Final Results
08/03/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240308:nGNE1FNJB3&default-theme=true
Octopus AIM VCT 2 plc
Final Results
Octopus AIM VCT 2 plc today announces the final results for the year ended 30
November 2023.
Octopus AIM VCT 2 plc (the ‘Company’) is a venture capital trust (VCT)
which aims to provide shareholders with attractive tax-free dividends and
long-term capital growth by investing in a diverse portfolio of predominantly
AIM-traded companies. The Company is managed by Octopus Investments Limited
(‘Octopus’ or the ‘Investment Manager’).
Financial Summary
30 November 2023 30 November 2022
Net assets (£’000) 84,690 101,794
Loss after tax (£’000) (15,709) (36,695)
Net asset value (NAV) per share (p) 47.9 61.6
Dividends per share paid in year (p) 4.1 4.2
Total return (%) (1) (15.6) (27.5)
Final dividend proposed (p) (2) 1.8 2.3
Special dividend proposed (p) (2) 3.6 -
Ongoing charges (%) (3) 2.2 2.2
(1) Total return is an alternative performance measure calculated as movement
in NAV per share in the period plus dividends paid in the period, divided by
the NAV per share at the beginning of the period.
(2) Subject to shareholder approval at the Annual General Meeting, the
proposed final and special dividends will be paid on 27 June 2024 to
shareholders on the register on 31 May 2024.
(3) Ongoing charges is an alternative performance measure calculated using the
AIC recommended methodology.
Chair’s statement
Introduction
Firstly, I would like to welcome all new shareholders who have joined us in
the past year.
The year to 30 November 2023 has been another extremely challenging period for
stock markets in general, and smaller companies in particular, with the
Alternative Investment Market ('AIM') Index once again the worst performer in
2023. The very real issue of inflation and the need to tighten monetary policy
by raising interest rates further than had been anticipated when I wrote this
statement a year ago has prolonged the pain for the share prices of companies
exposed to growth sectors. It has also posed a particular challenge to the
early stage companies in the portfolio which have yet to attain profitability.
Against this background, the net asset value (NAV), which had already fallen
by 8.8% on a total return basis in the first half of the year, declined
further, ending the year 15.6% behind on a total return basis, in line with
the AIM Index.
In the year under review AIM raised £1.6 billion of new capital, for new and
existing companies, a decrease on the £3.0 billion raised in the previous
year and a substantial fall from the high of £8.7 billion in 2021, reflecting
continuing volatile market conditions. For the second year running new issues
were very subdued and the majority of fundraisings in 2023 were for existing
AIM companies seeking further capital. The Investment Manager made £3.9
million of new qualifying investments, down from £6.1 million the previous
year. Although significant geo-political risks remain, market sentiment has
improved more recently, with market commentators and economists taking a more
optimistic stance on inflation and interest rates in 2024. The Investment
Manager expects the pipeline of potential new issues to strengthen later this
year, supplementing existing companies seeking further finance.
Performance
The NAV on 30 November 2023 was 47.9p per share, a sharp decline from the NAV
of 61.6p per share reported at 30 November 2022. Adding back the 4.1p of
dividends paid in the year, to adjust the year-end NAV to 52.0p, gives a total
return decrease of 15.6%. In the same year, the FTSE AIM All-Share Index fell
by 14.2%, the FTSE SmallCap (excluding investment trusts) Index increased by
2.7% and the FTSE All-Share Index rose by 1.8%, all on a total return basis.
As always, it was stock-specific factors that had the most significant impact
on performance, and these are covered in more detail in the Investment
Manager’s Review. As interest rates rose during the year investors became
less willing to take risks and this had the greatest impact on the earlier
stage companies exposed to the new economy (emerging, high growth industries
expected to boost economic growth and productivity) which make up a
significant proportion of our investment portfolio. The purpose of a VCT is to
provide capital for small, growth companies at an early stage and the benefits
of doing so have been clear in past periods. However, in the year under review
it was the smallest AIM companies which were the worst performers.
Additionally, AIM as a whole trailed the other UK indices because of its
concentration of growth stocks and the larger and more profitable holdings in
the portfolio saw valuations retreat to levels last seen at the time of the
financial crisis. The FTSE Small Cap Index (excluding Investment Trusts) fared
much better, helped by a strong recovery in November. It has a much narrower
membership and its constituents were less affected by the conditions described
above.
Dividends
In November 2023 an interim dividend of 1.8p was paid to all shareholders. The
Board is recommending a final dividend in respect of the year to 30 November
2023 of 1.8p per share totalling 3.6p in respect of the year, which is a 6.2%
yield on the prior year closing share price of 58.0p, all paid from special
distributable reserves. In addition, as a result of taking exceptional profits
in a number of long-term holdings during the year, most notably the full
disposal of Ergomed, the Board is proposing a special dividend of 3.6p which
will be paid at the same time as the final dividend. Including the special
dividend, the total dividend in respect of the year is 7.2p which is a 12.4%
yield on the prior year closing share price. Subject to the approval of
shareholders at the Annual General Meeting ('AGM'), both dividends will be
paid on 27 June 2024 to shareholders on the register on 31 May 2024. It
remains the Board’s intention to maintain a minimum annual dividend payment
of 3.6p per share or a 5% yield based on the prior year closing share price,
whichever is greater. This will usually be paid in two instalments during each
year.
Shareholders are encouraged to ensure that the details held for them by the
registrar remain accurate and to check whether they have received all
dividends payable to them. This is particularly important for those who move
house or change their bank account or email address. We are aware that some
dividends remain unclaimed by shareholders, so if you believe you are impacted
by this, please contact our registrar, Computershare, at the details provided
in the Annual Report.
Cancellation of share premium account
At the last AGM, shareholders voted to cancel share premium to increase the
pool of distributable reserves by the amount of £13.6 million. This is a
regular occurrence to enable the continued payment of dividends and buyback of
shares.
Board changes
There have been no board changes during the year although Elizabeth Kennedy
has announced her intention to step down at the AGM in May. We thank her for
her years of service to the Board, and wish her well in retirement. The Board
have undertaken a recruitment process and were delighted to announce the
appointment of Virginia Bull as a Director from 1 January 2024.
Dividend reinvestment scheme
In common with a number of other VCTs, the Company has established a dividend
reinvestment scheme (DRIS) following approval at the AGM in 2014. Some
shareholders have already taken advantage of this opportunity. For investors
who do not need income, but value the additional tax relief on their
reinvested dividends, this is an attractive scheme and I hope that more
shareholders will find it useful. Over the course of the year 2,557,239 new
shares have been issued under this scheme, returning £1.3 million to the
Company. The final and special dividends referred to above will be eligible
for the DRIS.
Share buybacks
During the year to 30 November 2023 the Company continued to buy back shares
in the market from selling shareholders and purchased 6,011,097 Ordinary
shares for a total consideration of £3.1 million. We have maintained a
discount of approximately 4.5% to NAV (equating to up to a 5% discount to the
selling shareholder after costs), which the Board monitors and intends to
retain as a policy which fairly balances the interests of both remaining and
selling shareholders. Buybacks remain an essential practice for VCTs, as
providing a means of selling is an important part of the initial investment
decision and has enabled the Company to grow. As such, I hope you will all
support the appropriate resolution at the AGM.
Share issues
On 14 September 2023, a prospectus offer was launched alongside Octopus AIM
VCT plc to raise a combined total of up to £20 million, with a £10 million
over-allotment facility. The offer closed fully subscribed on 21 December 2023
with £11.4 million being raised for the Company, £7.0 million of which was
raised in the year to 30 November 2023. A total of 17,713,658 shares were
issued during the year, raising £8.4 million after costs for the Company.
Liquidity
The issue of liquidity within investment funds has remained a topic of
discussion this year. Shareholders may be interested to know that at the year
end, 37.5% of the Company’s net assets were held in cash or collective
investment funds including funds managed by the team at Octopus and money
market funds, providing short-term liquidity, 54.3% in individual quoted
shares and 8.6% was held in unquoted single company investments. Shareholders
should be aware that a proportion of the quoted securities may have limited
liquidity owing to the size of the portfolio company and the overall
proportion held by the Company.
VCT status
Shoosmiths LLP provide the Board and Investment Manager with advice concerning
continuing compliance with HMRC regulations for VCTs. The Board has been
advised that the Company is in compliance with the conditions laid down by
HMRC for maintaining approval as a VCT. A key requirement is to maintain at
least an 80% qualifying investment level. As at 30 November 2023, the level
was 85.4%.
Annual General Meeting
The AGM will take place on 16 May 2024 at 12.00pm. Further information can be
found in the Notice of Annual General Meeting. The Investment Manager will
provide an update on the Company's activities and future plans at the AGM.
Formal notices will be sent to shareholders by their preferred method (email
or post) and shareholders are encouraged to submit their votes by proxy. We
always welcome questions from our shareholders at the AGM. Please send these
via email to AIMVCT2AGM@octopusinvestments.com by 5.00pm on 13 May 2024 if you
are unable to attend the AGM in person.
If your shares are held through a nominee account, formal notices will be sent
to your nominee.
Outlook
Although significant geo-political and economic risks remain, the positive
stock market reaction to lower inflation figures in November demonstrated how
quickly share prices can turn when commentators start to believe that interest
rates will start to fall in response to a more positive macro-economic
environment. Strategists are now aligned on interest rate cuts later in 2024
which will be supportive of a recovery in equity markets following a very
challenging period. Meanwhile GDP and corporate earnings continue to hold up
better than many analysts were predicting, reinforcing the Investment
Manager’s belief that any further impact on corporate earnings is already
reflected in share prices at current valuations.
The portfolio contains 83 holdings across a range of sectors with exposure to
some exciting new technologies in the environmental and healthcare sectors.
Although the current market environment remains challenging for those
companies in need of further funding, this can provide the Investment Manager
with good opportunities to invest newly raised cash at attractive valuations.
The balance of the portfolio towards profitable companies remains, with the
majority of these now trading at a significant valuation discount to their
long term averages.
We are also pleased that the sunset clause in place for April 2025, regarding
eligibility of VCT’s for tax relief, has been extended to April 2035 and
seems likely to be removed all together in due course.
Keith Mullins
Chair
Investment Manager’s review
Introduction
Many of the equity market and economic trends seen in 2022 flowed through into
2023. Concerns about rising inflation, continued interest rate hikes, the
possibility of a protracted recession and a consumer credit crunch affected
sentiment for most of the year. Moreover, geo-political conflict continues
unabated, from Russia’s war with Ukraine to violence in the Middle East.
This dampened investor sentiment and, in its wake, fuelled equity market
volatility for most of the year. However, we ended the year with inflation
data confirming that UK inflation had begun to ebb and that the widely
anticipated recession might not appear. Furthermore, this led to a growing
consensus amongst strategists and economists, that the UK (and other major
global economies) will see a fall in interest rates in the coming year. This
should provide much needed and long-awaited support for equity markets,
particularly small growth companies, following a very challenging period. In
2024, the debate amongst market strategists and economists is focused on
whether inflation will stay on its downward path, interest rates will be cut
aggressively, and if upcoming elections will bring in any impactful changes.
Against a challenging macro-economic and stock market environment, AIM
continued to retreat over the period signalling that small, growth companies
remained out of favour. Despite this, AIM raised further capital for existing
listed companies and the AIM Initial Public Offering ('IPO') market (albeit
slower), was still active in the second half of the year. With the appetite
for risk still to rebound, small, growth companies in the UK remain
undervalued and well below their long-term valuation range, which in turn
creates a strong opportunity for potential revaluation when stock markets
recover. Since the period end some confidence has been restored, helped by
encouraging January and February trading updates.
The Alternative Investment Market
The performance of AIM over the last year was disappointing, with the appetite
for small growth companies impacted more by macro-headwinds compared to its
larger peers. In the 12 months to November 2023 the AIM Index fell by 14.2%
compared with an increase of 2.7% for the FTSE SmallCap index (excluding
investment companies) and a rise of 1.8% for the FTSE All-Share Index, all on
a total return basis.
AIM has a high exposure to growth stocks in the software, technology and
healthcare sectors, which counted against it as sentiment moved against highly
rated growth stocks as inflationary and recessionary pressures intensified.
Although VCTs have additional constraints on what they can invest in, the AIM
Index is considered to be the most appropriate broad equity market index for
comparative purposes, given the nature of the underlying investments. The FTSE
SmallCap and All-Share indices provide wider market context. The continued
movement away from growth and momentum-driven shares and subsequent weak
performance of AIM versus its market peers, highlighted that investors sought
value in more traditional sectors which has been the case for the last two
years.
The rate of IPOs on AIM remained slow, while the number of companies leaving
the market throughout 2023 picked up pace. There was a total of 14 IPOs on AIM
over the year, compared to 31 the previous financial year. AIM ended the year
with 760 companies, which was down 7% on the previous year. We still believe
in the importance of functioning equity markets as a driver of growth in the
UK, particularly at the smaller, growth company end, where the Company
invests. Although the pipeline for new issues remains active in the new
financial year, the significance of VCTs as a critical funding platform for
smaller companies remains which is evident by the flow of further fundraisings
on AIM over the year and since the year end albeit at a slower speed than
previous years. In the year to 30 November 2023 AIM raised £1.5 billion of
new capital for existing companies, which compares to a figure of £2.7
billion the previous year. Furthermore, we were encouraged by the
government’s decision to address pension policy reform, in the Mansion House
Reforms in the Treasury’s Autumn Budget statement.
Performance
Adding back the 4.1p of dividends paid in the year, the NAV total return was a
loss of 15.6%. This compares with a fall in the FTSE AIM All-Share Index of
14.2%, a rise in the FTSE SmallCap (excluding investment companies) of 2.7%
and a small rise in the FTSE All-Share Index of 1.8% all on a total return
basis. The last year was again characterised by months of significant market
volatility in response to both global and local economic uncertainty. Rising
inflationary and interest rate expectations were the dominant theme and seeped
their way into weaker consumer confidence and the reality of a credit crunch
affected many in the UK. This was not helped as the impact of variable rates
extended to those ending fixed rate arrangements. As a result, the soft
landing of lower energy and food prices in the latter part of the year was
barely felt. Despite the squeeze on consumer spending, interest rate
expectations continued to rise more steeply than had previously been
anticipated. Between December 2021 and August 2023, the Bank of England raised
interest rates a total of 14 times from a low of 0.1% to the current level of
5.25%. Against this background, performance in the FTSE AIM All-Share Index
was affected by the momentum away from smaller, growth companies and the move
towards lower risk appetite drove the investment in traditional sectors and
larger well-established companies. This largely explains the fall in the NAV
in the year under review. The portfolio’s relatively high exposure to higher
rated growth companies (particularly healthcare and technology sectors) was
detrimental to performance in a market environment where risk averse investors
have little appetite for earlier stage growth stocks. Predictably, volatile
market dynamics led to greater investor focus not just on product/service
offering, but on healthy balance sheets and the ability to access financing.
The VCT rules require investment to be made at this early stage and the
benefits of doing so have been clear in many past periods.
Some of the larger, profitable holdings in the portfolio were affected by the
poor market sentiment towards AIM growth stocks, which included GB Group, IDOX
plc and Craneware. Learning Technologies was the biggest detractor to the
performance of the portfolio over the year. The company’s trading
performance was affected by the challenging macro environment which impacted
both transaction and project-based work. However, this has prompted a much
needed refocus on profitability and technology redevelopment. Furthermore, the
company recently embarked on a plan to accelerate its support of higher growth
areas of the business that are more aligned with its core proposition of
digital learning and talent management, through the sale of non-core assets
which will enable it to fund future value-enhancing acquisitions. Libertine
Holdings had a very challenging year. Despite this the company continuing to
support the integration of its HEXAGEN™ technology platform with Hyliion
Holdings Corp. and develop its intelliGEN™ technology platform through grant
funded operations with the Department for Business, Energy and Industrial
Strategy, alongside a number of other commercial projects. Furthermore, the
company has completed work on performance validation prototypes for both the
intelliGEN™ and HEXAGEN™ platforms and is currently working on performance
and durability enhancements, which it is confident will meet the requirements
of Original Equipment Manufacturer product development programmes expected to
commence in 2024. However, the need for further raising to enable the
development of its technology weighs down on the share price performance. SDI
Group disappointed a couple of times over the year due to the end of a
contract with Atik cameras, which had been lucrative over the Covid period.
However, we are encouraged by the recent change in the management team and the
new CEO comes with a wealth of operational experience in the sector. Later in
the year, Sosandar announced its decision to open own-branded retail outlets
in the UK and the move away from being a pure play retail online business came
as a surprise to the market, affecting its rating. Though the decision will
likely increase the costs of the business in the short term, the instore
retail offering allows the company to capitalise on the growth of its brand
visibility and popularity in existing major UK retail stores (both instore and
online) which include Sainsbury’s Tu, NEXT and Marks & Spencer.
Encouragingly, and despite slowing down its discount strategy, the company had
a strong calendar year end trading period and has returned to quarterly
profitability. ENGAGE XR, the spatial computing and metaverse technology
company, had a mixed trading year. Although the company continues to expand
its reach globally, including securing contracts with global banks, the
slippage of a few sizeable contracts over the year has led to a recent
downgrade. However, we are encouraged by the progress the company is achieving
across the US.
On the positive side, we have seen many companies in the portfolio report
solid trading performances over the period which was reflected in their share
prices and contributed positively to the portfolio performance. This included
Breedon, who continued to benefit from its dynamic pricing strategy and focus
on operational excellence throughout the year, putting them in a strong
position despite macro-economic and industry headwinds. As a result, the
company had a series of revenue and profit upgrades during the year.
Equipmake, the provider of electric drivetrain solutions for heavy vehicles
and aerospace, made progress over the year and now has working buses in York
and secured contracts within the global aerospace industry. Although a
positive contributor to the portfolio over the year, Vertu Motor’s trading
performance has been affected by tough conditions in the used car market.
Wholesale values in the used market reduced significantly at the latter end of
the year as a result of the higher supply of new cars. This coupled with weak
consumer demand impacted sales volumes. Having had a fairly volatile share
price performance the previous year, Ergomed had a solid trading performance
throughout the year, recording strong revenue and profit growth. However, the
company was approached by Premia, a private equity firm and the bid was duly
accepted. Other exits in the portfolio over the year and since the period end
include Adept Telecom, TP Group, Glantus and Falanx.
In our private company holdings, Hasgrove had its valuation increased over the
year due to a growing recurring revenue base and a strong balance sheet.
General market weakness that impacted quoted company share price performance
resulted in the proportion of the portfolio represented by unquoted
investments increasing.
Portfolio activity
Having made two qualifying investments at a total cost of £1.2 million in the
first half of the year, we added two new qualifying investments totalling
£1.4 million as well as two follow-on investments totalling £1.3 million in
the second half of the year. This made a total investment of £3.9 million in
qualifying investments for the year, a decrease on last year’s £6.3
million, reflecting a slower AIM market for both fundraisings and new issues.
Post the year end, we have invested a further £2.1 million in 5 qualifying
investments.
Of the two first half investments, one was a follow-on investment in Equipmake
Holdings plc and one was a new entrant to AIM, Itaconix plc.
We invested in two new issues in the second half of the year, Tan Delta
Systems plc and Eden Research plc, and made follow on investments into Haydale
Graphene Industries plc and Rosslyn Data Technologies plc. In August, we made
a £0.3 million investment in Tan Delta Systems plc, a global manufacturer of
real-time oil quality monitoring sensors and systems and a new entrant to AIM.
In September, we invested approximately £0.5 million in Rosslyn Data
Technologies plc, a United Kingdom-based provider of a cloud-based enterprise
data analytics platform and an existing AIM-listed company. In November, we
made two investments, a follow-on investment in Haydale Graphene Industries
plc (£0.8 million), a supplier of production quantities of functionalized
graphene nanomaterials for innovative materials development and a new
investment in Eden Research plc (£1.1 million), a company that develops and
supplies biopesticide products and natural microencapsulation technologies.
During the year we sold partial holdings in eight companies, six of these
where we took profits into rising share prices, Judges Scientific, Cirata, EKF
Diagnostics, Equipmake, Nexteq and Intelligent Ultrasound. We also had full
disposals of six holdings being Adept Telecom plc, Ergomed, Osirium
Technologies, TP Group, Itsarm and Glantus Holdings. Total disposals made a
£3.8 million gain over original cost and generated £9.2 million of cash
proceeds.
Non-qualifying investments are used to manage liquidity while awaiting new
qualifying investment opportunities. Although we still hold some existing
non-qualifying AIM holdings where we see the opportunity for further share
price progress, we continued to reduce some of these holdings in the year
under review. During the year we increased our holdings in the FP Octopus
Micro Cap Fund, FP Octopus Multi Cap Income Fund and the FP Octopus Future
Generation Fund, investing a total of £2.0 million over the period and
disposed of part of our holding in FP Octopus UK Multi Cap Income Fund for
£1.5 million.
VCT regulations
There have been no further changes to the VCT regulations since publication of
the previous set of audited accounts, however the sunset clause was extended
to 2035 in the recent Autumn statement. As a reminder, the current
requirements are that 30% of any funds raised should be invested in qualifying
holdings within 12 months of the end of the accounting period in which the
shares were issued, and the Company has to maintain a minimum of 80% of the
portfolio (at HMRC value) invested in qualifying holdings. We are determined
to maintain a threshold of quality and to invest where we see the potential
for returns from growth. At present there has been only gradual change to the
profile of the portfolio, as we continue to hold the larger market
capitalisation companies, in which we invested several years ago as qualifying
companies, or which we bought in the market prior to the rule changes where we
see the potential for them to continue to grow.
In order to qualify, companies must:
* have fewer than 250 full time equivalent employees; and
* have less than £15 million of gross assets at the time of investment and no
more than £16 million immediately post investment; and
* be less than seven years old from the date of its first commercial sale (or
ten years if a knowledge intensive company) if raising state aided (i.e. VCT)
funds for the first time; and
* have raised no more than £5 million of state aided funds in the previous 12
months and less than the lifetime limit of £12 million (or since 6 April 2018
£10 million in 12 months, £20 million lifetime limit if a knowledge
intensive company); and
* produce a business plan to show that the funds are being raised for growth
and development.
Outlook and future prospects
Against a backdrop of economic, geopolitical and market uncertainty, risk
appetite, particularly for smaller companies, remains low leaving UK equities
materially undervalued relative to other developed markets. The macro dynamics
continue to be a key area of focus with a particular attention on the
direction of inflation and timing of interest rate cuts which appear to be the
main lever driving market sentiment. Consensus among economists still
indicates that interest rates have peaked, with cuts on the way this year
expected by the end of the third quarter. The news that the UK is in a
recession following the economy’s contraction for two consecutive quarters
in 2023 has dampened some of the market momentum seen at the end of 2023.
However, we have been encouraged by the number of positive trading statements
and general news flow from many holdings in the portfolio since the period
end. We believe that smaller, growth companies, in particular, offer
exceptional value, reflected by many holdings within the portfolio trading at
historically low valuation multiples not seen since the Financial Crisis.
Reassuringly, the VCT qualifying pipeline remains active and the current
market conditions provide opportunities to invest at attractive valuations.
The Octopus Quoted Companies team
Octopus Investments Limited
Viability statement
As part of their continuing programme of monitoring risk the Directors have
assessed the prospects of the Company over a longer period than the 12 months
required by the ‘going concern’ provision. The Board conducted this review
for a period of five years, which was considered to be a reasonable time
horizon given that the Company has raised funds under an offer for
subscription which closed to new applications on 21 December 2023 and, under
VCT rules, subscribing investors are required to hold their investment for a
five year period in order to benefit from the associated tax reliefs. The
Board regularly considers the Company’s strategy, including investor demand
for the Company’s shares, and a five-year period is considered to be a
reasonable time horizon for this.
The Board carried out a robust assessment of the emerging and principal risks
facing the Company and its current position. This includes the impact of the
cost of living crisis, the unstable economic environment and any other risks
which may adversely impact its business model such as future performance,
solvency or liquidity. Particular consideration was given to the Company’s
reliance on, and close working relationship with, the Investment Manager. The
principal risks faced by the Company and the procedures in place to monitor
and mitigate them are set out below.
The Board has also considered the liquidity of the underlying investments and
the Company’s cash flow projections and found these to be realistic and
reasonable. The Company’s cash flow includes cash equivalents which are
short-term, highly liquid investments.
Based on the above assessment the Board confirms that it has a reasonable
expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due over the five-year period to 30 November
2028.
Principal risks, risk management and regulatory environment
The Board carries out a regular review of the risk environment in which the
Company operates. The Board seeks to mitigate risks by setting policy,
reviewing performance and monitoring progress and compliance. In the
mitigation and management of these risks, the Board applies the principles
detailed in the Financial Reporting Council’s Guidance on Risk Management,
Internal Control and Related Financial and Business reporting. Detailed below
are what the Board deems to be the principal risks of the Company and the
mitigating actions in relation to those risks.
Risk Mitigation
Investment risk: The focus of the Company’s investments is into VCT qualifying companies quoted on AIM and the AQSE exchange, which by their nature entail a higher level of risk and lower liquidity than investments in larger quoted companies. The Investment Manager has significant experience and a strong track record of investing in AIM and AQSE companies, and appropriate due diligence is undertaken on every new investment. The overall risk in the portfolio is mitigated by maintaining a wide
spread of holdings in terms of financing stage, age, industry sector and business models. The Board reviews the investment portfolio with the Investment Manager on a regular basis.
VCT qualifying status risk: The Company is required at all times to observe the conditions for the maintenance of HMRC approved VCT status. The loss of such approval could lead to the Company and its investors losing access to the tax benefits associated with VCT status and, in certain circumstances, to investors being required to repay the initial income tax relief on their investment. Prior to investment, the Investment Manager seeks assurance that the investment will meet the legislative requirements for VCT investments. On an ongoing basis, the Investment Manager monitors the Company’s compliance with VCT regulations on a current and
forecast basis to ensure ongoing compliance with VCT legislation. Regular updates are provided to the Board throughout the year. The VCT status adviser formally reviews the Company’s compliance with VCT regulations on a bi-annual basis and reports its
results to the Board.
Operational risk: The Board is reliant on the Investment Manager to manage investments effectively, and manage the services of a number of third parties, in particular the registrar and tax advisors. A failure of the systems or controls at the Investment Manager or third-party providers could lead to an inability to provide accurate reporting and to ensure adherence to VCT and other regulatory rules. The Board reviews the system of internal control, both financial and non-financial, operated by the Investment Manager (to the extent the latter are relevant to the Company’s internal controls). These include controls that are designed to ensure that the
Company’s assets are safeguarded and that proper accounting records are maintained, as well as any regulatory reporting. Feedback on other third parties is reported to the Board on at least an annual basis, including adherence to service level agreements
where relevant.
Information security: A loss of key data could result in a data breach and fines. The Board is reliant on the Investment Manager and third parties to take appropriate measures to prevent a loss of confidential customer information. Annual due diligence is conducted on third parties which includes a review of their controls for information security. The Investment Manager has a dedicated information security team and a third party is engaged to provide continual protection in this
area. A security framework is in place to help prevent malicious events. The Investment Manager reports to the Board on an annual basis to update them on relevant information security arrangements. Significant and relevant information security breaches are
escalated to the Board when they occur.
Economic: Events such as an economic recession, movement in interest rates, inflation, political instability and rising living costs could cause volatility in the market, adversely impacting the valuation of investments. This could result in a reduction in the value of the Company’s assets . The Company invests in a diverse portfolio of companies across a range of sectors, which helps to mitigate against the impact of poor performance in any one sector. The Company also maintains adequate liquidity to ensure that it can continue to provide
follow-on investment to those portfolio companies which require it and which is supported by the individual investment case. The Investment Manager monitors the impact of macroeconomic conditions on an ongoing basis and provides updates to the Board at
least quarterly.
Legislative: A change to the VCT regulations could adversely impact the Company by restricting the companies the Company can invest in under its current strategy. Similarly, changes to VCT tax reliefs for investors could make VCTs less attractive and impact the Company’s ability to raise further funds. Failure to adhere with other relevant legislation and regulation could result in reputational damage and/or fines. The Investment Manager engages with HM Treasury and industry bodies to demonstrate the positive benefits of VCTs in terms of growing UK companies, creating jobs and increasing tax revenue, and to help shape any change to VCT legislation. The Investment
Manager employs individuals with expertise across the legislation and regulation relevant to the Company. Individuals receive ongoing training and external experts are engaged where required.
Liquidity: The risk that the Company’s available cash will not be sufficient to meet its financial obligations. The Company invests into smaller companies, which are inherently less liquid than stocks on the main market. Therefore, these may be difficult to realise for their fair market value at short notice. The Investment Manager prepares cash flow forecasts to ensure cash levels are maintained in accordance with policies agreed with the Board. The Company’s overall liquidity levels are monitored on a quarterly basis by the Board, with close monitoring of
available cash resources. The Company maintains sufficient cash and readily realisable securities, including money market funds and OEICs, which can be accessed at short notice. At 30 November 2023, 27.1% of net assets was held in cash and cash equivalents,
realisable within one business day, and 10.4% in OEICs, realisable in seven business days.
Valuation: For smaller companies or illiquid shares, establishing a fair value can be difficult due to the lack of readily available market data for similar shares, resulting in a limited number of external reference points. Investments in companies traded on AIM and AQSE exchange are valued by the Investment Manager using closing bid prices as reported on Bloomberg. Where investments are in unquoted companies or where there are indicators the bid price is not appropriate,
alternative valuation techniques are used in accordance with the IPEV guidelines. Valuations of unquoted portfolio companies are performed by appropriately experienced staff, with detailed knowledge of both the portfolio company and the market in which it
operates. These valuations are then subject to review and approval by the Octopus Valuations Committee, comprised of staff who are independent of the Investment team and with relevant knowledge of unquoted company valuations. The Board reviews valuations
after they have been agreed by the Octopus Valuations Committee.
Emerging risks
The Board has considered emerging risks. The Board seeks to mitigate emerging
risks and those noted below by setting policy, regular review of performance
and monitoring progress and compliance.
The following are some of the potential emerging risks management and the
Board are currently monitoring:
* Adverse changes in global macroeconomic environment
* Geo-political tensions
* Climate change
Directors' responsibilities statement
The Directors are responsible for preparing the Strategic Report, the
Directors’ Report, the Directors’ Remuneration Report and the financial
statements in accordance with applicable laws and regulations. They are also
responsible for ensuring that the annual report and accounts include
information required by the Listing Rules of the Financial Conduct Authority.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have elected to prepare the
financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (GAAP), including Financial Reporting Standard 102 –
‘The Financial Reporting Standard Applicable in the United Kingdom and
Republic of Ireland’ (FRS 102), (United Kingdom accounting standards and
applicable law). Under company law the Directors must not approve the
financial statements unless they are satisfied that they give a true and fair
view of the state of affairs and profit or loss of the Company for that
period. In preparing these financial statements, the Directors are required
to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether applicable UK accounting standards have been followed,
subject to any material departures disclosed and explained in the financial
statements;
• prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business; and
• prepare a Strategic Report, a Director’s Report and Director’s
Remuneration Report which comply with the requirements of the Companies Act
2006.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company’s transactions, to disclose with
reasonable accuracy at any time the financial position of the Company and to
enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for ensuring that the annual report and
accounts, taken as a whole, are fair, balanced and understandable and provides
the information necessary for shareholders to assess the Company’s
performance, business model and strategy.
In so far as each of the Directors is aware:
• there is no relevant audit information of which the Company’s auditor is
unaware; and
• the Directors have taken all steps that they ought to have taken to make
themselves aware of any relevant audit information and to establish that the
auditor is aware of that information.
The Directors are responsible for preparing the annual report and accounts in
accordance with applicable laws and regulations. Having taken advice from the
Audit Committee, the Directors are of the opinion that this report as a whole
provides the necessary information to assess the Company’s performance,
business model and strategy and is fair, balanced and understandable.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company’s website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
The Directors confirm that, to the best of their knowledge:
• the financial statements, prepared in accordance with United Kingdom
Generally Accepted Accounting Practice, including FRS 102, give a true and
fair view of the assets, liabilities, financial position and profit or loss of
the Company; and
• the annual report and accounts (including the Strategic Report), give a
fair review of the development and performance of the business and the
position of the Company, together with a description of the principal risks
and uncertainties that it faces.
On behalf of the Board
Keith Mullins
Chair
Income statement
Year to 30 November 2023 Year to 30 November 2022
Revenue Capital Total Revenue Capital Total
£'000 £’000 £’000 £'000 £’000 £’000
Gain/(loss) on disposal of fixed asset investments - 668 668 - (32) (32)
Loss on disposal of current asset investments - (91) (91) - - -
Loss on valuation of fixed asset investments - (14,333) (14,333) - (31,821) (31,821)
Loss on valuation of current asset investments - (1,047) (1,047) - (2,946) (2,946)
Investment income 1,194 - 1,194 589 19 608
Investment management fees (393) (1,179) (1,572) (481) (1,443) (1,924)
Other expenses (528) - (528) (580) - (580)
Profit/(loss) before tax 273 (15,982) (15,709) (472) (36,223) (36,695)
Tax - - - - - -
Total comprehensive Income/(loss) after tax 273 (15,982) (15,709) (472) (36,223) (36,695)
Earnings per share – basic and diluted 0.2p (9.8p) (9.6p) (0.3p) (24.5p) (24.8p)
• The ‘Total’ column of this statement represents the statutory income
statement of the Company; the supplementary revenue return and capital return
columns have been prepared in accordance with the AIC Statement of Recommended
Practice.
• 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, as well as OEIC funds.
The Company has no recognised gains or losses other than the results for the
period as set out above. Accordingly a statement of comprehensive income is
not required.
The accompanying notes are an integral part of the Financial Statements.
Balance sheet
As at 30 November 2023 As at 30 November 2022
£’000 £’000 £’000 £’000
Fixed asset investments 53,288 72,249
Current assets:
Investments 8,796 9,399
Money market funds 21,893 3,515
Debtors 152 205
Cash at bank 1,045 17,217
31,886 30,336
Creditors: amounts falling due within one year (484) (791)
Net current assets 31,402 29,545
Total assets less current liabilities 84,690 101,794
Called up equity share capital 18 17
Share premium 7,619 12,904
Capital redemption reserve 3 3
Special distributable reserve 80,043 76,154
Capital reserve realised (5,400) (5,843)
Capital reserve unrealised 4,765 21,190
Revenue reserve (2,358) (2,631)
Total equity shareholders’ funds 84,690 101,794
NAV per share – basic and diluted 47.9p 61.6p
The statements were approved by the Directors and authorised for issue on 7
March 2024 and are signed on their behalf by:
Keith Mullins
Chair
Company No: 05528235
The accompanying notes are an integral part of the Financial Statements.
Statement of changes in equity
Share capital £’000 Share premium £’000 Capital redemption reserve £’000 Special distributable reserves (1) £’000 Capital reserve realised (1) £’000 Capital reserve unrealised £’000 Revenue reserve (1) £’000 Total £’000
As at 1 December 2022 17 12,904 3 76,154 (5,843) 21,190 (2,631) 101,794
Comprehensive income/(loss) for the year:
Management fee allocated as capital expenditure - - - - (1,179) - - (1,179)
Current year net gain on disposal - - - - 577 - - 577
Current year loss on fair value of investments - - - - - (15,380) - (15,380)
Profit after tax - - - - - - 273 273
Total comprehensive loss for the year - - - - (602) (15,380) 273 (15,709)
Contributions by and distributions to owners:
Repurchase and cancellation of own shares - - - (3,076) - - - (3,076)
Issue of shares 1 8,821 - - - - - 8,822
Share issue costs - (468) - - - - - (468)
Dividends paid - - - (6,673) - - - (6,673)
Total contributions by and distributions to owners 1 8,353 - (9,749) - - - (1,395)
Other movements:
Cancellation of share premium - (13,638) - 13,638 - - - -
Prior years’ holding gains now realised - - - - 3,215 (3,215) - -
Transfer between reserves - - - - (2,170) 2,170 - -
Total other movements - (13,638) - 13,638 1,045 (1,045) - -
Balance as at 30 November 2023 18 7,619 3 80,043 (5,400) 4,765 (2,358) 84,690
Share capital £’000 Share premium £’000 Capital redemption reserve £’000 Special distributable reserves (1) £’000 Capital reserve realised (1) £’000 Capital reserve unrealised £’000 Revenue reserve (1) £’000 Total £’000
As at 1 December 2021 15 54,600 2 30,826 (4,533) 56,103 (2,159) 134,854
Comprehensive income/(loss) for the year:
Management fee allocated as capital expenditure - - - - (1,443) - - (1,443)
Current year loss on disposal - - - - (32) - - (32)
Current year loss on fair value of investments - - - - - (34,767) - (34,767)
Capital investment income - - - - 19 - - 19
Loss after tax - - - - - - (472) (472)
Total comprehensive loss for the year - - - - (1,456) (34,767) (472) (36,695)
Contributions by and distributions to owners:
Repurchase and cancellation of own shares (1) - 1 (3,117) - - - (3,117)
Issue of shares 3 13,698 - - - - - 13,701
Share issue costs - (794) - - - - - (794)
Dividends paid - - - (6,155) - - - (6,155)
Total contributions by and distributions to owners 2 12,904 1 (9,272) - - - 3,635
Other movements:
Cancellation of share premium - (54,600) - 54,600 - - - -
Prior years’ holding gains now realised - - - - 146 (146) - -
Total other movements - (54,600) - 54,600 146 (146) - -
Balance as at 30 November 2022 17 12,904 3 76,154 (5,843) 21,190 (2,631) 101,794
(1)Included within these reserves is an amount of £72,285,000 (2022:
£67,680,000) which is considered distributable to shareholders under
Companies Act rules.
The accompanying notes are an integral part of the Financial Statements.
Cash flow statement
Year to 30 November 2023 Year to 30 November 2022
£'000 £'000
Cash flows from operating activities
Loss on ordinary activities before tax (15,709) (36,695)
Adjustments for:
Decrease/(increase) in debtors 53 (20)
Decrease in creditors (82) (196)
(Gain)/loss on disposal of fixed assets (668) 32
Loss on disposal of current asset investments 91 –
Loss on valuation of fixed asset investments 14,333 31,821
Loss on valuation of current asset investments 1,047 2,946
Non-cash distributions – (19)
Net cash utilised in operating activities (935) (2,131)
Cash flows from investing activities
Purchase of fixed asset investments (4,086) (6,071)
Proceeds from sale of fixed asset investments 9,157 2,249
Purchase of current asset investments (2,040) (352)
Proceeds from sale of current asset investments 1,505 -
Total cash flows generated from/(utilised in) investing activities 4,536 (4,174)
Cash flows from financing activities
Purchase of own shares (3,076) (3,117)
Share issues net of DRIS 7,519 12,502
Share issue costs net of DRIS (468) (794)
Dividends paid net of DRIS (5,370) (4,956)
Total cash flows (utilised in)/generated from financing activities (1,395) 3,635
Increase/(decrease) in cash and cash equivalents 2,206 (2,670)
Opening cash and cash equivalents 20,732 23,402
Closing cash and cash equivalents 22,938 20,732
Closing cash and cash equivalents is represented by:
Cash at bank 1,045 17,217
Money market funds 21,893 3,515
Total cash and cash equivalents 22,938 20,732
The accompanying notes are an integral part of the Financial Statements.
Events after the end of the reporting period
The following events occurred between the balance sheet date and the signing
of these financial statements.
* an investment of £600,000 into Verici Dx plc
* an investment of £534,204 into GENinCode plc
* an investment of £129,600 into Equipmake Holdings plc
* an investment of £199,998 into Alusid Limited
* a loan note of £600,000 into Strip Tinnings Holdings plc
* an investment of £120,000 into FP Octopus UK Future Generations Fund
* a partial disposal of 141,437 shares in FP Octopus UK Multi Cap Income Fund
for total consideration of £200,000
* a partial disposal of 762,912 shares in Polarean Imaging plc for total
consideration of £45,682
* a partial disposal of 2,800 shares in Judges Scientific plc for total
consideration of £293,411
* a full disposal of 8,298,059 shares in Velocys plc for total consideration
of £20,745
* a full disposal of 2,526,666 shares in Clean Power Hydrogen plc for total
consideration of £213,038
* a full disposal of 108,404 shares in Renalytix plc for total consideration
of £98,254
The following shares have been allotted since the year end:
* 14 December 2023: 5,635,893 Ordinary shares at a price of 50.5p per share
* 11 January 2024: 3,555,668 Ordinary shares at a price of 51.4p per share
The following shares have been bought back since the year end:
* 14 December 2023: 791,619 shares at a price of 45.9p per share
* 18 January 2024: 408,110 shares at a price of 46.6p per share
* 22 February 2024: 448,271 shares at a price of 46.8p per share
Notes to the financial statements
1. Principal accounting policies
The Company is a Public Limited Company (“plc”) incorporated in England
and Wales and its registered office is 6th Floor, 33 Holborn, London, EC1N
2HT.
The Company’s principal activity is to invest in a diverse portfolio of
predominantly AIM-traded companies with the objective of providing
shareholders with attractive tax-free dividends and long-term capital growth.
Basis of preparation
The financial statements have been prepared under the historical cost
convention, except for the measurement at fair value of certain financial
instruments, and in accordance with UK Generally Accepted Accounting Practice
(GAAP), including Financial Reporting Standard 102 – ‘The Financial
Reporting Standard applicable in the United Kingdom and Republic of Ireland’
(FRS 102), and with the Companies Act 2006 and the Statement of Recommended
Practice (SORP) ‘Financial Statements of Investment Trust Companies and
Venture Capital Trusts (issued 2014 and updated in July 2022 with
consequential amendments).’
The principal accounting policies have remained unchanged since those set out
in the Company’s 2022 annual report and accounts.
2. Income
Accounting policy
Investment income includes interest earned on money market securities and
shown net of income tax withheld at source. Dividend income is shown net of
any related tax credit. Dividends are allocated to revenue or capital
depending on whether the dividend is of a revenue or capital nature.
Dividends receivable are recognised when the Company’s right to receive
payment is established and it is probable that payment will be received. Fixed
returns on debt and money market securities are recognised on a time
apportionment basis so as to reflect the effective yield, provided there is no
reasonable doubt that payment will be received in due course.
Disclosure
30 November 30 November
2023 2022
£’000 £’000
Dividends receivable from fixed asset investments 563 522
In-specie dividend (1) - 19
Loan note interest receivable 20 30
Income receivable on money market securities and bank balances 611 37
1,194 608
(1)There was no in-specie dividend for the year ended 30 November 2023. In the
prior period, the Company received shares in Verici Dx plc as a result of an
in-specie dividend from EKF Diagnostics Holdings plc. These have been treated
as capital income.
3. Investment management fees
30 November 2023 30 November 2022
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Investment management fees 393 1,179 1,572 481 1,443 1,924
Octopus provide investment management and accounting and administration
services to the Company under a management agreement which initially ran for a
period of five years with effect from 6 October 2005 and may be terminated at
any time thereafter by not less than 12 months’ notice given by either
party. No compensation is payable in the event of terminating the agreement by
either party, if the required notice period is given. The fee payable, should
insufficient notice be given, will be equal to the fee that would have been
paid should continuous service be provided, or the required notice period was
given. The management fee is an annual charge and is set at 2% of the
Company’s net assets. The Investment Manager is not entitled to any annual
performance incentive scheme.
During the year Octopus charged gross management fees of £1,860,000 (2022:
£2,266,000). When the various allowances detailed below are included, the net
management fee for the year is £1,572,000 (2022: £1,924,000). At the year
end £356,000 was payable to Octopus (2022: £395,000). Octopus received
£154,000 as a result of upfront fees charged on allotments of Ordinary shares
(2022: £186,000). The decrease in upfront fees this year has proportionately
decreased in line with the value of allotments in the year.
The Company pays ongoing adviser charges to independent financial advisers
(IFAs). Ongoing adviser charges are an ongoing fee of up to 0.5% per annum of
the amount invested for a maximum of nine years paid to Advisers who are on an
advised and ongoing fee structure. The Company is rebated for this cost by way
of a reduction in the annual management fee. For the year to 30 November 2023
the rebate received was £105,000 (2022: £133,000).
The Company also facilitates upfront fees to IFAs where an investor has
invested through a financial adviser and has received upfront advice. Where an
investor agrees to an upfront fee only, the Company can facilitate a payment
of an initial adviser charge of up to 4.5% of the investment amount. If the
investor chooses to pay their intermediary/adviser less than the maximum
initial adviser charge, the remaining amount will be used for the issue and
allotment of additional new shares for the investor. In these circumstances
the Company does not facilitate ongoing annual payments. To ensure that the
Company is not financially disadvantaged by such payment, a notional ongoing
adviser charge equivalent to 0.5% per annum of the amount invested will be
deemed to have been paid by the Company for a period of nine years. The
Company is rebated for this cost, also by way of a reduction in the annual
management fee. For the year to 30 November 2023 the rebate received was
£127,000 (2022: £152,000).
The Company also receives a reduction in the management fee for the
investments in other Octopus managed funds, being the Multi Cap, Micro Cap
Growth and Future Generations products, to ensure the Company is not double
charged on these products. This amounted to £56,000 for the year to 30
November 2023 (2022: £57,000).
The management fee has been allocated 25% to revenue and 75% to capital, in
line with the Board’s expected long-term return in the form of income and
capital gains respectively from the Company’s investment portfolio.
4. Other expenses
Accounting policy
All expenses are accounted for on an accruals basis and are charged wholly to
revenue, apart from management fees which are charged 25% to revenue and 75%
to capital.
The transaction costs incurred when purchasing or selling assets are written
off to the income statement in the period that they occur.
Disclosure
30 November 2023 30 November 2022
£’000 £’000
Other administration expenses 145 204
IFA charges 105 133
Directors’ remuneration 103 106
Audit fees 51 42
Registrar fees 49 47
Printing and postage 22 10
VCT monitoring fees 20 3
Legal and professional fees 14 16
Directors’ and officers’ liability insurance 13 12
Brokers’ fees 6 7
528 580
The fees payable to the Company’s auditor above are stated net of VAT and
the VAT is included within other administration expenses. No non-audit
services were provided by the Company’s auditor.
The ongoing charges of the Company were 2.2% of average net assets during the
year to 30 November 2023 (2022: 2.2%).
5. Tax
Accounting policy
Current tax is recognised for the amount of income tax payable in respect of
the taxable profit/(loss) for the current or past reporting periods using the
current UK corporation tax rate. The tax effect of different items of
income/gain and expenditure/loss is allocated between capital and revenue
return on the ‘marginal’ basis as recommended in the SORP.
Deferred tax is recognised on an undiscounted basis in respect of all timing
differences that have originated but not reversed at the balance sheet date,
except as otherwise indicated.
Deferred tax assets are only recognised to the extent that it is probable that
they will be recovered against the reversal of deferred tax liabilities or
other future taxable profits.
Disclosure
The corporation tax charge for the year was £nil (2022: £nil).
30 November 2023 30 November 2022
£’000 £’000
Loss before tax (15,709) (36,695)
Current tax at 23.01% (2022: 19.00%) (3,615) (6,972)
Effects of
Non-taxable income (270) (110)
Non-taxable capital gains 3,406 6,608
Non-deductible expenses 3 6
Excess management expenses on which deferred tax not recognised 476 468
Total tax charge - -
Approved VCTs are exempt from tax on capital gains within the Company. Since
the Board intends that the Company will continue to conduct its affairs so as
to maintain its approval as a VCT, no deferred tax has been provided in
respect of any capital gains or losses arising on the revaluation or disposal
of investments.
In March 2021, the UK Government announced that from 1 April 2023, the main
rate of corporation tax will be increased to 25%. Consequently, deferred tax
has been calculated at the year end using a tax rate of 25%. As at 30 November
2023, there is an unrecognised deferred tax asset of £5,118,000 (2022:
£4,616,000) in respect of surplus management expenses, based on a prospective
tax rate of 25% (2022: 25%). This deferred tax asset could in future be used
against taxable profits.
Provided the Company continues to maintain its current investment profile, it
is unlikely that the expenses will be utilised and that the Company will
obtain any benefit from this asset. Additionally, the tax rate used of 23% was
calculated as an average of the tax rate during the year, being 19% from 1
December 2022 to 31 March 2023, and 25% from 1 April 2023 to 30 November 2023.
6. Dividends
Accounting Policy
Dividends payable are recognised as distributions in the financial statements
when the Company’s liability to make a payment has been established. This
liability is established on the record date, the date on which those
shareholders on the share register are entitled to the dividend.
Disclosure
30 November 2023 30 November 2022
£’000 £’000
Dividends paid on Ordinary shares during the year
2022 Final dividend – 2.3p per share paid 25 May 2023 (2022: 2.1p per share) 3,746 3,080
2023 Interim dividend – 1.8p per share paid 3 November 2023 (2022: 2.1p per share) 2,927 3,075
Total 6,673 6,155
During the year £1,303,000 (2022: £1,199,000) of dividends were reinvested
under the DRIS.
Under Section 32 of FRS 102 ‘Events After the end of the Reporting
Period’, dividends payable at year end are not recognised as a liability.
Details of these dividends and all other dividends declared in the year are
set out below.
30 November 2023 30 November 2022
£’000 £’000
Dividends paid and proposed
2023 Interim dividend – 1.8p per share paid 3 November 2023 (2022: 2.1p per share) 2,927 3,075
2023 Special dividend - 3.6p per share payable 27 June 2024 (2022: Nil) Final proposed dividend – 1.8p per share payable 27 June 2024 (2022: 2.3p share) 6,639 3,328 - 3,773
12,894 6,848
The above proposed final dividend is based on the number of shares in issue at the date of this report. The actual dividend paid may differ from this number as the dividend payable will be based on the number of shares in issue on the record date and will reflect any changes in the share capital between the year end and the record date.
7. Earnings per share
30 November 2023 30 November 2022
Revenue £’000 Capital £’000 Total £’000 Revenue £’000 Capital £’000 Total £’000
Profit/(loss) attributable to Ordinary shareholders 273 (15,982) (15,709) (472) (36,223) (36,695)
Earnings per Ordinary share 0.2p (9.8p) (9.6p) (0.3p) (24.5p) (24.8p)
The profit/(loss) per share is based on 164,257,336 (2022: 147,948,350)
Ordinary shares, being the weighted average number of Ordinary shares in issue
during the year, and the loss on ordinary activities after tax for the year of
£15,709,000 (2022: loss of £36,695,000).
There are no potentially dilutive capital instruments in issue and, as such,
the basic and diluted earnings per share are identical.
8. Net asset value per share
30 November 2023 30 November 2022
Net assets (£’000) 84,690 101,794
Shares in issue 176,875,405 165,172,844
NAV per share (p) 47.9 61.6
There are no potentially dilutive capital instruments in issue and, as such,
the basic and diluted NAV per share are identical.
9. Related Party Transactions
As at 30 November 2023, Octopus Investments Nominees Limited (OINL) held nil
shares (2022: 4,284) in the Company as beneficial owner, having purchased
these at a cost of £nil (2022: £3,000) from shareholders to protect their
interests after delays or errors with shareholder instructions and other
similar administrative tasks. Throughout the period to 30 November 2023 OINL
purchased nil shares (2022: 7,916) at a cost of £nil (2022: £6,000) and sold
4,284 shares (2022: 3,632) for proceeds of £2,000 (2022: £3,000). In
accordance with the listing rules, this is classed as a related party
transaction as Octopus, the Investment Manager, and OINL are part of the same
group of companies. Any such future transactions, where OINL takes over the
legal and beneficial ownership of Company shares will be announced to the
market and disclosed in annual and half yearly reports.
10. 2023 financial information
The figures and financial information for the year ended 30 November 2023 are
extracted from the Company’s annual financial statements for the period and
do not constitute statutory accounts. The Company’s annual financial
statements for the year to 30 November 2023 have been audited but have not yet
been delivered to the Registrar of Companies. The Auditors’ report on the
2023 annual financial statements was unqualified, did not include a reference
to any matter to which the auditors drew attention without qualifying the
report, and did not contain any statements under Sections 498(2) or 498(3) of
the Companies Act 2006.
11. 2022 financial information
The figures and financial information for the period ended 30 November 2022
are compiled from an extract of the published financial statements for the
period and do not constitute statutory accounts. Those financial statements
have been delivered to the Registrar of Companies and included the Auditors’
report which was unqualified, did not include a reference to any matter to
which the auditors drew attention without qualifying the report, and did not
contain any statements under Sections 498(2) or 498(3) of the Companies Act
2006.
12. Annual Report and financial statements
The Annual Report and financial statements will be posted to shareholders in
March and will be available on the Company’s website. The Notice of Annual
General Meeting is contained within the Annual Report.
13. General information
Registered in England & Wales. Company No. 05528235
LEI: 213800BW27BKJCI35L17
14. Directors
Keith Mullins (Chair), Andrew Raynor, Elizabeth Kennedy, Brad Ormsby and
Virginia (Connelly) Bull
15. Secretary and registered office
Octopus Company Secretarial Services Limited
33 Holborn, London EC1N 2HT