TIDMOVCT
Octopus VCT plc
Half-Yearly Results
27 October 2011
Octopus VCT plc, managed by Octopus Investments Limited, today announces the
Half-Yearly results for the six months ended 31 August 2011.
These results were approved by the Board of Directors on 27 October 2011.
You may shortly view the Half-Yearly Report in full at
www.octopusinvestments.com by navigating to Services, Investor Services, Venture
Capital Trusts, Octopus VCT. All other statutory information will also be found
there.
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 GBP1 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
GBP7 million and whose total number of employees is less than 50, all at the time
of investment.
Financial Summary
+--------------+
| Six months to| Six months to Year to
|31 August 2011|31 August 2010 28 February 2011
=--------------------------------+--------------+-------------------------------
| |
| |
Net assets ( GBP'000s) | 48,992| 49,583 49,765
| |
Net (loss)/profit after tax| |
( GBP'000s) | (251)| 293 492
| |
Net asset value per share (NAV) | 93.8p| 94.9p 95.3p
| |
Cumulative dividends paid to date| 1.0p| - -
| |
Total return | 94.8p| 94.9p 95.3p
+--------------+
Chairman's Statement
Introduction
I am pleased to present the half-yearly report of Octopus VCT plc for the period
ended 31 August 2011.
Performance
The Total Return of the Fund has been relatively flat in the period with the Net
Asset Value (NAV) decreasing marginally from 95.3 pence per share to 94.8 pence
per share when adding back the 1.0 pence dividend paid.
This is in-line with expectations at this stage of the Fund's life, as receipts
from loan based investments are still gaining momentum, and we are yet to
recognise any appreciation in equity valuations due to their infancy.
Investment Portfolio
A total of GBP19.6 million has been invested in the period, of which GBP12.6 million
has been invested into companies that own and operate solar power units that
have been, or will be, connected to the National Grid. These investments were
made as your Board and Investment Manager believe that solar represents an
appropriate investment opportunity. This is because it is a well-established,
reliable form of technology that offers more predictable returns in exchange for
minimal risk due to the government administered Feed-in-tariff (FiT) scheme,
providing inflation linked returns.
GBP3.2 million was loaned into ticketing companies. These are companies that
provide a good yield by buying and re-selling tickets, at a margin, to various
events. To date, these loans have been repaid on schedule.
Other Investments were made into CSL DualCom, a company that provides building
security devices and Autologic, a company that develops automotive diagnostic
software. An investment was also made into Salus Services, a company funding the
development of a high-quality care home, predominantly for private residents, in
particular patients suffering with dementia who have a need for specialist care.
In the case of CSL and Autologic, the Investment Manager has structured the
investments so that the majority of funds receive loan interest, and there is
also potential for boosting Fund returns via a small equity stake.
The Salus investment is fully asset backed, in keeping with the lower risk
nature of this Fund.
Investment Strategy
The Fund continues to be managed in line with the mandate that was set out in
the prospectus whereby investments are made on the basis of taking less risk
than a typical VCT. Generally the Fund 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 Fund'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 Fund generated from its cash deposits, your Board proposed a dividend of
1.0 pence per share that was paid on 29 July 2011. However, given the current
opportunities the Investment Manager is seeing to deploy material levels of cash
into investments, in which a greater than 5% yield can be achieved, your Board
has decided it prudent not to pay an interim dividend.
VCT Qualifying Status
As at 31 August 2011 the Company was compliant with all necessary regulations.
A key requirement is to invest at least the 70% of the funds raised into
qualifying investments. As at 31 August 2011, 43.9% of the portfolio, as
measured by HMRC rules, was invested in VCT qualifying investments. The Manager
does not foresee any issues with reaching 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
Uncertainty over the current economic climate continues both from a domestic and
international point of view which has had the effect of dissuading investors
from investing into small unquoted companies. However all investments that have
been made by this Fund are currently trading in line with their budgets and were
selected on the basis that they are largely shielded from the macro-economic
environment.
Our interests remain aligned with that of the entrepreneurs' companies we have
invested into, being that of boosting growth and profitability, and we have
confidence that the Fund has been successful in adhering to the lower risk
mandate offered in the prospectus.
If you have any questions on any aspect of your investment, please call one of
the team on 0800 316 2347.
James Otter
Chairman
27 October 2011
Investment Portfolio
=---------------------------------------------------------------------------------
AIM-quoted Sector Investment Movement in Fair value % %
investments at cost as valuation to as at 31 equity equity
at 31 31 August August held by held by
August 2011 2011 Octopus all
2011 ( GBP'000) ( GBP'000) VCT funds
( GBP'000) managed
by
Octopus
=---------------------------------------------------------------------------------
EKF Healthcare 378 231 609 1.0% 6.4%
Diagnostics
Holdings
plc
=---------------------------------------------------------------------------------
Total AIM- 378 231 609
quoted
investments
=---------------------------------------------------------------------------------
Unquoted
investments
=---------------------------------------------------------------------------------
Shakti Solar 2,808 - 2,808 0.0% 0.0%
Power Ltd
Season Ticketing 2,671 - 2,671 0.0% 0.0%
Ticket
Credit Ltd
CSL Dualcom Security 1,300 - 1,300 0.0% 45.3%
Ltd
Donoma Solar 1,220 - 1,220 18% 100%
Power Ltd
Salus Care homes 1,000 - 1,000 10.4% 100.0%
Services
Holdings 1
Ltd
Salus Care homes 1,000 - 1,000 49.0% 49.0%
Services 2
Ltd
Personnel Advisory 1,000 - 1,000 49.0% 49.0%
Advisory
Services
Ltd
GreenCo Environmental 1,000 - 1,000 49.0% 49.0%
Services 2
Ltd
Saas Business 1,000 - 1,000 49.0% 49.0%
Business services
Services
Ltd
Autologic Automotive 1,000 - 1,000 16.3% 49.0%
Diagnostics
Holdings
Ltd
Resilient Business 1,000 - 1,000 16.3% 49.0%
Corporate services
Services
Ltd
Healthcare Healthcare 1,000 - 1,000 49.0% 49.0%
Education
Business
Services
Ltd
MediaCo Media 1,000 - 1,000 49.0% 49.0%
Business
Services
Ltd
Ticketus Ticketing 625 - 625 0.0% 0.0%
34 LLP
Howbery Solar 600 - 600 32% 32%
Solar Ltd
Aashman Solar 500 - 500 17% 100%
Power Ltd
Grian Power Solar 500 - 500 25% 100%
Ltd
Helaku Solar 500 - 500 25% 100%
Power Ltd
Intina Solar 500 - 500 25% 100%
Power Ltd
Kala Power Solar 500 - 500 18% 100%
Ltd
Nima Power Solar 500 - 500 25% 100%
Ltd
Tonatiuh Solar 500 - 500 21% 100%
Trading Ltd
Tuwale Solar 500 - 500 25% 100%
Power Ltd
Cyrah Power Solar 500 - 500 50% 100%
Ltd
Evaki Power Solar 500 - 500 50% 100%
Ltd
Gnowee Solar 500 - 500 25% 100%
Power Ltd
Sula Power Solar 500 - 500 25% 100%
Ltd
Teruko Solar 500 - 500 50% 100%
Power Ltd
Tonatiuh Solar 500 - 500 21% 100%
Power 2 Ltd
Yata Power Solar 500 - 500 50% 100%
Ltd
Palk Power Solar 500 - 500 25% 100%
Ltd
PTB Films Media 249 - 249 12.5% 100.0%
Ltd
Quickfire Media 247 - 247 6.5% 99.9%
2 Ltd
Quickfire Media 246 - 246 6.6% 99.7%
Ltd
=---------------------------------------------------------------------------------
Total
unquoted 26,966 - 26,966
investments
=---------------------------------------------------------------------------------
Total fixed
asset 27,344 231 27,575
investments
Money
market 14,642
funds
Cash at 6,118
bank
Debtors
less 657
creditors
=---------------------------------------------------------------------------------
Total net 48,992
assets
=---------------------------------------------------------------------------------
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
27 October 2011
Income Statement
+----------------------+
| Six months to 31 | Six months to 31 August Year to 28 February
| August 2011 | 2010 2011
| |
|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 | 208 - 208| 315 - 315 602 - 602
| |
| |
Fixed asset| |
investment | |
holding | |
(losses)/gains| - (6) (6)| - 194 194 - 237 237
| |
| |
Investment | |
management | |
fees | - - -| - - - - - -
| |
| |
| |
Other expenses| (453) - (453)| (216) - (216) (304) - (304)
| |
| |
=-------------+----------------------+-------------------------------------------------
(Loss)/profit | |
on ordinary | |
activities | |
before tax | (245) (6) (251)| 99 194 293 298 237 535
| |
| |
| |
Taxation on | |
(loss)/profit | |
on ordinary | |
activities | - - -| - - - (43) - (43)
| |
| |
=-------------+----------------------+-------------------------------------------------
(Loss)/profit | |
on ordinary | |
activities | |
after tax | (245) (6) (251)| 99 194 293 255 237 492
=-------------+----------------------+-------------------------------------------------
(Loss)/profit | |
per share - | |
basic and | |
diluted | (0.5)p 0.0p (0.5)p| 0.2p 0.4p 0.6p 0.5p 0.5p 1.0p
+----------------------+
* 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 2011| 31 August 2010 28 February 2011
| |
| GBP'000| GBP'000 GBP'000
=----------------------------+----------------+---------------------------------
Shareholders' funds at start | |
of period | 49,765| 4,729 4,729
| |
(Loss)/profit on ordinary | |
activities after tax | (251)| 293 492
| |
Issue of equity | -| 44,561 44,562
| |
Dividends paid | (522)| - -
| |
Shares bought back for | |
cancellation | -| - (18)
=----------------------------+----------------+---------------------------------
Shareholders' funds at end of| |
period | 48,992| 49,583 49,765
+----------------+
Balance Sheet
+------------------+
| As at 31 August| As at 28 February
| 2011|As at 31 August 2010 2011
| |
| GBP'000 GBP'000| GBP'000 GBP'000 GBP'000 GBP'000
=-------------------+------------------+----------------------------------------
| |
| |
Fixed asset | |
investments | 27,575| 569 8,615
| |
Current assets: | |
| |
Investments - money | |
market funds* |14,642 | - 35,038
| |
Debtors | 657 | 5 12
| |
Cash at bank | 6,118 |49,150 6,235
=-------------------+------------------+----------------------------------------
|20,864 |49,155 41,825
| |
Creditors: amounts | |
falling due within | |
one year | - | (141) (135)
=-------------------+------------------+----------------------------------------
Net current assets | 21,417| 49,014 41,150
=-------------------+------------------+----------------------------------------
| |
=-------------------+------------------+----------------------------------------
Net assets | 48,992| 49,583 49,765
=-------------------+------------------+----------------------------------------
| |
| |
Called up equity | |
share capital | 522 | 522 522
| |
Share premium | - |48,843 -
| |
Special | |
distributable | |
reserve |48,305 | - 48,827
| |
Capital reserve | |
holding gains and | |
losses | 231 | 194 237
| |
Revenue reserve | (66) | 24 179
=-------------------+------------------+----------------------------------------
Total equity | |
shareholders' funds | 48,992| 49,583 49,765
=-------------------+------------------+----------------------------------------
Net asset value per | |
share | 93.8p| 94.9p 95.3p
+------------------+
*Held at fair value through profit and loss
The statements were approved by the Directors and authorised for issue on 27
October 2011 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 2011| 31 August 2010 28 February 2011
| |
| GBP'000| GBP'000 GBP'000
=----------------------------+----------------+---------------------------------
| |
| |
Net cash (outflow)/inflow | |
from operating activities | (1,025)| 121 264
| |
| |
| |
Financial investment: | |
| |
Purchase of fixed asset | |
investments | (19,622)| (375) (8,378)
| |
Sale of fixed asset | |
investments | 656| - -
| |
| |
| |
Management of liquid | |
resources: | |
| |
Purchase of current asset | |
investments | (12,430)| - (64,155)
| |
Sale of current asset | |
investments | 32,826| - 29,117
| |
| |
| |
Dividends paid | (522)| - -
| |
| |
| |
Financing: | |
| |
Issue of own shares | -| 46,978 47,156
| |
Share issue expense | -| (2,417) (2,594)
| |
Purchase of own shares | -| - (18)
=----------------------------+----------------+---------------------------------
(Decrease)/increase in cash | |
at bank | (117)| 44,307 1,392
+----------------+
Reconciliation of net cash flow to movement in net funds
+----------------+
|Six months ended|Six months ended Year to
| 31 August 2011| 31 August 2010 28 February 2011
| |
| GBP'000| GBP'000 GBP'000
=----------------------------+----------------+---------------------------------
(Decrease)/increase in cash | |
at bank | (117)| 44,307 1,392
| |
(Decrease)/increase in cash | |
equivalents | (20,396)| - 35,038
| |
Opening net cash resources | 41,273| 4,843 4,843
=----------------------------+----------------+---------------------------------
Net cash resources at end of | |
period | 20,760| 49,150 41,273
+----------------+
Reconciliation of profit before taxation to cash flow from operating activities
+----------------+
|Six months ended|Six months ended Year to
| 31 August 2011| 31 August 2010 28 February 2011
| |
| GBP'000| GBP'000 GBP'000
=----------------------------+----------------+---------------------------------
(Loss)/profit on ordinary | |
activities before tax | (251)| 293 492
| |
(Increase) in debtors | (645)| (2) (9)
| |
(Decrease)/increase in | |
creditors | (135)| 24 18
| |
Loss on disposal of fixed | |
asset investments | -| - 12
| |
Holding gain/(loss) on fixed | |
asset investments | 6| (194) (237)
=----------------------------+----------------+---------------------------------
Net cash (outflow)/inflow | |
from operating activities | (1,025)| 121 264
+----------------+
Notes to the Half-Yearly Report
1. Basis of preparation
The unaudited half-yearly results which cover the six months to 31 August 2011
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
period ended 28 February 2011, 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 2011 do not
constitute statutory accounts within the meaning of s.415 of the Companies Act
2006. The comparative figures for the period ended 28 February 2011 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 2011 is calculated on the basis of
52,214,787 (31 August 2010: 45,343,019 and 28 February 2011: 49,318,293) 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 52,214,787 (31
August 2010: 52,233,294 and 28 February 2011: 52,214,787) shares in issue at
that date.
5. 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 period ended 28 February 2011. The Company's principal risks
and uncertainties have not changed materially since the date of that report.
6. Related Party Transactions
Chris Hulatt, a non-executive director of Octopus VCT plc, is a director 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.
Octopus is entitled to an annual management fee of 2.0% of net assets. In order
to ensure the alignment of
interests between Octopus and shareholders, the annual management fee will be
rolled up (without interest) and
will only be paid to Octopus once shareholders have received dividends during
the life of the Fund and
distributions at the time of the winding-up of a total of 105p per share.
Octopus will only be entitled to receive an
annual management fee for the period from the date on which shares are first
allotted under the Offer until the
date on which the general meeting is held (expected to be in August 2015) at
which shareholders will be asked to
approve the winding-up of Octopus VCT and the return of capital to shareholders.
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.
In addition, Octopus also provides secretarial services for an additional fee of
GBP15,000 per annum.
7. 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 Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Octopus VCT PLC via Thomson Reuters ONE
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