TIDMHYG
For immediate release 28 August 2015
HYGEA VCT PLC
Unaudited Half-Yearly Report for the Six Months Ended 30 June 2015
Financial Headlines
85.7p Net Asset Value per share at 30 June 2015
24.25p Cumulative dividends paid to date
109.95p Total return per share since launch
Financial Summary
Six months to Six months to Year to
30 June 2015 30 June 2014 31 December 2014
Net assets (GBP'000s) 6,951 7,545 7,334
Return on ordinary activities
after tax (GBP'000s) (383) (284) (495)
Earnings per share (4.7p) (3.5p) (6.1p)
Net asset value per share 85.7p 93.0p 90.4p
Dividends paid to date 24.25p 24.25p 24.25p
Total return per share 109.95p 117.25p 114.65p
Dividends declared for the - - -
period
Contacts:
Charles Breese Hygea VCT
Tel: 01280 703482
Roland Cornish Beaumont Cornish Ltd
Tel: 020 7628 3396
About Hygea vct plc
Hygea vct plc ("the Company") is a Venture Capital Trust (VCT). Since
30 July 2007, the Board has managed the Company. The Company was
launched in October 2001 and raised over GBP7 million through an offer
for subscription.
The Company's objective is to develop a portfolio of unquoted and quoted
MedTech companies conforming to the Company's investment template (which
can be found on www.hygeavct.com, clicking on About, and then clicking
on Investment Strategy/Process) in order to generate capital growth over
the long-term.
Venture Capital Trusts (VCTs)
VCTs were introduced by the UK Government in 1995 to encourage
individuals to invest in UK smaller companies by offering VCT investors
a series of tax benefits.
The Company has been approved as a VCT by HM Revenue & Customs (HMRC).
In order to maintain its approval the Company must comply with certain
requirements on a continuing basis. Within three years from the date of
provisional approval at least 70% of the Company's investments must
comprise "qualifying holdings" of which at least 30% must be in eligible
ordinary shares. A "qualifying holding" consists of up to GBP5 million
invested in any one year in new shares or securities in an unquoted
company (including companies listed on AIM) which is carrying on a
qualifying trade and whose gross assets do not exceed GBP15 million at
the time of investment. The Company has continued its compliance with
these requirements.
Chairman's Statement
As announced on 15 July 2015, following James Otter's resignation as
Chairman, I was appointed to replace him. The Board is grateful to James
for his contribution in leading the Board over the last ten years,
following its assumption of the management of the Company. James remains
on the Hygea Board as a Director.
I am pleased to present the unaudited results for the six months ended
30 June 2015. The Company's net asset value ('NAV') per share at 30 June
2015 was 85.7p compared to 90.4p at 31 December 2014 and 93.0p at 30
June 2014.
Results and Dividend
The total negative return for the period amounted to 4.7p. This was made
up of a negative revenue return of 0.9p (June 2014: negative 1.0p),
being operating expenses net of income, and a negative capital return of
3.8p (June 2014: negative 2.5p). This negative return also reflects a
reduction in the accrual for performance fee. Our unquoted portfolio has
shown a small reduction in value and our AIM portfolio has also shown a
net reduction in value since the last year end, principally due to the
decrease in the bid price of Scancell plc shares from 32p at 31 December
2014 to 29p at 30 June 2015.
Whilst believing that the market has yet to realise the underlying
commercial value of our AIM portfolio, without any liquidity event
within the portfolio, we remain unable to pay a dividend.
Portfolio Review
At 30 June 2015, the fund consisted of 16 holdings with five companies
quoted on AIM and 11 unquoted companies. No new investments have been
made in the portfolio since 31 December 2014. During the period we have
taken the opportunity to realise the final 13,000 shares of our holding
in Tristel plc. The Company's holding in our significant AIM investments,
therefore, remains as reported on 14 May 2015, namely 13,249,730 shares
in Scancell plc, 2,431,768 shares in Omega Diagnostics Holdings plc and
1,285,552 shares in EKF Diagnostics Holdings plc. At 30 June 2015 the
Company had utilised GBP64,189 of its overdraft facility of GBP100,000.
As mentioned above, the value of our AIM portfolio has reduced over the
last six months, mainly due to the reduction in value of our Scancell
holding which remains an exciting stock but whose share price, like many
small biotechnology stocks, is volatile. Scancell still accounts for
half of the value of our investment portfolio.
In respect of our unquoted portfolio, we remain encouraged by the
progress of the majority of holdings, and in particular Hallmarq
Veterinary Imaging Limited. When the accounts of that company for the
year to 31 August 2015 are available, we believe that these will support
a meaningful uplift in the carrying value. Meanwhile, Exosect Limited
continues to disappoint and in view of their current liquidity position,
we have decided to reduce the carrying value by a further 25%.
VCT Qualifying Status
PricewaterhouseCoopers LLP continues to provide the Board with advice on
the ongoing compliance with HMRC rules and regulations concerning VCTs.
The Board believes that the Company continues to comply with the
conditions laid down by HMRC for maintaining approval as a VCT
Outlook
Following the AGM on 14 May 2015, the Board announced that it would be
holding discussions regarding the appropriate Board structure and on 15
July 2015 we further announced that we had asked Richard Roth, who is a
significant shareholder in the Company and a Director of the Oxford
Technology VCTs, to assist in this process. In conjunction with Richard,
we are well under way in this review, the scope of which has been
extended to include reviews of a) the cost base of the Company, given
that current financial restrictions effectively prohibit further new or
follow-on investments, and b) the performance fee arrangements. It is
expected that discussions on these matters will be concluded in the near
future, at which time we will report to shareholders with the intention
of seeking your approval to the proposals.
In the 2014 annual report, reference was made to Charles Breese and his
company, Larpent Newton & Co Limited, developing a broking service based
on the same investment template as that used by the Company. Charles has
informed the Board that this service will be launched as SMARTCO
Investment Services in Q4 2015. The existence of such a service is
expected to assist the Company in supporting its investee companies to
realise their full potential.
The Board continues to believe that the portfolio has significant upside
potential and believes that this will be demonstrated during the three
year extension of the life of the fund which shareholders agreed to at
the AGM on 14 May 2015. Whilst this will appear to many shareholders to
have taken a very long time, the timescale is in line with that
generally experienced for converting a disruptive technology into an
established business. The strategy has been to invest in businesses
which bring better patient outcomes at a lower total cost, and we
continue to believe that this is a particularly attractive investment
positioning at a time of global economic uncertainty, increasing demand
for healthcare and many governments needing to cut costs.
John Hustler
Chairman
28 August 2015
Investment Review
Investment Portfolio
Movement
in the
six
months to
Investment Unrealised 30 June
at cost profit/(loss) Carrying value at 2014
Unquoted Investments (GBP'000) (GBP'000) 30 June 2014 (GBP'000) (GBP'000)
Hallmarq Veterinary Imaging Limited 1,116 (62) 1,054 -
OR Productivity Limited 765 (101) 664 -
Glide Pharmaceutical Technologies Limited 325 (7) 318 -
Fuel 3D Technologies Limited (formerly Eykona Technologies
Limited) 250 146 396 -
Exosect Limited 250 (188) 62 (62)
Arecor Limited 127 5 132 -
ImmunoBiology Limited 868 (742) 126 -
(MORE TO FOLLOW) Dow Jones Newswires
August 28, 2015 09:32 ET (13:32 GMT)
Insense Limited 509 (421) 88 -
Microarray Limited (formerly Archimed LLP) 132 (65) 67 -
Axon Limited 374 (374) - -
Wound Solutions Limited 350 (350) - -
Total unquoted investments 5,066 (2,159) 2,907 (62)
Quoted Investments
Scancell plc 801 3,042 3,843 (398)
Omega Diagnostics plc 348 157 505 58
EKF Diagnostics plc 260 (3) 257 (16)
EpiStem Holdings plc 44 49 93 (1)
Reneuron plc 50 - 50 12
Total quoted investments 1,503 3,245 4,748 (345)
Total investments 6,569 1,086 7,655 (407)
Objective and Investment Policy
The Company's objective is to provide shareholders with an attractive
income and capital return by investing its funds in a portfolio of
unquoted and quoted UK MedTech companies which meet the relevant
criteria under the VCT Rules.
The Company's investment policy is designed to deliver absolute returns
on its investments rather than a performance measured against the market
indices. On an ongoing basis, it is intended that at least 80% of the
Company's assets will be invested in qualifying holdings, with the
remainder held in cash and money market securities. The Board does not
intend to vary the Company's investment policy. However, should a
material change be deemed appropriate this will be done with
shareholders' approval by the passing of an ordinary resolution and in
accordance with the Listing Rules.
The Directors control the overall risk of the portfolio by ensuring that
the Company has exposure to a diversified range of quoted and unquoted
companies from the MedTech sector. The Directors continually monitor
the investment process and ensure compliance with the investment policy.
Valuation Methodology
Quoted and unquoted investments are valued in accordance with the
accounting policy set out on page 38 of the 2014 Annual Report, which
takes account of current industry guidelines for the valuation of
venture capital portfolios and is compliant with International Private
Equity and Venture Capital Valuations guidelines and current financial
reporting standards.
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
28 August 2015
Income Statement
Six months to 30 June Six months to 30 June
2015 2014 Year to 31 December 2014
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain/(loss) on disposal of fixed asset investments - 5 5 - (1) (1) - 60 60
Loss on valuation of fixed asset investments - (407) (407) - (275) (275) - (527) (527)
Performance fee - 95 95 - 70 70 - 123 123
Investment income - - - 5 - 5 12 - 12
Other expenses (76) - (76) (83) - (83) (163) - (163)
Return on ordinary activities before tax (76) (307) (383) (78) (206) (284) (151) (344) (495)
Taxation on profit/(loss) on ordinary activities - - - - - - - - -
Return on ordinary activities after tax (76) (307) (383) (78) (206) (284) (151) (344) (495)
Earnings per share - basic and diluted (0.9p) (3.8p) (4.7p) (1.0p) (2.5p) (3.5p) (1.9p) (4.2p) (6.1p)
-- 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 those disclosed
in the income statement.
Statement of Changes in Equity
Six months to 30 Six months to 30
June 2015 June 2014 Year to 31 December 2014
GBP'000 GBP'000 GBP'000
Shareholders'
funds at start
of period 7,334 7,829 7,829
Return on
ordinary
activities
after tax (383) (284) (495)
Dividends paid - - -
Shareholders'
funds at end of
period 6,951 7,545 7,334
Balance Sheet
As at 30 June As at 30 June As at 31
2015 2014 December 2014
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed asset investments* 7,655 8,336 8,072
Current assets:
Debtors 12 9 8
Cash at bank - 5 16
12 14 24
Creditors** (110) (49) (60)
Net current assets (98) (35) (36)
Performance fee payable (606) (756) (702)
Net assets 6,951 7,545 7,334
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 (62) (242) (165)
- holding
gains/(losses) 1,085 1,710 1,495
Revenue reserve (1,565) (1,416) (1,489)
Total equity shareholders' funds 6,951 7,545 7,334
Net asset value per share 85.7p 93.0p 90.4p
*At fair value through profit and loss
**Included within creditors as at 30 June 2015 is a bank overdraft of
GBP64,189
Company Number: 04221489
Cash flow statement
Six months to 30 Six months to 30 Year to 31 December
June 2015 June 2014 2014
GBP'000 GBP'000 GBP'000
Net cash
(outflow)/inflow
from operating
activities (95) (16) (78)
Financial
investment:
Purchase of
investments - (70) (70)
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Sale of investments 15 61 134
Dividends paid: - - -
(Decrease)/increase
in cash resources
at bank (80) (25) (14)
Reconciliation of net cash flow to movement in net
funds
Six months to Six months to
30 June 2015 30 June 2014 Year to 31 December 2014
GBP'000 GBP'000 GBP'000
(Decrease)/increase
in cash resources
at bank (80) (25) (14)
Opening net liquid
resources 16 30 30
Net funds at period
end (64) 5 16
Reconciliation of return before taxation to cash flow
from operating activities
Six months to Six months to
30 June 2015 30 June 2014 Year to 31 December 2014
GBP'000 GBP'000 GBP'000
Return on ordinary
activities before
tax (383) (284) (495)
(Gain)/loss on
disposal of fixed
asset investments (5) 1 (60)
Loss on valuation of
fixed asset
investments 407 275 527
(Increase)/decrease
in debtors (4) 66 67
(Decrease)/increase
in creditors (110) (74) (117)
Net cash
(outflow)/inflow
from operating
activities (95) (16) (78)
Notes to the Half-Yearly Report
1. Basis of preparation
The unaudited half-yearly results which cover the six months to 30 June
2015 have been prepared in accordance with the Financial Reporting
Council's (FRC) Financial Reporting Standard 104 Interim Financial
Reporting (March 2015) and the Statement of Recommended Practice (SORP)
for Investment Companies re-issued by the Association of Investment
Companies in November 2014.
2. Publication of non-statutory accounts
The unaudited half-yearly results for the six months ended 30 June 2015
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 2014 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 2015 are calculated on the basis of
8,115,376 shares (31 December 2014: 8,115,376 and 30 June 2014:
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 2015
divided by 8,115,376 (31 December 2014: 8,115,376 and 30 June 2014:
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 2014. 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 2014.
The Commercial Advisory Committee is entitled to receive a performance
incentive fee, being 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).
7. Copies of this statement are being sent to all shareholders.
Copies are also available from the registered office of the Company at
39 Alma Road, St Albans, AL1 3AT and on the company's website -
www.hygeavct.com.
Shareholder Information and Contact Details
Financial Calendar
The Company's financial calendar is as follows:
April 2016 - Annual results for year to 31
December 2015 announced; Annual Report and accounts published
May 2016 - Annual General Meeting
Dividends
Dividends are paid by the Registrar on behalf of the Company.
Shareholders who wish to have dividends paid directly into their bank
account rather than by cheque to their registered address can complete a
mandate form for this purpose. Queries relating to dividends,
shareholdings and requests for mandate forms should be directed to the
Company's Registrar, Capita Registrars, by calling 0871 664 0300 (calls
cost 10p per minute plus network extras), or by writing to them at:
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4BR
www.capitaregistrars.com
Share Price
The Company's share price is published daily on the London Stock
Exchange's website (www.londonstockexchange.com), and other financial
websites, and can also be accessed through the Company's website
(www.hygeavct.com). The share price may be found with the following
TIDM/EPIC code:
Ordinary shares
TIDM/EPIC code HYG
Latest mid-market share price (27 August 2015) 65p per share
Buying and selling shares
The Company's Ordinary shares, which are listed on the London Stock
Exchange, can be bought and sold in the same way as any other company
quoted on a recognised stock exchange via a stockbroker. There may be
tax implications in respect of all or part of your holdings, so
Shareholders should contact their independent financial adviser if they
have any queries.
The Company does not currently operate a buyback policy. If you are
considering selling your shares or trading in the secondary market,
please contact the Company's Corporate Broker, Panmure Gordon (UK)
Limited ('Panmure'). Panmure can be contacted as follows:
Chris Lloyd 020 7886 2716 chris.lloyd@panmure.com
Paul Nolan 020 7886 2717 paul.nolan@panmure.com
Notification of change of address
Communications with Shareholders are mailed to the registered address
held on the share register. In the event of a change of address or other
amendment this should be notified to the Company's Registrar, Capita
Registrars, (contact details shown above) under the signature of the
registered holder.
Other information for Shareholders
Previously published Annual Reports and Half-yearly Reports are
available for viewing on the Company's website at www.hygeavct.com.
Directors and Advisers
Board of Directors Independent Auditor and Taxation Adviser
John Hustler (Chairman) James Cowper LLP
Charles Breese Willow Court
James Otter 7 West Way
Company Number - 04221489 Botley
Registered in England & Wales Oxford
Secretary and Registered Office OX2 0JB
Craig Hunter VCT Status Adviser
39 Alma Road PricewaterhouseCoopers LLP
St Albans 1 Embankment Place
AL1 3AT London
Administration Manager WC2N 6RH
Octopus Investments Limited Bankers
33 Holborn The Royal Bank of Scotland plc
London 62/63 Threadneedle Street,
EC1N 2HT London
Solicitors EC2R 8LA
Keystone Law Registrars
53 Davies Street Capita Registrars
London The Registry
W1K 5JH 34 Beckenham Road
Corporate Broker Beckenham
Panmure Gordon (UK) Limited Kent
One New Change BR3 4TU
London Tel: 0871 664 0300 (calls cost 10p per minute plus
EC4M 9AF network extras)
Tel: 020 7886 2500 www.capitaregistrars.com
Financial Adviser
Beaumont Cornish Limited
2(nd) Floor, Bowman House
29 Wilson Street
London
EC2M 2SJ
This announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
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