TIDMOAP3
Octopus Apollo VCT Plc
Half-Yearly Results
21 September 2018
Octopus Apollo VCT plc, managed by Octopus Investments Limited, today
announces the unaudited half-yearly results for the six months ended 31
July 2018.
These results were approved by the Board of Directors on 21 September
2018.
You may, in due course, view the Half-Yearly report in full at
www.octopusinvestments.com. All other statutory information can also be
found there.
Financial Headlines
Six months Six months
to 31 July to 31 July Year to 31
2018 2017 January 2018
Net assets (GBP'000s) 122,252 155,341 130,377
Return on ordinary activities after
tax (GBP'000s) (3,038) 1,799 3,699
Net asset value per share ('NAV') 47.9 62.2 50.6
Cumulative dividends paid since
launch (p per share) 69.6 55.7 68.0
NAV plus cumulative dividends paid
(p) 117.5 117.9 118.6
Total return %* (2.2) 1.0 2.2
Ordinary dividend paid in period (p) 1.6 1.7 3.3
Special dividend paid in the period
(p) -- - 10.7
Ordinary dividend declared in the
period (p) 1.5 1.6 1.6
Total return is calculated as (movement in NAV + dividends paid in the
period) divided by the NAV at the beginning of the period.
The interim dividend will be paid on 14 December 2018 to shareholders on
the register at 23 November 2018.
Chairman's Statement
I am pleased to present the half-yearly report of Octopus Apollo VCT for
the six months ended 31 July 2018.
During the period the majority of the portfolio performed broadly in
line with expectations. However a small number of investments performed
below expectations resulting in an overall loss on the portfolio of
GBP3.2 million for the period.
The NAV Total Return including the 1.6p dividend paid in the period
decreased by 2.2% during the six months. Despite the current period
performance the Company has sufficient reserves to maintain its target
dividend policy. In keeping with this policy, the Board has declared an
interim dividend of 1.5p which will be paid to shareholders in December.
The Company invested over GBP9 million into new companies in the period,
as well as investing follow-on funding into four existing investments.
The investment team has been expanded during the period, which has
helped to further increase the pipeline of new investment opportunities
and assist with the execution of new investments. Although the overall
performance in the period has been disappointing and political and
economic uncertainty resulting from Brexit negotiations still persists,
I remain cautiously optimistic for the future.
Murray Steele
Chairman
21 September 2018
Interim Management Report
Performance
In the six months under review the Total Return has decreased 2.2%. This
disappointing performance is mainly attributable to adverse movements in
fair value of four assets in the period, offset by a continuation of the
strong interest yield from loans made to portfolio companies, gains on
investment exits, and positive fair value movements across the rest of
the portfolio.
Portfolio Activity
In the period under review the value of the portfolio has decreased by
GBP3.2 million, excluding additions and disposals. This decrease is
driven by Eve Sleep plc (GBP1.3 million valuation decrease), Coupra
Limited (trading as ISG Technology) (GBP1.1 million valuation decrease),
Valloire Power Limited (GBP0.6 million valuation decrease), and Red Poll
Power Limited (GBP0.4 million valuation decrease), as a result of
specific trading performance issues within each business during the
period, with Eve Sleep plc's share price falling 84%.
During the period GBP10.2 million was invested, GBP9.3 million of which
was into the following new investments:
-- Natterbox Limited (GBP5.0 million) -- a B2B cloud-based telephony
provider, whose offering seamlessly integrates with customer
relationship management ("CRM") software;
-- City Pantry Ltd (GBP2.2 million) -- an online marketplace
facilitating the provision of high-quality food catering from local
specialist independent food vendors to corporate customers; and
-- Ubisecure Limited (GBP2.1 million) -- a customer identity and
access management software provider to enable customers to effectively
manage their end-users' digital identities and automate authentication
and encryption.
The remaining GBP0.9 million invested was to provide growth funding to
four existing portfolio companies, including GBP0.4 million invested
into Oxifree to continue to support its growth plans.
In April we saw the successful disposal of Tailsco Limited, an
investment the Company acquired in the merger with Eclipse VCT plc, to
Nestle Purina Petcare. This exit resulted in proceeds of GBP1.6 million
(including a potential future retention of GBP0.3 million), a gain of
GBP1.2 million on the merger acquisition price. We also sold our
remaining investment in Tanfield plc, as well as part of our holding in
Timeout plc, making a small loss on both.
Transactions with Manager
Details of amounts paid to the Manager are disclosed in note 7 to the
financial statements.
Share Buybacks
The Company has continued to buy back shares as required. In the six
months to July 2018, the Company bought back 3,567,465 shares for total
consideration of GBP1.7 million.
Share Issues and Fundraising
Following the successful exit of a number of investments in the last 18
months, the Company has sufficient cash to meet new investment
opportunities and is not currently open to new shareholders.
Dividend and Dividend Policy
It is the Board's policy to maintain a regular dividend flow where
possible in order to take advantage of the tax free distributions a VCT
is able to provide.
The Board has declared an interim dividend of 1.5p per share in respect
of the period ended 31 July 2018. The dividend will be payable on 14
December 2018 to shareholders on the register at 23 November 2018.
During the six months to July 2018 1,453,722 shares were issued in lieu
of cash dividends to those shareholders participating in the Dividend
Reinvestment Scheme ("DRIS"). This remains an attractive scheme for
investors, and the dividend referred to above will be eligible for the
DRIS.
VCT Qualifying Status
PricewaterhouseCoopers LLP provides the Board and Investment Manager
with advice concerning ongoing compliance with Her Majesty's Revenue &
Customs ('HMRC') rules and regulations concerning VCTs. The Board has
been advised that the Company is in compliance with the conditions set
by HMRC for maintaining approval as a VCT.
A key requirement is to ensure that at least 70% of the assets of the
fund are in VCT qualifying investments. As at 31 July 2018, 87% of the
portfolio, as measured by HMRC rules, was invested in VCT qualifying
investments.
The Autumn Budget announced in November 2017 introduced a few further
changes to VCT legislation. The most notable of these is that from 6
April 2019, the proportion of the VCT's HMRC value that must be invested
in qualifying investments will increase from 70% to 80%. Additionally,
from 6 April 2018 VCTs will have to invest 30% of funds raised into
qualifying investments within 12 months.
Typically the structure of the Company's investments has been weighted
more heavily towards loan based instruments as opposed to equity, with
such investments providing fixed returns and payments are generally
ranked above most other creditors, allowing for future visibility and
security.
The recent changes to the VCT legislation are such that future new
investments are likely to be more heavily weighted towards equity, and
less towards loan instruments. These new VCT rules will not affect the
majority of the existing investment portfolio but will impact future new
investments.
Principal Risks and Uncertainties
The principal risks and uncertainties are set out in note 6 to the
financial statements.
Summary and Future Prospects
The political and economic environment continues to be uncertain as a
result of exit negotiations with the European Union. However to date
there has been little, if any, negative economic impact that would
affect the portfolio or the investment team's ability to continue to
invest. While the overall portfolio has underperformed during the period,
the newly expanded investment team has made several new investments and
continues to have an active pipeline of new investment opportunities,
and we believe we can continue to find suitable VCT qualifying
investments.
Grant Paul-Florence
Octopus Investments Limited
21 September 2018
Investment Portfolio
Movement
Investment in fair Fair % equity
cost value value Movement % equity held
as at to 31 as at in fair held by all
31 July July 31 July value by funds
2018 2018 2018 in period Apollo managed
Sector GBP'000 GBP'000 GBP'000 GBP'000 VCT by Octopus
Fixed asset investments
Healthcare and
Services Technology Healthcare
Limited & Education 7,186 716 7,902 143 10 10
Technology
Natterbox Limited & Communication 4,990 206 5,196 206 9 9
Anglo European Manufacturing
Group Limited & Engineering 5,000 (23) 4,977 167 26.7 26.7
Countrywide Healthcare Healthcare
Services Limited & Education 2,675 2,229 4,904 39 20.7 20.7
Information
Coupra Limited Technology 5,000 (1,013) 3,987 (1,098) 9.8 9.8
Healthcare
Dyscova Limited & Education 4,700 (1,626) 3,074 -- 62.2 62.2
Kabardin Limited Energy 2,450 -- 2,450 -- 49 100
Travel &
City Pantry Ltd Leisure 2,200 204 2,404 204 8 8
Winnipeg Heat Anaerobic
Limited Digestion 3,719 (1,457) 2,262 (1) 49 100
Technology
Ubisecure Limited & Communication 2,125 64 2,189 64 10 10
Other(*) Various 42,096 (4,363) 37,733 (2,960)
Total fixed asset
investments 82,141 (5,063) 77,078 (3,236)
Current asset
investments
Octopus Portfolio Manager -- Cash 19,188 73 19,261 36
Octopus Portfolio Manager -- Cash Plus 14,410 194 14,604 1
Octopus Portfolio Manager -- Defensive
Capital Growth 7,396 240 7,636 1
Total current
asset investments 40,994 507 41,501 38
Total fixed and current asset investments 118,579
Cash at bank 2,960
Debtors less creditors 713
Total net assets 122,252
*Comprises 41 other investments: Acquire Your Business Limited, Angelico
Solar Limited, Artesian Solutions Limited, Augean plc, Barrecore Limited,
Behaviometrics AB, Bramante Solar Limited, British Country Inns plc,
Canaletto Solar Limited, Cello Group plc, CurrencyFair Limited, Ecrebo
Limited, EKF Diagnostics Holdings plc, Ergomed plc, Eve Sleep plc,
Hasgrove Limited, Leonardo Solar Limited, Luther Pendragon Limited,
Mi-Pay Group plc, MIRACL Limited, Modigliani Solar Limited, Nektan plc,
Origami Energy Limited, Oxifree Group Holding Limited, Pirlo Solar
Limited, Plastics Capital plc, Red Poll Power Limited, Secret Escapes
Limited, Segura Systems Limited, Sourceable Limited (Swoon Editions),
Spiralite Holdings Limited, Superior Heat Limited, Tanganyika Heat
Limited, Time out Group plc, Tintoretto Solar Limited, Tiziano Solar
Limited, Trafi Limited, Valloire Power Limited, Vertu Motors plc, Yu
Group plc, Zynstra Limited.
Directors' Responsibilities Statement
We confirm that to the best of our knowledge:
-- the half-yearly financial statements have been prepared in
accordance with the Financial Reporting Standard 104 "Interim Financial
Reporting" issued by the Financial Reporting Council;
-- the half-yearly financial statements give a true and fair view of
the assets, liabilities, financial position, and profit or loss of the
Company;
-- the half-yearly report includes a fair review of the information
required by the Financial Conduct Authority's Disclosure and
Transparency Rules, being:
-- an indication of the important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of financial statements;
-- a description of the principal risks and uncertainties for the
remaining six months of the year; and
-- a description of related party transactions that have taken place
in the first six months of the current financial year, that may have
materially affected the financial position or performance of the Company
during that period and any changes in the related party transactions
described in the last annual report that could do so.
On behalf of the Board
Murray Steele
Chairman
21 September 2018
Income Statement
Unaudited Unaudited Audited
Six months to Six months to Year to 31 January
31 July 2018 31 July 2017 2018
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain on disposal
of fixed asset
investments -- 889 889 -- 3,701 3,701 -- 4,186 4,186
Loss on disposal
of current asset
investments - (6) (6) _ _ _ _ _ _
Change in fair
value of fixed
asset investments -- (3,236) (3,236) -- (1,274) (1,274) -- 1,063 1,063
Change in fair
value of current
asset investments -- 38 38 -- 190 190 -- 469 469
Investment income 1,638 -- 1,638 2,061 -- 2,061 3,627 3,627
Investment management
fees (310) (929) (1,239) (341) (1,406) (1,747) (724) (2,858) (3,582)
Other expenses (1,122) -- (1,122) (1,136) -- (1,136) (2,068) -- (2,068)
FX translation -- -- -- -- 4 4 -- 4 4
Return on ordinary
activities before
tax 206 (3,244) (3,038) 584 1,215 1,799 835 2,864 3,699
Taxation on return
on ordinary activities -- -- -- -- -- -- -- -- --
Return on ordinary
activities after
tax 206 (3,244) (3,038) 584 1,215 1,799 835 2,864 3,699
Earnings per share
-- basic and diluted 0.1p (1.3)p (1.2)p 0.2p 0.5p 0.7p 0.3p 1.2p 1.5p
-- The 'Total' column of this statement is the profit and loss account of
the Company; the supplementary revenue return and capital return columns
have been prepared under guidance published by the Association of
Investment Companies.
-- All revenue and capital items in the above statement derive from
continuing operations.
-- The Company has only one class of business and derives its income from
investments made in shares and securities and from bank and money market
funds.
-- The Company has no recognised gains or losses other than those disclosed
in the income statement.
-- The accompanying notes are an integral part of the half-yearly report.
Balance Sheet
Unaudited Unaudited Audited
As at 31 July As at 31 As at 31
2018 July 2017 January 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed asset investments 77,078 78,386 71,326
Current assets:
Investments 41,501 70,190 53,469
Debtors 2,307 2,245 2,074
Cash at bank 2,960 6,067 5,455
46,768 78,502 60,998
Creditors: amounts falling
due within one year (1,594) (1,547) (1,947)
Net current assets 45,174 76,955 59,051
Net assets 122,252 155,341 130,377
Share capital 25,537 25,138 25,748
Share premium 52,729 48,308 52,162
Special distributable
reserve 34,690 71,149 40,489
Capital redemption reserve 3,482 2,958 3,125
Capital reserve realised 10,164 7,714 9,445
Capital reserve unrealised (4,556) (520) (602)
Revenue reserve 206 584 --
Translation reserve - 10 10
Total equity shareholders'
funds 122,252 155,341 130,377
Net Asset Value per share 47.9p 62.2p 50.6p
The statements were approved by the Directors and authorised for issue
on 21 September 2018 and are signed on their behalf by:
Murray Steele
Chairman
Company Number: 05840377
Statement of Changes in Equity
Special Capital Capital Capital
Share Share distributable Redemption reserve reserve Revenue Translation
Capital Premium reserves Reserve realised unrealised reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Six months to 31
July 2018
As at 1 February
2018 25,748 52,162 40,489 3,125 9,445 (602) -- 10 130,377
Comprehensive
income for the
period:
Management fee
allocated as
capital expenditure -- -- -- -- (929) -- -- -- (929)
Current period
gains on disposal -- -- -- -- 883 -- -- -- 883
Current period
losses on fair
value of investments -- -- -- -- -- (3,199) -- -- (3,199)
Profit on ordinary
activities after
tax -- -- -- -- -- -- 206 -- 206
Total comprehensive
income for the
period -- -- -- -- (46) (3,199) 206 -- (3,039)
Contributions
by and distributions
to owners:
Repurchase and
cancellation
of own shares (357) -- (1,706) 357 -- -- -- -- (1,706)
Issue of shares 146 567 -- -- -- -- -- -- 713
Dividends paid -- -- (4,093) -- -- -- -- -- (4,093)
Total contributions
by and distributions
to owners (211) 567 (5,799) 357 -- -- -- -- (5,086)
Other movements:
Prior period
holding gains/losses
now realised -- -- -- -- 765 (755) -- (10) --
Total other
movements -- -- -- -- 765 (755) -- (10) --
As at 31 July
2018 25,537 52,729 34,690 3,482 10,164 (4,556) 206 -- 122,252
Special Capital Capital Capital
Share Share distributable Redemption reserve reserve Revenue Translation
Capital Premium reserves Reserve realised unrealised reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Six months to 31
July 2017
As at 1 February
2017 22,603 34,231 76,144 2,832 (1,537) 7,520 - 6 141,799
Comprehensive
income for the
period:
Management fee
allocated as
capital expenditure -- -- -- -- (1,406) -- -- -- (1,406)
Current period
gains on disposal -- -- -- -- 3,701 -- -- -- 3,701
Current period
losses on fair
value of investments -- -- -- -- -- (1,084) -- -- (1,084)
Current period
currency gains -- -- -- -- -- -- -- 4 4
Profit on ordinary
activities after
tax -- -- -- -- -- -- 584 -- 584
Total comprehensive
income for the
period -- -- -- -- 2,295 (1,084) 584 4 1,799
Contributions
by and distributions
to owners:
Repurchase and
cancellation
of own shares (126) -- (754) 126 -- -- -- -- (754)
Issue of shares 2,661 14,077 -- -- -- -- -- -- 16,738
Dividends paid -- -- (4,241) -- -- -- -- -- (4,241)
Total contributions
by and distributions
to owners 2,535 14,077 (4,995) 126 -- -- -- -- 11,743
Other movements:
Prior period
holding gains/losses
now realised -- -- -- -- 6,956 (6,956) -- -- --
Total other
movements -- -- -- -- 6,956 (6,956) -- -- --
As at 31 July
2017 25,138 48,308 71,149 2,958 7,714 (520) 584 10 155,341
Special Capital Capital Capital
Share Share distributable Redemption reserve reserve Revenue Translation
Capital Premium reserves Reserve realised unrealised reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year to 31 January
2018
As at 1 February
2017 22,603 34,231 76,144 2,832 (1,537) 7,520 - 6 141,799
Comprehensive
income for the
year:
Management fee
allocated as
capital expenditure -- -- -- -- (2,858) -- -- -- (2,858)
Current year
gains on disposal -- -- -- -- 4,186 -- -- -- 4,186
Current year
gains on fair
value of investments -- -- -- -- -- 1,532 -- -- 1,532
Current year
currency gains -- -- -- -- -- -- -- 4 4
Profit on ordinary
activities after
tax -- -- -- -- -- -- 835 -- 835
Total comprehensive
income for the
year -- -- -- -- 1,328 1,532 835 4 3,699
Contributions
by and distributions
to owners:
Repurchase and
cancellation
of own shares (293) -- (1,639) 293 -- -- -- -- (1,639)
Issue of shares 3,594 17,931 -- -- -- -- -- -- 21,525
Dividends paid -- -- (34,172) -- -- -- (835) -- (35,007)
Total contributions
by and distributions
to owners 3,301 17,931 (35,811) 293 -- -- (835) -- (15,121)
Other movements:
Prior year holding
gains/losses
now realised -- -- -- -- 9,654 (9,654) -- -- --
Cancellation
of Deferred
Shares -- D
shares (156) -- 156 -- -- -- -- -- --
Total other
movements (156) - 156 -- 9,654 (9,654) -- -- --
As at 31 January
2018 25,748 52,162 40,489 3,125 9,445 (602) -- 10 130,377
Cash Flow Statement
Unaudited Unaudited Audited
Six months Six months Year to
to to 31 January
31 July 2018 31 July 2017 2018
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities:
(Loss)/Return on ordinary
activities after tax (3,038) 1,799 3,699
Adjustments for:
(Increase)/decrease in
debtors (233) 1,832 2,003
Decrease in creditors (353) (2,844) (2,444)
Gain on disposal of fixed
assets (889) (3,701) (4,186)
Loss/(Gain) on revaluation
of fixed asset investments 3,236 1,274 (1,063)
Loss on disposal of current
assets 6 -- --
Gain on revaluation of
current asset investments (38) (190) (469)
Cash from operations (1,309) (1,830) (2,460)
Cash flows from investing
activities:
Purchase of fixed asset
investments (10,176) (1,348) (2,051)
Purchase of current asset
investments -- (72,000) (53,000)
Sale of fixed asset investments 2,076 38,273 48,858
Sale of current asset
investments 12,000 2,000 --
Net cash flows from investing
activities 3,900 (33,075) (6,193)
Cash flows from financing
activities:
Purchase of own shares (1,706) (754) (1,639)
Share issues -- 16,738 21,525
Dividends Paid (3,380) (4,241) (35,007)
Net cash flows from financing
activities (5,086) 11,743 (15,121)
Decrease in cash and
cash equivalents (2,495) (23,162) (23,774)
Opening cash and cash
equivalents 5,455 29,229 29,229
Closing cash and cash
equivalents 2,960 6,067 5,455
Notes to the Half-Yearly Report
1. Basis of preparation
The unaudited half-yearly results which cover the six months to 31 July
2018 have been prepared in accordance with the Financial Reporting
Council's (FRC) Financial Reporting Standard 104 "Interim Financial
Reporting" (March 2018) and the Statement of Recommended Practice for
Investment Companies, re-issued by the Association of Investment
Companies in February 2018.
2. Publication of non-statutory accounts
The unaudited half-yearly results for the six months ended 31 July 2018
do not constitute Statutory Accounts within the meaning of s.415 of the
Companies Act 2006. The comparative figures for the year ended 31
January 2018 have been extracted from the audited financial statements
for that year, which have been delivered to the Registrar of Companies.
The independent auditor's report on those financial statements, in
accordance with chapter 3 of part 16 of the Companies Act 2006, was
unqualified. This half-yearly report has not been reviewed by the
Company's auditor.
3. Earnings per share
The earnings per share is based on 256,759,529 shares, being the
weighted average number of shares in issue during the period (31 January
2018: 248,105,555; 31 July 2017: 243,295,650).
There are no potentially dilutive capital instruments in issue and,
therefore, no diluted earnings per share figures are relevant. The basic
and diluted earnings per share are therefore identical.
4. Net asset value per share
31 July 31 July 31 January
2018 2017 2018
Net Assets (GBP) 122,252,000 155,341,000 130,377,000
Shares in Issue 255,369,857 249,818,756 257,483,600
Net Asset Value
per share (p) 47.9 62.2 50.6
5. Dividends
A final dividend, for the year ended 31 January 2018, of 1.6p per share
was paid on 27 July 2018 to shareholders on the register on 29 June
2018.
The interim dividend of 1.5p per share for the six months ending 31 July
2018 will be paid on 14 December 2018, to those shareholders on the
register on 23 November 2018.
6. Principal Risks and Uncertainties
The principal risks and uncertainties faced by the Company are described
in detail within the strategic report in the Company's annual report for
the year ended 31 January 2018.
The principal risks include loss of VCT status, investment risk,
valuation risk, financial risk, internal control risk and price risk.
7. Related Party Transactions
Octopus acts as the investment manager of the Company. Under the
management agreement, Octopus receives a fee of 2.0% per annum of the
net assets of the Company for the investment management services.
The Company has incurred management fees of GBP1,239,000 during the
period to 31 July 2018 (31 July 2017: GBP1,494,000; 31 January 2018:
GBP2,895,000).
No performance fee has been incurred during the period to 31 July 2018
(31 July 2017: GBP253,000; 31 January 2018: GBP687,000).
Octopus also provides administration and company secretarial services to
the Company. Octopus receives a fee of 0.3% per annum of net assets of
the Company for administration services and GBP20,000 per annum for
company secretarial services.
The Company currently holds GBP41.5 million of investments in Octopus
managed funds, being the Octopus Portfolio Manager funds. To ensure the
Company is not double charged management fees on these products, the
Company receives a reduction in the management fee as a percentage of
the value of these investments.
8. Other Information
A version of this statement will be made available to all shareholders.
Copies will also be available from the registered office of the Company
at 33 Holborn, London, EC1N 2HT, and will also be available to view on
the Investment Manager's website at
www.octopusinvestments.com.
(END) Dow Jones Newswires
September 21, 2018 12:13 ET (16:13 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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