REG - Calculus VCT - Annual Financial Report

Calculus VCTAnnouncement

01/06/2022 07:01

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RNS Number : 4769N  Calculus VCT PLC  31 May 2022

Calculus VCT Plc  (the 'Company')

Legal Entity Identifier: 2138005SMDWLMMNPVA90

Final results for the year ended 28 February 2022

 

For the full annual financial report, please refer to the Investor Information
section on
https://calculuscapital.com/investment-opportunities/calculus-vct/investor-information/
(https://calculuscapital.com/investment-opportunities/calculus-vct/investor-information/)

 

The Annual Report and Financial Statements ("Annual Report and Accounts") for
the year ended 28 February 2022 and the Notice of Annual General Meeting will
be posted to shareholders shortly and will be available for inspection at 12
Conduit Street, London, W1S 2XH, the Company's registered office, and will be
available in electronic format for download on
www.calculuscapital.com/calculus-vct/
(http://www.calculuscapital.com/calculus-vct/) , a website maintained by the
Company's Investment Manager, Calculus Capital Limited. A copy of the Annual
Report and Accounts will also be submitted shortly to the National Storage
Mechanism ("NSM") and will be available for inspection at the NSM, which is
situated at:
https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism
(https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism)

 

Page numbers and cross-references in the announcement below refer to page
numbers and cross-references in the PDF of the Annual Report and Accounts.

 

Financial Highlights

 

                            Year to 28 February 2022  Year to 28 February 2021
 Net Asset Value per share  67.90p                    67.08p
 Final dividend proposed    3.06p                     3.02p
 Annual yield*              4.50%                     4.50%
 Total return per share*    4.83p                     0.98p
 Share price                55.00p                    60.00p

 

 

Chairmans Update

 

I am pleased to present Calculus VCT plc's (the Company) results for the year
ended 28 February 2022. The Company has shown robust financial performance,
which included five successful exits during the financial year. It has been a
year of progress for the Company with five new investments and £8.6 million
worth of new Ordinary shares allotted. The venture capital portfolio of
qualifying investments grew in value by £2.5 million, excluding the effects
of new and follow-on investments and exits. This portfolio growth represents a
growth of 16% of the average value of the portfolio and was driven by the
strong performance of a number of investee companies.

 

Manager's Review

 

There has been a strong performance across a broad range of the Company's
qualifying investments, which is particularly encouraging given the
challenging market conditions. The Company completed seven exits during the
year, five of which were successful, including three companies that assisted
towards the fight against Covid.

 

Exits

 

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 overall and a 4.0x return on the shares
acquired from the Neptune-Calculus Income and Growth VCT plc in September
2017.

 

Open Orphan plc, a world leader in the testing of vaccines and antivirals
using human challenge clinical trials 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 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 on the equity investment 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.

 

CloudTrade Limited, a platform which automatically processes and interprets
electronic documents, was acquired by Advanced, a leading provider of business
software, delivering a 4x return to Calculus VCT investors in just over 3
years.  The Company invested in July 2018, having been impressed by the
patented technology, strong management team and large addressable market.
During the investment period the company's revenues have grown significantly,
and multiple new partnerships and contracts have been won. The acquisition by
Advance was completed in October 2021.

 

The Company's holding in Maze Theory Limited, a digital entertainment studio
focusing on the creation and development of immersive entertainment
experience, was realised in December 2021. The sale resulted in a 1.3x return
to the Company.

 

In addition, the following exits occurred during the year which had less
successful outcomes.

 

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 divest the
company yielding a minimal 0.05x return.

 

In February 2022 the Company divested its stake in Money Dashboard, a personal
finance management web and mobile app. Challenges arose from additional
controls which the banks have implemented to the open banking directive
introduced by the Government. For example, requiring external app users to
re-authenticate every 90 days. This has made scaling the Money Dashboard user
base more difficult than anticipated. The resulting sale produced a 0.6x
return to the Company.

 

Performance

 

The net asset value per Ordinary share at 28 February 2022 was 67.90 pence,
compared to 67.08 pence as at 28 February 2021, this is after paying a
dividend during the year of 3.02 pence per share. Despite the Covid Delta and
Omicron variants causing disruption in labour markets and supply chains, the
Board is pleased with the growth of the Company's portfolio and the positive
uplifts in the valuations of several of portfolio companies.

 

The most substantial movement in the qualifying portfolio was the uplift of
Arecor Therapeutics plc. Arecor, 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 prior to the company's
successful IPO. Since then, the Company has seen its share value increase
which resulted in strengthening the NAV by £0.7 million.

 

Home Team Content Limited, a UK-based independent production company also
enjoyed an uplift in value since February 2021, improving the NAV by £0.6
million. Home Team 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. The company has numerous
exciting projects on the development slate.

 

Brouhaha Entertainment Limited, a production company founded by Oscar
nominated producer, Gabrielle Tana, Independent film industry pioneer, Troy
Lum, and producer, Andrew Mason saw the value of its shares increase due to
the company's exciting slate across both film and television, not to mention
strong progress with several projects entering production. Brouhaha has two
fully financed film projects and a major television series for Netflix either
in production or due to go into production in 2022. The increase in valuation
resulted in a £0.4 million uplift on the NAV.

 

Wazoku Limited, an idea management company, whose collaborative idea
management platform helps organisations transform raw ideas generated by the
workforce into actionable innovation, saw its value increase due to a
significant number of new blue-chip customers added on the roster and a strong
year of growth across its suite of products. Wazoku maintains an impressive
client list including the United Kingdom Ministry of Defence (MoD), Waitrose,
Microsoft and HSBC. The effect of Wazoku's performance produced a £0.4
million increase on the Company's NAV.

 

Oxford Biotherapeutics, Wonderhood, Essentia Analytics, Maven Screen Media,
Park Street Shipping, Fiscaltec, Raindog Films and Weedingtech also saw their
valuation increase over the year along with several other investee companies.
Altogether these valuation improvements added a further £1.4 million to the
Company's NAV.

 

Conversely, during the year, Arcis Biotechnology's portfolio of technologies
has not yet transitioned into material commercial opportunities. As a result,
the Company has prudently reduced its valuation by £0.4 million.

 

Scancell plc, an immune-oncology company saw its share price fall resulting in
a decrease of £0.3 million on the NAV. Life sciences shares and technology
stocks have fallen in the last quarter as it is felt that interest rate rises
are negative for these sectors. Scancell's valuation reduced despite having
two cancer drugs in clinical trials.

 

Spectral MD Holdings, a US based firm which produces predictive analytics,
proprietary AI algorithms and imaging systems to assist with medical
treatment, also saw its share price fall. This was due to limited liquidity
since it IPO'd on AIM resulting from delayed "Regulation S" compliance - a
series of rules which exempt registration with the US Securities and Exchange
Commission (SEC) in order to be able to trade outside of the US. Because of
this issue, Spectral MD shares have been unable to trade via certain
distributors and platforms in the US or abroad. However, Spectral MD will be
fully compliant once it has completed one year of trading which will be in
June 2022. The fall in share price led to a £0.2 million decrease on the NAV.

 

Due to a combination of Covid and Brexit, the DFID (Department for
International Development) was merged with the Foreign and Commonwealth Office
which resulted in reduced funding for international development projects, and
as a result Every 1 Mobile Limited, was written down in full in August 2021.
The impact was a £0.2 million reduction on the NAV.

 

Factoring all other investee company valuation movements, the total portfolio
enjoyed a net £2.5 million uplift since the beginning of the financial year.

 

 

New Investments

 Investments                     Date                          Sector      Investment cost £'000   Website
 Invizius Limited                March 2021                    Healthcare  375                     https://www.invizius.com/
 Censo Biotechnologies Limited   April 2021                    Healthcare  651                     https://censobio.com/
 Spectral MD Holdings Limited    June 2021                     Healthcare  500                     https://www.spectralmd.com/
 Brouhaha Entertainment Limited  July 2021 & January 2022      Media       831                     -
 Hinterview Limited              December 2021                 Media       800                     https://hello.hinterview.com/

 

 

Follow-on Investments

 

 Investments                           Date           Sector      Investment cost '000  Website
 Arcis Biotechnology Holdings Limited  April 2021     Healthcare  50                    https://arcisbio.com/
 Arecor Therapeutics plc               May 2021       Healthcare  200                   https://arecor.com/
 Home Team Content Limited             October 2021   Media       138                   -
 Fiscaltec Group Limited               January 2022   Technology  268                   https://fiscaltec.com/
 MIP Diagnostics Limited               February 2022  Healthcare  482                   https://www.mip-dx.com/

 

 

Venture Capital Investments

Calculus Capital Limited manages the portfolio of VCT qualifying investments
made by the Company. The Company invested £3.2 million in five new
investments and £1.1million in five follow-on investments during the year
ended 28 February 2022.

Issue of new Ordinary shares

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 £7.8 million.

On 13 September 2021, a new offer was launched. The Company had issued shares
for £1.9 million of subscriptions under this offer by the end of the
financial year. Of the £8.7 million total new share issues in the year ended
28 February 2022, £6.8 million took place under the offer that closed on 27
August 2021.

From September 2020 more than £10 million was raised in share issues, funds
generated have and will be used in the investment of enterprises with growth
potential. The current offer will close on 26 August 2022.

2.2 million shares were issued on the 22 March 2022 at an average issue price
of 65.9 pence per share, additionally on 5 April 2022 the Company issued a
further 2.2 million shares at an average issue price of 65.6 pence per share.

Share Buybacks

During the year, 241,611 shares at a consideration of £147,020 were bought
back for cancellation. In keeping with its policy for returning funds to
shareholders, the Company will continue to consider opportunities for buybacks
in the coming year. The total shares bought back represent 0.60 per cent of
the weighted average number of shares in issue during the year ended 28
February 2022.

Dividend

The Directors are pleased to announce a final dividend of 3.06 pence per
Ordinary share to be paid to all Ordinary shareholders.

Subject to shareholder approval, the Ordinary share dividend will be paid on
29 July 2022 to shareholders on the register on 1 July 2022. The deadline for
the Scheme Administrator to receive any applications under the dividend
reinvestment scheme is 14 July 2022.

Impact of Covid

The initial impact of the economic challenges caused by the pandemic were
mitigated due to several factors. The Company was shielded to a certain degree
by holding a significant portion of its assets in cash, and although some
portfolio companies were adversely affected by the impact of Covid, the
valuations in several life sciences companies benefited from a general
rerating of the life sciences sector and, in some cases, developed products
and services to aid the fight against Covid. B2B SASS technology companies
were also largely unaffected as business continued to function, albeit often
remotely, during the pandemic. The Company's investment in the media and
entertainment sector also showed an uplift. This arose both from progress by
individual companies and from a general rerating of the producers' premium
content. This was also stimulated by increased streamer subscriptions during
lock-downs and the entry of a number of new well-capitalised streamers.

Developments since the year end

In March 2022, the Company made an investment in Destiny Pharma plc. Destiny
Pharma is a clinical phase biotechnology company dedicated to the development
of novel anti-infectives with a focus on infection prevention. The company is
developing novel antimicrobial drugs from its "in-house" XF platform and from
recently acquired Biotherapeutic products that harness beneficial components
of the human microbiome.

Also in March 2022, the Company made a follow-on investment in Arcis
Biotechnology. Arcis completed the development of its new one step RNA reagent
formulation, designed to overcome the well-known obstacles to the use of
saliva in Covid testing. The investment was part of a £300,000 funding round
to assist in getting its formulation to market. Currently, Arcis has
agreements in place for field evaluations of its formulation with three
leading collection device companies, one leading supplier of components in
diagnostics kits and a leading provider of molecular diagnostics products.

In the same month, the Company acquired additional holdings in Censo
Biotechnologies Limited (trading as Axol). Using stem cell technology, Censo
Biotechnologies supplies high quality adult human cells to many of the biggest
and best-known pharmaceutical companies and research institutions.

As mentioned above, since the year end the Company has made a further
allotment of Ordinary shares. On 22 March 2.2 million shares were allotted at
an average price of 65.9 and on 5 April 2022, a further 2.2 million Ordinary
shares were allotted at an average price of 65.6 pence per share.

The most recent unaudited NAV available at the time of publishing these
accounts is 68.00 pence per share as at 30 April 2022.

Outlook

The strong recovery from Covid in the UK was driven by a bounce back in
household consumption, which until recently had been expected to continue to
drive economic growth. However, the rise in geopolitical risk caused by the
Russian conflict with Ukraine, which has already resulted in sharp increases
in inflation, rising energy prices and increased exposure to cyber-attacks,
could contribute to renewed economic disruption. This would be amplified by
falling UK consumer confidence, which had weakened even before the invasion
due to the cost of living crisis and impact of the Omicron variant. The
Manager continues to assess the exposure for these risk and appropriate
measures, where applicable, will be implemented.

At the time of writing, the Russian-Ukraine conflict is far from resolved and
the negative economic consequences are yet to be fully transparent. However,
with a set of diverse investments across different sectors, primarily
technology, healthcare and media, the overall impact to the Company is
expected not to be significant.

Despite the often challenging market conditions, we ended the year strongly
with several notable successes in our current portfolio and in the exits we
have achieved. The Company is pleased to announce that the VCT has
successfully fund raised over £10 million since September 2020.

The Companys' Manager, Calculus Capital is a long-term investor, actively
identifying attractive investment opportunities.  The Manager will continue
to deploy capital to proactively support companies through difficult periods
and to invest in selective new opportunities which may arise.

Your Board is focused on consistently delivering value for shareholders over
the long-term by investing in high potential businesses and building a
well-diversified portfolio.

 

 

Jan Ward

Chairman

31 May 2022

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