REG-Hygea VCT plc : Half-yearly report <Origin Href="QuoteRef">HYG.L</Origin>
15/09/2017 07:05
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release
15 September 2017
Hygea vct plc
("Hygea" or "the Company")
Unaudited Half-Yearly Report For the Six Months Ended 30 June 2017
Financial Headlines
64.4p Net Asset Value per share at 30 June 2017
24.25p Cumulative dividends paid to date
88.65p Total return per share since launch
Financial Summary
Six months to 30 June 2017 Six months to 30 June 2016 Year to 31 December 2016
Net assets (£'000s) 5,225 5,606 5,547
Return on ordinary activities after tax (£'000s) (322) (523) (582)
Earnings per share (3.9p) (6.4p) (7.2p)
Net asset value per share 64.4p 69.1p 68.3p
Dividends paid to date 24.25p 24.25p 24.25p
Total return per share 88.65p 93.35p 92.55p
Dividends declared for the period - - -
Chairman's Statement
I present the unaudited results for the six months ended 30 June 2017. The
Company's net asset value ('NAV') per share at 30 June 2017 was 64.4p compared
to 68.3p at 31 December 2016 and 69.1p at 30 June 2016.
Results
The total negative return for the period amounted to 3.9p per share (June
2016: negative 6.4p). This is made up of a negative revenue return of 0.7p
(June 2016: negative 0.7p) and a negative capital return of 3.2p (June 2016:
5.7p), net of performance fee reduction.
Our AIM portfolio has shown a net reduction in value since the year end,
principally due to the reduction in value of Scancell plc shares from 14.5p
per share to 12.5p per share following its fund raising during the period. Our
unquoted portfolio has also been reduced in value following a discounted share
issue by ImmunoBiology Limited.
Portfolio review
During the period we have realised the remaining holding in EKF Diagnostics
plc, following a strengthening of its price on recent company news, which
resulted in a profit in the period of £26,000.
Scancell continues to make good clinical progress on SCIB1 and has recently
announced the grant of patents in Europe. Despite this, the fund raising
climate for early stage Life Science companies remains very difficult and the
company had to raise a modest extra sum at a discount to our valuation at the
year end and the valuation at the half year reflects this. One glimmer of hope
is the emergence on the Scancell share register of significant institutions,
whose investing decisions are not driven by tax breaks - the absence of the
latter makes them more appropriate shareholders for this stage of Scancell's
development. Notwithstanding the disappointing reduction in the bid price
during the period, we are encouraged that these new shareholders share our
view for the prospects of Scancell and are pleased to see a reasonable
recovery in the bid price since the period end. We, therefore, remain
supportive of the current management team under its new chairman and are also
optimistic of the progress being achieved.
On a more positive note, Omega Diagnostics Group plc has raised funds at a
modest premium to our valuation at 31 December 2016 and since the fund raising
the price has strengthened.
We were disappointed by the terms of the fundraising by ImmunoBiology, where
the rights attaching to the new shares effectively diminish any value
attaching to our shareholding at the current post money valuation. We have
therefore written down the value of our holding to nil but, should the company
achieve its aspirations, we would expect value to return to our holding.
The other significant fundraise by a portfolio company during the period was
by Fuel 3D - this was on terms which required no change to our carrying
value. Meanwhile our two most important unquoted companies (Hallmarq
Veterinary Imaging Limited and OR Productivity plc) continue to make positive
progress but it is not appropriate to reconsider our valuations at the half
year.
Details of our AIM portfolio are included in the Investment Portfolio on Page
4 so that shareholders are able to calculate the current value of the AIM
portfolio. Any significant sales from this portfolio will be the subject of an
announcement; however, small sales of shares for liquidity purposes will only
be reported on a quarterly basis together with an up to date NAV at the
quarter end.
Following the sale of our holding in EKF Diagnostics, the overdraft at 30 June
2017 has been reduced to £112,000.
VCT qualifying status
The Directors believe that the Company continues to comply with the conditions
laid down by HMRC for maintaining approval as a VCT.
Presentation of half-year report
In order to simplify this report and reduce costs, we have omitted details of
the Company's objectives and investment strategy, its Advisers and Registrars
and how to buy and sell shares in the Company. These details are all included
in the latest Annual Report, available on the Company's website at
www.hygeavct.com.
Outlook
Our accounting has now been taken over by Pennywise Accounting Limited leading
to a reduction in running costs. We remain focussed on cost reduction but with
the current structure further opportunities are difficult to see without
eroding shareholder benefits.
Our 2017 AGM once again gave rise to a good discussion with interesting
feedback which the Board values. We remain confident for the overall return on
the portfolio but disappointed that opportunities for realisations on
appropriate terms have been much slower to materialise than we would have
expected or wished - we are, therefore, grateful for the overall patience
shown by our shareholders.
John Hustler
Chairman
14 September 2017
Enquiries:
John Hustler, Hygea vct plc at john.hustler@btconnect.com
Roland Cornish, Beaumont Cornish Limited on 020 7628 3396
Investment Portfolio
Unquoted Investments Equity Held (%) Investment at cost (£'000) Unrealised profit/(loss) (£'000) Carrying value at 30 June 2017 (£'000) Movement in the six months to 30 June 2017 (£'000)
Hallmarq Veterinary Imaging Limited 10.2 1,116 913 2,029 -
OR Productivity Limited 11.1 765 (101) 664 -
Fuel 3D Technologies Limited <1.0 299 (23) 276 -
Arecor Limited 2.1 142 45 186 -
Insense Limited 8.1 509 (388) 121 -
Exosect Limited 1.8 270 (150) 120 -
Microarray Limited 2.9 132 (65) 67 -
Glide Pharmaceutical Technologies Limited <1.0 326 (314) 12 -
ImmunoBiology Limited 2.5 868 (868) - (126)
Axon Limited 13.7 374 (374) - -
Total Unquoted Investments 4,801 (1,326) 3,475 (126)
Quoted Investments Shares Held Investment at cost (£'000) Unrealised profit/(loss) (£'000) Carrying value at 30 June 2017 (£'000) Movement in the six months to 30 June 2017 (£'000)
Scancell plc 13,249,730 801 855 1,656 (265)
Omega Diagnostics plc 2,293,868 328 102 430 29
Genedrive plc (formerly EpiStem Holdings plc) 34,300 43 (29) 14 (5)
Total Quoted Investments 1,172 928 2,100 (242)
Total Investments 5,973 (398) 5,575 (368)
Responsibility Statement of the Directors' in respect of the half-yearly
report
We confirm that to the best of our knowledge:
* the half-yearly financial statements have been prepared in accordance with
the statement "Interim Financial Reporting" issued by the Financial
Reporting Council;
* the half-yearly report includes a fair review of the information
required by the Financial Services Authority Disclosure and Transparency
Rules, being:
* an indication of the important events that have occurred during the first
six months of the financial year and their impact on the condensed set of
financial statements.
* a description of the principal risks and uncertainties for the remaining six
months of the year.
* a description of related party transactions that have taken place in the
first six months of the current financial year that may have materially
affected the financial position or performance of the Company during that
period and any changes in the related party transactions described in the last
annual report that could do so.
On behalf of the Board:
John Hustler
Chairman
14 September 2017
Income Statement
Six months to 30 June 2017 Six months to 30 June 2016 Year to 31 December 2016
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gain on disposal of fixed asset investments - 26 26 - 3 3 - 25 25
Loss on valuation of fixed asset investments - (368) (368) - (597) (597) - (624) (624)
Performance fee - 80 80 - 131 131 - 146 146
Investment income - - - - - - - - -
Other expenses (60) - (60) (60) - (60) (129) - (129)
Return on ordinary activities before tax (60) (262) (322) (60) (463) (523) (129) (453) (582)
Taxation on loss on ordinary activities - - - - - - - - -
Return on ordinary activities after tax (60) (262) (322) (60) (463) (523) (129) (453) (582)
Earnings per share - basic and diluted (0.7p) (3.2p) (3.9p) (0.7p) (5.7p) (6.4p) (1.6p) (5.6p) (7.2p)
* The 'Total' column of this statement is the profit and loss account of the
Company; the supplementary Revenue return and Capital return columns have
been prepared under guidance published by the Association of Investment
Companies.
* All revenue and capital items in the above statement derive from
continuing operations.
* The accompanying notes are an integral part of the half-yearly report.
* The Company has only one class of business and derives its income from
investments made in shares and securities and from bank and money market
funds.
The Company has no recognised gains or losses other than the results for the
period as set out above. Accordingly a Statement of Comprehensive Income is
not required.
As at 30 June 2017 As at 30 June 2016 As at 31 December 2016
£'000 £'000 £'000 £'000 £'000 £'000
Fixed asset investments* 5,575 6,103 6,038
Current assets:
Debtors 9 15 4
9 8 4
Creditors:
Amounts falling due within one year (72) (56) (55)
Cash at Bank (112) (186) (185)
Net current assets (175) (227) (236)
Performance fee payable (175) (270) (255)
Net assets 5,225 5,606 5,547
Called up equity share capital 4,058 4,058 4,058
Share premium - - -
Special distributable reserve 3,397 3,397 3,397
Capital redemption reserve 38 38 38
Capital reserve - gains/(losses) on disposal (38) 236 (121)
- holding gains/(losses) (398) (420) (53)
Revenue reserve (1,832) (1,703) (1,772)
Total equity shareholders' funds 5,225 5,606 5.547
Net asset value per share 64.4p 69.1p 68.3p
*At fair value through profit and loss
Balance Sheet
Statement of Changes in Equity
Share Capital Special distributable reserve Capital redemption reserve Capital reserve gains/ (losses) Capital reserve holding gains/ (losses) Revenue reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 January 2016 4,058 3,397 38 144 135 (1,643) 6,129
Revenue return on ordinary activities after tax - - - - - (60) (60)
Performance fee allocated as capital expenditure - - - 131 - - 131
Current period gains on disposal - - - 3 - - 3
Current period losses on fair value of investments - - - - (597) - (597)
Prior years' unrealised losses now realised - - - (42) 42 - -
Balance as at 30 June 2016 4,058 3,397 38 236 (420) (1,703) 5,606
As at 1 January 2016 4,058 3,397 38 144 135 (1,643) 6,129
Revenue return on ordinary activities after tax - - - (129) (129)
Performance fee allocated as capital expenditure - - - 146 - - 146
Current period gains on disposal - - - 25 - - 25
Current period losses on fair value of investments - - - - (624) - (624)
Prior years' unrealised losses now realised - - - (436) 436 - -
Balance as at 31 December 2016 4,058 3,397 38 (121) (53) (1,772) 5,547
Revenue return on ordinary activities after tax - - - - - (60) (60)
Performance fee allocated as capital expenditure - - - 80 - - 80
Current period gains on disposal - - - 26 - - 26
Current period losses on fair value of investments - - - - (368) - (368)
Prior years' unrealised losses now realised - - - (23) 23 - -
Balance as at 30 June 2017 4,058 3,397 38 (38) (398) (1,832) 5,225
Statement of Cash Flows
Six months to 30 June 2017 Six months to 30 June 2016 Year to 31 December 2016
£'000 £'000 £'000
Cash flows from operating activities
Return on ordinary activities before tax (322) (523) (582)
Adjustments for:
(Increase)/decrease in debtors (5) (9) 2
Decrease in creditors (63) (136) (151)
Gain on disposal of fixed asset investments (26) (3) (25)
Loss on valuation of fixed asset investments 368 597 624
Cash from operations (48) (74) (132)
Income taxes paid - - -
Net cash used in operating activities (48) (74) (132)
Cash flows from investing activities
Purchase of fixed asset investments - (20) (35)
Sale of fixed asset investments 121 77 151
Total cash flows from investing activities 121 57 116
Cash flows from financing activities - - -
Total cash flows from financing activities - - -
Increase/(Decrease) in cash and cash equivalents 73 (17) (16)
Opening cash and cash equivalents (185) (169) (169)
Closing cash and cash equivalents (112) (186) (185)
Notes to the Half-Yearly Report
1. Basis of preparation
The unaudited half-yearly results which cover the six months to 30 June 2017
have been prepared in accordance with the Financial Reporting Council's (FRC)
Financial Reporting Standard 104 Interim Financial Reporting ('FRS 104') and
the Statement of Recommended Practice (SORP) for Investment Companies
re-issued by the Association of Investment Companies in November 2014. Details
of the accounting policies and valuation methodologies are included within the
Annual Report on Pages 39-42.
2. Publication of non-statutory accounts
The unaudited half-yearly results for the six months ended 30 June 2017 do not
constitute statutory accounts within the meaning of Section 415 of the
Companies Act 2006. The comparative figures for the year ended 31 December
2016 have been extracted from the audited financial statements for that year,
which have been delivered to the Registrar of Companies. The independent
auditor's report on those financial statements, in accordance with chapter 3,
part 16 of the Companies Act 2006, was unqualified. This half-yearly report
has not been reviewed by the Company's auditor.
3. Earnings per share
The earnings per share at 30 June 2017 are calculated on the basis of
8,115,376 shares (31 December 2016 8,115,376 and 30 June 2016: 8,115,376)
being the weighted average number of shares in issue during the period.
There are no potentially dilutive capital instruments in issue and, therefore,
no diluted returns per share figures are relevant.
4. Net asset value per share
The net asset value per share is based on net assets as at 30 June 2017
divided by 8,115,376 (31 December 2016: 8,115,376 and 30 June 2016: 8,115,376)
shares in issue at that date.
5. Principal risks and uncertainties
The Company's assets consist of equity and fixed interest investments, cash
and liquid resources. Its principal risks are therefore market risk, credit
risk and liquidity risk. Other risks faced by the Company include economic,
loss of approval as a Venture Capital Trust, investment and strategic,
regulatory, reputational, operational and financial risks. These risks, and
the way in which they are managed, are described in more detail in the
Company's Annual Report and Accounts for the year ended 31 December 2016. The
Company's principal risks and uncertainties have not changed materially since
the date of that report.
6. Related party transactions
The Board of the Company acts as the investment manager of the Company through
its Commercial Advisory Committee. During the period under review, no
remuneration was paid to the Board in their capacity as investment manager.
The Directors received remuneration for their roles as non-executive Directors
to Hygea on the terms as set out in the Directors' Remuneration Report of the
Company's Annual Report and Accounts for the year ended 31 December 2016.
The Commercial Advisory Committee is entitled to receive a performance
incentive fee, of up to 20% of sums returned to shareholders by way of
dividends and capital distributions of whatever nature, which in aggregate
exceeds the sum of 80p per share (including dividends paid to date, i.e.
24.25p, but excluding any sums returned to shareholders from HMRC in the year
of subscription). Full details are included in the Directors' Remuneration
Report and in Note 5 of the 2016 Annual Report and Accounts, which can be
viewed on the Company's website.
Copies of this statement are available from the Registrar's office at Neville
House, 18 Laurel Lane, Halesowen, B63 3DA, and on the company's website -
www.hygeavct.com.
This announcement is distributed by Nasdaq Corporate Solutions on behalf of
Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for
the content, accuracy and originality of the information contained therein.
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