers at which Shareholders approve the relevant company's accounts or by the date the relevant company is subject to a takeover. The warranties and indemnities are in usual form for a contract of this type and the warranties are subject to limits of the total proceeds of the 2014 Offers for the Investment Manager, and one year's director fees for each Director. The Companies also agreed to indemnify Nplus 1 Singer Advisory LLP in respect of its role as sponsor and under the 2015 Offer Agreement. The 2014 Offer Agreement may be terminated, inter alia, if any statement in the prospectus issued in relation to the 2014 Offers is untrue, any material omission from the prospectus in relation to the 2014 Offers arises or any breach of warranty occurs.
9.7 Under an offer agreement dated 31 October 2013 (the "2013 Offer Agreement") made between the Companies (1), the Directors (2), Nplus 1 Singer Advisory LLP (3), and the Investment Manager (4), Nplus 1 Singer Advisory LLP agreed to act as sponsor to the share offers in 2013 (the "2013 Offers") and the Investment Manager undertook as agent of the Companies to use its reasonable endeavours to procure subscribers under the 2013 Offers. Under the 2013 Offer Agreement, the Companies each paid the Investment Manager a commission of 3.5% of the aggregate value of accepted applications for Ordinary Shares received pursuant to the 2013 Offers.
Out of this fee, the Investment Manager paid all other costs and expenses of or incidental to the 2013 Offers. Under the 2013 Offer Agreement, the Investment Manager, the Companies and the Directors gave certain warranties and indemnities to Nplus 1 Singer Advisory LLP. Warranty claims must be made by no later than 3 months after the second annual general meeting of the relevant company following the closing date of the Offers at which Shareholders approve the relevant company's accounts or by the date the relevant company is subject to a takeover. The warranties and indemnities are in usual form for a contract of this type and the warranties are subject to limits of the total proceeds of the 2013 Offers for the Investment Manager, and one year's director fees for each Director. The Companies also agreed to indemnify Nplus 1 Singer Advisory LLP in respect of its role as sponsor and under the 2013 Offer Agreement. The 2013 Offer Agreement may be terminated, inter alia, if any statement in the prospectus issued in relation to the 2013 Offers is untrue, any material omission from the prospectus in relation to the 2013 Offers arises or any breach of warranty occurs
9.8 An agreement (the " Investment Management Agreement") dated 10 September 2004 (as amended) between Hargreave Hale AIM VCT 1 (1) and the Investment Manager (2) under which the Investment Manager agreed to provide discretionary investment management and advisory services to the Company in respect of its portfolio of Qualifying Investments and Non-Qualifying Investments. This was amended by a deed of variation dated 13 October 2005 in relation to the previous offer of C shares (which have since converted into Ordinary Shares).
Under the Hargreave Hale AIM VCT 1 Investment Management Agreement , the Investment Manager received fees (exclusive of VAT) equal to 0.9% per annum of the net asset value of the Company until the termination of the HH1 Investment Management Agreement, payable quarterly in arrears. The Investment Manager is also entitled to receive the Performance Incentive Fees and reimbursement of expenses incurred in performing its obligations. In respect of investments made in companies that are not quoted on AIM, the Investment Manager is entitled to charge expenses and initial management fees to investee companies that, without the Board's consent, will not exceed 1% of the value of the total investment by the Company (and any other investor to whom the Company syndicates any part of its investment) plus, in the case of periodical fees, £10,000 per annum (plus VAT, if applicable).
In line with normal VCT practice, a performance related incentive fee will be payable to the Investment Manager. This annual performance related incentive fee will payable at the rate of 20% of any dividends paid to Shareholders in excess of 6p per Ordinary Share per annum, provided that the Net Asset Value per Ordinary Share is at least 95p. The first payment of the performance related incentive fee was payable after 30 September 2007 and would be payable provided cumulative distributions in the first three accounting periods exceeded 18p per Ordinary Share. Thereafter, a performance related incentive fee will be payable annually, provided the hurdles have been exceeded, with any cumulative shortfalls below 6p per Ordinary Share having to be made up in subsequent years before the incentive fee becomes payable. No performance related incentive fee will be payable unless the NAV per Ordinary Share is at least 95p.
The appointment may be terminated on 12 calendar months' notice by either party. No benefits are payable on termination.
date of the appointment of the administrator of KIS) under an administration agreement between KIS and Hargreave Hale AIM VCT 1 dated 10 September 2004, notwithstanding that that agreement was terminated by reason of the appointment of the administrator. KIS and Hargreave Hale AIM VCT 1 also agreed that the Company shall, out of the £60,000 due to KIS referred to above, assume responsibility to pay the trail commissions referred to above in this paragraph on behalf of KIS, and to pay to Hargreave Hale AIM VCT 2 £20,000 due to be paid to KIS in relation to the agreement referred to in paragraph 12.12 below. The Company also agreed to assume liability for all trail commissions payable after 29 September 2010, with KIS undertaking to indemnify the Hargreave Hale AIM VCT 1 and the directors against all claims resulting from inaccuracy of information provided by KIS to the Company, with the waiver of certain obligations of KIS under the 2004 and 2005 Offer Agreements (including the giving of an indemnity provided to the Company by KIS in relation to Annual Running Costs exceeding 3.5% of the company's net asset value).
9.11 Under an agreement between Hargreave Hale AIM VCT 1 (1), and the Investment Manager (2), dated 15 December 2010, the Company agreed to the variation of the terms of the Investment Management Agreement referred to in paragraph 9.6 above with (i) the Investment Manager providing an indemnity in relation to Annual Running Costs of the company exceeding 3.5% of the net assets of the Company with effect from 1 October 2010 and (ii) the annual management fee payable to the Investment Manager increasing to 1.5% of the net asset of the Company.
Under an agreement between Hargreave Hale AIM VCT 1 (1), and the Investment Manager (2), dated 27 February 2012, the Company agreed to the variation of the terms of the Investment Management Agreement referred to in paragraph 9.6 whereby that agreement was varied so as to extend the rights and obligations of the Investment Manager to the assets attributable to the new Ordinary Shares and the C shares in Hargreave Hale AIM VCT 1. Under the relevant Deed of Variation, the Investment Manager will receive an annual investment management fee of 1.5% of the net assets attributable to the new Ordinary Shares and the C shares and a Performance Incentive Fee in respect of the new Ordinary Shares and the C shares.
9.12 A transfer agreement between the Company and Hargreave Hale AIM VCT 2 (acting through the Liquidators) to give effect to the Scheme pursuant to which all of the assets and liabilities of Hargreave Hale AIM VCT 2 will be transferred to the Company (subject only to the consents from third parties which may be required to transfer such assets and liabilities) in consideration for Scheme Shares, as described in Part I of this document. If any of the parties so require, Hargreave Hale AIM VCT 2, acting by the Liquidators, shall promptly give instructions to any person holding any part of Hargreave Hale AIM VCT 2's assets as nominee of or on trust for Hargreave Hale AIM VCT 2, requiring such person to transfer such assets to the Company.
Hargreave Hale AIM VCT 2, acting by the Liquidators, will also undertake to execute and deliver such other documents and take such other steps as shall be reasonably required by the Company to vest in the Company the assets to be transferred to the Company under this agreement and otherwise to give the Company the full benefit of this Agreement. The Liquidators will agree under this agreement that all sale proceeds and/or dividends received in respect of the underlying assets of Hargreave Hale AIM VCT 2 will be transferred on receipt to the Company as part of the Scheme.
9.13 A deed of indemnity from the Company to the Liquidators pursuant to which the Company will indemnify the Liquidators for expenses and costs incurred by them in connection with the Scheme.
Other than the agreements, deeds and shareholdings referred to in paragraph 9, there
have been no related party transactions relating to the Companies between 1 October 2014 and the date of this document.
The Company will not conduct any trading activity which is significant in the context of its group (if any) as a whole. No more than 10%, in aggregate, of the value of the total assets of the Company at the time an investment is made may be invested in other listed closed-ended investment funds, except where those funds themselves have published investment policies which permit them to invest no more than 15% of their total assets in other listed closed-ended investment funds. The Company will, at all times, invest and manage its assets in a way which is consistent with their objective of spreading investment risk and in accordance with its published investment policy. The Company will also invest and manage its assets to ensure compliance with the Listing Rules, the Prospectus Rules and the VCT rules and restrictions.
13.1 The Board is accountable to Shareholders for the governance of the Company's affairs and is committed to maintaining the highest standards of corporate governance. Accordingly, the Board has adopted the Corporate Governance Code published by the Financial Reporting Council in April 2016 and reports against the principles and recommendations of this Code (the "Code"). Considering the principles detailed in the version of the Code applicable to the Company, the Boards believe that the Company as at the date of this document complies, save as disclosed below in relation to committees, with the provisions of the Code throughout the financial year ended 30 September 2017 (as detailed on page 32 of its Annual Report and Accounts for the period ended 30 September 2017) which can be downloaded at www.hargreaveaimvcts.co.uk. These Accounts are incorporated by reference, as set out below:
| Hargreave Hale AIM VCT 1 Audited financial statements for the period |
|
|---|---|
| ended 30 September 2017 | |
| Page numbers | |
| Corporate Governance Statement: | 29-33 |
| Departures from the Code: | 29 |
There are no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Company are aware) during the 12 months preceding the date of this document, which may have, or have had in the recent past, significant effects onthe Company's financial positions or profitability.
15.1 The estimated costs and expenses relating to the Offer will be 3.5% of gross funds raised
by the relevant Company under the Offer. Assuming full subscription under the Offer (and no utilisation of the Over-allotment Facility), the total net proceeds of the Offer after all fees, are expected to be £19.3 million. The Merger will not result in any proceeds being raised by the Company. The aggregate anticipated costs to the Company of undertaking the Merger are approximately £225,000.
Copies of the following documents will be available for inspection during normal business hours on any weekday (Saturdays, Sundays and public holidays excepted) at the registered office of each Company at 41 Lothbury London EC2R 7AE whilst the Offer remains open:
Dated: 12 February 2018
| "1985 Act" | The Companies Act 1985, as amended |
|---|---|
| "Act" | the Companies Act 2006 (as amended) |
| "Admission" | the admission of the Offer Shares issued, and to be issued, pursuant to the Offer to the premium segment of the Official List and to trading on the London Stock Exchange becoming effective |
| "AIFM" | means an AIFM as defined in Regulation 4 of the AIFM Regulations |
| "AIFM Regulations 2013" | The Alternative Investment Fund Managers Regulations 2013 (SI 2013/1773) |
| "Annual Running Costs" | means the running costs of the relevant Company and include the management fees payable to the Investment Manager (excluding any performance incentive fee), accounting and administration fees, as well as fees for directors, auditors, taxation advisers, sponsor, registrar, and the costs of communicating with shareholders; however, such costs shall exclude any VAT payable thereon (the payment of which is the responsibility of the respective Company) |
| "AIM" | the AIM Market operated by the London Stock Exchange |
| "Articles of Association" | the articles of association of each Company in force from time to time |
| "Companies" or "Funds" | Hargreave Hale AIM VCT 1 and/or Hargreave Hale AIM VCT 2 and "Company" or "Fund" means either one of them, as the context requires |
| "CREST" | the relevant system (as defined in the Regulations) operated by Euroclear |
| "Directors" or "Board" | the directors of the Company |
| "Disclosure Guidance and Transparency Rules" or "DTR" |
the Disclosure Guidance and Transparency Rules published by the FCA from time to time |
| "Equiniti" | Equiniti Limited |
| "EVCA" | the European Private Equity and Venture Capital Association |
| "FCA" | the Financial Conduct Authority in the United Kingdom and/or any successor or replacement body or bodies from time to time |
| "FSMA" | the Financial Services and Markets Act 2000, as amended |
| "General Meeting" | the general meeting of HH1 to be held on 16 March 2018 or any adjournment thereof) |
| "Hargreave Hale AIM VCT 1" or "HH1" |
Hargreave Hale AIM VCT 1 plc |
| "Hargreave Hale AIM VCT 2" or "HH2" |
Hargreave Hale AIM VCT 2 plc | ||
|---|---|---|---|
| "HH2 Share(s)" | Ordinary share(s) of 1p each in the capital of HH2 | ||
| "HMRC" | HM Revenue & Customs | ||
| "NEX" | ICAP Securities and Derivatives Exchange (formally PLUS) | ||
| "ITA" | Income Tax Act 2007, as amended | ||
| "Investment Manager" or "Hargreave Hale" |
Hargreave Hale Limited, which is authorised and regulated by the FCA |
||
| "Investor(s)" | subscriber for Offer Shares under the Offer | ||
| "Knowledge Intensive Company" |
a company satisfying the conditions in Section 331(A) of Part 6 ITA. | ||
| "Listing Rules" | the listing rules prescribed by the UK Listing Authority | ||
| "London Stock Exchange" | London Stock Exchange plc | ||
| "MAR" | Market Abuse Regulation (596/2014/EU) | ||
| "Marlborough Special Situations Fund" |
the Marlborough Special Situations Fund launched on 12 July 1995 being an authorised collective investment scheme as defined in FSMA |
||
| "Management Agreement" | the agreement dated 10 September 2004 (as amended) between Hargreave Hale AIM VCT 1 and Hargreave Hale Limited governing the management of Hargreave Hale AIM VCT 1's investments |
||
| "Maximum Subscription" | the receipt of the maximum subscription monies under the Offer, being an aggregate amount of £30,000,000 (including the Over allotment Facility) |
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| "Net Asset Value" or "NAV" | the value of each Company's assets and/or the relevant share pool, less its liabilities (divided by the appropriate number of shares in issue) |
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| "Non-Qualifying Investment" |
investments made by the Company which do not qualify as Qualifying Investments |
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| "Offer Agreement" | the offer agreement detailed in paragraph 9 of Part V of this document | ||
| "Offer" | the offer for subscription for Offer Shares by Hargreave Hale AIM VCT as described in this document |
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| "Offer Price" | the relevant offer price for the Offer Shares in the Company as determined by the Pricing Formula |
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| "Offer Shares" | the new Ordinary Shares in Hargreave Hale AIM VCT 1 to be issued pursuant to the Offer |
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| "Official List" | the Official List of the UK Listing Authority | ||
| "Ongoing Expense Ratio" | the total costs of managing and operating the Company divided by its NAV (including VAT where applicable) |
| Ordinary Shares | Ordinary shares of 1p each in the capital of the Company |
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| "Over-allotment Facility" | the ability of the Directors of the Company (at their discretion), if the Offer is oversubscribed, to increase the number of Offer Shares available for subscription under the Offer to raise further amounts under the Offer of up to £10 million |
| "Performance Incentive Fee" |
the fee payable to the Investment Manager, as described in paragraphs 9.6 and 9.10 of Part V of this document |
| "Pricing Formula" | the last Net Asset Value of an existing Ordinary Share (with an appropriate adjustment for any dividends declared and not yet paid if the allotment occurs whilst the shares are classified as ex-dividend) as published by the relevant Company prior to the date of allotment divided by 0.965 to allow for issue costs of 3.5% calculated, in pence, to two decimal places |
| "Prospectus" | this document |
| "Prospectus Rules" | as defined in section 73A(4) of the Financial Services and Markets Act 2000, rules expressed to relate to transferable securities |
| "Qualifying Investment" or "Qualifying Company" |
an investment made by a venture capital trust in a trading company which comprises a qualifying holding under Chapter 4 of Part 6 ITA |
| "Regulations" | the Uncertificated Securities Regulations 2001 (S.I. 2001/3755) |
| "Risk Finance State Aid" | State aid received by a company as defined in Section 280B (4) of ITA |
| "Risk Finance Guidelines" | The guidelines on State aid to promote risk finance investments published by the European Commission |
| "Scheme Shares" | the Ordinary Shares being issued subject to the Scheme (and each a "Scheme Share") |
| ''Scheme'' or "Merger" | the proposed merger of the Company with HH2 by means of placing HH2 into members' voluntary liquidation pursuant to Section 110 of IA 1986 and the acquisition by the Company of all of the assets and liabilities of HH2 in consideration for Scheme Shares |
| "Shareholder" | a holder of Shares |
| "Share(s)" | shares in the capital of Hargreave Hale AIM VCT 1 |
| "Sponsor" | Howard Kennedy Corporate Services LLP, which is authorised and regulated by the FCA and is a member of the London Stock Exchange |
| "Subscription" | means the amount in pounds sterling that the Investor has subscribed for in Shares |
| "UK Listing Authority" | the Financial Conduct Authority acting in its capacity as the competent authority for the purposes of Part VI of the Financial Markets and Services Act 2000 |
| "VCT" or "Venture Capital Trust" |
venture capital trust as defined in section 259 ITA |
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