Annual report & financial statements
31 December 2024
Herald Investment
Trust plc
2024
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Herald Investment Trust’s
objective is to achieve
capitalappreciation through
investments in smaller
quotedcompanies in the
areas oftechnology and
communications.
Investments may be made across the
world. The business activities of investee
companies will include technology and
communications, and the supply of
equipment and services to these
companies.
Introductory Highlights
1 Highlights
2 Company Summary
3 Year’s Summary
Investment Report
6 Company Overview
7 Geographical Analysis
8 Chairman’s Statement
10 Investment Manager’s Report
16 Classification of Investments
17 Top Twenty Equity Holdings
21 Detailed List of Investments
29 Long-Term Performance
Governance
34 Strategic Report
43 Your Board of Directors
44 Corporate Governance Report
48 Audit Committee Report
50 Directors’ Report
52 Directors’ Remuneration Report
55 Statement of Directors’ Responsibilities
56 Independent Auditor’s Report
Financial Statements
64
Statement of Comprehensive Income
65 Statement of Financial Position
66 Statement of Changes in Equity
67 Statement of Cash Flows
68 Notes to the Financial Statements
General
80 Further Shareholder Information
82 Alternative Performance Measures
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01
Herald Investment Trust plc
Annual report & financial statements 2024
INTRODUCTORY HIGHLIGHTS
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2024202220202018201620142012201020082006200420022000199819961994
42.8
22.7
16.1
10.9
7.9
–14.7
–10.5
–8.1
–3.8
–3.8
HIGHLIGHTS
NAV AT 31 DECEMBER 2023
£1,245.8m
NAV AT 31 DECEMBER 2024
£1,252.6m
TOTAL RETURN
IN 2024
£134.3m –£127.5m
+ =
SHARE BUYBACKS
IN 2024
TOTAL RETURN SINCE INCEPTION
(FIGURES HAVE BEEN REBASED TO 100 AT 16 FEBRUARY 1994)
Source: LSEG Data & Analytics.
NET ASSET VALUE (NAV)
A
PER SHARE 31 DECEMBER 2024
£24.88
CHANGE IN NAV
A
PER SHARE IN 2024
+12.1%
Super Micro Computer
Fully diluted NAV
Share price
Deutsche Numis Smaller Companies
plus AIM (ex. investment companies)
Index
Russell 2000® Technology Index
(small cap) (in sterling terms)
YouGov
TOP 5 LOSERS TOP 5 WINNERS
TOP FIVE WINNERS AND LOSERS 2024
TOTAL GAIN/LOSS IN 2024 IN STERLING TERMS (MILLIONS)
Next 15
Nordic Semiconductor
Oxford Metrics
Bango
Cohort
Pegasystems
Trustpilot
Celestica
NAV PER SHARE TOTAL RETURN
SINCE INCEPTION
2,611.1%
SHARE PRICE
31 DECEMBER 2024
£24.30
CHANGE IN
SHARE PRICE
A
IN 2024
+26.4%
SHARE PRICE TOTAL RETURN
SINCE INCEPTION
2,800.7%
Share Price Total Return based on 90.9p, the 1994 CGT base subscription price for shareholders adjusting for warrants, which were issued on a 1 for 5 basis.
A Alternative Performance Measures – see pages 82 and 83.
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INTRODUCTORY HIGHLIGHTS
02
Herald Investment Trust plc
Annual report & financial statements 2024
COMPANY SUMMARY
Company data at 31 December 2024
INVESTMENT OBJECTIVE
The objective of Herald Investment Trust plc (“Herald” or the “Company”) is to achieve
AND POLICY
capital appreciation through investments in smaller quoted companies in the areas of
technology and communications. Investments may be made across the world. The
business activities of investee companies will include technology and communications,
and the supply of equipment and services to these companies. The Company’s investment
policy is contained within the Strategic Report on page 34.
COMPARATIVE INDICES
The portfolio comparative indices are the Deutsche Numis Smaller Companies plus AIM
(ex.investment companies) Index in the UK and the Russell 2000® Technology Index
(small cap) (in sterling terms) in the US. Though we consider these indices to provide
reasonable bases for measuring the Company’s performance, the portfolio is not
modelled on them and outcomes may diverge widely.
MANAGEMENT DETAILS
Herald Investment Management Limited (“HIML” or the “Manager”) is the appointed
investment manager to the Company. The management contract can be terminated with
12months’ notice. Administration of the Company and its investments is delegated to
TheBank of New York Mellon (International) Limited and company secretarial duties to
NSM Funds (UK) Limited which took on the role on 1 October 2024 from Apex Listed
Companies Services (UK) Limited.
CAPITAL STRUCTURE
The Company’s share capital consisted at 31 December 2024 of 50,340,861 ordinary
shares of 25p each which are issued and fully paid. The Company has been granted
authority to buy back a limited number of its own ordinary shares for cancellation. During
the year, 5,793,809 ordinary shares were bought back and cancelled. As further described
in the circular published by the Company on or around the date of this document (the
“AGM Circular”), which contains the notice of AGM, the directors are seeking to renew this
authority at the forthcoming annual general meeting. In addition, the board will be seeking
a new authority to allot, or sell from treasury, a limited number of shares for cash on a non
pre-emptive basis.
MANAGEMENT FEE
HIML’s annual remuneration is 1.0% of the Company’s net asset value (excluding current
year revenue) based on middle market prices on the first £1.25bn and 0.8% thereafter,
calculated on a monthly basis, payable in arrears.
CONTINUATION VOTE
At the AGM of the Company held in April 2022, shareholders voted in favour of the
Company continuing to operate as an investment trust. The next continuation vote will be
put to shareholders at the forthcoming 2025 AGM and every third year thereafter. For the
reasons set out in the AGM Circular and this document, shareholders are strongly
encouraged to vote IN FAVOUR of continuation of the Company.
AIC
The Company is a member of the Association of Investment Companies.
LEGAL ENTITY IDENTIFIER (“LEI”)
An LEI is a 20-digit code which allows entities involved in financial transactions to be
identified. This is a global transparency measure endorsed by the G20. The Company’s
LEIis: 213800U7G1ROCTJYRR70
ALTERNATIVE PERFORMANCE
The alternative performance measures used in the annual report & financial statements
MEASURES
are described on pages 82 and 83.
None of the views expressed in this document should be construed as advice to buy or sell a particular investment.
Investment trusts are publicly traded collective investment funds. The Company is required to comply with the UK Listing Rules of the Financial Conduct
Authority (“FCA”).
SHAREHOLDERS’ FUNDS
£1,253m
MARKET CAPITALISATION
£1,223m
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03
Annual report & financial statements 2024Herald Investment Trust plc
50
75
100
125
150
175
202420232022202120202019
Fully diluted NAV
Share price
Deutsche Numis Smaller Companies
plus AIM (ex. investment companies)
Index
Russell 2000® Technology Index
(small cap) (in sterling terms)
YEAR’S SUMMARY
5 YEAR TOTAL RETURN OF NAV, SHARE PRICE AND COMPARATIVE INDICES
(FIGURES HAVE BEEN REBASED TO 100 AT 31 DECEMBER 2019)
Source: LSEG Data & Analytics.
At 31 December 2024 2023 % change
Total net assets £1,252.6m £1,245.8m
Shareholders’ funds £1,252.6m £1,245.8m
Net asset value per ordinary share
A
2,488.2p 2,219.2p +12.1
Share price
A
2,430.0p 1,922.0p +26.4
Deutsche Numis Smaller Companies plus AIM (ex. investment companies) Index (capital only) 5,498.8 5,404.7 +1.7
Russell 2000® Technology Index (small cap) (in sterling terms) (capital only)
B
5,786.6 4,605.3 +25.7
Dividend per ordinary share – –
Profit per ordinary share (revenue) 4.96p 6.79p
Ongoing charges
A
1.08% 1.07%
Discount to NAV
A
2.3% 13.4%
Total return for the year ended 31 December 2024 2023
Net asset value
A
+12.1% +5.7%
Share price
A
+26.4% +7.9%
Deutsche Numis Smaller Companies plus AIM (ex. investment companies) Index +5.0% +3.2%
Russell 2000® Technology Index (small cap) (in sterling terms)
B
+25.9% +21.0%
At 31 December 2024 2023
Profit per ordinary share
Revenue 4.96p 6.79p
Capital 244.77p 74.35p
Total 249.73p 81.14p
Year to 31 December 2024 2024 2023 2023
Year’s high and low High Low High Low
Share price 2,500.0p 1,870.0p 1,950.0p 1,596.0p
Net asset value per ordinary share
A
2,550.8p 2,161.0p 2,283.5p 1,911.4p
Discount/(Premium)
A
13.8% (0.3%) 17.3% 11.4%
A Alternative Performance Measure – see pages 82 and 83.
B Investments and indices valued at USD/GBP exchange rate of 1.252 at 31 December 2024 (1.275 at 31 December 2023).
® Russell Investment Group.
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INVESTMENT REPORT
04
Annual report & financial statements 2024Herald Investment Trust plc
Investment
Report
6 Company Overview
7 Geographical Analysis
8 Chairman’s Statement
10 Investment Manager’s Report
16 Classification of Investments
17 Top Twenty Equity Holdings
21 Detailed List of Investments
29 Long-Term Performance
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Herald Investment Trust plc
Annual report & financial statements 2024
Technology innovation and adoption
continues to disrupt the global
economy at an ever increasing pace.
Katie Potts, Investment Manager
HeraldIT_AR_pp01-31.qxp 19/02/2025 12:00 Page 05
WHAT WE DO
HISTORY
OF THE COMPANY
INVESTMENT REPORT
06
Herald Investment Trust plc
Annual report & financial statements 2024
COMPANY OVERVIEW
Achieving
capital growth
Herald invests, generally on a long-term
basis, using fundamental analysis. The
technology and communications sectors
globally comprises over 5,000 quoted
companies, and many more unquoted.
The Manager focuses on investment
within the technology and
communications sector.
Focus on the sector enables
asignificant degree of cross-
referencing across competitors,
customers and suppliers globally.
Using this mosaic of information and
industry knowledge combined with
strong financial analysis, we
endeavour to add value. The evolving
nature of technology means there is
awide divergence of performance
between winners and losers, but the
winners can be spectacular.
WHAT WE DO
Analysis entails a prolific number of
meetings with companies, either at
Herald’s office, virtually, through site
visits or at conferences globally, as well
as broker-hosted meetings. In addition,
Herald relies on independent industry
research and published company filings
statements, presentations, websites
and broker research.
The Company has consistently invested
in early stage companies, often
providing primary development capital,
then holding investments for long
periods, regularly providing further
capital when needed.
Many of these holdings have a high
stock specific risk and the Company
aims to offer investors a low risk way to
gain exposure to these exciting
opportunities through broad
diversification in the number of
holdings and the maturity of the
businesses.
HISTORY OF THE COMPANY
The Company was established in 1994
raising £65m to invest in UK and
European TMT (telecommunications,
multimedia and technology)
companies. In 1996 a further £30m was
raised to globalise the fund with the
recognition that TMT is a global sector
and cross-referencing across
geographies is a prerequisite for
investing within the sector.
Subsequently, the market has evolved
so that the Company universe is today
more commonly referred to as
technology and communications.
Since 1996, no further capital has been
raised, but share repurchases totalling
£471m have been made.
Over the history of the Company, the
NAV per share, on a total return basis,
has compounded at an annualised rate
of 11.3%.
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Herald Investment Trust plc
Annual report & financial statements 2024
GEOGRAPHICAL SPREAD OF EQUITY INVESTMENTS AT 31 DECEMBER 2024
†
0 20 40 60 80 100 120
UK
North America
EMEA
Asia Pacific
£8.4m
£115.4m
£15.8m
£4.8m
GEOGRAPHICAL ANALYSIS
*Costs including those of borrowing are accounted for at Company level.
† As a percentage of total assets.
CONTRIBUTION TO EQUITY INVESTMENT APPRECIATION YEAR ENDED 31 DECEMBER 2024
(STERLING, MILLIONS)
NORTH
AMERICA
34.1%
2023: 27.4%
UK
35.5%
2023: 40.5%
EMEA
11.7%
2023: 12.1%
ASIA
12.0%
2023: 11.5%
GEOGRAPHICAL RETURNS
TIME WEIGHTED RETURN BY GEOGRAPHY YEAR ENDED 31 DECEMBER 2024*
(STERLING, PERCENT)
0% 5% 10% 15% 20% 25% 30% 35% 40%
UK
North America
EMEA
Asia Pacific
6.8%
35.2%
2.6%
3.6%
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INVESTMENT REPORT
08
Herald Investment Trust plc
Annual report & financial statements 2024
Another year of strong performance
in spite of challenges facing smaller
companies markets.
2024, the Company’s thirtieth year, proved to be an eventful one for
it, finishing with the prospect of a vote for the Company’s survival in
its current form.
PERFORMANCE
The Company’s investment performance in 2024 was strong, with
the Net Asset Value (“NAV”) per share rising by 12.1% in the year. The
Manager’s Report goes into more detail, but in summary the North
American portfolio, with a return of 36.3%, outperformed the Russell
2000
®
Technology Index (25.9%). Two stocks in particular, Super
Micro Computer and Celestica, generated much of the performance.
The UK portfolio, with a return in the year of 3.3%, modestly
underperformed the Deutsche Numis Smaller Companies plus AIM
(ex. investment companies) Index of 5.0% (reflecting the UK
portfolio’s heavy exposure to AIM companies). Partly as a result, the
Company’s North American portfolio by year-end was for the first
time in the Company’s history of a similar size to its UK one, each
accounting for approximately 35% of the Company. A further 6.6%
comprised cash and government bonds, and the remaining 23.4% or
so represented the investments in EMEA and in Asia, in roughly equal
proportions.
The strong performance in North America was driven mainly by the
holdings with exposure to the boom in AI related investment. The UK,
however, was held back by the very weak performance of the AIM
market, stocks on which account for the majority of the UK portfolio.
The weakness in AIM was driven in part by the anticipation, following
the change of government at the General Election, that Inheritance
Tax (“IHT”) relief for AIM stocks would be withdrawn. In the event IHT
relief was halved in the Chancellor’s UK Budget in October. More
generally there has continued to be a much discussed flight of capital
from the smaller end of the UK Stock Market, which is troubling for
the Government’s growth agenda. This is in spite of the fact, as
mentioned in the Manager’s Report, that trading results have typically
been good.
A continuing feature of 2024 was the relative outperformance of
larger quoted technology stocks compared to the smaller ones on
which the Company has always focused. For most of the Company’s
history, small has outperformed large, but in recent years the
opposite has been true. The board and Manager continue to believe
that this will not last indefinitely and there is very much a place for a
top performing fund focused exclusively on the smaller companies in
the technology and communications space. In part, because there is
a lack of research available to market participants, it is possible for an
active manager who makes their own assessment of opportunities to
achieve superior and differentiated performance.
The Company’s share price in the year was extremely strong, rising
26.4%. This reflected the share purchases by Saba Capital
Management, L.P. (“Saba”) discussed below, which squeezed up the
share price until Saba reached 29.1%, close to the maximum holding
allowed without making an offer for the Company, after which not
surprisingly the share price fell back somewhat. Any shareholder who
invested at the Company’s inception in 1994 would have made 27x
NAV total return
1
by 31 December 2024. Even over the 15years
following the end of the Global Financial Crisis in 2009, the return
has been close to 6x share price total return.
LIQUIDITY AND CAPITAL ALLOCATION
2024 saw a continuation of the trend for takeovers of the Company’s
holdings in North America, the UK and Europe, with precious few
IPOsor share placings to replace the companies leaving the markets.
As a result, the Company has repeatedly found itself with involuntary
cash inflows. The Manager as always had a choice, guided by the
board, over how to deploy that liquidity.
Some years it may be that valuations in the market are compelling and
the surplus liquidity will best be recycled into investments that bring
the opportunity of high returns over the medium term. Alternatively,
the Company can buy back its own shares in the market. In practice
acombination of the two, in varying proportions, is likely. In 2024 the
main use of liquidity was to buy back shares amounting to 10.3% of
the Company’s opening share capital. This was the second year
running where a significant percentage of the Company’s shares was
bought back, always at a discount which enhances remaining
shareholders’ NAV. The Company has bought back shares every year
0
500
1,000
1,500
2,000
2,500
3,000
2024202320222021202020192018201720162015
NET ASSET VALUE PER SHARE
(PENCE)
881.8
1,083.2
1,374.9
1,307.9
1,668.1
2,285.3
2,719.3
2,099.1
2,488.2
2,219.2
The board believes smaller
companies in the technology and
communications sectors continue
toprovide attractive long-term
investment opportunities.
ANDREW JOY, CHAIRMAN
CHAIRMAN’S STATEMENT
1
Excluding warrant returns.
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Herald Investment Trust plc
Annual report & financial statements 2024
since 2007. As well as enhancing the shares’ liquidity, buying back
shares has the added benefit that the Company does not outgrow its
mandate. Since the Company was launched in 1994, it has bought
back shares totalling some £471m, which compares extremely
favourably with the Company’s total capital raised of £95m.
CORPORATE ACTIVITY
The defining development in the year was the continuation of Saba’s
purchases of the Company’s shares, and the ensuing chain of events
which straddled the year end. Saba started buying materially in 2023,
slowed in the first half of 2024 only to accelerate in the second half
when Saba clearly made a decision to try to seek management
control of the Company. This culminated on 18 December 2024 with
Saba issuing a requisition for a General Meeting of the Company at
which it proposed to remove all the current independent directors
and replace them with its own appointees, with a view to also
terminating the management contract of Herald Investment
Management Limited and replacing in due course with Saba. The
General Meeting was held on 22 January 2025 at which shareholders
voted overwhelmingly to reject the proposals, with 99.85% of the
shares which voted (other than shares believed to have been voted
by Saba) voting against.
As the board highlighted in its statement after the vote, the outcome
was clear, complete and incontrovertible. Regrettably the whole
process has cost the Company a material amount of money in hiring
advisers and arranging the meeting, and we are unable to charge
Saba for this uninvited distraction. In addition, it has been very
unsettling for the Company’s Manager, which, as pointed out in the
Manager’s Report, needs a stable and supportive shareholder base to
make the sort of far-sighted investment decisions which have in the
past led to its stellar long-term performance.
The board and the Manager were delighted by, and extremely
grateful for, the overwhelming support of shareholders. The turnout
at the vote was remarkable by historical standards, showing the
strength of feeling among shareholders, including those who hold
their shares through “platforms” who have historically tended not to
vote. Commentators have wondered whether this may mark a
turning point for retail shareholder turnout, but at the least the
debate has started as to how to make it easier for retail shareholders
to know when there is a vote, and then how to participate in the vote.
The board recognises that although nominally voting for the board,
the almost unanimous support in Herald’s case was for its strategy
and the way it has been executed. The board and the Manager are
also grateful to the many shareholders who attended the General
Meeting in person, some of whom asked questions, and we hope
that this level of turnout will continue for future meetings – the next
being the Annual General Meeting (see below).
It should not be overlooked that what Saba has been trying to do is
to take control of companies from a position of owning less than
30% of the shares, hoping that it can achieve a simple majority at
ageneral meeting to sack an independent board and take control,
relying as much on low turnout among shareholders as on any
support for its objectives.
Saba continues to hold a material percentage of your Company’s
shar
es and ther
e is uncertainty as to what it proposes to do, now that
it has found that it has to all intents and purposes no support
whatsoever from other shareholders.
OUTLOOK
The board continues to believe that an active manager with the right
skills and experience can achieve excellent returns in this sector. To
keep pace with the evolution of what constitutes the smaller quoted
companies market globally, the board has agreed with the Manager
that investments in new positions can be made in companies
capitalised at up to $5bn, compared with up to $3bn before.
Worldwide there are over 5,000 companies with a market cap below
$5bn in the sectors addressed by the Company. Many of the holdings
owned by the Company are in smaller and relatively illiquid
companies and the board believes that a closed end investment
company, known in the UK as an investment trust, is an excellent way
to invest for the long term in such a portfolio. The Manager can
afford to take the liquidity risk in the portfolio whereas if it were an
open-ended fund that would not be the case.
Since the year end, there has been something of a convulsion in the
market values of the larger technology companies, triggered by the
announcement of the low-cost Chinese AI large language model,
DeepSeek. Some of this has been felt at the smaller company end of
the sector as well. The coming year will no doubt throw up its usual
mix of opportunities and challenges, not least with the second term
of Donald Trump as US President leading to increased volatility and
uncertainty.
THE BOARD
It is with sadness that the board will soon lose the input of James
Will, who is stepping down after the AGM as he will have served for
ten years. His contribution cannot be overstated, not least during the
recent corporate activity. His role as Senior Independent Director will
be taken over by Henrietta Marsh, who has been on the board since
2019. The board wishes James the very best for the future.
AGM AND CONTINUATION VOTE
The Annual General Meeting (“AGM”) to be held on 24 March 2025,
towhich all shareholders are invited, provides shareholders with an
opportunity to hear the Manager speak first hand and to ask
questions of the board and the Manager.
The Company has also published a circular to shareholders (the
“AGM Circular”), which contains the notice of AGM and further details
of the AGM.
At this meeting, there will be the Company’s next triennial
continuation vote. The board urges shareholders to again vote to
ensure your Company can continue.
Your Company is the only investment trust specialising in the global
small and mid-capital sections of the technology and
communication sectors and its offering is both successful and unique
in the UK listed investment company sector. Its distinctive investment
focus has delivered a 27x NAV total return
1
to shareholders since its
inception in February 1994 and enables shareholders to invest in a
diverse portfolio of companies, with high stock specific risk and low
liquidity, which would otherwise be difficult to access.
The board believes that the Company’s mandate will continue to
provide attractive long-term investment opportunities. The directors
believe that the prospects for investment in the technology and
communications sectors remain positive and that we have a proven
Manager in the form of Herald Investment Management Limited.
Your board strongly recommends that shareholders vote in favour of
the resolution to continue as an investment trust, and the other
resolutions to be proposed at the AGM, as the directors intend to do
in relation to their own shareholdings.
Please see the section of the AGM Circular titled “Action to be taken”
for further information on the action shareholders are recommended
to take in respect of the AGM and details of how you can instruct
aproxy to vote on your behalf at the AGM.
ANDREW JOY
CHAIRMAN
19 February 2025
1
Excluding warrant returns.
0%
2%
4%
6%
8%
10%
12%
2024202320222021202020192018201720162015
SHARE BUYBACKS
(PERCENTAGE OF SHARES OUTSTANDING)
1.6%
4.0%
4.0%
3.8%
2.0%
2.3% 2.3%
1.6%
9.7%
10.3%
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Herald Investment Trust plc
Annual report & financial statements 2024
0
20
40
60
80
2020 2021 2022 2023 2024
PLACINGS AND IPOs
(STERLING, MILLIONS)
0
100
200
300
400
500
600
2020 2021 2022 2023 2024
AIM HOLDINGS
(STERLING, MILLIONS)
0
20
40
60
80
100
120
2020 2021 2022 2023 2024
TAKEOVERS*
(STERLING, MILLIONS)
*Announced basis.
The Chairman has described how 2024 proved to be a
challenging year reflecting instability in the Company’s share
register. Fortunately, this was not the result of poor
investment performance. The net asset value per share has
appreciated by 12.1%. The highlight has been the remarkable
performance of two North American companies which have
seen strong growth in their data centre computers enabling
artificial intelligence. In addition, nine takeovers announced in
2023 have completed yielding £21.1m in cash. A further eight
have been announced and completed delivering an additional
£48.8m in cash and more recently another nine have been
announced with a potential value of a further £50.0m. This
level of takeovers is consistent with previous years. However,
new issues have been few and far between in all geographies,
reflecting continued withdrawal of assets from active
managers in favour of fixed interest investments and index
trackers. There is a large pipeline of companies funded by
venture capital and private equity which would like to float if
public markets were receptive and valuations appropriate.
With a handful of exceptions trading performance across the
portfolio has generally been good.
Regional Analysis
Valuation at
31 December
2024 Return* % of
£m % `Net Assets
UK 444.8 3.3% 35.5%
North America 427.3 36.3% 34.1%
EMEA 146.3 5.8% 11.7%
Asia 150.2 3.3% 12.0%
Total equities 1,168.6 93.3%
Cash and liquid assets 84.0 6.7%
Total net assets 1,252.6 12.1% 100.0%
*IRR for year to 31 December 2024.
The supply chain for AI
has driven this year’s
out-performance.
INVESTMENT MANAGER’S REPORT
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Herald Investment Trust plc
Annual report & financial statements 2024
Over the last 5 years, £333m has been spent buying back
shares in the Company. 2024 marks the tenth successive year
when cash has been withdrawn from the UK portfolio,
reflecting high levels of takeovers and our cautious outlook
for UK smaller quoted companies despite the attractive
valuations. In North America, cash has also been withdrawn
reflecting significant profits in Super Micro Computer, partially
offset by further investments.
Net acquisitions
and disposals Total by Takeover
£m 2020 2021 2022 2023 2024 Region Proceeds
UK –24.9 –57.7 –43.3 –12.5 –67.6 –206.0 116.0
North America –29.5 –13.0 –30.7 –27.6 –28.0 –128.8 137.0
EMEA 19.1 10.7 –3.7 4.2 –11.2 19.1 54.0
Asia 23.0 27.4 –4.5 –19.1 3.4 30.2 35.0
Total –12.3 –32.6 –82.2 –55.0 –103.4 –285.5 342.0
The table below shows the weighted average forecast p/e of
the Company’s portfolio by region. It highlights a lower
forecast p/e in the UK, similar to the level a decade ago. All
other regions have to varying degrees rerated upwards.
Valuations are more comfortable in the UK reflecting an
illiquidity discount.
Regional Price to Earnings
Year-end P/E North
UK America EMEA Asia
2013 16.9 20.9 14.9 9.6
2014 15.8 19.2 13.4 12.3
2015 16.4 20.1 16.3 13.2
2016 15.9 20.7 17.5 13.1
2017 19.6 27.8 21.4 14.8
2018 15.9 24.0 17.7 16.3
2019 21.7 27.9 25.0 20.7
2020 26.2 45.0 34.9 25.0
2021 23.8 29.4 33.3 23.0
2022 16.7 17.9 24.1 16.9
2023 16.0 22.3 30.4 21.5
2024 16.6 23.3 29.2 20.5
Source: Bloomberg. Analyst earnings estimates, where available, are
aggregated using the Bloomberg weighted harmonic average calculation.
This excludes loss-making companies from the p/e calculation.
Aweighted harmonic average will normally be lower than a geometric or
arithmetic average.
The performance by market capitalisation at the year end and
by region is shown in the table below and shows a mixed
picture.
Market Market Market Market Market Market
Return by region cap cap cap cap cap cap
and market <$100m $100- $250m- $500m- $1bn- >$3bn
capitalisation (%)* 250m 500m 1bn 3bn
UK –19.4% 23.8% –13.8% 2.0% 31.3% 20.8%
North America 14.4% –16.1% 27.6% 30.0% –4.5% 74.3%
EMEA –21.9% –9.6% 23.1% 46.5% 13.9% –6.7%
Asia –14.6% –2.1% –13.3% 10.2% –6.2% 20.4%
All equities -17.6% 6.2% -1.6% 13.4% 11.6% 49.4%
* IRR for year to 31 December 2024.
Value of equity
investments in Market Market Market Market Market Market Total
market cap cap cap cap cap cap by
capitalisation <$100m $100- $250m- $500m- $1bn- >$3bn region
range (£m) 250m 500m 1bn 3bn
UK 97.8 75.2 74.6 87.8 85.6 23.8 444.8
North America 10.4 26.8 51.6 57.3 62.8 218.4 427.3
EMEA 15.4 21.5 21.7 16.4 45.0 26.3 146.3
Asia 14.0 18.3 18.2 26.9 28.7 44.1 150.2
Total equities 137.6 141.8 166.1 188.4 222.1 312.6 1,168.6
North America
The North American return of 36.3% compares well with the
return of the small-cap Russell 2000® Technology Index
(total return) of 25.9% in sterling. The dramatic performance
of Super Micro Computer continued in the first quarter.
Celestica and Fabrinet also performed strongly, driven by the
artificial intelligence supply chain boom. It should be noted
that the index had only returned 6.0% in the nine months to
0
10
20
30
40
50
AvePointDescartesPegasystemsCelesticaSuper Micro
Computer
TOP 5 WINNERS BY REGION – NORTH AMERICA
(IN STERLING £M)
REGIONAL ALLOCATION CHANGES
(STERLING, THOUSANDS)
Valuation at Net Valuation at
31 December acquisitions/ Appreciation/ 31 December
2023 (disposals) Amortisation (depreciation) 2024
Equities*
UK 503,934 (67,570) – 8,482 444,846
North America 341,571 (27,978) – 113,660 427,253
EMEA 150,349 (11,179) – 7,090 146,260
Asia Pacific 144,020 3,395 – 2,836 150,251
Total equities 1,139,874 (103,332) – 132,068 1,168,610
Government bonds 60,765 (534) 1,424 (238) 61,417
Total investments 1,200,639 (103,866) 1,424 131,830 1,230,027
Net liquid assets 45,118 (22,349) – (194) 22,575
Total net assets
+
1,245,757 (126,215) 1,424 131,636 1,252,602
* Equities includes convertibles and warrants.
+ The total assets figure comprises assets less current liabilities.
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INVESTMENT MANAGER’S REPORT CONTINUED
the end of September, so the majority of the return occurred
in the fourth quarter when there was a “Trump boom” in the
smaller companies market, and the returns on the Company’s
North American portfolio similarly broadened out.
Nevertheless, the weighted average return of small-cap
stocks in Bloomberg’s Technology and Communication
sectors is still negative for the year, and a far cry from that of
the Magnificent Seven stocks.
Thanks to the strong performance in this region, the North
American portfolio has now reached 34.1% of the Company’s
net assets and after further withdrawal of cash from the UK
portfolio is a similar proportion to the UK.
UK
The UK performance overall was a lacklustre return of 3.3%.
There was a marked divergence in returns between fully listed
holdings of 20.6% and the return of AIM stocks of –4.5%. The
Deutsche Numis Smaller Companies plus AIM (ex. investment
companies) Index returned 5.0%. However, in both cases
there are outliers that have impacted the Company
significantly. At the year end, the value of fully listed stocks
was £139.6m (22 holdings). Trustpilot (+£16.1m) is the largest
holding, and accounted for most of the return, followed by
long held Diploma and Bloomsbury Publishing.
The AIM portfolio is £288.5m (84 holdings), representing the
lowest proportion of the Company’s assets since 2005.
Regrettably, there are too few co-investors to adequately fund
companies, and an inadequate secondary market, so the
exposure has been gradually reduced through takeovers.
Through history, profits of c£349m have been achieved in AIM
stocks, and we regret AIM’s decline, because capital could be
usefully deployed. The performance of the Company’s AIM
portfolio for the year was marred by big declines in YouGov
(–£14.7m), Next Fifteen (–£10.5m) and Bango (–£8.1m). All
had trading issues, have contributed positively in the past and
in aggregate, and have returned £50.8m even after including
this year’s price falls. Fortunately, aggregate profits of £32.1m
have already been realised, reducing the adverse impact. This
has been mitigated by strong returns from Cohort (+£7.9m),
Corero Network Security (+£4.9m) and IQGeo (+£4.6m). The
latter was one of nine UK takeovers to complete this year.
Acquisition terms have also been agreed for Eckoh, Intelligent
Ultrasound and Windward but are yet to complete.
It is interesting to observe that the FTSE-AIM Index, the
FSTE-Small Companies Index, and the Deutsche Numis Smaller
Companies plus AIM (ex. investment companies) Index all had
similar returns until May. Thereafter, AIM steadily
underperformed. The one-day respite was the day of the Budget,
when AIM IHT relief was not abolished, but merely halved.
0
5
10
15
20
DiplomaIQGeoCorero Network
Securit
y
CohortTrustpilot
TOP 5 WINNERS BY REGION – UK
(IN STERLING £M)
It is particularly fulfilling to see Corero perform well, having
patiently provided primary capital over a number of years,
butthere are also a number of smaller holdings that have
contributed positively – Filtronic, Intercede, Celebrus
Technologies and System1 to name a few.
Like a record stuck in a groove, I repeat my annual message:
“There are promising small UK companies, but too few
co-investors.”
Europe, Middle East and Africa
The EMEA (Europe, Middle East and Africa) region currently only
comprises stocks in continental Europe, and accounts for 11.7%
of the Company’s assets. As in the UK, the European quoted
smaller company markets are challenged by a shortage of
capital. The positive return of 5.8% achieved in 2024 is thanks to
an extraordinarily high number of takeovers. EQS, Efecte,
Invision and Volue have all been acquired this year yielding
£21.6m in cash. In addition, Esker and Nexus have received
takeover bids which may yield a further £29m. As in the UK,
acquirers are generally private equity, and disappointingly
boards and management teams have generally rolled indicating
good long-term prospects. At this stage private equity still has
deeper pockets, and higher valuations than public markets,
certainly in the UK and Europe. This may prove temporary as
private equity returns have been flattered by leverage when
interest rates were low. Now that interest rates have normalised
profitable exits are more difficult to achieve, and the returns are
more subdued. I remain an evangelist for public markets
providing permanent capital, and they should in normal times
provide liquidity too. Currency has been a material headwind
this year to the £ Sterling reported return, with the Euro
depreciating by 4.5% and the Swedish Krona by 7.3% against it.
Asia
Asia now accounts for 12.0% of the Company’s assets and
returned 3.3% in 2024. Taiwanese investments account for
0
2
4
6
8
NordhealthSidetradeVolueRaySearch
Laboratories
Esker
TOP 5 WINNERS BY REGION – EMEA
(IN STERLING £M)
0
1
2
3
4
5
6
WiseTech
Global
E InkAnsaradaBizlinkCatapult
TOP 5 WINNERS BY REGION – ASIA
(IN STERLING £M)
HeraldIT_AR_pp01-31.qxp 19/02/2025 12:01 Page 12
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Herald Investment Trust plc
Annual report & financial statements 2024
athird of the Asian portfolio and delivered another
satisfactory return of 13.7%. Australia, with half of the
weighting of Taiwan, did even better, returning 44.8%, with
Catapult the standout performer. It collects and analyses data
on athletes’ performance. Unfortunately, these strong gains
were largely offset by negative returns in Japan (–5.2%) and
South Korea (–36.6%). There have also been major currency
headwinds with the Japanese Yen declining 8.7% versus
Sterling and the Korean Won declining 11.2%, but no major
stock specific challenges.
Sector Analysis
Valuation at Appreciation/ 31-Dec-24
31-Dec-24 depreciation % of equity 2024
£m £m investments % return*
Software &
Technology Services 493.1 69.3 42.2% 15.2%
Technology Hardware &
Semiconductors 330.2 63.5 28.3% 22.3%
Media 122.4 –8.9 10.5% –6.3%
Industrial Products 90.2 20.5 7.7% 29.0%
Industrial Services 33.3 4.4 2.8% 15.6%
Telecommunications 32.5 0.6 2.8% 1.7%
Other 66.9 –5.0 5.7% –7.0%
Total 1,168.6 144.4 100.0%
*IRR for year to 31 December 2024.
By value 70.5% of the Company’s investments are classified in
the Technology sector (Bloomberg), most of the remainder
being in Communications and Industrials. These Technology
investments are divided into two subsectors: Software and
Technology Services, and Technology Hardware and
Semiconductors.
Software and Technology Services
The Software sector was fashionable in the Covid era, and
Software-as-a-Service companies reached exotic valuations
in 2020-21. 2022-23 saw a sharp correction, and the return
of 15.2% in 2024 represents some recovery. In contrast the
Technology Services sector has had a challenging year, with
financial services and governments alike conspicuously
slowing the pace of investment. It seems their focus is on
saving money. Enterprise IT budgets have been moved
towards experimentation around AI initiatives.
31-Dec-23 31-Dec-24 2024
Software and Technology Services £m £m % return*
UK 191.4 168.3 10.5%
North America 139.8 188.3 20.0%
EMEA 68.3 85.3 25.4%
Asia 57.5 51.2 3.4%
Total 457.0 493.1 15.2%
*IRR to 31 December 2024.
US listed Pegasystems delivered the highest sterling return,
and the market value is now 14.7x the book cost. It had a
choppy period in 2022 when it was sued by Appian, and the
court found Pegasystems guilty with a $2bn fine. We know
management well having held the shares since 2003 and
have immense respect for the founder and CEO Alan Trefler,
so we maintained the holding. We have been rewarded with
an appeal which reversed the initial judgment, and the
company has continued to make progress, significantly
improving profitability. It is an early user of AI for corporate
workflows and customer engagement.
The second highest sterling return was from French listed
Esker, which has also been long held (since 2012 and
increased more recently) and its market value is 4.9x book
cost. It supplies software for purchase and invoice
management and is subject to a bid by private equity. The bid
price is a little disappointing, and disappointingly for us,
management will roll with the new owners. We prefer
takeovers when management sell as well, but it is another
example of a company that thinks private equity will be
abetter owner than public markets.
Third on the list, Swedish listed RaySearch Laboratories is
amore recent position with the first investment in 2020, and
additional purchases each year since. It provides radiotherapy
treatment planning software – RayStation – for cancer
treatment clinics. RaySearch has recently also launched two
new software products, an oncology information system –
RayCare – and an AI assisted oncology analytics platform –
RayIntelligence. Both have been developed organically with
key cancer centre clients across the world and revenues are
just starting for these new products while the costs are
already in the profit and loss and were covered by the
revenues and profits generated from RayStation.
Fourth on the list is Canadian listed Descartes, which was first
acquired in 2007. The market value is an astonishing 46.8x
book cost. Descartes exemplifies the investment process,
where we are prepared to take small high-risk positions in a
range of early-stage companies. When the successes rise
46.8x, they compensate for a minority of holdings which
disappoint. Descartes provide inter-enterprise software for
global supply chain management and they have been
acquisitive using internally generated cash to buy at sensible
prices.
Corero, IQGeo and AvePoint all delivered returns between
£4-5m. The worst return was Bango which declined by
£8.1m, having set market expectations too high in a fragile
AIM market. Oxford Metrics followed with a £3.8m decline,
asan order drought followed overordering when there were
Covid related supply chain issues.
Technology Hardware and Semiconductors
This is the sector that has benefited most from the artificial
intelligence supply chain boom, and the sector returns were
dominated by two stocks, Super Micro Computer and
Celestica, which together returned £65.5m out of a total
sector return of £63.5m.
Technology Hardware 31-Dec-23 31-Dec-24 2024
and Semiconductors £m £m % return*
UK 58.5 40.0 –12.3%
North America 164.7 178.5 64.7%
EMEA 60.6 50.1 –14.3%
Asia 53.0 61.6 4.6%
Total 336.8 330.2 22.3%
*IRR to 31 December 2024.
Super Micro Computer was the most profitable holding last
year, and momentum continued in the first quarter. More
recently it has been challenged by the resignation of the
company’s auditor, and thus a late filing, albeit the numbers
do not appear to need changing. The speed of growth was
unprecedented and I am sure the corporate functions were
stretched. Fortunately, we had sold the majority of the
holding, but we remain holders of a residual position.
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IfSuperMicro Computer has worked hand in glove with
Nvidia, Celestica has been a big supplier to Google Cloud.
Fabrinet was the next best contributor with a return of,
relatively speaking, a modest £4.3m reflecting strong
demand from Nvidia. Bizlink in Taiwan which sells high
performance cables also did well.
The disappointing stocks were Nordic Semiconductor
(–£3.8m) and IQE (–£3.1m). The latter has been long held.
Fortunately, £19.6m of profits have already been realised, but
there have been management issues and a tough mobile
phone market.
Communications
This sector comprises two subsectors – Media and
Telecommunications.
31-Dec-23 31-Dec-24 2024
Communications £m £m % return*
UK 132.6 111.3 –6.0%
North America 22.3 24.7 10.2%
EMEA 13.6 5.1 –0.1%
Asia 17.0 13.8 –17.3%
Total 185.5 154.9 -4.8%
*IRR to 31 December 2024.
This sector is dominated by UK holdings. Trustpilot has
performed very well and returned £16.1m and is the only
material new UK holding in recent years, with the first
purchases in March 2022. Unfortunately, this was more than
offset by declines in YouGov and Next 15. Both companies
had operational issues, both companies were heavily owned
by investors looking for inheritance tax relief, and had made
exceptional returns in the past. Previously realised profits of
£12.4m in YouGov, and £18.1m in Next Fifteen contained the
declines. Other returns were relatively immaterial.
Industrials
31-Dec-23 31-Dec-24 2024
Industrials £m £m % return*
UK 72.6 81.9 19.8%
North America 11.4 26.4 24.9%
EMEA 3.2 2.5 –0.5%
Asia 5.3 12.7 108.7%
Total 92.5 123.5 25.2%
*IRR to 31 December 2024.
The exposure to this sector is again dominated by UK
holdings. Cohort has appreciated 100% this year, with
stronger trading and a record order intake, while Leonardo
DRS is a US listed defence company which has done well
too. Catapult in Australia and Diploma in the UK have been
the other useful contributors.
Other
31-Dec-23 31-Dec-24 2024
Other £m £m % return*
UK 48.8 43.3 –5.7%
North America 3.4 9.4 28.2%
EMEA 4.7 3.3 –26.4%
Asia 11.2 10.9 –20.8%
Total 68.1 66.9 -7.0%
*IRR to 31 December 2024.
The holdings encompassed in the “Other” category include
holdings in healthcare, renewable energy and financial
services which have a technology aspect. There were no
standout performances, either positively or negatively.
Bestwas a US listed company Climb Global Solutions, which
was offset by Invinity Energy, which raised money through
aplacing before a set of disappointing results.
Sector Summary
I have endeavoured to demonstrate with this detail that
thetarget sector in which we invest has not produced a
homogenous performance. In fact in 2024, 29 holdings were
down more than 50%, while 18 holdings appreciated more
than 100%. It is also what makes active fund management
fulfilling, particularly when we have provided primary capital
to so many companies. Index trackers cannot provide
primary capital. Without primary capital, there will not be
growth companies.
Outlook
There are a number of factors that should drive continued
growth in the wider technology sector. Artificial intelligence
has been the talk of 2024. So far it has evidently benefited
companies directly in the supply chain, led by staggeringly
high levels of capital expenditure by the hyperscalers
(Microsoft Azure, AWS, etc), but it is inevitable that new
applications will emerge from innovative small companies.
Meanwhile the drive to net zero poses some unresolved
technical challenges, in particular the storage and
distribution of renewable power, plus a long tail of further
requirements. Meanwhile, military conflicts and a
geopolitically volatile world are leading to evident innovation
in defence and cyber security.
I am also optimistic that the flow of attractive new issues will
improve as the markets for companies continue to adjust to
the new norm for interest rates. The challenge for the
Company is to unite shareholders around its mandate in
order that we can continue to make long-term investments
in smaller quoted technology companies.
I should like to thank shareholders for voting at the recent
requisitioned general meeting and so decisively
demonstrating support. I should like to thank my team for
their hard work during the year and the extra effort the Saba
issue has caused. I would, of course, also like to thank the
board who have borne the brunt and especially the Chairman
whose efforts have been immense.
KATIE POTTS
19 February 2025
INVESTMENT MANAGER’S REPORT CONTINUED
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Annual report & financial statements 2024
SECTOR PERFORMANCE
(STERLING, MILLIONS)
Market value % of Total return Total return
equity portfolio equity portfolio equity portfolio equity portfolio
31 Dec 2024 31 Dec 2024 31 Dec 2024 31 Dec 2023
Software 426.2 36.5 71.6 –6.8
Technology Hardware 202.9 17.4 73.5 56.5
Semiconductors 127.3 10.9 –10.0 13.0
Technology Services 66.9 5.7 –2.3 –6.7
Internet Media & Services 58.5 5.0 13.6 8.8
Electrical Equipment 41.5 3.5 4.5 4.6
Advertising & Marketing 37.6 3.2 –22.5 –6.7
Telecommunications 32.5 2.8 0.6 3.7
Commercial Support Services 32.1 2.8 3.7 1.7
Industrial Intermediate Production 24.9 2.1 4.8 7.0
+
Other 118.2 10.1 6.9 –14.0
+
Total 1,168.6 100.0 144.4 61.1
Source: BICS (Bloomberg Industry Classification Standard).
+
2023 Comparative figures restated.
HeraldIT_AR_pp01-31.qxp 19/02/2025 12:01 Page 15
INVESTMENT REPORT
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Herald Investment Trust plc
Annual report & financial statements 2024
CLASSIFICATION OF INVESTMENTS
North Japan & Asia 2024 2023
UK EMEA America Pacific Total Total
CLASSIFICATION* % % % % % %
COMMUNICATIONS 9.0 0.4 1.9 1.1 12.4 14.9
Advertising & Marketing 2.8 0.1 0.2 – 3.1 5.4
Entertainment Content 0.5 – – – 0.5 0.8
Internet, Media & Services 3.1 0.1 0.6 0.9 4.7 4.3
Publishing & Broadcasting 1.5 – 0.1 – 1.6 1.9
Telecommunications 1.1 0.2 1.0 0.2 2.5 2.5
CONSUMER DISCRETIONARY – – 0.3 0.1 0.4 0.6
Automotive – – – – – –
E–Commerce Discretionary – – – 0.1 0.1 0.2
Leisure Facilities & Services – – – – – 0.1
Retail – Discretionary – – – – – 0.1
Wholesale – Discretionary – – 0.3 – 0.3 0.2
ENERGY 0.4 – 0.4 – 0.8 0.7
Oil & Gas Services & Equipment – – 0.2 – 0.2 0.2
Renewable Energy 0.4 – 0.2 – 0.6 0.5
FINANCIALS 0.7 – – 0.5 1.2 1.5
Asset Management 0.5 – – – 0.5 0.6
Equity Investment Instruments – – – – – 0.2
Speciality Finance 0.2 – – 0.5 0.7 0.7
HEALTH CARE 0.8 0.3 – 0.1 1.2 1.2
Biotechnology & Pharmaceutical 0.1 – – – 0.1 –
Health Care Facilities & Services 0.2 – – – 0.2 0.2
Medical Equipment & Devices 0.5 0.3 – 0.1 0.9 1.0
INDUSTRIALS 6.6 0.2 2.2 1.1 10.1 6.8
Aerospace & Defence 1.2 – 0.7 0.1 2.0 0.4
Commercial Support Services 1.6 – 1.0 – 2.6 1.9
Electrical Equipment 1.9 0.2 0.4 0.9 3.4 2.7
Industrial Intermediate Production 1.9 – – 0.1 2.0 1.8
Transportation & Logistics – – 0.1 – 0.1 –
MATERIALS 0.1 – – 0.2 0.3 0.3
Chemicals – – – 0.2 0.2 0.2
Forestry, Paper & Wood Products 0.1 – – – 0.1 0.1
TECHNOLOGY 16.6 10.8 29.3 8.9 65.6 64.2
IT Services 2.6 1.2 0.7 0.9 5.4 7.8
Semiconductors 0.6 3.0 4.2 2.3 10.1 10.4
Software 10.9 5.6 14.3 3.2 34.0 29.4
Technology Hardware 2.5 1.0 10.1 2.5 16.1 16.6
UTILITIES 1.3 – – – 1.3 1.3
Electricity & Gas Marketing & Trading 1.1 – – – 1.1 1.1
Gas & Water Utilities 0.2 – – – 0.2 0.2
TOTAL EQUITIES (including convertibles and warrants) 35.5 11.7 34.1 12.0 93.3 –
Total equities – 2023 (including convertibles and warrants) 40.5 12.1 27.4 11.5 – 91.5
BONDS – 1.2 2.5 1.2 4.9 4.9
NET LIQUID ASSETS** 1.0 0.3 0.2 0.3 1.8 3.6
TOTAL NET ASSETS 36.5 13.2 36.8 13.5 100.0 –
Total net assets – 2023 41.8 12.3 33.2 12.7 – 100.0
SHAREHOLDERS’ FUNDS 36.5 13.2 36.8 13.5 100.0 –
Shareholders’ Funds – 2023 41.8 12.3 33.2 12.7 – 100.0
Number of equity investments (including convertibles and warrants) 111 31 82 86 310 322
* Source: Bloomberg Industry Classification Standard.
** Cash, current assets and liabilities.
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Annual report & financial statements 2024Herald Investment Trust plc
TOP TWENTY EQUITY HOLDINGS AS AT 31 DECEMBER 2024
As a leader in design, manufacturing, hardware platform and supply chain solutions, Celestica partners
with leading companies in aerospace and defence, communications, enterprise, health technology,
industrial, and capital equipment, to deliver solutions for their most complex challenges. Celestica
brings global expertise and insight at every stage of product development — from the drawing board to
full-scale production and after-market services. Celestica has employees across North America, Europe
and Asia, that help, develop and deliver new products for their customers.
Founded in Denmark in 2007, Trustpilot has since grown to become one of the world’s leading
consumer review platforms. Trustpilot offers a public platform where consumers can leave reviews
for businesses and businesses can respond to honest feedback. The platform is open to all businesses
and consumers – yet independent of both – every interaction on Trustpilot is transparent for all to
see. Trustpilot’s business model is to charge recurring software fees to its corporate customers for
the use of the platform.
Fabrinet is a leading provider of advanced optical packaging and precision optical, electro-
mechanical, and electronic manufacturing services to original equipment manufacturers of complex
products, such as optical communication components, modules and subsystems, industrial lasers
and sensors. Fabrinet offers a broad range of advanced optical and electro-mechanical capabilities
across the entire manufacturing process, including process design and engineering, supply chain
management, manufacturing, advanced packaging, integration, final assembly and test. Fabrinet
focuses on production of high complexity products in any mix and volume. Fabrinet maintains
engineering and manufacturing resources and facilities in Thailand, the United States, and the
People’s Republic of China.
BE Semiconductor Industries (“Besi”) is a leading supplier of semiconductor assembly equipment for
the global semiconductor and electronics industries offering high levels of accuracy, productivity and
reliability at a low cost of ownership. Besi develops leading edge assembly processes and equipment
for lead frame, substrate and wafer level packaging applications in a wide range of end-user markets
including electronics, mobile internet, computer, automotive, industrial, LED and solar energy.
Customers are primarily leading semiconductor manufacturers, assembly subcontractors and
electronics and industrial companies.
Diploma is an international value-add distribution group, organised across three sectors: Controls,
Seals and Life Sciences. Value-add services are delivered alongside products, which include: wire &
cable, connectors, fasteners and adhesives; seals, gaskets, hose and fluid power sealing products;
surgical and diagnostic equipment, consumables and instrumentation. An entrepreneurial culture and
decentralised management structure ensures that decisions are made close to the customer and that
the businesses are agile and responsive to changes in the market and the competitive environment.
Diploma operates in core geographies of North America, Continental Europe, UK and Australia.
£31.0m
VALUATION
2.5%
OF TOTAL ASSETS
0.4%
OF ISSUED SHARE
CAPITAL HELD
£3.7m
BOOK COST
£26.8m
VALUATION
2.1%
OF TOTAL ASSETS
0.4%
OF ISSUED SHARE
CAPITAL HELD
£1.9m
BOOK COST
£29.0m
VALUATION
2.3%
OF TOTAL ASSETS
2.3%
OF ISSUED SHARE
CAPITAL HELD
£10.0m
BOOK COST
£26.3m
VALUATION
2.1%
OF TOTAL ASSETS
0.3%
OF ISSUED SHARE
CAPITAL HELD
£0.6m
BOOK COST
£23.8m
VALUATION
1.9%
OF TOTAL ASSETS
0.4%
OF ISSUED SHARE
CAPITAL HELD
£0.4m
BOOK COST
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Herald Investment Trust plc
Annual report & financial statements 2024
Founded in 1983, Pegasystems (“Pega”) provides a platform that empowers the world’s leading
organisations to unlock business-transforming outcomes with real-time optimisation software.
Clients use Pega’s enterprise AI decisioning and workflow automation to solve pressing business
challenges – from personalising engagement to automating service to streamlining operations.
Pegahas built a scalable and flexible architecture to help enterprises meet customer demands while
continuously transforming for tomorrow.
Esker is a global cloud platform built to unlock strategic value for finance, procurement and customer
Service professionals, and strengthen collaboration between companies by automating the cash
conversion cycle. Esker’s solutions incorporate AI technologies to drive increased productivity,
enhanced visibility, reduced fraud risk, and improved collaboration with customers, suppliers and
employees. Founded in 1985, Esker operates in North America, Latin America, Europe and Asia Pacific
with global headquarters in Lyon, France, and U.S. headquarters in Madison, Wisconsin. In September
2024, Esker and Bridgepoint announced a proposed cash public tender offer for Esker, made by
Bridgepoint, in association with General Atlantic and the management shareholders.
Descartes Systems (“Descartes”) offers networks, applications, global trade content, and collaborative
multi-modal logistics communities to improve the productivity, performance, safety and security of
logistics and supply chain operations. Customers use Descartes modular, cloud-based and data
content solutions to route, schedule, track, train and measure delivery resources; plan, allocate and
execute shipments; rate, audit and pay transportation invoices; access and analyse global trade data;
research and perform trade tariff and duty calculations; file customs and security documents for
imports and exports; comply with trade regulations, and complete numerous other logistics
processes. Customers can purchase Descartes’ solutions either on a subscription, transactional or
perpetual license basis. The company serves transportation providers (air, ocean and truck modes),
logistics service providers (including third-party logistics providers, freight forwarders, freight brokers,
and customs brokers) and manufacturers, retailers, distributors, and business service providers.
Descartes headquarters are in Waterloo, Ontario, Canada and they have offices and partners around
the world.
Super Micro Computer (“Super Micro”) is a global leader in application-optimised IT solutions. Founded
and operating in San Jose, California, Super Micro delivers innovative enterprise, cloud, AI, and 5G
telco/edge IT infrastructure hardware, it is a total IT Solutions provider with server, AI, storage, IoT,
switch systems, software, and support services. Super Micro’s motherboard, power, and chassis design
expertise further enables development and production, enabling next generation innovation from cloud
to edge for global customers. Products are designed and manufactured in-house (in the US, Taiwan,
and the Netherlands), leveraging global operations for scale and efficiency and optimised to improve
TCO and reduce environmental impact (Green Computing). The award-winning portfolio of solutions
enables customers to optimise for their exact workload and application by selecting from a broad family
of systems built from flexible and reusable building blocks that support a comprehensive set of form
factors, processors, memory, GPUs, storage, networking, power, and cooling solutions (airconditioned,
free air cooling or liquid cooling).
GB Group (“GBG”), was founded in 1989, originally pioneering new ways of delivering address
management services. Since then, the offering has grown to cover three core areas of Location,
Identity and Fraud, which together create confidence online. The location business ensures addresses
and locations can be easily captured, verified and managed. GBG’s digital identity verification tools
ensure that companies are trading with good customers and can identify the bad actors. Fraud
prevention solutions reduce financial risk and ensure compliance with regulations. GBG’s future goal
is to facilitate online environments where everyone can transact with the complete and unconditional
confidence they expect.
£22.4m
VALUATION
1.8%
OF TOTAL ASSETS
0.4%
OF ISSUED SHARE
CAPITAL HELD
£1.5m
BOOK COST
£21.6m
VALUATION
1.7%
OF TOTAL ASSETS
1.6%
OF ISSUED SHARE
CAPITAL HELD
£4.4m
BOOK COST
£17.2m
VALUATION
1.4%
OF TOTAL ASSETS
0.2%
OF ISSUED SHARE
CAPITAL HELD
£0.4m
BOOK COST
£17.0m
VALUATION
1.4%
OF TOTAL ASSETS
0.1%
OF ISSUED SHARE
CAPITAL HELD
£1.4m
BOOK COST
£16.3m
VALUATION
1.3%
OF TOTAL ASSETS
1.9%
OF ISSUED SHARE
CAPITAL HELD
£5.2m
BOOK COST
TOP TWENTY EQUITY HOLDINGS AS AT 31 DECEMBER 2024
CONTINUED
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Volex is a leader in integrated manufacturing for mission-critical applications, in particular for power
and data connectivity solutions. Volex supports international blue-chip customers in five key sectors:
Electric Vehicles, Consumer Electricals, Medical, Complex Industrial Technology and Off-Highway.
Headquartered in the UK, Volex has operations across 28 advanced manufacturing facilities, uniting
14,000 employees from 25 different nations. Products find their way to market through localised
sales teams and authorised distributor partners, supporting Original Equipment Manufacturers and
Electronic Manufacturing Services companies across the globe. In a world that grows more digitally
complex by the day, customers choose Volex to deliver power and connectivity that drives everything
from household essentials to life-saving medical equipment.
Silicon Motion Technology (“SMT”) is the global leader in supplying NAND flash memory controllers
for solid state storage devices. They supply more SSD controllers than any other company in the
world for servers, PCs and other client devices and are the leading merchant supplier of eMMC and
UFS embedded storage controllers used in smartphones, IoT devices and other applications. SMT also
supplies customised high-performance hyperscale data centre and specialised industrial and
automotive SSD solutions. Customers include most of the NAND flash vendors, storage device
module makers and leading OEMs.
Cohort is the parent company of six innovative, agile and responsive businesses providing a wide
range of services and products for British and international customers in defence, security and related
markets. Cohort was founded on the principle that SME-size businesses can prosper by being part of
a larger group, where they can benefit from financial oversight, management support and the
exchange of information and practices. Cohort aims to achieve this while preserving the high growth
potential of innovative independent businesses.
Telecom Plus, which owns and operates Utility Warehouse (“UW”), is the UK’s leading multiservice
utility provider, offering bundled household services – energy, broadband, mobile and insurance.
Customers benefit from the convenience of a single monthly bill, consistently good value across all
their utilities and exceptional service levels. Customers sign up through a network of local UW
Partners all across the country. These Partners recommend UW’s services to friends, family and
people they know by word-of-mouth.
Idox is a specialist software and geospatial solutions provider, helping government and industry, drive
productivity and offer a better experience for everyone. Built around the user and designed in
collaboration with experts who have worked through every detail of every process from end-to-end,
the company’s hard-working process engines deliver exceptional functionality and embed workflows
that drive efficiency and best practice with a long-term focus for regulated environments. Through
the automation of tasks, simplification of complex operations, scalability as operations evolve, and
more effective management of information, Idox helps their customers achieve more.
£15.8m
VALUATION
1.3%
OF TOTAL ASSETS
3.1%
OF ISSUED SHARE
CAPITAL HELD
£7.3m
BOOK COST
£15.4m
VALUATION
1.2%
OF TOTAL ASSETS
1.1%
OF ISSUED SHARE
CAPITAL HELD
£1.7m
BOOK COST
£14.9m
VALUATION
1.2%
OF TOTAL ASSETS
2.9%
OF ISSUED SHARE
CAPITAL HELD
£3.2m
BOOK COST
£14.1m
VALUATION
1.1%
OF TOTAL ASSETS
1.0%
OF ISSUED SHARE
CAPITAL HELD
£3.3m
BOOK COST
£13.9m
VALUATION
1.1%
OF TOTAL ASSETS
4.8%
OF ISSUED SHARE
CAPITAL HELD
£3.6m
BOOK COST
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TOP TWENTY EQUITY HOLDINGS AS AT 31 DECEMBER 2024
CONTINUED
Varonis Systems (“Varonis”) is a leader in data security, fighting a different battle than conventional
cybersecurity companies. The company’s cloud-native Data Security Platform continuously discovers
and classifies critical data, removes exposures, and detects advanced threats with AI-powered
automation. Thousands of organisations worldwide trust Varonis to defend their data wherever it lives
— across SaaS, IaaS, and hybrid cloud environments. Customers use Varonis to automate a wide
range of security outcomes, including data security posture management (“DSPM”), data
classification, data access governance (“DAG”), data detection and response (“DDR”), data loss
prevention (“DLP”), and insider risk management.
Radware is a global leader of cyber security and application delivery solutions for physical, cloud, and
software defined data centres. Its award-winning solutions portfolio secures the digital experience by
providing infrastructure, application, and corporate IT protection and availability services to
enterprises globally. Radware’s solutions empower enterprise and carrier customers worldwide to
adapt to market challenges quickly, maintain business continuity and achieve maximum productivity
while keeping costs down.
Wilmington is the recognised knowledge leader and partner of choice for data, information,
education and training in the global Governance, Risk and Compliance (“GRC”) markets. Wilmington
provides critical data and information to enable their customers to make the decisions needed to
maintain compliance with the rules and regulations that apply to them; and provides training and
education to equip customers with the knowledge and skills to carry out their activities in line with
best practice.
Craneware is the market leader in healthcare value cycle solutions for 25 years, it collaborates with
US healthcare providers to optimise revenue integrity, pricing intelligence, decision support, labour
productivity, business of pharmacy, and 340B programme management. Founded in May 1999 by
CEO Keith Neilson and co-founder Gordon Craig, Craneware launched its first product in October
1999 after signing its first customer contract the previous month. By the end of 2000, Craneware had
more than 20 customers, setting the stage for the continuous growth to come, and in September
2007, Craneware listed on the AIM market of the London Stock Exchange.
RaySearch Laboratories (“RaySearch”) is a medical technology company that develops innovative
software solutions for improved cancer treatment. RaySearch markets the RayStation treatment
planning system (“TPS”) and the oncology information system (“OIS”) RayCare. The most recent
additions to the RaySearch product line are RayIntelligence and RayCommand. RayIntelligence is an
oncology analytics system (“OAS”) which enables cancer clinics to collect, structure and analyse data.
RayCommand, a treatment control system (“TCS”), is designed to link the treatment machine and the
treatment planning and oncology information systems. RaySearch’s software has been sold to over
1,000 clinics in 44 countries. The company was founded in 2000 as a spin-off from the Karolinska
Institute in Stockholm and the shares have been listed on Nasdaq Stockholm since 2003.
£13.7m
VALUATION
1.1%
OF TOTAL ASSETS
0.3%
OF ISSUED SHARE
CAPITAL HELD
£4.1m
BOOK COST
£13.0m
VALUATION
1.0%
OF TOTAL ASSETS
1.7%
OF ISSUED SHARE
CAPITAL HELD
£5.4m
BOOK COST
£11.9m
VALUATION
0.9%
OF TOTAL ASSETS
3.5%
OF ISSUED SHARE
CAPITAL HELD
£4.4m
BOOK COST
£11.3m
VALUATION
0.9%
OF TOTAL ASSETS
1.5%
OF ISSUED SHARE
CAPITAL HELD
£2.2m
BOOK COST
£10.8m
VALUATION
0.9%
OF TOTAL ASSETS
2.0%
OF ISSUED SHARE
CAPITAL HELD
£3.8m
BOOK COST
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Annual report & financial statements 2024
DETAILED LIST OF INVESTMENTS
AT 31 DECEMBER 2024
Ordinary or common shares unless otherwise stated.
Value
Classification Name £’000 %
UNITED KINGDOM
Advertising & Marketing l Ebiquity 660
l M&C Saatchi 3,400
l Next 15 10,043
S4 Capital 2,858
l System1 3,630
l The Mission Group 1,329
l Time Out 3,203
l YouGov 8,208
33,331 2.8
Entertainment Content l Zinc Media 4,192 0.3
Internet, Media & Services l Dianomi 189
l Eagle Eye Solutions 1,322
Future 6,566
l Sysgroup 713
l Ten Lifestyle Group 1,233
Trustpilot 28,994
39,017 3.1
Publishing & Broadcasting l Audioboom 2,822
Bloomsbury Publishing 10,655
Centaur Media 2,364
Reach 2,385
18,226 1.5
Telecommunications l Crimson Tide 339
l Fonix 2,504
l Gamma Communications 2,966
l GlobalData 6,351
l Maintel 1,946
14,106 1.1
Automotive l EnSilica 233
l Quartix Technologies 312
545 0.0
Leisure Facilities & Services l Nexteq 534 0.0
Wholesale – Discretionary l Northamber 475 0.0
Renewable Energy l Invinity Energy Systems 2,549
l ITM Power 1,968
4,517 0.4
Asset Management Augmentum Fintech 428
l HIML Holdings 5,415
Integrafin 1,416
Sivota 10
7,269 0.5
Equity Investment Instruments Gore Street Energy Storage Fund 515
l KRM22 520
1,035 0.0
Speciality Finance l PCI-PAL 2,588 0.2
Biotechnology & Pharmaceutical l C4X Discovery 808 0.1
Health Care Facilities & Services l Diaceutics 1,920
l Feedback 298
2,218 0.2
l denotes AIM stock
l denotes unquoted security
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Annual report & financial statements 2024Herald Investment Trust plc
Value
Classification Name £’000 %
UNITED KINGDOM continued
Medical Equipment & Devices BATM Advanced Communications 3,325
l Creo Medical 760
l Deltex Medical 76
l Intelligent Ultrasound 1,387
5,548 0.5
Aerospace & Defence l Cohort 14,935 1.2
Commercial Support Services l Science Group 8,178
Wilmington 11,867
20,045 1.6
Electrical Equipment Oxford Instruments 4,849
l Synectics 609
l Vianet 560
l Volex 15,828
XP Power 1,287
23,133 1.9
Industrial Intermediate Production Diploma 23,793 1.9
Chemicals l Haydale Graphene Industries 138 0.0
Forestry, Paper & Wood Products l Accsys Technologies 872 0.1
IT Services l Celebrus Technologies 8,413
l Cerillion 5,311
l FD Technologies 5,527
FDM 1,128
Kainos 4,024
l Netcall 2,899
l Team Internet 3,374
l Tribal 1,910
32,586 2.6
Semiconductors l CML Microsystems 2,965
l IQE 2,566
l Kromek 2,167
7,698 0.6
Software l 1Spatial 2,726
l ActiveOps 3,602
Aptitude Software 8,235
l Bango 7,001
l Beeks Financial Cloud 2,740
l Blackbird 179
l Boku 5,379
l BrandShield Systems 554
l Celoxica 3,714
l Checkit 1,730
l Corero Network Security 8,485
l Craneware 11,267
l Dillistone 124
l Dotdigital 2,929
l Eckoh 8,538
l GB Group 16,273
l GetBusy 1,663
l Idox 13,854
l Intercede 5,725
l itim 809
l Light Science Technologies 513
l Microlise 1,261
NCC 4,299
DETAILED LIST OF INVESTMENTS CONTINUED
AT 31 DECEMBER 2024
l denotes AIM stock
l denotes unquoted security
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Annual report & financial statements 2024Herald Investment Trust plc
l denotes AIM stock
Value
Classification Name £’000 %
UNITED KINGDOM continued
Software (continued) l Oxford Metrics 4,412
l Pulsar Group 4,979
l Spectra Systems 3,624
l Windward 3,531
l ZOO Digital 3,679
131,825 10.6
Technology Hardware l Calnex Solutions 1,256
l Concurrent Technologies 1,176
l CyanConnode 2,161
discoverIE 6,360
l Filtronic 2,907
l Focusrite 469
Global Invacom 111
l Gooch & Housego 862
l Ilika 1,802
l MTI Wireless Edge 1,829
l SDI 2,840
l Seeing Machines 8,834
l Solid State 488
l Thruvision 1,312
32,407 2.5
Electricity & Gas Marketing & Trading Telecom Plus 14,149 1.1
Gas & Water Utilities l Water Intelligence 2,634 0.2
TOTAL UNITED KINGDOM EQUITIES 438,624 35.0
EUROPE, MIDDLE EAST AND AFRICA (EMEA)
Advertising & Marketing Growens 962 0.1
Internet, Media & Services North Media 962 0.1
Telecommunications Intred 3,162 0.2
Medical Equipment & Devices LUMIBIRD 3,397 0.3
Electrical Equipment Detection Technology 2,499 0.2
IT Services Adesso 3,629
B3 Consulting 2,105
Datalex 1,969
OVH 720
Sword Group 5,711
14,134 1.2
Semiconductors Aixtron 938
BE Semiconductor Industries 26,273
Nordic Semiconductor 10,703
37,914 3.0
Software Atea 1,970
Enea 4,254
Esker 21,580
Exasol 1,427
Median Technologies 1,623
Nexus 6,851
NFON 816
Nordhealth 5,608
RaySearch Laboratories 10,790
Sidetrade 10,398
Trifork 1,233
Upsales Technology 2,108
WALLIX 2,523
71,181 5.6
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DETAILED LIST OF INVESTMENTS CONTINUED
AT 31 DECEMBER 2024
Value
Classification Name £’000 %
EUROPE, MIDDLE EAST AND AFRICA (EMEA) continued
Technology Hardware Adtran 1,996
ATEME 1,891
Ekinops 2,844
Napatech 3,112
Vusion 2,206
12,049 1.0
TOTAL EMEA EQUITIES 146,260 11.7
NORTH AMERICA
Advertising & Marketing Inuvo 2,889 0.2
Internet, Media & Services HealthStream 4,816
Yelp 2,472
7,288 0.6
Publishing & Broadcasting Thryv 1,479 0.1
Telecommunications Cogent Communications 10,147
Ooma 2,914
13,061 1.0
Wholesale – Discretionary Climb Global Solutions 4,035 0.3
Oil & Gas Services & Equipment Pason 3,003 0.2
Renewable Energy Electrovaya 2,281 0.2
Aerospace & Defence Leonardo DRS 8,256 0.7
Commercial Support Services First Advantage 4,486
FranklinCovey 4,803
Spire Global 2,428
11,717 1.0
Electrical Equipment Bel Fuse – Class A 287
Bel Fuse – Class B 1,576
Mesa Labs 781
nLIGHT 2,179
Tecogen 376
5,199 0.4
Transportation & Logistics Freightos 1,214 0.1
IT Services CI&T 1,727
High Wire Networks 474
Integral Ad Science 1,666
Rimini Street 1,813
Softchoice 2,152
TTEC 557
8,389 0.7
Semiconductors Arteris 2,435
CEVA 8,188
FormFactor 2,632
Intellicheck 2,237
Power Integrations 1,871
QuickLogic 6,575
Silicon Motion Technology* 15,416
Tower Semiconductor 5,059
Valens Semiconductor 1,958
Veeco Instruments 3,746
Vishay Precision 1,875
51,992 4.2
* American Depositary Receipts – certificates representing shares in the stock, issued by a US bank, denominated and paying dividends in US dollars
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Value
Classification Name £’000 %
NORTH AMERICA continued
Software Alkami Technology 4,391
AvePoint 9,220
AvidXchange 3,717
Aware 670
Bandwidth 2,853
BigCommerce 2,440
Couchbase 2,242
CyberArk Software 10,645
D2L 7,434
Descartes Systems 17,241
Digital Turbine 805
FalconStor Software 280
Five9 4,541
Genasys 1,558
Issuer Direct 625
Jamf 1,682
JFrog 5,869
Kinaxis 3,450
Kneat 5,007
Logility Supply Chain Solutions 7,290
N-able 2,608
OneSpan 2,959
PDF Solutions 1,621
Pegasystems 22,408
Qualys 7,280
Radware 12,995
Real Matters 817
Red Violet 5,766
SecureWorks 1,689
SPS Commerce 7,351
Tecsys 3,126
Varonis Systems 13,654
Vertex 5,117
179,351 14.3
Technology Hardware Arlo Technologies 9,823
Aviat Networks 2,241
Blackline Safety 7,907
Celestica 30,956
Everspin Technologies 3,053
Fabrinet 26,768
Harmonic 8,296
Kopin 1,643
Lantronix 3,037
RADCOM 2,665
Ribbon Communications 2,644
Ribbon Communications – Restricted 1,089
l Ribbon Communications – Warrants 29 Mar 2027 55
Silicom 1,607
Super Micro Computer 17,048
Vicor 7,708
126,540 10.1
TOTAL NORTH AMERICA EQUITIES 426,694 34.1
l denotes unquoted security
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Annual report & financial statements 2024Herald Investment Trust plc
DETAILED LIST OF INVESTMENTS CONTINUED
AT 31 DECEMBER 2024
Value
Classification Name £’000 %
ASIA PACIFIC
Advertising & Marketing Pureprofile 459 0.0
Internet, Media & Services ADDCN Technology 446
Bengo4.com 2,185
CrowdWorks 815
Gabia 911
giftee 1,177
GMO Internet 1,631
Praemium 2,235
Proto 1,457
RMA Global 349
11,206 0.9
Telecommunications Kinx 2,159 0.2
E-Commerce Discretionary Momo.com 1,254 0.1
Speciality Finance EML Payments 284
Green World FinTech Service 685
Infomart 2,502
Net Protections 669
Plaid 1,989
6,129 0.5
Medical Equipment & Devices Compumedics 773
JEOL 429
1,202 0.1
Commercial Support Services Freelancer 383 0.0
Aerospace & Defence Electro Optic Systems 620 0.1
Electrical Equipment Catapult 9,408
Chroma ATE 558
FOCI 668
10,634 0.9
Industrial Intermediate Production Elite Material 1,099 0.1
Chemicals Soulbrain 2,320 0.2
IT Services Chief Telecom 1,456
Cyber Security Cloud 1,564
Cybertrust Japan 1,313
RAKUS 855
Senetas 1,411
WingArc1st 4,634
11,233 0.9
Semiconductors Andes Technology 1,614
eMemory Technology 3,240
Eugene Technology 503
ISC 1,190
Kulicke & Soffa Industries 8,274
Phison Electronics 1,299
PSK 1,625
Realtek Semiconductor 7,516
Santec 1,236
Tokyo Seimitsu 958
WinWay Technology 1,556
Wonik IPS 723
29,734 2.3
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** H Shares – issued by companies incorporated in the People’s Republic of China and listed on the Hong Kong Stock Exchange.
Value
Classification Name £’000 %
ASIA PACIFIC continued
Software Acer Cyber Security 170
Audinate 222
Beamtree 823
Bigtincan 1,630
Chanjet Information Technology** 1,293
CRESCO 1,122
Fasoo 1,936
Genians 574
GMO GlobalSign 719
HENNGE K.K. 995
Kaonavi 2,050
Kinatico 1,327
Kingdee International Software 390
MedAdvisor 2,447
Money Forward 7,037
OBIC Business Consultants 1,967
ORO 1,100
PKSHA Technology 972
Plus Alpha Consulting 367
Property Data Bank 775
Sansan 1,395
SpiderPlus 330
TeamSpirit 635
TerraSky 2,653
User Local 202
WantedLab 285
WiseTech Global 3,290
Xref 1,378
Yappli 89
Zuken 1,787
39,960 3.2
Technology Hardware Advantech 2,131
BizLink 8,188
Chicony Electronics 4,151
E Ink 4,496
Kinsus Interconnect Technology 787
Lanner Electronics 2,912
Parade Technologies 1,402
RFHIC 711
SOLUM 677
Soracom 134
Taiwan Union Technology 496
Tripod Technology 5,774
31,859 2.5
TOTAL ASIA PACIFIC EQUITIES 150,251 12.0
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Annual report & financial statements 2024Herald Investment Trust plc
DETAILED LIST OF INVESTMENTS CONTINUED
AT 31 DECEMBER 2024
Value
Classification Name £’000 %
LOAN STOCKS HAVING AN
ELEMENT OF EQUITY RISK
l High Wire Networks – USD Convertible 18% Loan 25 Jan 2025 559
l i-nexus Global – Convertible 8% 07 Jul 2026 210
l i-nexus Global – Convertible 8% 29 Sep 2026 250
l i-nexus Global – Convertible 8% 04 Nov 2026 375
l Pulsar Group – 7.25% Loan 20 Nov 2025 3,000
l Zinc Media – 8% Loan 31 Dec 2025 958
l Zinc Media – Libor+4% Rate Bank Loan 31 Dec 2025 1,052
l Zinc Media – Variable Rate Loan 31 Dec 2025 377
TOTAL LOAN STOCKS HAVING AN ELEMENT OF EQUITY RISK 6,781 0.5
Total Equity Investments 1,168,610 93.3
Fixed Interest Norwegian Government Bond – 1.75% 13 Mar 2025 14,689
Singaporean Government Bond – 1.25% 01 Nov 2026 14,809
US Treasury Stock – 3.875% 31 Mar 2025 31,919
TOTAL FIXED INTEREST 61,417 4.9
Total Investments 1,230,027 98.2
Net Liquid Assets+ 22,575 1.8
Total Assets At Market Value 1,252,602 100.0
l denotes unquoted security
+ Cash, current assets and liabilities
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Annual report & financial statements 2024Herald Investment Trust plc
LONG-TERM PERFORMANCE
Continued
steady growth
The Company, founded in 1994 by Katie Potts, raised an initial £65m to invest in the UK and continental European technology
and communications sector. Warrants were issued to initial investors on a 1 for 5 basis. In 1996, a further £30m was raised to
globalise the fund, thus bringing the total outside capital to £95m. Since 1996, no new capital has been raised, and the
warrants have been repurchased or converted into ordinary shares.
The Company has operated an opportunistic buyback policy, which has helped create value for shareholders. Since inception,
the Company has completed buybacks to the value of £471m which significantly exceeds the outside capital raised by the
Company. Over the history of the fund, net asset value per share on a total return basis has grown by 2,611.1% or 11.3% on an
annualised basis.
TOTAL RETURN SINCE
INCEPTION
2,611.1%
ANNUALISED TOTAL RETURN
SINCE INCEPTION
11.3%
CAPITAL SINCE INCEPTION
Number of Diluted net
Shareholders’ shares in asset value (Discount)/
At Total assets Bank loans funds issue per share*
A
Share price premium
A
31 December £’000 £’000 £’000 ’000 p p %
≠ Inception 64,107 – 64,107 65,000 98.70 90.90◊ (7.9)*
1994 60,823 – 60,823 65,000 93.57 94.60 1.1
±1995 89,689 – 89,689 65,000 132.36§ 127.00 (4.0)
1996 130,055 – 130,055 82,894 150.88§ 136.00 (9.9)
1997 147,424 – 147,424 82,896 171.80 136.15 (20.8)
1998 170,982 – 170,982 82,901 201.70 161.50 (19.9)
1999 432,620 (3,343) 429,277 82,961 494.22 511.10 3.4
2000 378,607 (3,233) 375,374 83,874 431.43 491.00 13.8
2001 275,624 (2,892) 272,732 84,454 314.53 306.00 (2.7)
2002 199,900 (22,310) 177,590 84,475 206.68 177.00 (14.4)
2003 350,209 (29,325) 320,884 87,807 365.44 325.25 (11.0)
#2004 356,874 (24,663) 332,211 87,556 379.43 322.75 (14.9)
2005 358,293 – 358,293 87,556 409.22 379.75 (7.2)
2006 401,228 (20,000) 381,228 86,556 435.41 383.50 (11.9)
2007 343,497 – 343,497 86,971 394.96 312.00 (21.0)
2008 275,789 (65,079)‡ 210,710 83,408 252.63 184.00 (27.2)
2009 397,194 (56,298)‡ 340,896 81,053 420.58 337.75 (19.7)
2010 533,499 (58,937)‡ 474,562 79,913 593.85 483.00 (18.7)
2011 519,656 (70,357)‡ 449,299 79,698 563.75 455.00 (19.3)
2012 572,243 (70,297)‡ 501,946 79,323 632.78 513.00 (18.9)
2013 662,538 (38,935)‡ 623,603 77,680 802.79 685.00 (14.7)
2014 667,450 (38,534)‡ 628,917 77,340 813.19 659.00 (19.0)
2015 709,139 (38,002)‡ 671,137 76,112 881.78 745.25 (15.5)
2016 816,414 (25,000) 791,414 73,062 1,083.21 882.50 (18.5)
2017 966,650 – 966,650 70,308 1,374.88 1,171.00 (14.8)
2018 901,154 – 901,154 68,902 1,307.89 1,075.00 (17.8)
2019 1,122,849 – 1,122,849 67,312 1,668.13 1,480.00 (11.3)
2020 1,503,367 – 1,503,367 65,783 2,285.33 2,245.00 (1.8)
2021 1,760,877 – 1,760,877 64,754 2,719.33 2,505.00 (7.9)
2022 1,305,048 – 1,305,048 62,173 2,099.05 1,782.00 (15.1)
2023 1,245,757 – 1,245,757 56,135 2,219.23 1,922.00 (13.4)
2024 1,252,602 – 1,252,602 50,341 2,488.24 2,430.00 (2.3)
* The diluted net asset value per ordinary share figures have been calculated in accordance with
FRS102 (2015-2018), FRS 22 (2008-2014), FRS 14 (1995-2007).
A Alternative Performance Measure – see pages 82 and 83.
≠ Inception date 16 February 1994, 100p was shareholders’ subscription price before launch costs of
1.3p.
◊ 90.9p is the capital gains tax (CGT) base subscription price for shareholders adjusting for warrants
which were issued on a 1 for 5 basis. The CGT base for the warrant is 45.5p.
± Restated for change in accounting policy to account for income on an ex-dividend basis.
§ The diluted net asset values at 31 December 1995 and 1996 have been restated with the adoption of
FRS 14. The previously reported fully diluted net asset values were 131.65p and 149.45p respectively.
# The figures prior to 2004 have not been restated for the changes in accounting policies implemented
in 2005.
‡ Includes derivative financial instruments.
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INVESTMENT REPORT
30
Herald Investment Trust plc
Annual report & financial statements 2024
60
80
100
120
140
160
180
202420232022202120202019
FIVE YEAR RETURNS (CAPITAL ONLY)
(FIGURES HAVE BEEN REBASED TO 100 AT 31 DECEMBER 2019)
Source: LSEG Data & Analytics.
Fully diluted NAV
Share price
Deutsche Numis Smaller Companies
plus AIM (ex. investment companies)
Index
Russell 2000® Technology Index
(small cap) (in sterling terms)
LONG-TERM PERFORMANCE CONTINUED
REVENUE
Available Earnings Dividend
for ordinary per ordinary per ordinary Ongoing Net
At Income shareholders share net
¶
share net charges
A
gearing/ Gross
31 December £’000 £’000 p p % cash
A
gearing
A
2014 8,245 (1,464) (1.89) – 1.07 101 106
2015 9,136 (36) (0.05) – 1.08 95 106
2016 9,541 430 0.58 – 1.09 92 103
2017 10,799 486 0.68 – 1.08 93 100
2018 11,250 58 0.08 – 1.07 87 100
2019 11,735 31 6.79 – 1.09 88 100
2020 9,361 (3,997) (6.00) – 1.08 92 100
2021 12,253 (5,417) (8.33) – 1.02 93 100
2022 15,326 135 0.21 – 1.05 88 100
2023 17,926 4,026 6.79 – 1.07 92 100
2024 17,169 2,668 4.96 – 1.08 93 100
¶ The calculation of earnings per ordinary share is based on the revenue from ordinary activities after
taxation and the weighted average number of ordinary shares in issue (see note 8, page 71).
A Alternative Performance Measure – see pages 82 and 83.
CUMULATIVE PERFORMANCE (TAKING 2014 AS 100) (CAPITAL ONLY)
Deutsche Numis Russell
Diluted net Smaller Cos 2000®
At asset value Share price plus AIM Technology Retail price
31 December per share p Index Index Index
2014 100 100 100 100 100
2015 108 113 105 106 101
2016 133 134 115 159 104
2017 169 178 137 171 108
2018 161 163 112 179 111
2019 205 225 133 232 113
2020 281 341 138 320 115
2021 334 380 162 368 123
2022 258 270 123 265 140
2023 273 292 123 318 147
2024 306 369 125 399 152
COMPOUND ANNUAL RETURNS (CAPITAL ONLY)
Deutsche Numis Russell
Diluted net Smaller Cos 2000®
At asset value Share price plus AIM Technology Retail price
31 December per share p Index Index Index
5 year 8.3% 10.4% –1.2% 11.5% 6.1%
10 year 11.8% 13.9% 2.3% 14.8% 4.3%
Past performance is not a reliable indicator to future performance.
NET LIQUID ASSETS AND FIXED
INTEREST AS PERCENT OF NAV
31DECEMBER 2024
6.7%
5 YEAR COMPOUND ANNUAL
GROWTH IN NAV PER SHARE
8.3%
10 YEAR COMPOUND ANNUAL
GROWTH IN NAV PER SHARE
11.8%
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–30
–20
–10
0
10
20
2024202220202018201620142012201020082006200420022000199819961994
0
500
1,000
1,500
2,000
2,500
3,000
2024 2022 2020 2018201620142012201020082006200420022000199819961994
PREMIUM/(DISCOUNT) TO FULLY DILUTED NET ASSET VALUE
(PLOTTED ON A MONTHLY BASIS)
Source: LSEG Data & Analytics.
CAPITAL RETURN SINCE INCEPTION
Inception
31 December 16 February
2024 1994 % change
Net asset value per ordinary share (including
current year income
A
2,488.24p 98.70p 2,421.01
Net asset value per ordinary share (excluding
current year income)
A
2,482.94p 98.70p 2,415.64
Share price
A
2,430.00p 90.90p 2,573.27
Deutsche Numis Smaller Companies plus AIM
(ex. investment companies) Index 5,498.80 1,750.00 214.22
Russell 2000® Technology Index (small cap)
(in sterling terms)
†
5,786.55 688.70* 740.21
A Alternative Performance Measure (APM). See Glossary of Terms and Alternative Performance Measures
on pages 82 and 83 of the financial report for details of the explanation and reconciliations of APMs.
* At 9 April 1996 being the date funds were first available for international investment.
† The Russell 2000® Technology Index (small cap) was rebased during 2009 following some minor
adjustments to its constituents. The rebased index is used from 31 December 2008 onwards.
DISCOUNT TO NAV
31 DECEMBER 2024
2.3%
CAPITAL RETURNS SINCE INCEPTION
(FIGURES HAVE BEEN REBASED TO 100 AT 16 FEBRUARY 1994)
Source: LSEG Data & Analytics.
Fully diluted NAV
Share price
Deutsche Numis Smaller Companies
plus AIM (ex. investment companies)
Index
Russell 2000® Technology Index
(small cap) (in sterling terms)
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GOVERNANCE
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Annual report & financial statements 2024
Governance
34 Strategic Report
43 Your Board of Directors
44 Corporate Governance Report
48 Audit Committee Report
50 Directors’ Report
52 Directors’ Remuneration Report
55 Statement of Directors’ Responsibilities
56 Independent Auditors’ Report
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STATUS
The Company is an investment company within the meaning
of s833 of the Companies Act 2006 and operates as an
investment trust in accordance with s1158 of the Corporation
Tax Act 2010 as amended (“s1158”). The Company is
governed by its articles of association, amendments to which
must be approved by shareholders by way of a special
resolution, and is subject to the UK Listing Rules of the FCA.
The Company obtained approval from HM Revenue and
Customs of its status as an investment trust under s1158 and
the directors are of the opinion that the Company has and
continues to conduct its affairs in compliance with s1158
since this approval was granted.
BUSINESS MODEL
The Company has appointed Herald Investment
Management Limited (“HIML”) as the Alternative Investment
Fund Manager to provide all portfolio management and risk
management services. HIML is authorised and regulated by
the FCA both for investment management and as an
Alternative Investment Fund Manager (see the Directors’
Report, page51).
Administration of the Company and its investments has been
delegated by HIML to the Bank of New York Mellon
(International) Limited (“BNYMIL”). BNYMIL is also the
depositary under a tripartite agreement between HIML, the
Company and BNYMIL, and is responsible for custody
activities. The company secretary is NSM Funds (UK) Limited
(“NSM”); up until 30 September 2024 the company secretary
was Apex Listed Companies Services (UK) Limited (“Apex”).
OBJECTIVE
The Company’s objective is described on the inside front
cover of this document.
INVESTMENT POLICY – STRATEGY
While the policy is global investment in smaller quoted
companies in technology and communications, the
approach is to construct a diversified portfolio through the
identification of individual companies which offer long-term
growth potential, typically over a five-year horizon or more.
The portfolio is actively managed and does not seek to track
any comparative index. With aremit to invest in smaller
companies with market capitalisation generally below $5bn
at the point of purchase, there tends to be a correlation with
the performance of smaller companies, as well as that of the
technology and communications sectors. A degree of
volatility relative to the overall market should be expected.
The risk associated with the illiquidity of smaller companies is
reduced by generally restricting the stake in any one
company to less than 10% of the shares in issue.
A number of investments are in early-stage companies,
which have a higher stock specific risk but the potential for
above average growth. Stock specific risk is reduced by
having a diversified portfolio.
In addition, to contain the risk of any one holding, the
Manager generally takes profits when a holding reaches
more than 5% of the portfolio. The Manager actively
manages the exposure within the constraint that illiquid
positions cannot be traded for short-term movements.
The Company has a policy not to invest more than 15% of
gross assets in other UK-listed investment companies.
From time to time, fixed interest holdings, non-equity or
unquoted investments may be held on an opportunistic
basis.
The Company recognises the long-term advantages of
gearing and has a maximum gearing limit of 50% of net
assets. Borr
owings ar
e invested primarily in equity markets
but the Manager is permitted to invest in other securities in
the companies in the target areas when it is considered that
the investment grounds merit the Company taking a geared
position. The board’s intention is to gear the portfolio when
appropriate, taking into account current and future cashflow
requirements of the Manager. Gearing levels are monitored
closely by the Manager and reviewed by directors at each
board meeting.
The Company may use derivatives which will be principally,
but not exclusively, for the purpose of efficient portfolio
management (i.e. for the purpose of reducing, transferring or
eliminating investment risk in its investments, including
protection against currency risk).
A detailed analysis of the Company’s investment portfolio is
set out on pages 21 to 28 and in the Investment Manager’s
Report.
KEY PERFORMANCE INDICATORS (“KPIs”)
At each board meeting, the directors consider a number of
performance measures to assess the Company’s success in
achieving its objectives.
The KPIs used to measure the progress and performance of
the Company over time are established industry measures
and are as follows:
— the movement in net asset value per ordinary share
compared to the comparative indices;
— the movement in the share price;
— the discount; and
— the ongoing charges.
A historical record of these measures is shown on pages 29
to31.
The Company makes reference in this annual report and
financial statements to a number of alternative performance
measures, as described on pages 82 and 83.
SHARE CAPITAL
At 31 December 2024 the Company’s capital structure
consisted of 50,340,861 ordinary shares of 25p each (2023–
56,134,670 ordinary shares). During the year 5,793,809 (2023–
6,038,553) ordinary shares were bought back and cancelled.
There are no restrictions concerning the holding or transfer of
the Company’s ordinary shares and there are no special rights
attached to any of the shares. On a winding up, after meeting
the liabilities of the Company, the surplus assets would be paid
to ordinary shareholders in proportion to their shareholdings.
Since year end and up to 19 February 2025, no shares have
been bought back for cancellation.
DERIVATIVE INSTRUMENTS
The Company does not currently have any exposure to
derivative instruments (2023 – nil).
BORROWINGS
The Company is not currently geared and does not have
anyform of credit facility but holds significant cash. The
requirement for a credit facility is kept under regular review,
taking into account the levels of cash held bythe Company,
and cost, general market conditions and the Manager’s view
of its potential use of any such facility.
STRATEGIC REPORT
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REVIEW OF THE YEAR AND FUTURE DEVELOPMENTS
A review of the year and the investment outlook is contained
in the Chairman’s Statement and the Manager’s Report on
pages 8 to 15.
DIVIDENDS
The ordinary shares carry a right to receive dividends. Interim
dividends are determined by the directors and final dividends
are subject to shareholder approval. Given the revenue
reserve is in deficit, there are no reserves available for
distribution and the directors do not recommend a dividend
for the year under review.
PRINCIPAL RISKS AND UNCERTAINTIES
The audit committee, on behalf of the board, regularly
undertakes a robust assessment of the principal, including
emerging, risks facing the Company. These include those
that would threaten its business model, future performance,
solvency or liquidity (see Corporate Governance Report on
pages 44 to 47 and the Audit Committee Report on pages 48
and 49). Principal risks are also considered as part of the
board’s annual strategy meeting. The principal risks that
follow are those identified by the board after taking account
of mitigating factors.
All risks are documented on arisk register and are grouped
into six main categories: strategic risk; market, economic and
geopolitical risk; investment management risk; operational
risk; emerging/external risk; and regulatory risk. Risks are
rated by impact and likelihood of occurrence, with the
ratings charted on tworisk matrices: a pre-mitigation and
apost-mitigation one. Mitigation takes into account
processes, procedures and internal controls, and the post-
mitigation matrix is used to identify the Company’s principal
risks. The risk register is reviewed on an ongoing basis, in an
attempt to capture all risks and ensure appropriate mitigation
is in place, and to enable directors to concentrate on
principal risks whilst ensuring all risks are considered.
As part of the risk review, the board considered the
challenging global economic and geopolitical environment
including: the continuing effects of the Russia/Ukraine war;
the Israel/Hamas conflict with resultant Middle East effects;
tensions between China/Taiwan and China/USA, with
attendant global supply chain issues; the increased probability
of imposition of trade tariffs; and the risks from climate
change. Inflation and interest rates were also discussed.
The top risks identified by this process (which correlate to the
principal risks of the Company) are set out below.
Risk trend from previous year: Û Risk level unchanged
Ú Less risk
Ò Heightened risk
Strategic Risk
Û
Company risk as an investor in smaller companies Û
There is a risk that public markets become unattractive to
investee companies due to a number of factors including
burdensome regulations and taxation, and this could result in
asmaller investible universe and orphan portfolio stocks. The
board and the Manager engage with external bodies in the
UK to endeavour to influence government and regulatory
policy to support quoted smaller companies. Theportfolio is
globally diversified and the Manager has the ability to move
capital to more favourable markets.
The Company’s objective and strategy are not attractive
to investors
Ò
A failure to adapt to changes in the market and investor
demand could leave the Company exposed to the risk of
shareholder dissatisfaction, activism and influence. There is
arisk to shareholders that they will not be able to sell their
shares at a price close to the underlying NAV. Over the
course of the Company’s history, the shares have generally
traded at adiscount to underlying NAV and this discount
changes with market conditions. The board regularly reviews
the performance of the Company against relevant indices
and peers and annually reviews the Company’s investment
management arrangements. The Company has in place an
active buyback policy, which is monitored by the board,
whereby the Manager has authority to arrange buybacks of
shares within the limits approved at the AGM each year. The
board, the broker and the Manager engage regularly with
shareholders to understand their views on key topics
including discount volatility and shareholder views are
discussed at each board and strategy meetings. The board
regularly monitors the market for changes in sentiment.
Shareholders can raise questions of the board and the
Manager at the AGM. Shareholders are given the opportunity
to vote on the Company’s continuation every three years at
the AGM, with the next vote being at the forthcoming AGM.
There is the risk that even though the Company’s objective
and strategy continues to be attractive to investors, the
influence of one or a relatively low number of shareholders
could cause long-term damage to the Company’s ability to
continue to meet the Company’s objective.
Continuation vote fails to be passed by shareholders, or
passed but major vote against
Ò
There is a risk that the continuation vote, which is an ordinary
resolution requiring only a 50% vote, may fail to be passed.
This is despite 99.99% of shareholders voting for
continuation in 2022, significant share buy backs (10.3% of
shares bought back in 2024) and excellent performance in
2024 adding to the Company’s superb long-term
performance record of 11.3% NAV total return (annualised)
since inception. The Company has a significant minority
shareholder. A significant minority shareholder’s vote could
disproportionately affect the outcome of the vote if
shareholder voting numbers were to be low. The board will
seek to ensure all shareholders, including those whose
shares are held indirectly on platforms, are informed of the
upcoming AGM and of their opportunity to vote.
Market, Economic and Geopolitical Risks
Û
Market risk including but not limited to liquidity, price,
valuation, technology and communications, small cap risks
Û
The Company’s assets consist mainly of listed securities and
the success of the Company’s business model is therefore
market-related and bears market risk (comprising currency
risk, interest rate risk and other price risk), liquidity risk and
credit risk. An explanation of those risks, which have been
subject to robust assessment by the directors, and how they
are managed is contained in note 17 to the financial
statements on pages 74 to 79, and a description of the
internal controls operated by the Company is on pages 46
and 47. Asaspecialist investor in technology and
communications and small cap stocks, the Company is
exposed to more volatile share price movements than those
of the general market and, on occasion, it may be difficult for
the Manager to achieve sales of investments at marketprices.
The board’s assessment of risk remained unchanged from
the previous year due to the continuing uncertainty and
volatility in the markets.
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Economic risk Û
Interest rates, exchange rates, inflation, recession, taxes and
changes in supply and demand can all pose a threat to the
future of portfolio companies. The risk rating is unchanged
from last year, reflecting the continuing impact of higher for
longer interest rates and costs and the continuing
challenging economies.
Geopolitical risk Û
Political developments can create risks to the value of the
Company’s assets. For example, the Russian-Ukraine war has
caused a rise in energy prices and decreased food
production; disruption to technology supply lines caused by
US-China-Taiwan trade tensions; the Middle East conflict
could potentially expand; US policy and tariff changes could
adversely effect markets; and the ongoing changes in
UKGovernment policy on Net Zero continues to create
uncertainty for UK businesses.
The Manager considers the above three risks on an ongoing
basis and reports on a regular basis to the board, including
reporting on the composition and diversification of the
portfolio by geography, sector and capitalisation along with
sales and purchases of investments. Individual investments
are discussed with the Manager together with the investment
team’s general views on the various investment markets and
sectors. The board recognises that the potential for mitigation
is likely to be limited other than through diversification. The
risk rating remains consistent with last year, being at a
heightened level from that of more ‘normal’ times.
Investment Management Risk
Û
Liquidity risk Û
There is a risk that the Manager is unable to realise profits on
significant positions in the portfolio and to redeploy them in
sufficient sizes to new positions. The Company may also
invest in unquoted securities which generally have greater
valuation uncertainties and liquidity risks than securities listed
or traded on a regulated market. The board receives regular
reports from the Manager, which is experienced in stock
selection. Investment risk is spread by having a diversified
portfolio of over 300 holdings. The holding in any one
company is generally restricted to less than 10% of the
portfolio company’s shares in issue and the Manager would
usually start taking profits when a holding reaches 5% of the
portfolio. The risk rating remains consistent with last year to
reflect the deteriorating liquidity in certain markets for some
stocks, albeit the Company’s closed end nature reduces the
risk of a forced disposal of illiquid investments.
Key person dependency Û
There is a risk the lead investment Manager (Katie Potts)
becomes incapacitated or otherwise unavailable. The lead
investment Manager works with an investment management
team who are responsible for geographic sectors of the
portfolio and collaborate collectively to ensure there is
appropriate coverage. The risk has reduced over time as the
Manager’s team grows in experience and resources expand
in both the investment management and administration
teams.
Third Party Service Provider Operational Risk
Û
Information (including cyber) security and physical
security
Û
The failure or breach of information security could
potentially lead to breaches of confidentiality, data records
being compromised and the inability to make investment
decisions. The failure or breach of physical security could
lead to damage or loss of equipment, with consequential
negative results. Cyber security risks are considered and
continually monitored by the Manager as these threats
evolve and become incr
easingly sophisticated. The integrity
of the Company’s information security is closely monitor
ed
by the board, with each of the key service providers providing
a regular report through its internal audit function which
covers information technology security and provides comfort
to the board that appropriate safeguards are in place. All
physical locations have security in place and all third-party
service providers have disaster recovery plans.
Emerging/External Risk
Û
Emerging risk is a failure to have in place procedures that
assist in identifying new or familiar risks that become
apparent in new or unfamiliar conditions. The audit
committee reviews risk management and internal controls
twice a year and the board regularly considers industry
trends and forthcoming legislation/regulatory change with its
advisors, including the Manager, the broker and company
secretary. It also reviews regular updates from the
Association of Investment Companies (“AIC”) and the auditor
on suchmatters.
OTHER RISKS
The following are risks identified by the audit committee as
potentially having a major impact on the Company but, after
mitigation, are not deemed to be principal risks. All risk
ratings remained unchanged from the previous year.
Strategic Risk
Gearing risk Û
The Company may borrow money for investment purposes,
although no borrowings were in place throughout the year
and at the year end. If the investments fall in value, any
borrowings will magnify the extent of this loss for
shareholders. All borrowings require the prior approval of the
board and gearing levels are discussed by the board and
Manager at every meeting.
Discount and discount volatility
Û
There is a risk that the discount at which the Company’s
shares trade may widen. The board monitors the level of
discount and its volatility and has undertaken significant
share buy backs over the life of the Company, including
buying back 10.3% of the issued share capital in 2024 and
9.7% in 2023, measured to the start of each year.
Operational Risk Û
Disruption to or failure of the Manager’s or administrator’s
accounting systems or those of other third-party service
providers could lead to an inability to provide accurate
reporting and monitoring or a misappropriation of assets.
The Company uses third party service providers and,
consequently, is exposed to operational risk including
information security and physical security, as described
earlier. The Manager, administrator and company secretary
each have comprehensive business continuity plans which
facilitate continued operation of the business in the event of
a service disruption or a major disruption event. The audit
committee receives the administrator’s report on internal
controls and the reports by other key third-party providers
are reviewed by the Manager and company secretary on
behalf of the audit committee. The depositary reports
sixmonthly on custody matters, including the continued
safecustody of the Company’s assets.
Emerging/External Risk
Climate change risk Û
The financial risks from climate change are typically classified
as physical or transitional risks. Physical risks are those arising
from specific weather events (such as wildfires) and
STRATEGIC REPORT CONTINUED
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transitional risks are those arising from the changes to
regulations (such as the move to net-zero carbon). The
portfolio is well diversified to mitigate against physical risks.
Changes in climate change focused regulation, governing
both the Company and investee companies, will create some
uncertainty. A number of investments address the challenges
arising from climate change and may benefit. However, if
climate change has a significant adverse impact on the wider
economy, the Company could be negatively affected.
Incomparison to the broader economy, the portfolio has
arelatively low carbon footprint. The board encourages the
Manager to consider environmental, social and governance
factors when selecting and retaining investments.
Global pandemic risk Û
A pandemic remains an ongoing risk with both primary and
consequential negative effects. The board continues to
monitor, together with the Manager, the market and
operational risks associated with pandemic risk and the
ongoing economic impact on the underlying investee
companies. Theboard is satisfied that the Manager and the
key service providers have in place robust plans and
infrastructure to minimise the impact on the Company’s
operations so that itcan continue to trade, meet its
regulatory obligations, and report and meet shareholder
requirements. By their nature the risks presented by possible
future pandemics are exceptionally difficult to assess.
Regulatory Risk
Û
The failure to comply with applicable legal and regulatory
requirements could lead to a suspension of the Company’s
Stock Exchange listing, financial penalties by the FCA or
aqualified audit report. Breach of s1158 could lead to the
Company being subject to tax on capital gains. The Manager,
depositary and administrator provide regular reports to the
audit committee on their monitoring programmes.
TheManager monitors investment positions and the
Manager and administrator monitor the level of forecast
income and expenditure. Major regulatory change could
impose disproportionate compliance burdens on the
Company. In such circumstances, representations would be
made to seek to ensure that the special circumstances of
investment trusts are recognised.
THE BOARD AND DIVERSITY
Information concerning the board’s diversity is set out on
pages 44 and 45, including the board’s diversity policy.
BOARD’S DUTY TO PROMOTE THE SUCCESS OF THE
COMPANY (SECTION 172 STATEMENT)
The directors have a statutory duty to promote the success of
the Company for the benefit of shareholders, whilst having
regard to all stakeholders. They are also required to report
annually how they have had regard to such matters, including
identification of, and engagement with, key stakeholders and
how this has impacted their decision making.
As an externally managed investment company with no
employees, the directors consider the Company’s main
stakeholders to be: its shareholders; the Manager; a small
number of other key service providers; investee companies
inthe portfolio; the environment; and the wider economy.
Inthis context, the directors are not responsible for setting
a“business culture” in the usual sense, but they do meet
regularly with representatives of the Manager and the
company secretary and seek to understand the culture of
those businesses, and those of the Company’s key service
providers, and would raise any concerns in this regard if
necessary.
SHAREHOLDERS
Shareholder support is critical to both the continued
existence of the Company and the successful delivery of its
long-term strategy. In this, the board is mindful of its duty to
act fairly between shareholders and is focused on fostering
good working relationships with shareholders and on
understanding the views of shareholders.
A fundamental consideration of the board is whether the
investment objective of the Company is continuing to meet
shareholder expectations. The board’s strategy is validated on
a triennial basis – the last vote was in April 2022 with 99.99%
of shareholders voting for the continuation of the Company
and the next continuation vote will be proposed at the AGM
in 2025.
The board places great importance on communication with
all its shareholders and maintaining an open dialogue with
them. The principal forum for this is the AGM. The Company’s
annual financial report is published generally in time to give
shareholders at least 20 working days’ notice of the AGM.
Details of the proxy voting position on each resolution are
published on the Company’s website shortly after the AGM.
At the Company’s most recent AGM held in April 2024,
shareholders had the opportunity to meet with the board and
the Manager and raise questions and concerns.
The board regularly monitors the shareholder profile of the
Company. It aims to provide shareholders with a full
understanding of the Company’s activities and performance,
and it reports formally to shareholders twice a year by way of
the annual and half-yearly financial reports. This is
supplemented by the daily publication of the Company’s net
asset value, routine and ad hoc regulatory announcements,
monthly factsheets and other information placed on the
Manager’s website, including pre-investment information,
portfolio disclosures, terms of reference and the Company’s
share price.
One of the board’s objectives has been, along with the
Manager, to ensure shareholder engagement is sufficient.
The board has endorsed the ongoing appointment of
QuotedData, a provider of research notes on the Company,
and retains joint brokers, Singer Capital Markets Securities
Limited and Peel Hunt LLP. The chairman and directors are
available to meet on a one-to-one basis with the institutional
shareholders with or without either brokers or the Manager
present. The chairman undertook several meetings with
institutional shareholders during the year. During the year the
Company’s brokers and Manager held regular discussions
with larger shareholders. Feedback from shareholder
engagement is reported to the board. Shareholders wishing
to contact the chairman or any other member of the board
may do so at any time by writing to the company secretary.
Consumer Duty
The FCA’s Consumer Duty rules comprise a fundamental
component of the FCA’s consumer protection strategy and
aim to improve outcomes for retail customers across the
entire financial services industry through the assessment of
various outcomes, one of which is an assessment of whether
a product provides value. Under the Consumer Duty, the
Manager is the product manufacturer of the Company and
therefore the Manager is required to complete a fair value
assessment on a regular basis. As at July 2024, the Manager
assessed the Company as “expected to provide fair value for
the reasonably foreseeable period”. The board has an
understanding of the Manager’s basis of assessment and no
concerns have been identified with either the assessment
method or the outcome of the assessment.
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STRATEGIC REPORT CONTINUED
THE MANAGER
The Manager is the principal service provider and supplies
investment management and administration services to the
Company. Details of the investment management contract
are shown on pages 39 and 40.
The board seeks to engage with the Manager in a collaborative
and collegiate manner, encouraging open and constructive
discussion and debate, whilst also ensuring that there is
appropriate and regular challenge. At all board meetings there
is a dialogue with the lead investment manager, Katie Potts
except where the Manager’s attendance is not appropriate for
governance reasons. In addition, other members of the
investment team attend board meetings to provide updates on
specific sectors or geographies in which the portfolio is
invested. A principal consideration of the board is whether the
Manager is performing in accordance with the Company’s
investment objective and investment policies. This
consideration, as quantified by the KPIs described earlier in the
Strategic Report, is discussed at all board meetings and at the
board’s annual strategy meeting and explained to shareholders
in detail in the Manager’s Report.
The investment management section of the Strategic Report
sets out the key terms of the management agreement.
Theboard reviews the performance of the Manager, its
remuneration and the discharge of its contractual obligations
at least annually.
Anumber of directors of HIML Holdings Limited and
employees of the Manager have shareholdings in the
Company, further aligning the Manager’s interests with those
of the Company’s shareholders.
OTHER SERVICE PROVIDERS
Other key service providers comprise the company secretary,
the administrator, the depositary, the custodian, the brokers,
the registrar and the auditor. The continuance, or otherwise,
of the engagement of these are reviewed by the board every
year to ensure that the Company continues to receive high
quality services at a competitive cost. During the year the
board undertook a competitive tender for company
secretarial services, concluding with a move to its new
company secretary, NSM.
Day to day dealings with the other key service providers are,
in general, conducted by the Manager with periodic reports
being provided to the board and an emphasis by both the
Manager and the directors on constructive and transparent
relationships.
In maintaining the Company’s reputation and high standards
of business conduct, the board is provided with regular
reports from the Company’s brokers and company secretary.
These alert the board to recent changes in regulation and
market practice, as well as any likely reputational threats
which, in turn, influence the board’s decision-making
process. The board also seeks annual assurance from its
service providers as regards governance, including
whistleblowing, prevention of tax evasion and anti-bribery
policy and procedures.
INVESTEE COMPANIES, THE ENVIRONMENT AND WIDER
ECONOMY
As stated earlier, as an investment trust with no trading
activity or employees, the Company has little direct impact
on the social community or the environment. It is a low
energy user in relation to the carbon reporting regulations
and is exempt from the relevant disclosure requirements.
Agreenhouse gas emissions statement is included in the
Dir
ectors’ Report on page 50 and the Company has given
shar
eholders the option to receive electronic copies of
annual reports and other information.
However, the Company has indirect interests through its
investment portfolio. The Company’s long-term success
isderived from the underlying success of the technology and
communications businesses in which it is invested through
the expertise of the Manager. The Manager in turn is
committed to being a long-term and responsible investor.
The directors believe that the Company is making a positive
contribution to addressing the challenges posed by climate
change through its investments in companies involved in, for
example, renewable energy and its supply chain, companies
which develop software which enables more efficient work
processes and companies which produce power efficient
components. In addition, the Manager’s Stewardship Report
(further described below) sets out the Manager’s approach to
encouraging investee companies to consider environmental
factors in a way that is proportionate to their size.
The Manager is committed to being a responsible investor
and applies, and is a signatory to, the United Nations
Principles for Responsible Investment (“PRI”), which
demonstrates its extensive efforts in terms of the integration
of ESG factors into the investment process, active ownership,
investor collaboration and transparency. Further details of
responsible investing, ESG and stewardship matters are dealt
with on pages 40 and 41 of the Strategic Report.
All engagement with investee companies in the portfolio is
through the Manager and, if strategically relevant, reported to
the board. Following the introduction of the UK Stewardship
Code 2020 by the Financial Reporting Council (FRC), the
Manager refreshed the explanation of its approach to the
stewardship of its clients’ assets. This included the
formalisation of the Manager’s Stewardship Approach and
Policy, which was discussed and approved by the board.
TheManager has been a signatory to the UK Stewardship
Code 2020 since September 2022. The board regularly
reviews the voting record of the Manager and the detailed
reports which set out the reasons why the Manager has
voted against investee company management
recommendations and/or against the recommendations of
third party proxy advisors. TheStewardship Approach and
Policy, the Stewardship Code Report and a summary of the
2024 Voting Record are available on the Manager’s website
www.heralduk.com.
The Company has investments in early-stage companies –
frequently companies which have not reached profitability.
Secondary fund raisings are often required for them to reach
profitability while other companies seek more capital to
acquire businesses. The Manager endeavours to support
these follow-on fund raisings as long as it is in the interests
of the Company’s shareholders. This supportive approach to
investee companies, combined with a willingness to engage
directly with their management, helps to underpin the
Manager’s reputation as an attractive source of finance
among potential investees and brokers. Bearing this in mind,
as well as several other factors including market conditions,
the economic cycle and liquidity, the directors have adopted
aconservative gearing policy. Borrowing facilities are a board
decision, but within this policy the Manager decides on net
cash or gearing levels which are reported on and discussed
at every quarterly board meeting.
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KEY DECISIONS
Key decisions and action taken by the board during the year
which required the directors to have regard to the factors set
out in s172 of the Companies Act 2006, included:
— Following the annual appraisal of the Manager by the
board, the board resolved to continue the appointment
of the Manager as it considers this to be in the best
interests of the Company and its stakeholders.
— Following a competitive tender, the board approved the
appointment of NSM to replace Apex as company
secretary on 1October 2024.
— The nomination committee reviewed the composition of
the board and recommended the appointment of a new
non-executive director. Consequently, it undertook
arecruitment exercise using an external recruitment firm.
Christopher Metcalfe was appointed as a director on
24April 2024.
— Stewardship Approach and Policy and the Stewardship
Code Report: As stated earlier, the board regularly
reviewed stewardship matters during the year and is
pleased to report that the Manager continues to be a
signatory to the FRC Stewardship Code 2020, which
seeks to improve the quality of engagement between
institutional investors and companies to help improve
long-term returns to shareholders and to ensure the
efficient exercise of governance responsibilities.
— The board reviewed the Manager’s latest Climate Report
for the Company which is available on the Company’s
website.
— During the year the directors decided to endorse the
Manager’s recommendation not to put in place any
borrowing facility, because of the cost of borrowing,
continued challenging liquidity and the uncertain
macroeconomic environment. Thedirectors will
consideradopting leverage when market conditions
seem appropriate.
— During the year, the board regularly reviewed buyback
levels and endorsed the continuation of the Manager’s
approach.
The directors are cognisant of their duty under s172 in their
deliberations as a board on all matters. Decisions made by
the board take into account the interests of all the
Company’s key stakeholders and reflect the board’s belief
that the long-term sustainable success of the Company is
linked directly to its key stakeholders.
VIABILITY STATEMENT
The directors’ view of the Company’s viability has not
changed since last year. The Company, as an investment
trust, is a collective investment vehicle designed and
managed for the long-term. The directors consider that
threeyears is an appropriate forward-looking time period to
consider viability. This recognises the Company’s current
position, the investment strategy, which includes investment
in smaller companies, some of which are early-stage and for
which athree-year horizon is a meaningful period over
which to judge prospects, the board’s assessment of the
main risks that threaten the business model and the relatively
fast-moving nature of the sectors in which the Company
invests. Inevitably, investment in smaller and early-stage
companies carries higher risks, both in terms of stock
liquidity and longer-term business viability and this risk is
accepted by the board as necessary to seek to deliver high
returns.
There are no current plans to amend the investment strategy,
which has deliver
ed good investment performance for
shar
eholders over many years and, the directors believe,
should continue to do so. The investment strategy and its
associated risks are kept under constant review by the board.
The board undertook a robust assessment of the risks
pertaining to the Company during the year, including risks to
the Company’s viability, and this is set out in the principal
risks and uncertainties section. This assessment included
emerging risks such as ongoing global tensions (for example
the war in Ukraine, the Israel/Hamas conflict and associated
tensions in the Middle East, and tensions over Taiwan), the
risk arising from the recent increase in shareholder
concentration, and continuing negative growing effects of
climate change. As part of this, the board considered several
severe but plausible scenarios, including the impact of
significant market movements.
Other items relevant in the directors’ assessment of the
Company’s viability were: income and expenses projections
and the expectation that a majority of the Company’s
investments comprise readily realisable securities as
substantiated by liquidity analysis of the portfolio; any
borrowing facilities in place – noting there were none at the
year end; and the fact that as aclosed-ended investment
company the Company is not affected by the liquidity issues
of open-ended companies caused by large or unexpected
redemptions.
The board takes account of the triennial shareholder vote on
whether the Company should continue as an investment
trust. At the AGM in April 2022, 99.99% of votes cast were in
favour of continuation. The next vote, which is an ordinary
resolution, will be at the Company’s forthcoming AGM on
24March 2025. The board has no reason to believe that the
continuation vote will not pass given a combination of
factors including but not limited to: the performance of the
portfolio; feedback from stakeholders, including the
Company’s advisers and several major shareholders; the past
voting of all shareholders, including at the requisitioned
general meeting held on 22January 2025 (the details of
which are contained in the Chairman’s Statement on page 9).
The directors confirm that, based on the above and on
reviews conducted as part of the detailed internal controls
and risk management processes set out on pages 46 and 47,
they have a reasonable expectation that the Company will
continue to maintain its status as an investment trust, to
implement its investment strategy and to operate and be able
to meet its liabilities as they fall due for at least the next
threefinancial years.
INVESTMENT MANAGEMENT
The management contract with HIML is terminable on
12months’ notice by either party. The senior director of
HIML, with overall responsibility for the management of the
Company’s portfolio, is Katie Potts, who is also a substantial
shareholder of HIML Holdings Limited, the parent company
of HIML. For the year under review, HIML was remunerated at
an annual rate of 1.0% of the Company’s net asset value
(excluding current year net revenue) up to £1.25bn and 0.8%
thereafter, calculated using middle-market prices. There is no
performance fee in place. Compensation fees would only be
payable in respect of this 12-month notice period if
termination were to occursooner.
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STRATEGIC REPORT CONTINUED
The board considers that maintaining an appropriate level of
ongoing charges for a specialist trust is in the best interest of
all shareholders. The board is also of the view that calculating
the fee with reference to performance would be unlikely to
exert apositive influence over the long-term performance.
At 31December 2024, Katie Potts held 344,165 or 0.7%
(2023– 478,614 or 0.9% respectively) of the Company’s
shares.
In addition, HIML Holdings Limited held 213,473 shares (0.4%)
in the Company (2023 – nil) and a number of directors of
HIML Holdings Limited and employees of the Manager have
shareholdings in the Company. At 31 December 2024, the
Company was the beneficial owner of 15.4% (2023 – 15.4%)
of the ordinary share capital of HIML Holdings Limited.
The board considers the investment management
arrangements for the Company on a continuing basis and
aformal review is conducted annually. The board considers,
amongst others, the following topics in its review: investment
performance in relation to the investment policy and
strategy; the continuity of personnel managing the assets
and reporting to the board; the level of service provided in
terms of the accuracy and timeliness of reports to the board
and the frequency and quality of both verbal and written
communications with shareholders.
Following the most recent review, the board is of the opinion
that the continued appointment of HIML as investment
Manager, on the current terms, is in the interests of
shareholders due to the experience of the Manager’s
investment team, the strengths of the investment process,
the track record of performance and the quality of service
and information provided to the board.
RESPONSIBLE INVESTING, ESG AND STEWARDSHIP
The United Nations PRI defines responsible investing as a
strategy and practice to incorporate environmental, social
and governance factors in investment decisions and active
ownership. The Stewardship Code 2020 sets out the
principles of stewardship which it defines as the responsible
allocation, management and oversight of capital to create
long-term value for clients and beneficiaries leading to
sustainable benefits for the economy, the environment and
society.
The board has delegated the management of the Company’s
investments to the Manager, HIML, and seeks to ensure that
HIML has a sensible and systematic approach to stewardship.
The board has adopted HIML’s suggested approach, after
considerable deliberations by the board with HIML. As well as
designing arobust framework, HIML regularly evidences to
the board that it has implemented its policies to act as
aresponsible investor on an on-going basis.
In relation to the portfolio, HIML has in turn documented its
approach to environmental, social and governance (“ESG”)
factors which sets out a number of objectives and criteria
that are considered in the context of its responsibility to
manage investments in the financial interests of
shareholders.
As an investment company with no employees, property or
activities outside investment, environmental policy has
limited direct application for the Company. Nevertheless, the
board is required to make a statement on greenhouse gas
emissions and this is included in the Directors’ Report on
page 50.
HIML’s, and thus the Company’s, approach to responsible
investing follows:
1.
HIML does not ex
clude companies from its investment
universe purely on the grounds of an ESG issue although
the technology and communications focus of Herald
implicitly limits investment in a number of the most
environmentally damaging sectors, such as coal mining
or generating energy by burning fossil fuels.
2. It adopts a positive engagement approach whereby
matters are discussed with the management of portfolio
companies with the aim of sharing best practice,
improving the portfolio companies’ relevant policies and
management systems and enabling HIML to consider how
ESG factors could impact long-term investment returns.
3. HIML’s focus on the newer sectors of the economy
means that it believes that in aggregate investee
companies assist in improving the world environmentally.
The largest component of the portfolio is software, which
provides efficiencies for enterprises, governments and
consumers. Other sectors of the portfolio often provide
and improve the enabling supply chain. Technology also
provides energy efficient communications, entertainment
and more; and HIML firmly believes that capitalism and
technological innovation combined offer the best
prospects to address the environmental challenges we
face. This is in contrast to the environmental impact of
the older parts of the economy such as transport,
extractive industries or heavy industrial sectors where
HIML does not invest. The majority of investments in the
technology and communications sectors have a low
carbon footprint and the carbon emissions of the
portfolio are estimated to be a fraction of those relative
to the large companies’ indices in the UK and US.
Furthermore, much of the world’s most advanced
technology and intellectual property tends to reside in
the wealthiest and most advanced economies, which
themselves have strict social and environmental
standards.
4. HIML is a signatory of the PRI, the globally recognised
accord for responsible investment. HIML is also a
signatory to the FRC Stewardship Code2020. In addition,
HIML is a supporter of the Task Force on Climate-related
Financial Disclosures (“TCFD”). HIML contributes to the
development of the rules that govern smaller companies
through its participation in the Quoted Companies
Alliance (“QCA”) and its committees including the QCA
secondary markets group and the QCA remuneration and
corporate governance committees which produce the
guides outlining best practice for UK quoted small
companies.
5. HIML’s investment team undertake in-depth company
research, seeking to identify sustainable competitive
advantages that enable businesses to generate excess
returns on capital and predictable cash flow. As
bottom-up fundamental investors, the team consider the
ESG risks that are material alongside other risks faced by
companies in the portfolio. They investigate and
incorporate any problematic issues into their assessment
and decision-making process; and portfolio holdings are
closely monitored throughout the time that the Company
are shareholders.
6. HIML actively encourages company management to
think about employees, customers and broader
stakeholders ahead of short-term shareholder returns,
and firmly believe that this leads to the best long-term
outcomes for shareholders. This includes engaging and
interacting with company management on strategy,
performance, governance, risk management and their
treatment of employees.
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7. HIML votes the vast majority of the Company’s shares in
investee companies by proxy using the ISS system,
although in exceptional circumstances, HIML will attend
meetings where the Company has large holdings and
there is a contentious issue and where attendance in
person, rather than voting by proxy, is in the Company’s
best interests. Given the wide range of company sizes
and variety of governance and regulatory environments,
HIML does not believe that it is sensible to enforce
prescriptive policies and rules. Furthermore, such an
approach may well prove to be damaging. Voting
decisions made by HIML’s investment team reflect all the
knowledge they have on the industry, company and
management as well as incorporating input from
specialist information sources.
PROXY VOTING
2024 2023
Number of meetings 399 395
Number of meetings voted at 398 394
Number of meetings voted against management 39 42
Number of resolutions 3,692 3,535
Number of resolutions voted against management 71 70
Number of resolutions where abstained or
vote withheld 37 36
During 2024 votes were cast against or abstained where
there were concerns about board composition,
remuneration, governance, auditors, erosion of shareholder
rights and delisting.
Further details on Responsible Investing, ESG and
Stewardship can be found on HIML’s website at
www.heralduk.com.
CLIMATE CHANGE REPORTING
The Company does not seek specific climate outcomes as
part of its investment objective. However, the need to create
a more sustainable world represents a considerable upside
opportunity for companies contributing to the transition, and
a significant downside risk for those which do not. Given the
long-term investment time horizon of at least five years, this
encompasses not only the risks from climate change itself
but also how market forces and regulation could influence
the potential returns for shareholders .
As explained in the Responsible Investing, ESG and
Stewardship section on pages 40 and 41, responsible
investing incorporates environmental factors, which includes
climate change. The board supports the aim of the TCFD for
more effective disclosure of climate-related financial risks
and opportunities across the economy and financial system,
which in turn help the Manager better assess climate-related
risks and opportunities as part of its investment decisions.
Although the TCFD was disbanded in 2023, the TCFD’s
recommendations remain applicable with the IFRS
Foundation taking over the monitoring of the progress of
companies’ climate-related disclosures.
The Manager is also a supporter of the aim of the TCFD and
has historically reported annually on its climate risks and
emissions. Although the Company as an investment
company is exempt from the requirement to produce a TCFD
report, the Manager has produced its second Climate Report
in line with TCFD recommendations for the Company as at
March 2024 (the same date as the Manager’s reporting). The
report layout mirrors the TCFD four core recommendations:
governance; strategy; risk management; and metrics and
targets and includes the estimated emissions of the
Company. The Climate Report can be found on the
Manager’s website: www.heralduk.com.
Emissions
Given the focus of the Company on investing in small
companies in the technology and communications sector,
the Company’s portfolio has a relatively low carbon intensity
and carbon footprint compared to the wider economy and
minimal exposure to “TCFD climate material” sectors. The
Company does not target a specific level of CO2 emissions.
Companies within the technology and communications
sector tend to be enablers of environmental efficiency rather
than contributors to substantial environmental damage.
There is a significant and current environmental challenge
from the enormous and rapidly increasing power
consumption of AI data centres, however, the large AI
companies remain committed to their net zero targets and
are investing billions in green power (frequently nuclear) to
produce the electricity they need.
As climate change and its effects will continue to pose ever
changing systemic risks, the Manager has developed a more
focused emissions based risk methodology to help identify
portfolio companies which may be high emitters. This risk
ranking of the portfolio from lowest to highest risk is set out
in the table that follows. No portfolio companies are in the
highest rating.
The Manager’s Climate Change Risk Matrix Analysis of the
Company’s portfolio
†
Number of Companies
Risk Matrix in HIT Portfolio %
1 – Lowest 205 63
2 – Low 21 6
3 – Medium Low 8 2
4 – Medium High 91 28
5 – High 2 1
6 – Highest 0 0
327 100
The following table analyses those portfolio companies risk
rated medium or above.
Emission Risk Factor BICS Level 3 Sectors Value £m % AUM
5 – High Chemicals 3.4 0.3
4 – Medium High Automotive 0.3 0.0
Electrical Equipment 34.1 2.6
Forestry, Paper & Wood Products 1.2 0.1
Semiconductors 138.4 10.4
Technology Hardware 238.9 18.0
412.8 31.1
3 – Medium Low Aerospace & Defence 6.1 0.5
E-Commerce Discretionary 1.4 0.1
Industrial Intermediate Products 23.0 1.7
Retail – Consumer Staples 0.3 0.0
Retail – Discretionary 0.2 0.0
Wholesale – Discretionary 2.7 0.2
33.8 2.5
† Emissions data based on portfolio holdings as at 31 March 2024.
Companies which have a medium risk factor and above, have
further analysis undertaken by the Manager, and engagement
is undertaken where relevant. Where applicable, voting will
be used, including for relevant shareholder resolutions. The
level of engagement on ESG issues is also considered in the
context of the relative size of the shareholding. Information
with regards to individual company engagements are
reported annually in the Manager’s annual Stewardship
Report available on the website (www.heralduk.com).
The Manager actively encourages investee companies to
reduce emissions and to improve climate-related disclosures
but recognises that there is an additional cost to this. Many of
the companies in the portfolio are early-stage and have far
more limited resources for providing comprehensive ESG
reports than larger, more established companies.
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STRATEGIC REPORT CONTINUED
TCFD Reporting Targets
In 2024 the Manager actively executed its climate
engagement strategy, which focuses on encouraging
companies in the high risk sectors (Medium High, High,
Highest), to report Scope 1 & 2 emissions and, where
applicable, to introduce an emissions reduction plan. After
adetailed review of portfolio holdings emissions reporting,
which included consideration of climate change risk and
business scale, a total of nineteen companies were
contacted and it was requested that they consider improving
their emissions reporting. The current status and reporting
targets set for the Company’s portfolio holdings are shown in
the table below.
Status 31 March Short-Term Long-Term
High Risk Sectors (Medium High, 2024 2023 (2030) (2040)
High, Highest)† Target Target
% Reporting Scope 1&2 By Value 77% 60% 90% 100%
% Emissions Reduction Plan By Value 66% 45% 90% 100%
Short-Term Long-Term
(2030) (2040)
Total Portfolio† Target Target
% Reporting Scope 1&2 By Value 63% 50% 60% 90%
% Emissions Reduction Plan By Value 42% 38% 50% 90%
† Data based on portfolio holdings as at 31 March 2024.
Significant progress on improving emissions reporting has
been made by portfolio holdings in the last year, we expect
that this trend will continue, however there is increased
uncertainty, in particular due to attitudes to ‘green’ policies in
the United States.
Comments on Metrics and Targets in General
The HIT Climate Report prepared by the Manager contains
metrics for the portfolio including, but not limited to: Carbon
Footprint; Weighted Average Carbon Intensity; and
Emissions. These metrics and further information with
regards to the challenges of data collection, estimation and
aggregation can be found in this Climate Report on the
Manager’s website: www.heralduk.com.
On behalf of the board
ANDREW JOY
CHAIRMAN
19 February 2025
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ANDREW JOY
Andrew Joy was appointed to the board on 1 October 2022
and became Chairman of the board and the nomination
committee on 18 April 2023. Andrew is a senior advisor of
Stonehage Fleming, a leading international multi-family
office and chairman of the investment committee of FPE
Capital.
Andrew was one of the founding partners of Cinven,
aleading private equity firm investing in Europe and U.S. and
has been chairman or director of numerous growth
companies over the past 30 years. He was previously
chairman of the British Venture Capital and Private Equity
Association, The Biotech Growth Trust plc and a director of
the European Venture Capital Association.
He is highly regarded for his extensive knowledge of the
financial sector and of the high-growth part of the smaller
company sector.
STEPHANIE EASTMENT
Stephanie Eastment was appointed to the board on
1December 2018 and is chair of the audit committee. She is
the non-executive senior independent director of Murray
Income Trust plc, a non-executive director and audit
chairman of Impax Environmental Markets plc and Alternative
Income REIT plc, and a non-executive director of RBS
Collective Investment Funds Limited.
Stephanie qualified as a chartered accountant at KPMG and
subsequently worked in financial services for Wardley Asset
Management and UBS (with roles in accounts, compliance
and taxation) before moving to Invesco Asset Management
where she specialised in investment companies for 22 years.
She is also a chartered company secretary.
She has extensive accounting, corporate governance and
investment trust sector experience and provides constructive
oversight and challenge not only as a director, but as the
audit committee chair.
PRIYA GUHA MBE
Priya Guha MBE was appointed to the board on 13 December
2023. She has a portfolio of roles across the global and
UKtechnology and innovation landscape including as
anon-executive director at UK Research & Innovation and
the Digital Catapult, a member of the Investment
Governance Board at Future Planet Capital, a UK VC Fund
and an advisor to various start-up companies including
Gallos Technologies. She is also a non-executive director at
Reach PLC and chairs its sustainability committee.
She has significant knowledge of the global technology
sector and valuable experience in both public and private
sectors.
HENRIETTA MARSH
Henrietta Marsh was appointed to the board on 1 September
2019, and will be appointed the Company’s senior independent
director at the conclusion of the forthcoming 2025 AGM. She
has a background in fund management, having worked in UK
small cap and private equity investment over several decades.
From 2005 until 2011, she was AIM fund manager at Living
Bridge Equity Partners. Prior to that, Henrietta spent 14 years at
3i in several roles, including in private equity and as fund
manager of 3i Smaller Quoted Companies Trust plc (1997–
2002). Her earlier career was with Morgan Stanley and Shell.
Mor
e r
ecently she has pursued a non-executive career, having
served on the boards of discoverIE plc, Alternative Networks
plc, Electric Word plc and Gamma Communications plc
(AIM-listed) where she was the senior independent director.
She has direct experience and understanding of the
investment process required in the Company. She takes the
lead on the board in reviewing HIML’s stewardship approach.
CHRISTOPHER METCALFE
Christopher Metcalfe was appointed to the board on 24 April
2024. He was previously a non-executive director of abrdn
Smaller Companies Income Trust plc until its merger with
Shires Income plc in December 2023.
Christopher is currently chairman of Martin Currie Global
Portfolio Trust plc, non-executive director at JP Morgan US
Smaller Companies Investment Trust plc and a non-executive
director of Columbia Threadneedle UK Capital and Income
Investment Trust plc.
He has considerable investment management experience
and a deep understanding of UK investors having worked
previously in senior fund management positions at Newton
Investment Management, Schroder Investment Management
and Henderson Administration Group plc.
JAMES WILL
James Will was appointed to the board on 21 April 2015 and
became senior independent director on 20 April 2021. He will
retire from the board and the Company at the conclusion of
the AGM in March 2025. Hewas previously chairman and
asenior corporate finance partner of law firm Shepherd and
Wedderburn LLP. He also headed the law firm’s financial
sector practice. As a lawyer, he was for over 20 years
involved in advising smaller quoted technology companies
on a range of corporate transactions, including IPOs,
secondary fundraisings and mergers and acquisitions.
Jamesis a non-executive director of Invesco Asia Dragon
Trust plc, BlackRock Throgmorton Trust plc and JPMorgan
European Discovery Trust plc. He was previously
non-executive chairman of The Scottish Investment Trust plc
and of Asia Dragon Trust plc and anon-executive director of
JP Morgan Global Growth & Income plc.
He has significant investment trust experience and in an
environment of increasingly complex legal and regulatory
framework, his legal counsel has a valued contribution. He
has taken the lead ensuring the Company’s legal agreements
are in line with best practice.
All directors are, in the opinion of the board, independent of
the management company
.
All directors are non-ex
ecutive.
All directors are members of the audit committee except for
the chairman. All directors are members of the nomination
committee.
YOUR BOARD OF DIRECTORS
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CORPORATE GOVERNANCE REPORT
GOVERNANCE PRINCIPLES
The board is committed to achieving and demonstrating
high standards of corporate governance. This statement
outlines how governance principles were applied
throughout the financial year. The UK Corporate
Governance Code (“UK Code”) issued by the Financial
Reporting Council (“FRC”) in July 2018 and the AIC Code of
Corporate Governance (“AIC Code”) issued in February 2019
are the applicable governance codes in this regard.
The FRC has confirmed that by following the AIC Code,
investment company boards will meet their obligations in
relation to the UK Code and paragraph 9.8.6 of the Listing
Rules. The AIC Code is available on the AIC website at
www.theaic.co.uk, and the UK Code on the FRC website at
www.frc.org.uk.
STATEMENT OF COMPLIANCE
The directors believe that the Company has complied with
the AIC Code during the year and up to the date of this
report, and thereby the provisions of the UK Code except as
set out below.
The UK Code includes provisions relating to the role of the
chief executive; executive directors’ remuneration; and the
need for an internal audit function. As an investment company
which outsources its administration to third-party providers,
the Company has no chief executive or other executives and
therefore these provisions are not applicable. It does not
maintain an internal audit function. The audit committee
considers the need for such a function at least annually and
additional detail is provided later on in this statement.
THE ROLE OF THE BOARD
The board has overall responsibility for the Company’s
affairs and for setting the Company’s purpose and strategy.
The s172 Statement on pages 37 and 38 sets out in detail the
parties, shareholders and other stakeholders, and factors the
directors consider as they perform their duties and the
board its role. There is an annual cycle of board meetings.
Aformal schedule of matters reserved for the board has
been established covering strategy; structure and capital;
investment objective, policy and limits; gearing; dividend
and corporate governance policy; performance; key
contracts; risk; financial reporting and board membership.
This is reviewed annually to ensure compliance with latest
regulatory requirements and best market practice.
The board is responsible for the approval of the annual and
half-yearly reports and board-published documents and for
ensuring that such documents provide a fair, balanced and
understandable assessment of the Company’s position and
prospects.
The board’s oversight of the Company’s risk management
and internal controls is set out in detail later in this report on
pages 46 and 47. Full and timely information is provided to
the board to enable it to function effectively and to allow
directors to discharge their responsibilities.
CHAIRMAN
The chairman of the Company, Andrew Joy, is responsible
for organising the business of the board, ensuring its
effectiveness and setting its agenda.
SENIOR INDEPENDENT DIRECTOR (“SID”)
James Will was appointed SID on 20 April 2021 and following
his retirement at the conclusion of the AGM on 24 March
2025 will be succeeded by Henrietta Marsh. The SID provides
asounding board for the chairman; is an intermediary for
other directors if required; and is an additional channel for
shar
eholders if contact thr
ough the chair or company
secretary has failed to resolve an issue or where that channel
would not be appropriate.
BOARD COMPOSITION AND INDEPENDENCE OF
DIRECTORS
The board currently comprises six directors. All are
non-executive. All directors will retire at the AGM and offer
themselves for re-election, other than James Will, who is
retiring, and Christopher Metcalfe, who will stand for election
as a new director having been appointed during the year.
The directors believe that the board has a balance of skills
and experience which enable it to provide effective
leadership and proper governance of the Company.
All the directors are considered by the board to be
independent of the Manager and free of any business or
other relationship which could interfere with the exercise of
their independent judgement.
The board believes that James Will continues to be
independent, notwithstanding that, having been appointed in
April 2015, he will have exceeded the nine years’ limit set out
in the UK and AIC Codes during the year. This ensured an
orderly succession which avoided two experienced directors
leaving the board at the 2024 AGM, and is in accordance
with the Company’s policy which permits flexibility. He will
retire at the conclusion of the AGM in March 2025.
There is an agreed procedure for directors to seek
independent professional advice if necessary at the
Company’s expense.
Conflicts of interest are unusual but in the event of one
occurring, there is an established procedure to manage them.
BOARD DIVERSITY
Diversity policy
Appointments are based on merit with due regard to the
benefits of diversity. The board considers many factors,
including the balance of skills, knowledge, experience,
gender, ethnicity, cognitive and personal strengths when
reviewing its composition and appointing new directors.
Theaim of the policy is to identify those with the best range
of skills and experience to complement existing directors in
order to provide effective oversight of the Company and
constructive support and challenge to the Manager.
Summary biographical details of the directors, including their
relevant experience, are set out on page 43.
Implementation of the Board’s Diversity Policy
The board reports against the “comply or explain” statement
targets set out in the FCA’s UK Listing Rules 6.6.6R(9)(a) that
at least 40% of individuals on the board should be women; at
least one individual on the board should be from a minority
ethnic background; and at least one of the senior board
positions of Chair, SID, CEO and CFO should be held by
awoman.
At 31 December 2024, and at the date this annual report and
financial statements was signed, the board comprised six
non-executive directors. Two of the targets are met because
there are three women on the board (50%) and one director
is from a minority ethnic background. The Company does
not meet the third target of a woman holding one of the
specified senior positions on the board but, in accordance
with AIC guidance, the board does not consider this target to
be applicable as the Company is externally managed and
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does not have any executive staff – specifically it does not
have either a CEO or CFO. However, the board considers that
the chair of the audit committee of an investment company
is a senior position, and this is held by a woman. Thus, the
board considers the Company to meet the spirit of this
target. It should be noted that, assuming she is re-elected,
Henrietta Marsh will become the SID with effect from the
conclusion of the AGM on 24 March 2025 at which time the
board will meet all of the FCA targets.
Board as at 31 December 2024
The following information has been provided by each
director. As the Company has no employees, no information
is included for executive management. The board has
resolved that the Company’s year end date be the most
appropriate date for disclosure purposes. There have been
no changes since 31 December 2024.
Number of
Number of Percentage of senior positions
board members the board on the board*
Men 3 50% n/a
Women 3 50% n/a
Number of
Number of Percentage of senior positions
board members the board on the board*
White British or
other White
(including
minority-white
groups) 5 83.3% n/a
Mixed/Multiple
Ethnic Groups 1 16.7% n/a
* As set out above, the board does not consider this column to be
applicable.
TERMS OF APPOINTMENT
The terms and conditions of directors’ appointments are set
out in formal letters of appointment which are available for
inspection upon request. There are no service contracts
between the Company and any of the directors.
Under the provisions of the Company’s articles of association, a
director appointed during the year is required to retire and seek
election by shareholders at the next AGM. All directors retire
annually and, if appropriate, offer themselves for re-election.
DIRECTORS’ MEETINGS
The board considers that it meets sufficiently regularly to
discharge its duties effectively. The table below shows the
attendance record for scheduled board and committee
meetings held during the year including the annual strategy
day. Additionally, ad-hoc meetings are held as required for
administrative purposes.
Number of Board Audit Nomination
scheduled meetings 5 2 1
Andrew Joy
1
5 2 1
Stephanie
Eastment 5 2 1
Priya Guha 5 2 1
Henrietta Marsh 4 1 1
Christopher Metcalfe
2
3 1 1
Karl Sternberg
3
1 – –
James Will 5 2 1
1 The chairman is not a member of the audit committee, but attends the
committee by invitation of the audit chairman.
2 Christopher Metcalfe was appointed on 24 April 2024 and attended all
meetings in the period since his appointment.
3 Karl Sternberg stepped down at the conclusion of the AGM held on
23April 2024.
COMMITTEES OF THE BOARD
The board has two committees: the audit committee and the
nomination committee. The role, responsibilities and
activities during the year of the audit committee are detailed
in its report on page 48 and those for the nomination
committee are shown below.
The board reviewed the terms of the management
agreement between the Manager and the Company and
determined it was in the best interests of shareholders to
re-appoint the Manager, as set out on page 40. The board
subsequently determined that it would set up a management
engagement committee in 2025. Its terms of reference will
be available in due course alongside the other committees’
terms of reference on the Company’s website. Aseparate
remuneration committee has not been established as all
directors are non-executive and the board as a whole
considers directors’ remuneration in line with the
remuneration policy set out on page 52.
DIRECTORS: ELECTION AND RE-ELECTIONS
All directors standing for re-election at the forthcoming AGM
served throughout the year. Christopher Metcalfe will be
standing for election having joined the board on 24 April
2024; he served from that date. The biographies of the
directors are set out on page 43 and are incorporated into
this report by reference. They include the skills and
experience that each director brings to the board in order to
contribute to the long-term sustainable success of the
Company. The attendance record of each director at
meetings of the board and its committees throughout the
year is shown in the Directors’ Meetings section.
NOMINATION COMMITTEE
The nomination committee consists of all the directors and is
chaired by the chairman of the board. The committee meets
on an annual basis and at such other times as may be
required. The committee has written terms of reference
which include identifying and nominating new candidates for
appointment to the board including engagement of
independent search consultants, board and director
appraisal, succession planning and training. The committee
also considers whether directors should be recommended
for re-election by shareholders. The committee is
responsible for considering directors’ potential conflicts of
interest and for making recommendations to the board on
whether or not the potential conflicts should be authorised.
The terms of reference are reviewed annually and are
available on request from the company secretary and at
www.heralduk.com.
Appointments to the Board
Appointments to the board are made on merit. They are
assessed in accordance with the following standards:
— when seeking to recruit, the nomination committee will
evaluate the skills, experience, independence, knowledge
and diversity of the board and prepare a description of
the role and capabilities required to fulfil the appointment
and will normally appoint an independent agency to
assist in the recruitment process or use open
advertisements;
— it will ensure that a diverse group of candidates is
considered;
— candidates will be considered against objective criteria
having regards to the benefits of diversity – including
gender, social and ethnic background and personal
strengths, experience and knowledge; and
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CORPORATE GOVERNANCE REPORT CONTINUED
— the demands on each candidate’s time and
consideration of their other commitments.
During the year the committee held one scheduled and
fourad hoc meetings. Itundertook the following activities:
— updated the Company’s succession planning;
— completed its search for a non-executive director and
recommended his appointment to the board. Cornforth
Consulting Limited, an independent firm with no
connection to the Company, was used to assist in the
search for this new director;
— reviewed the board and its committees’ structures, size
and composition and considered the skills required of
current and future directors;
— undertook an independent board evaluation using an
external consultant, Lintstock Limited and reviewed the
results of the evaluation as detailed further below;
— considered the independence of each director;
— considered each director’s time commitment;
— considered the board’s skills matrix;
— reviewed and approved the Company’s diversity policy
statement and disclosure on diversity targets; and
— reviewed and approved the Company’s tenure and
succession planning policy.
Board and chairman’s tenure
The nomination committee is responsible for considering the
policy on tenure of the chairman of the board and planning
for the chair’s succession. In line with the board’s policy on
director tenure, which meets the recommendations of the
AIC Code principles, the chairman’s appointment may extend
beyond nine years if required to provide flexibility and an
orderly succession during the handover period. This principle
is further extended to all members of the board.
Performance evaluation
During the year, the nomination committee met to assess
the effectiveness of the chairman, each director, the board
as awhole, its committees and the Manager. The evaluation,
led by an external consultant Lintstock Limited (“Lintstock”),
required the directors to complete a short questionnaire
based on open and closed questions on the operation of the
board and its committees and the individual contribution of
directors and the performance of the chairman. Following
these, Lintstock undertook an individual interview with each
director and summarised results of the process were
reviewed by the chairman and discussed with the board. The
appraisal of the chairman was reviewed by the senior
independent director and discussed with the chairman. The
appraisals and evaluations considered, amongst other
criteria, the board composition and succession planning,
board dynamics, reviewed meetings, information, support
and board committees, the investment strategy,
performance and the Company’s top strategic challenges.
The review generally endorsed the board’s current approach
and suggested a small number of process improvements
which are being implemented.
The nomination committee reported to the board on each
director’s performance, the process for which is described
above, and concluded that their performance continues to be
effective, they remain committed to the Company and have
sufficient time to fulfil their duties. The board therefore
recommends the re-election of Andrew Joy, Priya Guha,
Stephanie Eastment and Henrietta Marsh and the election of
Christopher Metcalfe at the forthcoming AGM in March 2025.
Induction and training
Training for new directors is tailored to the particular
circumstances of the individual appointee. Regular briefings
are provided on changes in regulatory requirements that
could affect the Company and the directors. Directors
receive other relevant training as necessary.
RISK MANAGEMENT AND INTERNAL CONTROLS
The directors acknowledge their responsibility for the
Company’s risk management and internal controls systems
and for reviewing their effectiveness. The systems are
designed to manage rather than eliminate the risk of failure
to achieve business objectives and can only provide
reasonable but not absolute assurance against material
misstatement or loss.
The board confirms that there is a continuing process for
identifying, evaluating and managing the significant and
emerging risks faced by the Company, in accordance with
the guidance on risk management, internal control and
related financial and business reporting, published by the
FRC. This takes into account ongoing and emerging risks,
procedures and controls and, after mitigation, identifies the
significant risks as summarised on pages 35 to 37.
The directors confirm that they have reviewed the
effectiveness of the Company’s risk management and
internal control systems and they have procedures in place
to review their effectiveness on a regular basis. No significant
weaknesses were identified in the year under review and in
the period up to and including the date of this report.
The practical measures to ensure compliance with regulation
and company law, and to provide effective and efficient
operations and investment management, have been
delegated to HIML, NSM (the company secretary) and
BNYMIL.
The audit committee and board monitor performance of the
functions performed by HIML, the company secretary and
BNYMIL through regular review. Since July 2014, when HIML
became the Company’s AIFM under the Alternative
Investment Fund Managers Directive (“AIFMD”), the audit
committee and board also monitor the controls managed by
the AIFM.
The AIFM has a risk policy covering the risks associated with
its management of the portfolio and it has in place its own
risk management procedures, which are periodically
reviewed. Risk limits are set by the AIFM and approved by the
audit committee taking into account several factors,
including investment strategy and risk appetite. The
investment policy limits are described in the Strategic Report
and are monitored at each board meeting, taking account of
appropriate sensitivity analysis.
HIML has a compliance function in accordance with the
FCAregulations. The compliance function provides the
auditcommittee and board with a report on its monitoring
procedures on a regular basis. Compliance monitoring by
HIML includes risk-based internal monitoring as well as
external monitoring of services that have been delegated to
third parties – principally fund accounting and company
secretarial services.
For fund accounting, monitoring includes reviewing the
monthly net asset value produced by BNYMIL versus HIML’s
own system, reviewing BNYMIL’s client accounting
compliance reports and internal audit confirmations and
reviewing KPMG’s annual Service Organisation Control
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(“SOC1”) and Centrally Managed Information Technology
Services (“CMITS”) reports on BNYMIL. The audit committee
also receives regular compliance reports from BNYMIL,
including performance against service level standards.
Under AIFMD, the Company has appointed a depositary,
BNYMIL, whose responsibilities include cash monitoring and
safekeeping of the Company’s assets. It also acts as the
custodian. The scope of the fund accounting services
includes reconciliations to custody records. Provision of
custody services by BNYMIL is covered by a SOC1 report,
acopy of which is available to audit committee members.
As set out in the Strategic Report, the board, using the
detailed risk and control review work of the audit committee,
undertakes a robust and ongoing assessment of the
Company’s risk management and controls. This active
monitoring ensures consideration is given regularly to the
nature and extent of the risks facing the Company. Where
new risks, or changes in risk, are identified during the year,
these procedures also provide a mechanism to assess
whether further action is required to manage the changes
identified.
The board confirms that these procedures have been in
place throughout the year under review and that they
continue to be in place up to the date of approval of this
report.
ACCOUNTABILITY AND AUDIT
The respective responsibilities of the directors and the
auditor in connection with the financial statements are set
out on page 55.
DISCLOSURES REQUIRED BY UK LISTING RULE 6.6.4
The above rule requires listed companies to report certain
information in a single identifiable section of their annual
financial reports or a cross reference table indicating where
the information is set out. None of the prescribed
information is applicable to the Company for the year under
review.
RELATIONS WITH SHAREHOLDERS
The board places great importance on communication with
shareholders. The Company’s Manager meets with
shareholders and reports to the board. The chairman is also
available to meet shareholders and undertook several such
meetings during the year, both with and without the
Manager. Shareholders wishing to communicate with the
chairman or any other director may do so by writing to the
company secretary at the registered office of the Company
which is shown on page 81.
Information is provided to all shareholders via the annual and
half-yearly financial statements and also by the publication of
daily NAVs and monthly factsheets.
The Company’s AGM provides a forum for communication
with all shareholders. The level of proxies lodged for each
resolution is announced at the meeting and is published on
the Manager’s website, www.heralduk.com, subsequent to
the meeting. Shareholders and potential investors may obtain
up-to-date information on the Company from the Manager’s
website.
In line with governance recommendations, if 20% or more of
votes cast are against any resolution, the Company would
announce what action it intended to take to consult
shareholders views and would provide a summary of the
outcome and actions it intended to take within six months of
the date at which the vote was held. The board confirms that
none of the r
esolutions put to shar
eholders at the AGM in
2024 received 20% or more of the votes cast against.
PURCHASE OF OWN SHARES AND SHARE ISSUANCE
At the AGM of the Company to be held on 24 March 2025,
the Company will as usual be seeking authority to make
purchases of the Company’s ordinary shares. Shares will only
be bought back at a time when the Company’s shares are
trading at a discount to its prevailing net asset value.
In addition, the board will be seeking a new authority to allot,
or sell from treasury, alimited number of shares for cash on a
non-pre-emptive basis. Shares issued under this authority,
will be at aprice that is equal to or greater than the
Company’s prevailing NAV per share, plus any applicable
transaction costs.
The Company does not have a rigid buy back policy
reflecting that it is best placed to operate its investment
mandate, which by its nature is investment in less liquid small
and mid-capital stocks, as a closed-ended vehicle. Even so,
over its history the Company has bought back shares to the
value of £465m, with £127m (10.3% of the issued share
capital at the start of the year) being bought back in 2024
(2023 – £107m and 9.7%, respectively). Share buy backs have
returned substantial capital to shareholders over the years,
and the board seeks this authority again in order to continue
returning capital in a considered way.
The directors unanimously recommend all holders to vote in
favour of all the resolutions to be proposed at the AGM as
they will be doing with their own holdings.
On behalf of the board
ANDREW JOY
CHAIRMAN
19 February 2025
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AUDIT COMMITTEE REPORT
AUDIT COMMITTEE
The audit committee is made up of all the independent
non-executive directors, with the exception of the chairman,
although he joins by invitation. The committee believes that
it is in the best interests of the Company for the chairman of
the board to attend. The committee is chaired by Stephanie
Eastment and the committee meets at least twice a year.
The committee considers that at least one of its members
has recent and relevant financial experience and that the
committee as a whole has competence relevant to the
sector in which the Company operates. Its authority and
duties are defined within its written terms of reference which
are available on request from the company secretary and on
the Manager’s website: www.heralduk.com.
ROLE AND RESPONSIBILITIES
The committee’s responsibilities include:
— monitoring and reviewing the integrity of the half-yearly
and annual financial statements and any formal
announcements relating to the Company’s financial
performance including: ensuring compliance with
statutory and listing requirements; appropriateness of
accounting policies and any financial judgements and key
assumptions;
— at the request of the board, considering whether the
annual report, when taken as a whole, is fair, balanced
and understandable and provides the information
necessary for shareholders to assess the Company’s
position, performance, business model and strategy;
— reviewing the adequacy and effectiveness of internal
control and risk management systems and considering
the key risks and emerging risks facing the Company;
— making recommendations to the board in relation to the
appointment of the external auditor and approving the
remuneration and terms of its engagement;
— overseeing and managing the audit tender and selection
processes and making recommendations to the board
about the appointment, reappointment and removal of
the external auditor;
— developing and implementing policy on the engagement
of the external auditor to supply non-audit services;
— management of the relationship with the external auditor
including: the scope, nature and planning of the audit;
discussion of matters of audit focus; evaluation of
external auditor’s results; and review and monitoring the
independence, objectivity and effectiveness of the
external auditor taking into consideration relevant UK
professional and regulatory requirements;
— reviewing whistleblowing arrangements in place within
HIML; and
— considering annually whether there is a need for the
Company to have its own internal audit function.
COMMITTEE ACTIVITY FOR THE YEAR
The committee fulfilled all the above roles and
responsibilities for the year under review, with the exception
of audit tendering as this was undertaken in 2019.
The Company’s external auditor is PricewaterhouseCoopers
LLP (“PwC”). As part of the year end audit process, the
committee reviewed the audit plan at an early stage. This
review cover
ed the scope of the audit, materiality, ensuring
that the auditor’s objectives would meet the committee’s
expectations and the key audit and accounting matters to be
considered. During the audit the committee chair liaised with
both the company secretary and PwC to receive progress
updates and reviewed the auditor’s draft audit results report
prior to the year end committee meeting at which the annual
financial report was reviewed.
RISK MANAGEMENT AND INTERNAL CONTROL
The extensive array of internal controls adopted by the
Company are set out in the Corporate Governance Report.
The board as a whole is responsible for the effectiveness of
internal control mechanisms but it is informed by more
specific work carried out by the audit committee.
SIGNIFICANT ISSUES RELATING TO THE 2024 FINANCIAL
STATEMENTS
The UK Corporate Governance Code requires us to describe
any significant issues considered in relation to the financial
statements and how those issues were addressed. Two
matters of risk of particular focus at the statement of
financial position date are the risks that investments might
not have been correctly valued or beneficially owned. The
committee receives bi-annual reports from the depositary
confirming the valuation, existence and ownership of the
Company’s investments as well as the year end auditor’s
report on these items. Noissues were discovered.
As part of the committee’s review of the annual report and
financial statements, it considers the appropriateness of
accounting policies. This includes the appropriateness of the
going concern basis for the preparation of the financial
statements, together with the disclosures in respect of this
assessment.
INTERNAL AUDIT
The audit committee carried out its annual review of the
need for an internal audit function. The committee continues
to believe that the compliance and internal control systems
in place within the Manager and the administrator provide
sufficient assurance that asound system of internal control,
which safeguards shareholders’ investment and the
Company’s assets, is maintained. An internal audit function,
specific to the Company, is therefore not considered
necessary.
FINANCIAL REPORTING COUNCIL (“FRC”) REVIEW OF ANNUAL
REPORT 2023
In 2024 the FRC reviewed the Company’s 2023 Annual
Report. It was pleasing to note that the FRC letter to the
Chairman of the board setting out the results of its review
confirmed that it had no matters to raise in respect of
Company’s compliance with corporate reporting
requirements. The letter went on to note that it “provided no
assurance that the annual report and accounts are correct in
all material respects; the FRC’s role is not to verify the
information provided to it but to consider compliance with
reporting requirements.”
This FRC review was the second one undertaken of the
Company’s financial reporting to shareholders of recent date,
both of which confirmed there were no matters to raise.
These results reflect the hard work of the audit committee,
the board, and the Company’s Manager and other
professional service providers.
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EXTERNAL AUDITOR
The committee reviewed the independence and objectivity
of the auditor, its performance and effectiveness by meeting
with the audit partner to discuss the year’s audit. Part of that
process required the auditor to give the committee an
assessment of how the audit team identified and managed
threats to its independence. The committee received
confirmation from the auditor that it has complied with the
relevant UK professional and regulatory requirements on
independence. It also took into account the findings in the
most recent FRC audit quality inspection report on PwC. The
committee does not believe that there has been any
impairment to the auditor’s independence.
This year’s audit was the sixth performed by PwC since it was
appointed on 21 October 2019 following an audit tender
process. Jeremy Jensen has taken over as engagement
partner following Allan McGrath’s completion of five years in
the role. As part of the year end committee meeting, the
committee sought the views of the Manager and
administrator on the effectiveness and performance of the
audit team. No issues were raised. As set out above, the
committee reviewed the performance and effectiveness,
independence and objectivity of the auditor for the year
under review. This also included consideration of the
experience of the audit partner and staff, the quality of
service, review of the audit plan, execution and reporting,
and attendance of the audit committee chair in additional
meetings with the auditor as part of the annual and
half-yearly reporting process. Allresults were satisfactory.
Accordingly, the committee has recommended that PwC be
reappointed at the forthcoming AGM.
PwC have indicated their willingness to continue in office and
resolutions proposing the reappointment of PwC and
authorising the committee to determine their remuneration
for the ensuing year will be proposed at the forthcoming AGM.
The next competitive audit tender will occur prior to the
financial year ending 31 December 2029 in line with legal
requirements.
NON-AUDIT SERVICES
The committee’s policy is that non-audit work should be
limited to those matters where the external auditor is most
appropriately placed to carry out the work, unless there is
aconflict of interest. All non-audit services must be approved
in advance. PwC did not provide any non-audit services to
the Company in this or the previous accounting year.
STEPHANIE EASTMENT
AUDIT COMMITTEE CHAIR
19 February 2025
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DIRECTORS’ REPORT
Directors are expected to notify the board if they become
aware of any actual or potential conflict of interest for
themselves or their connected parties, whether on an
ongoing basis or in relation to a particular transaction.
Having considered the lists of potential conflicts there were
no situations which gave rise to a direct or indirect interest of
a director which conflicted with the interests of the
Company.
The board have recorded within its conflicts register that
Priya Guha is a director of an entity in which the Company is
invested and have concluded that as the management of the
investment portfolio is delegated to HIML, there is no conflict
arising from this appointment. Should a decision need to be
taken by the board in relation to this investment, the relevant
director would abstain themself from any such discussion
and decision.
BRIBERY ACT 2010 AND CRIMINAL FINANCES ACT 2017
The board has a zero tolerance policy towards bribery and
the criminal facilitation of tax evasion. It is committed to
carrying out business fairly, honestly and openly.
TheManager, administrator and company secretary also
adopt a zero tolerance approach and have policies and
procedures in place to prevent both bribery and the
facilitation of tax evasion.
GREENHOUSE GAS EMISSIONS
The Company has no employees, physical assets, property or
operations of its own, does not provide goods or services
and does not have its own customers. It follows that the
Company has little to no direct environmental impact. In
consequence, the Company has limited greenhouse gas
emissions to report from its operations aside from travel to
board meetings, nor does it have responsibility for any other
sources of emissions under the Companies Act 2006
(Strategic Report and Directors’ Reports) Regulations 2013.
The Company consumed less than 40,000 kWh of energy
during the year.
DIRECTOR INDEMNIFICATION AND INSURANCE
The Company has entered into deeds of indemnity in favour
of each of the directors. The deeds cover any liabilities that
may arise to a third party, other than the Company, for
negligence, default or breach of trust or duty. The directors
are not indemnified in respect of liabilities to the Company,
any regulatory or criminal fines, or any costs incurred in
connection with criminal proceedings in which the director
isconvicted or civil proceedings brought by the Company
inwhich judgement is given against him. In addition, the
indemnity does not apply to any liability to the extent that it
isrecovered from another person.
The Company maintains Directors’ and Officers’ liability
insurance.
PRINCIPAL RISKS AND UNCERTAINTIES
These are set out as part of the Strategic Report.
SHARE CAPITAL
Details of the Company’s share capital and changes thereto
are disclosed in the Strategic Report on page 34 and note 12
on page 73 of the financial statements.
ARTICLES OF ASSOCIATION
Any amendments to the Company’s Articles must be made
by special resolution at a general or annual general meeting
of the Company.
The directors present their Directors’ Report for the year
ended 31 December 202
4
. The Strategic Report and the
Corporate Governance Report on pages 34 to 47 form a
part of the Directors’ Report.
RESULTS AND DIVIDEND
The net asset value (“NAV”) of the Company as at
31December 2024 was 2,488.2p per ordinary share (2023 –
2,219.2p). This represented an increase of 12.1% during the
year, compared to an increase in the comparative total
return indices of 5.0% for the Deutsche Numis Smaller
Companies plus AIM (ex. investment companies) Index and
an increase of 25.9% for the Russell 2000® Technology
Index (small cap) (in sterling terms). The discount at year end
was 2.3% (2023 – 13.4%).
The directors do not recommend a dividend for the year
ended 31 December 2024 (2023 – nil) as the revenue
reserve is in deficit. See note 7 on page 71.
DIRECTORS
The directors of the Company who were in office during the
year and up to the date of signing the financial statements
are listed on page 43.
GOING CONCERN
The directors have undertaken a review of the Company’s
financial position and its ability to continue as a going
concern. This review took account of rising global tensions –
for example the war in Ukraine, the Israel/Hamas conflict and
associated tensions in the Middle East, and tensions over
Taiwan. These uncertainties have created supply chain
disruption and exacerbated inflationary pressures worldwide.
The Company’s principal risks are market-related and the
current market conditions have demonstrated the resilience
of the Company and its investment objective and policy.
Anexplanation of the market, liquidity and credit risks and
how they are managed is contained in note 17 to the
financial statements. The Company’s assets, the majority of
which are investments in quoted securities, exceed its
liabilities significantly. Allborrowings require the prior
approval of the board. TheCompany had no borrowings as
at 31 December 2024. Inaccordance with the Company’s
articles of association, shareholders have the right to vote on
the continuation of the Company as an investment trust
every three years and an ordinaryresolution to that effect
was last approved at the AGM in April 2022 with 99.99% of
votes cast in favour. The next continuation vote will be at the
forthcoming AGM on 24 March 2025. With respect to this,
the board has considered the past voting of all shareholders,
including at the requisitioned general meeting held on
22January 2025 (the details of which are contained in the
Chairman’s Statement on page 9). In conclusion, after
weighing all available information and following consultation
with its advisers and several major shareholders, the board is
of the opinion that it has no reason to believe that the
continuation vote will not pass.
Further to the above conclusion, and there being no
material uncertainties that call into question the Company’s
ability to continue to be a going concern for at least
12months from the date of approval of these financial
statements, the board is confident that the Company will be
able to continue in operation and meet its liabilities as they
fall due. Accordingly, the financial statements have been
prepared on the going concern basis.
CONFLICTS OF INTEREST
The Company maintains a register of directors’ interests
which is reviewed at each board or committee meeting. The
board is able to authorise conflicts if appropriate.
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INTERESTS IN THE COMPANY’S SHARES
At year end the Company was aware of the following
substantial interests in the voting rights of the Company.
% of issued share
capital as notified
to the Company
Saba Capital Management, L.P. 20.1%
Rathbone Investment Management 11.4%
Societe Generale 5.9%
Interactive Investor Services Limited 5.8%
Hargreaves Lansdown Stockbrokers 5.4%
Investec Wealth & Investment 4.7%
Charles Stanley & Co 3.9%
JM Finn & Co 3.8%
Brewin Dolphin Securities 3.0%
At the latest practicable date prior to the publication of this
report, the Company has not been notified of any changes to
the above interests apart from notifications received from
Saba Capital Management, L.P. (“Saba”). Saba’s most recent
notification dated 16 January 2025 stated that Saba held an
interest in 29.1% of the Company’s shares in issue (27.8% in
shares and 1.3% through financial instruments).
REGULATORY COMPLIANCE
THE ALTERNATIVE INVESTMENT FUND MANAGERS
(“AIFM”) DIRECTIVE
The AIFM is required to provide portfolio management and
risk management. In accordance with the AIFM’s agreement
it is also required to provide administration, accounting and
company secretarial services to the Company. The Company
has appointed HIML as its AIFM, to undertake these functions
on its behalf.
AIFMs are obliged to publish certain information for investors
and prospective investors, which may be found either in this
annual report or on the Company’s website. Any information
on remuneration not already disclosed in the remuneration
report will be provided to investors on request.
The AIFMD requires an annual disclosure of ‘leverage’.
Ona‘gross’ basis, this is 0.99 against a maximum of
2.00(2023 – 0.99: 2.00) and on a ‘commitment’ basis,
1.00against amaximum of 2.00 (2023 – 1.00: 2.00).
THE MODERN SLAVERY ACT 2015
The Company falls outside the scope of the Modern Slavery
Act and is therefore not required to make a slavery and
human trafficking statement. Nevertheless, it requires all of
its suppliers in the scope of the Modern Slavery Act to
confirm compliance.
PAYMENT TO SUPPLIERS
The Company is a signatory to the Prompt Payment Code,
which enshrines a 30-day payment term as a norm.
DISCLOSURE OF INFORMATION TO THE AUDITOR
The directors confirm that so far as each of them 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.
INDEPENDENT AUDITOR
The independent auditor, PricewaterhouseCoopers LLP, is
willing to continue in office. Resolutions proposing the
reappointment of PricewaterhouseCoopers LLP and
authorising the Audit Committee to determine its remuneration
for the ensuing year will be proposed at the AGM.
POST BALANCE SHEET EVENTS
Further to a valid requisition being received just prior to the
Company’s year end from a significant minority shareholder,
the Company held a general meeting on 22 January 2025.
Allof the resolutions proposed by the requisitioner were
defeated on a poll. Further details can be found in the
Chairman’s Statement on page 9 and in the circular sent
toshareholders on 3 January 2025, a copy of which can be
found at www.heralduk.com.
ANNUAL GENERAL MEETING (“AGM”)
The AGM will be held at 2pm on 24 March 2025 at the
Company’s registered office, 10-11 Charterhouse Square,
London, EC1M6EE and shareholders are warmly invited to
attend. The Manager will make a presentation reviewing the
year which will be posted on the Manager’s website for those
unable to attend. The explanation of the special business to
be proposed at the 2025 AGM is set out in the AGM Circular
published on or around the date of this document.
Shareholders are strongly encouraged to submit proxy votes
online by visiting www.signalshares.com. There is
astraightforward registration process and a number of our
shareholders are using the site already. All you need is your
name, address and investor code, which can be found on
your share certificate. If you are having trouble locating your
share certificate or investor code, please call the shareholder
helpline on 03716640300 (or from overseas
+44(0)3716640300). Any shareholder who is unwilling or
unable to vote digitally can request to receive a paper proxy
card by telephoning the shareholder helpline.
Shareholders that hold their shares through an investment
platform provider or nominee are encouraged to contact
their investment platform provider or nominee as soon as
possible, and are encouraged to VOTE IN FAVOUR for each
of the Resolutions to be lodged on their behalf. The
Association of Investment Companies' guidance on how to
vote through investment platforms can be found on its
website (https://www.theaic.co.uk/how-to-vote-your-
shares).
The directors believe that the resolutions to be proposed at
the AGM are in the best interests of the Company and its
shareholders as a whole, and recommend that shareholders
vote in favour of the resolutions. The directors intend to vote
their own shareholdings in favour.
On behalf of the board
ANDREW JOY
CHAIRMAN
19 February 2025
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DIRECTORS’ REMUNERATION REPORT
1. CHAIRMAN’S ANNUAL STATEMENT
Dear Shareholder
I present below the Company’s remuneration report for the year ended 31 December 2024.
Our remuneration policy (see section 2 below) was approved by shareholders at the 2023 AGM. The policy is set out below.
Inaccordance with statute, the remuneration policy must be put to shareholders for approval every three years and the board
must only operate in accordance with the approved policy during the three-year cycle, unless shareholder approval is sought
to amend the policy. Accordingly, the remuneration policy is due to be put to shareholders at the AGM to be held in 2026.
I confirm that the board has complied with the Company’s remuneration policy during the year ended 31 December 2024. The
current annual fee rate paid to directors, and the amounts to be used to determine the maximum total increase allowable
under the policy on directors’ fees, are detailed in the table below:
Fee Rate from Fee Rate from Percentage
1 July 2024 1 July 2023 Increase for the year
Role £ £ %
Chairman 45,000 42,900 4.9%
Audit Committee Chair 36,500 34,650 5.3%
Senior Independent Director 33,500 32,340 3.6%
Director 30,500 29,400 3.7%
In reviewing the level of fees in July 2024 the board took into consideration market data on the level of fees paid to
investment trust non-executive directors, with particular focus on other trusts within its peer group and the technology sector,
and agreed that it was appropriate to increase fees for all directors, to bring them more into line with the median level paid in
the sector.
The law requires the Company’s auditor to audit certain of the disclosures provided. Where disclosures have been audited,
they are indicated as such. The independent auditor’s opinion is included in their report on pages 56 to 61.
When considering directors’ fees, the board did not appoint an external adviser during the year. No payments were made to
former directors during the year, or to any director for loss of office. No element of directors’ remuneration is attributable to
share price growth.
SCOPE AND RESPONSIBILITY
As the Company has no employees and no executive directors, the policy relates only to the non-executive directors.
2. COMPANY’S REMUNERATION POLICY
The policy is that the remuneration of directors should be set at a reasonable level that is commensurate with the duties and
responsibilities of the role and consistent with the requirement to attract and retain directors of appropriate quality and
experience. It should also reflect the experience of the board as a whole and be fair and comparable to that of other
investment trusts that are similar in size. The policy will continue in force (subject to shareholder approval) until the AGM in
2026. The board will take account of any views expressed by shareholders in formulating this policy.
The board may amend the levels of remuneration paid to individual directors within the parameters of this policy.
Component Commentary
Basic fee arrangement
Benefits None
Pension arrangements
None
Bonus arrangements None
Fees paid to directors are determined within an aggregate limit set out in the Company’s articles of association which
currently stands at £250,000 per annum.
There is no separate remuneration committee and the board as a whole considers changes to directors’ fees from time to time.
The company secretary provides advice and comparative information when the board considers the level of directors’ fees.
Under the terms of the directors’ appointment letters, there is no notice period and no provision for compensation upon early
termination of appointment.
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3. ANNUAL DIRECTORS’ REMUNERATION REPORT FOR THE YEARS ENDED 31 DECEMBER (AUDITED)
The table below sets out the single total figure of remuneration for each director who served during the year end and the
preceding year, and the percentage change for basic fees for the five years to 31 December 2024.
2024 2023 2024 2023 2022 2021 2020
Taxable Taxable Percentage change of
Fees expenses Total Fees expenses Total basic fees
Notes £ £ £ £ £ £ % % % % %
Andrew Joy 1 43,950 – 43,950 38,270 – 38,270 14.8 Note B Note A n/a n/a
Tom Black 2 – – – 12,705 184 12,889 n/a Note A 13.8 47.9 5.4
Stephanie Eastment 35,575 113 35,688 33,825 209 34,034 5.2 3.9 4.8 8.0 8.5
Henrietta Marsh 29,950 – 29,950 28,700 – 28,700 4.4 5.8 5.9 4.6 Note B
James Will 3 32,920 1,141 34,061 31,570 1,522 33,092 4.3 4.3 10.6 11.7 5.4
Priya Guha 29,950 160 30,110 1,530 – 1,530 Note B Note A n/a n/a n/a
Christopher Metcalfe 4 20,714 – 20,714 n/a n/a n/a Note A n/a n/a n/a n/a
Karl Sternberg 5 9,202 – 9,202 28,700 – 28,700 Note A 5.8 5.9 4.6 5.4
Total 202,261 1,414 203,675 175,300 1,915 177,215
Note A: In the year of appointment or the year of retirement/resignation, a meaningful percentage change figure cannot be calculated.
Note B: In the year following appointment, a direct per cent. calculation is not meaningful unless the denominator reflects a full year in office for the
preceding year.
Notes:
1. The 14.8% increase in 2024 for Andrew Joy reflects his role as the chairman for the full year. If Andrew Joy had been the chairman for the whole of
the preceding year, the year on year increase would have been 2.4%.
2. The 47.9% increase for Tom Black in 2021 arose mainly from his appointment as chairman on 1 March 2021. Tom Black retired at the conclusion of the
2023 AGM.
3. The 11.7% increase in 2021 for James Will arose mainly from his appointment as SID on 20 April 2021 and introduction of a higher fee for the SID role
on 1 July 2021 to reflect the extra responsibility and work of this role. The 10.6% increase in 2022 reflects his appointment as SID in the previous year
as well as an increase in fees in 2022 of 3.5% as previously reported.
4. Christopher Metcalfe was appointed on 24 April 2024.
5. Karl Sternberg retired at the conclusion of the AGM on 23 April 2024.
The table above omits other columns set out in the relevant regulations as the Company does not make payments of other
types, such as pension related-benefits or performance-related pay.
Board meetings are normally held at the Company’s registered office. Directors are entitled to claim travel expenses and other
reasonable expenses in carrying out their duties as Directors of the Company. The Company has entered into a PAYE
settlement agreement with HMRC under which the grossed up expenses detailed above are accounted for directly with
HMRC.
DIRECTORS’ INTERESTS (AUDITED)
There is no requirement for directors to own the Company’s shares. Directors’ shareholdings and interests (beneficial unless
stated) at the year end were as follows:
Interest as at 31 December 2024 2023
Andrew Joy 6,000 6,000
Stephanie Eastment* 3,200 3,200
Henrietta Marsh 1,000 1,000
Christopher Metcalfe 5,200 n/a
Priya Guha – –
James Will 6,000 6,000
* 1,500 held non-beneficially; shares held by connected person.
There have been no changes to any of the directors’ share interests in the period from 1 January 2025 to the date of this report.
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COMPANY PERFORMANCE
The graph below compares the total return (assuming all dividends are reinvested) to ordinary shareholders compared to
thetotal shareholder return on a notional investment made up of shares in the component parts of the MSCI World Index
(insterling terms). This index was chosen for comparison purposes as it is the most widely used global equity index.
Source: LSEG Data & Analytics.
* Total return (assuming all dividends are reinvested).
RELATIVE SPEND ON FEES
The following table shows the total amount spent on payments to directors with a comparator to last year, along with total
distributions to shareholders by way of dividend or (where applicable) share buy-back or other distributions. There are no
other significant distributions, payments or other uses of the Company’s profit or cash flow that the board feels are relevant to
assist the understanding of the relating spend on fees.
2024 2023
£’000 £’000
Total spend – directors’ fees 202 175
Total distributed to shareholders – dividends – –
– share buybacks 127,451 107,420
VOTING ON REMUNERATION MATTERS
At the AGM on 23 April 2024, the resolution to receive and approve the directors’ remuneration report for the year ended
31December 2023 received the following votes: for – 99.9% (21,021,798 votes); against – 0.1% (13,218 votes). 18,312 votes
were withheld.
The remuneration policy was last approved by shareholders on 18 April 2023 with 99.9% of votes in favour (31,668,834 votes);
0.1% votes against (23,373 votes). 7,570 votes were withheld.
The directors’ annual remuneration report set out above (section 3) was approved by the board of directors on 19 February
2025 and signed on its behalf by
ANDREW JOY
CHAIRMAN
HERALD’S SHARE PRICE AND MSCI WORLD INDEX (IN STERLING TERMS)*
(FIGURES HAVE BEEN REBASED TO 100 AT 31 DECEMBER 2014)
Share Price* MSCI World Index (in sterling terms)
100
150
200
250
300
350
400
20242023202220212020201920182017201620152014
DIRECTORS’ REMUNERATION REPORT CONTINUED
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Each of the directors, whose names and functions are listed
on page 43 confirm that, to the best of their knowledge:
— the financial statements, which have been prepared in
accordance with applicable law and United Kingdom
Accounting Standards (United Kingdom Generally
Accepted Accounting Practice), give a true and fair view
of the assets, liabilities, financial position and loss of the
Company;
— the annual report and financial statements includes a fair
review of the development and performance of the
business and the position of the Company, together with
a description of the principal risks and uncertainties that it
faces and the Directors’ Report contains those matters
required to be disclosed by applicable law; and
— they consider that the annual report and financial
statements, taken as a whole, is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Company’s position,
performance, business model and strategy.
On behalf of the board
ANDREW JOY
CHAIRMAN
19 FEBRUARY 2025
The directors are responsible for preparing the annual report
and the financial statements in accordance with applicable
law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the
directors have elected to prepare the financial statements in
accordance with applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted
Accounting Practice), including FRS 102 “The Financial
Reporting Standard applicable in the UK and Republic of
Ireland”. Under company law the directors must not approve
the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that
period. In preparing these financial 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 applicable UK Accounting Standards have
been followed, subject to any material departures
disclosed and explained in the financial statements; and
— prepare the financial statements on the going concern
basis, unless it is inappropriate to assume that the
Company will continue in business.
The directors are responsible for the keeping of adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements and
the Directors’ Remuneration Report 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 have delegated responsibility to the Manager
for the maintenance and integrity of the Company’s page of
the Manager’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
The work carried out by the auditor does not involve any
consideration of these matters and, accordingly, the auditor
accepts no responsibility for any changes that may have
occurred to the financial statements since they were initially
presented on the website.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
IN RESPECT OF THE FINANCIAL STATEMENTS
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INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF HERALD INVESTMENT TRUST PLC
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
OPINION
In our opinion, Herald Investment Trust plc’s financial statements:
— give a true and fair view of the state of the Company’s affairs as at 31 December 2024 and of its profit and cash
flows for the year then ended;
— have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and
Republic of Ireland”, and applicable law); and
— have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual report & financial statements (the “Annual
Report”), which comprise: the Statement of Financial Position as at 31 December 2024; the Statement of
Comprehensive Income, the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended;
and the Notes to the Financial Statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
INDEPENDENCE
We remained independent of the Company in accordance with the ethical requirements that are relevant to our audit
of the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard
were not provided.
We have provided no non-audit services to the Company in the period under audit.
OUR AUDIT APPROACH
CONTEXT
The Company is a standalone Investment Trust Company and engages Herald Investment Management Limited (the
“AIFM”) to manage its assets.
OVERVIEW
Audit scope
— We conducted our audit of the financial statements using information from the AIFM, NSM Funds (UK) Limited (the
“Company Secretary” from 1 October 2024 to 31 December 2024), Apex Listed Companies Services (UK) Limited
(the “Company Secretary” from 1 January 2024 to 30 September 2024) and The Bank of New York Mellon
(International) Limited (the “Depositary, Custodian and Administrator”) with whom the AIFM has engaged to provide
certain administrative functions.
— We tailored the scope of our audit taking into account the types of investments within the Company, the
involvement of the AIFM referred to above, and the industry in which the Company operates.
Key audit matters
— Valuation and existence of investments.
— Income from investments.
— Ability to continue as a going concern (Continuation Vote).
Materiality
— Overall materiality: £12,526,000 (2023 – £12,450,000) based on approximately 1% of net assets.
— Performance materiality: £9,394,000 (2023 – £9,337,500).
THE SCOPE OF OUR AUDIT
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements.
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KEY AUDIT MATTERS
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of
the financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any
comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Ability to continue as a going concern (Continuation Vote) is a new key audit matter this year. Otherwise, the key audit
matters below are consistent with last year.
KEY AUDIT MATTER HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Valuation and existence of
investments
Refer to Audit Committee Report,
Accounting Policies and Notes to
the Financial Statements.
The investment portfolio at
31December 2024 comprised of
quoted investments of £1,212.7m
and £17.3m of unquoted
investments. We focused on the
valuation and existence of
investments because investments
represent the principal element of
the net asset value as disclosed in
the Statement of Financial Position
in the financial statements.
W
e tested the valuation of the quoted investments by agreeing the prices
used in the valuation to independent third-party sources.
For a sample of unquoted investments, we assessed that management’s
methodology for determining the fair value of the investments is consistent
with the International Private Equity and Venture Capital Guidelines, agreed
the inputs into the valuation to third party sources (such as financial
statements of the issuer, investor reports and the instrument terms) and
re-performed calculations to confirm their arithmetical accuracy.
We tested the existence of all investments by agreeing the holdings of all
investments to an independent confirmation from the Depositary, The Bank
of New York Mellon (International) Limited as at 31 December 2024.
No material misstatements were identified from this testing.
W
e assessed the accounting policy for income r
ecognition for compliance
with accounting standards and the AIC SORP and performed testing to check
that income had been accounted for in accordance with this stated
accounting policy.
We understood and assessed the design and implementation of key controls
surrounding income recognition.
The gains and losses on investments held at fair value comprise realised and
unrealised gains and losses. For unrealised gains and losses, we tested the
valuation of the portfolio at the year-end (see Valuation and existence of
investments key audit matter), together with testing the reconciliation of
opening and closing investments and agreeing the year end holdings to an
independent confirmation. For realised gains and losses, we tested a sample
of disposal proceeds by agreeing the proceeds to bank statements and we
re-performed the calculation of a sample of realised gains and losses.
We tested the accuracy of dividend receipts by agreeing the dividend rates
from all investments to independent third party sources.
To test for completeness, we tested, for all investment holdings in the
portfolio, that all dividends declared in the market for investment holdings
had been recorded.
We tested occurrence of dividend income, by testing that all dividends
recorded in the year had been declared in the market by investment holdings,
and we traced a sample of dividends received to bank statements.
We tested the allocation and presentation of dividend income, including
special dividends, between income and capital by agreeing treatments to
thirdparty sources.
No material misstatements were identified from this testing.
Income from investments
Refer to Accounting Policies and
Notes to the Financial Statements.
W
e focused on the accuracy,
completeness and occurrence of
dividend income recognition as
incomplete or inaccurate income
could have a material impact on the
Company’s net asset value.
We also focused on the accounting
policy for income recognition and its
presentation in the Statement of
Comprehensive Income for
compliance with the requirements of
The Association of Investment
Companies Statement of
Recommended Practice (the “AIC
SORP”) as incorrect application
could indicate a misstatement in
income recognition.
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INDEPENDENT AUDITOR’S REPORT CONTINUED
TO THE MEMBERS OF HERALD INVESTMENT TRUST PLC
KEY AUDIT MATTER HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
HOW WE TAILORED THE AUDIT SCOPE
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account the structure of the Company, the accounting processes and
controls, and the industry in which it operates.
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements. In particular, we looked at where the Directors made subjective judgements, for example in
respect of significant accounting estimates that involved making assumptions and considering future events that are
inherently uncertain.
THE IMPACT OF CLIMATE RISK ON OUR AUDIT
In planning our audit, we made enquiries of the Directors and the Investment Manager to understand the extent of the
potential impact of climate change risk on the Company’s financial statements. The Directors and Investment Manager
concluded that the impact on the measurement and disclosures within the financial statements is not material because
the Company’s investment portfolio is approximately 98.5% made up of level 1 quoted securities which are valued at
fair value based on market prices along with a remaining unquoted portfolio. We found this to be consistent with our
understanding of the Company’s investment activities.
MATERIALITY
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in
evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall company materiality £12,526,000 (2023 – £12,450,000).
How we determined it Approximately 1% of net assets
Rationale for benchmark applied
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality indetermining
the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and
disclosures, for example in determining sample sizes. Our performance materiality was 75% (2023–75%) of overall
materiality, amounting to £9,394,000 (2023 – £9,337,500) for the Company financial statements.
We believe that net assets is the primary measure used by the shareholders in assessing
the performance of the entity, and is a generally accepted auditing benchmark. This
benchmark provides an appropriate and consistent year on year basis for our audit.
Ability to continue as a going
concern (Continuation Vote)
Refer to Going concern section in
Directors’ Report and Viability
Statement in the Strategic Report and
Notes to the Financial Statements.
A continuation vote is due to take
place at the 2025 AGM, which, if
passed, will allow the Company to
continue as an investment trust for
afurther three years. The Directors
have considered and assessed the
potential impact of the continuation
vote on the ability of the Company
to continue as a going concern.
The Directors have concluded,
based on their assessment and
discussions with key investors, that
the Company will be able to
continue its operations and meet its
liabilities as they fall due for a period
of at least 12 months from the date
of approving the financial
statements.
The pr
ocedures we performed and our conclusions on going concern are
included in the Conclusions relating to going concern section below.
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In determining the performance materiality, we considered a number of factors – the history of misstatements, risk
assessment and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of
our normal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above
£626,000 (2023 – £622,500) as well as misstatements below that amount that, in our view, warranted reporting for
qualitative reasons.
CONCLUSIONS RELATING TO GOING CONCERN
Our evaluation of the Directors’ assessment of the Company’s ability to continue to adopt the going concern basis of
accounting included:
— evaluating the Directors’ updated risk assessment and considering whether it addressed relevant threats including
the wider macroeconomic uncertainty;
— evaluating the Directors’ assessment of potential operational impacts, considering their consistency with other available
information and our understanding of the business and assessing the potential impact on the financial statements;
— reviewing the Directors’ assessment of the Company’s financial position in the context of its ability to meet future
expected operating expenses and debt repayments, their assessment of liquidity as well as their review of the
operational resilience of the Company and oversight of key third-party service providers; and
— reviewing the Directors’ assessment of going concern in relation to the passing of the continuation vote, including
assessing the stability of the shareholder register, engagement with key shareholders with regards to shareholders
voting intentions, the financial performance of the Company compared to its benchmarks, the result of previous
continuation votes and the recent requisitioned general meeting.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going
concern for a period of at least 12 months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the
Company’s ability to continue as a going concern.
In relation to the Directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether
the Directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report.
REPORTING ON OTHER INFORMATION
The other information comprises all of the information in the Annual Report other than the financial statements and our
auditors’ report thereon. The Directors are responsible for the other information. Our opinion on the financial
statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the
extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency
or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement
of the financial statements or a material misstatement of the other information. 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 based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the
UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain
opinions and matters as described below.
STRATEGIC REPORT AND DIRECTORS’ REPORT
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report
and Directors’ Report for the year ended 31 December 2024 is consistent with the financial statements and has been
prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the Company and its environment obtained in the course of the audit,
we did not identify any material misstatements in the Strategic Report and 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.
GOVERNANCE
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INDEPENDENT AUDITOR’S REPORT CONTINUED
TO THE MEMBERS OF HERALD INVESTMENT TRUST PLC
CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the Directors’ statements 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
UKCorporate Governance Code specified for our review. Our additional responsibilities with respect to the corporate
governance statement as other information are described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
corporate governance statement, included within the Corporate Governance Report is materially consistent with the
financial statements and our knowledge obtained during the audit, and we have nothing material to add or draw
attention to in relation to:
— The Directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
— The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being managed or mitigated;
— The Directors’ statement in the financial statements about whether they considered it appropriate to adopt the
going concern basis of accounting in preparing them, and their identification of any material uncertainties to the
Company’s ability to continue to do so over a period of at least 12 months from the date of approval of the financial
statements;
— The Directors’ explanation as to their assessment of the Company’s prospects, the period this assessment covers
and why the period is appropriate; and
— The Directors’ statement as to whether they have a reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due over the period of its assessment, including any related
disclosures drawing attention to any necessary qualifications or assumptions.
Our review of the Directors’ statement regarding the longer-term viability of the Company was substantially less in
scope than an audit and only consisted of making inquiries and considering the Directors’ process supporting their
statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance
Code; and considering whether the statement is consistent with the financial statements and our knowledge and
understanding of the Company and its environment obtained in the course of the audit.
In addition, 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 financial statements and our knowledge
obtained during the audit:
— The Directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and
understandable, and provides the information necessary for the members to assess the Company’s position,
performance, business model and strategy;
— The section of the Annual Report that describes the review of effectiveness of risk management and internal control
systems; and
— The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when the Directors’ statement relating to the
Company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code
specified under the Listing Rules for review by the auditors.
RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS AND THE AUDIT
RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL STATEMENTS
As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation
of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and
fair view. The Directors are also responsible for such internal control as they determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as
agoing concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic
alternative but to do so.
AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
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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.
Based on our understanding of the Company and industry, we identified that the principal risks of non-compliance with
laws and regulations related to breaches of section 1158 of the Corporation Tax Act 2010, and we considered the extent to
which non-compliance might have a material effect on the financial statements. We also considered those laws and
regulations that have a direct impact on the financial statements such as the Companies Act 2006. We evaluated
management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of
override of controls), and determined that the principal risks were related to posting inappropriate journal entries to present
a more favourable financial position. Audit procedures performed by the engagement team included:
— discussing with the AIFM and the Audit Committee, including specific enquiry of known or suspected instances of
non-compliance with laws and regulation and fraud where applicable;
— reviewing relevant meeting minutes, including those of the Audit Committee and the Board of Directors;
— assessing the Company’s compliance with the requirements of section 1158 of the Corporation Tax Act 2010,
including recalculation of numerical aspects of the eligibility conditions;
— identifying and testing year-end journal entries, in particular any material manual journal entries posted during the
preparation of the financial statements; and
— designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances
of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the
financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing
complete populations. We will often seek to target particular items for testing based on their size or risk characteristics.
In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the
sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
USE OF THIS REPORT
This report, including the opinions, has been prepared for and only for the Company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these
opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or
into whose hands it may come save where expressly agreed by our prior consent in writing.
OTHER REQUIRED REPORTING
COMPANIES ACT 2006 EXCEPTION REPORTING
Under the Companies Act 2006 we are required to report to you if, in our opinion:
— we have not obtained all the information and explanations we require for our audit; or
— adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been
received from branches not visited by us; or
— certain disclosures of Directors’ remuneration specified by law are not made; or
— the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with
the accounting records and returns.
We have no exceptions to report arising from this responsibility.
APPOINTMENT
Following the recommendation of the Audit Committee, we were appointed by the Directors on 1 November 2019 to
audit the financial statements for the year ended 31 December 2019 and subsequent financial periods. The period of
total uninterrupted engagement is 6 years, covering the years ended 31 December 2019 to 31 December 2024.
Jeremy Jensen (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
19 February 2025
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Financial Statements
64 Statement of Comprehensive Income
65 Statement of Financial Position
66 Statement of Changes in Equity
67 Statement of Cash Flows
68 Notes to the Financial Statements
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2024 2024 2024 2023 2023 2023
Revenue Capital Total Revenue Capital Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
Gains on investments 9 – 131,830 131,830 – 45,419 45,419
Losses on foreign exchange – (194) (194) – (1,316) (1,316)
Income 2 17,169 – 17,169 17,926 – 17,926
Investment management fee 3 (12,894) – (12,894) (12,375) – (12,375)
Other administrative expenses 4 (1,147) (8) (1,155) (966) (8) (974)
Profit before taxation 3,128 131,628 134,756 4,585 44,095 48,680
Taxation 6 (460) – (460) (559) – (559)
Profit after taxation 2,668 131,628 134,296 4,026 44,095 48,121
Profit per ordinary shares (basic
and diluted) 8 4.96p 244.77p 249.73p 6.79p 74.35p 81.14p
There is no final dividend proposed (2023 – nil). More information on dividend distributions can be found in
note7 on page 71.
The total column of this statement is the profit and loss account of the Company, prepared in accordance with
UK Accounting Standards.
The profit after taxation is the total comprehensive income and therefore no additional statement of
comprehensive income is presented. The supplementary revenue and capital columns are presented for
information purposes in accordance with the Statement of Recommended Practice issued by the Association of
Investment Companies. All items in the above statement derive from continuing operations of the Company. No
operations were acquired or discontinued in the year.
The accompanying notes on pages 68 to 79 are an integral part of this statement.
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2024
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2024 2023
Notes £’000 £’000
Fixed assets
Investments held at fair value through profit or loss 9 1,230,027 1,200,639
Current assets
Cash and cash equivalents 21,890 42,285
Other receivables 10 1,850 4,022
23,740 46,307
Current liabilities
Other payables 11 (1,165) (1,189)
(1,165) (1,189)
Net current assets 22,575 45,118
TOTAL NET ASSETS 1,252,602 1,245,757
Capital and reserves
Called up share capital 12 12,585 14,034
Share premium 13 73,738 73,738
Capital redemption reserve 13 9,367 7,918
Capital reserve 13 1,158,239 1,154,062
Revenue reserve 13 (1,327) (3,995)
TOTAL SHAREHOLDERS’ FUNDS 1,252,602 1,245,757
NET ASSET VALUE PER ORDINARY SHARE
(including current year income) 14 2,488.24p 2,219.23p
NET ASSET VALUE PER ORDINARY SHARE
(excluding current year income) 14 2,482.94p 2,212.06p
The financial statements of Herald Investment Trust plc (company registration number 02879728) on pages 64 to 67
were approved by the board of directors and authorised for issue on 19 February 2025 and signed on its behalf by
ANDREW JOY
CHAIRMAN
The accompanying notes on pages 68 to 79 are an integral part of this statement.
STATEMENT OF FINANCIAL POSITION
At 31 December 2024
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Called up Capital Total
Share Share Redemption Capital Revenue Shareholders’
Capital Premium Reserve Reserve Reserve funds
Notes £’000 £’000 £’000 £’000 £’000 £’000
Shareholders’ funds at 1 January 2024 14,034 73,738 7,918 1,154,062 (3,995) 1,245,757
Profit after taxation – – – 131,628 2,668 134,296
Shares purchased for cancellation 12 (1,449) – 1,449 (127,451) – (127,451)
Shareholders’ funds at 31 December 2024 12,585 73,738 9,367 1,158,239 (1,327) 1,252,602
For the year ended 31 December 2023
Called up Capital Total
Share Share Redemption Capital Revenue Shareholders’
Capital Premium Reserve Reserve Reserve funds
Notes £’000 £’000 £’000 £’000 £’000 £’000
Shareholders’ funds at 1 January 2023 15,543 73,738 6,409 1,217,387 (8,029) 1,305,048
Profit after taxation – – – 44,095 4,026 48,121
Unclaimed dividends 13 – – – – 8 8
Shares purchased for cancellation 12 (1,509) – 1,509 (107,420) – (107,420)
Shareholders’ funds at 31 December 2023 14,034 73,738 7,918 1,154,062 (3,995) 1,245,757
The accompanying notes on pages 68 to 79 are an integral part of this statement.
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2024
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2024 2024 2023 2023
Notes £’000 £’000 £’000 £’000
Cash flow from operating activities
Profit before taxation 134,756 48,680
Adjustments for gains on investments (131,830) (45,419)
Purchase of investments (229,991) (169,090)
Sale of investments 335,563 237,981
Return of capital 348 –
Decrease/(increase) in receivables 123 (817)
Decrease in payables (24) (26)
Amortisation of fixed income book cost (1,424) (1,516)
Effect of foreign exchange rate changes 194 1,316
Overseas tax on overseas income (465) (538)
Net cash inflow from operating activities 107,250 70,571
Cash flow from financing activities
Shares purchased for cancellation 12 (127,451) (107,420)
Unclaimed dividends 13 – 8
Net cash outflow from financing activities (127,451) (107,412)
Net decrease in cash and cash equivalents (20,201) (36,841)
Cash and cash equivalents at start of the year 42,285 80,442
Effect of foreign exchange rate changes (194) (1,316)
Cash and cash equivalents at the end of the year 21,890 42,285
Comprised of:
Cash and cash equivalents 21,890 42,285
Cash flow from operating activities includes interest received of £3,765,000 (2023 – £2,663,000) and dividends
received of £11,896,000 (2023 – £12,235,000).
As the Company did not have any long-term debt at both the current and prior year ends, no reconciliation of
the net debt position is presented.
The accompanying notes on pages 68 to 79 are an integral part of this statement.
STATEMENT OF CASH FLOWS
For the year ended 31 December 2024
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Herald Investment Trust plc
Annual report & financial statements 2024
1. PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES
Herald Investment Trust plc (the “Company”) is a public limited company incorporated in England and Wales with registered
number 02879728, the registered office of which is situated at 10-11 Charterhouse Square, London EC1M 6EE. The Company
is a closed-ended investment company with its ordinary shares being admitted to trading on London Stock Exchange’s Main
Market and to listing of the Official List of the FCA. The financial statements for the year to 31 December 2024 have been
prepared on the basis of the accounting policies set outbelow. The Company has applied “FRS 102 The Financial Reporting
Standard applicable in the UK and Republic of Ireland” (“FRS102”), which forms part of Generally Accepted Accounting
Practice (“UK GAAP”) issued by the Financial Reporting Council.
(A) ACCOUNTING CONVENTION
The financial statements are prepared on the assumption that approval as an investment trust will be retained.
The financial statements are presented in sterling, which is the Company’s functional and presentational currency and the
currency in which the Company’s share capital and expenses, as well the majority of its assets and liabilities, are denominated.
The financial statements have been prepared in accordance with The Companies Act 2006, FRS 102 and with the Statement
ofRecommended Practice ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ issued by the
Association of Investment Companies (AIC) in July 2022. The accounting policies applied are unchanged from the prior year
and have been applied consistently.
In order to better reflect the activities of the Company and in accordance with guidance issued by the AIC, supplementary
information which analyses the profit and loss account between items of a revenue and capital nature has been presented
inthe statement of comprehensive income.
As reported in the Going Concern section on page 50, based on the information available to the Directors at the time of this
report, including the results of stress tests, the Company’s cash balances, the liquidity of the Company’s investments and
consideration of the possible outcomes of the Company’s continuation vote at the forthcoming AGM, the Directors are
satisfied that the Company has adequate financial resources to continue in operation for at least the next 12 months and that,
accordingly, it is appropriate to adopt the going concern basis in preparing these financial statements. In respect of the
forthcoming continuation vote, the board considered the past voting of all shareholders, including both the 2022 vote of
99.99% to continue as an investment trust and the outcome of the requisitioned general meeting held on 22 January 2025
(the details of which are contained in the Chairman’s Statement on page 9).
The Directors are of the opinion that the Company is engaged in a single segment of business activity, being investment
business. Consequently, no business segmental reporting is required.
(B) FINANCIAL INSTRUMENTS
The Company recognises financial assets and financial liabilities when the Company becomes a party to the contractual
provisions of the instrument. The Company will offset financial assets and financial liabilities if the Company has a legally
enforceable right to set off the recognised amounts and interests and intends to settle on a net basis.
The Company has chosen to apply the provisions of sections 11 and 12 of FRS 102 in full in respect of the financial instruments.
(C) INVESTMENTS
Purchases and sales of investments are accounted for on a trade date basis.
All investments are at fair value through profit or loss upon initial recognition and are measured at subsequent reporting datesat
fair value. The fair value of listed security investments is bid value. Investments on the Alternative Investment Market are included
at their bid value. The fair value of unquoted investments uses valuation techniques determined by the directors onthe basis of
latest information in line with the relevant principles of the International Private Equity and Venture Capital Valuation Guidelines.
Gains and losses arising from changes in the unrealised fair value and on the sale of investments are taken to capital reserve
through the statement of comprehensive income.
(D) CASH AND CASH EQUIVALENTS
Cash and cash equivalents may comprise cash as well as cash equivalents (including short-term deposits and money market
funds which are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value).
Investments are regarded as cash equivalents if they meet all of the following criteria: highly liquid investments held in the
Company’s base currency that are readily convertible to a known amount of cash, are subject to an insignificant risk of change
in value and provide a return no greater than the rate of a three-month high quality government bond.
(E) INCOME
Dividend income is accounted for when the entitlement to the income is established (normally on the ex-dividend date).
Franked income is stated net of tax credits. Foreign dividends that suffer withholding tax at source are shown gross, with the
corresponding tax charge in the statement of comprehensive income. Unfranked investment income includes the taxes
deducted at source. Interest from fixed interest securities is recognised on an effective yield basis. Underwriting commission
and interest receivable on deposits are recognised on an accruals basis.
(F) EXPENSES
All expenses are accounted for on an accruals basis and are charged through the revenue column of the statement of
comprehensive income except where they relate directly to the acquisition or disposal of an investment (transaction costs)
and are taken to the statement of comprehensive income as a capital item.
(G) FINANCE COSTS
Finance costs are accounted for on an effective interest basis and are charged through the revenue column of the statement
of comprehensive income.
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 31 December 2024
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(H) DEFERRED TAXATION
Deferred taxation is provided on all timing differences which have originated but not reversed at the statement of financial
position date, calculated on an undiscounted basis, and based on enacted tax rates relevant to the benefit or liability. Deferred
tax assets are recognised only to the extent that it is more likely than not that there will be taxable profits from which
underlying timing differences can be deducted.
(I) FOREIGN CURRENCY
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Assets and liabilities denominated in
foreign currencies are translated at the rate of exchange ruling at the statement of financial position date. Exchange differences of a
revenue or capital nature are taken to the revenue or capital reserves respectively through the statement of comprehensive income.
(J) USE OF JUDGEMENTS AND ESTIMATES
The preparation of financial statements requires the Company to make judgements, estimates and assumptions that affect
amounts reported for assets and liabilities as at the statement of financial position date and the amounts reported for
revenues and expenses during the year. In the course of preparing the financial statements, no judgements have been made
in the process of applying the Company’s accounting policies, that have had a significant effect on the amounts recognised
in the financial statements, other than those involving estimations in the valuations of unquoted investments. The nature of
estimation means that the actual outcomes could differ from those estimates, possibly significantly. The estimates relate to
the investments where there is no appropriate market price i.e. the unquoted investments. Whilst the board considers the
methodologies and assumptions adopted in the valuation are supportable, reasonable and robust, because of the inherent
uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had
aready market for the investment existed.
As at 31 December 2024, the Company does not have any single key assumption concerning the future, or other key sources
of estimation uncertainty that, in the Directors’ opinion, has a significant risk of causing a material adjustment to the carrying
values of assets and liabilities within the next financial year.
2. INCOME
2024 2023
£’000 £’000
Dividend income from investments
UK dividends from listed investments 3,146 4,184
UK dividends from unlisted investments (inc AIM) 3,454 3,273
Overseas dividends from UK-listed and AIM companies 266 394
Overseas dividend income 5,157 5,179
12,023 13,030
Interest income from equity investments
Income from unlisted (inc AIM) UK convertible bonds 470 535
Income from unlisted US convertible bonds 205 85
675 620
Fixed interest
UK interest from government securities – 312
Overseas interest from government securities 2,656 2,368
2,656 2,680
Other income
Deposit interest 1,702 1,596
Other income 113 –
1,815 1,596
Total income 17,169 17,926
Included within dividend income are special dividends of £330,000 (2023 – £964,000).
Included within deposit interest is interest received of £1,702,000 (2023 – £1,598,000), and interest paid of £nil (2023 – £2,000).
3. INVESTMENT MANAGEMENT FEE
2024 2023
£’000 £’000
Investment management fee 12,894 12,375
Herald Investment Management Limited is appointed investment manager under a management agreement which is
terminable on 12 months’ notice. The management fee is 1.0% per annum of the Company’s net asset value (excluding current
year net revenue) based on middle market prices up to £1.25bn and 0.8% per annum on amounts beyond this level. The
management fee is levied on all assets.
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4. OTHER ADMINISTRATIVE EXPENSES
2024 2023
£’000 £’000
Custodian’s fees 107 97
Registrar’s fees 40 38
Directors’ fees 202 175
Auditor’s fees – statutory audit* 54 46
Depositary’s fees 231 225
Miscellaneous expenses 513 385
1,147 966
* Auditor’s fees excludes VAT. The VAT is included in miscellaneous expenses.
Other capital administration expenses of £8,000 (2023 – £8,000) consist of custodian transaction charges.
5. FINANCE COSTS OF BORROWING
There were no finance costs of borrowing during the year (2023 – £nil).
6. TAXATION
2024 2023
£’000 £’000
Analysis of charge in year
Overseas taxation 460 559
Factors affecting tax charge for year
The tax charge for the year is lower (2023 – lower) than the standard rate of corporation tax in the UK
of 25.00% (2023 – 23.50%). The differences are explained below:
Profit before taxation 134,756 48,680
Profit multiplied by the standard rate of corporation tax in the UK of 25.00% (2023 – 23.50%) 33,689 11,440
Effects of:
Capital gains not taxable (32,957) (10,674)
UK dividends not subject to UK tax (1,621) (1,752)
Overseas dividends not subject to UK tax (1,357) (1,311)
Capital losses on foreign exchange movements not subject to tax 50 311
Disallowable expenses 2 2
Overseas withholding tax 460 559
Movement in excess management expenses 2,194 1,984
Total tax charge for the year 460 559
As an investment trust, the Company’s capital gains are not taxable.
There is no UK corporation tax charge at 31 December 2024 or 31 December 2023 as the Company has unrelieved
management expenses which are available to be carried forward. The tax charge for 31 December 2024 and 2023 comprises
overseas withholding taxes incurred.
At 31 December 2024, the Company had a potential deferred tax asset of £41m (2023 – £38m) on taxable losses of £162m
(2023 – £154m) which are available to be carried forward and offset against future taxable profits. A deferred tax asset has not
been provided on these losses as it is considered unlikely that the Company will make taxable revenue profits in the future and
it is not liable to tax on its capital gains. The potential deferred tax asset has been calculated using a corporation tax rate of
25% (2023 – 25%).
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
For the Year Ended 31 December 2024
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7. DIVIDENDS ON ORDINARY SHARES
2024 2023 2024 2023
£’000 £’000
Amounts recognised as distributions in the year:
Previous year’s final nil nil nil nil
Set out below are the total dividends payable in respect of the financial year, which is the basis on which the requirements of
Section 1158 of the Corporation Tax Act 2010 are considered. As the revenue reserve is in deficit, there is no profit available for
distribution for the year ended 31 December 2024 (2023 – £nil).
2024 2023 2024 2023
£’000 £’000
Amounts paid and proposed per ordinary share in respect of the year:
Proposed final dividend nil nil nil nil
8. PROFIT PER ORDINARY SHARE (BASIC AND DILUTED)
2024 2024 2024 2023 2023 2023
Revenue Capital Total Revenue Capital Total
4.96p 244.77p 249.73p 6.79p 74.35p 81.14p
Revenue, capital and total profit per ordinary share is based on each of the returns on ordinary activities after taxation
respectively, revenue profit of £2,668,000 (2023 – revenue profit of £4,026,000), capital profit of £131,628,000 (2023 – capital
profit of £44,095,000) and total profit of £134,296,000 (2023 – total profit of £48,121,000) and on 53,775,344 ordinary shares
(2023 – 59,308,199) being the weighted average number of ordinary shares in issue during the year.
There are no dilutive or potentially dilutive shares in issue.
9. INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS
2024 2023
£’000 £’000
Financial assets designated at fair value through profit or loss on initial recognition
Listed UK – equity investments – London Stock Exchange 139,618 149,430
– AIM 288,515 341,490
Listed overseas – equity investments 723,150 633,869
Unquoted 17,327 15,085
Total equity investments 1,168,610 1,139,874
Government debt securities 61,417 60,765
Total investments in financial assets at fair value through profit or loss 1,230,027 1,200,639
See Detailed List of Investments on pages 21 to 28.
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9. INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS CONTINUED
Listed in Listed 2024 2023
UK overseas AIM Unquoted Total Total
£’000 £’000 £’000 £’000 £’000 £’000
Cost of investments at 1 January 83,246 462,605 249,547 18,396 813,794 843,129
Investment holding gains/(losses) 1 January 66,184 232,029 91,943 (3,311) 386,845 381,384
Fair value of investments at 1 January 149,430 694,634 341,490 15,085 1,200,639 1,224,513
Movements in the year:
Purchases at cost 2,829 210,666 13,634 3,000 230,129 169,090
Sales proceeds (37,531) (245,018) (48,737) (2,361) (333,647) (239,278)
–gains/(losses) on investments 24,890 123,209 (9,429) (6,840) 131,830 45,419
Amortisation of fixed income book cost – 1,424 – – 1,424 1,516
Transferred from AIM to unquoted – – (9,443) 9,443 – –
Transferred from unquoted to AIM – – 1,000 (1,000) – –
Return of capital/capital special dividends – (348) – – (348) (621)
Fair value of investments at 31 December 139,618 784,567 288,515 17,327 1,230,027 1,200,639
Cost of investments at 31 December 66,000 511,288 227,026 27,391 831,705 813,794
Investment holding gains/(losses) 31 December 73,618 273,279 61,489 (10,064) 398,322 386,845
Fair value of investments at 31 December 139,618 784,567 288,515 17,327 1,230,027 1,200,639
Cost of investments sales 20,075 163,059 27,712 2,448 213,294 199,320
Gains/(losses) on investments
Net realised gains/(losses) on sales 17,456 81,959 21,025 (87) 120,353 39,958
Investment holding gains/(losses) 7,434 41,250 (30,454) (6,753) 11,477 5,461
24,890 123,209 (9,429) (6,840) 131,830 45,419
The Company received £333,647,000 (2023 – £239,278,000) from investments sold in the year. The book cost of these
investments when they were purchased was £213,294,000 (2023 – £199,320,000). These investments have been revalued
over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.
The investments in the equity and fixed interest stocks of unquoted companies that the Company holds are not traded and as
such the prices are more uncertain than those of more widely traded securities. The fair value of unquoted investments uses
valuation techniques determined by the directors on the basis of latest information in line with the relevant principles of the
International Private Equity and Venture Capital Valuation Guidelines as described in note 1(c). The fair value of unquoted
investments at 31 December 2024 was £17,327,000 (2023 – £15,085,000) and the investment is not considered material in the
context of these financial statements.
At 31 December 2024 the Company was the beneficial owner of 15.4% (2023 – 15.4%) of the ordinary share capital of HIML
Holdings Limited. HIML Holdings Limited is incorporated in the United Kingdom and is the parent company of the Company’s
manager.
2024 2023
£’000 £’000
Transaction costs
Commission costs:
Purchases 366 222
Sales 551 343
Total commission costs 917 565
Custody transaction costs 8 8
Other transaction costs 38 98
963 671
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
For the Year Ended 31 December 2024
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10. OTHER RECEIVABLES
2024 2023
£’000 £’000
Due within one year:
Prepayments and accrued income 1,723 1,982
Sales for subsequent settlement – 1,918
Taxation recoverable 127 122
1,850 4,022
The carrying amount of other receivables is a reasonable approximation of fair value.
11. OTHER PAYABLES
2024 2023
£’000 £’000
Amounts falling due within one year:
Other payables 1,165 1,189
1,165 1,189
Included in other payables and accruals is £1,046,000 (2023 – £1,041,000) in respect of the investment management fee.
12. CALLED UP SHARE CAPITAL
2024 2024 2023 2023
Number £’000 Number £’000
Allotted, called up and fully paid ordinary shares of 25p:
Brought forward 56,134,670 14,034 62,173,223 15,543
Shares bought back and cancelled (5,793,809) (1,449) (6,038,553) (1,509)
Carried forward 50,340,861 12,585 56,134,670 14,034
At the AGM held on 23 April 2024 the Company’s authority to buy back up to 14.99% of its issued share capital at that date
wasrenewed. During the year to 31 December 2024 a total of 5,793,809 (2023 – 6,038,553) ordinary shares of 25p each with
anominal value of £1,449,000 (2023 – £1,509,000) were bought back and cancelled at a total cost of £127,451,000 (2023 –
£107,420,000). This was 10.3% (2023 – 9.7%) of the ordinary shares in issue at the start of the year. At 31 December 2024 the
Company had authority to buy back a further 3,966,510 ordinary shares. Under the provisions of the Company’s articles share
buy-backs are funded from the capital reserve.
13. CAPITAL AND RESERVES
Capital
Share Redemption Capital Revenue
Premium Reserve Reserve Reserve
£’000 £’000 £’000 £’000
At 1 January 2024 73,738 7,918 1,154,062 (3,995)
Shares purchased for cancellation – 1,449 (127,451) –
Gains on sales – – 120,353 –
Changes in investment holding gains – – 11,477 –
Other exchange differences – – (194) –
Custody transaction and capital legal costs – – (8) –
Profit after taxation – – – 2,668
Balance at 31 December 2024 73,738 9,367 1,158,239 (1,327)
At 1 January 2023 73,738 6,409 1,217,387 (8,029)
Shares purchased for cancellation – 1,509 (107,420) –
Gains on sales – – 39,958 –
Changes in investment holding gains – – 5,461 –
Other exchange differences – – (1,316) –
Custody transaction and capital legal costs – – (8) –
Profit after taxation – – – 4,026
Unclaimed dividends – – – 8
Balance at 31 December 2023 73,738 7,918 1,154,062 (3,995)
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13. CAPITAL AND RESERVES CONTINUED
The share premium represents the premium above nominal value received by the Company on issuing shares net of cost. The
share premium is non-distributable.
The capital redemption reserve represents the nominal value of shares bought back and cancelled and is non-distributable.
The capital reserve includes investment holding gains of £398,322,000 (2023 – gains of £386,845,000) as disclosed in note 9.
The capital reserve is non-distributable except for the buy back of shares.
The revenue reserve represents cumulative net revenue retained after payment of any dividends and is the only reserve from
which dividends can be funded. Dividends can only be paid when this reserve is in surplus.
14. NET ASSET VALUE PER ORDINARY SHARE
The net asset value per ordinary share and the net assets attributable to the ordinary shareholders at the year end calculated in
accordance with the articles of association were as follows:
2024 2023
per share per share 2024 2023
(pence) (pence) £’000 £’000
Total net assets (including current year revenue) 2,488.24 2,219.23 1,252,602 1,245,757
Less revenue profit after taxation (5.30) (7.17) (2,668) (4,026)
Total net assets (excluding current year revenue) 2,482.94 2,212.06 1,249,934 1,241,731
Net asset value per ordinary share is based on net assets as shown above and on 50,340,861 (2023 – 56,134,670) ordinary
shares, being the number of ordinary shares in issue at each balance sheet date.
15. CONTINGENT LIABILITIES, GUARANTEES AND FINANCIAL COMMITMENTS
There were no contingent liabilities, guarantees or financial commitments at 31 December 2024 (2023 – nil).
16. CAPITAL MANAGEMENT
The Company does not have any externally imposed capital requirements. The capital of the Company is the ordinary share
capital and reserves as detailed in notes 12 and 13. It is managed in accordance with its investment policy in pursuit of its
investment objective, both of which are detailed on pages 2 and 34 respectively, and shares may be repurchased as explained
on page 47.
17. FINANCIAL INSTRUMENTS
In accordance with the corporate objective of maximising capital appreciation the Company invests in securities on a
worldwide basis. The Company may make use of gearing to achieve improved performance in rising markets. The Company’s
other financial instruments consist of cash and cash equivalents, short-term debtors and creditors.
The main risks arising from the Company’s financial instruments are:
A. MARKET RISK
(i) Other price risk, being the risk that the value of investment holdings will fluctuate as a result of changes in market prices
caused by factors other than interest rate or currency rate movement;
(ii) Interest rate risk, being the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates; and
(iii) Foreign currency risk, being the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in foreign exchange rates.
B. CREDIT RISK
Being the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an
obligation.
The Company invests in government debt securities which are investment grade.
Cash and cash equivalent balances are held only with approved deposit takers which are regulated entities and considered of
high credit quality.
The Company is exposed to counterparty credit risk from the parties with which it trades and will bear the risk of settlement
default. Counterparty credit risk to the Company arises from transactions to purchase or sell investments held within the
portfolio.
There were no past due nor impaired assets as of 31 December 2024 (2023 – nil).
The counterparties engaged with the Company are regulated entities and of high credit quality.
C. LIQUIDITY RISK
Being the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.
These risks and the policies for managing them have been applied throughout the year and are summarised below. Further
detail is contained in the strategic report on page 34.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
For the Year Ended 31 December 2024
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A. MARKET RISK
(i) Other Price Risk
The Company’s investment portfolio is exposed to market price fluctuations which are monitored by the Manager in
pursuance of the corporate objective. Quoted securities held by the Company are valued at bid prices, whereas material
unquoted investments are valued by the directors on the basis of the latest information in line with the relevant principles of
the International Private Equity and Venture Capital Valuation Guidelines (Accounting Policy 1(c)). These valuations represent
the fair value of the investments, see note 9 on pages 71 and 72.
A full list of the Company’s investments is given on pages 21 to 28. In addition, a geographical analysis of the portfolio, an
analysis of the investment portfolio by broad industrial or commercial sector and a review of the 20 largest equity investments
by their aggregate market value, are shown on pages 17 to 20.
Other Price Risk Sensitivity
11.9% of the Company’s total equity investments at 31 December 2024 (2023 – 13.1%) were listed on the main list of the
London Stock Exchange and a further 24.7% (2023 – 30.0%) on AIM. The NASDAQ Stock Exchange accounts for 26.6% (2023 –
24.4%), New York Stock Exchange for 7.8% (2023 – 5.4%) and other stock exchanges or unquoted 29.0% (2023 – 27.1%). A 10%
increase in equity investment prices at 31 December 2024 would have increased total net assets and profit & loss after taxation
by £116,861,000 (2023 – £113,987,000). A decrease of 10% would have the exact opposite effect. The portfolio does not target
any exchange as a comparative index, and the performance of the portfolio has a low correlation to generally used indices.
The shares of Herald Investment Trust plc have an underlying NAV per share. The NAV per share of Herald Investment Trust plc
fluctuates on a daily basis. In addition, there is volatility in the discount/premium the share price has to NAV.
(ii) Interest Rate Risk
The majority of the Company’s assets are equity shares and other investments which neither pay interest nor have a maturity
date. However, the Company does hold convertible bonds and Government bonds, the interest rate and maturity dates of
which are detailed below. Interest is accrued on cash balances at a rate linked to the UK base rate.
The interest rate risk profile of the financial assets and financial liabilities at 31 December was:
FINANCIAL ASSETS
2024 2023
2024 Weighted 2023 Weighted
Weighted average Weighted average
average period average period
interest until interest until
2024 rate/ maturity/ 2023 rate/ maturity/
Fair value interest maturity Fair value interest maturity
£’000 rate date £’000 rate date
Fixed rate:
US bonds 31,919 3.9% 0.3 years 60,765 2.7% 0.3 years
EMEA and Asia Pacific bonds 29,498 1.5% 1.0 years – – –
Overseas convertible bonds 559 18.0% 0.1 years 549 18.0% 1.1 years
UK convertible bonds 835 16.0% 1.7 years 2,336 9.1% 0.9 years
Floating rate cash:
Non-sterling 8,593 4.0% 27,877 3.7%
Sterling 13,297 4.9% 14,408 3.4%
21,890 42,285
The benchmark rates which determine the interest payments received on cash balances are the Bank of England base rate, the
European Central Bank rate and the United States Federal Reserve rate.
Interest rate risk sensitivity
(a) Cash
An increase of 100 basis points in interest rates as at 31 December 2024 would have a direct effect on net assets. Based on the
position at 31 December 2024, over a full year, an increase of 100 basis points would have increased the profit & loss after
taxation by £219,000 (2023 – £423,000) and would have increased the net asset value per share by 0.44p (2023 – 0.75p). The
calculations are based on the cash balances and number of shares in issue as at the respective balance sheet dates and are not
representative of the year as awhole.
(b) Fixed rate bonds
An increase of 100 basis points in bond yields as at 31 December 2024 would have decreased total net assets and profit & loss
aftertaxation by £367,000 (2023 – £195,000) and would have decreased the net asset value per share by 0.73p (2023 – 0.35p).
Adecrease in bond yields would have had an equal and opposite effect. The loan stocks having an element of equity are not
included in this analysis, as given the nature of the businesses and the risk profile of their balance sheets, they are considered to
have more equity like characteristics.
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17. FINANCIAL INSTRUMENTS CONTINUED
(iii) Foreign Currency Risk
The Company’s reporting currency is sterling, but investments are made in overseas markets as well as the United Kingdom
and the asset value can be affected by movements in foreign currency exchange rates.
Furthermore many companies trade internationally both through foreign subsidiaries, and through exports. The greatest
foreign currency risk occurs when companies have a divergence in currencies for costs and revenues. A much less risky
exposure to currency is straight translation of sales and profits. The list of investments on pages 21 to 28 breaks down the
portfolio by geographic listing. However the location of the stock market quote only has a limited correlation to the costs,
revenues and even activities of those companies, and so this note should not be regarded as a reliable guide to the sensitivity
of the portfolio to currency movements. For example, the holdings in the portfolio that have suffered most from US$
weakness are UK companies with dollar revenues and sterling costs.
The Company does not hedge the sterling value of investments that are priced in other currencies. Overseas income is subject
to currency fluctuations. The Company does not hedge these currency fluctuations because it is impossible to quantify the
effect for the reasons stated above. However, from time to time the Manager takes a view by holding financial assets or
liabilities in overseas currencies.
Exposure to currency risk through asset allocation by currency of listing is indicated below:
At 31 December 2024
Other
receivables
Cash and and Net
Investments deposits payables exposure
£’000 £’000 £’000 £’000
US dollar 436,547 2,663 344 439,554
Euro 101,417 2,771 95 104,283
Taiwan dollar 51,898 3,159 – 55,057
Japanese yen 47,741 – 44 47,785
Norwegian krone 36,083 – 207 36,290
Canadian dollar 32,895 – 16 32,911
Australian dollar 27,039 – – 27,039
Swedish krona 19,257 – – 19,257
Singaporean dollar 14,920 – 32 14,952
Other overseas currencies 17,494 – 139 17,633
Exposure to currency risk on translation of valuations of securities listed in
overseas currencies 785,291 8,593 877 794,761
Sterling 444,736 13,297 (192) 457,841
1,230,027 21,890 685 1,252,602
At 31 December 2023
Other
receivables
Cash and and Net
Investments deposits payables exposure
£’000 £’000 £’000 £’000
US dollar 403,795 10,942 787 415,524
Euro 112,813 2,777 76 115,666
Taiwan dollar 43,155 14,158 9 57,322
Japanese yen 47,257 – 34 47,291
Norwegian krone 22,988 – – 22,988
Australian dollar 22,182 – – 22,182
Korean won 18,388 – 119 18,507
Other overseas currencies 26,342 – 36 26,378
Exposure to currency risk on translation of valuations of securities listed in
overseas currencies 696,920 27,877 1,061 725,858
Sterling 503,719 14,408 1,772 519,899
1,200,639 42,285 2,833 1,245,757
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
For the Year Ended 31 December 2024
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Foreign currency risk sensitivity
At 31 December 2024, had sterling strengthened by 10% (2023 – 10%) in relation to all currencies, with all other variables held
constant, total net assets and profit & loss after taxation would have decreased by the amounts shown below based on the
balances denominated in foreign currency. A 10% (2023 – 10%) weakening of sterling against all currencies, with all other
variables held constant, would have had the exact opposite effect on the financial statement amounts. However, companies
whose cost base diverges in currency terms from its sales will in the longer term have a significantly greater effect on valuation
than simple translation. In the short-term, investee companies generally cover their currency exposure to varying degrees.
There is insufficient publicly disclosed information to quantify this, but in the long-term this effect is expected to dwarf simple
translation of foreign listings in terms of both risk and reward, because many investee companies trade globally. Furthermore,
the country of listing is not necessarily an indication of the geography of some or even any operational activities for investee
companies. The Manager does not use financial instruments to protect against currency movements. From time to time
financial leverage has been made using debt in overseas currencies.
2024 2023
£’000 £’000
US dollar 43,955 41,552
Euro 10,428 11,567
Taiwan dollar 5,506 5,732
Japanese yen 4,779 4,729
Norwegian krone 3,629 2,299
Canadian dollar 3,291 899
Australian dollar 2,704 2,218
Swedish krona 1,926 1,089
Singaporean dollar 1,495 22
Other overseas currencies 1,763 2,479
79,476 72,586
B. Credit Risk
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment which it
has entered into with the Company. The Manager monitors counterparty risk on an ongoing basis.
The Company has investments in convertible loan stocks that have an element of equity. These securities are viewed as having
a risk profile similar to the equity holdings. This is because the convertibles held are in nascent technology companies that
may be loss making and may have weak balance sheets. For this reason these stocks are categorised as equity holdings and for
risk management purposes excluded from the credit risk analysis.
Credit Risk Exposure
The exposure to credit risk at 31 December was:
2024 2023
£’000 £’000
Government debt securities 61,417 60,765
Cash and cash equivalents 21,890 42,285
Sales for subsequent settlement – 1,918
83,307 104,968
During the year the maximum exposure in fixed interest investments was £61,804,000 (2023 – £75,518,000) and the minimum
£29,506,000 (2023 – £38,735,000). The maximum exposure in cash was £68,825,000 (2023 – £79,533,000) and the minimum
£21,890,000 (2023 – £23,504,000).
C. Liquidity Risk
The Company’s policy with regard to liquidity is to provide a degree of flexibility so that the portfolio can be repositioned when
appropriate and that most of the assets can be realised without an excessive discount to the market price.
Equity Securities
The Company’s unquoted investments are not readily realisable, but these only amount to 1.4% of the Company’s total assets
at 31 December 2024 (2023 – 1.2%).
In practice, liquidity in investee companies is imperfect, particularly those with a market value of less than £100m. To reduce
this liquidity risk it is the policy to diversify the holdings and generally to restrict the holding in any one company to less than
10% of the share capital of that company. Furthermore the guideline is for no single investment to account for more than 5%
of the assets of the Company.
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FINANCIAL STATEMENTS
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Annual report & financial statements 2024
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
For the Year Ended 31 December 2024
17. FINANCIAL INSTRUMENTS CONTINUED
Equity Securities continued
The market valuation of each underlying security gives an indication of value, but the price at which an investment can be
made or realised can diverge materially from the bid or offer price depending on market conditions generally and particularly
to each investment. 11.9% (£136m) (2023 – 15.1% (£169m)) of the listed equities in the portfolio are invested in stocks with
amarket capitalisation below £100m, where liquidity is expected to be more limited. If these stocks had on average
arealisable value 20% below the bid price the value of the total fund would be adversely affected by 2.2% (2023 – 2.7%).
Liquidity Risk Exposure
Contractual maturities of the financial liabilities at the year end, based on the earliest date on which payment can be required
are as follows:
2024 2023
One year One year
or less or less
£’000 £’000
Other payables 1,165 1,189
1,165 1,189
Fair Value of Financial Instruments
The Company’s investments, as disclosed in the Company’s balance sheet, are valued at fair value.
Nearly all of the Company’s portfolio of investments are disclosed in the Level 1 category as defined in FRS 102.
Categorisation is based on the lowest level input that is significant to the fair value measure in its entirety.
The three levels set out in FRS 102 follow:
Level 1 – The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the
measurement date.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the
asset or liability, either directly or indirectly.
Level 3 – Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability.
The investment manager considers observable data to be that market data that is readily available, regularly distributed or
updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant
market.
The analysis of the valuation basis for the financial instruments based on the hierarchy as at 31 December is as follows:
At 31 December 2024
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Financial assets
Equity investments 1,151,283 – 10,546 1,161,829
Government debt securities 61,417 – – 61,417
Unquoted loan stocks – – 6,781 6,781
Total investments 1,212,700 – 17,327 1,230,027
At 31 December 2023
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Financial assets
Equity investments 1,124,789 – 9,813 1,134,602
Government debt securities 60,765 – – 60,765
Unquoted loan stocks – – 5,272 5,272
Total investments 1,185,554 – 15,085 1,200,639
Unquoted Investments are valued £17,327,000 as at 31 December 2024 (2023 - £15,085,000). A 10% increase in unquoted
equity investment prices at 31 December 2024 would have increased total net assets and profit & loss after taxation by
£1,732,700 (2023 – £1,508,500). A decrease of 10% would have the exact opposite effect.
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A reconciliation of fair value measurements in Level 3 is set out below:
At 31 December 2024
£’000
Opening balance at 1 January 2024 15,085
Purchases 3,000
Sales (2,361)
Total losses
– on assets sold during the year (87)
– on assets held at 31 December 2024 (6,753)
Net assets transferred during the year 8,443
Closing balance at 31 December 2024 17,327
At 31 December 2023
£’000
Opening balance at 1 January 2023 13,737
Purchases 2,538
Sales (400)
Total losses
– on assets held at 31 December 2023 (2,366)
Assets transferred during the year 1,576
Closing balance at 31 December 2023 15,085
18. RELATED PARTY TRANSACTIONS AND TRANSACTIONS WITH THE MANAGER
Under UK GAAP, the Company has identified the directors as related parties. The directors’ emoluments and interests have
been disclosed within the Directors’ Remuneration Report on page 53 with additional disclosure in note 4. No other related
parties have been identified.
The Company has agreements with HIML for the provision of management, accounting and administration services and
promotional activities as disclosed in the Strategic Report on page 39. Details of transactions during the year are disclosed in
note 3 and 11.
19. POST BALANCE SHEET EVENTS
Further to a valid requisition being received just prior to the Company’s year end from a significant minority shareholder, the
Company held a general meeting on 22 January 2025. The requisitioner sought to remove all of the existing independent
non-executive directors and appoint two new directors. All of the resolutions proposed by the requisitioner were defeated on
a poll. If the resolutions had passed, the stated intentions included removing the Investment Manager and changing the
Investment Policy. Further details can be found in the Chairman’s Statement on page 9.
The Directors confirm that there have been no other post balance sheet events which require adjustment of, or disclosure in,
the Financial Statements or notes thereto up to 19 February 2025.
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FURTHER SHAREHOLDER INFORMATION
HERALD INVESTMENT TRUST PLC
The Company is an investment trust. Investment trusts offer
investors the following:
— Participation in a diversified portfolio of shares;
— Constant supervision by experienced professional
managers;
— The Company is free from capital gains tax on capital
profits realised within the portfolio; and
— The opportunity to achieve improved performance for
shareholders’ funds in rising markets by the borrowing of
additional money.
HOW TO INVEST
The Company’s shares are traded on the London Stock
Exchange. They can be bought by placing an order with
astockbroker or an online share dealing platform or by
asking a professional adviser to do so.
SOURCES OF FURTHER INFORMATION ON THE COMPANY
The price of shares is quoted daily in the Financial Times,
TheDaily Telegraph and The Times. The NAV per share is
calculated and released daily to the London Stock Exchange
and monthly to the Association of Investment Companies.
KEY DATES
If a dividend is declared in respect of a financial year, it is
normally paid mid May.
TAXATION
The price of the ordinary shares (adjusted for the price of
attributable warrants) on 21 February 1994, which was the
first day of trading, was 90.9p. The amount attributable to the
warrants for the purpose of capital gains tax is 9.1p per share
issued (1994 Annual Report). Any shareholder uncertain of his
or her position is recommended to seek expert advice.
ISAs
The ordinary shares of the Company are qualifying
investments for individual saving accounts.
ELECTRONIC PROXY VOTING
If you hold stock in your own name you should vote by
returning proxies electronically at www.signalshares.com.
Ifyou have any questions about this service please contact
MUFG Corporate Markets on 0371 664 0300. Calls are
charged at the standard geographic rate and will vary by
provider. Calls outside the United Kingdom will be charged at
the applicable international rate. Lines are open between
9.00am and 5.30pm Monday to Friday (excluding public
holidays in England and Wales). Shareholders who wish to do
so can obtain a hard copy proxy form by calling the above
number or writing to the registrar at: MUFG Corporate
Markets, Central Square, 29Wellington Street, Leeds LS1 4DL.
MAINSTREAM INVESTMENT
The Company conducts its affairs so that its ordinary shares
are capable of being recommended by independent financial
advisors to ordinary retail investors in accordance with
relevant FCA rules. Our ordinary shares are, we consider,
mainstream investment products because they are shares in
an investment trust. The Company intends to continue
conducting its affairs for the foreseeable future so that the
ordinary shares can continue to be categorised as
mainstream.
KEY INFORMATION DOCUMENT (“KID”)
Since 1 January 2018 there is a requirement to make a KID
available to retail investors in the Company. The KID provides
key information about the Company’s shares as an
investment product. The information is required by law to
help potential shareholders understand the nature, risks,
costs, potential gains and losses of the Company’s shares
and to help them compare it with other products. The KID
can be viewed at https://www.heralduk.com/the-
packaged-retail-and-insurance-based-investment-products-
regulation-priips/.
ALTERNATIVE INVESTMENT FUND MANAGERS
DIRECTIVE (AIFMD)
The UK version of the AIFMD, an European Union Directive
which came into force on 22 July 2013 and which is part
ofUK law by virtue of the European Union (Withdrawal)
Act2018, as amended by The Alternative Investment Fund
Managers (Amendment etc.) (EU Exit) Regulations 2019 and
any further equivalent UK legislation replacing or superseding
the AIFMD. The UK AIFMD regulates fund managers that
manage alternative investment funds (this includes
investment trusts).
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DIRECTORS
Andrew Joy
Stephanie Eastment
Priya Guha MBE
Henrietta Marsh
Christopher Metcalfe
James Will
COMPANY SECRETARY
Appointed 1 October 2024:
NSM Funds (UK) Limited
4th Floor
46-48 James Street
London
W1U 1EZ
HIT@nsm.group
Prior to 1 October 2024:
Apex Listed Companies Services (UK) Limited
6th Floor
125 London Wall
London
EC2Y 5AS
REGISTERED OFFICE
10–11 Charterhouse Square
London
EC1M 6EE
COMPANY NUMBER
02879728
(England and Wales)
DEPOSITARY, CUSTODIAN AND ADMINISTRATOR
The Bank of New York Mellon (International) Limited
160 Queen Victoria Street
London
EC4V 4LA
ALTERNATIVE INVESTMENT FUND MANAGER AND
MANAGER
Herald Investment Management Limited
10–11 Charterhouse Square
London EC1M 6EE
Tel: 020 7553 6300
Fax: 020 7490 8026
Website: www.heralduk.com
Email: info@heralduk.com
INDEPENDENT AUDITOR
PricewaterhouseCoopers LLP
7 More London Riverside
London
SE1 2RT
LEGAL ADVISER
Dickson Minto LLP
Dashwood House
69 Old Broad Street
London
EC2M 1QS
CORPORATE BROKER
Singer Capital Markets Securities Limited
One Bartholomew Lane
London
EC2N 2AX
Peel Hunt LLP
7th Floor
100 Liverpool Street
London
EC2M 2AT
REGISTRARS
MUFG Corporate Markets (formerly known as Link Group)
Central Square
29 Wellington Street
Leeds
LS1 4DL
Tel: 0371 664 0300
Calls are charged at the standard geographic rate and will
vary by provider. Calls outside the United Kingdom will be
charged at the applicable international rate. Lines are open
between 9.00am and 5.30pm Monday to Friday (excluding
public holidays in England and Wales).
Website: eu.mpms.mufg.com
Email: shareholderenquiries@cm.mpms.mufg.com
ASSOCIATION OF INVESTMENT COMPANIES (“AIC”)
24 Chiswell Street
London
EC1Y 4YY
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ALTERNATIVE PERFORMANCE MEASURE (“APM”)
An APM is a numerical measure of the Company’s current,
historical or future performance, financial position or cash
flows other than a financial measure defined or specified in
the applicable financial framework. The following APMs are
typically used within the investment trust sector to provide
additional useful information to shareholders and others and
to help assess an investment trust’s performance and
position against its peers and the market generally. The
Company’s directors have therefore chosen the following
APMs as useful measures, however, make the important
distinction for the discount APM that the Company does not
target or attempt to control the discount (or premium) given
that this is a function of the stock market’s view of the
Company’s share price.
GEARING
The gearing ratio reflects the degree to which the Company
is exposed to movements on its investment portfolio. The
gearing ratio indicates the extra amount by which
shareholders’ funds would move if the Company’s
investments were to rise or fall. A gearing ratio higher than
100 indicates the extent to which shareholders’ funds are
geared; a gearing ratio of 100 shows the Company is
ungeared and fully invested; and a gearing ratio lower than
100 indicates that the Company is not fully invested. There
are several ways to calculate gearing, and the following
methods are used in this report.
Gross gearing
This reflects the amount of borrowings in use by the
Company and takes no account of any cash balances or
amounts invested in government debt securities which the
directors deem to be equivalent to cash for the purpose of
the net gearing/net cash calculation.
Net gearing or net cash
This reflects the amount of borrowings actively invested,
i.e.investments (excluding amounts invested in government
debt securities) divided by shareholders’ funds. A net cash
position arises when cash and cash equivalents and
government debt securities held are greater than borrowings.
31 December 31 December
2024 2023
PAGE £’000 £’000
Cash and cash equivalents 65 A 21,890 42,285
Add: Government debt
securities 71 B 61,417 60,765
Total cash and cash
equivalents and
government debt securities C=A+B 83,307 103,050
Net assets 65 D 1,252,602 1,245,757
Add: borrowings E – –
Net assets plus borrowings F=D+E 1,252,602 1,245,757
Less: Total cash and
cash equivalents and
government debt securities C (83,307) (103,050)
Total assets (excluding total
cash and cash equivalents and
government debt
securities) G=F-C 1,169,295 1,142,707
Gross gearing F/D 100 100
Net gearing G/D n/a n/a
Net cash G/D 93 92
NET ASSET VALUE (NAV) PER ORDINARY SHARE
The value of the Company’s assets less any liabilities for
which the Company is responsible, divided by the number of
shares in issue. See note 14 on page 74. The NAV per
ordinary share is published daily.
The NAV per ordinary share is shown both including and
excluding current year revenue.
The change in NAV per share (see total return below) during
2024, as shown on page 1, is calculated by taking 2024 total
return and dividing by the opening NAV for the year (that is,
the NAV disclosed for 31 December 2023).
ALTERNATIVE PERFORMANCE MEASURES
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ONGOING CHARGES
The ongoing charges figure has been calculated in
accordance with AIC guidelines: annualised charges (total
expenses), excluding non-recurring expenses and interest,
incurred by the Company, divided by the average daily net
asset values throughout the year.
The ongoing charges are derived in accordance with the
following table:
2024 2023
PAGE £’000 £’000
Investment management fee 64 A 12,894 12,375
Other administrative
expenses 64 B 1,155 974
Less: custody costs in
relation to trades and
non-recurring expenses C (88) (73)
Ongoing charges D=A+B+C 13,961 13,276
Average net assets E 1,290,744 1,238,291
Ongoing charges figure D/E 1.08% 1.07%
TOTAL RETURN
Share price and NAV total returns show how the NAV and
share price have performed over a period of time in
percentage terms, taking into account both the movement in
share price/NAV and any dividends paid to shareholders.
Share
PAGE Price NAV
Opening at 1 January 2024 3 A 1,922.0p 2,219.2p
Closing at 31 December 2024 3 B 2,430.0p 2,488.2p
Price movements C=(B-A)/A 26.4% 12.1%
Dividend reinvestment* D 0.0% 0.0%
Total return C+D 26.4% 12.1%
Share
PAGE Price NAV
Opening at 1 January 2023 29 A 1,782.0p 2,099.1p
Closing at 31 December 2023 3 B 1,922.0p 2,219.2p
Price movements C=(B-A)/A 7.9% 5.7%
Dividend reinvestment* D 0.0% 0.0%
Total return C+D 7.9% 5.7%
* No dividend has been declared for the year (2023 – nil).
DISCOUNT OR PREMIUM
The amount by which the share price of an investment trust
is either higher (premium) or lower (discount) than the NAV
per share, expressed as a percentage of the NAV per share.
31 December 31 December
DISCOUNT OR PREMIUM PAGE 2024 2023
Share Price (p) 3 A 2,430.0 1,922.0
Net Asset Value per share (p) 3 B 2,488.2 2,219.2
Discount (A-B)/B 2.3% 13.4%
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Herald Investment Trust plc
10–11 Charterhouse Square
London EC1M 6EE
020 7553 6300
www.heralduk.com
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