TIDMOAP3
Octopus Apollo VCT Plc
Half-Yearly Results
19 September 2019
Octopus Apollo VCT plc, managed by Octopus Investments Limited, today
announces its unaudited half-yearly results for the six months ended 31
July 2019.
These results were approved by the Board of Directors on 19 September
2019.
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 to Year to
31 July 2019 31 July 2018 31 January 2019
Net assets (GBP'000s) 122,093 122,252 119,024
Return on ordinary activities after
tax (GBP'000s) 1,433 (3,038) (1,183)
Net asset value per share ('NAV') 46.2 47.9 47.1
Cumulative dividends paid since launch
(p per share) 72.6 69.6 71.1
NAV plus cumulative dividends paid (p) 118.8 117.5 118.2
Total return %* 1.3 (2.2) (0.8)
Ordinary dividend paid in period (p) 1.5 1.6 3.1
Ordinary dividend declared in the period
(p) 1.5 1.5 1.5
(*) 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 9 January 2020 to shareholders on
the register at 20 December 2019.
Chairman's Statement
I am pleased to present the half-yearly report of Octopus Apollo VCT for
the six months ended 31 July 2019.
On a total return basis, after adding back the 1.5p dividend paid in the
period, the NAV has increased 1.3% during the six months. In keeping
with the regular dividend policy, your Board has declared an interim
dividend of 1.5p which will be paid to shareholders on 9 January 2020.
During the period the majority of the portfolio performed broadly in
line with expectations leading to an increase in value of GBP1.8 million
as explained in detail in the next section. This increase in value
resulted in a profit of GBP1.4 million for the company, net of
investment income and management expenses.
The Company invested GBP7.2 million into new companies in the period, as
well as GBP4.3 million of follow-on funding rounds into five existing
investments, with further investments made after the end of the period.
The overall performance in the period has shown an improvement and a
return to profitability, although the political and economic uncertainty
resulting from Brexit negotiations still persists. I remain cautiously
optimistic for the future. Lastly, the Company's current fundraising is
ongoing and we are confident of raising sufficient new capital to fund
our exciting pipeline of future opportunities.
Murray Steele
Chairman
19 September 2019
Interim Management Report
Performance
In the six months under review the Total Return, after adding back the
1.5p of dividends paid in the period, has increased 1.3%. This
performance is attributable to a combination of the continuation of the
strong interest yield from loans made to portfolio companies and
positive fair value movements across most of the portfolio, offset by
adverse movements in the fair value of a small number of legacy assets
in the portfolio.
Portfolio Activity
In the period under review the value of the portfolio has increased by
GBP1.8 million, excluding additions and disposals. This increase is
mainly driven by Natterbox (N2JB Limited) (GBP2.8 million valuation
increase), Ubisecure (GBP1.5 million valuation increase) and ISG
Technology (Coupra Limited) (GBP1.9 million valuation increase)
partially offset by valuation decreases of GBP4.0 million on the Reserve
Power portfolio (Kabardin Limited, Valloire Power Limited and Red Poll
Power Limited) and GBP2.2 million on Oxifree. Other smaller valuation
adjustments across the portfolio also contributed to the overall
increase in the value of the portfolio.
During the period GBP11.5 million was invested, GBP7.2 million of which
was into the following new investments:
-- Rotolight GBP3.9 million -- a designer and producer of LED
lighting, which sells patent-protected flash and lighting products to
photographers, filmmakers and broadcasters; and
-- Veeqo GBP3.3 million -- an inventory management software company
focused on the SME e-commerce retail sector.
The remaining GBP4.3 million invested was to provide growth funding to
five existing portfolio companies including GBP2.1 million invested into
Ubisecure and GBP1.5 million invested into Natterbox to continue to
support each business' growth plans.
In July 2019 we saw the successful acquisition of City Pantry Limited by
Just Eat plc. This exit saw total proceeds of GBP4.9 million to Apollo,
a gain of GBP1.5 million on the previous valuation and a record IRR for
an Apollo investment. We also sold our investment in Tanganyika Heat
Limited realising a small loss on the disposal.
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 2019, the Company bought back 5,517,197 Ordinary shares
for total consideration of GBP2.5 million.
Share Issues and Fundraising
An Offer for Subscription was launched in May 2019 to raise up to GBP20
million and is expected to be open till December 2019 for prospective
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 2019. The dividend will be payable on 9
January 2020 to Ordinary shareholders on the register at 30 December
2019.
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 2019, 95.1% of the
portfolio, as measured by HMRC rules, was invested in VCT qualifying
investments.
The Finance Act 2018 made a number of changes to VCT rules on qualifying
holdings, with the main change being VCTs are now required to hold at
least 80% of its investments in VCT qualifying holdings, up from 70%.
This applies to accounting periods starting on or after 6 April 2019, so
for Apollo these rules will apply from 1st February 2020.
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 very uncertain in
the UK as a result of protracted exit negotiations with the European
Union. To date there has been little, if any, negative impact on the
portfolio and the investment team remains vigilant in monitoring the
situation carefully and any potential impact, directly or indirectly, on
the portfolio. The overall Company performance has been modest during
the period primarily as a result of specific trading performance issues
in a limited number of legacy investments which were offset by a strong
performance across the rest of the portfolio. On a positive note, the
investments completed after the significant change in VCT rules in 2017
are performing in line with expectations and are now the largest
positive contributor to the overall profit of the Company, which
provides further optimism for the future. The investment team has
continued the steady pace of new investments and continues to source an
active pipeline of new VCT qualifying investment opportunities.
Richard Court
Octopus Investments Limited
19 September 2019
Investment Portfolio
Movement
Investment in fair Movement % equity
cost as value Fair value in fair % equity held by
at 31 to 31 as at value held all funds
July 2019 July 2019 31 July in period by Apollo managed
Sector GBP'000 GBP'000 2019 GBP'000 GBP'000 VCT by Octopus
Fixed asset investments
Natterbox (N2JB Limited) Technology 6,490 3,185 9,675 2,774 9.0 9.0
Healthcare and Services Healthcare &
Technology Limited Education 7,186 1,130 8,316 (66) 10.0 10.0
Ubisecure Holdings Limited Technology 4,250 1,687 5,937 1,461 30.0 30.0
Information
Coupra Limited (ISG) Technology 5,000 878 5,878 1,891 9.8 9.8
Manufacturing
Anglo European Group Limited & Engineering 5,000 291 5,291 195 26.7 26.7
Countrywide Healthcare Healthcare &
Services Holdings Limited Education 2,675 2,315 4,990 81 20.7 20.7
Simply Cook Limited Consumer Goods 4,500 -- 4,500 - 16.4 16.4
Rotolight Group Ltd Consumer Goods 3,850 371 4,221 371 15.3 15.3
Veeqo Limited Technology 3,300 167 3,467 167 19.8 19.8
Care & Independence (Dyscova Healthcare &
Limited) Education 4,700 (1,626) 3,074 - 62.2 62.2
Other(*) Various 44,449 (6,426) 38,023 (5,025)
Total fixed asset investments 91,400 1,972 93,372 1,849
Current asset investments
Octopus Portfolio Manager -- Cash 9,251 103 9,354 34
Octopus Portfolio Manager -- Cash Plus 3,830 383 4,213 145
Total current asset investments 13,081 486 13,567 179
-------------
Total fixed and current asset investments 106,939
Cash at bank 20,288
Debtors less creditors (5,134)
Total net assets 122,093
* Comprises 40 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, Kabardin Limited, Leonardo Solar Limited,
Luther Pendragon Limited, Mi-Pay Group plc, Modigliani Solar Limited,
Nektan plc, Origami Energy Limited, Oxifree Group Holding Limited, Pirlo
Solar Limited, Red Poll Power Limited, Renalytix plc, Secret Escapes
Limited, Segura Systems Limited, Sourceable Limited (Swoon Editions),
Superior Heat Limited, Synnovia plc, Tintoretto Solar Limited, Tiziano
Solar Limited, Trafi Limited, Triumph Holdings Limited, Valloire Power
Limited, Vertu Motors plc, Winnipeg Heat Limited, 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
19 September 2019
Income Statement
Unaudited Unaudited Audited
Six months to 31 Six months to 31 Year to 31 January
July 2019 July 2018 2019
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
Realised gain/(loss)
on disposal of fixed
asset investments -- 6 6 -- 889 889 -- (531) (531)
Realised gain/(loss)
on disposal of current
asset investments -- 46 46 _ (6) (6) _ (127) (127)
Change in fair value
of fixed asset investments -- 1,849 1,849 -- (3,236) (3,236) -- 302 302
Change in fair value
of current asset investments -- 179 179 -- 38 38 -- -- --
Investment income 1,573 -- 1,573 1,638 -- 1,638 3,469 139 3,608
Investment management
fees (see note 7) (266) (1,932) (2,198) (310) (929) (1,239) (545) (1,634) (2,179)
Other expenses (22) -- (22) (1,122) -- (1,122) (2,256) -- (2,256)
FX translation -- -- -- -- - - -- 4 4
Profit/(loss) before
tax 1,285 148 1,433 206 (3,244) (3,038) 668 (1,851) (1,183)
Tax -- -- -- -- -- -- -- -- --
Profit/(loss) after
tax 1,285 148 1,433 206 (3,244) (3,038) 668 (1,851) (1,183)
Earnings per share --
basic and diluted 0.5p 0.1p 0.6p 0.1p (1.3)p (1.2)p 0.3p (0.7)p (0.4)p
-- 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 July As at 31 January
2019 2018 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed asset investments 93,372 77,078 86,538
Current assets:
Investments 13,567 41,501 18,342
Debtors 2,405 2,307 2,580
Cash at bank 20,288 2,960 13,203
32,260 46,768 34,125
Creditors: amounts falling due
within one year (7,539) (1,594) (1,639)
Net current assets 28,721 45,174 32,486
Net assets 122,093 122,252 119,024
Share capital 26,430 25,537 25,250
Share premium 59,620 52,729 53,256
Special distributable reserve 23,142 34,690 29,602
Capital redemption reserve 4,465 3,482 3,914
Capital reserve realised 4,691 10,164 7,698
Capital reserve unrealised 2,460 (4,556) (696)
Revenue reserve 1,285 206 --
Total equity shareholders'
funds 122,093 122,252 119,024
------------------------------- ------- ------- ------- ------- -------- ---------
Net asset value per share 46.2p 47.9p 47.1p
* Increase in creditors relate to dividends, the Dividend Reinvestment
Scheme and shares not alloted at the end of the period.
The statements were approved by the Directors and authorised for issue
on 19 September 2019 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 2019
As at 1 February
2019 25,250 53,256 29,602 3,914 7,698 (696) -- -- 119,024
Comprehensive income
for the period:
Management fee allocated
as capital expenditure -- -- -- -- (1,931) -- -- -- (1,931)
Current period gains
on disposal -- -- -- -- 52 -- -- -- 52
Current period losses
on fair value of
investments -- -- -- -- -- 2,028 -- -- 2,472
Profit after tax -- -- -- -- -- -- 1,285 -- 1,285
Total comprehensive
income for the period -- -- -- -- (1,879) 2,028 1,285 -- 1,878
Contributions by
and distributions
to owners:
Repurchase and cancellation
of own shares (551) -- (2,478) 551 -- -- -- -- (2,478)
Issue of shares 1,731 6,364 -- -- -- -- -- -- 8,095
Dividends paid -- -- (3,982) -- -- -- -- -- (3,982)
Total contributions
by and distributions
to owners 1,180 6,364 (6,460) 551 -- -- -- -- 1,635
Other movements:
Prior period holding
gains/losses now
realised -- -- -- -- (1,128) 1,128 -- --
Total other movements -- -- -- -- (1,128) 1,128 -- --
As at 31 July 2019 26,430 59,620 23,142 4,465 4,691 2,460 1,285 -- 122,093
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 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
Year to 31 January 2019
As at 1 February
2018 25,748 52,162 40,489 3,125 9,445 (602) -- 10 130,377
Comprehensive income
for the year:
Management fee allocated
as capital expenditure -- -- -- -- (1,634) -- -- -- (1,634)
Current year gains
on disposal -- -- -- -- (658) -- -- -- (658)
Current year gains
on fair value of
investments -- -- -- -- -- 302 -- -- 302
In-specie dividend -- -- -- -- 139 -- -- -- 139
Profit after tax -- -- -- -- -- -- 668 -- 668
Total comprehensive
income for the year -- -- -- -- (2,153) 302 668 -- (1,183)
Contributions by
and distributions
to owners:
Repurchase and cancellation
of own shares (789) -- (3,649) 789 -- -- -- -- (3,649)
Issue of shares 291 1,094 -- -- -- -- -- -- 1,385
Dividends paid -- -- (7,238) -- -- -- (668) -- (7,906)
Total contributions
by and distributions
to owners (498) 1,094 (10,887) 789 -- -- (668) -- (10,170)
Other movements:
Prior year holding
gains/losses now
realised -- -- -- -- 396 (396) -- -- --
Transfer of translation
reserve -- -- -- -- 10 -- -- (10) --
Total other movements -- -- -- -- 406 (396) -- (10) --
As at 31 January
2019 25,250 53,256 29,602 3,914 7,698 (696) -- -- 119,024
Cash Flow Statement
Unaudited Unaudited Audited
Six months to Six months to Year to
31 July 2019 31 July 2018 31 January 2019
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities:
Profit/(loss) after tax 1,433 (3,038) (1,183)
Adjustments for:
Decrease/(increase) in debtors 176 (233) (506)
Increase/(decrease) in creditors 1,918 (353) (308)
(Gain)/loss on disposal of fixed
assets (6) (889) 531
(Gain)/loss on revaluation of
fixed asset investments (1,849) 3,236 (302)
(Gain)/loss on disposal of current
assets (46) 6 127
Gain on revaluation of current
asset investments (179) (38) _
In-specie dividend - - (139)
Cash from operations 1,447 (1,309) (1,780)
Cash flows from investing
activities:
Purchase of fixed asset investments (11,477) (10,176) (17,509)
Disposal of current asset
investments 5,000 12,000 35,000
Sale of fixed asset investments 6,498 2,076 2,207
Net cash flows from investing
activities 21 3,900 (19,698)
Cash flows from financing
activities:
Purchase of own shares (2,478) (1,706) (3,649)
Share issues 8,095 - -
Dividends paid - (3,380) (6,521)
Net cash flows from financing
activities 5,617 (5,086) (10,170)
Increase/(decrease) in cash
and cash equivalents 7,085 (2,495) 7,748
Opening cash and cash equivalents 13,203 5,455 5,455
Closing cash and cash equivalents 20,288 2,960 13,203
Notes to the Half-Yearly Report
1. Basis of preparation
The unaudited half-yearly report which cover the six months to 31 July
2019 has 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 report for the six months ended 31 July 2019
does not constitute Statutory Accounts within the meaning of s.415 of
the Companies Act 2006. The comparative figures for the year ended 31
January 2019 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 252,299,145 shares, being the
weighted average number of shares in issue during the period (31 January
2019: 255,593,108; 31 July 2018: 256,759,529).
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 January
31 July 2019 31 July 2018 2019
Net assets (GBP) 122,093,000 122,252,000 119,024,000
Shares in Issue 264,300,126 255,369,857 252,496,695
Net asset value per
share (p) 46.2 47.9 47.1
5. Dividends
A final dividend, for the year ended 31 January 2019, of 1.5p per share
was paid on 9 August 2019 to shareholders on the register on 19 July
2019.
The interim dividend of 1.5p per share for the six months ending 31 July
2019 will be paid on 9 January 2020, to those shareholders on the
register on 20 December 2019.
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 2019.
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 GBP2,198,000 during the
period to 31 July 2019 (31 July 2018: GBP1,239,000; 31 January 2019:
GBP2,179,000).
During the period the Company has incurred performance fees of
GBP211,000 (31 July 2018: nil; 31 January 2019: nil) which are included
in the above management fees, as is a one-off charge of GBP870,000 made
to correct the calculation of historic performance fees.
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 GBP13.6 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 are also 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 19, 2019 12:40 ET (16:40 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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