Seneca Growth Regulatory News (HYG)

19 Mar 2008 17:02

Hygea VCT plc19 March 2008 FOR IMMEDIATE RELEASE 19 March 2008 Hygea VCT plc Annual Report and Accounts Notice of Annual General Meeting The directors are pleased to announce the audited results of the Company for theyear ended 31 December 2007 and a copy of the Annual Report and Accounts isexpected to be sent to Shareholders on 3 April 2008. Set out below is a summaryof the audited Report and Accounts. In addition the Notice of Annual General Meeting is attached at the end of theReport and Accounts and is set out below. The AGM will be held at 8 Angel Court,London, EC2R 7HP on Tuesday, 22 July 2008 at 11:00am. This will be sent out withthe Report and Accounts. A copy of both documents is available from the registered office of the Companyat 8 Angel Court, London, EC2R 7HP. Financial Highlights Ordinary shares Year to 31 December 2007 Year to 31 December 2006---------------------------- ---------------- ---------------- Net assets (£'000s) 4,608 4,294Net revenue loss beforetax (£'000s) (164) (167)Net asset value pershare 61.2p 56.8pRevenue loss per share (2.2)p (2.2)p---------------------------- ---------------- --------------- Chairman's Statement I am pleased to present the 2007 annual report to shareholders in Hygea VCT plc. At 31 December 2007, the Company had a portfolio of 15 investments; 5 AIM quotedholdings and 10 unquoted holdings. It is encouraging to see that the net assetvalue has continued its modest appreciation at 61.2p at the 31 December 2007compared with 56.8p at 31 December 2006 and 60.2p at 30 June 2007. In my letter to shareholders on 14 January 2008, I reported on news and progressin some of our portfolio companies and further details are set out in theInvestment Review. Whilst our portfolio of unquoted companies has not changedduring the year, we have, during the year and since the year end, added to ourholdings in Hallmarq Veterinary Imaging Limited, Insense Limited, ProsurgicsLimited, Glide Pharmaceutical Technologies Limited and ImmunoBiology Limited.During the year we have taken the opportunity to realise eight of our AIMholdings in order to provide liquidity for these follow on investments as wellas working capital. Background Over the period, many of the Hygea investees have made good progress bringingstep change within their respective market niches by harnessing varioustechnologies to develop products and/or services with the potential to disruptcurrent players - most of the investees are now overcoming one of the keyhurdles, namely market acceptance. In contrast, many major bioscience corporations are tightening their budgets,putting pressure on prices and volumes of purchases and reduction in somedevelopment projects. Although apparently negative, this situation provides arange of new opportunities for most of the Hygea investees as they are wellplaced to benefit from companies increasing outsourcing and showing increasedinterest in licensing new products/knowhow. The investment climate within the bioscience sector remains sluggish as the lackof good exits is deterring some investors and making many major VC groups morecautious about prospects and therefore valuations. Despite this, a number of theinvestees have secured additional funding during the year, reflecting theirintrinsic value, and where appropriate your Board has made follow on investmentsrather than risk suffering dilution. Using the Investment Template described in the circular of 9 July 2007 providesa simple means of ensuring that we are supporting companies with a clear view oftheir future. We remain confident about delivering value to shareholders over the three tofive year period referred to in the circular dated 9 July 2007. This confidenceis based on the quality of the management teams within the portfolio and theHygea structure of the Board and the Commercial Advisory Committee. Investment Management Following the passing of the resolutions at our Extraordinary General Meeting on30 July 2007, the Board has assumed responsibility for investment management.This has led to a reduction in our expenses which have fallen from £249,000 in2006 to £193,000 in 2007. This latter figure includes the investment managementfee for the period to 30 July 2007 as well as costs associated with the EGM.Your Board is therefore confident on an ongoing basis that normal runningexpenses of the Company will be less than 3% of NAV per annum on the basis ofour current net asset value. NAV As stated above, the net asset value at 31 December 2007 was 61.2p. We havetaken the opportunity to increase the value of our holding in DxS Limited wheresignificant progress has been made during the year and we are valuing theholding in line with value attributed by the syndicate leader. As I have saidbefore, BVCA valuation guidelines have not allowed us to attribute significantlyhigher values to other unquoted investments at this stage despite encouragingprogress which is being made by many of them and which is referred to in theInvestment Review. Our AIM holdings are valued at bid price at 31 December 2007. Share issue The board has decided to take advantage of its authority to make a top-up issueof up to 750,000 shares at 50p, following interest shown by existingshareholders and other parties. If fully subscribed, this issue will raise inexcess of £360,000 net of expenses. The purpose of the issue is to provide theCompany with additional investment monies for existing investee companies andworking capital. UK taxpayers should receive 30% tax relief on applications.Existing shareholders will be given priority over other applicants andapplications will close on 30 April 2008, with an earlier allotment of sharesbeing made on 2 April 2008 to assist those earlier subscribers looking toqualify for tax relief in respect of the 2007/08 tax year. Whilst the issueprice represents a discount to net asset value of some 18%, in view of themodest size of the issue, your Board believe the overall dilution to bereasonable. The current share price has continued to reflect a large discount to net assetvalue mainly due to the Board's policy of not repurchasing shares in the market.However it is pleasing to note that third parties, including the Board, havepurchased shares in the market. VCT Qualifying Status PricewaterhouseCoopers LLP continues to provide the Board with advice on theongoing compliance with HM Revenue & Customs' rules and regulations concerningVCTs and have advised the Board that Hygea VCT is in compliance with theconditions laid down. Outlook During 2007, we took steps to reduce the running cost of the Company and webelieve we now have a portfolio of unquoted companies which will drive the netasset value per share forward over the next two to four years. At least three ofour companies have plans to obtain a quote on AIM or PlusMarkets in 2008 or 2009depending on market conditions. This should allow us to recognise an increase invalue. The listing of some of our holdings should also allow us to realise valueand recommence distributions to shareholders. James OtterChairman17 March 2008 Investment Review Review of portfolio Most of the portfolio companies are developing MedTech products and/or servicesproviding better patient outcomes at lower total cost. At a time when theeconomic background is challenging and the average age of populations is rising,well run companies with these characteristics continue to provide theopportunity for attractive returns, partly due to their total offering beingeven more financially compelling for customers in the current environment. During 2007, the Company made two new investments, EpiStem plc and OmegaDiagnostics plc, increased its holding in four unquoted companies and realisedeight of its AIM quoted holdings. Since the year end the Company has subscribed a further £100,000 in furtherrounds for both Hallmarq and Prosurgics and £36,865 for a further funding roundfor Insense. Investment portfolioUnquoted Qualifying Investment at Unrealised Carrying valueInvestments -------- cost (£'000) profit/(loss) at 31 December----------------- ------------ (£'000) 2007 (£'000) ------------ ------------ImmunoBiologyLimited 600 244 844----------------- -------- ------------ ------------ ------------ScancellLimited 725 - 725----------------- -------- ------------ ------------ ------------DxS Limited 325 236 561----------------- -------- ------------ ------------ ------------ProsurgicsLimited 390 (5) 385----------------- -------- ------------ ------------ ------------WoundSolutionsLimited 350 - 350----------------- -------- ------------ ------------ ------------HallmarqVeterinaryImagingLimited 785 (447) 338----------------- -------- ------------ ------------ ------------Insense Limited 245 59 304----------------- -------- ------------ ------------ ------------BioAnaLabLimited 279 - 279----------------- -------- ------------ ------------ ------------GlidePharmaceuticalTechnologiesLimited 105 173 278----------------------- ------------ ------------ ------------PurelyProteinsLimited 372 (372) ------------------------ ------------ ------------ ------------Total unquotedqualifyinginvestments 4,176 (112) 4,064----------------------- ------------ ------------ ------------ ------------ AIM-listedQualifying ---------- ------------ ------------ ------------Investments---------------EpiStemHoldings plc 61 16 77--------------- ---------- ------------ ------------ ------------Stem CellSciences plc 250 (177) 73--------------- ---------- ------------ ------------ ------------York Pharma plc 90 (26) 64--------------- ---------- ------------ ------------ ------------OmegaDiagnosticsplc 75 (30) 45--------------- ---------- ------------ ------------ ------------Phoqus plc 150 (115) 35--------------- ---------- ------------ ------------ ------------TotalAIM-listedqualifyinginvestments 626 (332) 294----------------------- ------------ ------------ ------------ ------------Totalinvestments 4,802 (444) 4,358--------------- ---------- ------------ ------------ ------------ Ten largest holdings Readers wishing to obtain easily further information on portfolio companiesshould click on the Investee Companies page on www.hygeavct.com. ImmunoBiology Limited ImmunoBiology is a biotechnology company that is focused on developing productsthat could have applications in the treatment of cancer and certain infectiousdiseases. The company's technology is based on a recent discovery that a groupof proteins known as 'heat shock proteins' has a pivotal role in controlling thenormal immune response to infections. During the year the Company subscribed£300,000 for further shares. Initial investment November 2005 Cost £600,000 Valuation at 31 December 2007 £844,000 Basis of valuation Last funding round Equity held 6% Website www.immbio.com Audited financial information Period ended 31 May 2006 £000's Sales 28 Loss before tax (495) Retained losses (495) Net assets 1,213 Scancell Limited Scancell is a Nottingham-based biotechnology company that is developing apipeline of drugs to target various types of cancer. Its accounts for the yearto 30 April 2007 reflect the sale of its pipeline of antibodies in a deal thathad a total value of up to £4.85 million. Initial investment December 2003 Cost £725,000 Valuation at 31 December 2007 £725,000 Basis of valuation Cost Equity held 13% Website www.scancell.co.uk Audited financial information Period ended 30 April 2007 £000's Sales 2,176 Profit before tax 1,039 Retained profit 891 Net assets 1,432 DxS Limited DxS is a leading provider of genetic analysis services to pharmaceuticalcompanies and contract research organisations. The company's services includethe provision of genetic testing using single nucleotide polymorphism technologyand DNA extraction and banking. David Evans who is a member of Hygea'sCommercial Advisory Committee and Chairman of a number of AIM quoted healthcarediagnostic companies is Chairman of DxS. During 2007 DxS won a $1.2 millionorder from a major US pharmaceutical company. Initial investment April 2004 Cost £325,500 Valuation at 31 December 2007 £561,100 Basis of valuation Fair value Equity held 8% Website www.dxsgenotyping.com Audited financial information Period ended 30 June 2006 £000's Sales 1,164 Loss before tax (502) Retained losses (456) Net assets (2,934) Prosurgics Limited Prosurgics is a leading image-guided surgical robotics company. The key progressduring the year has been in developing Version 2 of the camera holding robot forkeyhole surgery - this will be much cheaper and smaller than Version 1, with theadded advantage of generating recurring revenue through incorporating aconsumable - commercial launch is due in Q4 2008, with the benefit of Prosurgicsalready having an established position in this market. Initial investment January 2006 Cost £390,000 Valuation at 31 December 2007 £385,000 Basis of valuation Last funding round Equity held 7% Website www.prosurgics.com Audited financial information Year ended 31 December 2006 £000's Sales 209 Loss before tax (1,297) Retained losses (1,297) Net assets 265 Wound Solutions Limited Wound Solutions is working on the development of a product that has applicationsin the treatment of difficult to heal wounds such as leg ulcers and foot ulcers. Initial investment May 2006 Cost £350,000 Valuation at 31 December 2007 £350,000 Basis of valuation Cost Equity held 3% Website www.woundsolutions.com Audited financial information Period ended 30 June 2006 £000's Sales nil Loss before tax (926) Retained losses (926) Net assets 3,330 Hallmarq Vetinerary Imaging Limited Hallmarq specialises in developing low cost magnetic resonance imaging systems.The first application is for equine vets to enable the diagnosis of causes oflameness in horses that are not identifiable by any other method. The keydevelopment has been the launch of Version 2 of the scanner, which has had asignificant beneficial impact on growth in scan fees (the key performanceindicator). Initial investment August 2005 Cost £785,000 Valuation at 31 December 2007 £338,000 Basis of valuation Last funding round Equity held 8% Website www.hallmarq.net Audited financial information Year ended 31 August 2007 £000's Sales 2,008 Adjusted loss before tax (792) Retained losses (1,522) Net assets 1,026 Insense Limited Insense is working on the development of an innovative product range for thewound care market - commercial launch started in January 2008, against thebackground of trials showing significant improvement in patient outcomes atlower cost. Initial investment July 2003 Cost £245,000 Valuation at 31 December 2007 £304,000 Basis of valuation Last funding round Equity held 3% Website www.insense.co.uk Audited financial information Year ended 31 December 2006 £000's Sales 15 Loss before tax (1,033) Retained losses (1,033) Net assets 252 BioAnaLab Limited BioAnalab is a leader in the provision of specialist analytical services topharmaceutical and biotechnology companies in the growing sector ofbiopharmaceuticals. Its sales in the year to 31 October 2007 grew 59%. Initial investment May 2005 Cost £278,600 Valuation at 31 December 2007 £278,600 Basis of valuation Cost Equity held 14% Website www.bioanalab.com Audited financial information Year ended 31 October 2007 £000's Sales 1,843 Profit before tax 236 Retained profit 233 Net assets 984 Glide Pharmaceutical Technologies Limited Glide Pharma has developed a needle-free drug delivery technology known as Glidethat is able to deliver a drug formulation in a solid form directly through theskin of a patient. The Glide technology has been shown to have a number ofbenefits when compared to other delivery mechanisms. In trials on humanvolunteers, Glide's device was shown to be preferable to injection using astandard needle and syringe. Initial investment November 2005 Cost £105,000 Valuation at 31 December 2007 £277,500 Basis of valuation Last fund round Equity held 2% Website www.glidepharma.com Audited financial information Year ended 31 March 2007 £000's Sales 45 Loss before tax (1,686) Retained losses (1,475) Net assets 649 EpiStem Holdings plc EpiStem listed on AIM in April 2007. Its knowledge is based on over 30 yearsresearch at Christies Hospital, Manchester on the behaviour of adult epithelialstem cells - epithelial cancers account for over 80% of adult cancers. It hasthe attractive business model of a profitable Contract Research Organisationdivision, a Biomarker division and a Novel Therapies division. Initial investment April 2007 Cost £61,700 Valuation at 31 December 2007 £77,400 Basis of valuation Bid price Equity held