For immediate 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.