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Half-yearly report

Date : 09/30/2011 @ 12:07PM
Source : UK Regulatory (RNS & others)
Stock : Octopus App.2 (OAP2)
Quote : 82.5  0.0 (0.00%) @ 12:00AM
Octopus App.2 share price Chart

Half-yearly report


 
TIDMOAP2 
 
Octopus Apollo VCT 2 plc 
Half-Yearly Results 
 
30 September 2011 
 
Octopus Apollo VCT 2 plc, managed by Octopus Investments Limited, today 
announces the Half-Yearly results for the six months ended 31 July 2011. 
 
These results were approved by the Board of Directors on 30 September 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 Apollo VCT 2. All other statutory information will also 
be found there. 
 
About Octopus Apollo VCT 2 plc 
 
Octopus Apollo VCT 2 plc ("Apollo 2", "Company" or "Fund") is a venture capital 
trust ("VCT") and is managed by Octopus Investments Limited ("Octopus"). 
 
The Fund was launched in May 2006 together with Octopus Apollo VCT 1 plc. Both 
companies have identical investment policies, and together launched an offer for 
subscription comprising 25,000,000 Ordinary shares each, or 50,000,000 in 
aggregate (the "Offer"). The Offer closed on 5 April 2007 having raised  GBP17.6 
million in aggregate ( GBP16.8 million net of expenses). The objective of the Fund 
is to invest in a diversified portfolio of UK smaller companies in order to 
generate income and capital growth over the long-term. 
 
 
Venture Capital Trusts (VCTs) 
 
VCTs were introduced in the Finance Act 1995 to provide a means for private 
individuals to invest in unlisted 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: 
 
  * upfront income tax relief of 30% 
 
 ·                     exemption from income tax on dividends paid; and 
 ·                     exemption from capital gains tax on disposals of shares in 
VCTs 
 
The Company has been approved as a VCT by HM Revenue & Customs.  In order to 
maintain its approval, the Company must comply with certain requirements on a 
continuing basis.  Above all, the Company is required at all times to hold at 
least 70% of its investments (as defined in the legislation) in VCT qualifying 
holdings, of which at least 30% must comprise eligible Ordinary shares.  For 
this purpose, a 'VCT qualifying holding' consists of up to  GBP1 million invested 
in any one year in new shares or securities of a UK unquoted company (which may 
be quoted on AIM) which is carrying on a qualifying trade, and whose gross 
assets at the time of investment do not exceed a prescribed limit.  The 
definition of 'qualifying trade' excludes certain activities such as property 
investment and development, financial services and asset leasing. The Company 
will continue to ensure its compliance with these qualification requirements. 
 
 
Financial Summary 
 
 
                                    +-------------+ 
                                    |Six months to|Six months to         Year to 
                                    | 31 July 2011| 31 July 2010 31 January 2011 
                                    |             | 
                                    |             | 
                                    |             | 
Net assets ( GBP'000s)                 |        8,083|        7,925           8,020 
                                    |             | 
Net profit/(loss) after tax ( GBP'000s)|          192|         (24)             202 
                                    |             | 
Net asset value per share ("NAV")   |        93.0p|        91.2p           92.3p 
                                    |             | 
Cumulative dividends since launch - |             | 
paid and proposed                   |       10.25p|        7.25p           8.75p 
                                    +-------------+ 
 
Chairman's Statement 
 
 
Introduction and Performance 
 
Welcome to the half-yearly report of Octopus Apollo VCT 2 plc for the period 
ended 31 July 2011. The Fund has enjoyed a good performance in the first 6 
months of the year, the NAV has increased from 92.3 pence per share to 93.0 
pence per share. With the 1.5 pence dividend paid within the period, Total 
Return for the half year has increased 2.4%. 
 
This stems from both increased levels of interest income and an uplift in 
portfolio valuations of  GBP144,000. 
 
Investment Portfolio 
At CSL DualCom and Autologic, follow on VCT qualifying investments were made, in 
both cases the Investment Manager has agreed lending terms more favourable to 
the Fund, enabling it to receive higher rates of interest on the monies 
invested. 
 
With Autologic, the Fund has acquired equity at a discounted rate, causing 
recognition of an immediate gain in value. This accounts for the larger part of 
the increase in portfolio valuations recognised in the period. 
 
One new investment has been made, Kala Power - a company that has constructed 
solar power units to be connected to the National Grid. Your Board and 
Investment Manager believe that solar represents an appropriate investment 
opportunity; it is an established and reliable technology that offers 
predictable returns for low risk due to the government administered Feed-in- 
tariff (FiT) scheme. The UK government introduced a 25 year duration FiT in 
April 2010 to encourage greater investment into renewable energy. FiT is a form 
of cashback, with guaranteed payments (the rates of FiTs rise with inflation) 
made to households, organisations or companies that produce electricity from 
renewable sources, either for themselves or to be sold back to the National 
Grid. 
 
Investment Strategy 
The original mandate set out in the prospectus continues to set our investment 
strategy: investments are made on the basis of taking less risk than a typical 
VCT.  The Fund generally receives its return from interest paid on secured loan 
notes and from exposure to the value of the shares of investee companies. We 
seek to derive sufficient return from the secured loan notes to achieve the 
Fund's investment aims and to use the equity exposure to boost returns. 
 
As the cost of borrowing for private companies remains high, the Investment 
Manager is able to find appropriate investment opportunities to meet these 
objectives. 
 
Dividend and Dividend Policy 
Dividends paid out of a VCT are received by shareholders free of tax. For that 
reason your Board intends to maintain a consistent dividend flow when 
circumstances allow this to be done prudently. Given the performance of the 
Fund, your Board has proposed a dividend of 1.5 pence per share (payable from 
revenue reserves) in respect of the half year end. This will be paid on 18 
November 2011 to shareholders on the register on 21 October 2011. 
 
This follows the 1.5 pence dividend that was paid to shareholders on 8 July 
2011 in relation to the year ended 31 January 2011. 
 
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 is pleased to announce it has been 
advised that Octopus Apollo VCT 2 plc is in compliance with the conditions laid 
down by HMRC for maintaining approval as a VCT. 
 
A key requirement is to maintain at least the 70% qualifying investment level. 
As at 31 July 2011, 85.2% of the portfolio, as measured by HMRC rules, was 
invested in VCT qualifying investments. 
 
Principal Risks and Uncertainties 
The principal risks and uncertainties are set out in note 6 of the Notes to the 
Half-Yearly Report on page x. 
 
Outlook 
The economic climate, both domestically and internationally, remains uncertain, 
which dissuades some investors from small unquoted companies. However, although 
the Investment Manager is having to work closely with Bruce Dunlop, a company 
which has experienced difficulties, all other investments continue to trade 
positively. 
 
The investee companies and ourselves share common objectives, to boost growth 
and profitability. We are confident that the Fund has successfully adhered to 
its lower risk mandate and expect the Total Return to continue to progress. 
 
If you have any questions on any aspect of your investment, please call one of 
the team on 0800 316 2347. 
 
 
 
Stuart Brocklehurst 
Chairman 
30 September 2011 
 
Investment Portfolio 
 
                                                                                   % 
                                              Movement                        equity 
                                    Cost of         in                     % held by 
                                 investment  valuation                equity     all 
                                  as at 31   as at 31   Fair value as   held   funds 
                                       July       July     at 31 July     by managed 
Qualifying                       2011       2011       2011           Apollo      by 
investments   Sector                ( GBP'000)    ( GBP'000)        ( GBP'000)      1 Octopus 
 
Salus 
Services 1 
Holdings 
Limited       Care homes              1,365          -          1,365  14.2%  100.0% 
 
Clifford 
Thames Group 
Limited       Automotive                965        152          1,117   1.5%    8.0% 
 
Autologic 
Diagnostics 
Holdings 
Limited       Automotive              1,025        112          1,137   1.7%   10.0% 
 
CSL DualCom 
Limited       Environmental           1,000         16          1,016   0.0%   45.3% 
 
Project 
Tristar 
Limited       Chauffeur services        500         26            526   1.3%   35.0% 
 
Bruce Dunlop 
& Associates 
International 
Limited       Media                     509       (24)            485   0.9%   30.0% 
 
Bluebell 
Telecom 
Services 
Limited       Telecommunications        225         25            250   0.5%    6.5% 
 
Hydrobolt 
Limited       Manufacturing             197         32            229   0.9%   43.5% 
 
Ticketing 
Services 1 
Limited       Ticketing                 200          -            200  25.3%  100.0% 
 
Ticketing 
Services 2 
Limited       Ticketing                 200          -            200  25.3%  100.0% 
 
Kala Power 
Limited       Solar                     142          -            142   5.2%  100.0% 
 
 
 
Total qualifying investments          6,328        339          6,667 
 
Non- 
qualifying 
investments                             128          -            128 
 
Total fixed asset investments         6,456        339          6,795 
 
Money market funds                                                943 
 
Cash at bank                                                      244 
 
Debtors less creditors                                            101 
 
 
 
Total net assets                                                8,083 
 
 
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 
 
 
Stuart Brocklehurst 
Chairman 
30 September 2011 
 
 
Income Statement 
              +---------------------+ 
              |Six months to 31 July|Six months to 31 July  Year to 31 January 
              |        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 
              |                     | 
              |                     | 
              |                     | 
Gain on       |                     | 
disposal of   |                     | 
fixed asset   |                     | 
investments   |      -       -     -|      -       -     -       -     (6)   (6) 
              |                     | 
Gain on       |                     | 
disposal of   |                     | 
current asset |                     | 
investments   |      -       -     -|      -       -     -       -       6     6 
              |                     | 
              |                     | 
              |                     | 
Fixed asset   |                     | 
investment    |                     | 
holding gains |      -     144   144|      -       -     -       -     195   195 
              |                     | 
Current asset |                     | 
investment    |                     | 
holding gains |      -       -     -|      -       7     7       -       -     - 
              |                     | 
              |                     | 
              |                     | 
Income        |    201       -   201|    155       -   155     378       -   378 
              |                     | 
              |                     | 
              |                     | 
Investment    |                     | 
management    |                     | 
fees          |   (15)    (46)  (61)|   (21)    (64)  (85)    (42)   (125) (167) 
              |                     | 
              |                     | 
              |                     | 
Other expenses|   (92)       -  (92)|  (101)       - (101)   (202)       - (202) 
              |                     | 
              |                     | 
              |                     | 
Profit/(loss) |                     | 
on ordinary   |                     | 
activities    |                     | 
before tax    |     94      98   192|     33    (57)  (24)     134      70   204 
              |                     | 
              |                     | 
              |                     | 
Taxation on   |                     | 
profit/(loss) |                     | 
on ordinary   |                     | 
activities    |      -       -     -|      -       -     -     (2)       -   (2) 
              |                     | 
              |                     | 
              |                     | 
Profit/(loss) |                     | 
on ordinary   |                     | 
activities    |                     | 
after tax     |     94      98   192|     33    (57)  (24)     132      70   202 
              |                     | 
Earnings per  |                     | 
share - basic |                     | 
and diluted   |   1.1p    1.1p  2.2p|    0.4   (0.7) (0.3)    1.5p    0.8p  2.3p 
              +---------------------+ 
 
 
  * 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 July 2011|    31 July 2010 31 January 2011 
                              |                | 
                              |            GBP'000|            GBP'000            GBP'000 
                              |                | 
Shareholders' funds at start  |                | 
of period                     |           8,020|           8,167           8,167 
                              |                | 
Profit/(loss) on ordinary     |                | 
activities after tax          |             192|            (24)             202 
                              |                | 
Dividends paid                |           (129)|           (218)           (349) 
                              |                | 
Shareholders' funds at end of |                | 
period                        |           8,083|           7,925           8,020 
                              +----------------+ 
 
 
 
Balance Sheet 
                             +----------------+ 
                             |   As at 31 July|   As at 31 July As at 31 January 
                             |            2011|            2010             2011 
                             |                | 
                             | GBP'000       GBP'000| GBP'000       GBP'000  GBP'000       GBP'000 
                             |                | 
                             |                | 
                             |                | 
Fixed asset investments*     |           6,795|           6,771            6,691 
                             |                | 
Current assets:              |                | 
                             |                | 
Investments*                 |  943           |1,053            1,124 
                             |                | 
Debtors                      |  133           |   10               92 
                             |                | 
Cash at bank                 |  244           |  111              153 
                             |                | 
                             |1,320           |1,174            1,369 
                             |                | 
Creditors: amounts falling   |                | 
due within one year          | (32)           | (20)             (40) 
                             |                | 
Net current assets           |           1,288|           1,154            1,329 
                             |                | 
                             |                | 
                             |                | 
Net assets                   |           8,083|           7,925            8,020 
                             |                | 
                             |                | 
                             |                | 
Called up equity share       |                | 
capital                      |             869|             869              869 
                             |                | 
Special distributable reserve|           6,952|           7,346            7,081 
                             |                | 
Capital redemption reserve   |              16|              16               16 
                             |                | 
Capital reserve - gains &    |                | 
losses on disposal           |           (361)|           (258)            (315) 
                             |                | 
                         -   |                | 
holding gains & losses       |             340|           (122)              196 
                             |                | 
Revenue reserve              |             267|              74              173 
                             |                | 
Total equity shareholders'   |                | 
funds                        |           8,083|           7,925            8,020 
                             |                | 
Net asset value per share    |           93.0p|           91.2p            92.3p 
                             +----------------+ 
 
 
 
*Held at fair value through profit and loss 
 
 
 
The statements were approved by the Directors and authorised for issue on 30 
September 2011 and are signed on their behalf by: 
 
 
 
 
Stuart Brocklehurst 
Chairman 
Company Number: 05770744 
 
Cash flow statement 
                         +-------------+ 
                         |Six months to|  Six months to 31    Year to 31 January 
                         | 31 July 2011|          July 2010                 2011 
                         |             | 
                         |         GBP'000|               GBP'000                 GBP'000 
                         |             | 
                         |             | 
                         |             | 
Net cash outflow from    |             | 
operating activities     |          (1)|               (31)                 (53) 
                         |             | 
                         |             | 
                         |             | 
Taxation                 |            -|                  -                  (2) 
                         |             | 
                         |             | 
                         |             | 
Financial investment:    |             | 
                         |             | 
Purchase of  fixed asset |             | 
investments              |        (270)|              (110)                (109) 
                         |             | 
Sale of fixed asset      |             | 
investments              |          310|                  -                  269 
                         |             | 
                         |             | 
                         |             | 
Management of liquid     |             | 
resources:               |             | 
                         |             | 
Purchase of current asset|             | 
investments              |      (2,161)|              (250)              (1,819) 
                         |             | 
Sale of current asset    |             | 
investments              |        2,342|                626                2,122 
                         |             | 
                         |             | 
                         |             | 
Dividends paid           |        (129)|              (218)                (349) 
                         |             | 
                         |             | 
                         |             | 
Increase in cash at bank |           91|                 17                   59 
                         +-------------+ 
 
Reconciliation of profit before taxation to cash flow from operating activities 
                             +----------------+ 
                             |   Six months to|   Six months to      Year to 31 
                             |    31 July 2011|    31 July 2010     January 2011 
                             |                | 
                             |            GBP'000|            GBP'000             GBP'000 
                             |                | 
Profit/(loss) on ordinary    |                | 
activities before tax        |             192|            (24)              204 
                             |                | 
Gain on disposal of current  |                | 
asset investments            |               -|               -              (6) 
                             |                | 
Loss on disposal of fixed    |                | 
asset investments            |               -|               -                6 
                             |                | 
Holding gain on current asset|                | 
investments                  |               -|             (7)                - 
                             |                | 
Holding gain on fixed asset  |                | 
investments                  |           (144)|               -            (195) 
                             |                | 
(Increase)/decrease in       |                | 
debtors                      |            (41)|              32             (50) 
                             |                | 
Decrease in creditors        |             (8)|            (32)             (12) 
                             |                | 
Net cash outflow from        |                | 
operating activities         |             (1)|            (31)             (53) 
                             +----------------+ 
 
 
Reconciliation of net cash flow to movement in net funds 
                       +------------------+ 
                       | Six months to 31 | Six months to 31  Year to 31 January 
                       |         July 2011|         July 2010               2011 
                       |                  | 
                       |              GBP'000|              GBP'000               GBP'000 
                       |                  | 
Increase in cash at    |                  | 
bank                   |                91|                17                 59 
                       |                  | 
Decrease in cash       |                  | 
equivalents            |             (181)|             (368)              (297) 
                       |                  | 
Opening net cash       |                  | 
resources              |             1,277|             1,515              1,515 
                       |                  | 
Net cash resources at  |                  | 
end of period          |             1,187|             1,164              1,277 
                       +------------------+ 
 
 
Notes to the Half-Yearly Report 
 
1.         Basis of preparation 
The unaudited half-yearly results which cover the six months to 31 July 2011 
have been prepared in accordance with the Accounting Standard 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 31 January 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 July 2011 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 2011 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 figures as at 31 July 2011 are calculated on the basis of 
8,693,486 (31 July 2010: 8,693,486 and 31 January 2011: 8,693,486) 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 earnings 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 based on net assets as at 31 July 2011 divided 
by 8,693,486 (31 July 2010: 8,693,486 and 31 January 2011: 8,693,486) shares in 
issue at that date. 
 
5.         Dividends 
The interim dividend of 1.5 pence per share for the six months ending 31 July 
2011 will be paid on 18 November 2011, to those shareholders on the register on 
21 October 2011. This will be paid from revenue reserves. 
 
A final dividend, for the year ending 31 January 2011, of 1.5 pence per share 
was paid on 8 July 2011 to shareholders on the register on 10 June 2011, 
comprising a payment of 0.75 pence from revenue reserves and 0.75 pence from 
capital reserves. 
 
6.         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 31 January 2011. The Company's principal risks and 
uncertainties have not changed materially since the date of that report. 
 
 
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 cent per annum of the net assets of 
the Company for the investment management services. During the period, the 
Company incurred management fees of  GBP61,000 (31 July 2010:  GBP85,000 and 31 
January 2011:  GBP167,000) payable to Octopus. At the period end there was  GBPnil (31 
July 2010:  GBPnil and 31 January 2011:  GBPnil) outstanding to Octopus.  Furthermore, 
Octopus provides administration and company secretarial services to the 
Company.  Octopus receives a fee of 0.3 per cent per annum of net assets of the 
Company for administration services and  GBP7,500 per annum for company secretarial 
services. 
 
8.         A version 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 Apollo VCT2 plc via Thomson Reuters ONE 
 
[HUG#1551345] 
 

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