REG - Calculus VCT - Annual Financial Report
11/07/2024 17:45
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RNS Number : 1218W Calculus VCT PLC 11 July 2024
Calculus VCT Plc (the 'Company')
Legal Entity Identifier: 2138005SMDWLMMNPVA90
Final results for the period ended 31 March 2024
Publication of Circular (the "Circular")
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 period ended 31 March 2024 and the Notice of Annual General Meeting,
together with the Circular, will be sent 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
https://calculuscapital.com/investment-opportunities/calculus-vct/investor-information/
(https://calculuscapital.com/investment-opportunities/calculus-vct/investor-information/)
, a website maintained by the Company's Investment Manager, Calculus Capital
Limited. A copy of the Annual Report and Accounts and the Circular 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
Period to 31 March 2024 Year to 28 February 2023
Total net assets £39.06m £34.32m
Net Asset Value per share 61.58p 65.63p
Final dividend proposed 2.77p 2.95p
Annual yield* 4.50% 4.50%
Total return per share* (0.89)p 1.30p
Dividend yield*** 7.42% 7.30%
Share price 60.00p 62.50p
Shares in issue 63,441,389 52,296,457
Key Dates
· Annual General Meeting: 22 August 2024
· Dividend reinvestment scheme application deadline: 19 August 2024
· Final dividend payment date: 29 August 2024
· Company's half year end: 30 September 2024
· Unaudited half yearly results: to be announced November 2024
· Annual results for year to 31 March 2025: to be announced July 2025
Recommended Proposals to approve entry into a revised Performance Incentive
Scheme with Calculus Capital Limited (the "Performance Incentive Scheme")
The Board has stated previously that the purpose of any performance fee
arrangement with a fund manager is to incentivise that Manager to perform, to
enable it to attract and retain key staff and to align the interests of the
manager with those of investors. It is now proposed that the existing
agreements be revised as follows and a resolution will be put to Shareholders
at the upcoming Annual General Meeting:
1. that the quantum of Calculus Capital's entitlement to a performance fee
in respect of excess realised gains be reduced from 20% to 10%; and
2. that a co-investment syndicate ("Syndicate") structure be put in place
to facilitate the individual members of the Calculus Capital investment team
and other key members of its staff ("Syndicate Members") putting their own
money into each investment that the Company makes, with Syndicate Members
receiving a junior class of shares to those received by the Company.
It is the Board's view that these revisions go even further in aligning the
interests of investors with those persons most closely engaged in originating
investments for the Company's portfolio and managing them through to the point
of exit - the investment team themselves. Allowing those team members to have
direct 'skin in the game', and to risk their own capital alongside investors'
in the pursuit of success of the Company portfolio, serves to reinforce the
ultimate purpose of the performance incentive arrangements.
For Syndicate Members, the arrangements allow them to benefit directly from
the successes achieved on the back of their hard work and skill in selecting
and managing the Company's portfolio, with the added bonus of the attractive
EIS tax reliefs which are likely to be available to them, subject to their
personal circumstances.
The Circular contains further details of the proposed performance scheme,
which is a related party transaction under the listing rules (the "Related
Party Transaction"), has been approved by the Financial Conduct Authority and
is being sent to shareholders today.
Change of accounting reference date
In June 2023, the Board changed the accounting reference date of the Company
to achieve greater operational efficiency. The accounting reference date
changed from 28 February to 31 March, resulting in a 13-month period-end. The
unaudited half-yearly results for the six-month period ending 30 September
2024 will be released in November 2024.
Chairman's Statement
I am pleased to present Calculus VCT plc's (the Company) results for the
period ended 31 March 2024. I am pleased to report another year of encouraging
performance and progress for the Company despite the challenges presented by
global events. Throughout the period, we remained committed to our investment
strategy, focusing on identifying and supporting promising businesses with
high growth potential. The two new investments and £8.4 million worth of new
Ordinary shares allotted, which equate to a 48 per cent increase from last
year, are a testament to the strength of our investment strategy, the hard
work and expertise of the team and the growing popularity of the Calculus VCT
across the adviser and investor space.
Venture Capital Investments
The Company invested £1.7 million in two new investments and £3.2 million in
six follow-on investments during the period ended 31 March 2024.
Issue of new Ordinary shares
The Company issued 13.2 million shares in the financial period to 31 March
2024 at an average issue price of 64.11 pence per share. Of these shares
issued, 9.8 million shares were issued under the offer that launched on 14
September 2022 and closed on 31 August 2023.
The Company launched a further offer on 22 September 2023 and issued 3.4
million shares under this offer in the financial period under review.
Since the period-end, the Company has issued a further 5.3 million shares on 5
April 2024 at an average price of 60.42 pence per share.
Share Buybacks
During the period, 2.0m shares were bought back for cancellation at no more
than 5 per cent discount to the latest published NAV. In keeping with its
policy of returning funds to shareholders, the Company will continue to
consider and assess opportunities for buybacks in the coming year. The total
shares bought back represented 3.35 per cent of the weighted average number of
shares in issue during the period ended 31 March 2024. The Company has agreed
to continue to make timely and consistent buybacks to ensure shareholders can
liquidate their holdings throughout the year and to manage the level of
discount to share price.
Dividend
The Directors are pleased to announce a final dividend of 2.77 pence per
Ordinary share to be paid to all Ordinary shareholders.
Subject to shareholder approval, the Ordinary share dividend will be paid on
29 August 2024 to shareholders on the register on 9 August 2024. The deadline
for the scheme administrator (City Partnership) to receive any applications
under the dividend reinvestment scheme is 19 August 2024.
Developments since the year end
On 26 April 2024, C4X Discovery Holdings plc (now C4X Discovery Holdings
Limited) de-listed from the AIM market. The board of C4X took this strategic
decision because the LSE AIM valuation has not reflected the underlying
potential of the business for some time. Whilst the AIM-market has provided
the Company with valuable opportunities to enrich its portfolio and stimulate
growth and visibility, we believe the de-listing of C4X will allow the Company
to provide a more accurate and fair valuation of C4X's progress.
Continuing a successful fundraising period for the Company, a further £3.2m
shares were issued on the 5 April 2024. This was made up of 5,257,265 shares
at 60.42p. On 24 April 2024, 833,854 shares were bought back by the Company
for £472,378.
On 29 May 2024, Blu Wireless Technology Limited ("BWT") raised new equity from
a strategic investor, Westermo, and other financial investors. As part of
the equity issue, the convertible loan note ("CLN") held by the Company was
converted into equity alongside other CLNs issued by BWT.
On 4 June, the Company invested £666k in Engaging Works Holding Limited
("WorkL"). WorkL helps over 1,000 businesses globally improve the happiness
and engagement of their teams and is also the powerhouse behind the UK's most
prestigious business awards, "The Sunday Times Best Places to Work". This
investment will enable WorkL to accelerate and expand its domestic and
international operations, which already include the UK, Ireland, the UAE,
Australia and South Africa.
Manager's Review
The Company, through its Investment Manager, Calculus Capital Limited
("Calculus Capital"), invests in a diverse portfolio of established UK growth
companies. The investments aim to support those companies to grow, innovate
and scale while simultaneously achieving long-term returns. Calculus Capital's
success is underpinned by a disciplined investment process, strong risk
management and very close monitoring of and partnerships with the portfolio
companies.
Results for the year
There has been a strong performance across a broad range of the Company's
qualifying investments, which is particularly encouraging given challenging
market conditions.
Performance
We are pleased with the overall resilience shown across the Company's
portfolio despite ongoing political and financial uncertainties and the
resulting inflationary environment and disruption in global supply chains.
The top 5 performing portfolio companies in terms of valuation growth cover
the range of sectors which make up the Company's investment strategy (this
includes both media and technology) highlighting the effectiveness of the
Company's well diversified portfolio and unique sector focus. Collectively,
these five companies contributed to £1.09m of NAV growth.
The most substantial movement in the qualifying portfolio across the period
was the £0.33m value increase of Optalitix Limited ("Optalitix"). Optalitix
offers a low-code SaaS product to insurers and financial institutions which
allows business processes based on Excel to be transformed into robust online
systems. The company has a strong customer base in the UK and internationally,
including notable insurance names such as Vitality Health, Dale Underwriting
Partners, GoCompare and Lloyd's of London. The company experienced good growth
in H2 2023 which continued into Q1 2024. It is likely the company will use
this sales growth to launch a further funding round in 2024.
Riff Raff Entertainment Limited ("Riff Raff") contributed £0.3m to the
Company's NAV despite the lengthy US writers' and actors' strikes that took
place last year. As a co-founder, Jude Law is actively involved in the
creative process, collaborating with talented filmmakers and writers to
develop TV and film projects with strong narratives. Riff Raff has made strong
progress since receiving first investment from funds managed by Calculus
Capital in 2022 due to projects such as Black Rabbit, a major eight part TV
series developed by Riff Raff and currently shooting in New York for Netflix
with Jude Law, Jason Bateman (Ozark), Laura Linney and directed by Jason
Bateman.
Quai Administration Services Limited ("Quai") has enjoyed a considerable
increase in demand for its platform and services since becoming authorised by
the Financial Conduct Authority (FCA) in 2021. Revenues in the year to October
2023 grew by over 40% compared to the prior year and growth of a similar level
is expected in the year to October 2024. This last year of promising growth
within Quai has provided the VCT with an additional £0.3m in the Company's
NAV.
A further £0.24m NAV growth was delivered across the qualifying portfolio by
Fiscaltec Group Limited ("Fiscaltec"). Fiscaltec solutions empower procurement
teams across the globe to protect their organisational spend. Its NXG
Forensics® enterprise solution provides continuous protection through
transactional risk analysis, supplier risk profiling, anti-fraud controls and
ongoing reporting. In the year to November 2023, Fiscaltec grew revenues by
14%. The company continues to manage its costs and was able to achieve this
growth whilst delivering a breakeven EBITDA result for the second consecutive
year. Fiscaltec is well positioned as a software provider to the "office of
the CFO" and now has the scale to capitalise on this position. As a result,
the investment team believe a material uplift in valuation (25%) to be
appropriate.
Wonderhood Studios Limited ("Wonderhood") experienced further valuation
growth, contributing £0.16m to the overall Company NAV growth. Wonderhood
consists of five studios comprising a full-service advertising agency, social
media studio, TV production division, data insights unit and design studio. In
the period to March 2024, Studio A (Advertising) won major new clients,
including FTSE 100 companies, Coral and Hargreaves Lansdown. Additionally,
Wonderhood has been asked to handle the account of the Princess of Wales'
Early Learning Foundation which is a small but prestigious client. Studio C
(TV production business) has sold programming to every UK public service
broadcaster plus Sky and Paramount +.
Negative investor sentiment towards the LSE Alternative Investment Market
(AIM) remains a challenge for the quoted companies held within the Company
portfolio. In the same period as the Company's FYE, the FTSE AIM All Share
declined by -13.6%, highlighting the supressed sentiment. Lack of liquidity
and the higher risk profile of AIM means a large majority of the market
constituents remain considerably undervalued. Arecor Therapeutics plc, one of
the Company's healthcare/ drug discovery portfolio companies, is now being
held at a market value which is £0.46m lower that its closing value for the
FYE 2023 notwithstanding considerable progress in the development of its
portfolio of treatments. Other listed companies, including Destiny Pharma plc
and Scancell Holdings plc lost an aggregate of £0.27m, again despite
considerable scientific progress.
Exits
In July 2023, the Company received a capital distribution from Park Street
Shipping Limited ("Park Street"). The distribution came from the sale of the
MV Nordic, Park Street's only asset, back in October 2021. The payment
represents a 1.68x return on cost. Since then, Park Street has been put in
members' voluntary liquidation and a final payment to the Company which
concluded our involvement with the business took place in October 2023.
In October 2023, Tollan Energy Limited received the clearances from HMRC to
proceed with distributing remaining assets to shareholders and liquidating the
company. The Company received its final payment in October 2023 and the
company was dissolved in February 2024.
Following the sale of Mologic Limited in July 2021, there was a deferred
element of the consideration that was paid to the Company in February 2024.
There are still additional deferred amounts due to the Company but at the year
end, all realisation proceeds received to date represents a 2.1x return on
equity.
A final payment of deferred consideration was paid to the Company from Money
Dashboard Limited in February 2024.
New Investments
Investments Date Sector Investment cost £'000 Website
Laverock Therapeutics Limited September 2023 Healthcare 744 https://www.laverocktx.com/
Tagomics Limited February 2024 Healthcare 909 https://tagomics.com/
Laverock Therapeutics Limited ("Laverock")
Laverock is developing new approaches to regenerative medicine and oncology
treatment using its Gene Editing induced Gene Silencing (GEiGS) technology and
cutting-edge bioinformatics platform. GEiGS uses universal gene editing tools
to minimally edit the host's own non-coding genes and redirect their silencing
activity (RNAi) towards any desired target gene or gene family. This should
allow for stable, tuneable and programmable gene silencing functionality and
deliver improved safety, efficacy and accessibility for these therapies.
Tagomics Limited ("Tagomics")
Tagomics' proprietary multitopic platform unlocks disease-associated
biomarkers from a range of biological sources including genetic, epigenetic,
and fragmentomic features. In combination with its advanced bioinformatic and
machine learning approaches, Tagomics' platform provides unique biological
insights and offers a step change in genomics-based disease profiling and
diagnosis.
Destiny Pharma is a clinical stage biotechnology company, dedicated to the
development and commercialisation of novel anti-infectives with a focus on
infection prevention. In March 2022, the Calculus VCT invested £500k as part
of a £6.45m fundraising. Recently, in February 2023, Sebela Pharmaceuticals,
a US gastroenterology specialist, signed an exclusive collaboration and
co-development agreement with Destiny Pharma for the North American rights of
NTCD-M3, a medicine developed to prevent C.difficile infection (CDI)
recurrence.
Follow-on Investments
Investments Date Sector Investment cost* Website
£'000
Blu Wireless Technology Limited March 2023 Technology 350 https://www.bluwireless.com/
Brouhaha Entertainment Limited December 2023 Creative 250 https://www.brouhahaent.com/
Riff Raff Entertainment Limited August 2023 Creative 450 https://riffraffentertainment.com/
Rotageek Limited November 2023 Creative 250 https://www.rotageek.com/ (https://www.rotageek.com/)
Quai Administration Services Limited March 2023 Technology 550 https://www.quai-digital.co.uk/
WheelRight Limited March - June 2023 Industrials 1,312 https://www.wheelright.co.uk/
Blu Wireless Technology Limited ("Blu Wireless")
Blu Wireless specialises in wireless technology that enables data transmission
at exceptionally high speeds, comparable to fibre-optic connections.
Currently, Blu Wireless is focused on providing reliable, fibre-like
connectivity for high-speed transport, perimeter security, and secure
vehicle-to-vehicle applications in the defence and security industries.
Brouhaha Entertainment Limited ("Brouhaha")
Brouhaha Entertainment is an Anglo-Australian production company founded in
2021. The company made significant progress in the period to March 2024
despite the lengthy US writers' and actors' strikes which had global
ramifications for the industry. The TV series Boy Swallows Universe was
released worldwide on Netflix on 11 January 2024 and achieved a highest
position of No. 2 in the USA and the UK, No. 1 in Australia and was in the top
5 in 65 countries worldwide outperforming on a global basis even optimistic
expectations. Since launch, Brouhaha has shown itself to be able to develop
innovative, commercially attractive content which spans multiple genres and
formats and the ability to physically produce film and TV content to a quality
that can compete in international markets.
Riff Raff Entertainment Limited ("Riff Raff")
Riff Raff is a film and television production company co-founded by Jude Law
and producer Ben Jackson. The company was established with a vision to develop
and produce compelling film and television projects. Despite the US writers'
and actors' strikes which had global ramifications, progress is ahead of plan.
The most advanced projects include: Black Rabbit, a major eight part TV series
developed by Riff Raff and currently shooting in New York for Netflix with
Jude Law, Jason Bateman (Ozark) and Laura Linney and directed by Jason
Bateman. A number of other projects have been added to a strong and diverse
slate and the company remains focused on developing and acquiring new,
original IP across diverse genres with broad, inspiring, and informative
storylines, guided by Jude's passion for storytelling and commitment to
entertaining drama.
Rotageek Limited ("Rotageek")
Rotageek provides a workforce management solution, creating staff schedules
using cloud-based technology to effectively manage and engage staff. The
company is led by the co-founder, and current CEO, Dr Chris McCullough, who
spent 16 years in the NHS and 8 years as an Emergency Medicine Physician, at
several London based hospitals, including St Mary's Hospital. In June 2022,
the Company invested £0.75 million as part of a £2.75 million fundraising,
alongside existing investors, as well as new investors. The fundraise will be
used to support the company's further expansion into the global workforce
management market, primarily across retail and healthcare sectors.
Quai Administration Services Limited ("Quai")
Quai provides platform technology combined with back office administration
services for the high-volume personal savings industry. In late 2021 Quai
became authorised by the Financial Conduct Authority, hitting a major
milestone. Revenues in the year to October 2023 grew by over 40% compared to
the prior year and growth of a similar level is expected in the year to
October 2024.
WheelRight Limited
WheelRight's cutting-edge drive-through automated tyre safety check system
uses advanced technologies and services to provide a simple solution to the
problems of performing tyre inspections and capturing tyre diagnostics. The
company's board and management team remain actively engaged with several
prospective purchasers as they look to realise a viable and lasting funding
solution for the business that will enable it to provide a stable platform for
the continued growth of WheelRight, its employees and customers.
Outlook
Looking ahead, we remain optimistic about the future opportunities for the
Company. Whilst we anticipate a degree of continued market volatility and
uncertainty, we believe that our diversified portfolio and Calculus Capital
Limited's experienced investment team are well-positioned to navigate these
challenges and capitalise on attractive investment opportunities as they
arise. The Company's focus on investment in growth companies in the
technology, life sciences and media sectors, all of which are key expansion
areas for the UK economy, will continue to provide opportunities for
profitable investment. The 2024 Spring Budget focused in on three distinct
sectors; technology, life sciences and the creative industry and the roles
these will play in delivering future sustained economic growth to the UK. This
focus further highlights the growth potential provided by the Company's
investment strategy and unique sector focus.
As we navigate the evolving political landscape, the recent election of Keir
Starmer as the new Prime Minister marks a significant moment of change. His
leadership may bring a fresh perspective and potential policy changes that
could stimulate growth in the economy. In September 2023, Labour published
their 'Start Up, Scale Up' report which outlined the party's plans to make
Britain the high growth, start-up hub of the world. VCT schemes will be vital
in delivering this target. Rachel Reeves, the UKs first female Chancellor has,
on numerous occasions, made clear her support and appreciation of the
importance of the VCT schemes. Reassuringly, tax efficient venture capital
managers will continue to play a vital role in stimulating investment and
entrepreneurship across the UK and to contribute to delivering sustained
economic growth.
The Company ended the period with several notable uplifts in value within our
current portfolio despite challenging market conditions. We are pleased to
announce that the VCT has successfully fundraised over £8.4 million in the
current financial period with a further £3.2m raised in April 2024. The
marginal decline in total funds raised across the wider VCT market was not
experienced by the Company. VCTs provide a compelling opportunity for UK
investors to provide funding for growing businesses in a tax‑efficient way,
and we look forward to continuing to update you on our progress in the year
ahead.
Jan Ward
Chairman
11 July 2024
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