Hygea VCT plc Hygea Vct Plc : Annual Report And Accounts, Notice Of Agm

Share Name	Share Symbol	Market	Type	Share ISIN	Share Description
Seneca Growth Capital Vct Plc	LSE:HYG	London	Ordinary Share	GB0031256109	ORD 1P

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.00	0.00%	13.50	10.00	17.00	13.50	13.50	13.50	0.00	01:00:00

Industry Sector	Turnover	Profit	EPS - Basic	PE Ratio	Market Cap
Trust,ex Ed,religious,charty	-2.26M	-2.75M	-0.0950	-6.37	17.5M

 
TIDMHYG 
 
 
 
 
   For immediate release                                                                                                  11 April 2016 
 
 
   Hygea VCT plc ("the Company" or "Hygea") 
 
   Annual Report and Accounts for the year ended 31 December 2015 
 
   and 
 
   Notice of General Meeting 
 
   The Directors are pleased to announce the audited results of the Company 
for the year ended 31 December 2015 and a copy of the Annual Report and 
Accounts will be made available to Shareholders shortly.  Set out below 
are extracts of the audited Report and Accounts. 
 
   In addition, the Notice of Annual General Meeting ("AGM") is attached at 
the end of the Report and Accounts, and is set out below.   The AGM will 
be held at the offices of Octopus Investments, 33 Holborn, London EC1N 
2HT on Thursday 2 June 2016, at 12.00 noon. 
 
   A copy of both documents will be available from the registered office of 
the Company at 39 Alma Road, St Albans AL1 3AT, as well as on the 
Company's website: www.hygeavct.com 
 
   Financial Summary 
 
 
 
 
                            Year to 31 December 2015  Year to 31 December 2014 
 
Net assets (GBP'000s)                          6,129                     7,334 
Return on ordinary 
 activities after tax 
 (GBP'000s)                                  (1,205)                     (495) 
Earnings per share                           (14.9p)                    (6.1p) 
Net asset value per share                      75.5p                     90.4p 
Dividends paid since                          24.25p                    24.25p 
 inception 
Total return (NAV plus                        99.75p                   114.65p 
 cumulative dividends 
 paid) 
 
 
   Enquiries: 
 
   John Hustler, Chairman on 01428 727985 
 
   Roland Cornish, Beaumont Cornish Limited on 020 7628 3396 
 
   Chairman's Statement 
 
   I am pleased to present the 2015 annual report to Shareholders in Hygea. 
 
   Overview 
 
   Against the background of the turmoil in stock markets globally, many UK 
smallcaps are finding it difficult to obtain finance through the 
established UK capital market channels and, within the smallcap universe, 
Life Science companies are finding it particularly difficult. The UK 
capital market lacks experience in successfully supporting smaller Life 
Science companies through their technology development stage - this is 
exacerbated by commercialising their technology being a lengthy process 
because of the challenging regulatory hurdles which are (quite rightly) 
in place in order to minimise risk to patients. Nevertheless, we remain 
confident that many of the portfolio companies are both making good 
progress in terms of their science and/or technology and applying the 
right principles to commercialisation of their Intellectual Property - 
both of which we expect will lead to long term success. As you will see 
in UK Capital Markets section below, we also believe that developments 
are occurring which will improve the ability of the UK capital market to 
support companies such as those in Hygea's portfolio. 
 
   During 2015 our net asset value has declined principally due to the 
reduction in the value of our AIM listed portfolio and annual running 
costs. As Shareholders are aware, a large percentage of the Company's 
net asset value is represented by the holding in Scancell plc shares. 
The bid price of Scancell shares at 31 December 2015 was 21.5p compared 
to 32p at the beginning of the year. The share price remains volatile 
and the latest bid price was 17p. Your Board does not believe that there 
is any underlying reason related to the science for the reduction in the 
current share price of Scancell - as you will see in the Investment 
Review, the company has made progress over the last year. In April 2016, 
Scancell announced that it had raised gross proceeds of GBP6.2m through 
a placing and open offer at 17p per share - as detailed in the 
Investment Review. We were prohibited from subscribing by the VCT rules 
(even had we had the funds available), as we would have exceeded the 15% 
maximum holding condition allowed in any single company (as defined 
within ITA07/S274(2) and S277). 
 
   On a positive note, however, we remain pleased with the progress made 
with some of our unquoted portfolio companies - in particular Hallmarq 
Veterinary Imaging Limited, Fuel 3D Limited and OR Productivity plc, 
further details of which can be found in the Investment Review beginning 
on page 5 of the Report and Accounts ("the Accounts"). 
 
   Following the last Annual General Meeting ("AGM"), we announced that we 
would review the Board structure and this led to the retirement of James 
Otter both as Chairman and as a Director and the appointment of Richard 
Roth. The Board has also carried out a review of the cost base: amongst 
other savings, the salaries of Directors have been reduced and the 
Performance Incentive Fee has been restructured. Details of these 
changes can be found in the Directors' Remuneration Report and Note 4 to 
the accounts. Whilst we are advised that the changes to the Performance 
Incentive Fee do not require shareholder approval, we are asking for 
your approval as part of the resolution to approve the Company's 
Remuneration Policy and we trust you will find these changes beneficial 
to Shareholders. 
 
   Results and Dividend 
 
   During the year our revenue return on ordinary activities saw a loss of 
1.9p per share, the same as in 2014. The benefits of our cost reduction 
are already being seen with our operating costs down by 5%, although our 
total expense ratio rose to 2.5%, compared to 2.2% in 2014, due to the 
reduction in net asset value. The ratio remains lower than most other 
VCTs due to the self-management structure of Hygea and the absolute 
level of day to day expenditure should reduce further in the light of 
changes following our review of the cost base. 
 
   The capital return per share amounted to a loss of 13.0p compared to a 
loss of 4.2p in 2014, primarily due to the reduction in bid prices on 
all of our AIM shares (of between 16% and 57%). 
 
   During the year we sold 1,000 shares in EpiStem Holdings plc and the 
remaining 13,000 Tristel plc shares. In addition we have supported Fuel 
3D's recent fund raising. 
 
   Hygea has a policy of accruing for the Board's incentive fee 
arrangements in the accounts.  This fee will only start to be paid out 
when distributions per share have, cumulatively, reached 80p, and, 
reflecting the decrease in NAV, this accrual has been reduced from 
GBP702,000 to GBP401,000 in this year's accounts. 
 
   Overall the total return for the year amounted to a loss of 14.9p per 
share, compared to a loss of 6.1p per share in 2014.  As Scancell made 
up over 45% of the portfolio value at 31 December 2015, the loss of 
GBP1,391,000 in its share value makes up a significant part of the 
capital loss before the reduction in performance fee. 
 
   Subsequent to the year end, there has been continued volatility on AIM. 
Had our portfolio been valued at the latest AIM bid prices, the overall 
NAV would have been 69.2p, a decrease of 8% compared to the 31 December 
2015 value of 75.5p. 
 
   In order to provide greater control over the timing of realising part of 
our AIM portfolio to cover running costs, we have increased our 
overdraft facility to GBP200,000. 
 
   Hygea's investments provide the Company with very little income, and 
thus distributions or cash returns to Shareholders will come from 
disposals. Historically, the Board had intended to pay out a dividend 
averaging 5p per year, but following discussions after the continuation 
vote last year, we have determined to return funds to our Shareholders 
as soon as practicable. However, we will be precluded in this aim until 
we are able to make a significant realisation and we do not believe that 
the current state of the AIM market is conducive to achieving this in 
the short term. 
 
   Portfolio Review 
 
   Although there has been no change in the constituents of the portfolio 
(apart from the disposal of our remaining holding in Tristel), many of 
the companies have made good operational progress during the year as 
described in Investment Review, starting on page 5 of the Accounts. 
 
   Subsequent to the year end, to cover running costs, we have sold 226,519 
shares in EKF Diagnostics Plc ("EKF") and 137,900 shares in Omega 
Diagnostics. GBP20,048 of the funds raised have also been used to take 
up our share of rights in a recent Exosect fund raising. 
 
   UK Capital Markets 
 
   In addition to the recent well publicised events giving rise to 
uncertainty globally, the UK capital markets for smallcaps are also in 
some turmoil. In our view, this is contributed to by: 
 
 
   -- reduced interest on the part of UK institutional investors in UK 
      smallcaps. This is borne out by a report issued in October 2015 by 
      Hardman & Co entitled 'Why AIM Company Management Ignore Retail Investors 
      at their Peril', which can be found at 
      www.hardmanandco.com/docs/default-source/newsletters/ons-article-v2; 
 
   -- the eventual onset of MiFID 2 (the EU Directive on markets in financial 
      instruments) is causing brokers to reconsider the economics of providing 
      research; and 
 
   -- there being a significant movement during 2015 of life science analysts 
      from one employer to another, resulting in reduced research coverage 
      whilst the changes are taking place. For example, a recently scheduled 
      analyst meeting for one of Hygea's investees was cancelled because it 
      proved impossible to assemble sufficient analysts. 
 
   As outlined above, the remaining institutional investors understandably 
focus on the larger AIM companies, leaving companies with market caps of 
under GBP50m much less well supported. 
 
   Against the background of the Board's stated objective of having as much 
as possible of the portfolio in AIM quoted stocks, the Board takes a 
keen interest in trying to understand why existing market mechanisms

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