Interim Management Statement - Seite 2

For Yourgene (-28%, -0.14 pence per share), resilient trading in the six months to September 2020 was offset by a report of extended sales cycles.  Forecasts were maintained, implying a heavy weighting to the second half.  Whilst progress was made during the second half of the year, the company subsequently reduced expectations post period end.   Faron Pharma (-35%, -0.13 pence per share) reported that Traumakine did not result in reduced mortality rates amongst CV19 patients when included in a WHO trial. Disappointing as this was, it is important to note that the WHO trial was not core to the development of Traumakine.  A further investigation using different protocols will be run at Harvard Medical School.  Clevegen continues to progress through its combined Phase I/II trial.  Fusion Antibodies (-24%, -0.12 pence per shares) slipped back as investors acknowledged that a sharp move higher in September was difficult to justify.  The company reported that trading was in line with expectations in the six months to September 2020.

Non-Qualifying Investments

The successful development of CV19 vaccines in November was positive for our non-qualifying holdings as markets began to look towards the potential recovery. Notable contributors to performance over the quarter included Melrose, On The Beach and Taylor Wimpey, which all rose over 50%.

Portfolio structure

The VCT is comfortably above the HMRC defined investment test and ended the period at 87% invested as measured by the HMRC investment test. By market value, the weighting to qualifying investments decreased from 76.5% to 72.9%, primarily a consequence of the £18m of offer proceeds.

In the 3 months to 31 December 2020, we deployed £1.1m into 2 qualifying companies, one an AIM IPO and the other an existing AIM listed company.  We continued to adjust the qualifying portfolio and rebalance where necessary.  For the most part, this was in response to considerable gains in share prices.  We made four complete exits: two sales of non-core underperforming companies and two to M&A. We made partial disposals in 4 qualifying companies. We redeployed modest amounts of capital into the Marlborough Special Situations Fund, increasing the weighting from nil to 3.4%.  Our allocation to non-qualifying equities reduced marginally from 13.3% to 12.5% and cash increased from 10.7% to 11.7% of net assets.