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LONDON - Hargreave Hale AIM VCT PLC has reported a slight decrease in its net asset value (NAV) per share for the first quarter of the 2024/25 financial year, reflecting broader economic headwinds in the UK. The company's unaudited NAV per share fell by 0.40 pence from 40.55 pence to 40.15 pence, resulting in a total return of -0.99%.
The challenging economic climate, influenced by the 2024 Autumn budget and associated messaging, has led to a softening in the UK economy, with GDP, employment, and PMI surveys indicating a downturn. Consumer and business confidence also declined, suggesting increased caution among households and companies.
The Office for Budget Responsibility's projection for GDP growth is expected to be revised down from the current forecast of an increase from 1.1% in 2024 to 2.0% in 2025. This environment has led to fewer anticipated rate cuts, with higher inflation and lower growth affecting the borrowing landscape. Consequently, UK Gilt yields increased, and Sterling depreciated.
Investor interest in UK equities, particularly within the AIM and the IA UK Small Cap sector, has waned, as evidenced by the FTSE AIM All-Share Index's performance, which returned -2.32% in the three months to December 31, 2024.
Despite this, Hargreave Hale maintains a positive outlook on the value offered by many small companies trading on AIM. The VCT's qualifying investments saw mixed results, with notable gains from Aquis Exchange, PCI-PAL, and Cohort, and losses from Equipmake and Fadel. The non-qualifying investments, including the IFSL Marlborough UK Micro-Cap Growth Fund and IFSL Marlborough Special Situations Fund, were broadly flat.
The VCT's portfolio structure remains robust, with an HMRC investment test compliance of 87.5%. The subdued market has resulted in only two VCT qualifying IPOs in the last 12 months, but Hargreave Hale is hopeful for an increase in deal flow as market conditions improve.
During the quarter, the VCT engaged in share buybacks, acquiring 3.9 million shares at an average price of 38.27 pence per share. As of December 31, 2024, the share price stood at 38.40 pence, representing a 4.74% discount to the NAV per share.
Post the reporting period, the unaudited NAV per share saw a minor increase to 40.22 pence as of February 7, 2025. This update is based on a press release statement and reflects the company's performance and position in the context of the UK's current economic landscape.
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