TIDMOVCT
Octopus VCT plc
Half-Yearly Results
9 October 2014
Octopus VCT plc, managed by Octopus Investments Limited, today announces
its half-yearly results for the six months ended 31 August 2014.
The results were approved by the Board of Directors on 9 October 2014.
Financial Summary
Six months to Six months to Year to
31 August 2014 31 August 2013 28 February 2014
Net assets (GBP'000s) 51,427 49,354 50,402
Net profit after tax
(GBP'000s) 1,546 240 1,900
Net asset value per share 98.8p 94.6p 96.9p
(NAV)
Cumulative dividends paid 6.0p 4.0p 5.0p
to date
Total return 104.8p 98.6p 101.9p
An interim dividend of 1.0p will be paid on 21 November 2014 to
shareholders on the register on 24 October 2014.
Chairman's Statement
Introduction
I am delighted to present to you the half-yearly report for Octopus VCT
plc for the period ended 31 August 2014.
Performance
The Company's performance has been pleasing in the period, with the
total return of the Company (NAV plus cumulative dividends) increasing
by 2.8%, from 101.9p as at 28 February 2014 to 104.8p as at 31 August
2014. This is due to the performance of the investment portfolio which
generated an uplift in value of GBP1,257,000, excluding disposals, in
the six months to 31 August 2014 together with income which exceeded
expenses.
Possible Merger and Fundraising
An announcement was published on 29 September 2014 stating that your
Board has entered into discussions with the Board of Octopus Apollo VCT
plc ("Apollo") regarding a possible merger between the Company and
Apollo. These discussions may or may not lead to an agreement to merge
the companies. Further details of any proposed merger will be sent to
all Shareholders in due course, together with the requisite notices of
general meetings of the Company at which shareholders will be able to
vote on the proposals.
If approved by shareholders, the Board expects the proposed merger to
provide advantages to Octopus VCT shareholders through providing
additional liquidity in 2015 and giving them access to an enlarged VCT
with an evergreen mandate. The merger is therefore expected to give
Octopus VCT shareholders the choice either to exit at the five year
point, with returns predicted in the Octopus VCT prospectus, or to
retain their shares in an enlarged VCT, whose objective is to generate
steady returns.
Investment Portfolio
As at 31 August 2014, the Company held investments in 47 companies with
a combined fair value of GBP48,190,000, representing 93.7% of net
assets.
In March 2014, the GBP2,000,000 loan to Borro was fully repaid, along
with all outstanding interest. In July 2014, the Company received a
partial loan repayment from Michabo Power for GBP264,000, along with all
the interest outstanding at that point in time.
The majority of the Company's portfolio is invested in the renewable
energy sector which continues to perform in line with expectations.
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. 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 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
interest income the Company generated from its investments, your Board
proposed a dividend of 1.0 pence per share, which was paid to
shareholders on 14 August 2014. Your Board has declared an interim
dividend of 1.0 pence per share, which will be paid on 21 November 2014
to those shareholders on the register on 24 October 2014.
VCT Qualifying Status
A key requirement is to invest at least 70% of the funds raised into
qualifying investments. As at 31 August 2014, 83.1% 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%.
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
The outlook for the economy continues to improve and we are delighted
with the uplift in the total return for the six months to 31 August
2014, which is the result of the solid capital performance of the
investment portfolio and the Company's revenue profits from investments.
The Investment Manager remains committed to managing the existing
portfolio which complements the mandate pursued by the Company. With
this in mind, your Board remains confident that the Company will achieve
its investment objectives and that 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 2295.
James Otter
Chairman
9 October 2014
Responsibility Statement of the Directors in respect of the Half-Yearly
Report
We confirm that to the best of our knowledge:
-- the half-yearly financial statements have been prepared in accordance
with the statement "Half-Yearly Financial Reports" issued by the UK
Accounting Standards Board;
-- the half-yearly report includes a fair review of the information required
by the Financial Services Authority 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
James Otter
Chairman
9 October 2014
Income Statement
Six months to 31 August Six months to 31 August
2014 2013 Year to 28 February 2014
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
Income 559 - 559 679 - 679 1,245 - 1,245
Fixed asset investment losses on
disposal - - - - (176) (176) - (172) (172)
Fixed asset investment holding gains - 1,257 1,257 - - - - 1,498 1,498
Investment management fees - - - - - - - - -
Other expenses (270) - (270) (263) - (263) (528) - (528)
Profit/(loss) on ordinary activities
before tax 289 1,257 1,546 416 (176) 240 717 1,326 2,043
Taxation on profit/(loss) on ordinary
activities - - - - - - (143) - (143)
Profit/(loss) on ordinary activities
after tax 289 1,257 1,546 416 (176) 240 574 1,326 1,900
Profit/(loss) per share - basic and 0.6p 2.4p 3.0p 0.8p (0.3)p 0.5p 1.1p 2.5p 3.6p
diluted
-- 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 accompanying notes are an integral part of the half-yearly report.
-- The Company has no recognised gains or losses other than those disclosed
in the income statement.
Reconciliation of Movements in Shareholders' Funds
Six months ended Six months ended Year to
31 August 2014 31 August 2013 28 February 2014
GBP'000 GBP'000 GBP'000
Shareholders' funds at
start of period 50,402 49,635 49,635
Profit on ordinary
activities after tax 1,546 240 1,900
Dividends paid (521) (521) (1,042)
Shares bought back for
cancellation - - (91)
Shareholders' funds at
end of period 51,427 49,354 50,402
Balance Sheet
As at 28 February
As at 31 August 2014 As at 31 August 2013 2014
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed asset
investments 48,190 46,699 49,197
Current
assets:
Investments -
money market
funds* 5 5 5
Debtors 499 579 543
Cash at bank 2,975 2,459 946
3,479 3,043 1,494
Creditors:
amounts
falling due
within one
year (242) (388) (289)
Net current
assets 3,237 2,655 1,205
Net assets 51,427 49,354 50,402
Called up
equity share
capital 520 521 520
Special
distributable
reserve 47,488 47,871 48,009
Capital
redemption
reserve 2 1 2
Capital
reserve
holding gains
and losses 3,023 268 1,766
Capital
reserve gains
on disposal (172) - (172)
Revenue
reserve 566 693 277
Total equity
shareholders'
funds 51,427 49,354 50,402
Net asset 98.8p 94.6p 96.9p
value per
share
*Held at fair value through profit and loss
There is a contingent liability with regard to the management fees
payable by the Company which is not included in Creditors on the balance
sheet. More information is given on this in note 6.
The statements were approved by the Directors and authorised for issue
on 9 October 2014 and are signed on their behalf by:
James Otter
Chairman
Company Number: 06948448
Cash Flow Statement
Six months ended Six months ended Year to
31 August 2014 31 August 2013 28 February 2014
GBP'000 GBP'000 GBP'000
Net cash inflow from
operating activities 286 605 910
Taxation - - (210)
Financial investment:
Purchase of fixed asset
investments - (4,616) (5,616)
Sale of fixed asset
investments 2,264 6,279 6,283
Management of liquid
resources:
Purchase of current
asset investments - - -
Sale of current asset
investments - - -
Dividends paid (521) (521) (1,042)
Financing:
Issue of own shares - - -
Share issue expense - - -
Purchase of own shares - - (91)
Increase in cash at
bank 2,029 1,747 234
Reconciliation of net cash flow to movement in net
funds
Six months ended Six months ended Year to
31 August 2014 31 August 2013 28 February 2014
GBP'000 GBP'000 GBP'000
Increase in cash at
bank 2,029 1,747 234
Opening net cash
resources 951 717 717
Net cash resources at
end of period 2,980 2,464 951
Reconciliation of profit before taxation to cash flow
from operating activities
Six months ended Six months ended Year to
31 August 2014 31 August 2013 29 February 2014
GBP'000 GBP'000 GBP'000
Profit on ordinary
activities before tax 1,546 240 2,043
Decrease in debtors 44 147 183
(Decrease)/increase in
creditors (47) 42 10
Loss on disposal of
fixed asset
investments - 176 172
Holding gain on fixed
asset investments (1,257) - (1,498)
Net cash inflow from
operating activities 286 605 910
Notes to the Half-Yearly Report
1. Basis of preparation
The unaudited half-yearly results which cover the six months to 31
August 2014 have been prepared in accordance with the Accounting
Standards Board's (ASB) statement on half-yearly financial reports (July
2007) and adopting the accounting policies set out in the statutory
accounts of the Company for the year ended 28 February 2014, 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 2009.
2. Publication of non-statutory accounts
The unaudited half-yearly results for the six months ended 31 August
2014 do not constitute statutory accounts within the meaning of s.415 of
the Companies Act 2006. The comparative figures for the year ended 28
February 2014 have been extracted from the audited financial statements
for that period, which have been delivered to the Registrar of
Companies. The independent auditor's report on those financial
statements, in accordance with chapter 3, 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 at 31 August 2014 is calculated on the basis of
52,035,840 (31 August 2013: 52,145,218 and 28 February 2014: 52,125,038)
shares, being the weighted average number of shares in issue during the
period.
There are no potentially dilutive capital instruments in issue and,
therefore, no diluted return per share figures are relevant. The basic
and diluted earnings per share are therefore identical.
4. Net asset value per share
The net asset value per share is calculated on the basis of 52,035,840
(31 August 2013: 52,145,218 and 28 February 2014: 52,035,840) shares in
issue at that date.
1. Principal Risks and Uncertainties
The Company's assets consist of equity and fixed-rate interest
investments, cash and liquid resources. Its principal risks are
therefore market risk, credit risk and liquidity risk. Other risks faced
by the Company include economic, loss of approval as a VCT, investment
and strategic, regulatory, reputational, operational and financial
risks. These risks, and the way in which they are managed, are described
in more detail in the Company's Annual Report and Accounts for the year
ended 28 February 2014. The Company's principal risks and uncertainties
have not changed materially since the date of that report.
1. Contingencies, guarantees and financial commitments
Under the terms of the Investment Management agreement, Octopus is
entitled to an annual management fee of 2.0% of net assets. However,
the annual management fee will be rolled up (without interest) and will
only be paid to Octopus once shareholders have received dividends and
distributions during the life of the Company totalling or exceeding 105p
per share. It is anticipated that the total returns to shareholders will
have reached 105p per share by the 5(th) anniversary of the Company.
Therefore the Board are aware of the likelihood that the management fee
will become payable at this point. The fee will only be payable on
returns above 105p and, as such, will not cause total returns to fall
below 105p. Octopus will only be entitled to receive an annual
management fee for the period from the date on which shares were first
allotted under the Offer until the date on which the general meeting is
held (expected to be in August 2015).
Since the total return as at 31 August 2014 was less than 105p, no
accrual has been made in respect of any management fee potentially
payable, in respect of which there was a maximum contingent liability of
GBP4,450,000 as at 31 August 2014 (31 August 2013: GBP3,450,000 and 28
February 2014: GBP3,950,000).
Provided that an intermediary continues to act for a shareholder and the
shareholder continues to be the beneficial owner of the shares,
intermediaries will be paid an annual trail commission up to 0.5% of the
initial net asset value. Trail commission of GBP118,000 was paid during
the six month period to 31 August 2014 (31 August 2013: GBP115,000 and
28 February 2014: GBP212,000) and there was GBPnil outstanding at the
period end.
There were no further contingencies, guarantees or financial commitments
as at 31 August 2014 (31 August 2013: none and 28 February 2014: none).
1. Related Party Transactions
Martijn Kleibergen, a non-executive director of Octopus VCT plc, is an
employee of Octopus Investments Limited.
Octopus VCT plc has employed Octopus throughout the period as Investment
Manager. Octopus VCT plc has paid Octopus GBPnil in the period as a
management fee and there is GBPnil outstanding at the balance sheet
date. No management fee shall be payable until certain performance
targets have been met, as detailed in note 6 above.
The fee in respect of the accounting and administrative services,
charged at 0.3% of the net asset value, is
payable quarterly in arrears and is calculated at annual intervals as at
28 February.
Octopus also provides company secretarial services for an additional fee
of GBP15,000 per annum.
8. Other Information
Copies of this statement will be made available to all shareholders.
Copies are also available from the registered office of the Company at
20 Old Bailey, London, EC4M 7AN, and will also be available to view on
the Investment Manager's website at www.octopusinvestments.com.
This announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Octopus VCT PLC via Globenewswire
HUG#1861974
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