## Cultivating opportunities ### Annual report and accounts ### for Hargreave Hale AIM VCT plc ### year ended 30 September 2023 ## Contents ### Page ### Strategic report ### Financial highlights for the year ended 30 September 2023 3 ### Financial calendar 3 ### Chair’s statement 4 ### The Company and its business model 10 ### Investment objectives, policy and strategy 11 ### Key performance indicators 14 ### Section 172 statement 18 ### Principal and emerging risks and uncertainties 22 ### Long term viability statement 24 ### Other matters 25 ### Summary of VCT regulations 26 ### The Investment Manager and the Administrator 27 ### Investment Manager’s report 29 ### Investment portfolio summary 33 ### Top ten investments 37 ### Governance ### Board of Directors 41 ### Directors’ report 42 ### Directors’ remuneration report 46 ### Corporate governance 51 ### Report of the Audit Committee 56 ### Report of the Management and Service Provider Engagement Committee 59 ### Statement of Directors’ responsibilities 60 ### Financial statements ### Independent Auditor’s report 62 ### Income statement 69 ### Balance sheet 70 ### Statement of changes in equity 71 ### Statement of cash ows 73 ### Notes to the nancial statements 74 ### Alternative performance measures 89 ### Glossary of terms 91 ### Shareholder information 93 ### Company information 95 ### Notice of annual general meeting 96 ### 1 ## Strategic report ### 2 # Highlights The report has been prepared by the Directors in accordance with the requirements of Section 414A of the Companies Act 2006. ## Financial highlights for the year ended 30 September 2023 | Net asset value (NAV) per share | NAV total return | Tax free dividends paid in the period | Share price total return | Ongoing charges ratio | | --- | --- | --- | --- | --- | | **46.34p** | **-14.70%^{(1)}** | **5.00p** | **-23.51%^{(1)}** | **2.24%^{(1)}** | - € 13.6 million invested in Qualifying Companies in the year. - € 91.65% invested by VCT tax value in Qualifying Investments at 30 September 2023. - € Final dividend of 1.50 pence per share proposed for the year end. - € Other for subscription closed to further applications on 10 February 2023, having raised £40 million. - € New Other for subscription launched on 7 September 2023 to raise £20 million, together with an over-allotment facility to raise up to a further £20 million. | Summary Financial data | 2023 | 2022 | | --- | --- | --- | | NAV (£m) | **151.92** | 160.51 | | NAV per share (p) | **46.34** | 60.19 | | NAV total return (%) ^{(1)} | **-14.70** | -33.42 | | Market capitalisation (£m) | **140.96** | 167.32 | | Share price (p) | **43.00** | 62.75 | | Share price discount/premium to NAV per share (%) ^{(1)} | **-7.21** | +4.25 ^{(1)} | | Share price 5 year average discount to NAV per share (%) ^{(1)} | **-5.64** | -5.65 | | Share price total return (%) ^{(1)} | **-23.51** | -28.06 | | (Loss)/gain per share for the year (p) | **-9.32** | -33.42 | | Dividends paid per share (p) | **5.00** | 6.65 | | Ongoing charges ratio (%) ^{(1)} | **2.24** | 2.06 | (1) Alternative performance measure definitions and illustrations can be found on pages 89 to 92. (2) The FY22 year end premium to NAV is a function of the year end NAV of 60.19 pence per share and the year end share price. ## Financial Calendar | Financial calendar | | | --- | --- | | Record date for final dividend | 5 January 2024 | | Payment of final dividend | 15 February 2024 | | Annual General Meeting | 8 February 2024 | | Announcement of half-yearly results for the six months ending 31 March 2024 | June 2024 | | Payment of interim dividend (subject to Board approval) | July 2024 | 3 ## Chair’s statement Introduction Stock market liquidity is a major contributory factor. I would like to welcome shareholders who joined With many active managers now deep into their third us as a result of the recent oers for subscription. year of outows, there are few institutional buyers of As always, we are grateful to new and existing shares in small UK companies. Taken together, this shareholders who continue to support the VCT, has left the sector in deep value territory. despite the dicult times we continue to live The malaise that continues to hang over markets through. in the UK and elsewhere has heavily impacted the The nancial year started with some signicant primary markets in which companies raise new capital headwinds, including high ination, a dislocation in through the sale of new shares. With valuations the UK Government bond market and a forecast by so depressed and very little capital available for the Bank of England that the United Kingdom would investment (away from VCTs), very few companies endure the longest recession of the last 100 years. have undertaken an initial public oering (IPO). On Whilst we would not wish to downplay the hardship AIM there were just 3 VCT qualifying initial public that followed, the economy was stronger than oerings within the year. Despite this, we are predicted, in part due to Government intervention pleased to report that we deployed capital into VCT in the energy market over the winter. UK consumer qualifying companies ahead of budget, highlighting condence staged a partial recovery o historic lows, the importance of having a dened pool of capital, a employment remained strong and, towards the end diversied portfolio and a exible investment policy. of the period under review, UK real wage growth Performance turned positive. As described in more detail in the Investment As I noted in our interim report, uncertainty is a Manager’s report, this has been a second consecutive theme that we have all learned to live with these dicult year for performance. In contrast to last past few years. To this list, we must now add the year, when we suered a substantial (unrealised) loss implications of the terrible events that continue to of value across investments in public and private unfold in Israel and Gaza. companies, this year the material declines were Whilst we are encouraged that much of the deep conned to the portfolio of investments in public pessimism that permeated markets at the start companies. The value of the investments in private of the nancial year did not manifest, we remain companies were protected by the dicult decisions mindful of the macro-economic backdrop, both here made last year and, in some cases, better trading. and abroad. The cost of borrowing has changed Although the markets demand a cautious approach, dramatically within the year, impacting the nancial we are hopeful that we might start to see some value sector and companies with high levels of debt. Last recovery within the private companies in the current year, this manifested itself within the UK pension year. It is worth reiterating at this point that the industry. This year, stress emerged in parts of the predominant factor that drove down the valuations US and European banking system. Remote as this in our investments in private companies last year might seem, it aected companies closer to home, was the broad based (and deep) de-rating of publicly particularly pre-clinical and clinical stage companies listed companies. within the life sciences industry that were reliant Whilst higher interest rates are a source of concern upon funding from Silicon Valley Bank (SVB). Those for many and likely to weigh on economic activity, exposed to SVB became more cautious with their they have also made a signicant positive impact on budgets, which in turn reduced demand for the the income generated from within the VCT, either products and services sold into them. Several of our from cash held on deposit or from recently acquired portfolio companies have seen weaker trading as a short-dated xed income investments. Investment consequence of this. grade xed income assets were a feature of the When launching the 2022 oer for subscription, we investment portfolio for a number of years during were cautious about the short-term outlook but and after the nancial crisis until negative real yields spoke about the opportunity for value creation over (and therefore high prices) forced us to exit those the medium term. Our experience over the period positions. We have been able to use the sell o in the under review is consistent with that view. Generating bond market this year to rebuild positions that will short-term performance has been very dicult with continue to generate substantial income for the VCT the market applying asymmetrical responses to news for several years. ow: positive updates are not getting full recognition whilst those that disappoint are often treated harshly. ### 4 At 30 September 2023, the NAV per share was 46.34pence which, after adjusting for the dividends paid in the year of 5 pence, gives a NAV total return for the year of -14.70 % (1). The NAV total return (dividends reinvested) for the year was -15.93% (1) compared with -8.28 % in the FTSE AIM All-Share Index Total Return (also calculated on a dividends Index reinvested basis). The Directors consider this to be the most appropriate benchmark from a shareholder's perspective, however, due to the range of assets held within the investment portfolio and the investment restrictions placed on a VCT it is not wholly comparable. The earnings per share total return for the year was a loss of 9.32 pence (comprising a revenue profit of 0.27 pence and a capital loss of 9.59 pence). Revenue income increased by 168% to £2.6m as a result of an increase in dividends received from non-qualifying equity, non-qualifying fixed income investments and bank interest. Interest accrued on loan note instruments increased after the Investment Manager made two follow on (qualifying) investments into Kidly Ltd. For the first time, income received into the revenue account exceeded expenses, resulting in a revenue profit for the year of 0.27 pence per share (FY22: -0.36 pence per share). The share price decreased from 62.75 pence to 43.00 pence over the reporting period which, after adjusting for dividends paid, gives a share price total return of -23.51% (1), the fall amplified by the normalisation of the share price, having briefly traded at a premium at the close of the last financial year. ### Investments The Investment Manager invested £13.6 million into 10 Qualifying Companies during the period. The fair value of Qualifying Investments at 30 September 2023 was £89.1 million (58.7% of NAV) invested in 63AIM companies and 5(2) unquoted companies. At the year end, the fair value of non-qualifying equities and the Marlborough Special Situations Fund was £15.4 million (10.1% of NAV) and £8.3 million (5.4% of NAV) respectively, with most of the non-qualifying equities listed within the FTSE 350 and offering good levels of liquidity should the need arise. £17.4 million (11.4% of NAV) was held in short-dated investment grade corporate bonds, £2.0 million (1.3% of NAV) was invested in a UK Government bond exchange traded fund and £19.2 million (12.7% of NAV) held in cash at the period end. Further information can be found in the Investment Manager's report. ### Dividend The Directors continue to maintain their policy of targeting a tax free dividend yield equivalent to 5% of the year end NAV per share (see page 25 for the full policy). In the 12-month period to 30 September 2023, the Company paid dividends totalling 5 pence (2022: 6.65 pence). A special dividend of 2 pence and a final dividend of 2 pence (2021: 3.15 pence) in respect of the 2022 financial year was paid on 10 February 2023 and an interim dividend of 1.00 penny (2022: 1 penny) was paid on 28 July 2023. A final dividend of 1.50 pence is proposed (2022: 2pence) which, subject to shareholder approval at the Annual General Meeting, will be paid on 15 February 2024 to ordinary shareholders on the register on 5 January 2024. ### Dividend re-investment scheme Shareholders may elect to reinvest their dividend by subscribing for new shares in the Company. Further information can be found in the shareholder information section on pages 93 to 94. On 10 February 2023, 1,836,516 ordinary shares were allotted at a price of 54.95 pence per share, which was calculated in accordance with the terms and conditions of the dividend reinvestment scheme (DRIS), on the basis of the last reported NAV per share as at 20 January 2023, to shareholders who elected to receive shares under the DRIS as an alternative to the final dividend for the year ended 30 September 2022 and special dividend announced on 19 December 2022. On 28 July 2023, 591,318 ordinary shares were allotted at a price of 49.29 pence per share, which was calculated in accordance with the terms and conditions of the DRIS, on the basis of the last reported NAV per share as at 7 July 2023, to shareholders who elected to receive shares under the DRIS as an alternative to the interim dividend for the year ended 30 September 2023. ### Share Buybacks To maintain compliance with the discount control and management of share liquidity policy, the Company purchased through share buybacks 7,183,338 ordinary shares (nominal value £71,833) during the 2023 financial year at a cost of £3,636,841 (average price: 50.63 pence per share). As at 18 December 2023, a further 2,039,414 shares have been repurchased post the year end at a cost of £873,229 (average price: 42.82pence per share). (1) Alternative performance measure definitions and illustrations can be found on pages 89 to 92. (2) Excluding companies in administration or at risk of administration with zero value. 5 | Share price discount | Cancellation of share premium | | --- | --- | | The Company aims to improve liquidity and to | At the general meeting of the Company held on | | maintain a discount of approximately 5 per cent. | 7 October 2022, a special resolution was passed | | to the last published NAV per share (as measured | approving the cancellation of the Company’s | | against the mid-price) by making secondary | share premium account to expand the size of the | | market purchases of its shares in accordance with | Company’s distributable reserves. | parameters set by the Board (see page 25 for the full We are pleased to conrm the cancellation of policy). the share premium account of the Company was We continued to operate the discount control and approved by the High Court of Justice in England and management of share liquidity policy eectively Wales and, accordingly, the amount standing to the during the period. As at 30 September 2023, the credit of the share premium account (£133.2m) of the Company had 1 and 5 year average share price Company as at 9May 2023 was cancelled. discounts of 6.06% and 5.64% respectively. Cost eciency The Company’s share price was trading at a discount | | (1) | | The Board reviews costs incurred by the Company | | --- | --- | --- | --- | | of 7.21% | as at 30 September 2023 compared to | | | | | | (1) | on a regular basis and is focused on maintaining | | a premium of +4.25% | | as at 30 September 2022, | | a competitive ongoing charges ratio (OCR). The this being calculated using the closing mid-price of (1) year end ongoing charges ratio was 2.24% the Company’s shares on 30 September 2023 as a (1) (FY22:2.06% ) when calculated in accordance percentage of the year end net asset value per share, with the AIC’s “Ongoing Charges” methodology. as published on 5 October 2023. The increase in the OCR is principally driven by the As at 15December 2023, the discount to NAV was fall in the average net assets across the year that 6.71% of the last published NAV per share. followed the drop in the NAV per share. Other factors included an increase in the number of independent Oer for subscription non-executive directors to ve and below ination The Directors of the Company announced on increases in remuneration. The Company also 5 September 2022 the launch of an oer for made modest investments to improve shareholder subscription for shares to raise up to £20 million, communication through investments into the together with an over-allotment facility of up Company’s website, video updates and an increased to a further £30 million. On 10 February 2023, number of shareholder events. The Ongoing Charges the Company announced it had received valid methodology divides ongoing expenses by average applications of approximately £40 million. The Board net assets. decided not to utilise any further sums under the over-allotment facility and therefore the oer for Board remuneration subscription was closed to further applications. Following a review of Board remuneration, and taking The oer resulted in gross funds being received of into account peer group analysis and ination, the £40million and the issue of 66 million shares. Board has agreed to increase its remuneration by 5%, eective from 1 October 2023. The annual New Oer for subscription remuneration of the Chair will increase to £41,000, The Directors of the Company announced on 7 the independent non-executive directors to £32,000 September 2023 the launch of a new oer for and the non-independent non-executive director, subscription for shares to raise up to £20 million, Oliver Bedford, to £29,500. together with an over-allotment facility of up to An additional fee of £1,500 will continue to be paid to a further £20 million. The oer was approved by the Chair of the Management and Service Provider shareholders of the Company at a general meeting on Engagement Committee. The Chair of the Audit 11 October 2023. Committee will continue to receive an additional fee On 18December 2023, the Company had allotted of £3,000. 17.6million shares raising gross proceeds of £8.1million. The Company has received valid Investment Manager applications for a further £0.5million. Future On 2 November 2022, the Company’s Investment decisions by the Board about the potential use of Manager changed its name from Hargreave the over-allotment facility, in part or in full, will be Hale Limited (trading as Canaccord Genuity made with advice from the Investment Manager and Fund Management) to Canaccord Genuity Asset subject to investor demand and the deployment of Management Limited (CGAM). capital into VCT qualifying companies. (1) Alternative performance measure denitions and illustrations can be found on pages 89 to 92. ### 6 Annual General Meeting communicate with the Chair, any other member of Shareholders are invited to attend the Company’s the Board or the Investment Manager by writing Annual General Meeting (AGM) to be held at 4.45 pm to the Company, for the attention of the Company on 8 February 2024 at 88 Wood Street, London, EC2V Secretary at the address set out on page 95 of this 7QR. The AGM notice is set out on pages96 to 99. document or by email to HHV.CoSec@jtcgroup.com | The AGM will be followed by a presentation from the | or aimvct@canaccord.com. | | --- | --- | | Investment Manager and a drinks reception. | Within the 2023 nancial year, the Investment | | Those shareholders who are unable to attend | Manager gave three presentations covering the | | the AGM in person are encouraged to raise any | 12months to 30 September 2022 on 23 November | | questions in advance with the Company Secretary | 2022, the 6 months to 31 March 2023 on 21 June | | at HHV.CoSec@jtcgroup.com. The deadline for the | 2023 and the 3months to 30 June 2023 on 16 August | | advance submission of questions is 5.00 p.m. on | 2023. | | 1February 2024. Answers will be published on the | Subsequent to the year end, the Investment Manager | | Company’s website on 8February 2024. | gave a presentation covering the 12 months to | 30September 2023 on 29 November 2023. The well Shareholder Engagement attended shareholder event was once again held Shareholder engagement is given a high priority at Everyman Cinema, Broadgate, City of London. It by the Board. Following a recent review, the Board included presentations and a pre-recorded interview agreed to signicantly improve the website and with several guest speakers and contributions from develop new content (including video content) for a number of portfolio companies, including a panel shareholders to provide more information about discussion and a presentation from the Investment the Company’s activities and performance. The new Manager’s VCT team. The event concluded with the website is live at www.hargreaveaimvcts.co.uk. screening of a feature lm. Summary recordings of The Company is working hard to make new, the Investment Manager’s presentations are available better and more accessible content and hope to view on the Company’s website https://www. that shareholders will nd the output useful. hargreaveaimvcts.co.uk. The website also introduces new functionality to The next shareholder event will be held at the allow shareholders to request by email updates Investment Manager’s oces at 88 Wood Street, on shareholder events, the performance of the London EC2V 7QR following the conclusion of the Company (interim management statements, fact AGM to be held at 4.45pm on 8 February 2024. The sheets and video updates) and information on the presentation will cover the 3 months to 31 December Company’s fundraising activities. 2023. Shareholders are asked to register their In addition to this, the Board wants to provide interest in attending the shareholder event through shareholders with more opportunities to meet the Company’s website (www.hargreaveaimvcts. directly with the Directors and the CGAM VCT co.uk) or by emailing aimvct@canaccord.com. management team. As a result, the number of Electronic communications in-person events has been increased with the introduction of three new in-person quarterly As ever, we are respectfully asking shareholders updates in February, May and August to sit alongside to opt into electronic communications and update the AGM in February and the annual shareholder their dividend payment preference from cheque event in November. The Board will look to run an to bank transfer. Switching to the digital delivery event outside of London in the current nancial year of shareholder communications and dividend to improve access for those unable to attend London distributions is more cost ecient and more secure based events. The Board is aware that increased whilst also helping to reduce our environmental engagement carries a cost; we therefore hope footprint. shareholders will be able to attend at least one of The Company no longer prints and distributes interim these events. Further information on future events reports to shareholders. The interim results continue and recordings of previous updates can be found on to be available for download on the Company’s the Company’s website. website (www.hargreaveaimvcts.co.uk) and a Whilst the Board strongly encourages shareholders summary of the results are published via a Regulatory to make use of everything the website has to oer, Information Service on the London Stock Exchange. the Directors recognise that it is not for everyone. Where necessary, the Administrator can produce and Should you prefer, you can of course continue to send out a hard copy. ### 7 To support the digital experience, the Company responsibility for meeting their nancial needs and has invested in an upgraded website to improve the objectives. For consumers, this should: experience and include more regular updates to ● give condence that rms are acting in good the content, including recorded updates from the faith, in line with their interests; manager and portfolio companies. Much of the new ● allow them to make informed choices about content will be available for distribution by email. You products and services that are t for purpose can register your interest in (and opt out of) email and designed to meet a designated target updates through the Company’s website. market; Shareholders are also encouraged to make use of ● improve the information available to assist with Equiniti’s shareview portal, which can be used to the review of the products and services most monitor their investment, review their transaction likely to meet their needs; history, see information on dividend payments and ● support the correct delivery of benets that update their communication preferences. consumers should reasonably expect from the Electronic Voting product and services they subscribe to; Electronic proxy voting is available for shareholders ● improve the standard of customer service; and to register the appointment of a proxy and voting ● help them obtain fair value from nancial instructions for any general meeting of the Company products and services. once notice has been given. This service assists the As the Company is not regulated by the FCA, it falls Company to make further printing and production outside of the FCA’s new Consumer Duty regulation. cost savings, reduce our environmental footprint and However, CGAM and Canaccord Genuity Wealth streamline the voting process for investors. Limited (CGWL) are regulated companies and in scope, respectively as the designated manufacturer Regulatory update and distributor of the Company. In its capacity as There were no major changes to VCT legislation manufacturer, CGAM has conducted a fair value during the period under review. assessment and a target market assessment. On 23 September 2022, the Government announced Having reviewed both reports, the Board is satised that it intended to extend the sunset clause that, if that CGAM and CGWL have complied with their not otherwise repealed or extended, would result in obligations. the withdrawal of the upfront 30% income tax relief Two of the four pillars that underpin Consumer Duty for new investment into VCTs from 6 April 2025. relate to consumer understanding and consumer The sunset clause, introduced as part of the 2015 EU support. State aid review, does not aect the Capital Gains Tax Although the Board is satised that these obligations relief or tax free dividend payments, nor does it aect are met in full, the Company’s website has been investors’ income tax relief on VCT investments upgraded to enhance the services and benets made before 6 April 2025. derived from an investment in the Company. As noted On 22 November 2023, the Chancellor of the above, the Board and Investment Manager have Exchequer announced as part of the Autumn jointly agreed to host more shareholder events to Statement the intention to extend the VCT and support the delivery of the consumer understanding EIS schemes to 5 April 2035. The Government will outcome, one of the key outcomes described under introduce new legislation as part of a future nance the Consumer Duty. bill. VCT status Consumer Duty I am pleased to report that the Company continues The Financial Conduct Authority (FCA) introduced to perform well against the requirements of the the Consumer Duty on 31 July 2023 to improve the legislation and at the period end, the investment standard of care provided by rms that are involved in test was 91.65% (2022: 84.85%) against an 80% the manufacture or supply of products and services requirement when measured using HMRC’s to retail clients. methodology. The increase in the investment test Consumer Duty comprises a new principle and suite percentage reects progress made in deploying of other rules and guidance to be followed by rms capital raised through the 2022 oer and the return involved in the manufacture and distribution of a of capital to shareholders through the payment of product to put consumers in a better position to take a 2 pence per share special dividend on 10 February ### 8 2023 following the successful exit from Ideagen plc. Outlook The Company satised all other tests relevant to its Whilst we continue to navigate an uncertain status as a Venture Capital Trust. Further information economic and geopolitical outlook, recent news on these tests can be found on page17. suggests that monetary policy is likely to become more accommodating as we progress through the Key information document year, helping to lay the foundations for a sustainable In accordance with the Packaged Retail Investment recovery in value. and Insurance Products (“PRIIPs”) regulations, the When it nally emerges, a change of sentiment in Company’s Key Information Document (“KID”) is public markets will benet our investments in both published on the Company’s website at public and private companies. Until then, we draw www.hargreaveaimvcts.co.uk/document-library/. comfort from a number of factors: rst, the majority of portfolio companies continue to provide updates Risk review that are in line with expectations; second, there is a The Board has reviewed the risks facing the substantial amount of growth on oer from within Company. Further detail can be found in the principal the portfolio, even in these more dicult times; third, and emerging risks and uncertainties section on a review of valuation metrics within the qualifying pages22 to 23. portfolio highlights the deep value on oer; and nally, a signicant majority of qualifying companies are well funded and commercially robust. David Brock Chair 18December 2023 ### 9 ## The Company and its business model The Company was incorporated and registered in The Company is registered as a small UK Alternative England and Wales on 16 August 2004 under the Investment Fund Manager (AIFM) with a Board Companies Act 1985, registered number 05206425. comprising of six non-executive directors, ve of whom are independent. Canaccord Genuity Asset The Company has been approved as a Venture Management Limited acts as investment manager Capital Trust by HMRC under Section 259 of the whilst Canaccord Genuity Wealth Limited (CGWL) Income Taxes Act 2007. The shares of the Company acts as administrator and custodian. JTC (UK) Limited were rst admitted to the Ocial List of the UK provides company secretarial services. Listing Authority and trading on the London Stock | Exchange on 29 October 2004 and can be found | The Board has overall responsibility for the | | --- | --- | | under the TIDM code “HHV”. The Company is | Company’s aairs including the determination of | | premium listed. | its investment policy. However, the Board exercises | these responsibilities through delegation to In common with many other VCTs, the Company Canaccord Genuity Asset Management Limited, revoked its status as an investment company as Canaccord Genuity Wealth Limited and JTC (UK) dened in Section 266 of the Companies Act 1985 on Limited as it considers appropriate. 23 May 2006 to facilitate the payment of dividends out of capital prots. The Directors have managed and continue to manage the Company’s aairs in such a manner as to comply The Company’s principal activity is to invest in a with Section 259 of the Income Taxes Act 2007. diversied portfolio of qualifying small UK based companies, primarily trading on AIM, with a view to generating capital returns and income from its portfolio and to make distributions from capital and income to shareholders whilst maintaining its status as a VCT. Investors: Aged over 18 Pay tax in the UK Capital Dividend distributions and share buybacks Hargreave Hale AIM VCT plc Board of Non-Executive Directors Responsible for setting and monitoring investment and other key policies Operations outsourced Operations outsourced Investment Manager Administrator and Custodian Canaccord Genuity Asset Management Ltd (Can accord Genuity Wealth Ltd) Responsible for implementing the investment policy Information Company Secretary (JTC (UK) Ltd) Registrars Capital (Equiniti Ltd) VCT Tax Adviser Investee Companies (Philip Hare and Associates LLP) Predominantly AIM Quoted Display characteristics set out in Investment Policy ### 10 ## Investment objectives, policy and strategy Investment objectives The value of funds held in bank deposits will vary The investment objectives of the Company are to between nil and 30 per cent. of the net assets of the generate capital gains and income from its portfolio Company. and to make distributions from capital or income Investment controls to shareholders whilst maintaining its status as a The Company may make co-investments in investee Venture Capital Trust. companies alongside other funds, including other funds managed by the Investment Manager. Investment policy The Company intends to achieve its investment Other than bank deposits, no individual investment objectives by making Qualifying Investments in shall exceed 10 per cent. of the Company’s net assets companies listed on AIM, private companies and at the time of investment. companies listed on the AQSE Growth Market, as well Borrowings as Non-Qualifying Investments as allowed by the VCT The Articles permit the Company to borrow up Rules. to 15per cent. of its adjusted share capital and Qualifying investments reserves (as dened in the Articles). However, it The Investment Manager will maintain a diversied is not anticipated that the Company will have any portfolio of Qualifying Investments which may borrowings in place and the Directors do not intend to include equities and xed income securities as utilise this authority. permitted by the VCT Rules. Investments will To the extent that any future changes to the primarily be made in companies listed on AIM but Company’s investment policy are considered to may also include private companies that meet the be material, shareholder consent to such changes Investment Manager’s criteria and companies listed will be sought. Such consent applies to the formal on the AQSE Growth Market. These small companies investment policy described above and not the have a permanent establishment in the UK and, whilst investment process set out below. of high risk, will have the potential for signicant capital appreciation. Investment process and strategy The Investment Manager follows a stock specic To maintain its status as a VCT, the Company must investment approach based on fundamental analysis have 80 per cent. by value as measured by the of the investee company. VCT Rules of all of its investments in Qualifying Investments throughout accounting periods of the The Investment Manager’s fund management team VCT beginning no later than three years after the has signicant reach into the market and meets date on which those shares are issued. To provide with large numbers of companies each week. These some protection against an inadvertent breach of meetings provide insight into investee companies, this rule, the Investment Manager targets a threshold their end markets, products and services, and of approximately 85per cent. competition. Investments are monitored closely and the Investment Manager usually meets or engages Non-Qualifying Investments with their senior leadership team at least twice each The Non-Qualifying Investments must be permitted year. Where appropriate the Company may co-invest by the VCT Rules and may include equities and alongside other funds managed by the Investment exchange traded funds listed on the main market Manager. of the London Stock Exchange, xed income The key selection criteria used in deciding which securities, bank deposits that are readily realisable, investments to make include, inter alia: the Marlborough Special Situations Fund and the ● the strength and depth of the management Marlborough UK Micro-Cap Growth Fund. Subject to the investment controls below, the allocation team; to each of these investment classes will vary to ● the business strategy; reect the Investment Manager’s view of the ● a prudent approach to nancial management market environment and the deployment of funds and forecasting; into Qualifying Companies. The market value of ● a strong balance sheet; the Non-Qualifying Investments (excluding bank ● prot margins, cash ows and the working deposits) will vary between nil and 50 per cent. of the capital cycle; net assets of the Company. ### 11 ● barriers to entry and the competitive landscape; and the Marlborough UK Micro-Cap Fund enables and the Company to maintain its exposure to small UK ● companies whilst the Investment Manager identies the balance of risk and reward over the medium opportunities to invest the proceeds of fundraisings and long term. into Qualifying Companies. Qualifying Investments The Investment Manager may use certain exchange Investments are made to support the growth traded funds listed on the Main Market of the London and development of a Qualifying Company. The Stock Exchange to gain exposure to asset classes not Investment Manager will maintain a diversied otherwise accessible to the Company. portfolio that balances opportunity with risk and liquidity. Qualifying Investments will primarily be Environmental, social and governance made in companies listed on AIM but may also include considerations private companies and companies listed on the AQSE Approach Growth Market. Seed funding is rarely provided and The Company regards the development of a clearly only when the senior leadership team includes proven dened and integrated ESG management system as business leaders known to the Investment Manager. an important pillar for the long-term success of its Working with advisers, the Investment Manager will business, as well as for its investee companies. screen opportunities, often meeting management The Investment Manager believes that companies teams several times prior to investment to gain a with strong governance, sustainable business models detailed understanding of the company. Investments and balanced workforces are more likely to create will be sized to reect the risk and opportunity value over the long term whilst reducing investment over the medium and long term. In many cases, risk, beneting the wider UK economy and society the Investment Manager will provide further and generating positive shareholder returns. funding as the need arises and the investment matures. When investing in private companies, the ESG in the investment process Investment Manager will shape the investment to Holding meaningful stakes in investee companies meet the investee company’s needs whilst balancing provides the Investment Manager with the the potential for capital appreciation with risk opportunity and responsibility to positively inuence management. investee company behaviour, both at the point Investments will be held for the long term unless of investment and during the time in which the there is a material adverse change, evidence of Company is a shareholder. structural weakness, or poor governance and Due diligence leadership. Partial realisations may be made where The Investment Manager assesses ESG factors necessary to balance the portfolio or, on occasion, to across the portfolio. For Qualifying Companies, capitalise on signicant mispricing within the stock the Investment Manager will use the information market. provided to develop an individualised ESG risk map Non-Qualifying Investments to identify issues and track behavioural themes. The The Investment Manager’s VCT team works Investment Manager regularly engages with senior closely with the Investment Manager’s wider fund management teams and boards to identify and raise management team to deliver the investment issues of note, provide a forum for positive feedback strategy when making Non-Qualifying Investments, and promote change where necessary. as permitted by the VCT Rules. The Investment Engagement, exclusions and divestment policies Manager will vary the exposure to the available asset As part of its investment strategy, the Company has classes to reect its view of the equity markets, adopted policies covering exclusions and divestment balancing the potential for capital appreciation with to describe behaviours that fall outside of the risk management, liquidity and income. Company’s expectations of investee companies. The The Non-Qualifying Investments will typically Investment Manager has adopted an engagement include a focused portfolio of direct investments in policy to create a clear framework that denes how it companies listed on the main market of the London will interact with investee companies. Stock Exchange. The portfolio will mix long term structural growth with more tactical investment The Investment Manager to exploit short term mispricing within the market. The Investment Manager adheres to its own ESG The use of the Marlborough Special Situations Fund investment and stewardship policies. These include ### 12 an ESG Policy, an Engagement Policy, a Conicts of Interest Policy and a Stewardship Policy that, together with the investment mandate and the Company’s ESG approach, inform the Company’s approach. CGAM is a signatory of the United Nations Principles of Responsible Investment (UN PRI) and HM Treasury’s Women in Finance Charter. Risk management The structure of the Company’s investment portfolio and its investment strategy, has been developed to mitigate risk where possible. Key risk mitigation strategies are as follows: ● The Company has a broad portfolio of investments to reduce stock specic risk. ● Flexible allocations to non-qualifying equities, exchange traded funds listed on the Main Market of the London Stock Exchange, xed income securities, bank deposits that are readily realisable, the Marlborough Special Situations Fund and the Marlborough UK Micro-Cap Fund allow the Investment Manager to adjust portfolio risk without compromising liquidity. ● Regular meetings with investee companies aid the close monitoring of investments to identify potential risks and allow corrective action where possible. ● Regular Board meetings and dialogue with the Directors, along with policies to control conicts of interest and co-investment with the Marlborough fund mandates, support strong governance. Further information can be found on page 22. ### 13 # Key performance indicators The Directors consider the following Key Performance Indicators (KPIs) to assess whether the Company is achieving its strategic objectives. The Directors believe these measures help shareholders assess how effectively the Company is applying its investment policy and are satisfied the results give a fair indication of whether the Company is achieving its investment objectives and policy. The KPIs are established industry measures. Further commentary on the performance of these KPIs has been discussed in the Chair's statement and Investment Manager's report on pages 4 to 9 and 29 to 32 respectively. ## 1 NAV and share price total returns The Board monitors NAV and share price total return to assess how the Company is meeting its objective of generating capital gains and income from its portfolio and making distributions to shareholders. The NAV per share decreased from 60.19 pence to 46.34 pence resulting in a loss to ordinary shareholders of -8.85 pence per share (-14.70%) (1) after adjusting for dividends paid in the year. ![img-0.jpeg](img-0.jpeg) The Board considers peer group and benchmark comparative performance. Due to the very low number of AIM VCTs, the Board reviews performance against the generalist VCTs as well as the AIM VCTs to provide a broader peer group for comparison purposes. Performance is also measured against the FTSE AIM All-Share Index Total Return. With 91% of the portfolio of Qualifying Investments in companies listed on AIM, the Directors consider this to be the most appropriate benchmark. However, HMRC derived investment restrictions and investments in private companies, main market listed companies and bonds mean that the index is not a wholly comparable benchmark for performance. | Rolling Returns to end Sep 2023 | 1Y | 3y | 5y | 10y | | --- | --- | --- | --- | --- | | NAV total return | -14.70% | -15.30% | -17.18% | 29.11% | | Share price total return | -23.51% | -10.53% | -15.87% | 35.53% | | NAV total return (dividends reinvested) (1) | -15.93% | -22.40% | -25.80% | 18.49% | | Share price total return (dividends reinvested) (1) | -24.80% | -18.58% | -25.16% | 23.65% | | FTSE AIM All-Share Index Total Return | -8.28% | -21.23% | -29.50% | 4.21% | Source: Canaccord Genuity Asset Management Ltd (1) The NAV total return (dividends reinvested) and share price total return (dividends reinvested) measures have been included to improve comparability with the FTSE AIM All-Share Index Total Return which is also calculated on that basis. The definitions and illustrations of these alternative performance measures can be found on pages 89 to 92. Rejecting the difficult market conditions that continued to dominate through the financial year, and in common with the AIM VCT peer group, the Company reported a significant reduction in the NAV per share. The NAV total return fell behind the benchmark over the year; however, it remains ahead of the benchmark over three, five and ten years but behind the average of the AIM VCT peer group over the same time horizons. The steep falls in valuations of companies listed on AIM, which have heavily impacted the performance of the Company and its AIM VCT peers, have not been mirrored in the Generalist VCT sector, which has reported a very modest average decline of -0.05% over the period under review (source: Morningstar). The divergence of performance across the two peer groups is particularly notable across the two years since the start of the bear market with the AIM (1) Alternative performance measure definitions and illustrations can be found on pages 89 to 92 14 VCT sector returning an average loss of 42.1% against the average loss within the Generalist VCT sector of -1.1%. AIM has fallen by 42.0% over the same two-year period. It is dicult to account for the strongly divergent performance although the possible use of investment structures not accessible to investors in public companies may account for some of the dierence. Further detailed information on peer group performance is available through Morningstar (https://www.morningstar.co.uk) and the AIC (https://www.theaic.co.uk/aic/statistics). 2. Share price discount to NAV per share The Company uses secondary market purchases of its shares to improve the liquidity in its shares and support the discount. The discount to NAV per share is an important inuence on a selling shareholder’s eventual return. The Company aims to maintain a discount of approximately 5 per cent. to the last published NAV per share (as measured against the mid-price). (1) (1) The Company’s shares traded at a discount of 7.21% as at 30 September 2023 (2022: 4.25% premium) when calculated with reference to the 30 September 2023 NAV per share. The 1 and 5 year average share price (1) (1) discounts were 6.06% and 5.64% respectively. The Company’s shares are priced against the last published NAV per share with the market typically adjusting the price to reect the NAV after its publication. In line with the Company’s valuation policy, the Company aims to publish the quarter end NAV per share within 5 business days of the period end to allow time for the Investment Manager and Board to review and agree the valuation of the private companies held within the investment portfolio. The Company’s share price on 30 September 2023 reected the last published NAV per share prior to the year end, which was released on 26 September 2023. The 30 September 2023 NAV was reported on 5 October 2023, following the review of the valuations of the private companies. As at 15 December 2023, the discount to NAV was 6.71% of the last published NAV per share. 6.0% 4.0% 2.0% 0.0% (2.0%) (4.0%) (6.0%) (8.0%) 10.0%) 12.0%) 14.0%) 16.0%) 18.0%) 3. Ongoing charges ratio | | | (1) | (1) | | --- | --- | --- | --- | | The ongoing charges of the Company were 2.24% | | (2022: 2.06% | ) of the average net assets of the Company | | during the nancial year to 30 September 2023. | Share price discount to NAV | | | The increase in the OCR is principally driven by the fall in the average net assets across the year that followed the drop in the NAV per share. Other factors included below ination increases in board remuneration and an increase in the number of non-executive directors from ve to six. There were also modest investments made to improve shareholder communication through investments into the Company’s website, video updates and an increased ( ( (1) Alternative performance measure denitions and illustrations can be found on pages 89 to 92 ( ( ( ### 15 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23 number of shareholder events. The Ongoing Charges methodology divides ongoing expenses by average net assets. The Company's ongoing charges ratio remains competitive against the wider VCT industry and similar to other AIM VCTs. This ratio is calculated using the AIC's "Ongoing Charges" methodology and, although based on historical information, it provides shareholders with an indication of the likely future cost of managing the fund. Cost control and efficiency continues to be a key focus for the Board. Although the OCR increased within the year, the Board is pleased to report that the Company's expenses incurred within the year were below budget. #### 4. Dividends per share The Company's policy is to target a tax free dividend yield equivalent to 5% of the year end NAV per share. The Board remains committed to maintaining a steady flow of dividend distributions to shareholders. A total of 5.00 pence per share (2022: 6.65 pence) of dividends was paid during the year, comprised of a special dividend of 2.00 pence per share paid on 10 February 2023, a final dividend of 2.00 pence in respect of the previous financial year (2021: 3.15 pence) paid on 10 February 2023 and an interim dividend of 1.00 penny (2022: 1.00 penny) paid on 28 July 2023. A final dividend of 1.50 pence per share will be proposed at the Annual General Meeting. If approved by shareholders, the payment of the interim, final and special dividends in respect of the financial year to 30 September 2023 would represent a distribution to shareholders of 9.7% of the 30 September 2023 NAV per share. The below table demonstrates how the Board has been able to consistently pay dividends in line with the 5% target and dividend policy. | Dividends paid payable by financial year | | | | | | --- | --- | --- | --- | --- | | Year | Year end NAV | | Yield | Additional information | | | pence per share | Dividends | | | | 2010/11 | 61.14 | 4.00 | 6.5% | | | 2011/12 | 61.35 | 3.25 | 5.3% | | | 2012/13 | 71.87 | 3.75 | 5.2% | | | 2013/14 | 80.31 | 4.25 | 5.3% | | | 2014/15 | 74.64 | 4.00 | 5.4% | | | 2015/16 | 75.93 | 4.00 | 5.3% | | | 2016/17 | 80.82 | 4.00 | 4.9% | | | 2017/18 | 87.59 | 5.40 | 6.2% | Including special dividend of 1 penny. | | 2018/19 | 70.60 | 3.75 | 5.3% | | | 2019/20 | 73.66 | 5.40 | 7.3% | Including a special dividend of 1.75 pence. | | 2020/21 | 100.39 | 7.40 | 7.4% | Including a special dividend of 2.50 pence. | | 2021/22 | 60.19 | 3.00 | 5.0% | | | 2022/23 | 46.34 | 4.50 | 9.7% | Including a special dividend of 2.00 pence and proposed final dividend of 1.50 pence. | (1) Alternative performance measure definitions and illustrations can be found on pages 89 to 92 16 5. Compliance with VCT regulations A VCT must be approved by HMRC at all times and, in order to retain its status, the Company must meet a number of tests as set out by the VCT legislation, a summary of which can be found on page 26. Throughout the year ended 30 September 2023 the Company continued to meet these tests. The investment test increased from 84.85% to 91.65% in the nancial year. The increase in the investment test percentage reects progress made in deploying capital raised through the 2022 oer and the return of capital to shareholders through the payment of a 2 pence per share special dividend on 10 February 2023 following the successful exit from Ideagen plc. The investment test remains comfortably ahead of the 80% threshold that applies to the Company and ahead of the target of 85% as set out in the Company’s investment policy. The Company invested £13.6 million into 10 Qualifying Companies, 4 of which were investments into new Qualifying Companies. The Board is pleased with the level of new Qualifying Investment, which was ahead of expectations. The Board believes that the Company will continue to meet the HMRC dened investment test and other qualifying criteria on an ongoing basis. For further details please refer to the Investment Manager’s report on pages 29 to 32. ### 17 # Section 172 statement Under section 172 of the Companies Act (“Section 172”), the Directors have a duty to promote the success of the Company for the benefit of its shareholders as a whole, and in doing so to have regard to a number of matters including the interests of its employees, suppliers and customers and the impact of the Company’s operations on the community and the environment. This section sets out how the Directors meet their obligations under Section 172. It provides a summary of how the Directors build and maintain strong relationships with stakeholders, how they understand their interests and concerns and how the strength of these relationships is contributing to the Company’s success. This Section 172 statement should be read with the other contents of the Strategic Report on pages 33 to 39. ## Purpose Hargreave Hale AIM VCT aims to support UK investors to fulfil their longer-term financial goals through the effective delivery of its investment objectives, namely by providing financial capital to support growing, innovative businesses across the UK. ## Stakeholder review Within the reporting year, the Board reviewed the Company’s key stakeholders, considered how it engaged with those stakeholders and any material issues raised during the year. Noting that the Company is an externally managed investment company with no employees and no physical premises or assets, the Board agreed that its key stakeholders were its shareholders, the Investment Manager, investee companies, other service providers and advisers, Government agencies and industry bodies and distributors. The Company has different engagement strategies to reflect the varied nature of its stakeholders. ## Shareholders The Board is committed to prioritising the Company’s shareholders and considers active shareholder engagement as being central to its understanding of shareholder interests and concerns, in order to ensure their continued support of and investment in the Company. As a result, the Board seeks to have an open, ongoing and positive dialogue with the Company’s shareholders. Reflecting shareholder requests for access to the Investment Manager, the Company and Investment Manager have increased the number of annual shareholder events with three in-person events held within the year. The Company also provides shareholders with regular reports on performance, investment activity, governance and compliance with HMRC legislation through weekly NAV announcements, monthly factsheets, quarterly interim management statements, the interim report and audited annual report. These reports, together with further background information regarding the Company, can be found on the Company’s website. Shareholders have several channels through which they can ask questions of, or raise matters with, the Investment Manager, the Board, the Administrator, the Company Secretary or the Registrar. Details can be found on the Company’s website. Enquiries are shared internally or escalated to the Board as necessary. One focus area for the Board this year has been to make the Company’s processes more efficient, minimising costs for shareholders and reducing its environmental footprint associated with the production of the annual reports, circulars and prospectuses. As part of the 2023/24 OIer documents, shareholders were asked to subscribe via an online application form and to elect to receive electronic communications from the Company to help reduce costs and paper usage. ## Key decisions: - Close the 2022/2023 OIer for subscription having successfully raised £40m; - launch the 2023/24 OIer for subscription of shares in September 2023; - payment of dividends totalling 5 pence per share; - continue the share buy-back programme in support of the discount control policy and to improve liquidity in the Company’s shares; - increase in the number of in-person shareholder events; and - improvements to digital communications including the website, a new LinkedIn page, additional recorded content and email communications. ## Impacts: - All decisions made in relation to the 2023/24 OIer, dividends and share buy-backs support the delivery of the Company’s purpose, investment objectives and key policies as set out in this report and elsewhere; 18 | ● | increased shareholder engagement leads to | On 7 September 2023, the Board and the Investment | | --- | --- | --- | | | increased condence in decisions made by | Manager entered into an updated Investment | | | the Board on behalf of shareholders, improves | Management Agreement (“IMA”) in advance of the | | | shareholder understanding and increases | Oer. The amended agreement included updates to | | | transparency and accountability; and | reect changes in regulation. There were no changes | | ● | | to the commercial terms of the agreement. | digital communication allows for better and more frequent communications with Key decisions: shareholders whilst substantially reducing the ● Retain CGAM as the Investment Manager; associated costs and environmental footprint, ● review investment policy and processes, improving accessibility and reducing the risk of fraud and error. introduce the Marlborough UK Micro- Cap Growth Fund as an alternative to the Investment Manager Marlborough Special Situations Fund; The Investment Manager is responsible for the ● further develop the ESG review process, successful delivery of the Company’s investment including the introduction of tailored due policy under a discretionary mandate. A transparent diligence questionnaires, and adopt specic and open working relationship between the Board policies on divestments and excluded activities; and the Investment Manager is fundamental to the ● update the IMA; and successful operation of the Company. The Board ● introduce measures to support the delivery of and its sub-committees maintain close and frequent the Consumer Duty outcomes. contact with the CGAM VCT fund management team. Oliver Bedford is a Board member, the lead fund Impacts: manager and an employee of Canaccord Genuity and Through engagement with the Investment Manager, therefore a key link between the Company and the the Board is able to: Investment Manager and Administrator. He and other ● oversee the execution of the Company’s key representatives of the Investment Manager attend all Board meetings and sub-committee meetings where policies; appropriate, thus ensuring a regular and constructive ● monitor progress with the deployment of capital dialogue on issues of a strategic and material nature. into qualifying companies; Less formal communications are adopted for more ● review the valuation of the Company’s operational issues or those that require the Board’s investments in unquoted assets; immediate attention. ● receive updates on the key drivers of The Board retains overall responsibility for the performance; Company’s portfolio of investments and risk ● monitor compliance with VCT regulations and management. The Board receives detailed reports FCA regulations, including the Consumer Duty; from the Investment Manager, including commentary ● receive updates on regulatory, governance and on portfolio performance and positioning, which public aairs matters; and enables it to oversee the delivery of the Company’s investment policy throughout the year and upon ● identify, monitor and (where applicable) mitigate which it relies to make its key decisions. other risk factors that may impact the Company. In June 2023, the Board held a strategy day. The Investee companies day allowed the Board and the Investment Manager The Company’s performance is directly linked to the to have direct and open discussions on a range performance of its underlying investee companies. of matters of importance to both, including the Through the IMA, the Board has delegated the Company’s investment strategy, the Investment monitoring of its portfolio companies to the Manager’s investment process, resourcing and Investment Manager, which directly engages with approaches to ESG factors. senior management teams and boards of investee Through the Management and Service Provider companies through meetings, updates, site visits and Engagement Committee (the “MSPEC”), the Board through other diligence work. undertakes an annual review of the Investment As a signicant shareholder in investee companies Manager. The most recent review was held on with a delegated authority to vote on shareholder 15November 2023 to cover the nancial year to resolutions, the Investment Manager is able to 30September 2023. ### 19 engage with and positively inuence investee approved a new anti-money laundering (“AML”) company behaviour, both at the point of investment policy to enhance investor due diligence, support and during the time in which the Company is a operational eciencies and created an AML High shareholder. This allows the Investment Manager Risk Sub-Committee to review applications from to identify and raise issues of note, provide a forum investors assessed as carrying an elevated risk when for positive feedback and promote change where assessed under AML regulation. necessary. The Company operates within a complex legal, The Investment Manager has a strong record of nancial, tax and regulatory environment. Engaging voting on shareholder resolutions on behalf of specialist, professional advisers provides the Board the Company. Within the year under review, the with appropriate support as it considers complex Investment Manager voted on 99% of the available and technical factors, designs and implements the resolutions. Company’s policies and monitors compliance with its regulatory obligations. The Board and Investment Key decisions: Manager receive quarterly in-person updates and ad ● Delegate authority to vote on shareholder hoc advice as appropriate, compliance status reports decisions to the Investment Manager; and and annual training. ● publish the Company’s engagement strategy on Key decisions: the website. | | | ● | Retain CGWL as the Administrator under an | | --- | --- | --- | --- | | Impacts: | | | updated administration agreement; | | Active engagement programmes create the forum | | ● | appoint CGWL as the Company’s receiving | | for: | | | agent for the 2023 Oer for subscription; | | ● | active monitoring of governance; | ● | | introduce a revised AML risk assessment and ● promoting good corporate behaviours; policy, and establish an AML High Risk Sub Committee of the Board; ● advocating for ESG initiatives where they are ● retain Philip Hare & Associates as the Company’s seen to be value accretive or reducing risk; and tax adviser; and ● protecting stakeholders. ● appoint Howard Kennedy LLP as the Company’s The Board believes that responsible investment, sponsor and legal adviser. executed through constructive and appropriately calibrated engagement with investee companies, Impacts: underpins the successful delivery of the investment Through the review process, the MSPEC is able to: policy over the long-term. ● evolve policies to reect regulatory changes; Key suppliers and professional advisers ● monitor service level agreements; and As the Company does not have any employees or ● review contracts to ensure they provide value premises of its own, it depends on outsourcing its for money to shareholders. operations to key third party suppliers and for those Specialist professional advice supports positive suppliers to run ecient operations on its behalf. compliance outcomes and informs decision making. Given this reliance, the Board seeks to have an open and constructive relationship with all service Distributors providers. Responsibility for the management of the Working alongside the Investment Manager and Company’s key suppliers is delegated to the MSPEC, the Receiving Agent, the Company’s distributors which meets bi-annually. promote the VCT to nancial intermediaries and Throughout the year, the Board received a investors when the Company is raising funds for comprehensive overview of the support functions investment through oers for subscription. Through provided by its service providers through a the IMA and, where applicable, Oer Agreements, combination of written reports and attendance at the Board delegates responsibility for this to the MSPEC meetings. Investment Manager and Receiving Agent. An updated agreement was signed with the The Investment Manager maintains close contact Administrator in advance of the launch of with key distributors throughout the year, providing the 2023/24 Oer. Following advice from the performance updates and listening to feedback. The Administrator and third-party consultants, the Board Investment Manager reports this back to the Board, ### 20 along with recommendations. As a result of feedback Government agencies, supporting relevant industry provided by distributors, the Board reviewed and associations, providing evidence to support the made changes to elements of the Company’s AML scheme and engaging in policy reviews and initiatives policy to reduce operational friction and remove to improve the operation of the scheme. barriers to investment. The Company is a member of the Association of The Board’s ESG Champions and members of the Investment Companies and the VCT Association and Investment Manager’s team met with certain of the regularly attends events held by both bodies. Oliver Company’s distributors during the year to discuss Bedford is a member of two VCT Association sub- their approach to ESG issues, responsible investment committees. and Consumer Duty. Key decisions: Key decisions: ● Continue to actively engage with policy makers ● Review the implementation of Consumer Duty through memberships of industry associations. by CGAM and CGWL; and Impacts: ● enhance ESG policies and processes to reect ● Promoting the VCT scheme through feedback from key elements of the distribution engagement with Government agencies; and chain. ● co-ordinating public aairs initiatives through Impacts: work with associations. ● Improved alignment on ESG issues with major distribution partner; and ● improved understanding of costs and value within the distribution chain. Government agencies, regulators and industry associations Governments, regulators and industry associations determine legislation and shape the business and policy environment the Company operates in. The Board is committed to having an open, cooperative and constructive relationship with its regulators and ### 21 ## Principal and emerging risks ## and uncertainties The Directors acknowledge that they are responsible for the eectiveness of the Company’s risk management and internal controls and periodically review the principal risks faced by the Company at Board meetings. The Board may full these responsibilities through delegation to Canaccord Genuity Asset Management Limited and Canaccord Genuity Wealth Limited as it considers appropriate. The principal risks facing the Company, together with mitigating actions taken by the Board, are set out below: Risk Potential consequence How the Board mitigates risk Changes During the Year | Venture Capital Trust approval | Loss of VCT approval could | To reduce this risk, the Board | No change. | | --- | --- | --- | --- | | risk. The Company operates in a | lead to the Company losing its | has appointed an investment | | | complex regulatory environment | exemption from corporation tax | manager with signicant | | | and faces a number of related | on capital gains, shareholders | experience in the management | | | risks. A breach of Section 259 of | losing their tax reliefs and, in | of venture capital trusts. The | | | the Income Taxes Act 2007 could | certain circumstances, being | Investment Manager regularly | | | result in the disqualication of | required to repay the initial tax | provides the Board with written | | | the Company as a VCT. | relief on their investment. | and verbal reports. The Board | | also appointed Philip Hare & Associates LLP to monitor compliance with regulations and provide half-yearly compliance reports to the Board. Investment risk. Many of the Investment in poor quality The Board has appointed an No change. Company’s investments are held companies could reduce the investment manager with Changes in monetary or in small, high risk companies capital and income return to signicant experience of scal policy have undermined which are either listed on AIM or shareholders. Investments in investing in small companies. consumer, business and investor privately held. small companies are often illiquid The Investment Manager condence with negative and may be dicult to realise. maintains a broad portfolio impacts on protability, of investments across a investment and stock market wide range of industries and performance. sectors. Individual Qualifying The higher cost of borrowing Investments rarely exceed 5% is starting to impact the cost of net assets. The Investment of debt for companies and Manager holds regular consumers. Whilst still subdued, company meetings to monitor UK consumer and business investments and identify condence has recovered o potential risk. The VCT’s liquidity lows as energy prices, ination is monitored on a regular basis and supply chain frictions all by the Investment Manager and eased. Whilst the economy has reported to the Board quarterly outperformed expectations for and as necessary. this year, the outlook remains weak. Compliance risk. The Company Failure to comply with these Board members have No change. is required to comply with regulations could result in a considerable experience of the FCA Listing Rules and delisting of the Company’s operating at senior levels within the Disclosure Guidance shares, nancial penalties, a quoted businesses. They have and Transparency Rules, the qualied audit report or loss of access to a range of advisors Companies Act, Accounting shareholder trust. including solicitors, accountants Standards, the General Data and other professional Protection Regulation and other bodies and take advice when legislation. The Company is also appropriate. a small registered Alternative CGWL provides compliance Investment Fund Manager oversight to both the (“AIFM”) and has to comply with Administrator and the the requirements of the AIFM Investment Manager and Directive. reports to the Board on a quarterly basis. ### 22 Risk Potential consequence How the Board mitigates risk Changes During the Year Operational risk and Failures could put the assets The Company has in place a No change. outsourcing. Failure in of the Company at risk or risk matrix and a set of internal the Investment Manager, result in reduced or inaccurate policies which are reviewed on Administrator, Custodian, information being passed to the a regular basis. It has written Company Secretary or Board or shareholders. agreements in place with its other appointed third party third-party service providers. The Quality standards may be systems and controls or Board, through the Management reduced through lack of disruption to its business as and Service Provider understanding or loss of control. a result of operational failure, Engagement Committee, environmental hazards or cyber receives regular reports from security attacks. the Investment Manager, Administrator and custodian to provide assurance that they operate appropriate control and oversight systems and have in place training and other defence measures to mitigate the risk of cyber attack. Additionally, the Board receives a control report from the Company’s registrars on an annual basis. Where tasks are outsourced to other third parties, reputable rms are used and performance is reviewed periodically by the Management and Service Provider Engagement Committee Key personnel risk. A change in Potential impact on investment The Board discusses key No change. the key personnel involved in the performance. personnel risk and resourcing management of the portfolio. with the Investment Manager periodically. The VCT team within the Investment Manager comprises two fund managers and two investment analysts, which helps mitigate this risk. Exogenous risks such as Instability or changes arising Regular dialogue with the No change. economic, political, nancial, from these risks could have an manager provides the Board The Bank of England increased climate change and health. impact on stock markets and with assurance that the base rates by 300bps to 5.25% Economic risks include recession the value of the Company’s Investment Manager is following during the nancial year, and sharp changes in interest investments so reducing returns the investment policy agreed signicantly increasing the cost rates. Political risks include the to shareholders. A failure to by the Board and appraises of debt for companies and and terms of the UK’s exit from the renew or replace the relevant the Board of the portfolio’s households with oating rate European Union or a change in sections of the Finance (No current positioning in the light debt. Companies and households government policy causing the 2) Act 2015 with similar or of prevailing market conditions. with savings benetted. The full VCT scheme to be brought to an equivalent legislation would make The Company’s investment impact of this is yet to be felt. end. A condition of the European it more dicult for the Company portfolio is well diversied and In the Autumn Statement 2023, Commission’s State aid approval to attract new capital whilst the Company has no gearing. the Government conrmed its of the UK’s VCT and EIS schemes continuing to operate under its The Board regularly reviews intention to extend the sunset in 2015 was the introduction of current investment policy. investment test forecasts and clause by 10 years to 5 April a retirement date for the current Companies may face liquidity analysis, including under 2035. Legislation is expected to schemes at midnight on 5 April restrictions on emissions, water stress scenarios, to monitor be introduced through the next 2025 (the ‘Sunset Clause’). If consumption and increased risk current and anticipate future Finance Bill and passed into law in the relevant legislation is not of environmental hazards. performance against HMRC early 2024. renewed or replaced with similar legislation and to ensure the or equivalent legislation, new The wars in Ukraine and Company has, and will continue investors will not be able to claim the Middle East present a to have, access to sucient income tax relief for investments range of risks that may have liquidity and distributable into new shares issued by VCTs profound economic and social reserves to maintain compliance after 5 April 2025. consequences if they impact with its key policies. access to certain commodities or Climate change presents The Board keeps abreast of much higher prices. environmental, geopolitical, current thinking through contact regulatory and economic risks. In with industry associations and its the long term, some companies advisors. may have restrictions imposed The Investment Manager on their operational model that undertakes a review of ESG reduce revenues and prot factors as part of the investment margins and increases their cost process. Climate change, or of capital. the need to limit its impact, will result in technological innovation as young companies seek to develop solutions and create opportunities for value creation for existing or new Qualifying Companies. Additional risks and further details of the above risks and how they are managed are explained in note 15 of the nancial statements. Trends aecting future developments are discussed in the Chair’s statement on pages4 to9 and the Investment Manager’s report on pages29 to32. ### 23 ## Long term viability statement | In accordance with provision 36 of the AIC Code of | ● | the nancial position of the Company at | | --- | --- | --- | | Corporate Governance, the Directors have carried | | 30September 2023 was strong with no debt or | | out a robust assessment of the Company’s current | | gearing; | | position and its emerging and principal risks, further | ● | | the oer for subscription launched on details can be found in the principal and emerging 7September 2023 has provided further liquidity risks and uncertainties section on pages22 to23. for deployment in line with the Company’s This assessment has been carried out over a longer policies and to meet future expenses; period than the 12 months required by the ‘Going ● the ongoing charges ratio of the Company at Concern’ provision. The Board conducted this review the year end was 2.24%; for a period of ve years, which was selected because ● the Company has procedures and forecast it: models in place to identify, monitor and control ● is consistent with investors’ minimum holding risk, portfolio liquidity and other factors relevant period to retain the 30% income tax relief; to the Company’s status as a VCT; and ● exceeds the time allowed to deploy funds raised ● the Investment Manager and the Company’s under the current oer in accordance with VCT other key service providers have contingency legislation; and plans in place to manage operational ● is challenging to forecast beyond ve years with disruptions. sucient accuracy to provide actionable insight. In assessing the Company’s future viability, the Board The Board considers the viability of the Company as has assumed that investors will wish to continue part of its continuing programme of monitoring risk. to have exposure to the Company’s activities, that The Company has a detailed risk control framework, performance will be satisfactory and the Company documented procedures and forecasting model will continue to have access to sucient capital. in place to reduce the likelihood and impact of risk Based on this assessment, the Directors have a taking that exceeds the levels agreed by the Board. reasonable expectation that the Company will be These controls are reviewed by the Board and able to continue in operation and meet its liabilities as Investment Manager on a regular basis. they fall due over the next ve years. The Board has considered the Company’s nancial position and its ability to meet its liabilities as they fall due over the next ve years. Forecasts and stress tests have been used to support their assessment and the following factors have been considered in relation to the Company’s future viability: ● the Company maintains a highly diversied portfolio of Qualifying Investments; ● the Company is well invested against the HMRC investment test (91.65% at 30 September 2023) and the Board believes the Investment Manager will continue to have access to sucient numbers of investment opportunities to maintain compliance with the HMRC investment test; ● the Company held £19.2 million in cash at the year end; ● the Company has distributable reserves of £134.4 million at 30 September 2023, equivalent to 41 pence per share; ● the Company has a portfolio of Non-Qualifying Investments, most of which are listed in the FTSE 350 and oer good levels of liquidity should the need arise; ### 24 ## Other matters Dividend policy social and community issues but does expect The Company’s dividend policy is to target a tax free the Investment Manager to consider them when dividend yield equivalent to 5% of the year end NAV fullling their role. As the Company used less than per share. The ability to pay dividends is dependent 40MWh of energy during the period it is exempt on the Company’s available distributable reserves from the Streamlined Energy and Carbon Reporting and cash resources, the Act, the Listing Rules and requirements. the VCT Rules. The policy is non-binding and at the The Company, whilst exempt, continues to monitor discretion of the Board. Dividend payments may vary and develop its approach to the recommendations from year to year in both quantum and timing. The of the Task Force on Climate related Financial level of dividend paid each year will depend on the Disclosures. performance of the Company’s portfolio. In years The management of the Company’s investment where there is strong investment performance, the portfolio has been delegated to its Investment Directors may consider a higher dividend payment, Manager Canaccord Genuity Asset Management including the payment of special dividends. In years Ltd. The Company has adopted specic policies where investment performance is not as strong, the on divestment and excluded activities and it Directors may reduce or even pay no dividend. expects the Investment Manager to take account of ESG considerations in its investment process Discount control policy and management of share for the selection and ongoing monitoring of liquidity underlying investments. The Board has also given The Company aims to improve liquidity and to the Investment Manager discretion to exercise maintain a discount of approximately 5 per cent. voting rights on resolutions proposed by investee to the last published NAV per share (as measured companies. against the mid-price) by making secondary market purchases of its shares in accordance with The Investment Manager continues to strengthen its parameters set by the Board. approach to ESG issues. Further detail regarding the Investment Manager’s approach to ESG issues can be This policy is non-binding and at the discretion found on pages12 to 13. of the Board. Its operation depends on a range of factors including the Company’s liquidity, shareholder To minimise the direct impact of its activities the permissions, market conditions and compliance with Company oers electronic communications where all laws and regulations. These factors may restrict acceptable to reduce the volume of paper it uses and the eective operation of the policy and prevent the uses Carbon Balanced paper manufactured at a FSC Company from achieving its objectives. accredited mill to print its nancial reports. Vegetable based inks are used in the printing process where Diversity appropriate. The Board comprises three male non-executive Prospects directors and three female non-executive directors with a diverse range of experience, skills, length The prospects and future development of the of service and backgrounds. The Board considers Company are discussed in detail in the outlook diversity when reviewing Board composition and section of the Chair’s statement on page9. has made a commitment to consider diversity The strategic report is approved, by order of the when making future appointments. The Board will Board of Directors. always appoint the best person for the job. It will not discriminate on the grounds of gender, race, ethnicity, David Brock religion, sexual orientation, age or physical ability. Chair Environmental Social and Governance (ESG) and 18December 2023 Considerations The Board seeks to maintain high standards of conduct with respect to environmental, social and governance issues and to conduct the Company’s aairs responsibly. The Company does not have any employees or oces and so the Board does not maintain any specic policies regarding employee, human rights, ### 25 ## Summary of VCT regulations To maintain its status as a VCT, the Company must o will use the investment to fund an be approved by HMRC and comply with a number acquisition of another company (or its of conditions. A summary of the most important trade and assets). conditions are detailed below: ● make any investment which is not a Qualifying Investment unless permitted by section 274 ITA; VCTs’ obligations and/or VCTs must: ● return capital to shareholders before the third ● have 80per cent. (by VCT tax value) of all funds anniversary of the end of the accounting period raised from the issue of shares invested in during which the subscription for shares occurs. Qualifying Investments throughout accounting Qualifying Investments periods of the VCT beginning no later than three years after the date on which those shares are A Qualifying Investment consists of new shares or issued; securities issued directly to the VCT by a Qualifying Company that at the point of investment: ● have at least 70per cent. by VCT tax value of ● has gross assets not exceeding £15million prior Qualifying Investments in Eligible Shares which | | carry no preferential rights (unless permitted | | to investment and £16million post investment; | | --- | --- | --- | --- | | | under VCT Rules); | ● | carries out activities which are regarded as a | | ● | have at least 30per cent. of all new funds | | Qualifying Trade; | | | raised by the Company invested in Qualifying | ● | is a private company or is listed on AIM or the | | | Investments within 12months of the end of the | | AQSE Growth Market; | | | accounting period in which the Company issued | ● | | has a permanent UK establishment; the shares; | | | ● | is not controlled by another company; | | --- | --- | --- | --- | | ● | have no more than 15per cent. by VCT tax value | | | | | | ● | will deploy the money raised for the purposes | of its investments in a single company (as valued of the organic growth and development of a in accordance with the VCT Rulesat the date of Qualifying Trade within 2years; investment); ● has fewer than 250 employees (or fewer than ● derive most of its income from shares and 500 employees in the case of certain Knowledge securities, and, must not retain more than Intensive Companies); 15per cent. of its income derived from shares ● in general, has not been generating commercial and securities in any accounting period; and sales for more than 7years (ten years for ● have their shares listed on the main market Knowledge Intensive Companies); of the London Stock Exchange or a European ● has not received more than the permitted regulated Stock Exchange. annual and lifetime limits of risk nance State aid VCTs must not: investment; and ● make a Qualifying Investment in any company ● has not been set up for the purpose of accessing that: tax reliefs or is in substance a nancing o has (as a result of the investment or business. otherwise) received more than £5million The Finance Act2018 introduced a principles-based from State aid investment sources in approach known as the risk to capital condition to the 12months prior to the investment establish whether the activities or investments of an (£10million for Knowledge Intensive investee company can qualify for VCT tax reliefs. This Companies); condition has two parts: o has (as a result of the investment or ● whether the investee company has an objective otherwise) received more than £12million to grow and develop over the long term; and from State aid investment sources in its ● whether there is a signicant risk that there lifetime (or £20million for Knowledge could be a loss of capital to the investor of an Intensive Companies); amount exceeding the net return. o in general has been generating commercial revenues for more than 7years (or 10years for Knowledge Intensive Companies); or ### 26 ## The Investment Manager & the Administrator Canaccord Genuity Asset Management Limited (“CGAM”), is a wholly owned subsidiary of Canaccord Genuity Wealth Group Limited. The Investment Manager is a leading small cap UK fund manager with a team of 15 fund managers and analysts. Their combined experience aligns with the Company’s published investment policy. As at 30September 2023, the Investment Manager had more than £2.7billion of funds under management across 8 unit trusts/OEICS and the Company, including approximately £1.9billion invested in small UK companies. The Investment Manager’s VCT fund management team is led by Oliver Bedford with support from Lucy Bloomeld as the Deputy Fund Manager, Anna Salim and Archie Stirling as investment analysts and Abbe Martineau as legal counsel. The VCT fund management team is also supported by the wider CGAM fund management team, mainly in the delivery of the Non-Qualifying Investment Strategy through the direct investment of the Company’s capital into companies listed on the main market of the London Stock Exchange, as permitted by the VCT Rules. A short biography on the members of the Investment Manager’s VCT team is set out below. | Oliver Bedford | Lucy Bloomeld | | --- | --- | | Oliver Bedford graduated from Durham University | Lucy Bloomeld joined the Investment Manager in | | with a degree in Chemistry. He served in the | August2018. Prior to this she spent eight years as | | British Army for 9years before joining the | an analyst and UK Small& Mid cap fund manager | | Investment Manager in 2004. After initially working | at BlackRock before her most recent role as a | | as an analyst in support of the VCT, Oliver was | European Small& Mid-cap fund manager with | | appointed as co-manager in 2011 and then lead | Ennismore Fund Management. Lucy graduated | | fund manager in 2019. | from Durham University in 2007 with a degree in | Economics and is a CFA charterholder. | Abbe Martineau | Anna Salim | | --- | --- | | Abbe Martineau graduated from the University | Anna Salim joined the Investment Manager in | | of Birmingham and went on to qualify as a lawyer | April2018. Her prior experience includes European | | in 2005. Her prior legal experience includes eight | lower mid-market private equity investments at | | years at Freshelds Bruckhaus Deringer, where | Revolution Capital Group and equity research at | | she advised international businesses on a range | Cormark Securities. Anna graduated from the | | of corporate matters and strategic M&A, and | University of Toronto and holds an MBA from | | eight years at Prudentialplc, where she worked on | University of Western Ontario. She is a CFA | | delivering the group’s strategic priorities, including | charterholder. | its rst ESG Report and the demerger of M&G. She joined the Investment Manager in 2023. ### 27 Archie Stirling Archie Stirling joined the Investment Manager in September 2021. Prior to this he spent eight years at KPMG, including ve years in Transaction Services working for private equity and corporate clients. Archie graduated from Bristol University in 2013 with a degree in Economics and is a Chartered Accountant (ICAEW). | £2.7 | £1.9 | | OVER 2,000 | | --- | --- | --- | --- | | BILLION | BILLION 25 YEAR | | MEETINGS | | of funds under | Invested in small UK | Track record of fund | With companies | | management | companies | management | (12months to | 30September 2023) Source:Canaccord Genuity Asset Management Limited (as at 30September 2023) The Administrator Canaccord Genuity Wealth Limited (“CGWL”) provides administration and custody services to the Company. CGWL is a subsidiary of Canaccord GenuityInc., a full service nancial services company listed on the Toronto Stock Exchange. Fees and expenses The annual running costs of the Company are capped at 3.5per cent. of the net assets of the Company. The Investment Manager has agreed to indemnify the Company in relation to all costs that exceed this cap (such costs excluding any VAT payable on the annual running costs of the Company). As at 30September 2023, the Company’s running costs were 2.24per cent. of the net assets of the Company (including irrecoverable VAT). Under the investment management agreement, the Investment Manager receives an annual management fee of 1.7per cent. of the Net Asset Value of the Company. A maximum of 75per cent. of the annual management charge will be chargeable against capital reserves, with the remainder being chargeable against revenue. The Company does not pay the Investment Manager a performance fee. As the Investment Manager to the Company and investment advisor to the Marlborough Special Situations Fund and the Marlborough UK Micro-Cap Growth Fund (in which the Company may, and does, invest), the Investment Manager adjusts the fee it receives under the investment management agreement to ensure that the Company is not charged twice for its services. The Investment Manager carries out some due diligence and transaction services on potential investments internally. Upon completion of an investment, the Investment Manager is permitted under the investment management agreement to charge private investee companies a fee equal to 1.5per cent. of the investment amount. This fee is subject to a cap of £40,000 per investment and is payable directly from the investee company to the Investment Manager. The Investment Manager may recover external due diligence and transactional services costs directly from private investee companies. The Administrator is engaged by the Company under the terms of an administration agreement. Under the terms of this agreement, with eect from 1October 2023, the Administrator will be paid an annual fee of £250,000 (previously £195,000) (plus VAT) in relation to administration services. Prior to this, administration fees were last reviewed in June 2019. In addition, the Administrator will continue to receive a fee of £30,000 per annum in relation to its appointment as the Company’s Custodian. Any initial or trail commissions paid to Financial Intermediaries are paid by CGWL. ### 28 # Investment Manager’s report ## Introduction This report covers the 2022/23 financial year, 1 October 2022 to 30 September 2023. The Investment Manager’s report contains references to movements in the NAV per share and NAV total return per share. Movements in the NAV per share do not necessarily mirror the earnings per share reported in the accounts and elsewhere, which convey the profit after tax of the Company within the reported period as a function of the weighted average number of shares in issue for the period. Investment performance measures contained in this report are calculated on a pence per share basis and include realised and unrealised gains and losses. ## Investment report Starting from a very low base, investor sentiment showed tentative signs of recovery as investors became more confident that inflation was close to peaking and, with it, the interest rate tightening cycle that had done so much damage to risk assets in 2022. The failure in March 2023 of Silicon Valley Bank, several US regional banks and Credit Suisse challenged the developing thesis and the markets swiftly moved to price in a series of rate cuts by the Federal Reserve throughout the second half of the year. A series of subsequent data points highlighted a substantially more robust US economy which would require US interest rates to remain higher for longer. This dynamic had implications for risk assets globally. The UK economy has experienced something similar, proving to be substantially stronger this year than most predicted. Inflation has remained disappointingly high, forcing the Bank of England (“BoE”) into a more hawkish position with many homeowners protected by fixed rate mortgages and now benefiting from higher interest payments on their savings. UK inflation (“CPI”) peaked at 11.1% in October 2022 but has since steadily declined, reaching 6.7% in September. UK consumer confidence remains low, albeit substantially better than at the start of the financial year. The September reading did, however, suggest that higher interest rates might finally start to take their toll. There are other signs too that tighter monetary policy is starting to impact with retail sales weakening and unemployment starting to trend higher, whilst remaining low by historical standards. With the Bank of England raising interest rates seven times within the year to 5.25%, the focus has shifted to the outlook for rate cuts. Currently, the market is forecasting that the BoE remains on hold until mid-2024. This is substantially better than the forecast at the start of the financial year, but also much higher than predicted in the Spring following the failure of SVB. These huge swings in the outlook have been mirrored in the US and, to a lesser extent, in Europe making it difficult for a range of asset classes from equities to bonds and foreign exchange. Sadly, these factors continue to depress appetite for investment into high-risk growth equity. AIM continues to endure a particularly difficult period, having now fallen by 41.6% in the two years to 30 September 2023. By any measure, this is a long and uncomfortable bear market. Although trading varies quite significantly by sector, price action is heavily influenced by technical factors with many UK institutional shareholders still having to manage sustained outflows. This dynamic is not unique to AIM. Small companies are struggling in other territories too, with the Russell 2000 (US small companies) and MSCI Europe Small Cap Index both posting positive returns over the period under review whilst remaining negative over two years. The risk averse environment and constant need for liquidity has again led to a material underperformance by AIM (-9.95%) over the year relative to other domestic indices such as the FTSE100 (+10.36%) and FTSE250 (+6.47%). ## Performance In the 12 months to 30 September 2023, the audited NAV per share decreased from 60.19 pence to 46.34 pence, a NAV total return to investors of -8.85 pence per share after adding back the 5.00 pence of dividends paid in the year and which translates to a loss of -14.70%. The qualifying investments made a net loss of -7.99 pence per share whilst the non-qualifying investments loss was -0.32 pence per share. The -0.54 pence adjusting balance was the net of the investment in Marlborough Special Situations Fund, running costs and investment income. 29 ### Contribution to NAV performance ![img-1.jpeg](img-1.jpeg) [ Corporate news flow was mixed across the year. After a difficult winter, when many companies faced weaker trading or pressure on margins, primarily due to macro-economic factors, many companies reported trading improved through the spring and summer. September included an unusually high number of poor updates, although our analysis suggests this was mostly due to company specific factors rather than a weakening economy or tightening of financial conditions. We report below on those companies that were the most significant contributors to performance. In particular, we noted that three of the most significant detractors (Zoo Digital, Maxcyte and Tortilla Mexican Grill) are companies that have previously delivered strong contributions to the NAV; we are hopeful that their share prices can recover with time. Equipmake (+44.0%, +0.75%pence per share) reported that revenues in the 12 months to May 2023 grew by 34% to £5.1m. The company also announced two contracts to convert diesel buses into battery powered buses and a £3.2m grant to develop its electric powertrain technology for the oil-highway sector in partnership with Caterpillar. The company is forecast to increase revenues by 163% to £13.4m in the current year. Profits are not expected until 2026. The company is expected to close the current year with £2.0m of net cash. Following an activist campaign launched by founder Jonathan Milner, Abcam (+38.0%, +0.25%pence per share) launched a strategic review that resulted in a $24 per share takeover offer from Danaher. The exit price represents an increase of 7,086% (71x) over the book cost of the investment. Following a two-year legal process, PCI-PAL (+21.7%, +0.21%pence per share) received a favourable ruling from the UK High Court, comprehensively defeating the patent infringement claims from competitor Sycurio. Whilst this is a clear positive and a strong endorsement of the company's IP position, the ruling may yet be subject to appeal. Sycurio filed similar claims in the US courts, which may be heard in 2024. The company continues to trade well with 2024 revenue growth subject to some modest revision to £19.1m (previously £20.0m), equivalent to +28% YOY. The company is expected to report a maiden profit within the current financial year and close the year with net cash of £0.3m. XP factory (+37.5%, +0.17%pence per share) reported strong growth in both H1'23 revenues (£18.6m, +130% YoY) and adjusted EBITDA (£2.4m, +120%). The company continues to roll out its escape room and competitive socialising concepts across the UK. Although trading within the current year remains strong, the company has moderated the new openings planned in FY25 and beyond. The company has a good balance sheet with net cash of £3.6m (30 June 2023). Diaceutics (+28.8%, +0.15%pence per share) reported H1'23 revenues of £9.9m (+32% YoY) and an EBITDA loss of £0.2m. Net cash was £17.9m. Recurring revenues grew by 66% to £4.6m as more customers signed annual or multi-year licences for the company's DXRX platform. The forward order book of £24.1m provides good cover of the current year forecast. The company also announced that the founder would move from his current CEO role into a business development role with the current COO moving into the CEO role. 30 Long running strikes (screenwriters and actors) in the US have materially affected the commissioning of new content for distribution through streaming platforms, leading to a substantial drop of in demand for Zoo Digital's (-69.2%, -1.14% of space per share) localisation and media services and several significant forecast revisions. On current projections, revenues will fall by 50% this year to $45m. Whilst the short-term outlook remains uncertain, production has resumed with the company expecting to return to growth in early 2024. There are no changes to medium term guidance. The company is well funded following a $15.5m fundraise in April 2023. The commercial impact of last year's dispute with Azerion continues to cast a long shadow over Bidstack (-90.0%, -0.90% of space per share), highlighting profound issues with the company's operational model, leadership and governance structures. A Dutch court will review Azerion's decision to withhold payment. In the meantime, a substantially weaker balance sheet has left the company exposed. Following a very successful year in 2022 that included three profit upgrades, Maxcyte (-55.4%, -0.73% of space per share) has been the victim of a notably weaker end market following the failure of Silicon Valley Bank. The significant tightening of financial conditions within the healthcare sector has caused many clinical and pre-clinical companies to adopt a more cautious approach to investment, leading the company to substantially revise its expectations for this year across several updates. Disappointing as this is, Maxcyte's long-term prospects remain attractive, underpinned by an expanding partnership portfolio with potential pre-commercial milestones valued at over $1.6b and future royalties. The company's shares have been savagely de-rated, at one point valuing the company at $264m with year-end net cash forecast to be approximately $200m. Post period end, the FDA approved Casgevy for the treatment of severe sickle cell disease, the first time a therapy developed using Maxcyte's low electroporation technology has been approved by the FDA. The approval will trigger further milestone payments and significant royalties from 2025. Initially, the outlook looked promising for Polarean (-76.9%, -0.70% of space per share) with the company receiving (in December 2022) FDA clearance for Xenoview, its drug-device combination product that allows MRI scanners to provide detailed evaluation of lung function. In subsequent updates, the company reduced its assumptions for revenue growth and increased its guidance on costs. The company has appointed a new CEO with prior experience in driving adoption within the medical equipment sector. The company has net cash of $9.9m but will need additional funding in 2024. A desire to defend its value proposition at the cost of margins led Tortilla Mexican Grill (-51.7%, -0.56% of space per share) to issue revised profit guidance in late 2022 as inflationary pressures (food, labour and energy) are into margins. Subsequent updates have remained consistent with the revised forecasts with the company reporting revenue growth of 22% in the 6 months to June 2023. The company continues to use its strong balance sheet to expand its UK footprint with 8 new sites to be opened in 2023. The medium-term opportunity remains compelling. We entered the year expecting to see an increase in the number of companies undertaking an initial public offering in the second half of the financial year. This has not come to pass with the low valuations and the continued flow of capital out of open-ended funds increasing the risk of a poor outcome and acting as a deterrent to new entrants. Investor confidence and appetite for risk was depressed by a broad range of factors (higher interest rates, US regional banking crisis, war in the Middle East) and will need to improve before the market becomes more attractive to new listings. We invested £13.6m through 12 Qualifying Investments into 10 Qualifying Companies that included 2 IPOs, 2 new investments into companies listed on AIM, 6 follow on investments into existing AIM portfolio companies and 2 further investments into Kidly. The most significant new investments included Engage XR, Fadel and Itaconix. We reduced our investments in Bidstack, Eneraqua, Equipmake, Faron Pharmaceuticals, Smoove and Zoo Digital. We made complete exits from Diurnal, In The Style and Yourgene. ### Portfolio structure The VCT is comfortably through the HMRC defined investment test and ended the period at 91.65% invested as measured by the HMRC investment test. By market value, the VCT had a 58.7% weighting to Qualifying Investments at year-end. The allocation to non-qualifying equity investments increased from 7.7% to 10.1% within the year. In line with the investment policy, we made investments in the Marlborough Special Situations Fund as a temporary home for proceeds from fundraising, increasing the allocation from 2.1% to 5.4%. The non-qualifying direct equity investments, which are mostly held in FTSE 350 companies contributed -0.08% of space per share. Within the period, JD Sports 31 returned +72.4% (+0.17%pence per share), Bytes Technology returned +18.8% (+0.09%pence per share) and Bodycote returned +40.3% (+0.09%pence per share). The largest losses from within the non-qualifying portfolio came from NCC (-63.4%, -0.18%pence per share), Diversified Energy (-37.6%, -0.12%pence per share) and Harbour Energy (-41.0%, -0.10%pence per share). We took advantage of the significant increase in fixed income yields to invest in six short-dated investment grade bonds and a short-dated UK Gilts exchange trade fund. As a result, the allocation to non-qualifying fixed income increased from nil to 12.7% whilst the cash weighting fell from 26.1% to 12.7%. The Company invests across all available investment sectors, although VCT legislation tends to promote investment into sectors such as technology, healthcare and consumer discretionary. In respect of the Qualifying investment portfolio, the weightings to these three sectors changed slightly over the year as a consequence of additional investment and share price performance, taking their respective shares to 37.5%, 20.6% and 13.7%. The weighting to the industrial sector increased from 14.9% to 17.9%. The HMRC investment tests are set out in Chapter 3 of Part 6 Income Tax Act 2007, which should be read in conjunction with this investment manager's report. Funds raised by VCTs are first included in the investment tests from the start of the accounting period containing the third anniversary of the date on which the funds were raised. Therefore, the allocation of qualifying investments as defined by the legislation can be different to the portfolio weighting as measured by market value relative to the net assets of the VCT. #### **Share Buy Backs & Discount Control** 7,183,338 shares were acquired in the year at an average price of 50.63%pence per share. The share price increased by 0.5% and traded at a discount of 6.78% following the publication of the 30 September 2023 NAV on 5 October 2023. #### **Post period end update** The NAV per share has decreased from 46.34 pence to 45.45pence in the period to 8 December 2023, a decrease of 1.92%. As at 15 December 2023, the share price of 42.40pence represented a discount of 6.71% to the last published NAV per share. The start of the new financial year was particularly difficult with global markets selling oil in the face of higher oil prices and further increases in the cost of capital, most obviously exemplified by the march higher in US$10-year Treasury Yields. For a variety of reasons, the bond markets turned in November with yields falling sharply. This was in part a consequence of comments made by several members of the Federal Open Market Committee that the market took to be dovish in nature. Both bonds and equities rallied. In the UK, inflation fell further post period to 4.6% in October. Having fallen 6.4% in October, the AIM All-share index rebounded by 5.0% in November. Whilst the war in Israel and Gaza is yet to materially challenge markets, it only adds to the general sense of unease with investors concerned about the risks that would follow were it to escalate from a localised conflict into a regional war. There is considerable debate about the 'neutral' rate for monetary policy, the level at which interest rates are neither seeking to restrain or stimulate economic activity. The debate is not as abstract as it might appear, with important ramifications for the risk-free rate and the cost of capital, both of which have increased substantially in the year and are factors in assessing company valuations. When central banks return to the neutral rate, and where it is set, are therefore important when establishing the path to a recovery in value. The outlook for the UK economy will impact some companies within the portfolio, but surprisingly few. As we have said in the past, many portfolio companies continue to develop new products and services, with success determined by technical and operational excellence, and access to capital. Whilst it is disappointing to again report on difficult markets, a weak economy and negative performance, we remain convinced that the portfolio contains a broad array of companies with a range of maturities and a shared ambition to grow revenues and deliver profitable outcomes to their shareholders. For now, the market is unwilling or unable to appropriately recognise value. The stasis will not persist forever and valuations will recover. In the meantime, the portfolio contains substantial amounts of growth at unreasonably low prices. We have completed one new qualifying investment post period end. Deal flow on AIM remains very subdued. We expect this to remain the case through the early part of 2024, before improving in the second half of the new financial year. In the meantime, we continue to review large numbers of investment opportunities in private companies. For further information please contact: **Oliver Bedford** Lead Fund Manager 18 December 2023 32 ## Investment portfolio summary ## As at 30 September 2023 | | | | Cumulative | | | | Change in | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Net Assets | | | Movement | | | | Value for | | | | | | | % at | Cost | | in value | Valuation | | the Year | | | | | | | | | | | | | | | (1) | | (2) | | 30.09.23 | | £000 | | £000 | | £000 | | £000 | | Market COI | | Qualifying Investments Equipmake Holdingsplc 5.02 3,662 3,969 7,631 2,501 AIM No Eagle Eye Solutions Groupplc 2.99 1,642 2,903 4,545 (173) AIM Yes PCI-PALplc 2.55 2,280 1,596 3,876 692 AIM Yes Abcamplc 2.02 55 3,007 3,062 843 AIM No Learning Technologies Groupplc 1.90 2,238 649 2,887 (1,834) AIM No (3) Innity RelianceLtd (My 1st Years) 1.81 2,500 243 2,743 – Unlisted Yes Surface Transformsplc 1.76 1,744 929 2,673 (1,188) AIM Yes Engage XR Holdingsplc 1.59 3,453 (1,036) 2,417 (1,036) AIM Yes Cohortplc 1.54 619 1,718 2,337 152 AIM Yes Fadel Partners, Inc 1.51 2,300 – 2,300 – AIM No XP Factoryplc 1.40 4,068 (1,939) 2,129 581 AIM Yes Diaceuticsplc 1.38 1,550 550 2,100 469 AIM Yes Maxcyte Inc 1.23 1,270 605 1,875 (2,325) AIM Yes C4X Discovery Holdingsplc 1.18 2,300 (500) 1,800 (199) AIM No Aquis Exchangeplc 1.18 765 1,024 1,789 398 AIM Yes Zoo Digital Groupplc 1.16 2,159 (399) 1,760 (3,806) AIM Yes Tortilla Mexican Grillplc 1.15 1,125 625 1,750 (1,875) AIM Ye s Beeks Financial Cloud Groupplc 1.09 1,038 623 1,661 (925) AIM Yes Team Internet Groupplc 1.09 588 1,067 1,655 243 AIM Yes Intelligent Ultrasound Groupplc 1.09 1,550 103 1,653 119 AIM No Itaconixplc 1.09 3,025 (1,376) 1,649 (1,376) AIM No SCA InvestmentsLtd (Gousto) 1.02 2,484 (929) 1,555 (1,228) Unlisted Yes Cranewareplc 0.95 125 1,316 1,441 (441) AIM Yes ZapparLtd 0.94 1,600 (171) 1,429 – Unlisted No Instemplc 0.92 297 1,105 1,402 417 AIM Yes Belvoir Groupplc 0.86 762 539 1,301 30 AIM Yes Arecor Therapeuticsplc 0.80 1,687 (471) 1,216 (320) AIM No Bivictrix TherapeuticsPlc 0.78 1,600 (420) 1,180 (420) AIM No Idoxplc 0.75 135 1,007 1,142 (22) AIM Ye s Ilikaplc 0.73 1,636 (526) 1,110 (888) AIM No Equals Groupplc 0.72 750 345 1,095 253 AIM Ye s AnimalCare Groupplc 0.67 720 298 1,018 (407) AIM Yes Eden Researchplc 0.67 1,355 (339) 1,016 (45) AIM No Blackbirdplc 0.64 606 364 970 (858) AIM No The Property Franchise Groupplc 0.60 377 534 911 (17) AIM Yes OneMedia iP Groupplc 0.59 1,141 (245) 896 (244) AIM Ye s Tristelplc 0.56 543 310 853 252 AIM No Skillcast Groupplc 0.53 1,570 (764) 806 (42) AIM No EKF Diagnostics Holdingsplc 0.53 565 239 804 (390) AIM No Crimson Tideplc 0.50 1,260 (504) 756 – AIM Yes Nexteqplc 0.48 1,209 (479) 730 (250) AIM No Rosslyn Data Technologiesplc 0.47 1,345 (629) 716 (299) AIM Yes Creo Medical Groupplc 0.47 2,329 (1,616) 713 (506) AIM Yes Crossword Cybersecurityplc 0.47 2,039 (1,332) 707 (864) AIM Yes Polarean Imagingplc 0.45 2,081 (1,391) 690 (2,297) AIM No Hardideplc 0.42 3,566 (2,928) 638 (232) AIM Yes Globaldataplc 0.39 173 424 597 40 AIM Ye s Verici DXplc 0.35 1,939 (1,405) 534 (463) AIM No Eneraqua Technologiesplc 0.33 1,401 (895) 506 (702) AIM No Faron Pharmaceuticals Oy 0.33 1,133 (638) 495 269 AIM No Tan Delta Systemsplc 0.31 504 (39) 465 (39) AIM No Intercede Groupplc 0.30 305 157 462 72 AIM Yes Velocysplc 0.23 2,220 (1,866) 354 (1,372) AIM No Strip Tinning Holdingsplc 0.22 1,054 (712) 342 28 AIM No Angleplc 0.22 1,158 (825) 333 (1,182) AIM No K3 Business Technology Groupplc 0.22 270 60 330 (39) AIM Ye s KidlyLtd 0.21 1,660 (1,334) 326 (793) Unlisted No Bidstack Groupplc 0.21 2,733 (2,419) 314 (2,915) AIM No Smooveplc 0.20 621 (316) 305 83 AIM No Science in Sportplc 0.19 1,479 (1,191) 288 (96) AIM No ### 33 | | | | Cumulative | | | | Change in | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Net Assets | | | Movement | | | | Value for | | | | | | | % at | Cost | | in value | Valuation | | | the Year | | | | | | | | | | | | | | (1) | | (2) | | 30.09.23 | | £000 | | £000 | | £000 | | £000 | | Market COI | | Everyman Media Groupplc 0.14 600 (394) 206 (186) AIM Ye s Trakm8 Holdingsplc 0.09 486 (352) 134 (18) AIM No MYCELX Technologies Corporation 0.09 361 (230) 131 73 AIM Yes Renalytix AIplc 0.03 82 (43) 39 2 AIM Ye s Fusion Antibodiesplc 0.02 624 (588) 36 (280) AIM No Gnityplc 0.02 2,026 (1,998) 28 (266) AIM Ye s Osirium Technologiesplc 0.01 858 (845) 13 (5) AIM No Flowgroupplc – 26 (26) – – Unlisted No Honest BrewLtd – 2,800 (2,800) – – Unlisted No LaundrappLtd – 2,450 (2,450) – – Unlisted No Mporium Groupplc – 33 (33) – – Unlisted No (3) Airportr TechnologiesLtd – 1,888 (1,888) – (529) Unlisted No (4) Infoserve Groupplc – – – – – Unlisted No Total – equity Qualifying Investments 56.36 100,597 (14,972) 85,625 (25,875) Qualifying xed income investments KidlyLtd (convertible loan notes) 1.58 2,400 – 2,400 – Unlisted No Osirium Technologiesplc (convertible loan notes) 0.53 800 – 800 44 AIM No Rosslyn Data Technologiesplc (convertible loan notes) 0.20 300 – 300 – AIM No Honest BrewLtd (loan notes) – 300 (300) – – Unlisted No Total qualifying xed income investments 2.31 3,800 (300) 3,500 44 Total Qualifying Investments 58.67 104,397 (15,272) 89,125 (25,831) Non qualifying investments Funds Marlborough Special Situations Fund 5.44 9,717 (1,449) 8,268 (1,125) Unlisted iSharesplc ISHRS UK Gilts 0-5Yr ETF GBP (Dist) 1.30 2,001 (23) 1,978 (24) Main Total non-qualifying funds 6.74 11,718 (1,472) 10,246 (1,149) Hollywood Bowl Groupplc 0.98 1,566 (81) 1,485 194 Main Ye s Bodycoteplc 0.97 1,534 (66) 1,468 296 Main No Chemring Groupplc 0.82 1,362 (113) 1,249 (59) Main Ye s Bytes Technology Groupplc 0.75 747 400 1,147 304 Main Ye s WH Smithplc 0.71 1,220 (145) 1,075 63 Main Yes Ashtead Groupplc 0.66 1,116 (116) 1,000 (115) Main Ye s BAE Systemsplc 0.65 782 206 988 180 Main No National Gridplc 0.65 1,041 (61) 980 (61) Main No TP ICAP Groupplc 0.63 1,022 (69) 953 (70) Main Ye s Rotorkplc 0.58 944 (69) 875 176 Main Yes Energeanplc 0.53 926 (126) 800 (126) Main No Diversied Energy Companyplc 0.48 1,050 (324) 726 (402) Main Ye s XP Powerplc 0.47 743 (35) 708 (35) Main Yes The Watches of Switzerland Groupplc 0.44 1,216 (549) 667 (246) Main Ye s On the Beach Groupplc 0.38 1,304 (722) 582 (81) Main No Wickes Groupplc 0.23 585 (242) 343 42 Main No Tortilla Mexican Grillplc 0.12 161 29 190 (204) Main Ye s MYCELX Technologies Corporation 0.10 298 (146) 152 85 AIM Ye s Genagro ServicesLtd – – – – 1 Unlisted Yes Total – equity non-qualifying investments 10.15 17,617 (2,229) 15,388 (58) Fixed income – bonds Royal Bank of Canada 5.000% SNR NTS24/01/28 1.90 3,045 (161) 2,884 (161) Main No British Telecommunicationsplc 5.75% BDS17/12/28 1.96 3,158 (173) 2,985 (173) Main No ### 34 | | | | Cumulative | | | | Change in | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Net Assets | | | Movement | | | | Value for | | | | | | | % at | Cost | | in value | Valuation | | the Year | | | | | | | | | | | | | | | (1) | | (2) | | 30.09.23 | | £000 | | £000 | | £000 | | £000 | | Market COI | | Barclaysplc 3.25% NTS12/02/27 1.78 2,876 (169) 2,707 (169) Main No NatWest Marketsplc 6.375% NTS08/11/27 1.93 3,051 (122) 2,929 (122) Main No Next Groupplc 4.375% BDS02/10/26 1.89 2,980 (108) 2,872 (108) Main No Marks& Spencerplc 3.000% NTS08/12/23 1.96 2,999 (15) 2,984 (15) Main No Total non-qualifying xed income - bonds 11.42 18,109 (748) 17,361 (748) Total – non-qualifying investments 28.31 47,444 (4,449) 42,995 (1,955) Total investments 86.98 151,841 (19,721) 132,120 (27,786) Cash at bank 12.65 19,231 Prepayments& accruals 0.37 569 Net assets 100.00 151,920 (1) The change in fair value has been adjusted for additions and disposals in the year and as such does not reconcile to the unrealised total in note7. The dierence is £0.7million which is the total of 16 full investment disposals in the year. (2) COI – Co investments with other funds managed by the Investment Manager at 30September 2023. (3) Dierent classes of shares held in unlisted companies within the portfolio have been aggregated. (4) Impaired fully through the prot and loss account and therefore shows a zero cost. The investments listed below are either listed, headquartered or registered outside the UK: Listed Headquartered Registered Listed Investments: Abcamplc UK/USA UK UK Bytes Technology Groupplc UK/South Africa UK UK Crimson Tide UK/Republic of Ireland UK UK Cranewareplc UK UK/USA UK Engage XRplc UK/Ireland Ireland Ireland Fadel Partnersplc UK USA USA Faron Pharmaceuticals Oy UK/Finland Finland Finland Itaconixplc UK USA UK Maxcyte Inc UK/USA USA USA Mycelx Technologies Corporationplc UK USA USA Polarean Imagingplc UK USA UK Renalytix AIplc UK/USA USA UK Verici DXplc UK UK/USA UK XP PowerLtd UK Singapore Singapore Unlisted private companies: (1) GenagroLtd – UK Jersey (1) Companies awaiting liquidation. ### 35 Total investments by market sector as at 30 September 2023 ![img-2.jpeg](img-2.jpeg) Total investments by market sector as at 30 September 2022 ![img-3.jpeg](img-3.jpeg) 36 ## As at 30 September 2023 (by market value) The top 10 investments are shown below. Each investment is valued by reference to the bid price or, in the case of unquoted companies, the IPEV guidelines using one or more valuation techniques according to the nature, facts and circumstances of the investment. Forecasts, where given, are drawn from a combination of broker research and/or Bloomberg consensus forecasts and exclude amortisation, share based payments and exceptional items. Forecasts are in relation to a period end for which the company results are yet to be released. Published accounts are used for private companies or public companies with no published broker forecasts. The net asset figures and net cash values are from published accounts in most cases. | Equipmake Holdings plc | | Share Price 29.0p | | | --- | --- | --- | --- | | Investment date | July 2022 | Forecasts for the year to | May 2024 | | Equity held | 8.94% | Turnover (£'000) | 13,400 | | Av. Purchase Price | 4.3p | (Loss) before tax (£'000) | (5,300) | | Cost (£'000) | 3,662 | Net cash May 2023 (£'000) | 7,000 | | Valuation (£'000) | 7,631 | Net assets May 2023 (£'000) | 13,803 | ### Company description Equipmake is a UK based technology company, which has developed a range of electrification products for the provision of electric vehicle (EV) drivetrains to meet the needs of the automotive, aerospace and other sectors in support of the transition from fossil-fuelled to zero emission powertrains. Equipmake products can be applied in a variety of other vehicle electrification contexts, including hybrid, fully electric and fuel cell vehicles. Equipmake provides individual components to full turnkey systems. | Eagle Eye Solutions Group plc | | Share Price 25.5p | | | --- | --- | --- | --- | | Investment date | April 2014 | Forecasts for the year to | June 2024 | | Equity held | 2.96% | Turnover (£'000) | 50,800 | | Av. Purchase Price | 189.7p | Profit before tax (£'000) | 4,400 | | Cost (£'000) | 1,642 | Net cash June 2023 (£'000) | 9,300 | | Valuation (£'000) | 4,545 | Net assets June 2023 (£'000) | 24,100 | ### Company description Eagle Eye is a Software-as-a-Service (SaaS) technology company that creates digital connections enabling personalised, real-time marketing solutions for large retailers. Through Eagle Eye AIR, the company's loyalty and promotions omnichannel SaaS platform, companies connect all aspects of the customer journey in real time, unlocking the capability to deliver personalisation, streamline marketing execution and open up new revenue streams through promotions, loyalty apps, subscriptions and gift services. | PCI PAL plc | | Share Price 26.0p | | | --- | --- | --- | --- | | Investment date | January 2018 | Forecasts for the year to | June 2024 | | Equity held | 10.55% | Turnover (£'000) | 19,100 | | Av. Purchase Price | 32.9p | (Loss) before tax (£'000) | 1,000 | | Cost (£'000) | 2,280 | Net cash June 2023 (£'000) | 1,169 | | Valuation (£'000) | 3,876 | Net (liabilities) June 2023 (£'000) | (4,109) | ### Company description PCI PAL plc is a provider of Software-as-a-Service (SaaS) solutions that allows companies to take payments from their customers securely. Its products secure payments and data in any business communications environment including voice, chat, social, email, and contact centre and is integrated to, and resold by, business communications vendors and payment service providers. 37 | Abcam plc^{(1)} | | Share Price: £22.63 USD | | | --- | --- | --- | --- | | Investment date | October 2005 | Forecast for the year to | December 2023 | | Equity held | 0.07% | Turnover (£'000) | 438,800 | | Av. Purchase Price | 33.4p | Profit before tax (£'000) | 118,600 | | Cost (£'000) | 55 | Net (debt) December 2022 (£'000) | (30,600) | | Valuation (£'000) | 3,062 | Net assets December 2022 (£'000) | 726,900 | ### Company description Abcam is a global life science company listed on the Nasdaq stock exchange after delisting from AIM. Abcam produces and distributes research-grade antibodies and biological tools to the life sciences sector. The Company's customers include universities, research institutes and pharmaceutical and biotechnology companies in countries around the world. (1) Abcam was acquired by Danaher Inc. post period-end for $24.00 a share with £3.14m received by the Company on 6 December 2023. | Learning Technologies Group plc | | Share price: £64.15p | | | --- | --- | --- | --- | | Investment date | July 2015 | Forecast for the year to | December 2023 | | Equity held | 0.57% | Turnover (£'000) | 560,200 | | Av. Purchase Price | 49.7p | Profit/(loss) before tax (£'000) | 83,000 | | Cost (£'000) | 2,238 | Net (debt) June 2023 (£'000) | (108,377) | | Valuation (£'000) | 2,887 | Net assets June 2023 (£'000) | 419,647 | ### Company description Learning Technologies Group provides workplace digital learning and talent management software and services to corporate and government clients. The group offers end-to-end learning and talent solutions ranging from strategic consultancy, through a range of content and platform solutions to analytical insights that enable corporate and government clients to meet their performance objectives. | Infinity Reliance Ltd (My 1st Years) | | Unquoted | | | --- | --- | --- | --- | | Investment date | May 2018 | Results for the year to | December 2022 | | Voting rights held | 8.97% | Turnover (£'000) | 18,751 | | Av. Purchase Price | 4670.4p | Profit before tax (£'000) | 1,091 | | Cost (£'000) | 2,500 | Net cash December 2022 (£'000) | 2,818 | | Valuation (£'000) | 2,743 | Net assets December 2022 (£'000) | 6,235 | | Income recognised in period (£) | 0 | | | ### Company description My 1st Years is a UK retail platform that focusses on the sale of personalised baby and children's gifts through e-commerce channels. The product range includes bespoke presents for new born babies to seven year olds, for christenings, birthdays and Christmas. | Kidly Ltd^{(1)} | | Unquoted | | | --- | --- | --- | --- | | Investment date | March 2020 | Results for the year to | March 2022 | | Voting rights held | 9.45% | Turnover (£'000)^{(2)} | – | | Av. Purchase Price | 165.6p | Profit/(loss) before tax (£'000)^{(2)} | – | | Cost (£'000) | 4,060 | Net cash March 2022 (£'000) | 358 | | Valuation (£'000) | 2,726 | Net assets March 2022 (£'000) | (1,490) | | Income recognised in period (£) | 223,562 | | | ### Company description Kidly is an online retail platform that curates a range of the world's best brands for children that sit alongside its own Kidly Label brand catering to children between the ages of 0-5 years. (1) Includes equity investment of £0.3m and convertible loan note investments of £2.4m. (2) Not available, data taken from abbreviated accounts. 38 | Surface Transforms plc | | Share price: 27.0p | | | --- | --- | --- | --- | | Investment date | March 2016 | Forecast for the year to | December 2023 | | Equity held | 4.85% | Turnover (€'000) | 8,600 | | Av. Purchase Price | 17.6p | (Loss) before tax (€'000) | (8,500) | | Cost (€'000) | 1,744 | Net cash June 2023 (€'000) | 3,512 | | Valuation (€'000) | 2,673 | Net assets June 2023 (€'000) | 28,990 | ### Company description Surface Transforms develops and produces carbon-ceramic brake discs serving customers that include major OEMs in the global automotive markets. Surface Transforms interweaves continuous carbon fibre to form a 3D multi-directional matrix, producing a stronger, lighter and more durable product with 3x the heat conductivity compared to standard production components. | Engage XR Holdings plc | | Share price: 2.80p | | | --- | --- | --- | --- | | Investment date | March 2023 | Forecast for the year to | December 2023 | | Equity held | 29.72% | Turnover (€'000) | 5,400 | | Av. Purchase Price | 4.0p | (Loss) before tax (€'000) | (4,500) | | Cost (€'000) | 3,453 | Net cash December 2022 (€'000) | 9,447 | | Valuation (€'000) | 2,417 | Net assets December 2022 (€'000) | 10,340 | ### Company description Engage XR is virtual reality ('VR') technology company with a proprietary cloud-based professional metaverse platform used to deliver immersive corporate communications, remote collaborations and events, training and education. The company has a strong reputation for data security and reliability, with a diverse customer base of 190 clients including several blue-chip companies such as Meta, HP, HTC, KIA and BMW. | Cohort plc | | Share price: 492.0p | | | --- | --- | --- | --- | | Investment date | February 2006 | Forecast for the year to | April 2024 | | Equity held | 1.15% | Turnover (€'000) | 187,400 | | Av. Purchase Price | 130.2p | Profit before tax (€'000) | 19,200 | | Cost (€'000) | 619 | Net cash April 2023 (€'000) | 15,608 | | Valuation (€'000) | 2,337 | Net assets April 2023 (€'000) | 99,778 | ### Company description Cohort is the parent company of six businesses based in the UK, Germany and Portugal, providing a wide range of services and products for domestic and export customers in defence and related markets. The group is split into two divisions: Communications and Intelligence, and Sensors and Electors. For further information please contact: ### Oliver Bedford Lead Fund Manager Canaccord Genuity Asset Management Limited 88 Wood Street London EC2V 7QR 0207 523 4837 aimvct@canaccord.com 39 ## Governance ### 40 ## Board of Directors David Brock (Chair) Oliver Bedford Date of Appointment: 13 October 2010 Date of Appointment: 13 December 2016 David Brock, who is an experienced company chair Oliver Bedford sits on the Board as part of his role in both private and public companies and a former as lead fund manager at the Investment Manager in main board director of MFI Furniture Groupplc. relation to the Company. David is chair of Molten Ventures VCTplc and ECS Global GroupLtd. David was appointed as Chair of the Board on 4February 2020. Angela Henderson (Management and Service Megan McCracken Provider Engagement Committee Chair) Date of Appointment: 1 June 2022 Date of Appointment: 1 November 2019 Megan McCracken is Chair of State Street Trustees Angela Henderson is a non-executive director at Limited, the senior independent director of GB Macquarie Capital (Europe) Limited, Wells Fargo Bank and chair of Remuneration and Nomination Securities International Limited and Polar Capital Committees for Folk2Folk. She was awarded the Global Financials Trustplc following an executive Institute of Directors’ Chair’s Award. Megan has held career in nancial services. She has invested in early executive roles at HSBC and Citibank, and was a PwC stage technology companies and held non-executive consultant and a Boeing Satellite Systems engineer. board seats in the asset management sector. She has an MBA from MIT Sloan and a Bachelor of Previously, she has served on the governing body Science in Aerospace Engineering from the University of a London hospital and is a trustee of a healthcare of Notre Dame. charity. She is a solicitor of the Senior Courts of England& Wales. Busola Sodeinde Justin Ward (Audit Committee Chair) Date of Appointment: 1 June 2022 Date of Appointment: 1 November 2020 Busola Sodeinde is a qualied Chartered Accountant Justin Ward is a qualied Chartered Accountant and is and has spent most of her executive career in Financial a non-executive director and chair of the Investment Services. Until 2019 she was a Managing Director/CFO in Committee of The Income and Growth VCTplc. He Global Markets EMEA at State Street Bank. She is a non- is also a non-executive director of School Explained executive director and chair of the Audit Committee Limited and has previously served on the board of of TRProperty Investment Trustplc, a member of the a number of private companies. Justin formerly led Board of Governors for Church Commissioners (and growth equity and private equity buyout transactions sits on its Audit& Risk Committee), is a non-executive at CVC Capital Partners, Hermes Private Equity and director at The Ombudsman Services and a Trustee of Bridgepoint Development Capital. The Scouts. Busola is the founder of a social start up and is also an activator supporting women-led ventures. ### 41 ## Directors’ report ## For the year end 30 September 2023 The Directors of the Company present their report liability scenarios. The deeds of indemnity give each together with the audited nancial statements of Director the benet of an indemnity, out of the assets the Company for the year from 1October 2022 to and prots of the Company, to the extent permitted 30September 2023 (“Annual Report”), incorporating by the Companies Act2006 and subject to certain the corporate governance statement on pages 51 to limitations against liabilities incurred by each of them 55. The principal activity of the Company has been in the execution of their duties and exercise of the outlined in the strategic report on page 10. The Board powers as Directors of the Company. believes that the Annual Report taken as a whole is Disclosable interests fair, balanced and understandable and provides the information necessary for shareholders to assess the No Director is under contract of service with the Company’s position, performance, business model Company and other than as disclosed in note14, and strategy. no contract existed during or at the end of the year in which any Director was materially interested and Directors which was signicant in relation to the Company’s The Directors of the Company during the year business. were David Brock (Chair), Oliver Bedford, Angela Revenue and dividends Henderson, Justin Ward, Busola Sodeinde and Megan McCracken. Brief biographical details are given on The statutory loss for the year amounted to page 41. £29,726,556 (2022:loss £88,670,119). A special dividend of 2.00pence per share was paid on Directors’ interests 10February 2023. An interim ordinary dividend The Directors’ interests (including those of of 1.00penny per share was paid on 28July connected persons) in the issued share capital of the 2023 (2022:1.00penny per share). The nal Company are outlined in the Directors’ remuneration dividend of 1.50pence per share for the year report on page 46. There is no minimum holding ended 30September 2023 is due to be paid on requirement that the Directors need to adhere to. 15 February2024 (2022:2.00pence per share). David Brock, Oliver Bedford, Angela Henderson, and Capital structure Justin Ward are shareholders in the Company. Their The Company’s capital structure is summarised in current shareholdings, as at the date of the Annual notes1 and 11 to the nancial statements. Report, are stated in the Directors’ remuneration report on page 46. Voting rights in the Company’s shares Details of the voting rights in the Company’s shares Directors’ and ocers’ liability insurance as at the date of the Annual Report are given in note2 Directors' and ocers' liability insurance cover is held to the Notice of Annual General Meeting on page 96. by the Company in respect of the Directors. Substantial holdings in the company Deeds of Indemnity As at 30September 2023 and the date of this The Company has entered into deeds of indemnity report, the Company was aware of the following in favour of each of the Directors in order to provide shareholdings of 3% or more of the Company’s additional protection to the Directors in certain issued ordinary share capital: | | | Number of | | Number of | | | --- | --- | --- | --- | --- | --- | | | | ordinary | | ordinary | | | | | shares as at | | sharesas at | | | | 30September | | | 14December | | | Shareholder | | | 2023 % held | | 2023 % held | Hargreave Lansdown (Nominees) Limited 12,880,056 3.93 13,109,189 3.87 UBS Banking NomineesLtd 11,140,397 3.40 11,494,052 3.39 Share buybacks and share price discount shares (nominal value £20,394) have been purchased During the year, the Company repurchased 7,183,338 since the year end at a total cost of £873,229. ordinary shares (nominal value £71,833) at a cost The Directors believe that these share buybacks of £3,636,841. The repurchased shares represent are in the best interests of all shareholders as they 2.69% of the ordinary shares in issue on 1October provide liquidity for shareholders looking to realise 2022. All repurchased shares were cancelled. As at their investment whilst ensuring the shares are 18December2023, a further 2,039,414ordinary ### 42 bought back at a discount to the NAV to the longer term benefit of remaining shareholders. This policy is non-binding and at the discretion of the Board. Its operation depends on a range of factors including the Company's liquidity, shareholder permissions, market conditions and compliance with all laws and regulations. These factors may restrict the effective operation of the policy and prevent the Company from achieving its objectives. ### **Shares issued** During the year, the Company issued 65,917,234 ordinary shares of 10penny (nominal value £659,172) in the order for subscription launched in the year ending September 2022, representing 24.7% of the opening share capital at prices ranging from 54.76p to 63.84p per share. Gross funds of £39,935,333 were received. The 3.5% premium of £1,397,737 payable to Canaccord Genuity Wealth Ltd (CGWL) under the terms of the order was reduced by £555,552, being the discount awarded to investors in the form of additional shares. A further reduction of £755 introductory commission was made resulting in fees payable to CGWL of £841,430 which were used to pay other costs associated with the prospectus and marketing. In accordance with the order agreement, the Company was entitled to a rebate of £100,000 from CGWL reducing the net fees payable to CGWL to £741,430. On 10 February 2023, 1,836,516 ordinary shares were allotted at a price of 54.95pence per share, which was calculated in accordance with the terms and conditions of the DRIS, on the basis of the last reported NAV per share as at 20 January 2023, to shareholders who elected to receive shares under the DRIS as an alternative to the final dividend for the year ended 30 September 2022 and special dividend announced on 19 December 2022. On 28 July 2023, 591,318 ordinary shares were allotted at a price of 49.29pence per share, which was calculated in accordance with the terms and conditions of the DRIS, on the basis of the last reported NAV per share as at 7 July 2023, to shareholders who elected to receive shares under the DRIS as an alternative to the interim dividend for the year ended 30 September 2023. ### **Financial instruments** The Company's financial instruments and principal risks are disclosed in note 15 to the accounts. ### **VCT status monitoring** The Company has appointed Philip Hare & Associates LLP as advisors on, inter alia, compliance with legislative requirements. The Directors monitor the Company's VCT status through regular reports from Philip Hare & Associates LLP. ### **Auditors** A resolution proposing the reappointment of BDOC LLP as auditors to the Company and authorising the Directors to determine their remuneration will be proposed at the forthcoming Annual General Meeting. ### **Greenhouse gas emissions** As a UK quoted company, the Company is required to report on its greenhouse gas emissions. The Company outsources all of its activities to third parties and does not have any physical assets, property, employees or operations. The Company has no direct greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013. ### **Amendments to the Articles of Association** The Company's Articles of Association may be amended by the members of the Company by special resolution (requiring a majority of at least 75% of the persons voting on the relevant resolution). At the Company's General Meeting on 11 October 2023, a resolution to adopt amended Articles of Association which, provided that the next continuation vote in relation to the Company will be held in 2030 rather than 2029, was passed, with 96.96% votes in favour. ### **Post balance sheet events** Post balance sheet events are disclosed in note 17 to the financial statements on page 87. ### **Future developments** Consideration of the Company's future development and prospects are contained in the Chair's statement, long term viability statement and Investment Manager's report on pages 4 to 9, 24 and 29 to 32 respectively. ### **Going concern** The Company's business activities and the factors affecting its future development are set out in the Chair's statement on pages 4 to 9 and the Investment Manager's report on pages 29 to 32. The Company's 43 principal and emerging risks are set out in the strategic report on pages 22 to 23. The Board receives regular reports from the Investment Manager and Administrator and reviews the financial position, performance and liquidity of the Company's investment portfolio. Revenue forecasts and expense budgets are prepared at the start of each financial year and performance against plan is reviewed by the Board. Cash forecasts are prepared and reviewed by the Board as part of the HMRC investment test compliance monitoring. The Directors have assessed the Company's ability to continue as a going concern and are satisfied that the Company has adequate resources to continue in operational existence for a period of 12 months from the date these financial statements were approved. The Company has sufficient cash (£19.2 million at 30 September 2023) and liquid assets held across a diversified portfolio of investments in listed companies to meet obligations as they fall due. The Company is a close-ended fund, where assets are not required to be liquidated to meet day-to-day redemptions. The major driver of cash outflows (dividends, buybacks and investments) are managed in accordance with the Company's key policies at the discretion of the Board or, in the case of the Company's investments, the Investment Manager. The Board has reviewed forecasts and stress tests to assist them with their going concern assessment. These tests have included the modelling of a 15% reduction in NAV, whilst also considering ongoing compliance with the VCT investment test. It was concluded that in a plausible downside scenario the Company would continue to meet its liabilities. The Directors have carefully considered the principal risk factors facing the Company, as described on pages 22 to 29 and their potential impact on income into the portfolio and the NAV. The Directors are of the opinion that the Company has sufficient cash and other liquid assets to continue to operate as a going concern, including under a stress scenario. The Investment Manager has a team of four dedicated fund managers and analysts with multi-year experience working for the VCT. Abbe Martineau joined the CGAM VCT fund management team as legal counsel on 17 April 2023. The Investment Manager and the Company's other key service providers have contingency plans in place to manage operational disruptions. The Directors have not identified any material uncertainties related to events or conditions that may cast significant doubt about the ability of the Company to continue as a going concern. Therefore, they are satisfied that the Company should continue to operate as a going concern and report its financial statements on that basis. ### Annual General Meeting Shareholders are invited to attend the Company's Annual General Meeting (AGM) to be held at 4.45pm on 8 February 2024 at 88 Wood Street, London EC2V7QR. The Company's Notice of AGM is set out on pages 96 to 99 of this annual report. Shareholders who are unable to attend the AGM in person are invited to vote by proxy ahead of the AGM and submit any questions in writing to the Company Secretary at HHV.CoSec@jtcgroup.com (please include 'HHV AGM' in the subject heading) by 5.00p.m. on 1 February 2024. Answers will be published on the Company's website on 8 February 2024. The Chair will record the voting for each resolution by way of a poll to ensure each vote cast is counted. A proxy form for the AGM is enclosed separately with shareholders' copies of this annual report. The proxy form permits shareholders to disclose votes 'for', 'against' and 'withheld'. A vote 'withheld' is not a vote in law and will not be counted in the proportion of the votes for and against the resolution. Shareholders who wish to appoint a proxy are recommended to appoint the Chair of the AGM as their proxy. ### Resolutions being proposed at the AGM There are 15 resolutions being proposed at the forthcoming AGM, 13 as ordinary resolutions, including approval of the annual accounts (resolution 1), and 2 as special resolutions, requiring the majority of the votes cast and 75 per cent of the votes cast to be in favour of the resolutions, respectively, in order for the resolutions to carry. Ordinary resolutions include the re-election of the Directors. ### Resolution 12 – Authority to implement any scrip dividend offer Ordinary resolution number 12 grants the Directors the necessary authority, in accordance with the terms of Article 29 of the Articles, to continue to offer a scrip dividend alternative in respect of future dividends made or paid in the period ending at the conclusion of the annual general meeting to be held in 2025. The Board believes that this continued authority offers the Company and its shareholders a greater level of flexibility in relation to dividend payments. The appendix on pages 100 to 102 of this document sets out a summary of key terms and conditions of the Company's scrip dividend 44 scheme. The full terms and conditions can be The authority sought at the forthcoming Annual accessed via the Company’s website at https://www. General Meeting will expire 15months from the date hargreaveaimvcts.co.uk and are available on request that this resolution is passed or at the conclusion of from the Company’s registrar, Equiniti Limited. the next Annual General Meeting of the Company, whichever is earlier. Resolution13 – Power to allot shares Ordinary resolution number 13 will request the Resolution15 – Purchase of own shares authority for the directors to allot up to an aggregate Special resolution number 15 will request the nominal amount of £338,803 representing authority to purchase a maximum of 14.99per cent. approximately 10per cent. of the total share capital of the Company’s issued ordinary share capital of the Company in issue (excluding treasury shares) at the date of the passing of the resolution being as at the date of this document, generally from approximately 50,786,705 as at the date of this time to time or pursuant to shareholders’ right to document at or between the minimum and maximum elect or participate in the dividend reinvestment prices specied in resolution 13. Shares bought scheme operated by the Company in accordance with back under this authority may be cancelled or held in Article29 of the Company’s Articles of Association. treasury. This authority is in addition to any existing The Board believes that it is helpful for the Company authorities. to continue to have the exibility to buy its own The authority sought at the forthcoming Annual shares and this resolution seeks authority from General Meeting will expire 15months from the date shareholders to do so. The passing of this resolution that this resolution is passed, or at the conclusion of will replace and renew the buyback authority taken at the next Annual General Meeting of the Company, the last AGM. During the nancial year under review, whichever is earlier. the Company purchased 7,183,338 ordinary shares which were then cancelled. Resolutions14 and 15 are being proposed as special resolutions requiring the approval of at least 75per The authority sought at the forthcoming Annual cent. of the votes cast at the meeting. General Meeting will expire 15months from the date this resolution is passed, or at the conclusion of Resolution14 – Disapplication of pre-emption the next Annual General Meeting of the Company, rights whichever is earlier. Special resolution number 14 will request the authority for the Directors to allot equity securities Recommendation for cash without rst being required to oer such The Directors believe that the passing of the securities to existing members. This will include the resolutions above are in the best interests of the sale on a non pre-emptive basis of any shares the Company and its shareholders as a whole and Company holds in treasury for cash. The authority unanimously recommend that you vote in favour is limited to (i)an aggregate nominal amount of of these resolutions, as they intend to in respect £169,401 (representing approximately 5per cent. of of their own benecial shareholdings amounting to the issued share capital of the Company (excluding 318,689ordinary shares. treasury shares) as at the date of this document) By order of the Board pursuant to the dividend reinvestment scheme operated by the Company and (ii)for allotments generally from time to time, an aggregate nominal amount of £169,401 (representing approximately David Brock 5per cent. of the issued share capital of the Company Chair (excluding treasury shares) as at the date of this Registered oce: document). This authority is in addition to any Hargreave Hale AIM VCTplc existing authorities. Talisman House Boardmans Way Blackpool FY4 5FY 18December2023 ### 45 # Directors' remuneration report ## For the year ended 30 September 2023 The Board presents this report which has been prepared in accordance with the requirements of Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013. Shareholders are encouraged to vote on the remuneration report annually at the Annual General Meeting and on the remuneration policy at least every three years. Notwithstanding this, the Directors' policy is to put the remuneration to the vote of its shareholders at each Annual General Meeting. Your Company's independent auditor is required to audit certain disclosures provided in this report. Where disclosures have been audited, they are indicated in this report. The auditor's opinion is included in their report on pages 62 to 68. ### Statement from the Chair of the Board in relation to Directors' remuneration matters The Board is mindful of its obligation to set remuneration at levels which attract and maintain an appropriate calibre of individuals whilst simultaneously protecting the interests of shareholders. Following a review of the Board remuneration levels of the Company's peers and taking into account inflation, the Board has decided to increase its remuneration, effective 1 October 2023. As a result of the increases, the annual remuneration of the Chair will be £41,000, the independent non-executive directors will receive £32,000 and Oliver Bedford, who is not considered independent, will receive £29,500. An additional fee of £1,500 will continue to be paid to the Chair of the Management and Service Provider Engagement Committee and the Chair of the Audit Committee will continue to receive an additional fee of £3,000. ### Remuneration responsibilities As the Board consists entirely of non-executive directors it is considered appropriate that matters relating to remuneration are considered by the Board as a whole, rather than a separate remuneration committee. All Directors are considered independent with the exception of Oliver Bedford who is an employee of the Investment Manager and is not therefore independent. The remuneration policy is set by the Board, who consider the remuneration of each of the Directors and whether the remuneration policy is fair and in line with comparable VCTs. The Board deals with all matters relating to the Directors' remuneration and reporting thereon. ### Policy on Directors' remuneration The Company has no employees, so the Board's policy is that the remuneration of its Directors should be fair and reasonable in relation to the time commitment and responsibilities of the Directors and in line with the remuneration paid by other listed Venture Capital Trusts and investment trusts. The Board aims to review Directors' remuneration from time to time. Fees for the Directors are determined by the Board within the limits stated in the Company's Articles of Association. The maximum permitted by the Company's Articles of Association is £250,000 per annum. The Directors are not eligible for bonuses, pension benefits, share options, other incentives or benefits. The Directors may be reimbursed for reasonable expenses incurred. The Directors do not receive payment on loss of office other than in lieu of notice period, if applicable. ### Director's terms of appointment It is the Board's policy that none of the Directors has a service contract. Each of the Directors has entered into an agreement with the Company when appointed. David Brock was appointed on 28 September 2010, Oliver Bedford on 13 December 2016, Angela Henderson on 29 October 2019, Justin Ward on 1 November 2020 and Busola Sodeinde and Megan McCracken on 1 June 2022. The terms of appointment provide that a Director shall retire and be subject to election at the first Annual General Meeting after appointment. The Articles of Association provide that a Director may retire at any Annual General Meeting following the Annual General Meeting at which he or she last retired and was re-elected provided that he or she must retire from office at or before the third Annual General Meeting following the Annual General Meeting at which he or she last retired and was re-elected. However, notwithstanding this, the Board agreed in July 2019 that all Directors will be subject to annual re-election. Either party can terminate the agreement by giving to the other at least 30 months' notice in writing. ### Basis of remuneration All of the Directors are non-executive and considered to be independent with the exception of Oliver Bedford, who is not independent. It is not considered appropriate to relate any portion of their remuneration to the performance of the Company and performance conditions have not been set in determining their level of remuneration. As the Company has no employees, it is not possible to take account of the pay and employment conditions of the employees when determining the levels of the Directors' remuneration. 46 The following table shows the expected maximum payment that can be received per annum by each director for the year to 30 September 2024, together with a summary of the Company’s strategy and how this is supported by the current remuneration policy. Expected Fees for the year to | | | Components | 30 September | | Performance | | Remuneration | | --- | --- | --- | --- | --- | --- | --- | --- | | Director Role | | of pay package | | 2024 | Conditions Company Strategy | | Policy | | David Brock Chair | | | | £41,000 | | To generate | The levels of | | Justin Ward Director and Chair of | | | | | | capital gains and | remuneration are | | | the Audit Committee £35,000 | | | | | income from its | considered to be | | | | | | | | portfolio and make | fair and reasonable | Angela Henderson Director and Chair distributions from in relation to the of the Management capital or income to time committed, and Service Provider Basic Salary N/A shareholders whilst responsibilities Engagement maintaining its of the Directors Committee £33,500 status as a Venture and in line with the Oliver Bedford Director £29,500 Capital Trust remuneration paid Megan McCracken Director £32,000 by other VCTs and Busola Sodeinde Director £32,000 investment trusts Annual remuneration report The purpose of this report is to demonstrate the method by which the Board has implemented the Company’s remuneration policy and provide shareholders with specic information in respect of the Directors’ remuneration. Under s439 of the Companies Act 2006, companies are required to ask shareholders to approve the annual remuneration paid to directors every year and to formally approve the directors’ remuneration policy every three years. However, the Board’s preferred approach is to put the remuneration policy to shareholders annually for approval. Any change to the Directors’ remuneration policy will require shareholder approval. As in prior years, the vote on the Directors’ remuneration report is an advisory vote, whilst the vote on the Directors’ remuneration policy is binding. Accordingly, ordinary resolutions will be put to shareholders at the forthcoming Annual General Meeting to be held on 8February 2024, to receive and adopt the Directors’ remuneration report and to receive and approve the directors’ remuneration policy. At the Annual General Meeting held on 2 February 2023 the following votes were cast on the remuneration report and the remuneration policy: Votes Votes Votes for % for against % against Total votes cast withheld Remuneration report 12,763,878 93.31 915,521 6.69 13,679,399 531,672 Remuneration policy 12,685,494 92.62 1,010,324 7.38 13,695,818 515,253 Company performance The Company was incorporated on 16 August 2004 and commenced trading on 29 October 2004. The performance chart below plots the Company’s NAV total return (dividends reinvested) (rebased to 100) and share price total return (dividends reinvested) (rebased to 100) over the last 10 years compared to the FTSE AIM All-Share Index Total Return over the same period (also calculated on a dividends reinvested basis). This index was chosen for comparison purposes as it represents the closest comparable equity market index. However, HMRC derived investment restrictions, along with Qualifying Investments in private companies and xed income securities and Non-Qualifying Investments in main market listed companies, predominantly in the FTSE 350, mean the index is not a wholly comparable benchmark for performance. ### 47 Performance against the FTSE AIM All-Share Index Total Return 0 0 0 0 0 0 0 90.00 70.00 50.00 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 FTSE AIM All-Share Index Total Return NAV total return (dividends reinvested) Source: Bloomberg Directors’ emoluments for the year (audited) The total emoluments of each person who served as a director during the year are set out in the table below. David Brock is entitled to a higher fee due to his role as Chair of the Board, Justin Ward is entitled to a higher fee due to his role as Chair of the Audit Committee and Angela Henderson is entitled to a higher fee due to her role as Chair of the Management and Service Provider Engagement Committee. | | | | 2023 | | | | | | | 2022 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 2023 | | Taxable | | | 2023 | | 2022 | | Taxable | | | 2022 | | | Fees | | Expenses | | | Total | | Fees | | Expenses | | | Total | | | | £ | | | £ | | £ | | £ | | | £ | | £ | David Brock (Chair) 39,000 532 39,532 36,500 – 36,500 Oliver Bedford 28,000 – 28,000 26,125 – 26,125 (1) Ashton Bradbury – – – 9,633 558 10,191 Angela Henderson 32,000 – 32,000 30,125 – 30,125 Justin Ward 33,500 – 33,500 31,625 40 31,665 (2) Megan McCracken 30,500 – 30,500 9,667 – 9,667 (2) Busola Sodeinde 30,500 – 30,500 9,667 – 9,667 Total 193,500 532 194,032 153,342 598 153,940 (1) Ashton Bradbury resigned as a Director eective 3 February 2022. 250.00 (2) Megan McCracken and Busola Sodeinde were appointed with eect from 1 June 2022 and their 2022 fees are with eect from that date. 230.0 210.0 190.0 170.0 150.0 130.0 110.0 Sep-23 ### 48 Share price total return (dividends reinvested) Directors’ annual percentage change in remuneration The increase in Directors’ remuneration over the last two years is set out in the table below. As the Company does not have any employees no comparisons are given for employees’ remuneration increases. | 2023 | | 2022 | | 2021 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | Fees | | Fees | | Fees | | Annual % | Annual % | | Total | | Total | | Total | | Change | Change | | | £ | | £ | | £ | 2022-2023 | 2021-2022 | David Brock (Chair) 39,532 36,500 34,250 6.9 6.6 Oliver Bedford 28,000 26,125 25,000 7.2 4.5 (1) Ashton Bradbury – 10,191 26,875 N/A N/A Angela Henderson 32,000 30,125 28,000 6.2 7.6 Sir Aubrey Brocklebank – – 9,982 N/A N/A (3) Justin Ward 33,500 31,665 26,703 5.8 18.4 (2) Megan McCracken 30,500 9,667 – 215.5 N/A (2) Busola Sodeinde 30,500 9,667 – 215.5 N/A Total 194,032 153,940 150,810 – – (1) Ashton Bradbury resigned as a Director eective 3 February 2022. (2) Megan McCracken and Busola Sodeinde were appointed with eect from 1 June 2022 and their 2022 fees are with eect from that date. (3) Justin Ward’s annual % change 2021-2022 reects his fee increase following his appointment as Audit Chair in February 2021. Relative importance of spend on pay (unaudited) The table below compares Directors’ remuneration to shareholder distributions (through dividend payments and share buybacks) in respect of the nancial year ended 30 September 2023 and the preceding nancial year: | | Year ended | | | | Year ended | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 30 September | | | | 30 September | | | | | | | | | 2023 | | | | 2022 | | Growth | | | | | | £ | | | | £ | | % | (1) Directors’ remuneration 193,500 153,342 26.2 Dividend paid 15,717,501 16,828,890 -6.6 Share buybacks 3,636,841 3,243,492 12.1 (1) The gures above exclude employer’s National Insurance contributions. Within the nancial year, the Company paid interim and nal dividends totalling 3.00 pence per share. The Company also paid a special dividend of 2.00 pence per share on 10 February 2023, taking the total cash distributions in the year to 5.00 pence per share, a 24.8% decrease on the prior year. Including share buybacks, the Company returned £19.3 million to shareholders during the period under review. In light of the signicant time contributed by the independent non-executive Directors during the year, particularly from those with additional responsibilities as Chair of the Board and its sub committees, the Board agreed to a modest increase in the Directors’ remuneration for the year ending 30 September 2023. Directors’ interests (audited) The Directors’ interests (including those of connected persons) in the issued share capital of the Company are outlined below. There is no minimum holding requirement that the Directors need to adhere to. Ordinary Shares Total holding at 30 September 30 September Acquired after 18 December 2022 2023 Year end 2023 David Brock 42,170 122,606 216,560 339,336 Oliver Bedford 84,488 167,790 54,475 222,265 Angela Henderson – 8,223 – 8,223 Justin Ward 25,223 62,899 – 62,899 Megan McCracken – – – – Busola Sodeinde – – – – ### 49 Taxable benets The Directors who served during the year received no taxable benets in the year. Variable pay The Directors who served during the year received no variable pay relating to the performance of the Company in the year. Pension benets The Directors who served during the year received no pension benets in the year. Recruitment remuneration policy The remuneration levels are designed to reect the duties and responsibilities of the roles and the value of time spent in carrying these out. The Board will obtain independent advice on this where it considers it necessary. No such advice was taken during the year under review. This policy would be used when agreeing the remuneration of any new director. Approval The Directors’ remuneration report on pages46 to 50 was approved by the Board of Directors on 18 December 2023 and will be further subject to an advisory vote at the Annual General Meeting being held on the 8 February 2024 and every year thereafter. Signed on behalf of the Board of Directors David Brock Chair 18 December 2023 ### 50 ## Corporate governance ## For the year ended 30September 2023 Directors’ statement of compliance with the Shareholder relations and relations with key UK corporate governance code and AIC code of stakeholders corporate governance The Directors have a duty to promote the success of the Company for the benet of its members and Introduction communication with shareholders is considered The Board recognises the importance of sound a high priority by the Board. The Board also has corporate governance and has chosen to comply with a responsibility to consider the interests of its the Association of Investment Companies (AIC) Code other key stakeholders. Please see the section 172 of Corporate Governance (the AIC Code). This was statement on pages18 to 21 for further information. last updated in February 2019. The Board believes that the Company has complied with the principles Management of conicts of interest and provisions of the AIC Code in the period under In order to manage potential conicts of interest review, with the exceptions of the items outlined the Board requires that any conicts are declared below. at each meeting. A schedule of all the directorships ● Appointment of a senior independent director; held by Board members and director shareholdings ● Establishment of a separate nomination in unquoted companies in which the Company has an committee; and interest is maintained by the Company Secretary and reviewed by the Board. Where a conict arises the ● Establishment of a separate remuneration Board will consider what is in the best interests of the committee. Company and whether the Director’s ability to act in For the reasons commented on in the relevant accordance with his or her wider duties is aected. sections of this Corporate Governance Report, the Board considers these provisions are not relevant to Director responsibilities the position of the Company and has therefore not The Directors have adopted a formal Schedule of reported in respect of these provisions. Matters Reserved for the Board which sets out the Copies of the AIC Code can be found on the AIC’s responsibilities of the Board, a copy of which is website: https://www.theaic.co.uk. available on the Company’s website. These matters include, but are not limited to: Board leadership and purpose ● approving strategic objectives and reviewing the The Board considers that the Company’s business Company’s strategy and investment policy to model remains attractive because of the potential ensure it is consistent with the objectives of the returns available from investing in small companies Company; and the advantageous VCT tax structure. The ● monitoring the performance of the Investment management of the investment portfolio has been Manager and other key service providers; delegated to the Investment Manager and, through regular meetings with the Investment Manager, the ● changes to the Company’s structure and capital, | Board seeks to ensure that the portfolio is managed | | this includes capital raising and reductions, | | --- | --- | --- | | in accordance with the agreed investment objectives | | policy on share buybacks and the approval of | | and policy. The Company’s investment objectives | | any borrowing arrangements; | | and policy are shown on pages11 to 13, these were | ● | approval of all nancial statements and any | | reviewed during the year and deemed appropriate for | | signicant changes in accounting practices or | | the Company’s needs. The Board seeks to control risk | | policies; | by ensuring that appropriate policies and controls are ● ensuring the maintenance of a sound system of in place and by reviewing the Company’s risk matrix internal control and risk management; every six months and taking mitigating action where ● carrying out an annual review of the contracts in necessary. A summary of the principal and emerging place with key service providers and approving risks facing the Company is detailed on pages22 any other materially strategic contracts; to23. ● communication with shareholders; The Board carries out an annual review of its own ● appointment and removal of the Company culture, practices and behaviour, the ndings from which are considered by the Board and any actions Secretary; required are monitored. ### 51 ● determining the remuneration of the Chair The Board also held a number of ad-hoc meetings and other directors subject to the Articles outside of the scheduled meeting cycle to meet of Association and shareholder approval as business needs. appropriate; and Board Committees ● responsibility for all corporate governance The Board has established Audit and Management matters. and Service Provider Engagement Committees. The The Directors have delegated the responsibility for terms of reference for these committees are available the day to day investment management decisions on the Company’s website. of the Company to the Investment Manager. The Due to the size of the Company and the experience provision of administration and custodian services of its Board members, separate Remuneration and has been delegated to Canaccord Genuity Wealth Nomination Committees have not been established. Limited. These roles are instead fullled by the Board as a The following tables set out the number of scheduled whole. A statement from the Chair in relation to Board meetings, valuation meetings, Audit Directors’ remuneration matters is included in the Committee meetings and Management and Service Directors’ Remuneration Report on page46. Provider Engagement Committee meetings held during the year and the number of meetings attended Audit Committee by each individual Director: Information regarding the composition, Scheduled Meetings responsibilities and activities of the Audit Committee | | Number of Board Meetings | | are detailed in the report of the Audit Committee on | | --- | --- | --- | --- | | | | Held Attended | pages56 to 58. During the year, no fees were paid | | Oliver Bedford 5 5 | | | to the Company’s auditors for non-audit services | | David Brock (Chair) 5 4 | | | (2022:nil). | Angela Henderson 5 5 Justin Ward 5 5 Management and Service Provider Engagement Megan McCracken 5 5 Committee Busola Sodeinde 5 5 Information regarding the composition, Approval of private responsibilities and activities of the Management company valuations and Service Provider Engagement Committee are Number of Board Meetings detailed on page59. Held Attended Oliver Bedford 5 5 Board and Director independence David Brock (Chair) 5 5 As at 30 September 2023, the Board consisted of six Angela Henderson 5 5 directors, all of whom are non-executive. Justin Ward 5 5 The Board considers that with the exception Megan McCracken 5 5 Busola Sodeinde 5 4 of Oliver Bedford, all of the directors remain independent. David Brock, Chair of the Company, Number of Audit Meetings has served on the Board for 13 years since his initial Held Attended appointment. The Board does not have a policy of Angela Henderson 3 3 restricting the term served by director to a xed Justin Ward (Chair) 3 3 time limit. As part of the Board evaluation process Megan McCracken 3 3 a rigorous review was carried out on the Chair’s Busola Sodeinde 3 3 independence, without him present. The Directors Number of Management concluded that notwithstanding his tenure, David and Service Provider | | Engagement Meetings | Brock is still considered to be independent given | | --- | --- | --- | | | Held Attended | that he was independent upon his appointment, | | David Brock 2 2 | | throughout his tenure there has been the absence | | Angela Henderson (Chair) 2 2 | | of connections with the Investment Manager or | | Justin Ward 2 2 | | any other of the Company’s advisors, he does not | Megan McCracken 2 2 have any involvement in the day to day running of Busola Sodeinde 2 2 the Company and his experience and the range of skills that he brings to the Board, including his constructive challenge and support, continues to ### 52 be benecial to the success of the Company. All new independent non-executive directors accepted the directors are required to disclose other roles prior Committee’s recommendation that the continuing to their appointment and the Board requires that all appointment of the Investment Manager was in the signicant additional external appointments receive best interests of the Company and its shareholders. prior Board approval. Details of the contractual arrangements with the Investment Manager can be found on page77. Board induction and training On appointment to the Board, Directors are fully Relationship with other service providers briefed as to their responsibilities and are kept The Company maintains a schedule of the contracts regularly informed of industry and regulatory that it has in place with its service providers (including developments. There is no formal training schedule in the administrator, company secretary, custodian, place, Directors’ training needs are identied as part registrar etc.) and the service provided by each is of the Board evaluation process and addressed on a monitored and reviewed by the Management and case by case basis. Service Provider Engagement Committee annually. The Board has direct access to the Company Board meetings Secretary, who is responsible for the timely delivery The Administrator and the Company Secretary of relevant information and advising the Board on all ensure that the Directors have timely access to governance matters. JTC (UK) Limited (“JTC”) was all relevant management, nancial and regulatory appointed as Company Secretary on 15 January 2021 information to enable informed decisions to be made. and a formal agreement detailing the responsibilities The Board meets on a regular basis at least ve of JTC to the Company is in place. times each year with additional meetings arranged The Board also has access to independent as necessary. The Board continued to make eective professional advice from lawyers and tax advisors etc. use of technology to enable it to operate eciently This is obtainable at the Company’s expense where which included holding some meetings virtually and the Directors consider it necessary in order to be able the use of electronic board packs. to properly discharge their responsibilities. The primary focus at these meetings is the review of the Company’s investment performance, progress Board composition against key performance indicators and corporate Due to the independent nature of the majority of its governance. members, the Board does not consider it necessary to appoint a senior independent director. However, Relationship with the Investment Manager this will be kept under review. For the same reason, Both the Schedule of Matters Reserved for the the Board has not established a separate nomination Board and the investment management agreement committee and all nomination responsibilities are with the Investment Manager clearly set out those therefore carried out by the Board as a whole. These areas of decision making over which the Investment responsibilities include reviewing the size, structure Manager has discretion. The Board’s responsibility and skills of the Board and considering any changes is to review the Company’s strategy and investment necessary or new appointments. Directors are policy to ensure it is consistent with the objectives required to seek approval from the Board prior to of the Company, and monitor the performance and taking on any new signicant external appointments. investment approach of the Investment Manager. All Directors are subject to annual re-election. The The Directors have delegated responsibility for day Board considers that due to their individual skills, to day investment management decisions to the experience and commitment the re-election of all Investment Manager and a review of the investment Directors is merited. portfolio is carried out at each Board meeting. The David Brock is a highly experienced company director report produced by the Investment Manager includes with specic expertise directly relevant to investing in information on investment performance and fund private companies. positioning, benchmarking against both indices and Angela Henderson is a solicitor, bringing legal skills peers, liquidity analysis, cash management and deal and a strong knowledge of governance within the ow. asset management industry. A formal review of the Investment Manager was Oliver Bedford is the Lead Fund Manager to the carried out by the Management and Service Provider Company, has strong technical knowledge covering Engagement Committee in November 2023. The ### 53 the VCT regulations and is an eective liaison succession planning, to ensure that it has appropriate between the Company and the Investment Manager. levels of experience and diversity whilst introducing new Board members as needed. Justin Ward is a chartered accountant and has extensive experience in unquoted company David Brock, Chair of the Company since February investment. 2020, joined the Board in 2010. David is still considered to be independent given the absence of Megan McCracken is an experienced director and connections with the Investment Manager, or any brings cross sector knowledge from her executive other of the Company’s advisors and, as a highly career. experienced company chairman, is ideally suited Busola Sodeinde is a chartered accountant with to guide the Board at a time when it is enacting its signicant regulatory and governance experience. succession plans. The role of the Chair In recent years the Board has successfully added The Chair leads the Board, and so is responsible new directors with complementary skills through for its eectiveness in directing the Company. the appointments of Megan McCracken and Busola By promoting a culture of openness and positive Sodeinde in June 2022. Summary biographies of all debate, whilst demonstrating independent and the Directors can be found on page41. objective judgement throughout his tenure, the Chair Board evaluation sets the tone for the Company and enhances the The Directors recognise the importance of evaluating Board’s performance. The Chair encourages all non- both the performance of the Board as a whole and executive directors to make an eective contribution that of the individual Directors. to the Board and acts to facilitate constructive Board relations. In conjunction with the Company Secretary, The annual Board evaluation is carried out by means the Chair ensures that the Directors receive accurate of a questionnaire which includes accountability and and clear information on a timely basis. eectiveness, culture, a Directors’ self-assessment and an appraisal of the Chair. Board succession A Board evaluation covering the year under review The Board’s policy for succession planning is that was carried out. Following this the Board is satised there should be forward-looking and detailed with the results and nds that the Board, the Chair succession and refreshment plans when proposing and the Directors are suitably qualied to undertake re-election of long-serving members. Any member their responsibilities and perform their duties in of the Board who has served for nine years will respect of managing the Company and that the be subject to a particularly rigorous review and Board culture remains strong. evaluation process to determine whether they During the year, the Board also considered whether remain independent and should continue in their it was appropriate to have an externally facilitated position. Each Board member is subject to annual re- Board evaluation. Following due consideration and election at each annual general meeting. taking into account the satisfactory results of the Board evaluation, this was not deemed necessary. Board tenure The Company has put in place a policy on the tenure Risk and internal control of its Board members (Board Tenure and Succession The Directors acknowledge that they are responsible Planning Policy). The Board Tenure and Succession for the Company’s systems of internal nancial and Planning Policy states that the term the Chair and non-nancial controls. The controls are operating other Directors serve on the Board should not be eectively and continue to be in place up to the date restricted to a xed time limit. of this report. The key components of this process The relevance of the individual length of service of are as follows: the Chair and other directors will be determined ● Day to day measures have been delegated to on a case by case basis. In addition to the length the Investment Manager, Administrator and of service, consideration will be given to the Custodian. Written agreements are in place contribution and ongoing independence of the which dene the roles and responsibilities of individuals and the overall composition of the Board, these parties including the investment policy including the experience and range of skills of the to be followed by the Investment Manager. The Directors. By adopting a rounded approach, the Board receives regular reports to provide it with Board believes it is best placed, through careful assurance that appropriate oversight is in place. ### 54 Additionally, the Board receives and reviews the basis of accounting in preparing these nancial annual internal control report published by its statements. The Board continues to adopt the going Registrar. concern basis and the detailed consideration is ● contained on pages43 to 44. On a quarterly basis, the Board reviews the Company’s management accounts, KPIs Viability Statement and investment reports provided by the The viability statement, under which the Directors Administrator and Investment Manager. assess the prospects of the Company over a longer ● Annual and half-yearly reports and associated period, is contained on page24. announcements are reviewed and approved by the Board prior to publication. Modern Slavery Statement ● A detailed risk matrix is maintained, this As an investment company with no employees | identies each of the Company’s principal and | or customers and which does not provide goods | | --- | --- | | emerging risks, assesses the potential impact | or services in the normal course of business, the | | and describes the controls in place to mitigate | Company considers that it does not fall within the | | those risks. A summary of the principal and | scope of the Modern Slavery Act 2015 and it is not, | | emerging risks can be found in the strategic | therefore, obliged to make a human tracking | | report on pages22 to 23. The risk matrix | statement. The Company’s own supply chain, which | | is discussed regularly at Board and Audit | consists predominantly of professional advisers and | | Committee meetings, thereby ensuring that | service providers in the nancial services industry, is | | the nature and extent of the risks facing the | considered to be low risk in relation to this matter. | Company are being actively monitored. Additional disclosures in the Directors’ Report ● The Board reviews the Company’s internal Additional disclosures required by Schedule 7 policies on an annual basis. The Board has of the Large and Medium sized Companies and also reviewed a summary of the range of risk Groups (Accounts and Reports) Regulations 2008 management and internal controls it has in (as amended 2013) are contained in the Directors’ place to satisfy itself that the overall system of Report on pages42 to 45. controls remains appropriate. For and on behalf of the Board All of the Company’s management functions are performed by the Investment Manager, Canaccord Genuity Wealth Limited and JTC (UK) Limited, all of which have their own control systems in place. The JTC (UK) Limited Board receives regular reports to provide it with Company Secretary assurance that appropriate oversight is being applied 18December 2023 and so has decided that the Company does not need its own internal audit function. The Board considers that the control systems in place provide reasonable, but not absolute, assurance against material misstatement or loss, and manage rather than eliminate the risk of failure to achieve business objectives. Remuneration As the Company has no employees and the Board is wholly comprised of non-executive directors the Board has not established a separate remuneration committee and all remuneration responsibilities are therefore carried out by the Board. The Company’s disclosure with regard to remuneration is included on pages46 to 50. Going concern Under the AIC Code, the Board needs to consider whether it is appropriate to adopt the going concern ### 55 ## Report of the Audit Committee Composition of the Audit Committee representatives of the Investment Manager as The Audit Committee consists of four independent well as the Auditor are also invited to attend. The non-executive directors at the year-end; Justin Ward Committee’s terms of reference were reviewed (Chair), Angela Henderson, Megan McCracken and during the year and are available on the Company’s Busola Sodeinde. website https://www.hargreaveaimvcts.co.uk and by request from the Company Secretary. The Board conrms that, in line with the recommendations of the AIC Code, at least one Activities during the year member of the Audit Committee has recent and A summary of the Audit Committee’s principal relevant nancial experience. Justin Ward and Busola activities and key considerations for the year to 30 Sodeinde are both chartered accountants. Angela September 2023 is provided below. Henderson and Megan McCracken also have relevant nancial experience and the Board is condent that Financial statements the Committee as a whole has competence relevant The interim and annual reports to shareholders and to the sector in which the Company operates. Oliver the accounting policies therein were thoroughly Bedford and David Brock are not members of the reviewed by the Committee prior to submission to Audit Committee due to their respective roles as the Board for approval. Lead Fund Manager and Chair of the Board. The Committee carried out a going concern Duties of the Audit Committee assessment, taking into account all reasonably available information about the future nancial The main responsibilities of the Audit Committee are prospects of the Company as well as the possible as follows: outcomes of events and changes in conditions. ● To monitor the integrity of the Company’s Following this assessment, the Committee nancial statements including the interim considered it was appropriate to adopt the going reports, preliminary announcements and concern basis of accounting and reviewed the going related formal statements before submission concern statement to ensure any signicant issues to and approval by the Board, paying particular were described in a concise and understandable form. attention to: The Committee also conducted a review of the o critical accounting policies and practices viability statement and concluded that this was a fair and any changes in them; representation of the Company’s future prospects and that the period of the viability statement o the clarity of disclosures; remained appropriate. The Committee is of the view that the Annual Report, o compliance with accounting standards; and taken as a whole, is fair, balanced and understandable and provides the information necessary for o compliance with stock exchange and other shareholders to assess the Company’s position and legal requirements. performance, business model and strategy. ● To review the eectiveness of the Company’s The Investment Manager and the Company’s internal nancial control and risk management independent auditor (the “Auditor”) conrmed to systems; the Committee that they were not aware of any ● To consider and make recommendations to the material misstatements to the nancial statements. Board on the appointment, reappointment and Having reviewed the nancial statements and the removal of the external auditor; and report produced by the Auditor, the Committee were ● satised that key areas of risks and judgement were To assess the independence and objectivity of appropriately addressed. the external auditors and the eectiveness of the external audit process. The external auditor Risk and Internal Control is not engaged to supply any non-audit services. The Board has identied the key risks faced by the Meetings Company and these are set out in the principal and emerging risks and uncertainties section on pages22 The Committee met three times during the year to to 23. The Committee (and the Board as a whole) has consider the annual and half-year reports for the received and reviewed periodic reports to provide it Company and review the audit plan. JTC attends with assurance that appropriate oversight of controls meetings as Secretary to the Committee and ### 56 is in place at its key third party providers and to the valuations proposed were acceptable. They highlight instances of non-compliance. further conrmed that there was no evidence of bias in the valuations of the investments The Committee has sought and obtained assurance based on the audit work performed. The from the Investment Manager that policies are in Company’s Custodian, CGWL, provides the place covering whistleblowing and to help prevent Company with quarterly reports conrming that bribery, corruption and fraud. The Investment reconciliations to check the safe custody of the Manager has also conrmed that no instances of Company’s investments have been carried out. bribery, corruption and fraud have been detected that Management accounts, including a full portfolio would have impacted the Company. The Committee listing, are considered at quarterly board has received a summary of the Investment Manager’s meetings; and approach to mitigating cyber security risks. ● Revenue recognition. The recognition of The Board maintains a schedule of anti-fraud controls dividend and interest income is undertaken in that is reviewed by the Committee and they are accordance with accounting policy note 1 to the satised that the Board have sucient oversight and nancial statements. Management accounts that adequate procedures are in place. showing income received by the Company, Key areas of risk and its categorisation, are reviewed by the The key areas of risk identied by the Audit Board on a quarterly basis. The Committee also Committee in relation to the business activities and considered the Auditor’s review of this area nancial statements of the Company are as follows: and concluded that there were no issues which needed to be addressed. ● compliance with HM Revenue and Customs legislation to maintain the Company’s VCT Relationship with the external auditor status; The Committee is responsible for overseeing ● valuation and safe custody of investments; and the relationship with the Auditor, assessing the | ● | revenue recognition. | eectiveness of the external audit process and | | | --- | --- | --- | --- | | These issues were discussed with the Investment | | making recommendations on the appointment and | | | Manager during the year and with the Auditor, at the | | removal of the Auditor, including the level of audit | | | time the Audit Committee reviewed and agreed the | | fees and terms of engagement. The Committee | | | Auditor’s audit plan and when the Auditor presented | | meets with the Auditor as part of the audit process. | | | its ndings at the conclusion of its year-end audit. | | The Committee undertook a review of the Auditor’s | | | The Committee concluded: | | performance during the 2023 audit and concluded | | | ● | Venture Capital Trust Status. The Investment | that the Auditor: | | | | Manager conrmed to the Audit Committee that | ● | provided a clear explanation of the audit plan, | | | the conditions for maintaining the Company’s | | scope and strategy; | | | status had been complied with throughout the | ● | | met the agreed audit plan; year. The Company’s status is also reviewed ● was appropriately resourced with sound by the Company’s tax advisors Philip Hare technical knowledge and demonstrated a clear & Associates LLP and further half-yearly understanding of the business; reconciliations are carried out. These reports ● demonstrated a proactive approach to the are reviewed by the Board as a whole, which is planning process and engaged well with the satised with the conclusions; Committee, Chair and other key individuals ● Valuation and safe custody of investments. within the business; The valuation of investments is undertaken in ● responded to the Committee’s questions and accordance with the accounting policies in note handled key audit issues eectively; 1 to the nancial statements. The Investment Manager has conrmed to the Committee that ● demonstrated that it had appropriate the basis of valuation for unquoted investments procedures and safeguards in place to maintain was in accordance with industry guidelines. its independence and objectivity; and The Auditor conrmed to the Committee ● charged justiable fees in respect of the scope that they had reviewed the estimates and of services provided. judgements made by the Investment Manager The Committee concluded that it is satised with when valuing the unlisted companies and that the standard of service received and that the ### 57 re-appointment of the Auditor was in the best interest of the Company and its shareholders and accordingly the Committee has recommended to the Board that a resolution to re-appoint the Auditor is proposed to shareholders at the forthcoming Annual General Meeting. The Committee undertook a tender process in 2017 in line with mandatory audit tendering legislation. In accordance with the FRC’s Ethical Standard for Auditors, rotation of the audit partner took place during the year. Subject to the Committee continuing to be satised with the performance of the Auditor, the next statutory auditor rotation will take place in 2026, in line with legislative requirements for UK public entities. Policy Reviews During the year, the Audit Committee conducted a review of the Company’s policies and provided recommendations to the Board regarding the continued appropriateness of these policies. Minor changes were made to the policies throughout the year. Each policy is reviewed at least annually and the Company Secretary maintains a record of when each policy is due for review by the Committee or the Board. Compliance Control The Committee receives a compliance control report on a quarterly basis, which details an operational update from the Administrator as well as conrmation that the Administrator, Custodian and Receiving Agent have carried out their relevant duties under the terms of their agreements. No compliance issues were reported during the year. Justin Ward Chair of the Audit Committee ### 58 ## Report of the Management and ## Service Provider Engagement Committee Composition of the Management and Service Review of the Investment Manager Provider Engagement Committee The Committee reviewed the performance of the The Management and Service Provider Investment Manager during the year. The Investment Engagement Committee comprises of all the Manager was asked to provide a report detailing the independent non-executive directors and is Company’s performance against its key performance chaired by Angela Henderson. The Committee’s indicators during this year and previous years, and the terms of reference were reviewed during the year contents of this were considered by the Committee and are available on the Company’s website as part of its review. JTC was also invited to provide https://www.hargreaveaimvcts.co.uk and by feedback on its experience of working with the request from the Company Secretary. Investment Manager. The views of the Committee and JTC, which were positive, were subsequently Duties of the Management and Service Provider provided to the Investment Manager by the Chair Engagement Committee of the Committee. The Committee is satised that The duty of the Committee is to review the terms its queries and concerns have been adequately of appointment of, and the performance by, the addressed throughout the remainder of the year. Investment Manager, the Administrator and the other Following the Committee’s recommendation, the key service providers appointed by the Company Board concluded that the continuing appointment of and to decide whether it is in the best interests of the Investment Manager was in the best interests of shareholders for those appointments to continue. shareholders and the Company. The Auditor is not included in this review as their appointment falls under the remit of the Audit Review of Key Service Providers Committee. The Committee reviewed the contractual terms, fees The key areas of focus for the Committee include: and service levels from its other key service providers ● Monitoring and evaluating the performance of during the year. Each provider was asked to complete the Investment Manager; a questionnaire assessing its own performance and ● Reviewing at least annually the performance of conrming it has complied with the legislation and the Investment Manager; statutory requirements related to its role. ● Reviewing at least annually the terms of The Investment Manager, Administrator and appointment of the Investment Manager Company Secretary each provided feedback on their including but not limited to the level of fees and experience of working alongside the other service the notice period of the Investment Manager; providers. This was generally positive, with some and areas for improvement being identied and fed back to each provider as appropriate. ● Reviewing the performance and fees of the other key service providers to the Company. Following a detailed review of the feedback and information provided, the Committee concluded it is Meetings satised that the service providers currently engaged The Committee met twice during the year to review by the Company are competent to carry out their the performance of the Investment Manager and roles. other key service providers. JTC (UK) Limited attends meetings as Secretary to the Committee, but takes no part in discussions relating to its own Angela Henderson performance. The Investment Manager is also invited Chair of the Management and Service Provider to attend the meetings as appropriate, to provide its Engagement Committee feedback on the Company’s service providers. Activities during the year A summary of the Committee’s principal activities and key considerations for the year to 30 September 2023 is provided below. ### 59 ## Statement of directors’ responsibilities ## in respect of the inancial statements The Directors are responsible for preparing the annual report and the nancial statements in accordance with applicable law and regulations. They are also responsible for ensuring that the annual report includes information required by the Listing Rules of the Financial Conduct Authority. Company law requires the Directors to prepare nancial statements for each nancial year. Under that law the Directors are required to prepare the nancial statements and have elected to prepare the company nancial statements in accordance with United Kingdom Generally Accepted Accounting Practice (UK GAAP) (United Kingdom Accounting Standards and applicable law). Under company law, the Directors must not approve the nancial statements unless they are satised that they give a true and fair view of the state of aairs of the Company and of the prot or loss for the Company for that period. In preparing these nancial statements, the Directors are required to: ● select suitable accounting policies and then apply them consistently; ● make judgements and accounting estimates that are reasonable and prudent; ● state whether they have been prepared in accordance with UK GAAP, subject to any material departures disclosed and explained in the nancial statements; ● prepare the nancial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and ● prepare a directors’ report, a strategic report and directors’ remuneration report which comply with the requirements of the Companies Act 2006. The Directors are responsible for keeping adequate accounting records that are sucient to show and explain the Company’s transactions, and disclose with reasonable accuracy at any time the nancial position of the Company, and enable them to ensure that the nancial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for ensuring that the annual report and accounts, taken as a whole, are fair, balanced and understandable, and provide the information necessary for shareholders to assess the Company’s position and performance, business model and strategy. Website publication The Directors are responsible for ensuring the annual report and the nancial statements are made available on a website. The Company’s website address is https://www.hargreaveaimvcts.co.uk. Financial statements are published on the Company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of nancial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the nancial statements contained therein. Directors’ responsibility statement pursuant to DTR4 David Brock (Chair), Oliver Bedford, Angela Henderson, Justin Ward, Megan McCracken and Busola Sodeinde, the Directors conrm to the best of their knowledge that: ● the nancial statements have been prepared in accordance with UK GAAP and give a true and fair view of the assets, liabilities, nancial position and prot and loss of the Company; and ● the annual report includes a fair review of the development and performance of the business and the nancial position of the Company, together with a description of the principal risks and uncertainties that it faces. Disclosure of information to the Auditor The Directors conrm that: ● so far as each Director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and ● the Directors have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company’s auditor is aware of that information. For and on behalf of the Board David Brock Chair 18December 2023 ### 60 ## Financial statements ### 61 ## Independent auditor’s report to the ## members of Hargreave Hale AIM VCT PLC Opinion on the nancial statements requirements. The non-audit services prohibited by In our opinion the nancial statements: that standard were not provided to the Company. ● give a true and fair view of the state of the Conclusions relating to going concern Company’s aairs as at 30 September 2023 and In auditing the nancial statements, we have of its loss for the year then ended; concluded that the Directors’ use of the going ● have been properly prepared in accordance with concern basis of accounting in the preparation of the United Kingdom Generally Accepted Accounting nancial statements is appropriate. Our evaluation of Practice; and the Directors’ assessment of the Company’s ability | ● | have been prepared in accordance with the | to continue to adopt the going concern basis of | | | --- | --- | --- | --- | | | requirements of the Companies Act 2006. | accounting included: | | | We have audited the nancial statements of Hargreave | | ● | obtaining the VCT compliance reports during | | Hale AIM VCT PLC (the ‘Company’) for the year ended | | | the year and as at year end and reviewing the | | 30 September 2023 which comprise the Income | | | calculations therein to check that the Company | | Statement, the Balance Sheet, the Statement of | | | was meeting its requirements to retain VCT | | Changes in Equity, the Statement of Cash Flows | | | status; | and Notes to the Financial Statements, including a ● consideration of the Company’s expected future summary of signicant accounting policies. compliance with VCT legislation, the absence of The nancial reporting framework that has been bank debt, contingencies and commitments and applied in their preparation is applicable law and United any market or reputational risks; Kingdom Accounting Standard, including Financial ● reviewing the forecasted cash ows that support Reporting Standard 102, The Financial Reporting the Directors’ assessment of going concern, Standard applicable in the UK and Republic of Ireland challenging assumptions and judgements (United Kingdom Generally Accepted Accounting made in the forecasts, and assessing them for Practice). reasonableness. In particular, we considered the available cash resources relative to the forecast Basis for opinion expenditure which was assessed against the We conducted our audit in accordance with prior year for reasonableness; and International Standards on Auditing (UK) (ISAs(UK)) ● evaluating the Directors’ method of assessing and applicable law. Our responsibilities under those the going concern in light of market volatility standards are further described in the Auditor’s caused by the current macroeconomic responsibilities for the audit of the nancial uncertainties. statements section of our report. We believe that the audit evidence we have obtained is sucient and Based on the work we have performed, we have not appropriate to provide a basis for our opinion. Our identied any material uncertainties relating to events audit opinion is consistent with the additional report to or conditions that, individually or collectively, may the audit committee. cast signicant doubt on the Company’s ability to continue as a going concern for a period of at least Independence twelve months from when the nancial statements are Following the recommendation of the audit authorised for issue. committee, we were appointed by the Board of In relation to the Company’s reporting on how it has Directors in January 2007 to audit the nancial applied the UK Corporate Governance Code, we have statements for the year ended 30 September 2007 nothing material to add or draw attention to in relation and subsequent nancial periods. The period of total to the Directors’ statement in the nancial statements uninterrupted engagement including re-tenders about whether the Directors considered it appropriate and reappointments is 17 years, covering the years to adopt the going concern basis of accounting. ended 30 September 2007 to 30 September 2023. We Our responsibilities and the responsibilities of the remain independent of the Company in accordance Directors with respect to going concern are described with the ethical requirements that are relevant to our in the relevant sections of this report. audit of the nancial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fullled our other ethical responsibilities in accordance with these ### 62 Overview 2023 2022 Valuation and ownership of investments ✓ ✓ Revenue recognition* ✗ ✓ *Revenue recognition was no longer considered to Key audit matters be a key audit matter because based on the nature of revenue generated being interest & dividends received from investments and the lack of incentive to manipulate revenue recognised given the capital growth objective of the Company. Company nancial statements as a whole Materiality £1,330,000 (2022: £1,200,000) based on 1% of adjusted net assets. An overview of the scope of our audit Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s system of internal control, and assessing the risks of material misstatement in the nancial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most signicance in our audit of the nancial statements of the current period and include the most signicant assessed risks of material misstatement (whether or not due to fraud) that we identied, including those which had the greatest eect on: the overall audit strategy, the allocation of resources in the audit, and directing the eorts of the engagement team. These matters were addressed in the context of our audit of the nancial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter How the scope of our audit addressed the key audit matter | Valuation and ownership | The investment portfolio | We obtained an understanding of the processes and | | --- | --- | --- | | of investments (Note1 | comprises of quoted and | controls relating to the valuation of investments. | | and Note 7 to the | unquoted investments | | In respect of quoted investments, we responded nancial statements) held at fair value through to this matter by testing 100% of the valuation and prot and loss. ownership of the portfolio. Quoted Investments We performed the following procedures: total £122.5 million ● Conrmed the year end bid price was used by (93%) of the investment agreeing to externally quoted prices and for all of portfolio and unquoted the investments, assessed if there were contra investments make up indicators, such as liquidity considerations, to £9.5 million (7%). suggest bid price is not the most appropriate The Investment indication of fair value; Manager’s fee is based ● Obtained direct conrmation from the on the value of the net custodian and agreed all investments held at the assets of the fund, as balance sheet date to CREST records. shown in note 3. We also tested 100% of the valuation and ownership As the Investment of the unquoted investment portfolio at the year end Manager is also and performed the following procedures: responsible for ● Challenged whether the valuation methodology preparing the valuation was the most appropriate in the circumstances of investments for the under the International Private Equity and financial statements, Venture Capital Valuation (“IPEV”) Guidelines there is a potential risk and the applicable accounting standards. of misstatement in the investment valuations. ### 63 Key audit matter How the scope of our audit addressed the key audit matter | Valuation and ownership | For quoted investments | ● | Obtained capital tables directly from the | | --- | --- | --- | --- | | of investments (Note1 | there is a risk that the | | investee companies to conrm the ownership at | | and Note7 to the | investment balance | | year end and recalculated the value attributable | | nancial statements) | includes investments | | to the Company, having regard to the application | | | which are no longer | | of enterprise value across the capital structures | | | owned by the Company | | of the investee companies; | | | or that inappropriate | ● | | Challenged and corroborated the inputs to pricing is used to value the valuation with reference to management the investment. information of investee companies, market data For unquoted and our own understanding and assessed the investments there is impact of the estimation uncertainty concerning risk that the investment these assumptions and the disclosure of these balance includes uncertainties in the nancial statements; investments which are ● Reviewed the historical nancial statements and no longer owned by the any recent management information available Company. Furthermore to support assumptions about maintainable there is a high level of revenues used in the valuation; estimation uncertainty ● Considered the revenue multiples applied and involved in determining the discounts applied by reference to observable the unquoted listed company market data; and investment valuations. ● Challenged the consistency and There is an inherent appropriateness of adjustments made to such risk of management market data in establishing the revenue multiple override arising from the applied in arriving at the valuations adopted, unquoted investment by considering the individual performance of valuations being investee companies against plan and relative prepared by the to the peer group, the market and sector in investment Manager, which the investee company operates and other who is remunerated factors as appropriate; based on a ● Challenged assumptions made in respect of percentage of the value the probability weighted average methodology of the net assets of the applied to convertible loan note scenarios fund, as shown in note 3. for example assessing the likelihood of Therefore we consider early redemption, redemption at maturity, the valuations assumptions made in respect of sale and prot and ownership of forecasts and recalculating the value of the investments to be a key convertible instrument. audit matter. ### 64 Key audit matter How the scope of our audit addressed the key audit matter | Valuation and ownership | ● | Where appropriate, we performed a sensitivity | | --- | --- | --- | | of investments (Note1 | | analysis by developing our own point estimate | | and Note7 to the | | where we considered that alternative input | | nancial statements) | | assumptions could reasonably have been | applied and we considered the overall impact of such sensitivities on the portfolio of investments in determining whether the valuations as a whole are reasonable and free from bias. Key Observations: Based on our procedures performed we did not identify any matters to suggest the valuation or ownership of investments was not appropriate and we are satised that the estimates and judgements made in the unquoted investment valuations are appropriate considering the level of estimation uncertainty. Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the eect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could inuence the economic decisions of reasonable users that are taken on the basis of the nancial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identied misstatements, and the particular circumstances of their occurrence, when evaluating their eect on the nancial statements as a whole. Based on our professional judgement, we determined materiality for the nancial statements as a whole and performance materiality as follows:  Company Financial statements 2023 2022  £ £ Materiality 1,330,000 1,200,000 Basis for determining materiality 1% of net assets adjusted to exclude funds raised during the year Rationale for the benchmark In setting materiality, we have had regard to the nature and disposition of applied the investment portfolio. The Company’s portfolio is mainly comprised of quoted investments, which are considered low risk. Since the portfolio is low risk where fair values are highly visible, we have applied a percentage of 1% of adjusted net asset value. An adjusted benchmark was used to exclude the eects of cash that has been raised from fundraising during the year. Performance materiality 1,000,000 900,000 Basis for determining 75% of materiality performance materiality Rationale for the percentage The level of performance materiality applied was set after having applied for performance considered a number of factors including the expected total value of materiality known and likely misstatements and the level of transactions in the year. ### 65 Lower testing threshold While the majority of long-term returns are expected to arise from capital, we considered that ongoing costs and revenue returns are still important to users of the nancial statements, despite being considerably smaller in magnitude. As a result, we determined a lower testing threshold for those items impacting revenue return of £194,000 (2022: £220,000) based on 5% (2022:5%) of total gross expenditure. Reporting threshold We agreed with the Audit Committee that we would report to them all individual audit dierences in excess of £26,000 (2022: £24,000). We also agreed to report dierences below this threshold that, in our view, warranted reporting on qualitative grounds. Other information The directors are responsible for the other information. The other information comprises the information included in the annual report and accounts other than the nancial statements and our auditor’s report thereon. Our opinion on the nancial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the nancial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the nancial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Corporate governance statement The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specied for our review. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the nancial statements or our knowledge obtained during the audit. Going concern and longer-term ● The Directors’ statement with regards to the appropriateness of viability adopting the going concern basis of accounting and any material uncertainties identied; and ● The Directors’ explanation as to their assessment of the Company’s prospects, the period this assessment covers and why the period is appropriate. Other Code provisions ● Directors’ statement on fair, balanced and understandable; ● Board’s conrmation that it has carried out a robust assessment of the emerging and principal risks; ● The section of the annual report that describes the review of eectiveness of risk management and internal control systems; and ● The section describing the work of the Audit Committee. Other Companies Act 2006 reporting Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below. ### 66 Strategic report and Directors’ In our opinion, based on the work undertaken in the course of the audit: report ● the information given in the Strategic report and the Directors’ report for the nancial year for which the nancial statements are prepared is consistent with the nancial statements; and ● the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identied material misstatements in the strategic report or the Directors’ report. Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. Matters on which we are required We have nothing to report in respect of the following matters in relation to report by exception to which the Companies Act 2006 requires us to report to you if, in our opinion: ● adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or ● the nancial statements and the part of the Directors’ remuneration report to be audited are not in agreement with the accounting records and returns; or ● certain disclosures of Directors’ remuneration specied by law are not made; or ● we have not received all the information and explanations we require for our audit. Responsibilities of Directors Auditor’s responsibilities for the audit of the nancial statements As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for Our objectives are to obtain reasonable assurance the preparation of the nancial statements and for about whether the nancial statements as a whole being satised that they give a true and fair view, and are free from material misstatement, whether due for such internal control as the Directors determine to fraud or error, and to issue an auditor’s report is necessary to enable the preparation of nancial that includes our opinion. Reasonable assurance is statements that are free from material misstatement, a high level of assurance, but is not a guarantee that whether due to fraud or error. an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. In preparing the nancial statements, the Directors Misstatements can arise from fraud or error and are are responsible for assessing the Company’s ability to considered material if, individually or in the aggregate, continue as a going concern, disclosing, as applicable, they could reasonably be expected to inuence the matters related to going concern and using the going economic decisions of users taken on the basis of concern basis of accounting unless the Directors these nancial statements. either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. Extent to which the audit was capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non- compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: ### 67 Non-compliance with laws and regulations Our procedures in respect of the above included: Based on: ● The procedures set out in the Key Audit Matters ● our understanding of the Company and the section above for the valuation of the unquoted industry in which it operates; investments; ● ● Review of estimates and judgements applied discussion with management and those charged with governance; and by management in the nancial statements to ● assess their appropriateness and the existence of obtaining an understanding of the Company’s any systematic bias; policies and procedures regarding compliance ● Review and consideration of the appropriateness with laws and regulations, of adjustments made in the preparation of the we considered the signicant laws and regulations nancial statements; and to be Companies Act 2006, the FCA listing and DTR ● Review of unadjusted audit dierences, if any, for rules, the principles of the UK Corporate Governance indications of bias or deliberate misstatement. Code, industry practice represented by the Statement of Recommended Practice: Financial Statements We also communicated relevant identied laws and of Investment Trust Companies and Venture regulations and potential fraud risks to all engagement Capital Trusts (2022) (the SORP) and the applicable team members who were all deemed to have nancial reporting framework. We also considered appropriate competence and capabilities and remained the Company’s qualication as a VCT under UK tax alert to any indications of fraud or non-compliance with legislation. laws and regulations throughout the audit. Our procedures in respect of the above included: Our audit procedures were designed to respond ● agreement of the nancial statement disclosures to risks of material misstatement in the nancial to underlying supporting documentation; statements, recognising that the risk of not detecting ● a material misstatement due to fraud is higher than the enquiries of management and those charged with risk of not detecting one resulting from error, as fraud governance relating to the existence of any non- may involve deliberate concealment by, for example, compliance with laws and regulations; forgery, misrepresentations or through collusion. ● reviewing minutes of meeting of those charged There are inherent limitations in the audit procedures with governance throughout the period for performed and the further removed non-compliance instances of non-compliance with laws and with laws and regulations is from the events and regulations; and transactions reected in the nancial statements, the ● obtaining the VCT compliance reports during less likely we are to become aware of it. the year and as at year end and reviewing their A further description of our responsibilities is available calculations to check that the Company was on the Financial Reporting Council’s website at: meeting its requirements to retain VCT status. www.frc.org.uk/auditorsresponsibilities. This Fraud description forms part of our auditor’s report. We assessed the susceptibility of the nancial Use of our report statement to material misstatement including fraud. This report is made solely to the Company’s members, Our risk assessment procedures included: as a body, in accordance with Chapter 3 of Part 16 of ● Enquiry with management and those charged the Companies Act 2006. Our audit work has been with governance regarding any known or undertaken so that we might state to the Company’s suspected instances of fraud; members those matters we are required to state to ● Obtaining an understanding of the Company’s them in an auditor’s report and for no other purpose. policies and procedures relating to: To the fullest extent permitted by law, we do not accept o Detecting and responding to the risks of or assume responsibility to anyone other than the fraud; and Company and the Company’s members as a body, for o Internal controls established to mitigate our audit work, for this report, or for the opinions we risks related to fraud; have formed. ● Review of minutes of meeting of those charged with governance for any known or suspected | | instances of fraud; and | Elizabeth Hooper (Senior Statutory Auditor) | | --- | --- | --- | | ● | Discussion amongst the engagement team as to | For and on behalf of BDO LLP, Statutory Auditor | | | how and where fraud might occur in the nancial | London, United Kingdom | | | statements. | Date: 18 December 2023 | | Based on our risk assessment, we considered the | | BDO LLP is a limited liability partnership registered | | areas most susceptible to be management override of | | in England and Wales (with registered number | | controls and the valuation of unquoted investments. | | OC305127). | ### 68 # Income statement | | Note | Year to 31 September 2023 | | | Year to 31 September 2022 | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Revenue £000 | Capital £000 | Total £000 | Revenue £000 | Capital £000 | Total £000 | | Net loss on investments held at fair value through profit or loss | 7 | – | (28,455) | (28,455) | – | (85,203) | (85,203) | | Income | 2 | 2,616 | – | 2,616 | 975 | 13 | 988 | | | | 2,616 | (28,455) | (25,839) | 975 | (85,190) | (84,215) | | Management fee | 3 | (699) | (2,098) | (2,797) | (835) | (2,505) | (3,340) | | Other expenses | 4 | (1,052) | (39) | (1,091) | (1,093) | (22) | (1,115) | | | | (1,751) | (2,137) | (3,888) | (1,928) | (2,527) | (4,455) | | Profit/(loss) on ordinary activities before taxation | | 865 | (30,592) | (29,727) | (953) | (87,717) | (88,670) | | Taxation | 5 | – | – | – | – | – | – | | Profit/(loss) after taxation | | 865 | (30,592) | (29,727) | (953) | (87,717) | (88,670) | | **Basic and diluted earnings/(loss) per share** | 6 | **0.27p** | **(9.59)p** | **(9.32)p** | **(0.36)p** | **(33.06)p** | **(33.42)p** | The total column of these statements is the income statement of the Company. All revenue and capital items in the above statements derive from continuing operations. There was no other comprehensive income other than the loss for the year. The accompanying notes are an integral part of these financial statements. 69 # Balance sheet As at 30 September 2023 Company Registration Number 5206425 (In England and Wales) | | Note | 2021 £000 | 2022 £000 | | --- | --- | --- | --- | | **Fixed assets** | | | | | Investments at fair value through profit or loss | 7 | 132,120 | 119,188 | | **Current assets** | | | | | Debtors | 9 | 1,475 | 408 | | Cash and cash equivalents | | 19,231 | 41,911 | | | | 20,706 | 42,319 | | Creditors/amounts falling due within one year | 10 | (906) | (1,000) | | **Net current assets** | | 19,800 | 41,319 | | **Total assets less current liabilities** | | 151,920 | 160,507 | | **Capital and Reserves** | | | | | Called up share capital | 11 | 3,278 | 2,666 | | Share premium | | 286 | 93,660 | | Capital redemption reserve | | 272 | 201 | | Capital reserve – unrealised | | 13,640 | 23,935 | | Special reserve | | 177,762 | 63,931 | | Capital reserve – realised | | (41,071) | (20,774) | | Revenue reserve | | (2,247) | (3,112) | | **Total shareholders' funds** | | 151,920 | 160,507 | | **Net asset value per share (basic and diluted)** | 12 | 46.34p | 60.19p | The accompanying notes are an integral part of these financial statements. These financial statements were approved and authorised for issue by the Board of Directors on 18 December 2023 and signed on its behalf by **David Brock** Chair 18 December 2023 70 ## Statement of changes in equity For the year ending 30 September 2023 (1) Non-distributable reserves Distributable reserves | | | | | Capital | | Capital | | Capital | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share | Share | Redemption | | | Reserve | Special | Reserve | Revenue | | | | | Capital | Premium | | Reserve | Unrealised | | Reserve | Realised | Reserve | | Total | | Note | £000 | £000 | | £000 | | £000 | £000 | £000 | | £000 | £000 | At 1October 2022 2,666 93,660 201 23,935 63,931 (20,774) (3,112) 160,507 Prot and total comprehensive income for the year Realised (losses) on investments 7 – – – – – (8,245) – (8,245) Unrealised (losses) on investments 7 – – – (20,210) – – – (20,210) Management fee charged to capital 3 – – – – – (2,098) – (2,098) Income allocated to capital 2 – – – – – – – – Due diligence investments costs 4 – – – – – (39) – (39) Revenue prot after taxation for the year – – – – – – 865 865 Total (loss) after taxation for the year – – – (20,210) – (10,382) 865 (29,727) Contributions by and distributions to owners Subscription share issues 11 659 39,277 – – – – – 39,936 Issue costs 11 – (742) – – – – – (742) Share buybacks 11 (71) – 71 – (3,637) – – (3,637) DRIS share issues 11 24 1,276 – – – – – 1,300 Equity dividends paid 16 – – – – (15,717) – – (15,717) Total contributions by and distributions to owners 612 39,811 71 – (19,354) – – 21,140 Other movements Capital reduction 11 – (133,185) – – 133,185 – – – Diminution in value – – – 9,915 – (9,915) – – Total other movements At 30September 2023 3,278 286 272 13,640 177,762 (41,071) (2,247) 151,920 Reserves available for distribution are capital reserve realised, special reserve and revenue reserve. Total distributable reserves at 30September 2023 were £134.4 million, following the capital reduction of £133.2m (2022:£40million). The accompanying notesare an integral part of these nancial statements. (1) The Income Taxes Act2007 restricts distribution of capital from reserves created by the conversion of the share premium account into a special (distributable) reserve until the third anniversary of the share allotment that led to the creation of that part of the share premium account. As at 30September 2023, £108.9million of the special reserve is subject to this restriction. ### 71 ## Statement of changes in equity For the year ending 30 September 2022 (1) Non-distributable reserves Distributable reserves | | | | | | Capital | | Capital | | Capital | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share | | Share | Redemption | | | Reserve | Special | Reserve | Revenue | | | | | Capital | Premium | | | Reserve | Unrealised | | Reserve | Realised | Reserve | | Total | | Note | £000 | | £000 | | £000 | | £000 | £000 | £000 | | £000 | £000 | At 1October 2021 2,280 53,802 158 102,311 84,004 (11,433) (2,159) 228,963 Prot and total comprehensive income for the year Realised gains on investments 7 – – – – – 2,056 – 2,056 Unrealised (losses) on investments 7 – – – (87,259) – – – (87,259) Management fee charged to capital 3 – – – – – (2,505) – (2,505) Income allocated to capital 2 – – – – – 13 – 13 Due diligence investments costs 4 – – – – – (22) – (22) Revenue (loss) after taxation for the year – – – – – – (953) (953) Total (loss) after taxation for the year (87,259) (458) (953) (88,670) Contributions by and distributions to owners Subscription share issues 11 416 39,579 – – – – – 39,995 Issue costs 11 – (746) – – – – – (746) Share buybacks 11 (43) – 43 – (3,243) – – (3,243) DRIS share issues 11 13 1,025 – – – – – 1,038 Equity dividends paid 16 – – – – (16,830) – – (16,830) Total contributions by and distributions to owners 386 39,858 43 – (20,073) – – 20,214 Other movements Diminution in value – – – 8,883 – (8,883) – – Total other movements – – – 8,883 – (8,883) – – At 30September 2022 2,666 93,660 201 23,935 63,931 (20,774) (3,112) 160,507 Reserves available for distribution are capital reserve realised, special reserve and revenue reserve. Total distributable reserves at 30September 2022 were £40million (2021:£70.4million). The accompanying notesare an integral part of these nancial statements. (1) The Income Taxes Act2007 restricts distribution of capital from reserves created by the conversion of the share premium account into a special (distributable) reserve until the third anniversary of the share allotment that led to the creation of that part of the share premium account. As at 30September 2023, none of the special reserve is subject to this restriction. ### 72 # Statement of cash flows | | Note | 2023 €000 | 2022 €000 | | --- | --- | --- | --- | | Total (loss) on ordinary activities before taxation | | (29,727) | (88,670) | | Realised losses/(gains) on investments | 7 | 8,245 | (2,056) | | Unrealised losses on investments | 7 | 20,210 | 87,259 | | (Increase) in debtors | | (1,067) | (78) | | (Decrease) in creditors | | (94) | (183) | | Amortisation for discount/premium on bonds | | (24) | – | | Non-cash distributions | 2 | – | (126) | | Net cash (outflow) from operating activities ^{(1)} | | (2,457) | (3,854) | | Purchase of investments | 7 | (57,699) | (29,460) | | Sale of investments | 7 | 16,336 | 27,995 | | **Net cash (used in) investing activities** | | **(41,363)** | **(1,465)** | | Share buybacks | 11 | (3,637) | (3,243) | | Issue of share capital | 11 | 39,936 | 39,995 | | Issue costs | 11 | (742) | (746) | | Dividends paid | 16 | (14,417) | (15,792) | | Net cash provided by financing activities | | 21,140 | 20,214 | | **Net (decrease)/increase in cash and cash equivalents** | | **(22,680)** | **14,895** | | Opening cash and cash equivalents | | 41,911 | 27,016 | | Closing cash and cash equivalents | | 19,231 | 41,911 | (1) The Company received dividends of £1,178,059 (2022: £715,253) and interest of £599,735 (2022: £47,143). The accompanying notes are an integral part of these financial statements. 73 ## Notes to the inancial statements Hargreave Hale AIM VCTplc is a company year experience working for the VCT. Abbe Martineau incorporated in England and Wales under the joined the CGAM VCT fund management team Companies Act. The address of the registered oce on 17 April 2023. The Investment Manager and is given in the company information on page 95 and the Company’s other key service providers have the nature and principal business activities are set contingency plans in place to manage operational out in the Strategic Report. disruptions. The Directors have not identied any material Basis of preparation uncertainties related to events or conditions that The nancial statements have been prepared in may cast signicant doubt about the ability of the accordance with UK Generally Accepted Accounting Company to continue as a going concern. Therefore, Practice (UKGAAP) , including Financial Reporting they are satised that the Company should continue Standard 102 (FRS 102) and with the Companies to operate as a going concern and report its nancial Act2006 and the Statement of Recommended statements on that basis. Practice for “Financial Statements of Investment Trust Companies and Venture Capital Trusts” Key judgements and estimates July2022 (SORP) . The preparation of the nancial statements requires the Board to make judgements and estimates Going Concern that aect the application of policies and reported The nancial statements have been prepared on amounts of assets, liabilities, income and expenses. a going concern basis and on the basis that the The nature of estimation means that the actual company maintains its VCT status. outcomes could dier from those estimates. The Directors have assessed the Company’s ability Key judgements and estimates mainly relate to to continue as a going concern and are satised that determination of the fair valuation of unquoted the Company has adequate resources to continue in investments. The policies for these are set out in the operational existence for a period of 12months from notesto the nancial statements. the date these nancial statements were approved. The assessment of fair value will reect the market The Company has sucient cash (£19.2million at conditions at the measurement date irrespective 30September 2023) and liquid assets held across of which valuation technique is used. The IPEV a diversied portfolio of investments in listed guidelines describe a range of valuation techniques, companies to meet obligations as they fall due. The as described in the “nancial instruments” section on Company is a close-ended fund, where assets are pages 79 to 81. not required to be liquidated to meet day-to-day Further areas requiring judgement and estimation redemptions. The major driver of cash outows are recognising and classifying unusual or special (dividends, buybacks and investments) are managed dividends as either capital or revenue in nature. The in accordance with the Company’s key policies at estimates and underlying assumptions are under the discretion of the Board or, in the case of the continuous review with particular attention paid to Company’s investments, the Investment Manager. the carrying value of the investments. The Board has reviewed forecasts and stress tests to assist them with their going concern assessment. 1. Accounting policies These tests have included the modelling of a 15% A summary of the principal accounting policies, all of reduction in NAV, whilst also considering ongoing which have been applied consistently throughout the compliance with the VCT investment test. It was year, is set out below: concluded that in a plausible downside scenario the Financial instruments Company would continue to meet its liabilities. All investments are classied as fair value through The Directors have carefully considered the principal prot or loss. Investments are measured initially risk factors facing the Company, as described on and subsequently at fair value which is deemed pages 22 to 23 and their potential impact on income to be market bid prices for listed investments and into the portfolio and the NAV. The Directors are of investments traded on AIM. Unquoted investments the opinion that the Company has sucient cash and are valued using the most appropriate methodology other liquid assets to continue to operate as a going recommended by the International Private Equity concern, including under a stress scenario. Venture Capital (IPEV) guidelines published in The Investment Manager has a team of four December2022. dedicated fund managers and analysts with multi- ### 74 Where no active market exists for the particular case of equity investments, impairment reviews are asset, the Company holds the investment at fair triggered when unrealised losses exceed 50% of value as determined by the Investment Manager book cost, or if the loss when realised would lead to and approved by the Board. Valuations of unquoted a material reduction in the Company’s distributable investments are reviewed on a quarterly basis and reserves. Fixed income investments are reviewed for more frequently if events occur that could have a impairment if the issuing company’s ability to repay material impact on the investment. is uncertain unless there are reasonable grounds to believe that the loan could be recovered through the In estimating fair value for an unquoted investment, sale of the company or its trading assets. the Investment Manager will apply one or more valuation techniques according to the nature, Other nancial assets and liabilities comprise facts and circumstances of the investment. The receivables, payables and cash and cash equivalents Investment Manager will use reasonable current which are measured at amortised cost. There are no market data and inputs combined with market nancial liabilities other than payables. participant assumptions. The assessment of fair Cash and cash equivalents value will reect the market conditions at the measurement date irrespective of which valuation For the purposes of the Balance Sheet, cash technique is used. The IPEV guidelines describe a comprises cash in hand and demand deposits. Cash range of valuation techniques, including but not equivalents are short-term, highly liquid investments limited to relevant observable market multiples, and money market funds that are readily convertible independent arms-length transactions, income, to known amounts of cash and which are subject discounted cash ows and net assets. The fair value to insignicant risk of changes in value. For the of convertible loan notesis estimated by aggregating purposes of the Statement of Cash Flows, cash and the Net Present Value of the bond component and cash equivalents consist of cash and cash equivalents the derivative value of the option to convert into as dened above, net of outstanding bank overdrafts equity. The derivative value of the option to convert a when applicable. Cash held at CGWL (see note15) particular loan noteis the probable weighted average meets the denition of cash and cash equivalents as of the present value of each conversion scenario it is to meet short term liquidity requirements and is described in the loan noteinstrument as calculated available on demand with no restrictions or penalties using the Black Scholes option pricing model. on withdrawal. Investments are recognised and derecognised Income at trade date where a purchase or sale is under a Equity dividends are analysed to consider if they are contract whose terms require delivery within the revenue or capital in nature on a case by case basis time frame established by the market concerned. and are taken into account on the ex-dividend date, Purchases and sales of unlisted investments are net of any associated tax credit. Fixed returns on recognised when the contract for acquisition or non-equity shares and debt securities are recognised sale becomes unconditional. Transaction costs are on a time apportionment basis so as to reect the included in the initial cost or deducted from the eective yield, provided there is no reasonable disposal proceeds as appropriate. doubt that payment will be received in due course. These investments will be managed and their All other income is recognised on an accruals basis. performance evaluated on a fair value basis in Other income is treated as a repayment of capital or accordance with a documented investment strategy revenue depending on the facts of each particular and information about them is provided internally on case. that basis to the Board. Gains and losses arising from changes in fair value Expenditure (realised and unrealised) are included in the net prot All expenditure is accounted for on an accruals basis. or loss for the period as a capital item in the income Of investment management fees, 75% are allocated statement and are taken to the unrealised capital to the capital reserve realised and 25% to the revenue reserve or realised capital reserve as appropriate. account in line with the Board’s expected long term split of investment returns in the form of capital If an investment has been impaired such that there gains to the capital column of the income statement. is no realistic expectation that there will be a full Due diligence costs incurred for prospective private return from the investment, the loss is treated company purchases are charged to capital in addition as a diminution in value and transferred to the to the cost of investment. All other expenditure is capital reserve realised. The Company conducts charged to the revenue account. impairments reviews on a quarterly basis. In the ### 75 Capital reserves that sterling is the Company’s functional currency. Realised prots and losses on the disposal of Sterling is also the currency in which these accounts investments, due diligence costs, income that is are presented. capital in nature, losses realised on investments Repurchase of shares to hold in treasury considered to be diminished in value and 75% of The cost of repurchasing shares into treasury, investment management fees are accounted for in including the related stamp duty and transaction the capital reserve realised. costs is charged to the special reserve and dealt Increases and decreases in the valuation of with in the statement of changes in equity. Share investments held at the year end are accounted for in repurchase transactions are accounted for on a the capital reserve unrealised. trade date basis. Where shares held in treasury are subsequently cancelled, the nominal value of those Operating segments shares is transferred out of share capital and into There is considered to be one operating segment capital redemption reserve. being investment in equity and debt securities. Should shares held in treasury be reissued, the sale Taxation proceeds will be treated as a realised prot up to the Deferred tax is recognised in respect of all timing amount of the purchase price of those shares and dierences that have originated but not yet reversed will be transferred to capital reserves. The excess at the balance sheet date. Deferred tax assets are of the sale proceeds over the purchase price will be only recognised to the extent that it is probable that transferred to share premium. they will be recovered against the reversal of deferred Capital structure tax liabilities or other future taxable prots. Current tax is expected tax payable on the taxable Share Capital prot for the period using the current tax rate and Ordinary shares are classed as equity. The ordinary laws that have been enacted or substantially enacted shares in issue have a nominal value of one penny at the reporting date. The tax eect of dierent and carry one vote each. Substantial holdings in the items of income and expenditure is allocated Company are disclosed in the Directors’ Report on between capital and revenue on the same basis as the page 42. particular item to which it relates. Share Premium Approved VCTs are exempt from tax on capital This reserve represents the dierence between the gains from the sale of xed asset investments. The issue price of shares and the nominal value of shares Directors intend that the Company will continue at the date of issue, net of related issue costs. to conduct its aairs to maintain its VCT status, no deferred tax has been provided in respect of any Capital Redemption Reserve capital gains or losses arising from the revaluation or This reserve is used for the cancellation of shares disposal of investments. bought back under the buyback facility. Dividends Special Reserve Only dividends recognised during the year are Distributable reserve used to pay dividends and re- deducted from revenue or capital reserves. Equity purchase shares under the buyback facility. dividends are recognised in the accounts when they Capital Reserve Realised become legally payable. Gains/losses on disposal of investments, due Interim dividends are approved by the Board of diligence costs, income that is capital in nature, Directors and may be varied or rescinded at any diminishment of nancial assets and 75% of the time before payment, therefore the liability is only investment management fee are accounted for in the established when the dividend is actually paid. Final capital reserve realised. dividends are subject to approval at the AGM. When the dividend is declared it states that it is payable on a Capital Reserve Unrealised future date, so liability is established on that date. Unrealised gains and losses on investments held at the year end arising from movements in fair value are Functional currency taken to the capital reserve unrealised. The Company is required to nominate a functional Revenue Reserve currency, being the currency in which the Company Net revenue prots and losses of the Company. predominantly operates. The Board has determined ### 76 2. Income 2023 2022 £000 £000 Income from investments: Revenue: Dividend income 1,247 744 (1) Fixed income interest 867 184 Interest 502 47 Total revenue income 2,616 975 Capital: Return of capital – – In-specie dividend – 13 Total capital income – 13 Total Income 2,616 988 (1) Additional loan stock interest of £18k was recognised in the year following reversal of the impairment being carried at 30September 2022. The loan noteaccrued interest to 30June 2023 in line with the terms of the redemption agreement with Sailpoint Technologies UK Limited. 3. Management fees | | 2023 | 2023 | 2023 | | 2022 | 2022 | 2022 | | --- | --- | --- | --- | --- | --- | --- | --- | | Revenue | | Capital | Total | Revenue | | Capital | Total | | | £000 | £000 | £000 | | £000 | £000 | £000 | Management fees 699 2,098 2,797 835 2,505 3,340 The investment management agreement terminates on 12months’ notice, subject to earlier termination in certain circumstances. In the event of termination by the Company on less than the agreed notice period, compensation may be payable to the Investment Manager in lieu of the unexpired notice period. No notice had been given by the Investment Manager or by the Board to terminate the agreement as at the date of approval of these accounts. The Investment Manager receives an investment management fee of 1.7% per annum of the NAV of the Company, calculated and payable quarterly in arrears. At 30September 2023, £645,397 (2022:£687,373) was owed in respect of management fees. The Company receives a reduction to the annual management fee for investments in other funds managed by the Investment Manager, being any investment in the Marlborough Special Situations Fund and/or the Marlborough UK Micro-Cap Growth Fund so the Company is not charged twice for these services. This amounted to £49,931 for the year to 30September 2023 (2022:£23,407) . The Investment Manager has agreed to indemnify the Company against annual running costs exceeding 3.5% of its net assets. No fees were waived between 1October 2022 and 30September 2023 and no fees were waived between 1October 2021 and 30September 2022 under the indemnity. ### 77 4. Other expenses 2023 2022 £000 £000 Other revenue expenses: Administration fee 195 195 Directors’ fees 205 157 Legal& professional 39 34 London Stock Exchange fees 84 131 Registrar’s fee 47 50 Website and marketing 60 14 Printing, postage and stationary 40 43 Auditors’ remuneration – for audit services 55 41 VCT monitoring fees 15 12 Company secretarial fees 57 72 Custody fee 30 30 Directors’ and ocers’ liability insurance 36 39 Broker’s fee 5 5 VAT 115 128 (1) | Other expenses | 104 98 | | | | --- | --- | --- | --- | | | | (2) | (3) | | Provision against loan stock interest receivable (35) | | | 44 | Total other revenue expenses 1,052 1,093 Other capital expenses: Due diligence costs 32 18 VAT on due diligence costs 7 4 Total other capital expenses 39 22 Total other expenses 1,091 1,115 (1) Other expenses include FCA fees, AIC membership fees, VCT Association fees, recruitment costs, professional subscriptions, license costs, shareholder event costs and other nominal expenses. (2) Reversal of provision against loan interest receivable in previous years of £34,816 for Osiriumplc. (3) Provision against loan interest receivable of £44,145 (2021:nil) , for loan stock interest regarded as collectable in previous years in relation to Honest BrewLtd and Osiriumplc. The Directors’ remuneration above includes national insurance contributions. Directors’ remuneration excluding employer’s national insurance contributions is detailed in the directors’ remuneration report on page 48. The maximum aggregate directors’ emoluments authorised by the Articles of Association are detailed in the directors’ remuneration report on page 48. 5. Tax on ordinary activities (1) | The tax charge for the year is based on the standard rate of UK Corporation Tax of 22% | (2022:19%) . | | | | --- | --- | --- | --- | | | | 2023 | 2022 | | | | Total | Total | | | | £000 | £000 | Loss on ordinary activities before taxation (29,727) (88,670) UK Corporation Tax:22% (2022:19%) (6,540) (16,847) Eect of non taxable losse s on investments 6,260 16,189 Eect of non taxable UK dividend income (274) (144) Deferred tax not recognised 554 802 Current tax charge – – (1) Average rate of corporation tax applicable for the period. At the 30September 2023 the Company had tax losses carried forward of £24,379,001 (2022:£21,921,076) . It is unlikely that the Company will generate enough taxable income in the future to use these expenses to reduce future tax charges and therefore no deferred tax asset has been recognised. There is no taxation charge in relation to capital gains or losses. No asset or liability has been recognised in relation to capital gains or losses on revaluing investments. The Company is exempt from such tax as a result of its intention to maintain its status as a Venture Capital Trust. ### 78 6. Basic and diluted earnings/(loss) per share | | 2023 | 2023 | 2023 | | 2022 | 2022 | 2022 | | --- | --- | --- | --- | --- | --- | --- | --- | | Revenue | | Capital | Total | Revenue | | Capital | Total | | | £000 | £000 | £000 | | £000 | £000 | £000 | Return (£) 865 (30,592) (29,727) (953) (87,717) (88,670) Earnings/(loss) per ordinary share 0.27p (9.59) p (9.32) p (0.36) p (33.06) p (33.42) p The earnings per share is based on 318,946,009 ordinary shares (2022:265,292,558) , being the weighted average number of shares in issue during the year. 7. Investments Quoted Unquoted Total Total (1) | investments | | Investments | | investments | | investments | | | --- | --- | --- | --- | --- | --- | --- | --- | | | 2023 | | 2023 | | 2023 | | 2022 | | | £000 | | £000 | | £000 | | £000 | Opening Valuation 108,630 10,558 119,188 202,800 Purchases at cost 56,199 1,500 57,699 29,460 Non-cash distribution – – – 126 Sale proceeds (16,336) – (16,336) (27,995) (2) Realised gains/(losses) (8,245) – (8,245) 2,056 (2) Unrealised losses (17,705) (2,505) (20,210) (87,259) Amortisation for discount/premium on bonds 24 – 24 – (4) Closing valuation 122,567 9,553 132,120 119,188 Cost at 30September 2023 132,600 19,241 151,841 118,699 Unrealised gains 14,981 (1,341) 13,640 23,935 (3) Diminution in value (25,014) (8,347) (33,361) (23,446) Closing valuation 122,567 9,553 132,120 119,188 (1) Includes the Marlborough Special Situations Fund (valuation £8.3m as at 30September 2023), included in unquoted investments previously. (2) The net loss on investments held at fair value through prot or loss in the income statement of -£28,455 is the sum of the realised gains and unrealised losses for the year as detailed in the table above. (3) Diminishments of £14,762,893 were made in the year. Once adjusted for disposals (£4,617,026) and diminishment reversals (£230,000) the net movement for the year is £9,915,867. Diminishments carried forward are £33,361,442. (4) Correction to prior year (casting error). Transaction Costs During the year the Company incurred transaction costs of £97,493 (2022:£40,809) and £15,710 (2022:£15,989) on purchases and sales respectively. These amounts are included in the gain on investments as disclosed in the income statement. Fair Value Measurement Hierarchy The table below sets out fair value measurements using FRS102 (appendix to section 2 fair value measurement) fair value hierarchy. The Company has one class of assets, being at fair value through prot or loss. ● Level 1:Quoted prices (unadjusted) in active markets for identical assets or liabilities. ● Level 2:Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e.as prices) or indirectly (i.e.derived from prices) . | ● Level 3:Valued by reference to valuation techniques using inputs that are not based on observable market data. | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2023 | 2023 | 2023 | 2023 | 2022 | 2022 | 2022 | 2022 | | | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | | | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | (1) Investments 82,565 40,002 9,553 132,120 105,069 3,561 10,558 119,188 (1) Correction to prior year (casting error). Transfers between level 3 and level 1 occur when a previously unquoted investment undertakes an initial public oering, resulting in its equity becoming quoted on an active market. There have been no instances in the current period (2022: £5.9m). Transfers between level 1 and 3 would occur when a quoted investment’s market becomes inactive, or the portfolio company elects to delist. There have been no instances in the current year (2022: none). There were transfers of £20.2m between level 1 and level 2 in the current period where the investments market is not suciently active (2022: £3.6m). There were no transfers between level 2 and level 1 (2022: none). ### 79 Level 3 nancial assets | 2023 | | 2023 | | 2023 | | 2022 | | 2022 | | 2022 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Equity | Preference | | | Loan | 2023 | Equity | Preference | | | Loan | 2022 | | shares | | Shares | | notes | Total | shares | | Shares | | notes | Total | | | | | (1) | | | | | | (1) | | | | £’000 | | £’000 | | £’000 | £’000 | £’000 | | £’000 | | £’000 | £’000 | Opening balance 4,740 3,861 1,957 10,558 19,956 9,380 5,835 35,171 Re-Classication (2) Adjustment – – – – (457) (3,013) (2,431) (5,901) Purchases at cost – – 1,500 1,500 – – 300 300 (3) Non-cash distribution – – – – – 59 – 59 Sale proceeds – – – – (590) – – (590) Realised (losses) /gains – – – – (1,159) – – (1,159) Unrealised (losses) /gains (1,756) (792) 43 (2,505) (13,010) (2,565) (1,747) (17,322) Closing valuation 2,984 3,069 3,500 9,553 4,740 3,861 1,957 10,558 (1) The preference shares held are in the nature of equity. (2) Includes Mexican Grill (£4.5m) listed on the London Stock Exchange on 8October 2021 and conversion of the XP Factory loan note(£1.4m) into listed equity shares on 2February 2022. (3) The Company elected to convert accrued xed income from a convertible loan notein Kidly into shares (£59k) . The following table sets out the basis of valuation for the material Level 3 investments and those where the value has materially changed during the year, held within the portfolio at 30September 2023. In assessing fair value, the Investment Manager considered a range of valuation methodologies including EV/ Sales, and EV/EBITDA multiples for the current and next nancial year. Where appropriate, the Investment Manager also assessed value using discounted cash ow analysis. Where observable market multiples were available, these were used as part of peer group analysis. Market based multiples were taken as reference points with discounts applied (where appropriate) to reect liquidity and forecast risk. The manager also undertook sensitivity analysis to consider the impact of a 30% movement in the peer group multiples, both higher and lower. The use of alternative investment structures such as convertible loan stock by the Company or other investors can lead to asymmetric movements in value in response to dierent upside and downside scenarios. For further information on sensitivities, please see note 15. Level 3 Unquoted Investments Innity RelianceLtd (My 1st Years) Despite the dicult environment, trading remained resilient and in line with expectations for the nancial year to December2022. Although trading remains dicult, the company expects to report further progress with revenues and EBITDA in the current nancial year. The fair value of the investment, which was unchanged, was reviewed against EV/Sales multiples across a peer group of listed companies. Peer group multiples recovered some of the heavy declines seen in the prior year. KidlyLtd Trading was dicult over the winter period with the company closing the nancial year to March2023 with revenues lower year on year. Although trading remains challenging within the current year, changes to the operating model are expected to increase margins and reduce losses. The company raised new equity and debt funding (including from the Company) during the period under review. The fair value of the equity investment, which was reviewed against EV/Sales multiples across a peer group of listed companies, was reduced. The fair value of the convertible loan noteinvestment was unchanged. The conversion option is valued using the Black-Scholes option pricing model. Peer group multiples recovered some of the heavy declines seen in the prior year. SCA InvestmentsLtd (Gousto) The company raised new equity (February2023) and debt (September2023) to fund capital expenditure and working capital. EBITDA and cash ow generation improved signicantly within the year. Although the assessment of value has resulted in an increased enterprise value, the addition of a new class of share and warrants resulted in a reduction to the value of the investment. EV/Sales and EV/EBITDA peer group ratios and discounted cash ow analysis were used to support the valuation. Peer group multiples recovered some of the heavy declines seen in the prior year. ZapparLtd Trading for the nancial year to March2023 was in line with (modestly) revised guidance. With end markets remaining dicult and extended sales cycles, the company has made small reductions to revenue and prot guidance for the nancial year to March2024, although these, if achieved, would still represent gains over the prior year. The valuation, which was unchanged, was reviewed against the revised nancial projections for the current year and EV/Sales multiples across a peer group of listed companies. Peer group multiples reduced in the year under review. Osirium Technologiesplc – On 30August 20203, Osirium announced a recommended cash oer for the company by SailPoint convertible loan note Technologies through a scheme of arrangement, eective from 30October 2023. As part of the transaction, the convertible loan notesand all outstanding accrued interest was repaid in full in November 2023. ### 80 ### Level 3 Unquoted Investments Rosslyn Data Technologies plc – convertible loan note On 19 September 2023, Rosslyn Data Technologies completed a £3.3m fundraising through the issue of new shares and convertible loan notes to fund its organic growth strategy. As part of the funding round, the Company invested £0.3m through the new convertible loan notes. The fair value of the convertible loan notes was unchanged with the value of the conversion option calculated using the Black-Scholes option pricing model. ### 8. Significant interests At the year end the Company held 3% or more of the issued share capital of the following investments: | Investment | Holding % | Investment | Holding % | | --- | --- | --- | --- | | Engage XR Holdings plc | 29.72% | Crimson Tide plc | 6.39% | | Fadel Partners inc | 22.55% | Falen Research plc | 5.59% | | Rosslyn Data Technologies plc | 20.27% | Skillcast Group plc | 4.74% | | Bivictrix Therapeutics plc | 11.00% | Zoo Digital Group plc | 4.50% | | PCI-PAL plc | 10.54% | C4X Discovery Holdings plc | 4.26% | | Bidstack Group plc | 9.64% | Intelligent Ultrasound Group plc | 4.21% | | Equipmake Holdings plc | 8.94% | Verici DX plc | 4.18% | | Itaconix plc | 8.80% | Surface Transform plc | 4.10% | | Crosword Cybersecurity plc | 8.38% | Strip Timming Holdings plc | 3.69% | | XP Factory plc | 7.39% | Polaran Imaging plc | 3.34% | | One Media IP Group | 7.33% | Blackbird plc | 3.29% | | Tortilla Mexican Grill plc | 7.17% | | | ### 9. Debtors | | 2023 £000 | 2022 £000 | | --- | --- | --- | | Prepayments and accrued income | 1,475 | 408 | The material increase in accrued income from the prior year is due to increased investment in fixed interest bonds and convertible loan notes. ### 10. Creditors: amounts falling due within one year | | 2023 £000 | 2022 £000 | | --- | --- | --- | | Trade Creditors | 21 | 8 | | Accruals | 885 | 992 | | | 906 | 1,000 | ### 11. Called up share capital | | 2023 £000 | 2022 £000 | | --- | --- | --- | | Allotted, called-up and fully paid: 327,813,939 (2022: 266,652,209) ordinary shares of 1p each. | 3,278 | 2,666 | During the year 7,183,338 (2022: 4,307,731) ordinary shares were purchased through the buyback facility at a cost of £3,636,841 (2022: £3,243,492). The repurchased shares represent 2.7% (2022: 1.9%) of ordinary shares in issue on 1 October 2022. The acquired shares have been cancelled. During the year, the Company issued 65,917,234 ordinary shares of 1 penny (nominal value £659,172.) in an offer for subscription, representing 24.7% of the opening share capital at prices ranging from 54.76p to 63.84p per share. Gross funds of £39,935,333 were received. The 3.5% premium of £1,397,737 payable to Canaccord Genuity Wealth Ltd (CGWL) under the terms of the offer was reduced by £555,552 being the discount awarded to investors in the form of additional shares. A further reduction of £755 introductory commission was made resulting in fees payable to CGWL of £841,430 which were used to pay other costs associated with the prospectus and marketing. In accordance with the offer agreement, the Company was entitled to a rebate of £100,000 from CGWL reducing the net fees payable to CGWL to £741,430. On 10 February 2023, 1,836,516 ordinary shares were allotted at a price of 54.95pence per share, which was calculated in accordance with the terms and conditions of the DRIS, on the basis of the last reported NAV per share as at 20 January 2023, to shareholders who elected to receive shares under the DRIS as an alternative to the final and special dividend for the year ended 30 September 2022. 81 On 28 July 2023, 591,318 ordinary shares were allotted at a price of 49.29pence per share, which was calculated in accordance with the terms and conditions of the DRIS, on the basis of the last reported NAV per share as at 7 July 2023, to shareholders who elected to receive shares under the DRIS as an alternative to the interim dividend for the year ended 30 September 2023. On 9 May 2023, the amount standing to the credit of the share premium account (£133.2m) was cancelled. Further details of the Company's capital structure can be seen in note 1. #### Income entitlement The revenue earnings of the Company are available for distribution to holders of ordinary shares by way of interim, final and special dividends (if any) as may from time to time be declared by the Directors. #### Capital entitlement The capital reserve realised and special reserve of the Company are available for distribution to holders of ordinary shares by way of interim, final and special dividends (if any) as may from time to time be declared by the Directors. #### Voting entitlement Each ordinary shareholder is entitled to one vote on a show of hands and on a poll to one vote for each ordinary share held. Notices of meetings and proxy forms set out the deadlines for valid exercise of voting rights and other than with regard to directors not being permitted to vote on matters upon which they have an interest, there are no restrictions on the voting rights of ordinary shareholders. #### Transfers There are no restrictions on transfers except dealings by directors, persons discharging managerial responsibilities and their persons closely associated which may constitute insider dealing or is prohibited by the rules of the FCA. The Company is not aware of any agreements with or between shareholders which restrict the transfer of ordinary shares, or which would take effect or alter or terminate in the event of a change of control of the Company. #### 12. Net asset value per ordinary share | | 30 September 2021 | 30 September 2022 | | --- | --- | --- | | Net assets (£'000) | 151,920 | 160,507 | | Shares in issue | 327,813,939 | 266,652,209 | | NAV per share (p) | 46.34 | 60.19 | There are no potentially dilutive capital instruments in issue and as such, the basic and diluted NAV per share are identical. #### 13. Contingencies, guarantees and financial commitments There were no contingencies, guarantees or financial commitments of the Company at the year end (2022: nil). #### 14. Related party transactions and conflicts of interest The remuneration of the directors, who are key management personnel of the Company, is disclosed in the Directors' remuneration report on page 46 and in note 4 on page 78. #### Transactions with the Investment Manager As the Company's Investment Manager, Canaccord Genuity Asset Management Ltd is a related party to the Company for the purposes of the Listing Rules. As the Investment Manager and Canaccord Genuity Wealth Limited (CGWL) are part of the same CGWL group, CGWL also falls into the definition of related party. On 7 September 2023, the Board and the Investment Manager entered into an updated Investment Management Agreement. The amended agreement included updates to reflect changes in regulation. There were no changes to the commercial terms of the agreement. Oliver Bedford, a non-executive director of the Company is also an employee of the Investment Manager which received fees of £28,000 for the year ended 30 September 2023 in respect of his position on the Board (2022: £26,125). Of these fees £7,000 was still owed at the year end. Oliver Bedford's non-executive directorship fees will increase to £29,500 per annum, with effect from 1 October 2023. 82 CGWL act as administrator and custodian to the Company. On 7 September 2023, the Company entered into an amended administration agreement with CGWL. Under the terms of the agreement the fees to be paid to CGWL were increased to £250,000 per annum (previously £195,000) with effect from 1 October 2023. CGWL received fees for the support functions as follows: | | 30 September 2023 | 30 September 2022 | | --- | --- | --- | | Custody | 30,000 | 30,000 | | Administration | 195,000 | 195,000 | | Total | 225,000 | 225,000 | | Still owed at the year end | 55,765 | 55,240 | Under an offer agreement dated 5 September 2022, CGWL were appointed by the Company to administer an offer for subscription and acted as receiving agent in relation to the offer. Under the terms of the agreement CGWL received a fee of 3.5% per cent. of the gross proceeds of the offer for providing these services. The Administrator agreed to discharge commissions payable to financial advisers in respect of accepted applications for offer shares submitted by them, including any trail commission. The Administrator also agreed to discharge and/or reimburse all costs and expenses of and incidental to the offer and the preparation of the prospectus, including without limitation to the generality of the foregoing, FCA vetting fees in relation to the prospectus, sponsor and legal fees, expenses of the Company and CGWL, the Company's tax adviser's fees and expenses, registrar's fees, costs of printing, postage, advertising, publishing and circulating the prospectus and marketing the offer, including any introductory commission and discounts to Investors. However, the Administrator was not responsible for the payment of listing fees associated with the admission of the ordinary shares to the premium segment of the Official List and to trading on the main market of the London Stock Exchange. During the year, the Company issued 65,917,234 ordinary shares of 1 penny (nominal value £659,172) in an offer for subscription, representing 24.7% of the opening share capital at prices ranging from 54.76p to 63.84p per share. Gross funds of £39,935,333 were received. The 3.5% premium of £1,397,737 payable to Canaccord Genuity Wealth Ltd (CGWL) under the terms of the offer was reduced by £555,552, being the discount awarded to investors in the form of additional shares. A further reduction of £755 introductory commission was made resulting in fees payable to CGWL of £841,430 which were then used to pay other costs associated with the prospectus and marketing. In accordance with the offer agreement, the Company was entitled to a rebate of £100,000 from CGWL reducing the net fees payable to CGWL to £741,430. Under an offer agreement dated 7 September 2023, CGWL were appointed by the Company to administer a new offer for subscription and act as receiving agent in relation to the offer. Under the terms of the agreement CGWL will receive a fee of 3.5% per cent. of the gross proceeds of the offer for providing these services. The Administrator has agreed to discharge commissions payable to financial advisers in respect of accepted applications for Offer Shares submitted by them, including any trail commission. The Administrator has also agreed to discharge and/or reimburse all costs and expenses of and incidental to the offer and the preparation of the prospectus, including without limitation to the generality of the foregoing, FCA vetting fees in relation to the prospectus, sponsor and legal fees, expenses of the Company and CGWL, the Company's tax adviser's fees and expenses, registrar's fees, costs of printing, postage, advertising, publishing and circulating the prospectus and marketing the offer, including any introductory commission and discounts to Investors. However, the Administrator will not be responsible for the payment of listing fees associated with the admission of the Ordinary Shares to the premium segment of the Official List and to trading on the main market of the London Stock Exchange. If following the final admission under the offer, the aggregate fee that has been paid to CGWL exceeds the costs and expenses referred to above by more than £25,000, then CGWL will rebate any surplus to the Company subject to a maximum rebate of £100,000. Canaccord Genuity Asset Management Ltd is appointed as Investment Manager to the Company and receives an investment management fee of 1.7% per annum. Investment management fees for the year are £2,797,377 (2022: £3,340,182) as detailed in note 3. Of these fees £645,397 (2022: £687,373) were still owed at the year end. As the Investment Manager to the Company and the investment advisor to the Marlborough Special Situations Fund (in which the Company may invest), 83 the Investment Manager makes an adjustment as necessary to its investment management fee to ensure the Company is not charged twice for their services. Upon completion of an investment, the Investment Manager is permitted under the investment management agreement to charge private investee companies a fee equal to 1.5% per cent. of the investment amount. This fee is subject to a cap of £40,000 per investment and is payable directly from the investee company to the Investment Manager. The Investment Manager may recover external due diligence and transaction services costs directly from private investee companies. No fees were charged to investee companies in the year under this agreement (2022: nil). Total commission of £63,318 was paid to CGWL in the year for broker services (2022: £30,612). The Investment Manager has agreed to indemnify the Company and keep indemnified the Company in respect of the amount by which the annual running costs of the Company exceed 3.5% per cent. of the net assets of the Company, such costs shall exclude any VAT payable thereon and any payments to financial intermediaries, the payment of which is the responsibility of the Company. No fees were waived by the Investment Manager in the financial year under the indemnity. The Company also held £8,119,302 in the client account held at CGWL at 30 September 2023 (2022: £16,786,442). ## 15. Financial instruments ### Risk management policies and procedures The investment objectives of the Company are to generate capital gains and income from its portfolio and to make distributions from capital or income to shareholders whilst maintaining its status as a Venture Capital Trust. The Company intends to achieve its investment objectives by making Qualifying Investments in companies listed on AIM, private companies and companies listed on the AQSE Growth Market, as well as Non-Qualifying Investments as allowed by the VCT Rules. At least 80% of the Company's funds have been invested in qualifying holdings during the year under the HMRC investment test definition. The balance of the Company's funds were invested in liquid assets (such as non-qualifying equities, fixed income securities and bank deposits). The Company is managed as a VCT in order that shareholders in the Company may benefit from the tax relief available. This strategy exposes the Company to certain risks, which are summarised below. The structure in place to manage these risks is set out in the corporate governance report on pages 51 to 55 of the annual report and accounts. A detailed review of the investment portfolio is contained in the chairman's statement and Investment Manager's report on pages 4 to 9 and 29 to 32 respectively. ### Classification of financial instruments The investments at year end comprise two types of financial instruments. The basis of valuation is set out below: - ☐ Fixed income securities – fair value through the profit and loss account Other financial assets comprise cash and cash equivalents of £19,231,167 (2022: £41,911,058), accrued income and debtors of £1,434,688 (2022: £370,624), which is classified as 'loans and receivables measured at amortised cost'. Financial liabilities consist of trade creditors and accruals of £905,897 (2022: £1,000,255) which are classified as 'financial liabilities measured at amortised cost'. ### Market risk Market price risk arises from any fluctuations in the value of investments held by the Company. Adherence to investment policies mitigates the risk of excessive exposure to any particular type of security or issuer. In particular, other than bank deposits, no individual investment shall exceed 10% per cent. of the Company's net assets at the time of investment. However, many of the investments are in small companies traded on the AIM market which by virtue of their size carry more risk than investments in larger companies listed on the main market of the London Stock Exchange. Market risk is monitored by the Board on a quarterly basis and on an ongoing basis, through the Investment Manager. 84 The following table summarises exposure to price risk by asset class at year end date: Change in Fair Value of Investments | | 30% market | | | 30% market | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | increase | | | decrease | | Aggregate value | | Aggregate value | | | | | | 2023 | | | 2023 | | 2023 | | 2022 | | Asset class | | | £’000 | | | £’000 | | £’000 | | £’000 | (1) AIM Qualifying Investments 14,365 -14,232 80,673 93,680 (2) Unquoted Qualifying Investments 2,004 -2,645 8,453 9,802 Quoted Non-Qualifying Investments 4,496 -4,496 17,366 12,397 Unquoted Non-Qualifying Investments – – – – Authorised unit trust 1,409 -1,409 8,268 3,309 Quoted Non-Qualifying xed income securities -110 110 17,360 – 22,164 22,672 132,120 119,188 (1) Includes variances in the value of CLN issued by Osiriumplc and Rosslyn Data Technologiesplc. (2) Including variances in the value of CLNs issued by KidlyLtd. If market prices had been 30% higher or lower while all other variables remained unchanged the return attributable to ordinary shareholders for the year ended 30September 2023 would have increased by £22,164,436 (2022:£25,128,703) or decreased by £22,671,676 (2022:£25,965,809) . The assessment of market risk is based on the Company’s equity and xed income portfolio including private company investments, as held at the year end. The assessment uses the AIM All-Share Index and the FTSE250 Index as proxies for the AIM Qualifying Investments and quoted Non-Qualifying Investments and illustrates, based on historical price movements, their potential change in value in relation to change in value of a reference index, in this case the FTSE100. The review has also examined the potential impact of a 30% move in the market on the CLN investments held by the Company, whose values will vary according to the price of the underlying security into which the loan note instrument has the option to convert. Currency risk The Company is not directly exposed to currency risk and does not invest in currencies other than sterling. There are indirect exposures through movements in the foreign exchange market as a consequence of investments held in companies who report in foreign currencies. Interest rate risk The Company is fully funded through equity and has no debt; therefore, interest rate risk is not considered a material risk. The Company’s nancial assets and liabilities are denominated in sterling as follows: 30September 2023 | Fixed | Variable | | Non-Interest | | | | --- | --- | --- | --- | --- | --- | | Rate | | Rate | | Bearing | Total | | £000 | | £000 | | £000 | £000 | Investments 20,860 – 111,260 132,120 Cash and cash equivalents – 19,231 – 19,231 (2) Other current assets (net) 1,293 – 182 1,475 Other current liabilities (net) – – (906) (906) Net assets 22,153 19,231 110,536 151,920 30September 2022 | Fixed | Variable | | Non-Interest | | | | --- | --- | --- | --- | --- | --- | | Rate | | Rate | | Bearing | Total | | £000 | | £000 | | £000 | £000 | Investments 1,956 – 117,232 119,188 Cash and cash equivalents – 41,911 – 41,911 (1) Other current assets (net) 262 – 146 408 (1) Other current liabilities (net) – – (1,000) (1,000) Net assets 2,218 41,911 116,378 160,507 (1) Prior year updated to split out assets and liabilities and correct xed interest accrual allocation. (2) Includes prepayments of £40k which is not considered a nancial asset. ### 85 Change in Fair Value of Investments | | 30% market | | | 30% market | | | Aggregate | | Aggregate | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | increase | | | decrease | | | value | | value | | | | | 2022 | | | 2022 | | 2022 | | 2021 | | Asset class | | | £’000 | | | £’000 | | £’000 | | £’000 | (1) AIM Qualifying Investments +19,281 -19,208 93,680 141,041 (2) Unquoted Qualifying Investments +1,783 -2,693 9,802 32,331 Quoted Non-Qualifying Investments +3,470 -3,470 12,397 25,284 Unquoted Non-Qualifying Investments – – – 443 Authorised unit trust +595 -595 3,309 3,701 +25,129 -25,966 119,188 202,800 Interest rate risk exposure relates to cash and cash equivalents (bank deposits) where interest income is primarily linked to bank base rates. Interest rate risk exposure on debt instruments is reected in the market risk and since these securities are valued at fair value, no additional disclosure is made in this respect. Movements in interest rates on cash and cash equivalents are not considered a material risk. Liquidity risk Liquidity risk is the risk that the Company is unable to meet obligations as they fall due. The Company has no debt and maintains sucient investments in cash or cash equivalents, or readily realisable securities to pay trade creditors and accrued expenses (£905,897 as at 30September 2023) . Liquidity risk is not considered material. As at 30September 2023 the Company held £19,231,167 in cash or cash equivalents. Credit risk Credit risk relates to the risk of default by a counterparty. The Company may have credit risk through investments made in unsecured loan stock issued by Qualifying Companies or through Non-Qualifying Investments in xed income securities and exchange traded funds. No assets are past due date for payment. On 30August 2023, Osirium announced a recommended cash oer for the company by SailPoint Technologies through a scheme of arrangement, eective from 30October 2023. As part of the transaction, the convertible loan notesand all outstanding accrued interest was repaid in full in November 2023. In anticipation of the completion of the transaction, which was completed post period end, the impairments to the carrying value of the loan noteand accrued interest were reversed. An investment will be impaired if the investee company is loss making and does not have sucient funds available to transition into prot and in the opinion of the Investment Manager may fail to secure sucient equity or debt funding to transition into prot, or if the borrower defaults or is expected to default on payment of accrued interest or repayment of the principal sum. The maximum credit risk exposure equates to the carrying value of assets at the balance sheet date: 2023 2022 £000 £000 Fixed income securities; Qualifying Investments (convertible loan notes) 3,500 1,956 Non-qualifying investments (investment grade corporate bonds) 17,361 – Non-qualifying investments (UK gilt exchange traded fund) 1,978 – (1) Total xed income securities 22,839 1,956 Cash and cash equivalents 19,231 41,911 Other assets 1,475 408 43,545 44,275 (1) Includes UK gilt exchange traded fund as underlying investments are xed income securities. Cash and cash equivalents include bank deposits held through Canaccord Genuity Wealth Limited of £8.1million (2022:£16.8million) (CGWL, trading as CGWM) , are held with banks that are authorised and regulated to carry on banking or deposit-taking business. All these meet the requirements of UK’s FCA CASS rules. Through its treasury function, CGWM uses a tiered level approach to counterparty selection to reect dierent maturities of cash held on deposit. The Company’s cash reserves, when held through CGWL, are pooled with cash deposits from other clients of CGWL and diversied across a specied panel of banks. CGWM’s treasury function reviews panel members ahead of selection and prioritises the safety of client assets with the panel selection process placing an emphasis on quality and security. Participating banks must be rated as investment grade by at least two international credit rating agencies. CGWM will also consider the expertise and market reputation of the bank; review a bank’s nancial statements and consider its capital and deposit base; consider the geographical location of the parent; monitor a bank’s credit default swaps; and ask the bank to complete a due diligence questionnaire. The CGWM treasury function maintains regular contact with panel banks, typically meeting them every 6months or so. There are no withdrawal restrictions on the Company’s cash held with CGWL. Fair value of nancial assets and nancial liabilities Equity investments are held at fair value. No investments are held for trading purposes only. ### 86 Capital management policies and procedures The current policy is to fund investments through equity. No future change to this policy is envisaged. As a public limited company, the Company is required to hold a minimum £50,000 share capital. The Company’s capital is summarised in notes1 and 11 to these accounts. The Company has no debt and is fully funded by equity. 16. Dividends | 2023 | 2022 | | --- | --- | | Ord | Ord | | £000 | £000 | Paid per share: Special capital dividend of 2.50pence for the year ended 30September 2021 – 5,704 Paid per share: Final capital dividend of 3.15pence for year ended 30September 2021 – 8,455 Paid per share: Interim capital dividend of 1.00penny for year ended 30September 2022 – 2,671 Paid per share: Special capital dividend of 2.00pence for the year ended 30September 2023 6,216 – Paid per share: Final capital dividend of 2.00pence for year ended 30September 2022 6,216 – Paid per share: Interim capital dividend of 1.00penny for year ended 30September 2023 3,298 – (1) Dividends unclaimed (13) (2) (3) 15,717 16,830 Proposed per share: Final capital dividend of 1.50pence for the year ended 30September 2023 5,151 – Paid per share: Special capital dividend of 2.00pence for the year ended 30September 2023 – 6,218 Paid per share: Final capital dividend of 2.00pence for the year ended 30September 2022 – 6,218 (1) Unclaimed dividends for a period of 12years reverted to the Company. (2) The dierence between total dividends paid for the period ending 30September 2023 and the cash ow statement is £1,300,000 which reects the amount of dividends reinvested under the DRIS. (3) The dierence between total dividends paid for the period ending 30September 2022 and the cash ow statement is £1,038,000 which reects the amount of dividends reinvested under the DRIS. 17. Post balance sheet events Share buybacks As at 18December2023, 2,039,414ordinary shares have been purchased at an average price of 42.82pence per share and a total cost of £873,229. Shares issued As at 18December2023, 17,599,435ordinary shares have been issued through the oer for subscription raising gross proceeds of £8,101,695. New investments The Company has made the following investments since the period end: | Amount | | Investment | | --- | --- | --- | | Invested | | into existing | | | £000 | company | Qualifying Investments Eden Researchplc 500 Yes Non-Qualifying Investments Next Groupplc GRTD BDS26/08/25 957 No Shellplc 809 No XP Power plc 126 Yes Marlborough UK Micro-Cap Fund 4,365 No Marks & Spencer plc 3.75% SNR EMTN 19/05/2026 2,058 No Unilever plc 1.375% GTD SNR NTS 15/09/24 3,028 No ### 87 Disposals The Company has made the following full disposals since the period end: Proceeds £000 Qualifying Investments Osiruim Technologies plc 14 Osiruim Technologies plc (convertible loan note) 800 Renalytix AI plc 13 Velocys plc 61 Instem plc 1,416 Abcam plc 3,143 Non-Qualifying Investments Diversied Energy Company plc 659 Watches of Switzerland plc 641 Energean plc 679 Marks and Spencer 3% SNR EMTN 3,000 IShares III plc UK Gilts 0-5 YR UCITS ETF 2,005 ### 88 # Alternative performance measures ## Alternative performance measures An alternative performance measure (APM) is a financial measure of the Company's historic or future financial performance, financial position or cash flows which is not defined or specified in the applicable financial reporting framework. The Directors assess the Company's performance against a range of criteria which are viewed as particularly relevant for a VCT. The definition of each APM is in the glossary of terms on pages 91 to 92. Where the calculation of the APM is not detailed within the financial statements, an explanation of the methodology employed is below: ### NAV total return | | | 30 September 2023 | 30 September 2022 | | --- | --- | --- | --- | | Opening NAV per share | A | 60.19p | 100.39p | | Special dividend paid | B | 2.00p | 2.50p | | Final dividend paid | C | 2.00p | 3.15p | | Interim dividend paid | D | 1.00p | 1.00p | | Closing NAV per share | E | 46.34p | 60.19p | | NAV total return | ((B+C+D+E-A)/A)*100 | -14.70% | -33.42% | ### NAV total return (dividends reinvested) | | | 30 September 2023 | % Return | | --- | --- | --- | --- | | Opening NAV per share (30 September 2022) | A | 60.19p | | | Closing NAV per share (30 September 2023) | | 46.34p | | | | Special dividend paid February 2023 | 2.00p | | | | Final dividend for year paid February 2023 | 2.00p | | | | Interim dividend July 2023 | 1.00p | | | Total dividend payments | | 5.00p | | | Closing NAV per share plus dividends paid | | 51.34p | -14.70% (-33.42% 30 September 2022) | | In year performance of reinvested dividends | | -0.74p | | | NAV total return (dividends reinvested) | ((B-A)/A)*100 | 50.60p | -15.93% (-35.47% 30 September 2022) | ### Share price total return | | | 30 September 2023 | 30 September 2022 | | --- | --- | --- | --- | | Opening share price | A | 62.75p | 93.00p ^{(1)} | | Special dividend paid | B | 2.00p | | | Final dividend paid | C | 2.00p | 3.15p | | Interim dividend paid | D | 1.00p | 1.00p | | Closing share price | E | 43.00p | 62.75p | | Share price total returns | ((B+C+D+E-A)/A)*100 | -23.51% | -28.06% | (1) Ex-dividend 89 Share price total return (dividends reinvested) 30September 2023 % Return Opening share price (30September 2022) A 62.75p Closing share price (30September 2023) 43.00p Special dividend paid February2023 2.00p Final dividend for year paid February2023 2.00p Interim dividend paid July2023 1.00p Total dividend payments 5.00p Closing share price plus dividends paid 48.00p % -23.51% (-28.06% 30September 2022) In year performance of reinvested dividends -0.81p Share price total return (dividends reinvested) ((B-A) /A) *100 B 47.19p % -24.80% (-28.98% 30September 2022) Ongoing charges ratio The ongoing charges ratio has been calculated using the AIC’s “Ongoing Charges” methodology. | 30September | | 30September | | | --- | --- | --- | --- | | | 2023 | | 2022 | | | £000 | | £000 | Investment management fee 2,797 3,340 (1) Other expenses 1,035 989 VCT proportion of MSSF expenses 65 26 Ongoing charges A 3,897 4,355 Average net assets B 174,334 211,552 Ongoing charges ratio (A/B) *100 2.24% 2.06% (1) Other expenses exclude London Stock Exchange fees of £58,905 for admission of shares under the oer for subscription, reversal of the provision of loan stock interest previously recognised (£34,816) , capital reduction costs of £15,131 and witholding tax charges of £16,485 as the Board do not consider these costs to be ongoing costs to the fund. Share price discount 30September 30September 2023 2022 Share price A 43.00p 62.75p Net asset value per share B 46.34p 60.19p (Discount) / premium ((A/B) -1) *100 -7.21% 4.25% The 1-year average discount of 6.06% is calculated by taking the average of the share price discount at each month end between 1October 2022 and 30September 2023. The 5-year average discount of 5.64% is calculated by taking the average of the share price discount at each month end between 1October 2018 and 30September 2023. ### 90 ## Glossary of terms AIM The Alternative Investment Market operated by the London Stock Exchange. AQSE Growth Market The Growth Market of the Aquis Stock Exchange, a recognised investment exchange for growth companies operated by Aquis Exchangeplc. CGWM In the UK& Europe, Canaccord Genuity Wealth Management (CGWM) is the trading name of Adam& Company Investment Management Limited (AIM) , Canaccord Genuity Wealth Limited (‘CGWL’) , Canaccord Genuity Financial Planning Limited (‘CGFPL’) , CG Wealth Planning Limited (‘CGWPL’) , Canaccord Genuity Asset Management Limited (‘CGAM’) , Punter Southall Wealth Limited (‘PSW’) and Canaccord Genuity Wealth (International) Limited. Earnings per share total return Total prot/(loss) for the reporting period divided by the weighted average number of shares in issue. Eligible Shares Shares in Qualifying Companies which do not carry preferential rights to dividends and/or assets on a winding-up or redemption. FTSE AIM All-Share Index Total Return Measures the total return of the underlying FTSE AIM All-Share index combining both capital performance and income. Calculated on a dividends re-invested basis. FTSE All-Share Index Total Return Measures the total return of the underlying FTSE All-Share index combining both capital performance and income. Calculated on a dividends re-invested basis. ITA Income Tax Act2007, as amended. Knowledge Intensive Companies A company satisfying the conditions in Section331(A) of Part6 ITA. Non-Qualifying Company or Non-Qualifying Investment An investment made by the Company which is not a Qualifying Investment and is permitted under the VCT Rules. Oer Shares New ordinary shares of 1 penny each in the capital of the Company issued or to be issued pursuant to the Oer for Subscription of Ordinary Shares in Hargreave Hale AIM VCTplc launched on 7September 2023. Qualifying Company or Qualifying Investment An investment made by a venture capital trust in a trading company which comprises a qualifying holding under Chapter4 of Part6 ITA. Qualifying Trade A trade complying with the requirements of section 300 ITA. State aid State aid received by a company as dened in Section280B (4) of ITA. VCT or Venture Capital Trust Venture capital trust as dened in section 259 ITA. VCT Rules All rules and regulations that apply to VCTs from time to time, including the ITA. ### 91 Alternative performance measures An alternative performance measure is a nancial measure of the Company’s historic or future nancial performance, nancial position or cash ows which is not dened or specied in the applicable nancial reporting framework. The Company uses the following alternative performance measures: Net asset value (NAV) The value of the Company’s assets, less its liabilities. Net asset value (NAV) per share The net asset value divided by the total number of shares in issue at the year end. NAV total return The NAV total return shows how the NAV per share has performed over a period of time in percentage terms taking into account both capital returns and dividends paid. We calculate this by adding the dividends paid in the period to the closing NAV per share and measuring the percentage change relative to the opening NAV per share. NAV total return since inception The sum of the published NAV per share plus all dividends paid per share over the lifetime of the Company. NAV total return (dividends reinvested) The NAV total return (dividends reinvested) shows the percentage movement in the NAV Total Return per share over time taking into account both capital returns and dividends paid assuming dividends are re-invested into new shares. To be consistent with industry standard practice, the allotment price of the new shares issued in place of the cash dividend is assumed to be the prevailing ex-dividend NAV per share on the day the shares go ex-dividend. This diers from the methodology followed by the registrar when issuing shares under the Company’s dividend re-investments scheme. Ongoing charges ratio The ongoing costs of managing and operating the Company divided by its average net assets. Calculated in accordance with AIC guidance, this gure excludes ‘non-recurring costs’. Share price discount As stock markets and share prices vary, a VCT’s share price is rarely the same as its NAV. When the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, this situation is called a premium. Share price total return The share price total return shows performance over a period of time in percentage terms by reference to the mid-price of the Company’s shares taking into account dividends paid and payable having past the ex-dividend date in the period and any return of capital if applicable. We calculate this by adding the dividends paid and payable having past the ex-dividend date in the period to the closing mid-price and measuring the percentage change relative to the opening mid-price. Share price total return (dividends reinvested) The performance of the Company’s share price on a total return basis assuming dividends are reinvested in new shares at the mid-price of the shares on the ex-dividend date. ### 92 ## Shareholder information The Company’s ordinary shares (Code:HHV) are listed on the London Stock Exchange. Shareholders can visit the London Stock Exchange website, https://www.londonstockexchange.com, for the latest news and share prices of the Company. Further information for the Company can be found on its website at https://www.hargreaveaimvcts.co.uk. Net asset value per share The Company’s NAV per share as at 8December2023 was 45.45pence per share. The Company publishes its unaudited NAV per share on a weekly basis. Dividends Subject to approval at the Annual General Meeting on 8February2024, the Board has proposed the payment of a nal dividend of 1.50pence in respect of the nancial year ending 30September 2023. Shareholders who wish to have future dividends paid directly into their bank account rather than sent by cheque to their registered address can complete a mandate for this purpose. Mandates can be obtained by contacting the Company’s Registrar, Equiniti. Dividend reinvestment scheme The Company oers a dividend re-investment scheme (DRIS) allowing shareholders to elect to receive all of their dividends from the Company in the form of new ordinary shares. Shareholders may elect to join the DRIS at any time by completing a DRIS mandate form. Mandates can be obtained by contacting the Company’s registrar, Equiniti or by visiting the Company’s website at https://www.hargreaveaimvcts.co.uk. As new ordinary shares will be issued, shareholders are also able to claim tax relief on the shares, including 30per cent. income tax relief on their investment (subject to the terms of the VCT legislation and the personal circumstances of the shareholder) . Selling your shares The Company aims to improve the liquidity in its ordinary shares and to maintain a discount of approximately 5% to the last published NAV per share (as measured against the mid-price of the shares) by making secondary market purchases. This policy is non-binding and at the discretion of the Board. The eective operation of the policy is dependent on a range of factors which may prevent the Company from achieving its objectives. As a result there is no guarantee you will be able to sell your shares or of the discount to NAV per share at which they will be sold. VCT share disposals are exempt of capital gains tax when the disposal is made at arms’ length, which means a shareholder should sell their shares to a market maker through a stockbroker or another share dealing service. In practice, this means that the price achieved in a sale is likely to be below the mid-price of the Company’s shares and, therefore, the discount is likely to be more than 5% to the last published NAV per share. VCT share disposals settle two business days post trade if the shares are already dematerialised or placed into CREST ahead of the trade, or ten days post trade if the stock is held in certicated form. Investors who sell their VCT shares before the fth anniversary of the share issue are likely to have to repay their income tax relief. Canaccord Genuity Wealth Management can facilitate the sale of VCT shares and is able to act for VCT shareholders who wish to sell their shares. However, you are free to nominate any stockbroker or share dealing service to act for you. If you would like further information from Canaccord Genuity Wealth Management please contact the VCT administration team at aimvct@canaccord.com or call 01253 376622. Please notethat Canaccord Genuity Wealth Limited will need to be in possession of the share certicate and a completed CREST transfer form before executing the sale. If you have lost your share certicate, then you can request a replacement certicate from the Company’s registrar Equiniti. The registrar will send out an indemnity form, which you will need to sign. The indemnity form will also need to be countersigned by a UK insurance company or bank that is a member of the Association of British Insurers. Since indemnication is a form of insurance, the indemnifying body will ask for a payment to reect their risk. Fees will reect the value of the potential liability. ### 93 Shareholder enquiries: For general shareholder enquiries, please contact Canaccord Genuity Wealth Limited on 01253 376622 or by e-mail to aimvct@canaccord.com. For enquiries concerning the performance of the Company, please contact the Investment Manager on02075234837 or by e-mail to aimvct@canaccord.com. Electronic copies of this report and other published information can be found on the Company’s website at https://www.hargreaveaimvcts.co.uk. Change of address To notify the Company of a change of address please contact the Company’s registrar at the address on page 95. ### 94 ## Company information | Directors | Investment Manager | | --- | --- | | David Brock, Chair | Canaccord Genuity Asset Management Limited | | Oliver Bedford | 88 Wood Street | | Angela Henderson | London | | Megan McCracken | EC2V 7QR | Busola Sodeinde Justin Ward | Administrator and Custodian | Company Secretary | | --- | --- | | Canaccord Genuity Wealth Limited | JTC (UK) Limited | | c/o Talisman House | The Scalpel | | Boardmans Way | 18th Floor | | Blackpool | 52 Lime Street | | FY4 5FY | London | EC3M 7AF | VCT Status Adviser | Registrars | | --- | --- | | Philip Hare& Associates LLP | Equiniti Limited | | Hamilton House | Aspect House | | 1 Temple Avenue | Spencer Road | | London | Lancing | | EC4Y 0HA | West Sussex | BN99 6DA | Auditors | Brokers | | --- | --- | | BDO LLP | Nplus1 Singer Advisory LLP | | 55 Baker Street | 1 Bartholomew Lane | | London | London | | W1U 7EU | EC2N 2AX | | Company Registration Number | Solicitors | | 05206425 in England and Wales | Howard Kennedy LLP | 1 London Bridge Registered oce London Talisman House SE1 9BG Boardmans Way Blackpool FY4 5FY ### 95 # Notice of Annual General Meeting NOTICE IS HEREBY GIVEN that the ANNUAL GENERAL MEETING of Hargreave Hale AIM VCTP plc (the “Company”) will be held at 88 Wood Street, London EC2V7QR on Thursday 8 February 2024 at 4.45pm for the purposes of considering and if thought fit, passing the following resolutions, of which resolutions 1 to 13 (inclusive) will be proposed as ordinary resolutions and resolutions 14 and 15 as special resolutions: ## Ordinary Resolutions 1. To receive and adopt the reports of the directors and auditor and the audited financial statements for the year ended 30 September 2023. 2. To receive and approve the directors’ remuneration report for the year ended 30 September 2023. 3. To approve the directors’ remuneration policy, the full text of which is contained in the directors’ remuneration report for the year ended 30 September 2023. 4. To reappoint BDO LLP as auditors to the Company and to authorise the Directors to determine their remuneration. 5. To re-elect David Brock as a director of the Company. 6. To re-elect Oliver Bedford as a director of the Company; 7. To re-elect Angela Henderson as a director of the Company. 8. To re-elect Justin Ward as a director of the Company. 9. To re-elect Megan McCracken as a director of the Company. 10. To re-elect Busola Sodeinde as a director of the Company. 11. To approve a final dividend of 1.50pence per ordinary share in respect of the year ended 30 September 2023. 12. To authorise the directors of the Company (the “Directors”), in addition to any existing power and authority granted to the Company pursuant to Article 29 of the Company’s articles of association (the “Articles”), to exercise the power conferred on them by Article 29 of the Articles to offer holders of ordinary shares in the capital of the Company the right to elect to receive ordinary shares credited as fully paid, instead of cash, in respect of the whole (or some part to be determined by the Directors) of dividends declared, made or paid during the period starting with the date of this resolution and ending at the conclusion of the next annual general meeting of the Company following the date of this resolution and to authorise the Directors to do all acts and things required or permitted to be done in accordance with the Articles in connection therewith. 13. THAT, in addition to all existing authorities, the Directors be and are hereby generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006 (the “Act”) to exercise all the powers of the Company to allot ordinary shares of 1 penny each in the capital of the Company (“Ordinary Shares”) and to grant rights to subscribe for, or to convert any security into, Shares (“Rights”), up to an aggregate nominal value of £338,803 (being equal to approximately 10 per cent. of the Company’s issued share capital (excluding treasury shares) as at 14 December 2023 generally from time to time or pursuant to shareholders’ right to elect to participate in the dividend reinvestment scheme operated by the Company in accordance with Article 29 of the Articles on such terms as the Directors may determine, such authority to expire on the earlier of the conclusion of the Annual General Meeting of the Company to be held in 2025 and the expiry of 15 months from the passing of this resolution (unless previously renewed, varied or revoked by the Company in a general meeting), but so that this authority shall allow the Company to make, before the expiry of this authority offers or agreements which would or might require Shares to be allotted or Rights to be granted after such expiry and the Directors shall be entitled to allot Shares or grant Rights pursuant to any such offers or agreements as if the power conferred by this resolution had not expired. ## Special Resolutions 14. THAT, in addition to all existing authorities and subject to the passing of Resolution 13 set out in this notice of meeting, the Directors be and are hereby empowered, pursuant to sections 570 and 573 of the Act to allot equity securities (within the meaning of section 560 of the Act) for cash pursuant to the authority given pursuant to Resolution 13 set out in the notice of this meeting, or by way of a sale of treasury shares, as if section 561(1) of the Act did not apply to any such allotment or sale, provided that this power: (i) shall be limited to the allotment of equity securities and the sale of treasury shares for cash up to an aggregate nominal amount of £169,401 (representing approximately 5 per cent. of the issued share capital of the Company (excluding treasury shares) as at 14 December 2023) pursuant to the dividend reinvestment scheme operated by the Company; 96 (ii) shall be limited to the allotment of equity securities and the sale of treasury shares for cash (otherwise than pursuant to sub-paragraph(i) above) , up to an aggregate nominal amount of £169,401 (representing approximately 5per cent. of the issued share capital of the Company (excluding treasury shares) as at 14December 2023) ; and (iii) expires on the earlier of the conclusion of the Annual General Meeting of the Company to be held in 2025 and the expiry of 15months from the passing of this resolution (unless previously renewed, varied or revoked by the Company in a general meeting) , save that the Company may before such expiry make an oer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of such an oer or agreement as if the power conferred by this resolution had not expired. 15. THAT, in substitution for any existing authority but without prejudice to the exercise of any such authority prior to the date hereof, the Company be generally and unconditionally authorised, in accordance with section 701 of the Act, to make one or more market purchases (within the meaning of section 693(4) of the Act) of its Ordinary Shares on such terms and in such manner as the directors may determine (either for cancellation or for retention as treasury shares for future re-issue, resale, transfer or cancellation) provided that: a) the maximum aggregate number of Ordinary Shares hereby authorised to be purchased is 50,786,705 Ordinary Shares or, if less, the number representing approximately 14.99per cent. of the issued share capital of the Company as at the date of the passing of this resolution; b) the maximum price (excluding expenses) which may be paid for any Ordinary Share purchased pursuant to this authority shall not be more than the higher of: (i) 105per cent. of the average of the middle market quotations of an Ordinary Share in the Company, as derived from the London Stock Exchange Daily Ocial List, for the ve business days immediately preceding the date of purchase; and (ii) the higher price of the last independent trade of an Ordinary Share and the highest current independent bid for such a share on the London Stock Exchangeplc; c) the minimum price (excluding expenses) which may be paid for an Ordinary Share shall be 1 penny (the nominal value thereof) ; and d) unless previously varied, revoked or renewed by the Company in general meeting, the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2025 or on the expiry of 15 months following the passing of this resolution, whichever is the earlier, save that the Company may, prior to the expiry of such authority, enter into a contract or contracts to purchase ordinary shares under such authority which will or might be completed or executed wholly or partly after the expiration of such authority and may make a purchase of Ordinary Shares pursuant to any such contract or contracts as if the power conferred by this resolution had not expired. By order of the Board of Directors. JTC (UK) Limited Company Secretary Registered Oce: The Scalpel 18th Floor 52 Lime Street London EC3M 7AF 18 December 2023 A member entitled to attend and vote at this meeting may appoint a proxy or proxies to attend and vote on their behalf. A proxy need not also be a member of the Company, however shareholders who wish to appoint a proxy are recommended to appoint the Chair of the AGM as their proxy. To be eective, forms of proxy together with the power of attorney or other authority, if any, under which it is signed, or a notorially certied copy or a copy ### 97 certied in accordance with the Powers of Attorney Act1971 of that power or authority must be lodged with the Company’s Registrar, Equiniti, Aspect House, Spencer Road, Lancing, West SussexBN996DA not less than 48hours (excluding non-working days) before the time appointed for holding the meeting or any adjourned meeting. A member may appoint more than one proxy, provided each proxy is appointed to exercise rights attached to dierent shares. Members may not appoint more than one proxy to exercise rights attached to any one share. The return of a completed proxy form or other instrument of proxy will not prevent you attending the AGM and voting in person if you wish. The right to appoint a proxy does not apply to persons whose shares are held on their behalf by another person and who have been nominated to receive communications from the Company in accordance with Section146 of the Companies Act2006 (nominated persons) . Nominated persons may have a right under an agreement with the member who holds the shares on their behalf to be appointed (or to have someone else appointed) as a proxy. Alternatively, if nominated persons do not have such a right, or do not wish to exercise it, they may have a right under such an agreement to give instructions to the person holding the shares as to the exercise of voting rights. The Company, pursuant to Regulation 41 of the Uncertied Securities Regulations 2001 species that only those members registered in the register of members of the Company as at 6.30pm on 6February 2024 or, in the event that the meeting is adjourned, on the register of members at 6.30pm on the day2days (excluding non-working days) prior to the reconvened meeting, shall be entitled to attend or vote at the aforesaid annual general meeting in respect of the number of shares registered in their name at that time. Changes to entries on the relevant register of members after 6.30pm on 6February 2024 (or in the event that the meeting is adjourned, as at 6.30pm 2days (excluding non-working days) prior to the adjourned meeting) shall be disregarded in determining the rights of any person to attend or vote at the meeting notwithstanding any provisions in any enactment, the Articles of Association of the Company or any other instrument to the contrary. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual (www.euroclear.com) . CREST personal members or other CREST sponsored members who have appointed a voting service provider(s) should refer to their CREST sponsor or voting service provider(s) , who will be able to take appropriate action on their behalf. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a “CREST proxy instruction”) must be properly authenticated in accordance with Euroclear’s specications and must contain the information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by Equiniti, the Company’s Registrar (ID RA19) , not later than 48hours (excluding non-working days) before the time appointed for the meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which Equiniti is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. CREST members and where applicable their CREST sponsors or voting service provider(s) should notethat Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST proxy instructions. It is the responsibility of the CREST member concerned to take (or if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s) , to procure that their CREST sponsor or voting service provider(s) take(s) ) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and where applicable, their CREST sponsors or voting service provider(s) are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST proxy instruction in the circumstances set out in Regulation 35(5) (a) of the Uncerticated Securities Regulations 2001. If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 4.45pm on 6February 2024 in order to be considered valid. Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s associated terms and conditions. It is important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your proxy. ### 98 A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, the proxy will vote or abstain from voting at his or her discretion. The proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the meeting. Information regarding the Annual General Meeting, including the information required by section 311A of the Companies Act 2006, is available from https://www.hargreaveaimvcts.co.uk Under section 319A of the Companies Act 2006, the Company must answer at the Annual General Meeting any question a member asks relating to the business being dealt with at the Annual General Meeting unless: - answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information; - the answer has already been given on a website in the form of an answer to a question; or - it is undesirable in the interests of the Company or the good order of the meeting that the question be answered. In accordance with Section 311A of the Companies Act 2006, the contents of this notice of meeting, details of the total number of shares in respect of which members are entitled to exercise voting rights at the Annual General Meeting and if applicable, any members' statements, members' resolutions or members' matters of business received by the Company after the date of this notice will be available on the Company's website https://www.hargreaveaimvcts.co.uk Members satisfying the thresholds in Section 527 of the Companies Act 2006 can require the Company to publish a statement on its website setting out any matter relating to the audit of the Company's accounts (including the auditor's report and the conduct of the audit) that are to be laid before the Annual General Meeting that the members propose to raise at the meeting. The Company cannot require the members requesting the publication to pay its expenses. Any statement required to be placed on the website must also be sent to the Company's auditor no later than the time it makes its statement available on the website. The business which may be dealt with at the meeting includes any statement that the Company has been required to publish on its website. Any person holding 30 per cent. or more of the total voting rights of the Company who appoints a person other than the Chair of the meeting as his/her proxy will need to ensure that both he/she and his/her proxy complies with their respective disclosure obligations under the UK Disclosure Guidance and Transparency Rules. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that they do not do so in relation to the same shares. Shareholders (and any proxy or representatives they appoint) agree, by attending the meeting, that they are expressly requesting that they are willing to receive any communications (including communications relating to the Company's securities) made at the meeting. Members who have general queries about the meeting should contact the Company's Registrars, Equiniti, on +44 (0)371 384 2714, if calling from outside the UK, please ensure the country code is used, or contact them via their website www.shareview.co.uk. Lines are open 8.30am to 5.30pm Monday to Friday (excluding public holidays in England and Wales), (no other methods of communication will be accepted. You may not use any electronic address provided either in this notice of meeting or any related documents (including the form of proxy) to communicate with the Company for any purpose other than those expressly stated. Note: 1. The following documents will be available for inspection at the registered office of the Company, Talisman House, Boardmans Way, Blackpool, England, FY4 5FY, during usual business hours on a weekday (except Saturdays, Sundays and Public Holidays) until the date of the meeting and at the place of the meeting for a period of 15 minutes up to and during the meeting; a) copies of the directors' letters of appointment; b) the Articles of Association of the Company; and c) the register of directors' interests in the shares of the Company. 2. As at 18 December 2023 (being the latest business day prior to the publication of this Notice), the Company's issued share capital consists of 338,803,907 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company are 338,803,907. 99 # Appendix - Scrip dividend scheme ## SUMMARY TERMS AND CONDITIONS ### General The Company operates, through Equiniti Limited, a scrip dividend scheme (the “DRIS”) whereby shareholders can elect to have relevant dividends reinvested in new Ordinary Shares. The Company seeks to renew its DRIS by virtue of Resolution 212 set out in the Notice of AGM. If Resolution 212 is passed, the DRIS will apply to any subsequent interim or final dividend of the Company in respect of which a scrip dividend alternative is offered and this shareholder authority will expire at the AGM to be held in 2024. When a future dividend is announced the Company will advise if the DRIS applies to that dividend, together with the relevant details for that dividend. The details (including the timetable, price etc.) for each relevant dividend to which the DRIS will apply along with the full terms and conditions of the DRIS, will be/are available on the Company’s website at https://www.hargreaveaimvcts.co.uk. Information regarding future scrip dividend alternatives will also be provided via a Regulatory Information Service. Shareholders can also contact Equiniti on their helpline at 0371 384 2714 (or from overseas on +44 121 415 7047) if they have any questions about the operation of the DRIS in respect of any relevant dividend. Whether or not you should elect to receive new Ordinary Shares instead of cash in respect of any future relevant dividends may depend on your own personal tax circumstances. Please note, the tax treatment may change during the period for which the Scrip Dividend Scheme is available. For the avoidance of doubt, if you currently participate in the Company’s DRIS and do not wish to cancel your standing mandate, there is no need to complete a new Mandate Form as your existing mandate will stand. For general enquiries about the DRIS please contact Equiniti on 0371 384 2714 (or from overseas on +44 121 415 7047) or contact them via their website www.shareview.co.uk. Lines are open from 8:30 a.m. to 5:30 p.m. Monday to Friday (except UK public holidays). Calls to the helpline from outside the UK will be charged at applicable international rates. Calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the DRIS nor give any personal financial, legal or tax advice. ### Summary terms and conditions of the DRIS For the avoidance of doubt, unless the context otherwise requires, all defined terms used in this Appendix have the same meanings as set out in the ‘DRIS Terms and Conditions’ available on the Company’s website at https://www.hargreaveaimvcts.co.uk. #### 1. Participation in the DRIS a. Applicants may join the DRIS by giving notice in writing to the DRIS Manager. The Company, acting through the DRIS Manager, shall have absolute discretion to accept or reject applications to participate in the DRIS. An Applicant shall become a member of the DRIS upon acceptance of his or her application by the DRIS Manager on the Company’s behalf. The DRIS Manager will provide written notification if an application is rejected. Only Shareholders or their applicable Nominee Shareholder may join the DRIS. b. In order to participate in the DRIS in relation to a certain Investment Date an Applicant must have notified the DRIS Manager of their intention to participate in the DRIS at least 10 Business Days prior to the relevant Investment Day. c. The Company shall not be obliged to accept any application or issue Ordinary Shares hereunder if the Directors so decide in their absolute discretion. The Company may do or refrain from doing anything which, in the reasonable opinion of the Directors, is necessary to comply with the law of any jurisdiction or any rules, regulations or requirement of any regulatory authority or other body which is binding upon the Company or the DRIS Manager. d. The Company and the DRIS Manager shall be entitled, at their absolute discretion at any time and from time to time, to suspend the operation of the DRIS and/or to terminate the DRIS without notice to the Applicants and/or to resolve to pay dividends to Applicants partly by way of cash and partly by way of new Ordinary Shares and/or to refuse to invest dividends due on Ordinary Shares held by a Nominee Shareholder where the DRIS Manager is unable to obtain confirmation of the identity and shareholdings of the relevant Beneficial Shareholder. In the event of termination, the Company shall, subject to the terms and conditions, pay to each Applicant all of the monies held by the Company on his or her behalf under the DRIS. 100 e. Applicants who are not Shareholders may join the DRIS in respect of the number of Ordinary Shares of the Company specied as Nominee Shareholdings and notied to the DRIS Manager by the Applicant and the Shareholder in whose name the Ordinary Shares are held. f. The number of Ordinary Shares held by any such Applicant which are mandated to the DRIS shall be altered immediately following any change to the number of Ordinary Shares in respect of which such Shareholder is the registered holder as entered onto the share register of the Company from time to time. g. Applicants who hold their Ordinary Shares through a Nominee may join the DRIS in respect of the number of Ordinary Shares of the Company specied as Nominee Shareholdings and notied to the DRIS Manager by the Applicant and the Shareholder in whose name the Ordinary Shares are held. 2. Issue of Ordinary Shares under the DRIS a. On an Investment Day, dividends paid, or to be paid, on Ordinary Shares held by, or on behalf of, Applicants who have elected to participate in the DRIS in relation to those Ordinary Shares shall be transferred by the Company to the DRIS. b. On or as soon as practicable after an Investment Day, the funds held within the DRIS on behalf of an Applicant shall be applied on behalf of that Applicant in the subscription for the maximum number of whole new Ordinary Shares as can be acquired with those funds. c. The number of new Ordinary Shares to be allotted to an Applicant shall be calculated by dividing the funds held within the DRIS on behalf of the Applicant by the greatest of: I. the latest published net asset value per Ordinary Share (net of all unpaid dividends declared on or before an Investment Day) ; II. the nominal value per Ordinary Share; and III. the mid-market price per Ordinary Share as quoted on the London Stock Exchange, each at the close of business on the tenth Business Day preceding the date of issue of such Ordinary Shares. Fractions of new Ordinary Shares will not be allotted to Applicants and their entitlement will be rounded down to the nearest whole number of new Ordinary Shares. d. Any balance of cash remaining within the DRIS for the account of an Applicant after an issue of Ordinary Shares is made shall be held by the Company on behalf of the relevant Applicant and added to the cash available in respect of that Applicant for the subscription of Ordinary Shares on the next Investment Day. No interest shall accrue or be payable in favour of any Applicant on any such cash balances carried forward. All cash balances held by the Company will be held as banker and not trustee and as a result will not be held in accordance with any client money rules made by the Financial Conduct Authority from time to time. e. The new Ordinary Shares will rank equally with all existing Ordinary Shares. f. The issue of Ordinary Shares under the DRIS shall be conditional on the following: i. the Company having the requisite Shareholder authorities to allot Ordinary Shares under the DRIS; and ii. the Company having not issued Ordinary Shares representing more than 10per cent. of its issued share capital under the DRIS in the 12months immediately preceding the Investment Date, and if this limit is reached in relation to Ordinary Shares to be issued on an Investment Date, the entitlements of each Applicant in relation to that Investment Date will be scaled back on a pro-rata basis. g. The Company shall immediately after the issue of Ordinary Shares under the DRIS take all necessary steps to ensure that those Ordinary Shares shall be admitted to the Ocial List and to trading on the premium segment of the main market of the London Stock Exchange, provided that at the time of such issue the existing Ordinary Shares in issue are so admitted to the Ocial List and to trading on the premium segment of the main market of the London Stock Exchange. h. The DRIS Manager shall as soon as practicable after the issue of Ordinary Shares take all necessary steps to ensure that the Applicants (or, where an Applicant is not a Shareholder, the Shareholder on whose behalf the Ordinary Shares mandated to the DRIS are held) are entered onto the share register of the Company as the registered holders of the Ordinary Shares issued to them in accordance with the DRIS, and that share certicates (unless such Ordinary Shares are to be uncerticated in which case the new Ordinary Shares will be credited to the Applicant’s CREST account) in respect of such Ordinary Shares are issued and delivered to Applicants at their own risk ### 101 i. Applicants (or such other person as aforesaid) will receive with their share certicates (if any) a statement detailing: i. the total number of Ordinary Shares held at the Investment Day in respect of which a valid election to participate in the DRIS was made; ii. the amount of the dividend available for investment and participation in the DRIS; iii. the price at which each Ordinary Share was issued under the DRIS; iv. the number of Ordinary Shares issued and the date of issue; and the amount of cash to be carried forward for investment on the next Investment Day. 3. Terminating and amending participation in the DRIS a. An Applicant may at any time by completing a Mandate Form and sending it to the DRIS Manager, terminate his or her participation in the DRIS and withdraw any monies held by the Company on his or her behalf in relation thereto. b. If an Applicant who is a Shareholder shall at any time cease to hold Ordinary Shares, he or she shall be deemed to have submitted a Mandate Form under paragraph(a) above in respect of his or her participation in the DRIS. Whenever a Nominee Shareholder sells Ordinary Shares on behalf of the Benecial Shareholder, the Nominee Shareholder agrees to notify the DRIS Manager of the full details of the sale as soon as practicable. Neither the Company nor the DRIS Manager shall be responsible for any loss or damage as a result directly or indirectly of a failure by a Nominee Shareholder to comply with such obligation. If a Shareholder in whose name Ordinary Shares are held on behalf of an Applicant shall at any time cease to hold any Ordinary Shares on behalf of that Applicant, he or she shall be deemed to have submitted a Mandate Form under paragraph(a) above in respect of his or her participation in the DRIS. If notice of termination is served or deemed to have been served, all of the monies held by the Company on the Applicant’s behalf shall be delivered to the Applicant as soon as reasonably practicable at the address set out in the Mandate Form, subject to any deductions which the Company may be entitled or bound to make. Any Mandate Form submitted or deemed to have been submitted as set out above shall not be eective in respect of the next forthcoming Investment Day unless it is received by the DRIS Manager at least 10 Business Days prior to such Investment Day. c. Cash balances of less than £1 held on behalf of Applicants who have withdrawn from, or otherwise cease to participate in, the DRIS will not be repaid, but will be donated to a recognised registered charity at the discretion of the Company. 4. Notices All Mandate Forms and any other notices and instructions to be given to the DRIS Manager shall be in writing and delivered or posted to Equiniti Limited, Aspect House, Spencer Road, LancingBN996DA. ### 102 by london@blackandcallow.com www.blackandcallow.com Produced 020 3794 1720 Hargreave Hale AIM VCT plc (Incorporated in England and Wales under the companies act 1985 with registered number 05206425) ® Printed on FSC certified paper. The print factory works to the EMAS standard and its Environmental Management System is certified to ISO 14001. This publication has been manufactured using 100% offshore wind electricity sourced from UK wind. 100% of the inks used are vegetable oil based, 95% of press chemicals are recycled for further use and, on average 99% of any waste associated with this production will be recycled and the remaining 1% used to generate energy. ® This document is printed on Revive 100 Silk paper containing 100% recycled fibre. 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