REG-Interim Management Statement Q3 2025

Hargreave Hale Aim VctAnnouncement

28/07/2025 17:15

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28 July 2025

HARGREAVE HALE AIM VCT PLC 
(the “Company”)

Interim Management Statement

Q3 2025

Introduction

This interim management statement covers the third quarter of the 2024/25
financial year, 1 April 2025 to 30 June 2025. Investment performance measures
contained in this report include income, realised and unrealised gains and
losses.

Overview

With remarkable speed, the volatility that followed Liberation Day (2 April)
was replaced by a more constructive outlook as markets concluded that Trump
was likely to succumb to market pressure. Despite all the heat and noise, and
amidst much talk of trade agreements and retaliatory tariffs, there was little
of either achieved within the period, leading the US to postpone their
implementation to 1 August 2025. The markets broadly agreed that the likely
final position will be tariffs of 15-20% on goods imported to the US, lower
than initially feared whilst higher than at any point in the last 100 years.
US trade agreements with Europe, Japan, Vietnam and other SE Asian economies
support this view.

The improved outlook that emerged helped equity markets post strong
gains. The UK market, buoyed by its early trade deal with the USA, looks like
a relative winner and notably cheap. Compositional factors, so often a drag
on the FTSE 100, have helped take it, and with it the FTSE All-Share, to new
highs. AIM has also enjoyed a strong rebound, recovering to its highest level
in 10 months and, in the process, recording its best quarter since late 2020.
There has been an improvement in interest in UK equities; however, this is yet
to manifest in fund inflows. The more positive mood in stock markets was not
mirrored in the UK economy, which continued to struggle with companies
adjusting to the new fiscal policy that came into effect with the start of the
current tax year. That having been said, June PMI data points to an
improvement following two months of contraction in April and May. Business
confidence has recovered following a sharp dip in April. Looking forward, the
UK economy is expected to post modest growth through the balance of this year.

The unemployment rate continues to grind higher with employers, reacting to
changes to national insurance and the minimum wage, reducing headcount in
seven of the eight months subsequent to the 2024 Autumn Budget. It is a mixed
picture for the UK consumer, with consumer confidence showing a small rebound
in June whilst remaining in a downward trend that has been in place since July
2024. A small dip in the household saving ratio, which remains unusually high,
and a bump in June retail sales suggest consumers have the capacity to spend
should they wish. Inflation is expected to peak in the current quarter,
creating capacity for two further cuts in interest rates this year and more
next year. History suggests this could be positive for the valuations of small
companies.

Returning to events within the three months to 30 June 2025, and as
highlighted earlier, AIM(1) was notably strong over the period, gaining 12.1%.
This has helped HHV to post its strongest quarterly performance in four years,
as we comment on below.

Performance

In the three months to 30 June 2025, the unaudited NAV per share increased by
1.95 pence from 34.48 pence to 36.43 pence (cum-dividend), giving a total
return of 5.66%.

The qualifying investments returned 1.42 pence per share whilst the
non-qualifying investments made a gain of 0.71 pence per share.

Qualifying Investments

Cohort (+29.5%, +£1.51m) continued to benefit from the positive environment
for defence companies. The UK Defence Strategic Review in June 2025 further
underlined the UK’s commitment to increasing investment in the sector.
Cohort’s FY24 trading update confirmed revenues and profits would be in line
with expectations. Following another period of strong order intake, the
company has a record high order book of £615m, and visibility over 80% of
expected FY26 revenues. The shares continue to command a premium to their
long-term historical average earnings multiples, reflecting the strong
outlook.

The Property Franchise Group (+31.0%, £1.17m) reported strong results, with
EBITDA growing 99% to £24.1m following the merger with Belvoir in May 2024,
and the acquisitions of Fine & Country and The Guild of Property Professionals
in June 2024. On an underlying basis, revenue grew 6% and overall EPS grew 7%
to 31.7p. The company remains highly cash generative. Management’s outlook
is cautiously optimistic with regulatory headwinds being offset by ongoing
strength in the lettings business and an improving sales pipeline.

The valuation of Gousto (+51.8%, +£0.68m) increased following a period of
good operating performance, coupled with rising valuations across its
peer-group.

Eagle Eye (-44.8%, -£1.4m) announced the loss of a significant, high-margin
contract with a US national grocer. This prompted a material downgrade to both
revenue and profit forecasts. Whilst Eagle Eye is strategically focused on
driving software revenues and distributing through new larger technology
partners, the contract loss is a major setback for the company. At the end of
June, the company also announced a small earnings-enhancing acquisition of a
promotional payments solutions business, and the balance sheet remains strong.

Shares in Oberon Investments Group (-18.6%, -£0.54m) gave back the gains made
in the previous quarter. There was no notable company news during the period.

Following approval by shareholders, Maxcyte (-22.5%, -£0.34m) de-listed from
AIM on 26 June 2025. The VCT continues to hold the US line as a qualifying
holding until July 2026, after which point it will become non-qualifying. Q1
results reported a revenue decline of 8% to $10.4m, with 1% growth in the core
business offset by lower milestone payments from strategic platform partners.
The company continues to have a strong balance sheet with $175m net cash,
equivalent to just under 80% of the market cap, implying a depressed valuation
for the company’s equity.

Non-Qualifying Investments

Within the non-qualifying portfolio, the IFSL Marlborough UK Micro-Cap Growth
Fund and IFSL Marlborough Special Situations Fund increased by £1.28m over
the period. Within the non-qualifying direct equities portfolio, Chemring
reported strong interim results and benefited from the strong backdrop for
defence spending. Shares in Wickes also performed well following a positive
trading update. Negative contributors included Shell, which declined alongside
falling oil prices and Hollywood Bowl, where earnings forecasts were slightly
downgraded due to less favourable weather conditions impacting consumer
activity. The direct equity holdings returned £0.95m whilst the fixed income
portfolio returned £0.37m.

Portfolio structure

The VCT is comfortably above the HMRC defined investment test and ended the
period at 93.25% invested as measured by the HMRC investment test.

The market for new qualifying investment remains unusually subdued with just
two VCT qualifying IPOs within the last 12 months. The most recent quarter was
exceptionally quiet, no doubt reflecting the uncertainty that swept through
markets in April. Within the period under review, AIM VCTs invested £2.0m
across four companies of which £0.5m was deployed by us into one follow-on
investment into an existing AIM company, Fusion Antibodies.

Within the qualifying portfolio, we exited Learning Technologies Group and
Science in Sport, which were both subject to private equity backed takeovers
which we did not support. The Learning Technologies Group exit valued the
company at £858m, a gain of 376% over book cost. The Science in Sport exit
valued the company at £79m and realised a loss of 37% relative to book cost.

By market value, the VCT had a reduced 53.8% weighting to Qualifying
Investments, a decreased 13.4% weighting to non-qualifying fixed income, a
reduced combined 10.5% weighting to the IFSL Marlborough UK Micro-Cap Growth
Fund and IFSL Marlborough Special Situations Fund and a reduced 6.8% weighting
to non-qualifying direct equities. Exit activity and the partial sale of the
IFSL Marlborough funds increased the weighting to cash to 14.9%. The VCT
maintained a 0.6% weighting to ETFs.

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

Share Buy Backs & Discount Control

1.5m shares were acquired in the quarter at an average price of 33.54 pence
per share. The share price increased from 33.8p to 34.10p within the quarter
and traded at a discount of 4.49% following the publication of the 30 June
2025 NAV on 7 July 2025.

Post Period End

The unaudited NAV per share decreased from 36.43 pence to 36.34 pence as at 18
July 2025, a decrease of 0.25%. AIM, as measured by the Deutsche Numis
Alternative Market (excluding investment companies) Total Return Index
increased by 0.54%.

END

For further information please contact:

Oliver Bedford, Canaccord Genuity Asset Management

Tel: 020 7523 4837

LEI: 213800LRYA19A69SIT31        

(1) As measured by the Deutsche Numis Alternative Markets (excluding
investment trusts) Total Return Index