RNS Number:2292E
Sitka Health Fund VCT PLC
20 September 2007
Sitka Health Fund VCT plc
20 September 2007
Objective of the Fund
The investment objective of the fund is to provide investors with an attractive
return by maximising the stream of dividend distributions from the capital gains
and income generated from a diversified portfolio of investments in the health
sector.
Investment Policy
* To create a balanced portfolio of growth companies in the health sector
* To invest in companies which have proven management and technology or
business propositions which are protected by patents or know how and where
there are barriers to entry for competitors
* Investments may include unquoted early-stage companies, those requiring
development capital and companies raising money on AIM
Portfolio highlights
* New investment of #850k completed in Onyx Scientific Limited, a
chemistry services company, alongside Noble VCT
* ImmunoDiagnostics Systems revenues up 22% to #9.9m and earnings before
interest and tax of #2.26m, up from #1.25m
* Sitka invested #210k in Digital Healthcare in a further financing of
#2m provided largely by existing investors;
* Biovex secured an additional investment of $22m including new USA based
investors and in which Sitka made a follow-on investment circa #116k
Key points
* Net assets per share of 83.8p after dividend of 5p per share distributed
during this half year
* Interim dividend of 1.5p per Ordinary share payable on 30 November 2007
* Completed new Ordinary Share Issue of #4.7m increasing assets to #15.8m
* Dr Stephane Mery joins the team and re-enforces the health sector
expertise of NFM
Chairman's Statement
I am pleased to present the sixth Interim Report of the Sitka Health Fund VCT in
respect of the half-year ended 31 July 2007. During the past six months the Fund
has been increased in size through a fund raising of #4.7m bringing the total
net assets of the Fund to #15.8m This will permit the fund to make follow on
investments in the most promising companies in the portfolio, and also to carry
out new investments in order to increase portfolio diversification.
Review of performance
The Net Asset Value of the ordinary shares as at 31 July 2007 was 83.8p
following a dividend of 5p per share which was paid to all ordinary shareholders
in May 2007. This compares to a Net Asset Value of 89.5p on 31 January 2007.
Taking the 5p dividend into consideration, the Net Asset Value has decreased by
0.8% during the six month period. However over the last 12 months, the Net Asset
Value has moved from 83.4p on 31 July 2006 to 90.8p on 31 July 2007 including
the cumulative dividends of 2p paid in October 2006 and 5p paid in May 2007.
This represents a growth of total return (Net Asset value plus distributed
dividends) of 9% over the last 12 months.
Portfolio Development
Over the last 5 years, Sitka VCT has maintained a consistent investment strategy
of diversification within the healthcare sector. Investments have been made in
the following sectors; Drug Development (4 investments), Medical Devices (4),
Specialty Pharma (5), Healthcare Services (3) and Diagnostics (3). The value of
the nine unquoted investments now stands at #6.4m, an uplift of 6.7 % over cost.
During the period a new investment of #850k was completed in Onyx Scientific
Limited. Onyx is a well established company which provides chemistry services to
a range of pharmaceutical companies. The investment was made alongside Noble VCT
who also invested #850k. Further follow on investments were completed in a
number of developing companies including Digital Healthcare Limited, Biovex
Limited, DeltaDOT Limited and Amura Holdings Limited.
Biovex has made good progress in clinical studies for the treatment of melanoma,
a skin cancer, and Amura has demonstrated that its protease inhibitors have the
potential to treat osteoporosis in preclinical studies. DeltaDOT has started
selling its research analytical machines to major pharmaceutical and
biotechnology companies as well as to leading medical research centres as a
result of which the third tranche of investment of nearly #84k was advanced.
Turning to the quoted portfolio, there have been significant movements, both
negative and positive during the period. The number of quoted investments rose
from 7 to 10 over this half year. Investments were completed in Sinclair Pharma
plc, Maelor plc and CeNeS Pharmaceuticals plc and follow on investments were
made in Vectura Group plc, and Genosis plc. The merit of holding quoted stocks
in the portfolio has been demonstrated by the ability to realise gains earlier
than it would be possible in a totally quoted portfolio. Selective sales
realised #295k, generating a net gain of #117k during the period. Overall, the
value of the ten quoted companies stands at #3.5m which is 89% of cost.
During the period, the deal flow was strong and the manager continued to be
highly selective when choosing new investments. The objective is to use the # 6m
in cash or cash equivalent available for investment to grow the number of
companies held to over twenty. Two or three new investments in unquoted
companies are expected to be completed in the second half of the year.
Dividend Payment
During the six month period to 31 July 2007 and as stated above, a number of
gains were achieved on partial sales of quoted investments generating profits of
#117k over a cost of #178k. Based on these profits and on those achieved in the
previous period, the directors have agreed to pay an interim dividend of 1.5p,
to be paid on 30 November 2007.
VCT Legislation
The Chancellor of the Exchequer made a number of changes to the qualification
rules for VCTs in his 2007 budget. These changes, while they may materially
alter the risk profile of future VCTs, are not expected to affect Sitka VCT's
investment strategy. The main rule changes were that in future new portfolio
companies must have a maximum of 50 employees and a maximum of #2m gross assets
at the time of investment. The majority of Sitka's existing portfolio companies
would have met these conditions at the time of investment.
Future fund raising
The Board has decided that it is appropriate to increase the size of the Fund.
It will therefore use the limited fund raising powers permitted under the
Prospectus Directive to raise up to Euro2.5m, equivalent to #1.69m, without a full
prospectus. We expect to issue the relevant documentation early in 2008. Prior
to this we will be holding an Extraordinary General Meeting to extend the life
of the Company.
Noble Fund Managers Limited
The investment management team at Noble Fund Managers Limited ("NFM") has
recently been considerably strengthened and the VCT funds under management have
been increased with NFM now managing four VCTs with total net assets of #80m.
Dr Stephane Mery has recently joined NFM reinforcing the manager's expertise in
healthcare. He gained his experience in the pharmaceutical industry and more
recently in managing the Bloomsbury Bioseed Fund, whose investors include
University College London, The School of Pharmacy and Cancer Research UK, which
is managed by NFM.
NFM has also recently strengthened its expertise in the AIM sector. First State
AIM VCT, now renamed Noble AIM VCT, with net assets of #34m, and one of the
highest performing AIM VCTs over the past two years, joined NFM in June 2007
together with its manager, Dr Paul Jourdan.
We expect that these moves will enable the Fund Manager to enhance the service
it provides to your company through the increased expertise available within
NFM.
Composition of the Board
There have also been a number of changes to the Board of your company. After a
formal process we appointed Charles Pinney, who is also director of the Noble
AIM VCT plc, to the Board of the Sitka VCT on 27 July 2007. I would formally
like to welcome Charles to the Board. He has many years of experience in the
investment management business. We also decided that from now on, in compliance
with best practice, we will only have completely independent directors on the
Board and therefore Dr Louis Nisbet and Gerard Tardy stepped down as Directors
of the Company, with effect from 27 July 2007. They will continue in their
executive capacity as Fund Manager to Sitka VCT and will generally attend all
Board meetings.
Outlook
The directors review regularly the strategy of the Sitka VCT and remain
convinced that over the long term the sector will continue to provide good
investment opportunities. While the market capitalisation of the world's ten
largest pharmaceutical companies has declined by almost 10% over the last twelve
months, the UK Healthcare Index has increased by 22%, demonstrating that there
are a good number of more agile companies operating in the UK Healthcare sector
which are experiencing fast growth and increasing in value. Finally the exposure
of our company to changes in market interest rates is very limited as the VCT is
financed through equity, does not have any borrowings and most of the investee
companies have very little debt.
We expect that despite the present market turbulence most of our portfolio
companies will demonstrate further progress in the second half of the year. The
main concern must be that if there is a sustained period of extreme volatility
assessing the investment valuations may be more difficult and realisations may
be slower.
Gill Nott OBE
Chairman
20 September 2007
Investment Portfolio
as at 31 July 2007
Cost Valuation Valuation % of
# # shareholders'
funds %
------------ ------------ -------------
Quoted investments
1st Dental
Laboratories plc 289,000 117,981 0.7
CeNeS
Pharmaceuticals plc 200,000 200,000 1.3
Chromogenex plc 253,000 155,250 1.0
Genosis plc 899,886 219,111 1.4
Immunodiagnostic
Systems Holdings plc 276,495 760,002 4.8
Maelor plc 227,944 307,724 2.0
MediGene GA 639,173 197,410 1.2
Sinclair Pharma plc 219,219 183,345 1.2
Vectura Group plc 385,496 397,098 2.5
York Pharma plc 598,375 996,149 6.3
------------ ------------ -------------
Total AIM investments 3,988,588 3,534,070 22.4
------------ ------------ -------------
Unquoted investments
Altacor Limited 300,000 300,000 1.9
Amura Holdings Limited 800,000 950,000 6.0
Biovex Limited 763,886 645,869 4.1
DeltaDOT Limited 251,406 251,406 1.6
Digital Healthcare Limited 810,000 777,077 5.0
InforSense Limited 1,020,000 1,418,215 9.0
Onyx Scientific Limited 850,000 850,000 5.4
Omni Dental Sciences Limited 500,000 500,000 3.1
Optasia Medical Limited 650,000 650,000 4.1
------------ ------------ -------------
Total unquoted investments 5,945,292 6,342,567 40.2
------------ ------------ -------------
Total investments 9,933,880 9,876,637 62.6
------------ ------------ -------------
Net current assets 5,898,342 37.4
------------ ------------ -------------
Shareholders' funds 15,774,979 100.0
------------ ------------ -------------
Income Statement
For the six months ended 31 July 2007
Six Months ended 31 July 2007 Six Months ended 31 July 2006 Year Ended 31 January 2007
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
# # # # # # # # #
------ ------- ------ ------ ------ ------ ------ ------ ------
Net gains on
disposal of
investments - 57,010 57,010 - 17,428 17,428 - 453,235 453,235
------ ------ ------ ------ ------ ------ ------ ------ ------
(Decrease)/ - (145,785) (145,785) - (621,167) (621,167) - 217,850 217,850
Increase in
fair value of
investments
held
Income 175,061 - 175,061 83,190 - 83,190 161,329 - 161,329
Investment (34,907) (104,720) (139,627) (34,173) (102,517) (136,690) (57,157) (171,468) (228,625)
management fee
Other expenses (118,423) - (118,423) (109,756) - (109,756) (225,843) (1,040) (226,883)
------ ------- ------ ------ ------ ------ ------ ------ -------
Return/(loss) 21,731 (193,495) (171,764) (60,739) (706,256) (766,995) (121,671) 498,577 376,906
on ordinary
actvities
before
taxation
Tax on ordinary - - - - - - - - -
activities ------ ------- ------ ------ ------ ------ ------ ------ ------
Return/(loss)
on ordinary 21,731 (193,495) (171,764) (60,739) (706,256) (766,995) (121,671) 498,577 376,906
activities
after taxation ------ ------- ------ ------ ------ ------ ------ ------ ------
Return
per
Ordinary
Share 0.13p (1.12)p (0.99)p (0.81p) (6.69)p (7.50)p (1.29)p 4.69p 3.40p
------ ------- ------ ------ ------ ------ ------ ------ ------
Return per
C1 share n/a n/a n/a 0.97p (1.44)p (0.47)p 1.17p (1.66)p (0.49)p
There have been no other recognised gains or losses in the period
The total revenue column is the profit & loss account for the Company
All revenue and capital items derive from continuing operations
No operations were acquired or discontinued during the period
Dividends
Six Months ended 31 Six Months ended 31 Year Ended 31 January
July 2007 (unaudited) July 2006 (unaudited) 2007 (audited)
Ordinary Shares # # #
------- ------- ------
Interim dividend for the six
months ended 31 July 2006 of
2p per Ordinary share paid on
10 November 2006 - 204,419 -
Interim dividend for the year
ended 31 January 2007 of
5p per Ordinary share paid on
14 May 2007 - - 943,912
Interim dividend for the six
months ended 31 July 2007 of
1.5p per ordinary share payable
on 30 November 2007 281,606 - -
281,606 204,419 943,912
------- ------- -------
Six Months ended 31 July Six Months ended 31 July Year Ended 31 January
2007 (unaudited) 2006 (unaudited) 2007 (audited)
C1 Shares # # #
------- ------- ------
Interim dividend for the six
months ended 31 July 2006 of
1.5p per 'C1' share paid on 10
November 2006 - 31,805 -
------- ------- ------
- 31,805 -
------- ------- ------
Reconciliation of movements in shareholders' funds
For the six months ended 31st July 2007
Six Months ended Six Months ended Year Ended
31 July 2007 31 July 2006 31 January 2007
(unaudited) (unaudited) (audited)
# # #
---------- ---------- ----------
Opening shareholders' funds 12,137,079 10,774,286 10,774,286
(Loss)/Return for the half year (171,764) (766,995) 376,906
Increase in share capitalin
issue (net of expenses) 4,753,576 509,253 1,222,111
Dividend Paid (943,912) - (236,224)
---------- ---------- ---------
Closing shareholders'funds 15,774,979 10,516,544 12,137,079
---------- ---------- ----------
Balance Sheet
31 July 2007 31 July 2006 31 January 2007
(unaudited) (unaudited) (audited)
# # #
-------- -------- --------
Fixed assets Investments
at fair value 9,876,637 10,382,561 7,651,092
Current assets
Debtors 52,177 54,016 1,455,740
Investments - global
liquidity funds 6,031,299 - 1,587,702
Cash at bank and on deposit - 94,524 1,560,130
Prepayments and accrued
income 70,574 89,887 44.562
-------- --------- --------
6,154,050 238,427 4,648,134
Current liabilities
Creditors:amounts falling due
within one year (255,708) (104,444) (162,147)
-------- --------- --------
Net current
assets 5,898,342 133,983 4,485,987
--------- --------- ---------
Total assets less current
liabilities 15,774,979 10,516,544 12,137,079
---------- ---------- ----------
Capital and reserves
Called up share capital 188,225 314,245 135,666
Share premium account* 6,352,776 668,874 1,483,143
Special distributable reserve 8,940,718 10,371,370 10,055,474
Capital redemption reserve* 388,703 197,831 386,476
Capital reserve (realised)** 288,055 (935,675) 276,358
Capital reserve (unrealised)* (57,245) 155,148 147,948
Revenue reserves (326,253) (255,249) (347,986)
--------- ---------- ----------
Equity shareholders'funds 15,774,979 10,516,544 12,137,079
---------- ---------- ----------
---------- ---------- ----------
Net asset value per Ordinary 83.8p 83.4p 89.5p
* These reserves are not distributable.
** Until 7 August 2006 the Company was an investment company and therefore until
this date these reserves were not distributable. On 7 August 2006 the Company
revoked its investment company status at which point these reserves became
distributable.
We confirm that to the best of our knowledge the condensed set of financial
statements which has been prepared in accordance with the applicable set of
accounting standards and in accordance with the Accounting Standard Board's
Statement on half Yearly Financial Reports (July 2007);
- gives a true and fair view of the assets, liabilities, financial position and
profit or loss
- includes an indication of important events in the six months ended 31 July
2007 and their impact on the condensed set of financial statements
- includes a description of the principal risks and uncertainties for the six
months to 31 January 2008
- includes related party transactions in the six months to 31 July 2007.
For and on behalf of the Board
Gill Nott
20 September 2007
Cash Flow Statement
Six months to Six months to Year to 31
31 July 2007 31 July 2006 January 2007
(unaudited) (unaudited) (audited)
# # #
---------- ----------- ----------
Operating activities
Investment income received 143,296 53,412 166,615
Deposit interest received 7,636 8,625 12,925
Investment management fees (139,627) (56,066) (182,056)
Other operating costs (168,713) (141,201) (228,708)
---------- ----------- ----------
Net cash outflow from operating activities (157,408) (135,230) (231,224)
---------- ----------- ----------
Financial investment
Purchase of investments (2,609,666) (915,010) (2,358,654)
Purchase of global liquidity funds (4,443,597) - (1,587,702)
Disposals of investments 690,025 401,082 5,282,816
Net cash (outflow)/inflow from
financial investment (6,363,238) (513,928) 1,336,460
Payment of Dividend (801,572) - (236,224)
---------- ----------- ----------
Net cash (outflow)/inflow before
financing (7,322,218) (649,158) 869,012
---------- ----------- ----------
Financing
Issue of shares 5,885,942 711,948 839,675
Expenses of the issue of shares (104,570) (30,651) (120,279)
Buy back of shares (191,657) (167,097) (257,760)
---------- ----------- ----------
Net cash inflow/(outflow) from
financing 5,589,715 514,200 461,636
---------- ----------- ----------
(Decrease)/increase in cash (1,732,503) (134,958) 1,330,648
---------- ----------- ----------
Reconciliation of net cash flow to
movement in net cash
Net cash at start of period 1,560,130 229,482 229,482
Net cash at end of period (172,373) 94,524 1,560,130
---------- ----------- ----------
(Decrease)/increase in cash
during the period (1,732,503) (134,958) 1,330,648
---------- ----------- ----------
Notes to the Accounts
for the six months ended 31 July 2007
1. The unaudited interim results cover the six months to 31 July 2007 and have
been drawn up in accordance with the accounting Standard Board's (ASB) Statement
on Half-yearly Financial Reports (July 2007) and adopting the accounting
policies set out in the statutory accounts for the year ended 31 January 2007
which were prepared under UK GAAP and in accordance with the Statement of
Recommended Practice for investment companies issued by the Association of
Investment Companies in January 2003, revised December 2005.
2. The financial information set out in this report has not been audited and
does not comprise full financial statements within the meaning of Section 240 of
the Companies Act 1985. Statutory accounts for the year ended 31 January 2007,
which were unqualified, have been lodged with the Registrar of Companies. No
statutory accounts in respect of any period after 31 January 2007 have been
reported on by the Company's auditors or delivered to the Registrar of
Companies.
3. Copies of the Interim Report are being sent to all shareholders. Further
copies are available free of charge from the Company's registered office.
4. The return per Ordinary share is based on the return attributable to Ordinary
shareholders for the six months to 31 July 2007 and the weighted average number
of shares in issue during the period of 17,265,852 (2006: 10,087,364).
5. The net asset value per Ordinary share is calculated based on net assets of
#15,774,979 (2006: #8,529,253) and the number of Ordinary shares in issue of
18,822,500 (2006: 10,220,945).
6. Income
Six months ended 31 Six months ended 31 Year ended 31
July 2007 July 2006 January 2007
(unaudited) (unaudited) (audited)
# # #
------------- ------------- -------------
Income from investments:
Income from fixed interest
securities - 63,243 105,316
Income from global
liquidity funds 156,144 - 14,290
Interest on loan stock 11,281 11,323 26,244
Dividends - - 2,647
Other income:
Deposit interest 7,636 8,624 12,832
------------- ------------- -------------
Total income 175,061 83,190 161,329
------------- ------------- -------------
Year ended
7. An interim dividend for the year ending 31 January 2008 of 1.5 pence per
Ordinary share totalling #281,606 (2006: #236,224) has been declared.
8. The effective rate of tax for the six months to 31 July 2006 is nil due to
the utilisation of losses brought forward from previous years.
9. Related Party Transactions
During the period, the Company was charged sums by Noble Group companies with
which certain directors had a relationship until 27 July 2007. These
relationships and amounts charged include:
Gerard Tardy, a director until 27 July 2007, is also a director of Sitka Limited
and Noble Fund Managers Limited. Louis Nisbet, a director until 27 July 2007, is
also a director of Sitka Limited. Both Sitka Limited and
Noble Fund Managers Limited is part of Noble Group.
Noble Fund Managers charged the Company management fees of #139,627 for the six
months ended 31 July 2007.
Noble Corporate Management Limited (a Noble Group company) charged the Company
administration fees of #7,500 and company secretarial fees of #7,500 for the six
months ended 31 July 2007.
Noble & Company Limited (a Noble Group company) charged the Company broker fees
of #4,000 for the six months ended 31 July 2007.
Independent Review Report
to Sitka Health Fund VCT plc
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31 July
2007 which comprises the Income Statement, the Balance Sheet, the Cash Flow
Statement and the related explanatory notes. We have read the other information
contained in the half-yearly financial report and considered whether it contains
any apparent misstatements or material inconsistencies with the information in
the condensed set of financial statements
This report is made solely to the company in accordance with the terms of our
engagement. Our review has been undertaken so that we might state to the company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company for our review work, for this
report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
As disclosed in the notes, the annual financial statements of the company are
prepared in accordance with UK company law and applicable accounting standards
("UK GAAP"). The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with the Accounting
Standards Board's Statement "Half-yearly Financial Reports".
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 31 July 2007 is not prepared, in all material
respects, in accordance with the Accounting Standards Board's Statement
"Half-Yearly Financial Reports" and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
PKF (UK) LLP
London
20 September 2007
Shareholder Information
Share price
The Company's Ordinary shares are listed on the London Stock Exchange. The
mid-price of the Company's Ordinary shares is given daily in the Financial Times
in the Investment Companies section of the London Share Service. Share price
information can also be obtained from many financial websites including Noble
Group's site: www.noblegp.com and the London Stock Exchange site:
www.londonstockexchange.com.
Net asset value per share
The Company's net asset value per Ordinary share at 31 July 2007 was 83.8 pence.
The net asset value per Ordinary share at 31 July 2006 was 83.4p. The Company
normally announces its net asset value per share on a monthly basis. Net asset
value per share information can be found on Noble Group's website:
www.noblegp.com
Financial calendar
September 2007 Interim Report for the half year ended 31 July 2007 circulated to
shareholders
November 2007 Interim Management Statement
31 January 2008 Year-end
April 2008 Results for the year ended 31 January 2008 announced and annual
report and review sent to shareholders
June 2008 Annual General Meeting
July/August 2008 Interim Management Statement
Shareholder enquiries
Call Lesley Chambers of Noble Corporate Management Limited (which is the Company
Secretary) on 0131 225 9677 or e-mail to Lesley.Chambers@noblegp.com
Change of address
Communications with shareholders are mailed to the address held on the share
register. In the event of a change of address or other amendment this should be
notified to the Company's registrar, Capita Registrars, The Registry, 34
Beckenham Road, Beckenham, Kent BR3 4TU.
Dividends
Shareholders who wish to have future dividends paid directly into their bank
account rather than sent by cheque can complete a Mandate Form for this purpose.
Mandates can be obtained by telephoning the Company's Registrar, Capita
Registrars on 0870 162 3100. The Company operates a dividend reinvestment
scheme. Details and application forms can be obtained from Lesley Chambers of
Noble Corporate Management Limited (which is the Company Secretary) on 0131 225
9677 or e-mail to Lesley.Chambers@noblegp.com.
The Interim 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
120 Old Broad Street, London, EC2N 1AR in October 2007.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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