Octopus VCT Octopus VCT PLC : Half-yearly report
October 11 2012 - 11:26AM
UK Regulatory
TIDMOVCT
Octopus VCT plc
Half-Yearly Results
11 October 2012
Octopus VCT plc, managed by Octopus Investments Limited, today announces the
Half-Yearly results for the six months ended 31 August 2012.
These results were approved by the Board of Directors on 11 October 2012.
You may shortly view the Half-Yearly Report in full at
www.octopusinvestments.com
About Octopus VCT plc
Octopus VCT plc ("Octopus VCT," "Company" or "Fund") is a venture capital trust
("VCT") and is managed by Octopus Investments Limited ("Octopus").
Octopus VCT was incorporated on 30 June 2009 under the name of Octopus Secure
VCT plc; this was subsequently amended to Octopus VCT plc on 18 November 2009,
with the first allotment of equity occurring on 14 December 2009. Octopus VCT
opened for subscription (the "Offer") on 17 September 2009 and raised GBP50
million through an offer for subscription by the time it closed on 5 April
2010. A further GBP1.8 million was raised through a top up issue of shares on 30
April 2010. The investment policy of Octopus VCT is to focus on making
Qualifying Investments into companies which have contractual revenues from
financially sound counterparties or which have a strong asset base.
Venture Capital Trusts (VCTs)
VCTs were introduced in the Finance Act 1995 to provide a means for private
individuals to invest in smaller companies in the UK. Subsequent Finance Acts
have introduced changes to VCT legislation. The tax benefits currently available
to eligible new investors in VCTs include:
* up-front income tax relief of 30%
· exemption from income tax on dividends paid
· exemption from capital gains tax on disposals of shares in
VCTs
The Company has been provisionally approved as a VCT by Her Majesty's Revenue &
Customs (HMRC). In order to maintain its approval, the Company must comply with
certain requirements on a continuing basis. By the end of the Company's third
accounting period at least 70% of the Company's investments must comprise
'qualifying holdings' of which at least 30% must be in eligible Ordinary
shares. A 'qualifying holding' consists of up to GBP5 million invested in any one
year in new shares or securities in an unquoted company (including companies
listed on AIM) which is carrying on a qualifying trade, whose gross assets do
not exceed GBP15 million and whose total number of employees is less than 250, all
at the time of investment.
Financial Summary
+--------------+
| Six months to| Six months to Year to
|31 August 2012|31 August 2011 29 February 2012
=--------------------------------+--------------+-------------------------------
| |
| |
Net assets ( GBP'000s) | 49,967| 48,992 49,919
| |
Net profit/(loss) after tax| |
( GBP'000s) | 570| (251) 735
| |
Net asset value per share (NAV) | 95.8p| 93.8p 95.7p
| |
Cumulative dividends paid to date| 2.0p| 1.0p 1.0p
| |
Total return | 97.8p| 94.8p 96.7p
+--------------+
Chairman's Statement
Introduction
I am delighted to present to you the half-yearly report for Octopus VCT for the
period ended 31 August 2012.
Performance
The Company has performed well in the period, with the Total Return of the
Company (NAV plus cumulative dividends) increasing by 1.1%, from 96.7p as at 29
February 2012 to 97.8p as at 31 August 2012. This appreciation of the Total
Return is due to the strong interest income on loan investments the Company now
generates, exceeding its running costs. To date, 2.0p per share has been paid to
shareholders in dividends.
Investment Portfolio
To date, GBP28.3 million has been invested into 33 solar companies that have
either successfully constructed solar power units that have been connected to
the National Grid, or are seeking to do so in the near future. Solar continues
to represent a significant investment opportunity as it is a well-established,
reliable form of technology that offers consistent ongoing returns via the
Government's Feed-In-Tariff scheme.
During the six month period, the Company extended its investments in the
renewable energy sector by investing GBP4 million into four companies that utilise
ground source heat pumps. A further GBP5.2 million has been invested into various
media sector companies and GBP6.7 million into companies operating in the sectors
of business services, security, care homes and crack detection systems. A
follow-on loan investment of GBP1 million was also made to Borro.
The loan made to Season Ticket Credit was fully repaid during the period and
part re-payments were made on the loans outstanding to Helaku Power and Michabo
Power. The majority holding in Salus Services Holdings 1 was also realised,
returning GBP1 million back into the Company.
Investment Strategy
The Company continues to be managed in line with the mandate that was set out in
the prospectus whereby investments are made with more of an emphasis on capital
preservation than a typical VCT. Generally the Company receives its return from
interest paid on secured loan notes as well as an exposure to the value of the
shares of investee companies. The investment strategy is to derive sufficient
return from the secured loan notes to achieve the Company's investment aims and
to use the small equity exposure to boost returns.
The Investment Manager continues to be able to identify appropriate investment
opportunities to meet these objectives.
Dividend and Dividend Policy
As mentioned in my statement at the year end, due to the high level of income
the Company generated from its cash deposits, your Board proposed a dividend of
1.0 pence per share that was paid to shareholders on 19 July 2012. Your board
has proposed an interim dividend of 1.0 pence per share to be paid on 23
November 2012 to those shareholders on the register on 26 October 2012.
VCT Qualifying Status
A key requirement is to invest at least the 70% of the Funds raised into
qualifying investments. As at 31 August 2012, 72.8% of the portfolio, as
measured by HMRC rules, was invested in VCT qualifying investments. The Manager
does not foresee any issues with maintaining the required investment hurdle of
70% before the third financial year end.
Principal Risks and Uncertainties
The principal risks and uncertainties are set out in note 5 of the Notes to the
Half-Yearly Report on page X.
Outlook
As explained in the Annual Report to 29 February 2012, the uncertainties in the
UK about the sustainability of the economic recovery, inflationary pressures and
condition of public finances continue to dominate the headlines. These factors
continue to provide an uncertain environment for many businesses.
Despite the tough trading conditions, it is pleasing to report that the
investments in your Company's portfolio continue to trade strongly and the Total
Return continues to make steady progress. The Board and investment manager
remain committed to managing the existing portfolio and seeking new investments
which fit into the mandate pursued by the Company. With this in mind, your Board
remains confident that the Company will achieve its investment objectives and
the Total Return will continue to appreciate.
If you have any questions on any aspect of your investment, please call one of
the team on 0800 316 2347.
James Otter
Chairman
11 October 2012
Investment Portfolio
Movement Fair
Cost of in fair value Movement
investment value to as at in year % %
as at 31 31 31 to 31 equity equity
August August August August held by managed
Fixed asset 2012 2012 2012 2012 Octopus by
investments Sector ( GBP'000) ( GBP'000) (' GBP000) ( GBP'000) VCT Octopus
=-------------------------------------------------------------------------------
CSL Dualcom Security
Holdings Ltd devices 3,839 - 3,839 - 1.4% 3.4%
Helaku Power Ltd Solar 3,277 - 3,277 - 25.0% 50.0%
Borro Loan 2 Consumer
Ltd* finance 2,000 - 2,000 - 0.0% 0.0%
GreenCo Services
2 Ltd Solar 1,600 - 1,600 - 40.9% 92.0%
3AM Music Ltd Media 1,500 - 1,500 49.9% 100.0%
Shakti Power
Ltd* Solar 1,458 - 1,458 - 0.0% 100.0%
Donoma Power Ltd Solar 1,220 - 1,220 - 44.9% 100.0%
Salus Services
2 Ltd Care homes 1,000 - 1,000 - 32.9% 67.8%
Personnel
Advisory
Services Ltd Solar 1,000 - 1,000 - 30.2% 90.6%
Saas Business
Services Ltd Solar 1,000 - 1,000 - 30.2% 90.6%
Resilient
Corporate
Services Ltd Solar 1,000 - 1,000 - 18.2% 88.5%
Healthcare
Education
Business
Services Ltd Solar 1,000 - 1,000 - 30.2% 90.6%
MediaCo Business Solar
Services Ltd 1,000 - 1,000 - 30.2% 90.6%
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