Calculus Vct Regulatory News (CLC)

Calculus VCT plc

Half Yearly Report for the six months ended 31 August 2016

INVESTMENT OBJECTIVE

The Company's principal objectives for investors are to:

● invest in a portfolio of Venture Capital Investments that will provide investment returns that are sufficient to allow the Company to maximise annual dividends and capital growth over the medium to long term;

● generate sufficient returns from a portfolio of Venture Capital Investments that will provide attractive long-term returns within a tax efficient vehicle;

● review the appropriate level of dividends annually to take account of investment returns achieved and future prospects; and

● maintain VCT status to enable qualifying investors to retain their income tax relief of up to 30 per cent. on the initial investment and receive tax-free dividends and capital growth.

FINANCIAL REVIEW

Ordinary Share Fund

C Share Fund

D Share Fund

CHAIRMAN'S UPDATE

Performance Summary

The accumulated shareholder value per Ordinary share is 98.43 pence. The value of the qualifying portfolios for the Ordinary shares and the C shares fell over the period, reflecting a challenging period for smaller companies' valuations and extreme volatility in financial markets. The net asset value per Ordinary share fell in the period to 31 August 2016 to 28.38 pence compared to 31.36 pence as at 29 February 2016. The valuations of Brigantes Energy Limited and Corfe Energy Limited were written down by 86% and 70% respectively during the period due to the unsuccessful Woodburn Forest-1 well and the withdrawal of a party that had committed to carry both Brigantes and Corfe on the P1918 licence. Since the period end the companies have been further written down as they no longer have sufficient funding needed to explore any potential value in their licences.

The accumulated shareholder value per C share is 97.66 pence. The net asset value per C share was 75.16 pence as at 31 August 2016 compared to 77.27 pence as at 29 February 2016. This was due to the payment of a dividend of 4.5 pence per C share in July 2016. This dividend payment took cumulative dividends paid on the C shares since inception to 22.5 pence.

The net asset value on the D shares is 97.63 pence.

The VCT has met its objective for the Ordinary shares stated at the launch of the Ordinary shares tranche of paying at least 70 pence in tax free dividends after five years and it remains the Director's objective to return 70 pence on the C shares tranche by March 2017. There is some evidence, however, that the aggressive dividend commitment has come at a cost to the capital growth of these tranches. The early sale of some investments required to meet the income target, have reduced the capital retained to generate growth. It is for this reason that the dividend target set for the D shares is a regular annual dividend of 4.5% of NAV.

Two new investments were made on behalf of the D share portfolio during the period, and a further investment has been made since the period end. £50,000 was invested in novel therapeutic vaccine developer, Scancell Holdings plc, in April 2016. £75,000 was invested in personalised medicine and biotechnology company, Genedrive plc, in July 2016, and £75,000 was invested in Manchester based drug discovery and development company, C4X Discover Holdings plc in September 2016. Further details on these investments can be found in the Investment Manager's Report below.

Since the period end, Human Race Group Limited and Metropolitan Safe Custody Limited have been sold from the Ordinary and C share portfolios, achieving a returns of 32% and 81% respectively.

Notwithstanding the recent fall in NAV, as the portfolio continues to develop and mature, it should lead to further value creation and provide opportunities for further profitable realisations.

Dividends 

Ordinary shares

The Company is delighted to announce that in order to return realisation proceeds from the sale of Metropolitan Safe Custody Limited and Human Race Group Limited to investors, a special dividend of 7.0 pence per Ordinary share will be paid on 25 November 2016 to shareholders on the register on 4 November 2016.

C shares

The directors paid a 4.5p dividend on the C shares portfolio in August 2016 bringing cumulative dividends paid to 22.5p. The directors' objective continues to be to provide an interim return to C shareholders of 70p per share by 14 March 2017.

D shares

In line with the dividend policy set out in the Company's prospectus dated 26 October 2015, it remains the Director's objective to pay a dividend of 4.5% of NAV to D Shareholders with the first relevant dividend to be in respect of the year ended 28 February 2017.

Merger

At the Extraordinary General Meetings in November 2015, shareholders approved the issue of up to £8 million of D shares by means of an offer for subscription. At the same meetings, shareholders approved mergers of the Ordinary and C share classes into a single class with the D shares following realisation or liquidation of the Structured Products investments attributable to those classes. The directors anticipate that the Ordinary shares and C shares class will be merged into the D shares class on a relative net asset value basis. The merger is likely to occur after the final structured product on the C shares has been realised and the special interim dividend paid on the C shares. The directors anticipate this will occur in May 2017 using the net asset value for the year to 28 February 2017.

D share issue

Since the period end, the offer for subscription for D shares of 1p each that opened on 26 October 2015, closed on 21 October 2016. An allotment of D shares in respect of the 2016/2017 tax year is expected to take place imminently.

The board were pleased to announce the intention to launch a further offer for subscription for D Shares following the close of the current offer, with the shares to be issued in the 2016/17 and 2017/18 tax years.

INTERIM MANAGEMENT REPORT

Venture Capital Investments

Portfolio developments

Calculus Capital Limited manages the Company's portfolio of Qualifying Investments. In general, we prefer to take stakes of sufficient size to enable us to play an influential role in helping the companies develop. Investments may be by way of loan stock and/or preference shares as well as equity. This provides income for the Company which helps us to pay dividends and provides a measure of risk mitigation.

The Ordinary Share Fund, C Share Fund and D Share Fund are managed separately although they all have the same investment remit with regards to the qualifying portfolio and, therefore, have similar portfolios. This is particularly the case for the Ordinary and C share portfolios. As at 31 August 2016, the Ordinary, C and D Share Funds had ten Qualifying Investments, nine Qualifying Investments and two Qualifying investments respectively.

An update on the portfolio companies has been provided below:

AnTech Limited (Ordinary share portfolio)

AnTech Limited ("Antech") is a specialist oil and gas engineering company both manufacturing products and providing services for directional coiled tube drilling.

AnTech's Products Division supplies customised and standard products used mainly in production. Its Coiled Tube Drilling Services Division has developed a new generation of directional drilling tools which transform the manner and efficiency with which oil and gas wells can be drilled with coiled tubing. These tools, COLT and POLARIS, are effective for interventions in existing wells to enhance production yield and extend well life. The tools have been used commercially in France in late 2014 and Ohio in 2015 with good results. In October this year, AnTech will drill its first well for Aramco in Saudi Arabia; this is a significant step for the company as talks are already underway for multiple further wells if the first is successful.

In February 2016, funds managed by Calculus Capital made a £2.35m investment in AnTech in order to provide working capital for the anticipated growth of the Services business.

Brigantes Energy Limited and Corfe Energy Limited (Ordinary share portfolio)

Brigantes Energy Limited ("Brigantes") and Corfe Energy Limited ("Corfe") were originally intended as one investment, but were split because it enabled a larger fundraising under the then rules for tax advantaged investment schemes.

Brigantes currently owns interests in the following licences: PL1/10 onshore Northern Ireland, P2123 offshore Northern Ireland, P1918 adjacent to Wytch Farm in Dorset and PEDL070 which contains the Avington oilfield in Hampshire. The net asset value has been written down by 86% due to the unsuccessful Woodburn Forest-1 well and the withdrawal of a party that had committed to carry Brigantes on the P1918 licence.

Corfe has interests in five licences: Osprey, Lulworth Banks and Ballard Point (adjacent to Wytch Farm) in Dorset, Burton on the Wolds in the East Midlands and Avington oilfield in Hampshire. Corfe is in a similar position to Brigantes and has been written down by 70% following the withdrawal of its P1918 funding partner.

Since the period end the companies have been further written down as they no longer have sufficient funding needed to explore any potential value in their licences.

Dryden Human Capital Group Limited (Ordinary share portfolio)

Dryden Human Capital Group Limited ("Dryden") is headquartered in the UK and specialises in the actuarial, insurance and compliance recruitment sector. Actions undertaken over the last 12 months have significantly improved operational processes within the business and elevated the competitive positioning of the Company's brands. The Company has focused on delivering exceptional service and added value to clients and candidates. This has enabled the Company to develop long term relationships with key clients and obtain exclusive contracts for recruitment mandates. The Company has a full pipeline of 'live vacancies' to fill and is continuing to look for opportunity in the current uncertain economic, political and regulatory environment.

The company remains subject to the close attention of Calculus Capital.

Genedrive plc (D share portfolio)

Genedrive provides molecular diagnostics tests delivered at or near the point of care for the diagnosis of infectious diseases. The Genedrive® platform and its first tuberculosis ("TB") test has been successfully commercially launched in India in conjunction with Xcelris Labs to provide rapid molecular identification and antibiotic resistance/drug susceptibility testing for TB. This launch follows hot on the heels of David Budd's appointment as CEO in March, David has a number of years' experience in successfully launching diagnostic tests within Danaher, Siemens and Bayer. Genedrive® is designed to bring the power of central laboratory molecular diagnostics to the Point of Care setting in a device that has a lower cost and lower time to result than molecular alternatives, just 60-90 minutes. Alongside this, Genedrive announced the successful completion of its first external assessment of its Point of Care Hepatitis C test at the Institut Pasteur, Paris. The Hepatitis C test forms part of a suite of tests to be subsequently launched on the Genedrive® platform including HIV and Hepatitis B. In addition, the Company has been allocated funding of $5.3 million from the US Department of Defence to develop Genedrive® to be a handheld biohazard identifier, should this stage be successful a further $2.5m will be granted. The contract research division, which was the company's original activity, is now largely unrelated to the company's core work in diagnostic devices, advisors have been appointed to assess the strategic options for this side of the business. The recent funding round will enable further development and commercialisation of the Genedrive platform.

Human Race Group Limited (Ordinary and C share portfolios)

Human Race owns and operates over 60 mass participation sports events for over 90,000 participants of all abilities and ages, making it the largest owner and deliverer of such events in the UK. The portfolio includes the London Winter Run (which on launch in 2015 was the largest inaugural 10k run ever in the UK with 14,000 entries in year one), Dragon Ride, Tour de Yorkshire Ride and the Windsor Triathlon.

In late September, Human Race was sold to Amaury Sports Organisation (ASO), the owner of the Tour de France and leading European mass participation sports event organiser. Whilst the terms of this transaction have not been disclosed, the total return to the Calculus VCT on the £370,500 equity and loan investment was 32% after a 4½ year investment period.

Metropolitan Safe Custody Limited (Ordinary and C share portfolios)

Metropolitan runs two safe custody sites, one in Knightsbridge, the other in St. Johns Wood. These profitable, stable businesses serve several thousand customers, providing access to the vaults seven days a week. The investment was made in 2012 and Metropolitan has performed well and paid steady dividends. The shares were subscribed for at 6.319p per share and were sold at 11p per share in September 2016, giving a total investment return including dividends of 81%.

MicroEnergy Generation Services Limited (Ordinary share portfolio)

MicroEnergy Generation Services Limited ("MicroEnergy") owns and operates a fleet of 168 small onshore wind turbines (

Picos Limited ("Benito's Hat") (C share portfolio)

Offering tailor-made burritos, tacos and salads, Benito's Hat is a Mexican-themed restaurant brand centred on an authentic experience and high-quality food, at an affordable price point. The brand has a devoted customer following and has won many accolades from food critics. In light of the need for strategic and operational change, the CEO hired in 2014 has been replaced and the Board has reappointed Ben Fordham, the Founder, as CEO. The core principles of the business remain first class engaging service, high quality food and drink with authenticity in a vibrant and fun environment. These aspects, coupled with a unique evening proposition, continue to separate the business from its competition.

Quai Administration Services Limited (C share portfolio)

Quai Administration Services Limited ("Quai") provides platform technology combined with back office administration services for the high-volume personal savings industry. Quai's platform administers thousands of individual savings plans at a fraction of the cost incurred by established insurance companies and wealth managers. Mass distribution of individual savings plans is pressurising providers to offer efficient, high-volume, low-margin schemes.

Quai is progressing well and now has eight live customers on its platform and advanced discussions with a number of additional customers. Financial performance in the year to October 2015 was similar as the prior year as revenue growth was slower than anticipated. Recent wins have targeted clients with large books of assets under management which will result in revenues growing more quickly.

In February 2016 funds managed by Calculus Capital Limited participated in a further funding round alongside members of the Quai board and other private individuals, to accelerate development of the Company's technology platform and expand the sales and marketing teams.

Scancell Holdings plc (C and D share portfolios)

Scancell Holdings plc ("Scancell") is developing two distinct immune-oncology platforms, each with broad applications. ImmunoBody® is a DNA vaccine which stimulates high avidity (i.e. powerful) anti-tumour T cells to target cancer cells for use in combination with a category of cancer drugs called checkpoint inhibitors. Moditope® targets modified antigens to stimulate a powerful anti-tumour T cell response for hard to treat cancers. Both platforms are targeting multi-billion dollar markets. The scientific principle behind Moditope® is autophagy which is the hitherto obscure area of medical research which was the subject of this year's Nobel Prize for Medicine.

SCIB1 (based on the ImmunoBody®) platform has achieved unprecedented survival rates in a phase I/II clinical trial covering twenty patients for malignant melanoma and a phase II combination trial of SCIB1 and a checkpoint inhibitor will commence out of Massachusetts General Hospital in Boston. A phase I trial for Modi-1, based on the Moditope® platform, targeting triple negative breast cancer, osteosarcoma and ovarian cancer is scheduled for 2018.

In April, Scancell completed a £6 million fund raising to prepare for the SCIB1 combination and Modi-1 trials. In June, Scancell had to suspend the extension of the SCIB1 phase 1/2 trial due to drug supply issues; this has since been rectified and manufacturing will be undertaken by Eurogentec in Belgium. Eurogentec is a world class manufacturer of DNA and recombinant proteins, and the material will be compliant with Good Manufacturing Practices (GMP) and Food and Drug Administration (FDA) requirements.

Solab Group Limited (Ordinary and C share portfolios)

Solab Group Limited ("Solab") (formerly Hampshire Cosmetics) is a long established manufacturer of fragrances, shampoos and skincare products for third party customers, including Penhaligon's and Philip Kingsley. The company has a good reputation as a supplier to both major cosmetics brands and smaller independents.

This cosmetics business has been affected by difficult market conditions generally and by a significant reduction in volumes from its largest customer, The Body Shop as a result of Body Shop's decision to in-source manufacturing to French factories following its acquisition by L'Oreal. New business from third parties has, to date, only partially replaced that lost turnover, although Solab has had some success in winning new customers and enlarging existing accounts. Solab has recently recruited Julien Laporte, a former CEO of Crabtree & Evelyn with extensive experience at L'Oreal, as a part time director to increase sales further.

The company has also sought more balance to its portfolio by investing in its animal care and veterinary orientated activities. Revenues from this area have increased substantially, with near break-even achieved in 2015 and a small profit anticipated this year.

Terrain Energy Limited (Ordinary and C share portfolios)

Terrain has interests in twelve petroleum licences; Keddington, Kirklington, Dukes Wood, Burton on the Wolds, Whisby and Louth in the East Midlands, Larne and an offshore licence to the north of Larne in Northern Ireland, Brockham and Lidsey in the Weald Basin and Egmating and Starnberger See in Germany. The Whisby-6 well was successfully drilled in March/April 2016 and is capable of producing c. 180 barrels of oil a day (net 153bopd to Terrain). A first well on the Larne licence targeting the Woodburn prospect was drilled in May/June 2016 but did not encounter any commercial hydrocarbon accumulation - the data collected in the well is being evaluated to decide where to focus future exploration activity in the basin. The company is currently producing from wells at Whisby and Keddington; Brockham and Lidsey are currently shut in until the oil price recovers. A new well at Lidsey and a sidetrack at Brockham are due to be drilled in the next 12 months.

The One Place Capital Limited ("Money Dashboard") (C share portfolio)

Money Dashboard empowers consumers to take control of their finances. The company has built a database of over 100,000 users whose financial transactions from all their internet enabled current accounts, savings accounts and credit cards are automatically updated in one secure place, providing these consumers with a free-to-use view of their financial lives. Money Dashboard aggregates this data on an anonymous basis to analyse consumer spending trends which can be sold to institutional investors and others.

A new CEO, Steve Tigar, was appointed in October 2015. Under his leadership, the cash flow generation of the Company has significantly improved with the Company's cost base reduced and growth in the Data Insights' pipeline underpinned by large recurring contracts with global institutional investor clients. New product developments, including a white label solution for financial advisors and a mortgage affordability assessment product, are expected to drive further revenue growth in 2017. Externally, the introduction of the Open Banking Standards from Q1 17 is expected to be a significant milestone for Money Dashboard; with the potential to transform the rate of data user acquisition, significantly enhancing the efficacy of the Company's Data Insights product.

Tollan Energy Limited (Ordinary share portfolio)

Tollan Energy Limited ("Tollan") owns a portfolio of solar systems on roof tops in Northern Ireland. The solar generating capacity, which is installed on residential and some commercial roofs in the Belfast area, benefits from Northern Ireland Renewable Obligation Certificates (NIROCs). In addition, the company benefits from the export tariff for any surplus electricity not used by the homeowner that is exported to the grid. The portfolio is now fully installed and comprises 334 systems (1.55MW). The systems generated 1276MWh in the year to March 2016. We are looking to divest our investment in Tollan within the next 6 months.

Venn Life Sciences plc (C share portfolio)

Venn Life Sciences plc ("Venn") is a growing Clinical Research Organisation (CRO), providing clinical trial management and resourcing solutions to pharmaceutical, biotechnology and medical device clients. Venn is consolidating a number of small European CROs to build a mid-sized CRO focused on the European market, offering clients a full service, multi-centre capability in Phase II-IV trials across a range of principal disease areas. Venn ended 2015 on very strong footing with revenue up 135% year on year and its first EBITDA profit of €400k (versus a loss of €1.5m for 2014). This marked improvement was due to a combination of small, value add acquisitions and a strong rate of new business wins. Since the end of the year, Venn have signed a new contract worth €2.8m with a European Biotechnology client for a Phase II study for Multiple Sclerosis starting in October 2016. We do not believe this positive performance is fully reflected in the share price.

Developments since the period end

In September 2016, £75,000 was invested for the D share portfolio in Manchester based drug discovery and development company, C4X Discovery Holdings plc. Other than the sales of Human Race and Metropolitan described above, there have been no developments since the year end.

Non Qualifying Portfolio

The D shares portfolio invested in £480,000 in three money market funds during the period in accordance with its investment policy: Aberdeen Sterling Liquidity Fund, Goldman Sachs Sterling Liquidity Fund and Fidelity Sterling Liquidity Fund.

Structured Products

There is only one remaining Structured Product which is held in the C share portfolio and there has been little change over the past six months in the portfolio.

Despite the recent volatility in the market, the FTSE 100 continues to support the valuation in the Structured Products portfolio. The index has risen from its level of 6,781.51 as at 31 August 2016 and it continues to sit comfortably above the product's strike level.

The Structured Products portfolio will achieve its target return subject to the Final Index Level of the FTSE 100 being higher than the Initial Index Level. The capital is at risk on a one-for-one basis ("CAR") if the FTSE 100 Index falls more than 50 per cent. at any time during the investment term and fails to fully recover at maturity such that the Final Index Level is below the Initial Index Level. As at 31 August 2016, the following Structured Products investment was held:

C Share Fund Structured Products Portfolio as at 31 August 2016

The total current valuation of the amount invested in Structured Products in the C Share Fund as at 31 August 2016 was £591,295.

* The Final Index Level is calculated using 'averaging', meaning that the average of the closing levels of the FTSE 100 is taken on each Business Day over the last 2-6 months of the Structured Product plan term (the length of the averaging period differs for each plan). The use of averaging to calculate the return can reduce adverse effects of a falling market or sudden market falls shortly before maturity. Equally, it can reduce the benefits of an increasing market or sudden market rises shortly before maturity.

Calculus Capital Limited Investec Structured Products

24 October 2016 24 October 2016

INVESTMENT PORTFOLIO AS AT 31 AUGUST 2016

- ORDINARY SHARE FUND

% of Net Assets

Asset class - % of Portfolio

INVESTMENT PORTFOLIO AS AT 31 AUGUST 2016

- C SHARE FUND

% of Net Assets

Asset class- % of Portfolio

INVESTMENT PORTFOLIO AS AT 31 AUGUST 2016

- D SHARE FUND

% of Net Assets

Asset class - % of Portfolio

PRINCIPAL RISKS

The principal risks facing the Company are substantially unchanged since the date of the Annual Report and Accounts for the year ended 29 February 2016 and continue to be as set out on pages 18 to 19 of that report.

Risks faced by the Company include, but are not limited to, loss of approval as a venture capital trust and other regulatory breaches, risks of making Venture Capital Investments, risks attaching to investment in Structured Products, liquidity/marketability risk, changes in legislation/taxation, engagement of third party advisers, C shares versus Ordinary shares and D shares, market price risk and credit risk.

GOING CONCERN

After making enquiries, and having reviewed the portfolio, balance sheet and projected income and expenditure for the next twelve months, the Directors have a reasonable expectation that the Company has adequate resources to continue in operation for the foreseeable future. The Directors have therefore adopted the going concern basis in preparing these Accounts.

DIRECTORS' RESPONSIBILITY STATEMENT

The half-yearly financial report, which has not been audited or reviewed by the Company's auditors is the responsibility of, and has been approved by, the Directors. The Directors confirm that to the best of their knowledge the half-yearly financial report, which has been prepared in accordance with the UK Listing Authority Disclosure and Transparency Rules ("DTR") and in accordance with the Financial Reporting Council's Financial Reporting Standard 104:'Interim Financial Reporting' gives a true and fair view of the assets, liabilities, financial position and the net return of the Company as at 31 August 2016.

The Directors confirm that the Chairman's Update, the Investment Management report, the disclosures above and notes 10 and 11, include a fair review of the information required by DTR 4.2.7R, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year, and DTR 4.2.8R.

The Directors of Calculus VCT plc are:

Michael O'Higgins

Kate Cornish-Bowden

Steve Meeks

John Glencross

By order of the Board

Michael O'Higgins

Chairman

24 October 2016

CONDENSED INCOME STATEMENT

FOR THE PERIOD FROM 1 MARCH 2016 TO 31 AUGUST 2016

(UNAUDITED)

* These figures are audited.

CONDENSED INCOME STATEMENT

FOR THE PERIOD FROM 1 MARCH 2016 TO 31 AUGUST 2016

(UNAUDITED)

* These figures are audited. 

CONDENSED INCOME STATEMENT

FOR THE PERIOD FROM 1 MARCH 2016 TO 31 AUGUST 2016

(UNAUDITED)

* These figures are audited.

CONDENSED INCOME STATEMENT

FOR THE PERIOD FROM 1 MARCH 2016 TO 31 AUGUST 2016

(UNAUDITED)

* These figures are audited. The total columns of these statements represent the Total Comprehensive Income Statement of the Ordinary Share Fund, C Share Fund and the D Share Fund. The supplementary revenue return and capital return columns are both prepared in accordance with the Association of Investment Companies ("AIC") Statement of Recommended Practice ("SORP"). No operations were acquired or discontinued during the period. All items in the above statements derive from continuing operations. There were no recognised gains or losses other than those passing through the Income Statement. The notes form an integral part of these Accounts.

CONDENSED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD FROM 1 MARCH 2016 TO 31 AUGUST 2016

(UNAUDITED)

* These figures are audited. The notes form an integral part of these Accounts.

CONDENSED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD FROM 1 MARCH 2016 TO 31 AUGUST 2016

(UNAUDITED)

 * These figures are audited. The notes form an integral part of these Accounts. 

CONDENSED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD FROM 1 MARCH 2016 TO 31 AUGUST 2016

(UNAUDITED)