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
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