Preliminary Announcement of Results for the year ended 31 January 2008 Key data
31 January 31 January
2008 2007
Total Net Asset Value ("NAV") £14.5m £12.1m
Shares in issue 18,837,545 13,566,646
NAV per share 77.0p 89.5p
Share price 59.5p 72.5p
Market capitalisation £11.2m £9.8m
Ordinary share price discount to NAV 22.7% 19.0%
NAV per share plus cumulative
dividends paid to date 90.5p 96.5p
Cumulative dividends per ordinary
share since inception 13.5p 7.0p
Chairman's Statement
Overview of performance and key events
I am pleased to present my seventh annual report of the Noble Health Fund VCT
(previously the Sitka Health Fund VCT). At 31 January 2008 the NAV of the
Company was 77.0p compared with 89.5p on 31 January 2007. Part of this decrease
is due to the payment of dividends totalling 6.5p during the year, the balance
being due to the fall in value in the AIM portfolio. We remain confident that
most of the unquoted investments in the portfolio are developing well and many
of them are still held at cost despite making considerable progress.
During the early part of the financial year a substantial fundraising raised
£4.9m and the recent top up offer, which closed post year end, raised £0.5m. This increase in the size of the fund will allow further diversity of
investments in the future.
At the end of the year the Company's portfolio consisted of a total of 21
companies comprising 10 unquoted investments and 11 quoted investments, a
significant increase of 7 over last year.
Portfolio developments
The Company made three new unquoted investments, Altacor Limited, Onyx
Scientific Limited and Plum Baby Limited, amounting to a total investment of
£1.9m. Four investments totaling £0.8m were added to the quoted portfolio,
Craneware plc, Cenes Pharmaceuticals plc, Maelor plc and Sinclair Pharma plc,
bringing the total quoted investments to 11 and further diversifying the
portfolio. As stated above the valuation of the quoted portfolio has decreased
considerably since the half-year in part due to the general deterioration of the
AIM market and in certain cases (Chromogenex plc and Genosis plc) due to
unexpected company specific events. In spite of this, the Company realised a net
gain of £0.3m through the sale of quoted holdings with proceeds of £0.8m. Further details are given in the Fund Manager's Review.
Change of name
Following the successful integration of Sitka Limited within Noble Fund Managers
Limited ("Noble"), the Board believed that it was appropriate to reflect this by
a change of name from Sitka Health Fund VCT plc to Noble Health Fund VCT plc.This was approved at the Extraordinary General Meeting ("EGM") on 10 January
2008. The name change allows Noble to align the branding of the Company
alongside the other VCTs that it manages.
Top-up fundraising
Further to my statement in the circular obtaining approval to raise additional
funds for the Company, this fundraising closed on 4 April 2008 and I am pleased
to announce that £551,500 was raised as a result of the issue of 708,339 new
ordinary shares.
Extension of the Life of the Company
The life of the Company was extended at the EGM held on 10 January 2008 in
order to allow new investors in the top-up offer to hold shares for the holding
period required to maintain VCT tax reliefs receivable.
Investment policy
Revisions to the Listing Rules during 2007 now require that a statement is
included within the investment policy about asset mix, the spread of risk and
maximum expenses. Details of the expanded investment policy for the Company are
included in the Business Review section of the Directors' Report.
Dividend policy
The Board's long-term objective is to maximise the flow of dividends to
shareholders. However the Company also needs to retain adequate funds for follow
on investments for companies already in the Company's portfolio, to fund the
running of the Company and to provide for any share buy backs in line with the
Company's policy. Generally the Company will pay out such realised gains as may
be prudent bearing in mind the above constraints.
Buy back policy
The Company operates a buy back policy purchasing shares at a discount to NAV
agreed by the Board. This policy helps ensure that the shares trade in a
narrower range than would otherwise be the case and provides liquidity for those
shareholders who wish to exit, whilst enhancing the NAV for remaining
shareholders. In the year ended 31 January 2008, 271,420 shares were bought
back. At the end of the financial year the discount is often wider than during
the rest of the year as we enter a closed period and cannot buy back shares. Over the year, the average discount at which the Company bought back shares was
10.1%.
VCT qualifying status
The Company continues to receive full approval from HM Revenue & Customs and
comfortably met the requirements to have 70% of relevant funds invested in
qualifying investments. In addition, the Company continues to meet the other
tests necessary for maintaining VCT qualifying status.
It is essential that the Company maintains its full qualifying status so that
shareholders retain their tax reliefs. The Board is satisfied that Noble has
continued to seek professional advice to ensure the necessary conditions are met
for an investment to be VCT qualifying. The Board reviews the Company's overall
qualifying status at each Board meeting and is advised by
PricewaterhouseCoopers.
Composition of the Board In July 2007, Gerard Tardy and Louis Nisbet retired from the Board, in line with
best practice that the Board should be completely independent and that fund
managers should not sit on the board of a company that they manage. In
addition, in April 2008 Gerard Tardy announced that he would be retiring in May
2008. As the founder of Sitka VCT, the Board would like to thank him for his
major contribution to the development of the Company. The healthcare team was
strengthened in 2007 with the arrival of two new managers with significant life
science investment experience. Paul Toon, who joined as Head of Unquoted
Investments at Noble and who leads the healthcare team, and Dr Stephane Mery,
who joined as Investment Director.
The Board has been strengthened by the appointment of two further non-executive
directors, one before the year end and one more recently. Charles Pinney was
appointed in July 2007 and Peter Arthur in April 2008. Charles who is also a
non-executive director of Noble AIM VCT plc and a consultant to Rathbones
Investment Management has experience and expertise with VCTs. Peter has
extensive experience with institutional and investment trust businesses, and is
currently chairman of an AIM VCT and an investment trust.
I would like formally to welcome Charles and Peter to the Board. As previously
communicated and for purely personal reasons I have decided to step down as
Chairman of the Noble Health Fund immediately following the AGM on 5 June. Charles Pinney will succeed me as Chairman and I am delighted to offer him my
best wishes for the future.
Outlook
Last year I commented that the increased funds available to the Noble Health
Fund would enable Noble to grow the portfolio to over 20 companies and this has
been achieved. Despite the current financial turmoil, deal flow and business
proposals continue to provide additional investment prospects and further
funding is being considered for existing portfolio companies to strengthen their
growth and development capabilities. Over the next year Noble will be focusing
on seeking to realise gains from certain unquoted companies. It will also try
to liquidate holdings in quoted companies where gains can be realised or where
the capital may be better deployed.
Annual General Meeting
I look forward to welcoming shareholders to the annual general meeting on
Thursday 5 June 2008 at 2.00pm at Noble Group's offices, 5th Floor, 120 Old
Broad Street, London EC2N 1AR, where I will present my report for the year and
Noble will present an overview of the prospects of the health sector in the UK.
Gill Nott OBE
Chairman
9 May 2008
Fund Manager's Review Generating dividends from profitable disposals
In the year to 31 January 2008 gains from profitable disposals enabled the
Company to distribute 6.5p of tax free dividends. A dividend of 5p was
distributed in May 2007 from gains on both unquoted and quoted investments and a
further 1.5p was distributed in November 2007 from sales of quoted investments.
New investments, increasing diversification
In February 2007 the fund invested in Altacor, a speciality pharmaceutical
company specialising in improved formulation and dosage forms for treatments for
eye disease. Our initial investment of £300,000 is expected to be followed by a
further tranche in the next funding round anticipated in the current year. In
July we participated in a buy-out of the pharmaceuticals service company,
Onyx Scientific. This company is currently exceeding both income and profit
projections and has already paid down one third of its debt.
In November 2007, we made our third new unquoted investment of the year in the
specialist nutritional baby foods business, Plum Baby. The owners of the
business wanted to access development stage capital to expand distribution and
to develop new varieties of their award winning products.
Shortly after the year end, we completed an investment in Population Genetics
Technologies which has patented tools for the analysis of gene variations in
large populations. There are potential enormous benefits in alerting patients
and healthcare professionals to risks of disease development and in tailoring
treatment of disease on a personalised basis.
The diversification of the fund was increased by four new quoted investments in
Craneware, Cenes Pharmaceuticals, Maelor and Sinclair Pharma.
At the date of this report the Fund comprised investments in 22 companies 11
unquoted and 11 quoted.
Progress of portfolio
In the year to 31 January 2008:
* Altacor has launched its first product range for the treatment of dry eye. Early signs are encouraging with several unsolicited positive endorsements from
patients including - "and now, at last, Clinitas (the Altacor product) seems to
offer some protection for my eyes. I would like to pass on my thanks to the
producers of this wonderful product".* BioVex has made substantial progress in meeting Phase II endpoints in
clinical trials of its leading product for the treatment of recalcitrant
tumours, with minimal side effects. The company is well funded and is seeking
approval from the FDA to fast track development of the lead product.* Digital Healthcare and Optasia Medical are medical imaging companies both
of which have completed the development of their initial products and are now
commercialising them with a focus on the US markets. Although sales could not be
achieved due to delays in product developments, the pipelines in both cases are
excellent and 2008 should be important year for these companies.* OmniDental Sciences has launched a new range of oral healthcare products
based on proprietary infection control agents from natural sources. Several
licensing discussions are in progress for the worldwide commercialisation of
these agents with multinational companies, including a `top five' pharmaceuticals
and consumer health business.* Inforsense has achieved sales growth of 25% in the year ended 31 March 2008
and has secured a large order from Hoffmann-La Roche. The company has also
entered into a partnership with the Dana-Farber Cancer Research Institute to
improve patient care in cancer.* Amura Holdings has continued to develop its intellectual property portfolio,
especially in the fields of osteoporosis, osteoarthritis and tumour metastasis
and plans to enter into out-licensing agreements. An uplift in valuation has
been achieved through a preferential securing of shares and warrants in the
course of a funding in the second half of the year.* deltaDOT which develops and commercialises innovative technologies for the
separation and analysis of biomolecules started to generate significant sales
during the last quarter of 2007.* York Pharma acquired a private dermatology business, Derms Developments,
and has recently reported sales of the acquired business to be ahead of
expectations. Gains through partial realisations of this holding contributed to
the dividends in the year. In line with the AIM market the share price has
deteriorated in the second half of the year.* The quoted portfolio has been negatively affected primarily as a result of
the general AIM market deterioration. Two companies we have held for some time,
Chromogenex and Genosis have suffered substantial deterioration in value mainly
as a result of poor market penetration.* The new investments in Vectura Group and Sinclair Pharma together lost 50%
of their value over the six months to year end. Similarly, in spite of
continued positive developments in reported business activity, Cenes
Pharmaceuticals suffered a substantial loss in value of nearly 70%. Maelor and
Craneware have been more robust, posting improvements in value of 15% and 20%
respectively.
Fundraising
In a difficult climate for fund raising this year the top-up offer closed
on 4 April 2008 raising £551,500 which resulted in the allotment of an
additional 708,339 new shares.
Deal flow
Possibly reflecting the changing market environment, the number of new deals
being received during the year has decreased, though we continue to review good
quality companies. The most prevalent sector was service companies (approx 40%),
followed by diagnostics (approx 25%) and medical devices (approx 17%). We
continue to focus on investing in unquoted investments which are less
susceptible to market sentiment and to avoid opportunities where the capital
requirements and time to market may be extensive.
Approximately two-thirds of new opportunities were provided through our network
of relationships, and the rest have come to us directly. We have noticed a slow
down in opportunities coming through as potential co-investments with other
venture capitalists which underscores the competitive environment for the larger
and more mature company investments.
Outlook
The investment priority for the current year is to focus on making approximately
3 new investments, further increasing the diversity of the fund. We will also
participate in follow-on investments in existing portfolio companies where the
capital should enhance value and/or accelerate an exit. Another key goal is to
generate profitable realisations from unquoted companies, primarily through
trade sales. Several of our unquoted companies have active M&A and licensing
discussions in progress with the aim of strengthening the business and improving
future exit prospects. Noble Fund Managers Limited
9 May 2008 Investment Portfolio
as at 31 January 2008
2008 2007
Valuation Valuation
as % of as % of
Cost Valuation shareholders' Cost Valuation shareholders'
£ £ funds £ £ funds
Quoted investments
1st Dental
Laboratories
plc * 289,000 110,287 0.7 289,000 153,889 1.3
Cenes
Pharmaceuticals
plc * 200,000 56,667 0.4 - - -
Chromogenex plc* 253,000 68,977 0.5 253,000 184,000 1.5
Craneware plc * 139,302 160,252 1.1 - - -
Genosis plc * 899,886 37,906 0.3 779,886 144,855 1.2
Immunodiagnostics
Systems
Holdings plc 42,351 199,093 1.4 325,880 762,649 6.3
Maelor plc * 214,169 257,002 1.8 - - -
MediGene AG 639,173 197,289 1.4 639,173 271,492 2.2
Sinclair Pharma
plc 219,219 93,021 0.6 - - -
Vectura Group plc481,664 365,583 2.5 153,538 275,582 2.2
York Pharma plc 592,413 542,865 3.7 675,063 922,808 7.6
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Total quoted
investments 3,970,177 2,088,942 14.4 3,115,540 2,715,275 22.3
------------------------------------------------------------------------------------
Unquoted investments Altacor Limited 300,000 300,000 2.1 - - -
Amura Holdings
Limited 987,150 1,438,303 9.9 800,000 950,000 7.8
BioVex Inc 763,885 645,854 4.5 650,000 650,000 5.4
deltaDOT Limited 599,574 599,574 4.1 167,604 167,604 1.4
Digital Healthcare
Limited 810,000 777,078 5.4 600,000 600,000 4.9
Eyebright plc(dissolved
August 2007) - - - 576,665 - -
Inforsense
Limited 1,020,000 1,418,215 9.8 1,020,000 1,418,215 11.7
OmniDental
Sciences Limited 500,000 500,000 3.4 500,000 500,000 4.1
Onyx Scientific
Limited * 850,000 850,000 5.8 - - -
Optasia Medical
Limited* 650,000 650,000 4.5 650,000 650,000 5.4
Plum Baby
Limited * 749,148 749,148 5.2 - - -
Total unquoted
investments 7,229,757 7,928,172 54.7 4,964,269 4,935,817 40.7
Total
investments 11,199,934 10,017,114 69.1 8,079, 809 7,651,092 63.0
---------------------------------------------------------------------------------------
Net current
assets 4,480,575 30.9 4,485,987 37.0
---------------------------------------------------------------------------------------
Shareholders'
funds 14,497,689 100.0 12,137,079 100.0
---------------------------------------------------------------------------------------* These investments are also held by other VCTs managed by Noble (subsequent to
the year end Noble VCT plc is no longer managed by Noble and has been re-named
Enterprise VCT plc).
Income Statement
for the year ended 31 January 2008
2008 2008 2008 2007 2007 2007
Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
----------------------------------------------------------------------------------
Gain on disposal of
investments - 30,067 30,067 - 453,235 453,235
(Decrease)/increase
in fair value of
investments held - (1,018,122) (1,018,122) - 217,850 217,850
Income 340,652 - 340,652 161,329 - 161,329
Investment management
fee (66,751) (200,254) (267,005) (57,157) (171,468) (228,625)
Other expenses (267,467) - (267,467)(225,843) (1,040) (226,883)
----------------------------------------------------------------------------------
Return/(loss) on
ordinary activities
before taxation 6,434 (1,188,309)(1,181,875) (121,671) 498,577 376,906
Tax on ordinary activities - - - - - -
----------------------------------------------------------------------------------
Return/(loss) on
ordinary activities
after taxation 6,434 (1,188,309) (1,181,875) (121,671) 498,577 376,906
----------------------------------------------------------------------------------
Return per Ordinary
share 0.04p (6.58p (6.54)p (1.29)p 4.69p 3.40p
Return per C1 share n/a n/a n/a 1.17p (1.66)p (0.49)p
The total column is the profit and loss account of the Company. The accompanying notes are an integral part of the statement. All revenue and capital items derive from continuing operations. No operations were acquired or discontinued during the year. There were no other recognised gains or losses in the year. Balance Sheet
as at 31 January 2008
2008 2007
£ £
Fixed assets
Investments held at fair value 10,017,114 7,651,092
------------------------------------------------------------
Current assets
Debtors 147,149 1,500,302
Cash at bank and on deposit 470,290 1,560,130
Investments - liquidity fund 3,943,498 1,587,702
4,560,937 4,648,134
------------------------------------------------------------
Current liabilities
Creditors: amounts falling due within
one year (80,362) (162,147)
------------------------------------------------------------
Net current assets 4,480,575 4,485,987
------------------------------------------------------------
Total assets less current liabilities 14,497,689 12,137,079
------------------------------------------------------------
Capital and reserves
Called up share capital 188,375 135,666
Share premium account * 6,403,631 1,483,143
Special distributable reserve 8,622,048 10,055,474
Capital redemption reserve * 389,190 386,476
Capital reserve (764,003) 424,306
Revenue reserve (341,552) (347,986)
------------------------------------------------------------
Equity shareholders' funds 14,497,689 12,137,079
------------------------------------------------------------
Net asset value per share 77.0p 89.5p
------------------------------------------------------------
* These reserves are not distributable.
The financial statements were approved and authorised for issue by the Board of
directors on 9 May 2008 and were signed on its behalf by Gill Nott OBE
Chairman
Cash Flow Statement
for the year ended 31 January 2008
Ordinary Ordinary
share 2007 'C1'
shares shares shares
2008 2007 2007 Total
£ £ £ £
-------------------------------------------------------------------------
Operating activities
Investment income received 299,398 72,492 94,123 166,615
Deposit interest received 16,039 10,737 2,188 12,925
Investment management fees (303,213) (143,023) (39,033) (182,056)
Other operating costs (260,829) (189,081) (39,627) (228,708)
-------------------------------------------------------------------------
Net cash (outflow)/inflow from
operating activities (248,605) (248,875) 17,651 (231,224)
-------------------------------------------------------------------------
Financial investment
Purchase of investments (4,129,602) (1,791,602)(567,604) (2,358,654)
Purchase of liquidity funds (2,355,796) (1,587,702) - (1,587,702)
Disposals of investments 1,170,205 4,765,798 517,018 5,282,816
--------------------------------------------------------------------------
Net cash (outflow)/inflow from
financial investment (5,315,193) 1,387,046 (50,586) 1,336,460
--------------------------------------------------------------------------
Dividends
Payment of dividends (1,031,799) (204,419) (31,805) (236,224)
--------------------------------------------------------------------------
Net cash (outflow)/inflow before
financing (6,595,597) 933,752 (64,740) 869,012
Financing
Issue of shares 5,896,127 839,675 - 839,675
Expenses of the issue of shares (161,762) (120,279) - (120,279)
Interfund transfers - 10,866 (10,866) -
Buy back of shares (228,608) (257,760) - (257,760)
--------------------------------------------------------------------------
Net cash inflow/(outflow) from
financing 5,505,757 472,502 (10,866) 461,636
--------------------------------------------------------------------------
(Decrease)/increase in cash
during the year (1,089,840) 1,406,254 (75,606) 1,330,648
--------------------------------------------------------------------------
Reconciliation of net cash flow to movement in net cash
Net cash at 1 February 2007 1,560,130 153,876 75,606 229,482
Net cash at 31 January 2008 470,290 1,560,130 - 1,560,130
--------------------------------------------------------------------------
(Decrease)/increase in cash
during the year (1,089,840) 1,406,254 (75,606) 1,330,648
--------------------------------------------------------------------------
Reconciliation of Movements in Shareholders' Funds
for the year ended 31 January 2008
2008 2007
£ £
-------------------------------------------------------------------
Opening shareholders' funds 12,137,079 10,774,286
(Loss)/return for the year (1,181,875) 376,906
Increase in share capital in issue 4,768,117 1,222,111
Dividends paid (1,225,632) (236,224)
-------------------------------------------------------------------
Closing shareholders' funds 14,497,689 12,137,079
-------------------------------------------------------------------
Dividends paid 2008 2007 2007
Ordinary Ordinary `C1' Total
shares shares shares 2007
£ £ £ £
-----------------------------------------------------------------------------
Interim dividend for the year ended 31
January 2008 of 5p per ordinary share -
paid on 14 May 2007 943,913 - - -
Interim dividend for the year ended 31
January 2008 of 1.5p per ordinary share -
paid on 30 November 2007 281,719
Interim dividend for the year ended 31
January 2007 of 1.5p per ordinary share -
paid on 10 November 2006 - 204,419 - 204,419
Interim dividend for the year ended 31
January 2007 of 1.5p per `C1' share - paid
on 10 November 2006 - - 31,805 31,805
--------------------------------------------------------------------------------
1,225,632 204,419 31,805 236,224
Reconciliation of (loss)/return on ordinary activities before taxation to net
cash (outflow)/inflow from operating activities
Ordinary Ordinary `C1'
shares shares shares Total
2008 2007 2007 2007
£ £ £ £
----------------------------------------------------------------------------------
(Loss)/return on ordinary activities before
taxation (1,181,875) 387,367 (10,461) 376,906
Net loss/(gain) and change in fair value of
investments 988,055 (676,703) 5,618 (671,085)
(Decrease)/increase in creditors, excluding
corporation tax payable (4,149) 4,468 (10,218) (5,750)
(Decrease)/Increase in prepayments and
accrued income (21,791) (19,388) 33,335 13,947
(Increase)/decrease in other debtors (28,845) 55,381 (623) 54,758
----------------------------------------------------------------------------------
Net cash (outflow)/inflow from operating
activities (248,605) (248,875) 17,651(231,224)
----------------------------------------------------------------------------------
Post balance sheet events
The following transactions have taken place between 31 January 2008 and the date
of this report:
* An investment of £346,667 was made in Population Genetics Limited shortly
after the year end; and
* 708,339 shares were allotted on 4 April 2008 raising net proceeds of
£551,500.The financial information set out in these financial statements does not
constitute the Company's statutory accounts for the year ended 31 January 2008
but is derived from those accounts. Statutory accounts for the year ended 31
January 2008 will be delivered to Companies House following the Annual General
Meeting. The auditors have reported on those accounts: their report was
unqualified and did not contain a statement under Section 237 (2) or (3) of the
Companies Act 1985. The accounting policies are set out in the most recently
published set of accounts.
The Annual Report will be circulated by post to all shareholders and copies will
be available to members of the public from the Company's registered office 5th
Floor, 120 Old Broad Street, London, EC2N 1AR.
Further information regarding the Company, including monthly net asset values
can be found at Noble Group's website www.noblegp.com.
For further information please contact
Paul Toon 0207 763 2200
Doreen Nic 0131 225 9677
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