Calculus VCT PLC Annual Financial Report (4769N)

TIDMCLC

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/

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/ , 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

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   Year to 28 February 
                             2022                  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 GBP8.6 million worth of new Ordinary shares allotted. The venture capital portfolio of qualifying investments grew in value by GBP2.5 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 GBP20 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 GBP0.7 million.

Home Team Content Limited, a UK-based independent production company also enjoyed an uplift in value since February 2021, improving the NAV by GBP0.6 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 GBP0.4 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 GBP0.4 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 GBP1.4 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 GBP0.4 million.

Scancell plc, an immune-oncology company saw its share price fall resulting in a decrease of GBP0.3 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 GBP0.2 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 GBP0.2 million reduction on the NAV.

Factoring all other investee company valuation movements, the total portfolio enjoyed a net GBP2.5 million uplift since the beginning of the financial year.

New Investments

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

Follow-on Investments

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

Venture Capital Investments

Calculus Capital Limited manages the portfolio of VCT qualifying investments made by the Company. The Company invested GBP3.2 million in five new investments and GBP1.1million 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 GBP7.8 million.

On 13 September 2021, a new offer was launched. The Company had issued shares for GBP1.9 million of subscriptions under this offer by the end of the financial year. Of the GBP8.7 million total new share issues in the year ended 28 February 2022, GBP6.8 million took place under the offer that closed on 27 August 2021.

From September 2020 more than GBP10 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 GBP147,020 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 GBP300,000 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 GBP10 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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