HARGREAVE HALE Hargreave Hale AIM VCTs This presentation is designed for regulated financial advisors and not retail clients For more information please visit www.hargreaveaimvcts.com or call 0207 523 4837 (calls may be recorded)
Important Notice This presentation has been prepared and issued by Hargreave Hale Limited in respect of a current offer for subscription of new ordinary shares (the "Securities") of Hargreave Hale AIM VCT 1 plc for information purposes. Although the presentation relates to the Hargreave Hale AIM VCT 1 plc offer, it also includes information on Hargreave Hale AIM VCT 2 plc. THIS PRESENTATION DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER OR INVITATION TO SELL, ISSUE, PURCHASE OR SUBSCRIBE FOR (OR ANY SOLICITATION OF ANY OFFER TO PURCHASE OR SUBSCRIBE FOR) THE SECURITIES DESCRIBED HEREIN IN ANY JURISDICTION. This presentation is an advertisement and not a prospectus and no reliance may be placed for any purposes whatsoever on the information contained herein or on its completeness. This presentation is designed for regulated financial advisors and not retail clients. Investors should not subscribe for or purchase any Securities referred to in this presentation except on the basis of the information in the prospectus (including the section on risk factors) that has been produced in connection with the offering of the Securities and any supplement thereto. All investments are subject to risk. The value of the Securities may go down as well as up. Throughout this presentation there are many references to past performance, including information about the VCT shares, assets and dividends as well as other investments such as the Marlborough Special Situations unit trust, investors should be aware that past performance is not a reliable indicator of future returns. Potential investors are advised to seek expert financial advice before making any investment decision. This document also contains information on the tax benefits of investing in VCTs. The value of these benefits depends on the individual circumstances of the investor and may be subject to future changes. Both VCTs invest in the Marlborough Special Situations Fund. The Investment Manager will invest up to 75% of the net proceeds of any issue of new shares of both Companies into the Marlborough Special Situations Fund subject to a maximum of 20% of the gross assets of each Company. Performance figures for the Marlborough Special Situations Fund are available in the appendix. Hargreave Hale Limited is authorised and regulated by the Financial Conduct Authority, no 209741. For more information please visit www.hargreaveaimvcts.com or call 0207 523 4837 (calls may be recorded) 2 Friday, February 23, 2018
Hargreave Hale: Now Part of CGWM Our services include: Discretionary Advisory Wealth Fund Broking portfolio portfolio planning management services management management Over More than 26,000 £24 billion* private clients, intermediaries, corporates and assets under management, administration and charities looked after across four offices management contract, shown by service: UK | Guernsey | Isle of Man | Jersey 2017 14.5 3.6 6.8 2016 5.8 3.4 4.8 583* 2015 4.9 3.3 3.8 2014 4.2 3.5 3.6 staff which includes 194* client-facing professional advisers 2013 3.8 3.7 3.3 Centralised and disciplined investment process 0 5 10 15 20 25 30 offering multi-currency portfolios Discretionary Advisory Execution Only 3 * As at 30 September 2017 following CGWM acquisition of Hargreave Hale Ltd
Hargreave Hale Fund Management Fund management team led by Giles Hargreave. • 14 fund managers and analysts with over 250 years experience • Advise 7 unit trusts for Marlborough Fund Managers and two Hargreave Hale AIM VCTs • 19 years managing investment in UK small and Micro Cap companies • 13 years managing VCTs • Diverse set of UK long-only equity mandates • Long term investors • Capacity to provide extensive support to companies at every stage of the growth journey: • Private company growth capital • Public company growth capital • Secondary market activity • For more information please visit www.hargreaveaimvcts.com or call 0207 523 4837 (calls may be recorded) 4 Friday, February 23, 2018
Investment Team Giles Hargreave – Co-manager of the Hargreave Hale AIM VCTs In addition to the AIM VCTs, Giles has been the investment adviser to the Marlborough Special Situations Fund since 1998. He is also the investment adviser to the Marlborough UK Micro Cap Growth Fund (with Guy Feld) and the Marlborough Nano-Cap Growth Fund (with Guy Feld and David Walton). Giles heads up Hargreave Hale’s investment committee and chairs the weekly meetings in which the team reviews existing and potential investments. Oliver Bedford – Co-manager of the Hargreave Hale AIM VCTs Oliver graduated from Durham University in 1995 with a degree in Chemistry . He served in the British Army for 9 years before joining Hargreave Hale in 2004. Oliver co-manages the VCT's investment portfolios with Giles and supports the other unit trusts through the investment committee. Oliver is a Director of Hargreave Hale AIM VCT 1 plc and Hargreave Hale AIM VCT 2 plc. Sid Eustace Shane De David Will Will Chand Santa Richard Joshua George Bruhn- Walton Guy Feld Searle Rosier Lall Barbara Hallett Northrop Finlay Smith For more information please visit www.hargreaveaimvcts.com or call 0207 523 4837 (calls may be recorded) 5 Friday, February 23, 2018
Small Cap Investing IMA UK Smaller Companies Performance 73.8% FTSE 100 Index Total Return 84.5% FTSE All Share Index Total Return 148.9% FTSE Small Cap Index Excluding IT Total Return 178.8% IMA UK Smaller Companies Average 292.6% Marlborough Special Situations -10.0% 40.0% 90.0% 140.0% 190.0% 240.0% 1 Year 5 Year 10 Year Sources: IMA, Trustnet & Bloomberg 3 January 2018 For more information please visit www.hargreaveaimvcts.com or call 0207 523 4837 (calls may be recorded) 6 Friday, February 23, 2018
Finance Bill 2017: What Changed? Qualifying Investments • State Aid lifetime limit unchanged at £12m (£20m for knowledge intensive companies). • State Aid annual limit unchanged at £5m (£10m for knowledge intensive companies). 1 unchanged at 7 years of from first commercial sale (10 years for knowledge intensive). • Age limit • New principles based approach to encourage ‘higher risk’ investments and prevent use of capital preservation schemes. 2 . • Qualifying Investment Test increased from 70% to 80% 3 . • New requirement to invest 30% of proceeds • No grandfathering rights. • No secured loans. • Lending must be made at commercial rates, debt interest cannot used to return equity capital to investors. 1. This rule does not apply if the company have raised state aided money within the first 7 years. 2. For accounting period starting on or after 6 April 2019. 3. Within first full financial year post fundraise, with effect from 6 April 2018. There were no changes to the rules relating to the non-qualifying investments. For more information please visit www.hargreaveaimvcts.com or call 0207 523 4837 (calls may be recorded) 7 Friday, February 23, 2018
Finance Act 2015: Impact • Investment strategy. No changes, continued focus on growth and capital • Qualifying investments. Greater focus on earlier stage companies • Non-qualifying investments. Official list only, greater emphasis on mid-large caps with more liquidity VCT 1 & 2 value invested vs no. of investments Average qualifying company revenue 120 16.0 24.0 100 20.0 12.0 80 16.0 No of Investments Value invested £m 60 8.0 12.0 40 8.0 4.0 4.0 20 0.0 0.0 0 2013 2014 2015 2016 2017 31/10/2014 31/10/2015 31/10/2016 31/10/2017 Value Invested No of investments VCT 1 VCT 2 Sources: HH & Bloomberg For more information please visit www.hargreaveaimvcts.com or call 0207 523 4837 (calls may be recorded) 8 Friday, February 23, 2018
Why Merge? • Harmonised legislation across both portfolios for 5 years. • Significant overlap in two portfolios. • Simplified fund structure will create significant operational benefits: 50% reduction in fund administration burden. Continue to scale without adding to support team. Allows FM to allocate more time to portfolio management. • Cost synergies will allow VCT to recover merger costs within 12 months. • Improved shareholder communication. For more information please visit www.hargreaveaimvcts.com or call 0207 523 4837 (calls may be recorded) 9 Friday, February 23, 2018
What are we looking for? A good company can be defined by many things • Strong and experienced management team • Strong business model • Intellectual property • Strong balance sheet • High cash generation • Revenue visibility • Customer profile • Pricing power • Competitive position We like AIM because it is: • Home to 1000+ companies including many global leaders, innovators and highly profitable companies • Large & difficult to cover • Under-researched and inefficient • Unpopular & misunderstood For more information please visit www.hargreaveaimvcts.com or call 0207 523 4837 (calls may be recorded) 10 Friday, February 23, 2018
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