CLC Calculus Vct Plc

Calculus VCT plc

Half Yearly Report for the six months ended 30 September 2024

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 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 and pay the appropriate level of dividends annually taking 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 OVERVIEW

² total dividends paid include cumulative dividends paid since 2017

Historical Total Return

*     Cumulative dividends received includes all dividends received since the relevant Financial period-end to date

**   Total NAV return is equal to the sum of NAV at 30 September 2024 and cumulative dividends received

CHAIRMAN'S UPDATE

I am pleased to present your Company's results for the 6 months to 30 September 2024.

Performance summary

The Company has maintained a positive total return over a five-year period across the portfolio. The NAV at the period end was 57.20 pence per share, which, after paying the 2.77 pence dividend in August 2024, represents a small decrease of 3% since the year end.

The largest positive movements in the qualifying portfolio derived from the de-listing of C4X Discovery Holdings plc (now C4X Discovery Holdings Limited), an uplift in Blu Wireless Technology Limited following the conversion of a loan note in May 2024 and an uplift in Scancell plc, one of the Company's AIM-listed holdings. These combine to make a £0.6m uplift in the Company's NAV.

In October 2024, Chancellor Rachel Reeves announced a number of changes to how capital gains and inheritance taxes are charged. In a high tax landscape, the VCT product range remains a stable and reliable source of tax relief. The new Chancellor used the Autumn Statement as an opportunity to identify the critical role VCT schemes play in creating a positive environment for UK entrepreneurship. Offering tax free capital growth, 30% income tax relief on the value of the investment and tax-free dividend income; the Calculus VCT remains a credible and dependable tax efficient investment product for UK investors.

Additionally, we are pleased to report positive developments in our dividend policy, reflecting our continued confidence of our portfolio and our commitment to delivering value to our shareholders. Following careful consideration, we are increasing the annual dividend yield from 4.5% to 5%, marking a significant step in enhancing shareholder returns. Furthermore, I am delighted to introduce an interim dividend, which will provide shareholders with more frequent income distributions and align with our goal of steady and predictable returns. These changes underscore our confidence in the outlook for the business and our ability to generate sustainable growth. Please refer to the "New Dividend Target" below for further information regarding the Company's dividend policy.

Open Energy Market ('OEM') has continued to build on what was a strong 2023 where revenues for the year ended 31 Jan 2024 increased by 34%. As a result, OEM's performance contributed £0.1m to the Company's NAV. This has been underpinned by increasing successful traction across both the energy intensive industry (EII) sector and increasing exposure to and presence in the lucrative European market through existing blue-chip multinational customers. OEM's senior management team are in the advanced stages of finalising a two-year strategic and operational plan, underpinned by the appointment of a new head of finance and head of financial planning and analysis, as they target an exit event in early 2027.

Riff Raff Entertainment Limited ('Riff Raff') has developed strongly since Calculus' first investment in June 2022 and increased the NAV by a further £0.2m having recently signed a two-year 'First Look' TV deal with Newen. In August 2024, the true-crime thriller film, The Order, premiered at the Venice Film Festival. It is set to be released in the US in December 2024. Black Rabbit, a major eight-part drama series, has finished production for Netflix with Jude Law and Jason Bateman (Ozark) starring and is in post-production.

In September 2024, eConsult was sold to Huma Therapeutics Limited in a share-for-share deal. Huma Therapeutics is a UK based company offering a remote patient monitoring platform which advances connected care for patients and accelerates research and therapies. Although Huma Therapeutics is a large, well-funded company that recently raised $80m from investors including AstraZeneca, the share-for-share exchange resulted in a fall of £0.5m of the Company's NAV.

The ideas and generation market has been challenging, leading to a large number of cost-cutting drives within the industry. Wazoku Limited was required to cut costs significantly throughout the year, which in turn, hit its ability to drive strong sales. This is reflected in the valuation of the company, resulting in a £0.5m decrease in the Company's NAV.

In the 6-month period following the year-end, WheelRight was acquired by Snider, a US strategic investor and tyre trucking company. Whilst WheelRight's technology is potentially groundbreaking, it has struggled to commercialise it to a level which made the company self-sustaining. In May 2024, with the company close to exhausting its cash runway, the Snider CEO made an offer for the company in a personal capacity and through an acquisition vehicle wholly owned by him in the amount of £0.01 per share and which, in the absence of any other tangible options, was agreed by all of the company's main shareholders including Calculus. Calculus insisted on a structure that would see its £1.6m outstanding loan notes and accrued interest paid out in full over an extended period and which was also agreed with the Snider CEO in a personal capacity. This saw the loan notes assigned to the Snider CEO's corporate acquisition entity in return for which Calculus received £400k upon completion and a promissory note for the residual ca. £1.45 million obligating full repayment in two tranches within 4 years.

As mentioned above, the Company also converted £300k of Blu Wireless Technology Limited loan stock. Following this, in June 2024, external and internal investors led a £5m equity round into Blu Wireless Technology, with Westermo, an industrial communications provider focused on the rail industry, acting as lead strategic investor.  As part of the round, significant convertible loan notes were converted into equity, resolving a key issue as these would have substantially matured otherwise on 31 December 2024. The company is continuing to make substantial progress in both the rail defence sectors.

In the period to 30 September 2024, four follow-on investments were made on behalf of the qualifying portfolio and one new investment was made:

New investment

Follow-on Investments

We believe the portfolio is well positioned to continue to provide long term growth to shareholders and that our Investment Manager is similarly positioned to exploit these opportunities.

Buybacks

During the period, the Company bought back and cancelled 833,854 Ordinary shares. The Company continues to review opportunities to carry out share buybacks at a discount of no greater than 5% to NAV.

Since the period end, the Company has bought back and cancelled a further 517,241 shares.

Dividends

As mentioned above, a dividend was paid on 29 August 2024 of 2.77 pence per eligible Ordinary share. It is expected that the next dividend will be paid in March 2025 as announced below

New Dividend Target

As mentioned in the Chairman's Statement, the Company is targeting a regular dividend yield in each financial year of 5% of the Net Asset Value per share at the start of that financial year. The Company is due to pay this dividend in two instalments; an interim dividend of 2% of the NAV, which is due to be paid in March 2025 and a final dividend of 3% of the NAV, which is due to be paid in October 2025.

The board are pleased to declare an interim dividend of 1.14p per share which will be paid to shareholders on 26 March 2025. Shareholders on the register as at 28 February 2025 will be eligible for the dividend.

Board composition

The board consist of four Directors, three of which are independent from the Manager.

Ordinary share issue

The offer for subscription for Ordinary Shares that opened on 22 September 2023 and closed on 29 August 2024 received aggregate subscriptions from the issue of Ordinary shares of £7.9 million. On 14 October 2024 a new prospectus was launched for a further offer for subscription for Ordinary Shares, with the shares to be issued in the 2024/25 and 2025/26 tax years.

Developments since the period end

Raindog is an independent production company co-founded by Academy Award® winning actor Colin Firth and former music executive Ged Doherty. Since the period end, the Company has made a follow-on investment of £450,000 in Raindog Films Limited to support continued development in a number of ongoing and new productions.

Jan Ward

Chairman

5 December 2024

INTERIM MANAGEMENT REPORT

Venture Capital Investments

Portfolio developments

Calculus Capital Limited manages the Company's portfolio of venture capital investments. In general, Calculus Capital prefers investments to be of a sufficient size to enable them to play an influential role in helping the investee companies develop. Investments by the Company are primarily in equity but may also be by way of loan stock and/or preference shares which provide income to assist in paying dividends and provide a measure of risk mitigation.

As at 30 September 2024, the portfolio had 37 Qualifying Investments. An update on some of the portfolio's top investments has been provided below.

Home Team Content Limited ("Home Team")

Home Team Content is a UK-based film and television production company founded in 2021 by experienced and award-winning producers Dominic Buchanan and Bennett McGhee. The company focuses on working with filmmakers of colour and women filmmakers of any ethnicity. Home Team signed a 'first look' deal with Universal International Studios (UIS) in 2022 covering television productions which provides a contribution to company overheads as well as funding development on projects picked up by UIS. In June 2024, UIS confirmed its option to extend for a third year on the 'First Look' deal. The company currently has several TV and film projects in paid development with UIS, Netflix, BBC, and Film4.

Optalitix Limited

Optalitix offers a low-code SaaS product to insurers and financial institutions which allows business processes based on Excel to be transformed into robust online systems.  Optalitix has performed well during the last year with recurring revenue as at September 2024 up 46% year on year.  The pipeline for the last quarter of the year continues to look strong, as the company is clearly achieving a strong product-market fit in the specialty insurance underwriting market.

Fiscaltec Group Limited ("Fiscaltec")

Fiscaltec's proprietary solution analyses an organisation's financial transactions and supplier contacts, providing an independent overview of the effectiveness of the processes and controls encompassing spend. The company has continued to perform well during 2024, enjoying particular success upselling additional solutions to its existing list of very committed clients. Although the economic environment of the last year has meant that potential new customers have been cautious when making buying decisions, Fiscaltec is focusing its efforts on the new client pipeline in order to increase the rate of "new logo" wins and accelerate its growth further.

Brouhaha Entertainment Limited ("Brouhaha")

Brouhaha, based in London and Sidney, is a film and television production company founded by Academy Award® nominated producer Gaby Tana and experienced industry professionals Troy Lum and Andrew Mason. After the phenomenal success of the TV Series Boy Swallows Universe on Netflix which outperformed all expected metrics, Brouhaha is working on two other TV projects with Netflix - Lola in the Mirror and Love & Virtue.

Oxford BioTherapeutics Limited ("OBT")

OBT is a clinical stage oncology company, it's pipeline of novel immunotherapies is balanced between internal and externally partnered programs with big pharma companies such as Boehringer Ingelheim. In February 2024 AbbVie (NYSE:ABBV) completed its acquisition of Immunogen, previously a partner of OBT. Following the acquisition AbbVie took the decision to end Immunogen's extensive, and successful, partnership with OBT. Whilst this was initially disappointing, it resulted in a number of well-advanced drug programs reverting to OBT, allowing the company to seek new partners for those programs. This has generated significant interest and allowed OBT to re-partner for the programs, predominantly on better terms given the advances that had been made with Immunogen.

Rotageek Limited ("Rotageek")

Rotageek provides a workforce management solution, creating staff schedules using cloud-based technology, including auto scheduling, to optimise the schedules based on staffing need, employee wishes and regulatory working time limits. Rotageek is continuing to experience good growth with 25% increase in year-on-year ARR as at September 2024. The company has a strong pipeline of opportunities and is continuing to consider its strategic options which, with continuing strong sales, could lead to a sale of the company in or around 2025.

Riff Raff Entertainment Limited ("Riff Raff")

Riff Raff is a TV and film production company founded by Academy Award® nominated actor Jude Law and his creative partner Ben Jackson. The company has a film 'First Look' deal with New Republic Pictures (NRP), contributing to company overheads and funding development on projects picked up by NRP. The company has also signed a two-year 'First Look' TV deal with Newen for TV projects.

Maven Screen Media Limited ("Maven")
Maven was launched in 2020 by experienced producers, Academy Award® nominated Celine Rattray and Trudie Styler. The company focuses on female-focused films, television, and podcasts often with a social message.  In July, the film Unicorns had a positive UK theatrical release, with Netflix SVOD to follow during the year. Among other advanced projects, the film Eleanor the Great, which marks Scarlett Johansson's directorial debut and is financed by Sony, has finished all the shooting and is now in post-production.

Censo Biotechnologies Limited ("Axol")

Censo Biotechnologies Ltd (trading as Axol Bioscience) is a stem cells science company which develops and manufactures induced pluripotent stem cells (iPSCs) and provides related laboratory services. In June 2024, Axol raised £3.6 million through a fully subscribed round in a new senior class of equity and in October, Axol acquired Phenocell SAS, an iPSC company specialising in skin and retinal disorders, complementing Axol's current specialisation on neuroscience, pain and touch and cardiovascular disorders.  During 2024, Axol has been performing in line with budget, notwithstanding a challenging period for many other iPSC companies in the market.

Tagomics Limited ("Tagomics")
Tagomics continues to make excellent technical and commercial progress in the development of its comprehensive disease insight platform. Tagomics' pioneering platform seamlessly combines 'omics' technologies, including genomics (detecting mutations), epigenomics (studying chemical 'switches' on the genome), and fragmentomics (the analysis of DNA fragmentation patterns in the blood); the evidence this platform can deliver means that the company has already attracted significant partners and commercial clients. The company expects to launch further partnerships over the next 6 months.

Developments since the period end

As mentioned above, the Company invested an additional £450,000 in a follow-on investment into Raindog Films Limited which took place in October 2024.

Calculus Capital Limited
Investment Manager                             

5 December 2024