Half yearly unaudited financial report

RNS Number : 0092Q

Calculus VCT PLC

25 October 2021

 

Calculus VCT Plc  (the 'Company')

Interim results for the six months ended 31 August 2021 (unaudited)

For the full half yearly unaudited financial report, please refer to the Investor Information section on   https://www.calculuscapital.com/calculus-vct/

Financial Highlights	6 Months to 31 August 2021	6 Months to 31 August 2020	12 Months to 28 February 2021
Dividends paid per new Ordinary share	3.02p	3.20p	3.20p
Total return per new Ordinary share[1]	0.54p	(2.29p)	0.98p
Net asset value per new Ordinary share	64.01p	64.27p	67.08p

CHAIRMAN'S UPDATE

I am pleased to present your Company's results for the 6 months to 31 August 2021.

Performance summary

The dominant story for investors has been the continued impact of Brexit and the Covid-19 Delta variant which has spread more widely in recent months, leading to further disruption in labour markets and supply chains. However, the Company has been shielded to a degree by a combination of holding a significant portion of its assets in cash and through carefully selected investments which have shown to be resilient against the ongoing pandemic.

The Company is pleased to announce the successful exits of three life sciences companies in the period, in which all contributed towards the fight against Covid-19.

The Company's remaining holding in Genedrive, a molecular diagnostics company which developed the Genedrive 96 SARS-COV-2 Kit, was sold in March 2021. The total sale resulted in a 2.8x return since its acquisition from the Neptune-Calculus Income and Growth VCT plc in September 2017. 

Open Orphan, a contract research organisation (CRO) was sold in May 2021 for a total return of 1.8x. Open Orphan worked in collaboration with US biotech Codagenix to conduct a Phase 1 study of a needle free, intranasal Covid-19 vaccine, COVI-VAC.

In July 2021, the Company divested its holdings in Mologic Limited, a world leading innovator in lateral flow and rapid diagnostic technologies. The sale generated a 3.6x return for the Company's investors since the initial investment in 2018 together with repayment of loan notes and associated interest. In addition, further consideration is payable in the event of strong sales of certain Mologic products.

Despite the ongoing economic challenges, the Board is pleased with the performance of the Company's portfolio and the positive uplifts in the valuations of some portfolio companies. The most significant movement in the qualifying portfolio on the upside was Cloud Trade Technologies (CloudTrade) which increased the NAV by £0.5m. CloudTrade's software automates invoice handling for large enterprises, saving time, improving accuracy and reducing costs. With the rise of robotic process automation (RPA) systems, Cloudtrade's addressable market is expected to expand significantly. The Company's shares in CloudTrade were sold after the year end.

Home Team Content, a UK-based independent production company enjoyed an uplift in share value since February 2021, improving the NAV by £0.2m. Home Team Content was co-founded by experienced producers, Dominic Buchanan and Bennett McGhee, both of whom have established reputations in the industry. Home Team will harness the reputations of its two producers in identifying and working with under-represented creatives and new voices through interactive as well as traditional film and television platforms.

Arecor Therapeutics plc, a biopharmaceutical products company, announced its admission to trading on AIM, a market operated by London Stock Exchange on 3 June 2021. Admission followed a successful oversubscribed placing by Panmure Gordon, raising gross proceeds of £20 million at a price of 226 pence per share. The Company decided to invest an additional £200,000 prior to the company's successful IPO. Since then, the company has seen its share value increase which resulted in strengthening the NAV by £0.1m.

In April 2021, a follow-on investment of £50,000 was made in Arcis Biotechnology Limited to help the company further develop commercial opportunities.

Although several companies in the portfolio showed strong growth, the Company also experienced a number of write-downs. The merging of the Department for International Development (DFID) with the Foreign and Commonwealth Office (FCO) resulted in reduced funding for international development projects, and as a result Every 1 Mobile was written down in full. The impact was a £0.2m reduction on the NAV.

C4X Discovery plc, a drug discovery and development company saw its share price fall resulting in a decrease of £0.2m on the NAV. The fall is a result of AIM listed market fluctuations and we remain positive on the company.

During the period, Arcis Biotechnology's (a DNA and RNA extraction company) portfolio did not transition into material commercial opportunities. As a result, the Company has prudently reduced the NAV by £0.2m. The Company continues to monitor Arcis closely and will revalue the company on a

periodic basis when other commercial prospects arise. 

In August 2021 the Company sold its holding in Cornerstone FS Plc, a fintech company focusing on providing foreign exchange trading services. Since April 2021, its share price had steadily declined, and it was decided to sell the Company's holding.

The priority of the Board is to give support to the existing portfolio where it is needed and appropriate, whilst also taking advantage of new business ideas which are proving resilient to the current pandemic.

In the period to 31 August 2021, four new investments and two follow-on investments were made on behalf of the qualifying portfolio:

New Investments

Date of Investment	Name of Investment	Location	Sector	Amount of Investment	Percentage of ownership by VCT	Percentage of ownership controlled by the Manager
March 2021	Invizius Limited	Edinburgh, UK	MedTech	£375,000	3.3%	5.5%
April 2021	Censo Biotechnologies Limited	Midlothian, UK	Healthcare	£651,000	2.9%	15.6%
June 2021	Spectral MD Holdings Limited	Texas, US	MedTech	£500,000	0.6%	N/A
July 2021	Brouhaha Entertainment Limited	London and Sydney	Media	£501,000	11.31%	5.62%

Follow-on Investments

Date of Investment	Name of Investment	Location	Sector	Amount of Investment	Percentage of ownership by VCT	Percentage of ownership controlled by the Manager
April 2021	Arcis Biotechnology Limited	Daresbury, UK	Life science	£50,000	9.8%	18.9%
June 2021	Arecor Therapeutics Limited	Saffron Walden, UK	Healthcare	£200,000	1.6%	7.2%

We believe the portfolio is well positioned to continue to provide long term growth to shareholders and that our Investment Manager is similarly positioned to exploit these opportunities.

Further information can be found on new investee companies Invizius Limited, Censo Biotechnologies Limited, Spectral MD Holdings Limited and Brouhaha Entertainment Limited in the Investment Manager's Report.

Buybacks

During the period, the Company bought back and cancelled no Ordinary shares. The Company continues to review opportunities to carry out share buybacks at a discount of no greater than 5% to NAV.

Dividends

As mentioned above, a dividend was paid on 30 July 2021 of 3.02 pence per eligible Ordinary share.

Board composition

The board consist of four Directors, three of which are independent from the Manager.

Ordinary share issue

The offer for subscription for Ordinary Shares that opened on 8 September 2020 and closed on 27 August 2021 received aggregate subscriptions from the issue of Ordinary shares of £7 million. On 13 September 2021 a new prospectus was launched for a further offer for subscription for Ordinary Shares, with the shares to be issued in the 2021/22 and 2022/23 tax years.

Claire Olsen invested £5,000 under the 2020/21-2021/22 offer and had 7,812 shares allotted in September 2021. Claire's shares were acquired on the same terms as the shares subscribed for by other investors in the offer.

Developments since the period end

The Company is pleased to confirm a £138,000 follow-on investment into Home Team Content, completed in October 2021. 

As of October 2021, as mentioned above, CloudTrade was acquired by Advance, one of the UK's leading providers of business and software services. The sale represents a 4x return for the Company since its investment from July 2018.

Future prospects

The pandemic continues to cause disruption in labour markets and supply chains, which has resulted in some downgrading of immediate growth prospects although, a full recovery is generally deemed to be delayed rather than cancelled. Your Board continues to keep a watchful brief over developments and our investment manager is working closely with our portfolio companies. In terms of the main focus of our current investment strategy, B2B technology, healthcare, life sciences and media, all of these sectors have shown robustness despite the economic climate and are all key growth areas of the UK economy. We look forward with a combination of caution and optimism.

Jan Ward

Chairman

25 October 2021

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[1] Total return per share is a non-GAAP Alternative Performance Measure ("APM"). It is taken from the Income Statement on page 12 of the Half Yearly Financial Report and is calculated by taking the total profit or loss for the period and dividing by the weighted average number of shares. This has been selected to provide better understanding of the Company's performance over the period on a per share basis.

 

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