TIDMOAP3
Octopus Apollo VCT Plc
Half-Yearly Results
28 September 2017
Octopus Apollo VCT plc, managed by Octopus Investments Limited, today
announces the unaudited half-yearly results for the six months ended 31
July 2017.
These results were approved by the Board of Directors on 28 September
2017.
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 to Six months to Year to
31 July 2017 31 July 2016 31 January 2017
Net assets (GBP'000s) 155,341 152,139 141,799
Return on ordinary activities
after tax (GBP'000s) 1,799 1,309 5,172
Net asset value ('NAV')* 62.2p 83.0p 63.2p
Cumulative dividends paid 55.7p 32.5p 54.0p
since launch (p per share)*
Total return* 117.9p 115.5p 117.2p
Ordinary dividend declared in 1.6p 2.5p 1.7p
respect of period
Special dividend declared - 16.5p -
*Comparative figures are for the Ordinary Share class only.
The interim dividend will be paid on 15 December 2017 to Shareholders on
the register on 24 November 2017, and will be eligible for the Dividend
Reinvestment Scheme (DRIS).
Chairman's Statement
I am pleased to present the half-yearly report of Octopus Apollo VCT for
the six months ended 31 July 2017.
The NAV total return including the 1.7p dividend paid in the period,
increased by 1.1% during the six months although the NAV decreased by
1.0p per share. In keeping with the regular dividend policy, your Board
has declared an interim dividend of 1.6p which will be paid to
shareholders in December.
During the period the portfolio performed broadly in line with
expectations with a small number of exceptions and there were five exits
as explained in further detail below.
There were follow-on funding rounds into seven existing investments and
the team currently has a strong pipeline of new investment opportunities
so I remain cautiously optimistic about the outlook, despite the
political and economic uncertainty resulting from Brexit negotiations.
Murray Steele
Chairman
28 September 2017
Interim Management Report
Overview
We are approaching the investment environment with caution at present
given the political and economic uncertainty relating to Europe. The
portfolio is not materially exposed to Europe so the most obvious risk
appears to be that a UK recession could result. However the investments
are generally structured with a higher component of lending than equity
which provides an element of downside protection.
Performance
In the six months under review the NAV Total Return, after adding back
the 1.7p of dividends paid in the period, has increased 1.1% although
the Net Asset Value has decreased 1.6% to 62.2p per share, compared to
63.2p per share at 31 January 2017. This generally positive performance
is attributable to a number of successful exits which will be discussed
later in this statement, as well as a continuation of the strong
interest yield from loans made to portfolio companies.
Portfolio Activity
The most significant drivers of change in value are the disposals
described in more detail below. Within the remaining portfolio the most
positive developments were in Eve Sleep, valued up by GBP0.6 million
during the period, based on the share price at the point of listing on
the Alternative Investment Market in April, and Swoon Editions (up
GBP0.5 million) as it continues to grow faster than forecasted.
Unfortunately the investment in Spiralite was written down to zero (from
GBP1.4 million) as a result of entering administration in July. The
rest of the portfolio continues to perform broadly in line with
expectations.
During the six months to 31 July 2017, the Company made the following
disposals:
Initial Cost Sale Proceeds Gain/(Loss) on Sale
(GBP) (GBP) (GBP)
Clifford Thames Group
Limited 13,318,000 24,014,000 10,696,000
Aquaso Limited 3,500,000 3,907,000 407,000
The History Press 754,000 857,000 103,000
Haravar Limited 5,000,000 4,987,000 (13,000)
Galvara Limited 5,000,000 4,987,000 (13,000)
27,572,000 38,752,000 11,180,000
Clifford Thames was acquired by OEConnection LLC in June 2017, a US
company specialising in automotive technology for vehicle manufacturers.
This generated a strong return to Apollo of 1.8x cash invested over the
three year period since Lloyds Development Capital acquired the company
in August 2014 and Apollo reinvested GBP14.4 million. The return
includes the interest income on the loan and the uplift in value of the
shares.
In May 2017 Aquaso was sold to Eddyfi Technologies, a Canadian oil and
gas technology business. Aquaso is the holding company of Technical
Software Consultants ("TSC"), an oil and gas technology, services and
manufacturing business. Apollo originally invested GBP3 million in 2012
and provided a further GBP0.5 million in January 2016 when the market
conditions were extremely challenging. The sale provided a return of
1.4x total cash invested, including interest income earned on the loan.
There was also an earn-out which successfully concluded after 31 July,
taking total returns to 1.5x.
The disposals of Galvara and Haravar related to acquisition vehicles
which had been established to acquire or develop a VCT qualifying trade,
but for which the opportunities being pursued did not materialise. The
boards of those companies consequently elected to liquidate them and
return funds to Apollo. The History Press was acquired as part of the
Eclipse portfolio and has now been sold.
Following the sale of SCM World to Gartner Inc in June 2016, an earn out
was successfully achieved resulting in a further GBP0.3 million of
proceeds in March 2017.
During the period GBP1.3 million was invested to provide follow-on
funding rounds to seven existing portfolio companies. The largest of
these was GBP0.7 million invested in Oxifree, an oil and gas services
business acquired as part of the Eclipse portfolio.
Transactions with Manager
Details of amounts paid to the Manager are disclosed in note 7 to the
Financial Statements.
Share Buybacks
Your Company has continued to buy back shares. In the six months to July
2017, the Company bought back 1,263,370 shares for total consideration
of GBP754,000.
Share Issues and Fundraising
An Offer for Subscription was launched in November 2016 to raise up to
GBP20 million, and closed fully subscribed in March 2017, eight months
ahead of schedule. After expenses, GBP16 million pounds was raised under
the offer in the period under review. In total, the offer raised GBP20.5
million net of expenses.
Dividend and Dividend Policy
It is your 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.
Your Board has declared an interim dividend of 1.6p per share in respect
of the period ended 31 July 2017. The dividend will be payable on 15
December 2017 to shareholders on the register at 24 November 2017.
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 2017, 78% 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 to the half
yearly report and accounts.
Summary and Future Prospects
The political and economic environments remain uncertain as a result of
exit negotiations with the European Union. However the portfolio has
generally continued to perform well and the focus on investing a
substantial part of the capital in the form of loans further reduces
volatility. The recent weakening of the British Pound has not had a
significant impact on the businesses we have backed as they are
generally UK based and do not have large unhedged foreign currency
exposures. As such, the returns to shareholders have shown low
volatility year on year, which is testament to the prudent investment
approach adopted by the Investment Manager. The investment team has an
active pipeline of new investment opportunities and we believe we can
continue to find suitable VCT qualifying investments.
Octopus Investments Limited
28 September 2017
Investment Portfolio
% equity
held by
Investment all
cost as at % equity funds
31 July held by managed
2017 Movement in fair value to Fair value as at Movement in fair value in period Apollo by
Sector (GBP'000) 31 July 2017 (GBP'000) 31 July 2017 (GBP'000) (GBP'000) VCT Octopus
Fixed asset
investments
Vista Retail
Support Business
Limited Services 6,758 2,639 9,397 (160) 12.0 12.0
Healthcare
and
Services
Technology Healthcare &
Limited Education 7,186 328 7,514 (403) 10.0 10.0
Anglo
European Manufacturing
Group &
Limited Engineering 5,000 (168) 4,832 40 26.7 26.7
Coupra Business
Limited Services 5,000 (189) 4,811 (494) 9.8 9.8
Dyscova Healthcare &
Limited Education 4,700 - 4,700 - 67.7 67.7
Countrywide
Healthcare
Services Healthcare &
Limited Education 2,675 952 3,627 193 20.7 20.7
Kabardin
Limited Energy 2,450 - 2,450 - 49.0 49.0
Red Poll
Power
Limited Energy 2,450 - 2,450 - 49.0 49.0
Valloire
Power
Limited Energy 2,450 - 2,450 - 49.0 49.0
Tanganyika
Heat
Limited Energy 4,108 (1,858) 2,250 (24) 50.0 50.0
Other(*) Various 36,319 (2,414) 33,905 (426)
Total fixed asset
investments 79,096 (710) 78,386 (1,274)
Current
asset
investments
Octopus Portfolio Manager -
Cash 32,000 4 32,004 4
Octopus Portfolio Manager -
Cash Plus 19,000 112 19,112 112
Octopus Portfolio Manager -
Defensive Capital Growth 19,000 74 19,074 74
Total current asset
investments 70,000 190 70,190 190
Total fixed and current
asset investments 148,576
Cash at bank 6,067
Debtors less creditors 698
Total net assets 155,341
*Comprises 43 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 plc, Ergomed plc, Eve Sleep Limited, Hasgrove
Limited, Leonardo Solar Limited, Luther Pendragon Limited, Mi-Pay Group
plc, MIRACL Limited, Modigliano Solar Limited, Nektan plc, Origami
Energy Limited, Oxifree UK Limited, Pirlo Solar Limited, Plastics
Capital plc, PTB Films, Quickfire, Quickfire2, Secret Escapes Limited,
Segura Systems Limited, Sourceable Limited, Superior Heat Limited,
Tailsco Limited, Tanfield Group Limited, Time Out Group plc, Tintoretto
Solar Limited, Tiziano Solar Limited, Trafi Limited, Vertu Motors plc,
Winnipeg Heat (Caspian), Yu Group plc, 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 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
28 September 2017
Income Statement
Unaudited Unaudited Audited
Six months to 31
Six months to 31 July 2017 July 2016 Year to 31 January 2017
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 - 3,701 3,701 - 987 987 - 2,658 2,658
Change in
fair value
of fixed
asset
investments - (1,274) (1,274) - 367 367 - 4,525 4,525
Change in
fair value
of current
asset
investments - 190 190 - - - - - -
Investment
income 2,061 - 2,061 2,188 - 2,188 4,128 - 4,128
Investment
management
fees (341) (1,406) (1,747) (308) (1,097) (1,405) (647) (2,844) (3,491)
Other
expenses (1,136) - (1,136) (758) - (758) (2,654) - (2,654)
FX
translation - 4 4 - - - - 6 6
Return on
ordinary
activities
before tax 584 1,215 1,799 1,122 257 1,379 827 4,345 5,172
Taxation on
return on
ordinary
activities - - - (70) - (70) - - -
Return on
ordinary
activities
after tax 584 1,215 1,799 1,052 257 1,309 827 4,345 5,172
Earnings per 0.2p 0.5p 0.7p 0.6p 0.2p 0.8p 0.5p 2.5p 3.0p
share -
basic and
diluted
-- The 'Total' column of this statement is the profit and loss account of
the Company; the supplementary revenue return and capital return columns
have been prepared under guidance published by the Association of
Investment Companies.
-- All revenue and capital items in the above statement derive from
continuing operations.
-- The 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 2017 As at 31 July 2016 As at 31 January 2017
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed asset
investments 78,386 115,435 112,884
Current
assets:
Investments 70,190 - -
Debtors 2,245 5,248 4,077
Cash at bank 6,067 35,632 29,229
78,502 40,880 33,306
Creditors:
amounts
falling due
within one
year (1,547) (4,176) (4,391)
Net current
assets 76,955 36,704 28,915
Net assets 155,341 152,139 141,799
Share capital 25,138 16,745 22,603
Share premium 48,308 1,438 34,231
Special
distributable
reserve 71,149 128,328 76,144
Capital
redemption
reserve 2,958 2,672 2,832
Capital
reserve
realised 7,714 (1,087) (1,537)
Capital
reserve
unrealised (520) 2,988 7,520
Revenue
reserve 584 1,055 -
Translation
reserve 10 - 6
Total equity
shareholders'
funds 155,341 152,139 141,799
Net Asset 62.2p 83.0p 63.2p
Value per
share
The statements were approved by the Directors and authorised for issue
on 28 September 2017 and are signed on their behalf by:
Murray Steele
Chairman
Company Number: 05840377
Statement of Changes in Equity
Share Capital Share Premium Special distributable reserves Capital Redemption Reserve Capital reserve realised Capital reserve unrealised Revenue reserve Translation 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 2017
As at 1
February
2017 22,603 34,231 76,144 2,832 (1,537) 7,520 - 6 141,799
Comprehensive
income for the
period:
Management fee
allocated as
capital
expenditure - - - - (1,406) - - - (1,406)
Current period
gains on
disposal - - - - 3,701 - - - 3,701
Current period
gains on fair
value of
investments - - - - - (1,084) - - (1,084)
Current period
currency
gains - - - - - - - 4 4
Profit on
ordinary
activities
after tax - - - - - - 584 584
Total
comprehensive
income for
the period - - - - 2,295 (1,084) 584 4 1,799
Contributions
by and
distributions
to owners:
Repurchase and
cancellation
of own
shares (126) - (754) 126 - - - - (754)
Issue of
shares 2,661 14,077 - - - - - - 16,738
Dividends paid - - (4,241) - - - - - (4,241)
Total
contributions
by and
distributions
to owners 2,535 14,077 (4,995) 126 - - - - 11,743
Other
movements:
Prior period
holding
gains/losses
now realised - - - - 6,956 (6,956) - - -
Total other
movements - - - - 6,956 (6,956) - - -
As at 31 July
2017 25,138 48,308 71,149 2,958 7,714 (520) 584 10 155,341
Six months to 31 July 2016
As at 1
February
2016 13,896 48,893 60,748 2,557 (1,866) 3,510 3 - 127,741
Comprehensive
income for the
period:
Management fee
allocated as
capital
expenditure - - - - (1,097) - - - (1,097)
Current period
gains on
disposal - - - - 987 - - - 987
Current period
gains on fair
value of
investments - - - - - 367 - - 367
Profit on
ordinary
activities
after tax - - - - - - 1,052 - 1,052
Total
comprehensive
income for
the period - - - - (110) 367 1,052 - 1,309
Contributions
by and
distributions
to owners:
Repurchase and
cancellation
of own
shares (115) - (901) 115 - - - - (901)
Issue of
shares 2,964 21,026 - - - - - - 23,990
Total
contributions
by and
distributions
to owners 2,849 21,026 (901) 115 - - - - 23,089
Other
movements:
Prior period
holding
gains/losses
now realised - - - - 889 (889) - - -
Cancellation
of share
premium - (68,481) 68,481 - - - - - -
Total other
movements - (68,481) 68,481 - 889 (889) - - -
As at 31 July
2016 16,745 1,438 128,328 2,672 (1,087) 2,988 1,055 - 152,139
Year to 31 January 2017
As at 1
February
2016 13,896 48,893 60,748 2,557 (1,866) 3,510 3 - 127,741
Comprehensive
income for the
year:
Management fee
allocated as
capital
expenditure - - - - (2,844) - - - (2,844)
Current year
gains on
disposal - - - - 2,658 - - - 2,658
Current year
gains on fair
value of
investments - - - - - 4,525 - - 4,525
Current year
currency
gains - - - - - - - 6 6
Profit on
ordinary
activities
after tax - - - - - - 827 - 827
Total
comprehensive
income for
the year - - - - (186) 4,525 827 6 5,172
Contributions
by and
distributions
to owners:
Repurchase and
cancellation
of own
shares (275) - (1,955) 275 - - - - (1,955)
Issue of
shares 5,446 35,706 - - - - - - 41,152
Dividends paid - - (36,711) - - - (830) - (37,541)
Total
contributions
by and
distributions
to owners 5,171 35,706 (38,666) 275 - - (830) - 1,656
Other
movements:
Prior year
holding
gains/losses
now realised - - - - 515 (515) - - -
Cancellation
of Share
Premium - (50,788) 50,788 - - - - - -
Cancellation
of Deferred
Shares - C
shares (349) - 349 - - - - - -
Deferred
shares
created - D
shares 156 - (156) - - - - - -
Shares issued
on D share
conversion 385 - (385) - - - - - -
Dividends paid
on D share
conversion - - (14,418) - - - - - 14,418
Acquisition of
D share
class (191) (17,693) 17,884 - - - - - -
Acquisition of
Octopus
Eclipse VCT
plc 3,535 18,113 - - - - - - 21,648
Total other
movements 3,536 (50,368) 54,062 - 515 (515) - - 7,230
As at 31
January 2017 22,603 34,231 76,144 2,832 (1,537) 7,520 - 6 141,799
Cash Flow Statement
Unaudited Unaudited Audited
Six months to Six months to Year to
31 July 2017 31 July 2016 31 January 2017
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities:
Return on ordinary
activities after tax 1,799 1,309 5,172
Adjustments for:
Decrease in debtors 1,832 57 1,228
Decrease in creditors (2,844) (291) (76)
Debtors obtained from
transaction - - 848
Creditors obtained from
transaction - - (157)
Gain on disposal of fixed
assets (3,701) (987) (2,658)
Loss/(Gain) on valuation of
fixed asset investments 1,274 (367) (4,525)
Gain on valuation of
current asset investments (190) - -
Cash from operations (1,830) (209) (168)
Cash flows from investing
activities:
Cash acquired from
transaction - - 622
Purchase of fixed asset
investments (1,348) (9,000) (9,269)
Purchase of current asset
investments (72,000) - -
Sale of fixed asset
investments 38,273 11,547 40,531
Sale of current asset
investments 2,000 - -
Dividend paid to exiting D
shareholders - - (14,418)
Net cash flows from
investing activities (33,075) 2,547 17,466
Cash flows from financing
activities:
Purchase of own shares (754) (901) (1,955)
Share issues 16,738 23,990 41,152
Dividends Paid (4,241) - (37,541)
Net cash flows from
financing activities 11,743 23,089 (1,656)
(Decrease)/Increase in cash
and cash equivalents (23,162) 25,357 18,954
Opening cash and cash
equivalents 29,229 10,275 10,275
Closing cash and cash
equivalents 6,067 35,632 29,229
Cash and cash equivalents
comprise:
Cash at Bank 6,067 35,632 29,229
Notes to the Half-Yearly Report
1. Basis of preparation
The unaudited half-yearly results which cover the six months to 31 July
2017 have been prepared in accordance with the Financial Reporting
Council's (FRC) Financial Reporting Standard 104 Interim Financial
Reporting (March 2015) and the Statement of Recommended Practice for
Investment Companies, re-issued by the Association of Investment
Companies in January 2017.
2. Publication of non-statutory accounts
The unaudited half-yearly results for the six months ended 31 July 2017
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 2017 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 243,295,650 shares, being the
weighted average number of shares in issue during the period (31 January
2017: 169,230,581; 31 July 2016: 172,098,191 including Ordinary Shares
and D Ordinary Shares).
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 July 2017 31 July 2016 31 January 2017
Net Assets (GBP) 155,341,000 134,526,000 141,799,000
Shares in Issue 249,818,756 162,042,257 224,470,119
Net Asset Value per share (p) 62.2 83.0 63.2
5. Dividends
A final dividend, for the year ended 31 January 2017, of 1.7p per share
was paid on 28 July 2017 to shareholders on the register on 30 June
2017.
The interim dividend of 1.6p per share for the six months ending 31 July
2017 will be paid on 15 December 2017, to those shareholders on the
register on 24 November 2017.
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 2017. 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.
The Company has incurred management fees of GBP1,494,000 during the
period to 31 July 2017 (31 July 2016: GBP1,232,000; 31 January 2017:
GBP2,588,000).
A performance fee of GBP253,000 has been incurred during the period to
31 July 2017 (31 July 2016: GBP173,000; 31 January 2017: GBP903,000).
Octopus also 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 GBP20,000 per
annum for company secretarial services.
The Company has invested GBP70 million into 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. Post balance sheet events
Since 31 July 2017 the Company has issued the following shares:
Date Number of Shares Issued Price per share (p)
8 August 2017 53,415 61.5
9. 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.
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Octopus Apollo VCT plc via Globenewswire
(END) Dow Jones Newswires
September 28, 2017 12:12 ET (16:12 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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