TIDMNEP TIDMTTM
RNS Number : 2095S
Neptune-Calculus Income &Growth VCT
15 March 2016
Neptune-Calculus Income and Growth VCT plc Results for the year
ended 31 December 2015
Financial highlights
Year ended
31 December
Ordinary Shares 2015
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Return per share (3.8) p
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Net asset value per share 39.3 p
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Cumulative dividends paid to 31 December 2015 34.0 p
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Accumulated shareholder value (1/2) 73.3 p
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Recommended final dividend 2.0 p
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(1/2) Accumulated shareholder value represents net asset value
per share plus cumulative dividends paid per share.
As at
29 February
2016 *
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Unaudited net asset value per share 38.0p
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* Being the latest practicable date prior to publication.
Including current year revenue.
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CHAIRMAN'S STATEMENT
The results for the year ended 31 December 2015 showed a decline
in net assets to 39.3 pence per share from 51.6 pence. Of this
decline in value, 8.5 pence per share is attributable to dividends
which were paid to shareholders during the year. The remainder of
the fall of 3.8 pence per share was largely attributable to the
fall in the share price of Epistem Holdings plc ("Epistem") and the
write off of value of our investment in Hembuild Group Limited
("Hembuild") due to the company's entering administration.
Investment performance (Qualifying Investments)
The Company continues to meet its requirements to qualify as a
VCT. Our qualifying investments are managed by Calculus Capital
Limited and are in a combination of unquoted and AIM companies.
During the year the Company made one qualifying investment of
GBP150,000 in Solab Group Limited ("Solab") (previously Hampshire
Cosmetics Limited) and in May 2015, Hembuild repaid GBP235,000 of
its qualifying loans. In January 2016, the Company made a
GBP100,000 investment in Arcis Biotechnology Holdings Limited
("Arcis"). Arcis is a Cheshire based, research and development
("R&D") company which has used its technology platform to
develop innovative products in the DNA extraction, agriculture and
hygiene markets.
The value of the qualifying portfolio decreased by 14.0 per
cent. on a like for like basis during 2015. The improved
performance of Dryden Human Capital Group Limited ("Dryden") and
Solab was offset by the aforementioned poor performance of Hembuild
and Epistem. The Board are disappointed by Epistem's drop in share
price but remain confident about the company's long term prospects.
RMS Group Holdings Limited ("RMS") and Human Race Group Limited
("Human Race") continue to perform satisfactorily.
During the year, the Company made a GBP150,000 loan facility
available to MicroEnergy Generation Services Limited
("MicroEnergy") to enable it to acquire 15 additional installed
wind turbines. The loan was subsequently repaid out of profits.
A more detailed analysis of investment performance can be found
in the Investment Manager's Review that follows this statement.
Investment performance (Non-Qualifying Investments)
Our non-qualifying investments comprise holdings in the Neptune
Income Fund, the Neptune Quarterly Income Fund and liquidity funds.
Our investments in the Neptune Income Fund increased by 0.9 per
cent and in the Neptune Quarterly Income Fund by 2.8 per cent over
the year, compared with a decrease of 4.9 per cent in the FTSE 100
Index.
During the year the Company invested GBP225,000 in each of the
liquidity funds held with Goldman Sachs Asset Management, Aberdeen
Global Liquidity Funds and Fidelity Fund Management.
Share buyback
Although the Company was prepared to undertake share buybacks in
the market, no share buybacks were carried out during the year. In
line with its policy of returning cash to shareholders, the Company
may carry out limited share buybacks in the future if it considers
it to be in the best of interests of all shareholders.
Dividends
The Company paid a special interim dividend for 2014 of 5 pence
per Ordinary Share in March 2015. The Company also paid the 2014
final dividend of 2 pence per share in June 2015 and an increased
interim dividend for 2015 of 1.5 pence per share in October 2015.
The total dividends paid to an ordinary shareholder to date are
34.0p.
The directors are pleased to propose a final dividend for 2015
of 2 pence per Ordinary Share which, subject to shareholder
approval, will be payable on 10 June 2016 to shareholders on the
register on 6 May 2016.
Changes to VCT tax legislation
Last year saw a series of regulatory changes which affect how
VCTs can invest. It is no longer possible for VCTs to undertake
management buyouts either as a purchase of equity or as a purchase
of a company's trade and its assets. Subject to certain caveats,
companies must also be under seven years old (ten years for
knowledge intensive companies) to be eligible for investment and
there is a lifetime investment limit on the amount any single
company can receive of GBP12million (GBP20 million for knowledge
intensive companies). Other changes to the legislation mean that
new investment in reserve power businesses will no longer qualify
and, from 6th April 2016, any new investment into the energy
generation sector will also not qualify for relief. HMRC has also
indicated that it will be more cautious about giving approval for
companies that are clearly set up with the intention of not having
a long term future, so called 'limited life' companies. These
changes in the legislation have affected individual VCTs to
differing extents. Investment for the purposes of growth and
development, which is Calculus Capital Limited's core model, is, by
and large, unaffected by the changes other than the prohibition on
investment in companies older than seven years that have not
previously raised tax advantaged funding within seven years of
first commercial sale.
Outlook
As mentioned in the previous section, 2015 saw a number of
changes affecting VCT legislation. Although the new legislation may
affect some of our investment opportunities and brings greater
complexity, the Board does not believe the changes will materially
impact our ability to invest in UK growth companies. As set out in
the Manager's Report, a number of portfolio companies are at
important inflexion points in their development. Whilst the general
economic outlook for 2016 may be uncertain for the UK, we are
optimistic, nonetheless, that the constituents of the portfolio
have considerable upside potential and we hope to see further
progress during the coming year.
Philip Stephens
Chairman
15 March 2016
INVESTMENT MANAGER'S REVIEW (QUALIFYING INVESTMENTS)
Calculus Capital Limited manages the Company's qualifying
portfolio.
Market commentary
The FTSE 100 fell by 4.9 per cent during 2015. It was
outperformed by the AIM All-Share Index, which rose by 5.1 per cent
over the same period.
Portfolio developments
At the year end, the portfolio of qualifying investments
comprised 12 companies, made up of both unquoted and AIM stocks.
Whilst many of the companies in both the quoted and unquoted
portfolios have made significant progress during the year,
valuations have, by and large, not reflected underlying performance
of the companies in the portfolio.
The quoted portfolio, which consists entirely of AIM companies,
has shown an overall decrease in value for the year of 57.8 per
cent which is predominantly attributable to Epistem. At 31 December
2015, the quoted portfolio was valued at GBP236,000 compared with
GBP560,000 on a like for like basis as at 31 December 2014. No new
quoted investments were made in 2015.
The unquoted portfolio has shown a decrease in value of 3.6 per
cent, largely because gains from Dryden and Solab were offset by
the losses from Hembuild. A new qualifying investment of GBP150,000
was made during the year in Solab which comprised GBP10,000 equity
and GBP140,000 loan stock. The section on unquoted portfolio
companies on pages 8 and 9 of the Report and Accounts contains
further information.
Quoted portfolio
Epistem
Epistem is a personalised medicine and biotechnology company
developing innovative diagnostics and biomarkers alongside
providing contract research services to drug development companies.
The company has three divisions, Personalised Medicine, Preclinical
Research Services and Novel Therapies. The company is increasingly
transitioning towards a focus on the Genedrive(R) diagnostics
system. In Genedrive(R), Epistem has created a significant new
diagnostic platform targeting Point of Care diagnostics. This
development has been achieved with very modest resources. The
Genedrive(R) platform and its first tuberculosis ("TB") test has
been launched in India and the Indian sub-continent. The
Genedrive(R) TB test product is simultaneously undergoing clinical
studies in countries across the world. Beyond launching its TB
test, excellent progress has been made in the development of a
Genedrive(R) 'Hepatitis C' (HCV) blood test in collaboration with
the Pasteur Institute and for pathogen detection in conjunction
with the US Department of Defence. A Genedrive(R) Hepatitis C test
will be launched for research use only in 2016 and a CE marked
version will be launched in
March 15, 2016 14:01 ET (18:01 GMT)
In order to maintain disclosures in line with the prior year,
the Company has early adopted the changes to FRS 102 published by
the FRC in March 2016.
In valuing the unquoted portfolio, the inputs include the
discount rate used when performing the discounted cash flow
analysis and the multiple applied in universal transaction and
comparable company analysis. The portfolio has been reviewed and
both downside and upside reasonable possible alternative
assumptions have been identified and applied to the valuation of
each of the unquoted investments. Applying the downside
alternatives the value of the unquoted investment portfolio would
be GBP565,003 (31 December 2014: GBP163,000) or 25.8 per cent (31
December 2014: 6.6 per cent) lower. Using the upside alternatives
the value of the unquoted investment portfolio would be increased
by GBP715,134 (31 December 2014: GBP166,000) or 32.6 per cent (31
December 2014: 6.7 per cent) higher.
Financial liabilities
The Company finances its operations through its issued share
capital and existing reserves. The only financial liabilities of
the Company are creditors all of which are sterling denominated and
are due within one year. The creditors are disclosed in note 12. No
interest is paid on these liabilities.
All assets and liabilities are carried at fair value.
Capital management policies and procedures
The Company's capital management objectives are to ensure that
it will be able to continue as a going concern and to maximise the
income and capital return to its Ordinary shareholders.
The Board, with the assistance of the Investment Manager
monitors and reviews the broad structure of the Company's capital
on an ongoing basis. This review includes the planned level of
gearing, which takes account of the Manager's views on the market;
the need for new issues of equity shares; and the extent to which
revenue in excess of that which is required to be distributed
should be retained. The capital of the Company is made up of called
up share capital and reserves as detailed on the statement of
financial position on page 31 of the Report and Accounts.
19 Related Party Transactions
Calculus Capital Limited receives an investment manager's fee
from the Company. As disclosed in Note 4, for the year ended 31
December 2015, Calculus Capital Limited waived GBP68,455 (2014:
GBP24,912) of its fees. At 31 December 2015, there was GBP5,259 due
to Calculus Capital Limited (31 December 2014:due to Calculus
Capital Limited GBP65,556).
20 Other Transactions with the Investment Manager
The Company's qualifying investments are managed by Calculus
Capital Limited. John Glencross, a director of the Company, has an
interest in Calculus Capital Limited and is a director of Terrain
Energy Limited.
Calculus Capital Limited receives annual fees for monitoring and
for the provision of a director from Terrain Energy Limited, Human
Race Group Limited and Solab Group Limited. Calculus Capital
Limited receives a monitoring fee from Hembuild Group Limited and
from MicroEnergy Generation Services Limited. Calculus Capital
Limited receives a fee from Dryden Human Capital Group for the
provision of a director. Calculus Capital Limited also received a
fee from Terrain Energy Limited for office support services.
In the year ended 31 December 2015, the amount payable to
Calculus Capital Limited which was attributable to the investment
in the Company was GBP700 (2014: GBP2,875) for Dryden Human Capital
Group Limited, GBP829 (2014: GBP699) for Solab Group Limited,
GBP3,178 (2014: GBP3,138) from Human Race Group Limited, GBP598
(2014: GBP5,780) from Hembuild Group Limited, GBP2,681 (2014:
GBP2,640) from Terrain Energy Limited and GBP954 (2014: GBP235)
from MicroEnergy Generation Services Limited (all excluding
VAT).
21 Nature of financial Information
These are not full accounts in terms of Section 434 of the
Companies Act 2006. Full audited accounts for the year ended 31
December 2014 have been lodged with the Registrar of Companies. The
Report and Accounts for the year ended 31 December 2015 will be
sent to shareholders shortly and will be available for inspection
at 104 Park Street, London, W1K 6NF, the Company's registered
office, and will be published on www.calculuscapital.com, 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:
http://www.morningstar.co.uk/uk/NSM
The audited accounts for the year ended 31 December 2015 contain
an unqualified audit report.
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACSSFMFWIFMSEID
(END) Dow Jones Newswires
March 15, 2016 14:01 ET (18:01 GMT)
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