REG-Final Results
20/06/2025 17:00
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Octopus AIM VCT plc
Final Results
Octopus AIM VCT plc today announces the final results for the year ended 28
February 2025.
Octopus AIM VCT 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
Year to 28 February 2025 Year to 29 February 2024
Net assets (£’000) 115,383 129,109
Loss after tax (£’000) (6,079) (17,734)
Net asset value (NAV) per share (p) (1) 50.6 63.3
Dividends per share paid in year (p) 9.9 5.0
Total return (%) (2) (4.4) (13.0)
Final dividend proposed (p) (3) 2.5 2.5
Special dividend proposed (p) – 4.9
Ongoing charges (%) (4) 2.3 2.1
(1)NAV per share is calculated on the underlying assets less liabilities of
the Company divided by the number of shares.
(2)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.
(3)Subject to shareholder approval at the Annual General Meeting, the proposed
final dividend will be paid on 28 August 2025 to shareholders on the register
on 1 August 2025.
(4)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 ended 28 February 2025 was a tale of two halves for investors in
smaller companies. In the first half of the year, the FTSE AIM Index delivered
positive returns of 5.8% as growth in the UK economy exceeded expectations,
supporting a more buoyant market for secondary fundraisings and IPO activity
than had been the case for quite a while. The returns in the second half were
marred by policy uncertainty surrounding the new UK Government’s growth
agenda. Announcements including cuts to Inheritance Tax relief on AIM shares
cast a shadow on both market activity and investor sentiment which
frustratingly resulted in a reversal of performance with the FTSE AIM Index
delivering a negative return of 2.6% for the full year.
The change in administration at the White House early in the new year
triggered a decline in global market confidence, as investors anticipated
policy uncertainty under the Trump Administration. Since our year-end
developments including the US ‘Liberation Day’ announcement of US tariffs
and subsequent pauses and reversals in these policies have heightened market
uncertainty, dampening investor confidence. This persistent volatility has
become a defining feature of the current market environment. These concerns
reflect broader fears of an economic slowdown, with the full extent of the
impact on the UK economy still unclear as trade negotiations continue.
For 2025 the Office for Budget Responsibility is forecasting a modest increase
in UK GDP of around 1%, roughly half of the 2% growth anticipated at the end
of 2024. Inflation is expected to average approximately 3% which, coupled with
this subdued growth, suggests that the pace of interest rate cuts will be
slower than previously anticipated. In the context of low UK equity valuations
this gradual easing could act as a meaningful positive catalyst for UK
equities and help restore some market confidence.
It is pleasing to report that despite these background challenges,
opportunities to invest in innovative, growth-oriented companies persisted.
During the year under review, the AIM market raised £2 billion for new and
existing companies, up from £1.7 billion the previous year. A significant
part of this capital (£1.6 billion) was raised by existing AIM companies
seeking additional funding. The Investment Manager deployed £7.3 million into
qualifying companies, slightly down from £7.7 million the prior year, and is
confident that there will continue to be sufficient opportunities to invest
our funds in good companies seeking more growth capital at attractive
valuations.
Performance
Amidst this backdrop of economic, market, political, and geopolitical
uncertainty, the year to 28 February 2025 proved challenging for the fund. The
NAV on 28 February 2025 was 50.6p per share, a decrease on the NAV of 63.3p
per share reported at 29 February 2024. Adding back the 9.9p of dividends paid
in the year gives a total negative return of 4.4%. In the same year, the FTSE
AIM Index fell by 2.6%, the FTSE SmallCap (excluding investment companies)
Index rose by 10.7% and the FTSE All-Share Index rose by 18.4%, all on a total
return basis.
The AIM market’s underperformance compared to other UK indices over the past
three years underscores investors’ aversion to risk during periods of market
instability and equity outflows. Investors have preferred larger more
defensive companies in traditional liquid sectors, rather than significant
exposure to new technology, healthcare and biotech growth stocks (sectors that
form a large part of your portfolio’s investments). Venture Capital Trusts
(VCTs) face additional investment restrictions and must ensure they are
invested in qualifying stocks. The FTSE AIM Index, while not a perfect
replica, remains the most appropriate broad equity benchmark for comparison
due to the nature of its underlying holdings. The FTSE SmallCap and All-Share
indices provide a broader market context.
Dividends
In January 2025 an interim dividend for the year to 28 February 2025 of 2.5p
was paid to all shareholders. This was in addition to the 2.5p final dividend
and 4.9p special dividend that had been paid in August 2024 which related to
the previous financial year ended 29 February 2024. The Board is recommending
a final dividend of 2.5p, resulting in a total dividend of 5.0p in respect of
the year. There is no special dividend this year as no material profits have
been generated on disposals during the year. The total dividend of 5.0p
represents 10.5% of the year-end share price of 47.8p. This is in line with
our policy of paying a minimum annual dividend of 5.0p per share or a 5% yield
based on the year-end share price, whichever is the greater.
Board changes
As mentioned in last year’s Annual Report, Louise Nash joined the Board on 1
July 2024, and Stephen Hazell-Smith stepped down from the Board at last
year’s AGM on 18 July 2024.
Having been on the Board for nearly nine years, and Chair since 2021, it is my
intention to step down from the Board with effect from this year’s Annual
General Meeting on 23 July 2025, and accordingly I will not be offering myself
for re-election. I am pleased to report that Joanne Parfrey, who has been a
member of the Board since 2016, will be taking over as Chair with effect from
the AGM.
The Board is currently conducting a recruitment process, with the assistance
of an external recruitment firm, Nurole Ltd, to appoint a further director of
the Company in due course.
Cancellation of share premium account
At the last Annual General Meeting, shareholders voted to cancel share premium
to increase the pool of distributable reserves to the amount of £18.1
million. This is a regular occurrence, and common practice, to enable the
continued payment of dividends and buyback of shares. A further resolution to
cancel share premium is being proposed at this year’s Annual General
Meeting.
Dividend reinvestment scheme
In common with many other VCTs in the industry, the Company has established a
Dividend Reinvestment Scheme (DRIS). Many shareholders have already taken
advantage of this opportunity. For investors who do not require income, but
value the additional tax relief on their reinvested dividends, this is an
attractive scheme and I hope more shareholders will find it useful. In the
course of the year 6,765,311 new shares have been issued under this scheme,
returning £3.7 million to the Company. The final dividend referred to above
will be eligible for the DRIS.
Share buybacks
During the year to 28 February 2025 the Company continued to buy back shares
in the market from selling shareholders and purchased 6,705,585 ordinary
shares for a total consideration of £3.7 million. We have maintained a
discount of approximately 4.1% to NAV (equating to up to a 5.0% 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 23 September 2024, a prospectus offer was launched alongside Octopus AIM
VCT 2 plc to raise a combined total of up to £20 million, with a £10 million
over-allotment facility. In the period under review the Company raised £12.6
million after costs and issued a total of 24,270,651 shares. After the
reporting period the offer closed fully subscribed on 27 March 2025.
VCT status
Shoosmiths LLP were engaged throughout the year to 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 28 February 2025, 85.1% of the Company’s portfolio was in VCT
qualifying investments.
Annual General Meeting (AGM)
The AGM will take place on 23 July 2025 at 10.30am. Further information can be
found in the Directors’ Report and Notice of Annual General Meeting. The
Investment Manager will also give a live presentation to shareholders on the
day of the AGM. This will enable shareholders to receive an update from the
Investment Manager and provide an opportunity for questions to the Board and
the Investment Manager. 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 any questions via email to AimAGM@octopusinvestments.com by
5.00pm on 15 July 2025.
Outlook
After a prolonged period of underperformance, there are reasonable grounds for
hoping that prospects for the AIM market should improve in the current
financial year. Key potential drivers of improvement include regulatory
reforms that facilitate investment, the recent Mansion House Accord which
commits major pension providers to direct £25 billion into UK growth assets
by 2030, the possible reform of VCT rules and a pipeline of IPOs and M&A
activity expected to restore investor confidence. Additionally, anticipated
interest rate cuts and government initiatives targeting innovation sectors
such as technology, healthcare, and green energy are creating a more
supportive environment. While geopolitical uncertainties persist, these
combined factors position AIM for a potential rebound, which could offer
attractive opportunities for growth-focused investors.
The portfolio contains 87 holdings across a range of sectors with exposure to
some exciting new technologies in the environmental and healthcare sectors in
particular. Many of these companies remain well funded, although the challenge
of raising further capital in the current market environment cannot be
dismissed. The balance of the portfolio towards profitable companies remains,
and the Investment Manager remains confident that there will continue to be
sufficient opportunities to invest our funds in good companies seeking more
growth capital at attractive valuations.
Neal Ransome
Chair
Investment Manager’s review
Introduction
The year ended 28 February 2025 began on a positive note. Economic uncertainty
had eased, inflation approached target levels, and UK GDP growth figures were
revised upwards, boosting optimism among economic commentators. Against this
backdrop, the IPO market showed early signs of recovery, and secondary
fundraisings had increased. Coupled with the first interest rate cut in four
years during the summer, these developments restored much-needed confidence
among UK investors that a sustained market recovery was imminent.
Consequently, markets responded positively, with reduced volatility and
company share prices reacting favourably to good news.
This positive trend continued through most of the first half of the year but
was interrupted ahead of the new UK Government’s Autumn Budget, which
introduced significant reforms to Business Property Relief (BPR) affecting tax
planning. The changes (notably the reduction of relief from 100% to 50% for
shares listed on markets such as AIM), heightened investor uncertainty and
sparked widespread concerns about the long-term implications for UK capital
markets. In response, market participants (including the London Stock
Exchange, investors, industry bodies and brokers), have actively engaged with
the government, focusing not only on regulatory adjustments but also on
anticipated pension reforms expected to transform investment in UK equities
and these conversations are ongoing.
A stock market rally in December, coupled with a series of encouraging trading
updates from companies in January, fostered optimism that 2025 would bring a
more stable and supportive environment for UK equities. This initial momentum
suggested a potential turnaround after a period of volatility, raising hopes
among investors for sustained growth and improved market sentiment. However,
the arrival of the new US administration and lingering uncertainty over the
implementation of its policies have tempered global investor confidence. The
administration’s aggressive tariff regime introduces complex challenges, as
the indirect consequences, such as disruptions to global supply chains and
diminished business confidence. These are difficult to quantify but could
materially affect global GDP growth, inflation trajectories, and interest rate
policies.
Market commentators widely anticipate that these tariffs will act as a drag on
global economic expansion, adding to a backdrop already marked by geopolitical
tensions and uneven economic recovery across regions. In recent years, global
investment has become increasingly concentrated in the US, driven by strong
corporate earnings and technological innovation. Yet, ongoing political
uncertainty and heightened market volatility may prompt investors to reassess
US market valuations, particularly within the technology sector, which has
historically been a major driver of returns. Such a reassessment could shift
investor focus toward alternative global markets, enhancing the appeal of the
UK as a destination for both domestic and international asset allocators. It
is hoped that this potential reallocation of capital flows could stimulate
increased investment into UK equities, supported by relatively attractive
valuations and a diverse market landscape.
Encouragingly, the UK economy is projected to grow in 2025, albeit at a slower
pace than initially forecast. While growth forecasts have recently been
revised downward to around 1% this year, macroeconomic indicators are largely
positive, with inflation only edging up slightly in recent months, and
remaining moderate compared to previous years. Meanwhile, interest rates are
anticipated to continue to decline, albeit at a lower than previously
anticipated pace, over the course of this year and into 2026, following the
first rate cut earlier in 2025 as inflationary pressures ease. This monetary
easing is cautiously restoring confidence among smaller companies, which have
been trading well below their long-term average valuations. The sustained
corporate activity within this segment of the market highlights
the substantial latent value in UK small businesses, suggesting considerable
upside potential as market conditions improve. Overall, while challenges
remain, including cost pressures caused by global uncertainties, the
combination of modest UK economic growth, easing inflation, and falling
interest rates is developing a more supportive environment for UK equities,
particularly for smaller companies.
The Alternative Investment Market (AIM)
In the year to February 2025 the FTSE AIM Index fell by 2.6%. This compared to
a rise in the FTSE SmallCap (excluding investment companies) of 10.7% and a
rise in the FTSE All-Share Index of 18.4%, all on a total return basis.
Although VCTs face additional investment restrictions, the AIM Index remains
the most appropriate broad equity market benchmark for comparison, given the
nature of its underlying holdings. The FTSE SmallCap and FTSE All-Share
indices provide useful broader market context. Last year, the larger indices
outperformed, supported by their significant exposure to major banks,
aerospace and defence and pharmaceuticals. This reflected a continued investor
shift away from growth and momentum stocks toward value opportunities in more
traditional sectors. Additionally, changes to Business Property Relief (BPR)
rules announced in the Autumn Budget proved destabilising. Historically, AIM
BPR funds have been a key source of support for AIM’s largest companies, but
the new regulations have led to a withdrawal of investment from these funds,
negatively impacting the market’s overall performance relative to its peers.
Consequently, the pace of IPOs on AIM remained subdued, with only 10 IPOs
during the period compared to 17 in the previous financial year. While the
number of exits remained broadly in line with historical levels, there has
been an increasing trend of companies migrating to the main market or
signalling their intention to do so. Examples of this include Gamma
Communications plc and Brooks Macdonald Group plc, both of which are held in
the portfolio. The total number of companies listed on AIM stood at 669 as of
the end of February, representing a 9.8% decline year-on-year.
Bid activity was also an important theme of the period under review with AIM
seeing 27 companies bid for at an average bid premium of 56%. Positive returns
were generated as a result of bids for portfolio companies Mattioli Woods plc,
Learning Technologies Group plc and Intelligent Ultrasound Group plc at 34%,
34% and 17% premiums to the last traded price respectively. It is important to
note that, while these bids took place at relatively modest premiums to their
trading prices, due to the long-term nature of our investments these still
represented significant returns on our initial investments. In total, these
three bids resulted in more than £8 million of profit over our initial
investment, the majority of which was received post the period end.
Despite these challenges, we remain confident that AIM, and AIM Venture
Capital Trusts (VCTs) in particular, continue to play a critical role in
supporting the growth ambitions of smaller public companies. The opportunity
to invest in qualifying companies remains. This was evidenced by the steady
flow of secondary fundraisings on AIM throughout the year. In the year to 28
February 2025 AIM raised £2 billion of new capital for existing companies, an
increase on the £1.7 billion raised in the previous year. This robust
fundraising activity highlights that, despite prevailing market headwinds, the
pipeline of qualifying companies seeking investment remains healthy. We
believe this environment will continue to offer attractive opportunities to
invest in exciting and innovative businesses.
Performance
Adding back the 9.9p of dividends paid in the year, the Company’s NAV total
return fell by 4.4% during the year. This compares with a fall in the FTSE AIM
Index of 2.6%, a rise in the FTSE SmallCap (excluding investment companies) of
10.7% and a rise in the FTSE All-Share Index of 18.4%, all on a total return
basis. The FTSE All-Share was lifted by strong performance of financials,
consumer staples, pharmaceuticals and aerospace and defence. Financials were
driven by the large banks who benefitted from improved margins as a result of
the continued higher interest rate environment. Standout categories of
consumer staples included tobacco and personal care where demand was
resilient. The pharmaceuticals sector was primarily driven by the continued
strong performance of AstraZeneca, which has an outsized impact due to being
one of the largest companies in the index. Aerospace and Defence was fuelled
by increasing interest in the sector due to the ongoing heightened
geopolitical uncertainty which is likely to result in a significant increase
in investment, particularly in Europe as the EU seeks to reduce its reliance
on the US. The outperformance of the FTSE All-Share Index, driven by these
sectors, was largely fuelled by the share price performance of larger more
established companies with investors taking more defensive positioning due to
the increased uncertainty. This trend of outperformance by traditional
industries was similar for both the FTSE SmallCap (excluding investment
companies) and the FTSE AIM All-Share though returns were less pronounced,
markedly so for AIM. This variance in performance is somewhat explained when
accounting for the differences in market cap scale of these indexes and
considering the context of the additional headwinds faced by AIM. For both
smaller indexes financials and consumer staples were also amongst the best
performing sectors, alongside consumer services and industrials for the FTSE
Small Cap (excluding investment companies) and basic materials and technology
for the FTSE AIM All-Share Index. While technology does not necessarily fit
well in this list this is explained by AIM’s larger weighting towards
technology.
The underperformance in the period of the Company compared to the FTSE AIM
All-Share Index is largely explained by the themes outlined above and the
weightings of certain sectors of the portfolio relative to the index. The
largest contributor to the FTSE AIM All-Share in the period was Keywords
Studios plc which was the subject of a bid at a premium of 67% and contributed
more than a percent to the performance of the index as a result. Strong
performance in the period by typically non-qualifying sectors such as mining
and financials also contributed to the relative underperformance.
Equipmake Holdings plc was the largest detractor from the Company’s
performance over the year, as the business struggled with significant
component price volatility, resulting in substantially higher costs than
anticipated. This challenge led to a much larger loss than expected,
shortening the company’s cash runway and necessitating further fundraising
at dilutive levels. At the end of last year, the company undertook a strategic
review, including exploring a potential sale of the business. This process
concluded post-period with a £5 million strategic investment from
Caterpillar, accompanied by a development agreement to create electric
drivetrain products for Caterpillar’s applications.
Next 15 Group plc reported a disappointing trading statement which
subsequently led to downgrades in market expectations following the unexpected
loss of its largest contract by portfolio company Mach49. While this setback
was frustrating, Next 15 remains a global business with a strong portfolio of
brands well-positioned to benefit from a recovery in their respective markets.
Verici Dx plc’s share price saw considerable volatility due to a delay in
local coverage determination for its Tutivia test, which was resolved after
the period end. Despite this headwind, the company achieved important
milestones, including a revenue-enhancing agreement with Thermo Fisher. Judges
Scientific Group downgraded revenue expectations during the year due to a
delay in Geotek’s large coring contract, coupled with softer demand in
China. However, the company’s proven business model and strong track record
of delivery make it well placed to resume growth once demand normalises.
Haydale Graphene Industries plc experienced a challenging trading period over
the year, prompting a management change focused on executing a strategic shift
toward near-term commercial opportunities. Encouragingly, the company
successfully raised £3 million in capital to support this new direction.
On a positive note, many companies in the portfolio delivered strong trading
performances during the period, contributing positively to overall returns.
Breedon Group plc was the largest contributor, announcing its long-anticipated
expansion into the US market through the acquisition of BMC Enterprises Inc.,
a leading regional supplier of ready-mixed concrete, aggregates, and building
products. This acquisition provides a valuable foothold, positioning Breedon
well for further expansion in a growing but fragmented US market. Performance
in Ireland was strong, delivering growth in profitability which helped offset
a slightly weaker performance in Great Britain, their largest region, where
there was weaker demand exacerbated further by adverse weather. Beeks
Financial Cloud Group plc continued to demonstrate excellent revenue growth,
driven by a series of significant contract wins and extensions. Nasdaq was
confirmed as an Exchange Cloud customer, and Grupo Bolsa Mexicana de Valores
became the fourth customer to adopt the Exchange Cloud product. With a strong
pipeline and expanding customer base, Beeks remains well positioned to deliver
sustained growth through contract expansions and new customer acquisitions.
Netcall plc continued its double digit revenue growth, demonstrating the
demand for its cloud solutions, which drive efficiency resulting in better
customer outcomes. The company completed the acquisitions of Govtech and
Parble, enhancing and complementing the existing suite of Liberty solutions
and creating cross-selling opportunities which underpin future revenue growth.
Diaceutics delivered another excellent performance, growing revenues at more
than 30% while also increasing the quality and visibility of earnings with an
improvement in the proportion of revenues which are recurring. The company won
three further enterprise wide engagements, taking the total to seven,
including a first commercialisation partner engagement where Diaceutics is the
primary partner for a customer launching a precision medicine.
In the period under review the private company holdings in our portfolio
performed strongly and had their valuations increased; Hasgrove continued to
see excellent growth in its annual recurring revenue which was the primary
reason for its increased valuation. This was further improved by an increased
valuation multiple reflective of the level of growth and profitability the
company has experienced. Popsa delivered a strong trading performance in the
year resulting in increased revenue expectations. The business is continuing
its growth trajectory, rolling out new features and growing its customer base,
reaching 1.5 million customers in 2024. The uplift in valuations contributed
positively to the NAV of the Company and increased the proportion of unquoted
investments in the overall value of the portfolio.
Portfolio activity
Having made four qualifying investments at a total cost of £2.1 million in
the first half of the year, of which one was a new investment, we added three
new qualifying investments totalling £3.7 million as well as three follow-on
investments totalling £1.4 million in the second half of the year. This made
a total investment of £7.2 million in qualifying investments for the year, an
increase on last year’s £5.8 million.
The four new qualifying issues invested into in the year were GETECH Group
plc, Windar Photonics plc, Aurrigo International plc and RC Fornax plc. We
invested £0.3 million in GETECH Group plc, an established AIM-listed company
and global leader in locating subsurface resources, including critical metals
essential to the energy transition. The funds raised will support the
company’s ongoing business development and R&D. £0.9 million was invested
into Windar Photonics plc who manufacture LiDAR monitoring and optimisation
solutions for wind turbines. This technology allows for optimum yaw alignment
which increases the annual energy production and extends the life of the
turbine by reducing wear caused by misalignment. An investment of £1.6
million was made into Aurrigo International plc which specialises in the
design and development of fully integrated airside solutions for the aviation
industry. The company has developed autonomous vehicles for baggage and cargo
handling and has announced partnerships with several of the largest airports
globally including Changi and Schipol. This autonomous technology combined
with their secure management systems boosts operational efficiency and safety
at airports, while supporting the reduction of emissions. We invested £1.2
million at IPO into RC Fornax plc an engineering consultancy business which
provides solutions for the defence industry.
The six follow-on investments into existing holdings were PCI-Pal plc,
Cambridge Cognition Holdings plc, Abingdon Health plc, Ixico plc, Haydale
Graphene Industries plc and GENinCode plc. We invested £1.1 million in
Abingdon Health plc, a diagnostics tests business, to support the expansion of
its laboratory capacity; £0.2 million in PCI-Pal plc, a provider of payment
solutions and services, to strengthen its US expansion; and £0.5 million in
Cambridge Cognition Holdings plc, a digital solutions provider for brain
health assessment, to advance the execution of its commercial strategy. We
invested £0.5 million into GENinCode plc, a leading provider in genomic
testing. We supported Ixico plc, a leading neuroscience imaging business, with
an investment of £0.6 million. We made a follow-on investment of £0.3
million in Haydale Graphene Industries plc which engages in the integration of
graphene into next generation industrial materials.
We invested £4.1 million into non-qualifying, main list stocks to manage
liquidity but also provide increased UK equity market exposure where we
believe that many share prices are significantly undervalued. This provides an
excellent entry point and the opportunity to generate significant returns on a
multi-year view. Performance of these main list stocks was broadly flat in the
period, but we remain convinced of the value that exists in these businesses.
We invested £0.6 million into JTC plc, a global professional services
business embarking on an ambitious ‘Cosmos Era’ business plan, with the
goal to double the business over the next three to four years. The business
has announced four acquisitions since our initial investment; £0.6 million
into GSK plc, a R&D focussed multinational pharmaceutical and biotechnology
company aiming to positively impact the health of billions of people. The
business has delivered good financial results, grown revenues and raising
dividend expectations; £0.6 million into WISE plc, a founder-led global
payments solutions business with ambitions to build the best solution to move
and manage money around the world. The company is continuing to expand into
new territories globally and has grown to 9 million customers, with increased
volumes allowing the business to cut fees for its customers, further enhancing
their value proposition; £0.6 million into Cranswick plc, a leading UK food
producer which operates a vertically integrated business model allowing it to
provide assurances to its customers over the integrity of practices due to
traceability. The company continues to invest in the resilience of its supply
chain, in the period expanding their pig operations with the acquisition of
JSR Genetics to further improve the quality of the company’s products by
ensuring animal health, playing a vital role in UK food supply; £0.6 million
into Ricardo plc, a global strategic environmental and engineering consultancy
group which executed a transformational acquisition and disposal to reposition
the business as a leader in environmental and energy solutions, acquiring E3
advisory whilst disposing of its defence business. The business unfortunately
faced unexpected headwinds with the delay of a major rail project as a result
of the California wildfires; £0.6 million into Bloomsbury Publishing plc, a
leading independent publisher committed to excellent and original works which
continued to benefit from the popularity of author Sarah J. Maas’s works and
began to see the benefits of the newly acquired academic publishing business,
Rowman & Littlefield. £0.5 million was invested into Bytes Technology Group
plc, an IT solutions and services business which is able to roll out the use
of novel AI technologies such as Copilot to customers. The business increased
share of spend from customers in the period and increased operating profits.
We continue to hold some existing non-qualifying AIM holdings where we see the
opportunity for further share price progress.
Non-qualifying investments are used to manage liquidity while awaiting new
qualifying investment opportunities. During the year we increased our holdings
in the FP Octopus Micro Cap Fund and the FP Octopus UK Future Generations Fund
and decreased our holding in the Octopus Multi Cap Income Fund. We made a net
investment of £0.7 million over the period, investing a combined £1 million
and disposing of £0.3 million. The funds were net detractors in the period,
with their portfolios also being exposed to many of the market headwinds
discussed above. This return was disappointing, but the funds remain well
positioned to benefit from the expected market recovery.
In the period under review we made partial disposals of four companies, Judges
Scientific plc, IDOX plc, Beeks Financial Cloud Group plc and Wise plc taking
profits into rising share prices. We also fully disposed of seven holdings
being Mattioli Woods plc, Renalytix plc, Cirata plc, LoopUp Group plc, Cordel
Group plc, Eluceda Limited and Spectral AI Inc. Disposals made a net overall
gain of £0.7 million over original cost and generated £4.9 million of cash
proceeds.
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 56.4% of the Company’s net assets were held in individual quoted shares,
13.2% were held in unquoted single company investments and 30.1% were held in
cash or collective investment funds providing short-term liquidity.
Shareholders should be aware that a proportion of the quoted holdings may have
limited liquidity owing to the size of the investee company and the overall
proportion held by the Company.
VCT regulations
There have been no further changes to the VCT regulations since the
publication of the previous set of audited accounts. The key requirements are
that 30% of funds raised should be invested in qualifying holdings within
twelve 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 remain committed to
maintaining a threshold of quality and to invest where we see the potential
for returns from growth. Over time there has been a gradual change to the
profile of the portfolio towards earlier-stage companies. However, 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;
• have less than £15 million of gross assets at the time of investment and
no more than £16 million immediately post investment;
• be less than seven years old from the date of their first commercial sale
(or ten years if a knowledge intensive company) if raising State Aided (i.e.
VCT) funds for the first time;
• not receive more than £5 million state aided funds in the previous twelve
months (£10 million for a knowledge intensive company from 6 April 2018), or
more than the lifetime limit of £12 million (£20 million for 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
The recently announced Mansion House Accord has provided a much-needed boost
to the market. The agreement, signed by 17 major UK pension providers managing
over £252 billion in assets, commits to investing at least 10% of defined
contribution default funds into private markets by 2030, with half of this
directed toward UK assets such as infrastructure, private equity, venture
capital, and private credit, unlocking an estimated £50 billion in
investment, including £25 billion into UK growth sectors. This voluntary
initiative aims to enhance long-term pension returns while supporting UK
economic growth and innovation, with a renewed focus on revitalising AIM as a
key platform for UK high-growth companies benefiting from increased pension
fund capital flows. Additionally, we are hopeful that anticipated regulatory
reforms for AIM, including potential amendments to VCT rules, will enhance the
market’s ability to attract innovative, high-growth small companies seeking
capital. While we remain cautiously optimistic about the short-term outlook,
we are encouraged by the strong trading performance of many companies within
your portfolio and remain hopeful for continued opportunities to invest in
exciting businesses at attractive valuations. There is broad consensus that UK
equities are undervalued compared to other developed markets, with smaller
companies in particular, presenting exceptional value at historically low
valuations.
The portfolio contains 87 holdings with investments across a wide range of
sectors. The balance of holdings in the portfolio is towards profitable
companies and many are still trading in line or above market expectations.
With many small companies trading below their long-term average, we still see
good growth potential when the market recovers.
The Octopus Quoted Companies team
Viability statement
In accordance with provision 4.31 of the UK Corporate Governance Code 2018,
the Directors have assessed the prospects of the Company over a longer period
than the twelve 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 27 March 2025
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, 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 considering the material inflows and
outflows of the Company including investment activity, buybacks, dividends
and fees 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 28 February
2030.
Risk and risk management
Principal risks, risk management and regulatory environment
In accordance with the UK Listing Rules under which the Company operates, the
Board is required to comment on the potential risks and uncertainties which
could have a material impact on the Company’s performance.
The Board carries out a review of the risk environment in which the Company
operates. The main areas of risk identified by the Board are as follows:
Risk Mitigation
Investment performance: The focus of the Company’s investments is into VCT qualifying companies quoted on AIM and the AQSE, 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. The ability of the fund to invest is dependent on the pipeline of qualifying investments. Prior to investment, the Investment Manager seeks assurance from the Company’s VCT status adviser 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 their 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 advisers. 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, that proper accounting records are maintained, and that regulatory reporting requirements are met. 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 performance in any one sector. The Company also maintains adequate liquidity to make sure 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/cash flow risk: The risk that the Company’s available cash will not be sufficient to meet its financial obligations. The Company invests in 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 make sure 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. As at 28 February 2025, 17.8% of net assets were held in cash and cash
equivalents and 12.4% in OEICs, realisable in seven business days.
Valuation risk: 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 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 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. Investment in FP Octopus UK Micro Cap Growth Fund, FP Octopus UK Multi Cap Income Fund and FP Octopus UK Future Generations Fund are all valued with reference to the daily prices which are published by
Fund Partners, the Authorised Corporate Director.
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. 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.
The following are some of the potential emerging risks that the Board and the
Investment Manager are currently monitoring:
• Geo-political protectionism.
• Climate change.
Gender and diversity
The Board of Directors currently comprises two female and two male
Non-Executive Directors with considerable experience of the VCT industry and a
broad range of skills and backgrounds. All appointments to the Board are made
on the basis of ability and knowledge. The composition of the Board, including
gender and diversity, is reviewed on an annual basis. As at 28 February 2025,
the Company has not met the UK Listing Rule 6.6.6R (9)(a) target for the Board
to have at least one member from a minority ethnic background during the year.
The Board believes in the value and importance of diversity in the boardroom,
including ethnic diversity, but seeks to recruit directors whose total
attributes best fit the needs of the Board at the time of recruitment.
In line with UK Listing Rule 6 Annex 1 R, the below tables in the prescribed
format, show the gender and ethnic background of the Directors as at 28
February 2025.
Gender identity or sex
Number of Board members Percentage of the Board Number of senior positions on the Board (CEO, CFO, SID and Chair)
Men 2 50% Not applicable
Women 2 50%
Not specified/prefer not to say - -
Ethnic background
Number of Board members Percentage of the Board Number of senior positions on the Board (CEO, CFO, SID and Chair)
White British or other White (including minority white groups) 4 100% Not applicable
Mixed/Multiple Ethnic Groups - -
Asian/Asian British - -
Black/African/Caribbean/Black British - -
Other ethnic group - -
Not specified/prefer not to say - -
As at 28 February 2025, the Board comprised four Directors. The gender
breakdown is as follows: two (50% female); two (50% male). All four Directors
identify as White British or other White (including minority White groups).
Whilst the Board ensures that all appointments are made on merit and that any
Board vacancies are filled by the most qualified candidates, the Board
supports the recommendations for senior positions to be held by female
directors and for ethnic representation on the Board, both matters will be
considered when assessing the Board’s succession plan.
As the Company is externally managed, it has no executive staff and therefore
does not have a CEO or CFO, both roles are deemed as senior Board positions by
the FCA. The Chair and Chair of the Audit Committee are considered senior
Board positions, with both currently held by a male. However, a female
Director will be taking over as Chair with effect from the conclusion of the
AGM to be held on 23 July 2025.
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 are required to prepare the
financial statements and have elected to prepare the Company’s financial
statements in accordance with United Kingdom Generally Accepted Accounting
Practice (GAAP) (United Kingdom Accounting Standards and applicable law)
including FRS 102 – ‘The Financial Reporting Standard applicable in the UK
and Republic of Ireland’ (FRS 102). 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 of the Company and of the profit or
loss for 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 and disclose with
reasonable accuracy at any time the financial position of the Company and
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.
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 ensuring that the annual report and
accounts, taken as a whole, are fair, balanced, understandable and provide the
information necessary for shareholders to assess the Company’s position and
performance, business model and strategy.
Website publication
The Directors are responsible for ensuring the annual report and the accounts
are made available on a website. Financial statements are published on the
Investment Manager’s website in accordance with legislation in the United
Kingdom governing the preparation and dissemination of financial statements,
which may vary from legislation in other jurisdictions. The maintenance and
integrity of the Company’s website is the responsibility of the Directors.
The Directors’ responsibility also extends to the ongoing integrity of the
financial statements contained therein.
Directors’ responsibilities pursuant to Disclosure Guidance and Transparency
Rule 4 (DTR4)
Neal Ransome (Chair), Andrew Boteler, Joanne Parfrey and Louise Nash, the
Directors, confirm to the best of their knowledge that:
• the financial statements have been prepared in accordance with the
Financial Reporting Standard applicable in the United Kingdom and Republic of
Ireland (‘FRS 102’) and give a true and fair view of the assets,
liabilities, financial position and profit and loss of the Company; and
•the annual report includes a fair review of the development and performance
of the business and the financial position of the Company, together with a
description of the principal risks and uncertainties that it faces.
By Order of the Board
Neal Ransome
Chair
Income statement
Year to 28 February 2025 Year to 29 February 2024
Revenue Capital Total Revenue Capital Total
£'000 £’000 £’000 £'000 £’000 £’000
Gain on disposal of fixed asset investments - 1,059 1,059 - 813 813
Loss on disposal of current asset investments - - - - (246) (246)
Loss on valuation of fixed asset investments - (6,264) (6,264) - (16,322) (16,322)
Loss on valuation of current asset investments - (352) (352) - (1,137) (1,137)
Investment income 2,209 - 2,209 2,060 - 2,060
Investment management fees (518) (1,561) (2,079) (555) (1,666) (2,221)
Other expenses (652) - (652) (681) - (681)
Profit/(loss) before tax 1,039 (7,118) (6,079) 824 (18,558) (17,734)
Tax - - - - - -
Profit/(loss) after tax 1,039 (7,118) (6,079) 824 (18,558) (17,734)
Earnings per share – basic and diluted 0.5p (3.4p) (2.9p) 0.4p (10.0p) (9.6p)
•The ‘Total’ column of this statement represents the statutory income
statement of the Company prepared in accordance with the accounting policies
detailed in the Notes to the financial statements; 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 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 28 February 2025 As at 29 February 2024
£’000 £’000 £’000 £’000
Fixed asset investments 81,535 80,350
Current assets:
Investments 14,283 13,897
Money market funds 18,204 33,641
Debtors 252 666
Applications cash (1) 4,350 4
Cash at bank 2,296 1,276
39,385 49,484
Creditors: amounts falling due within one year (5,537) (725)
Net current assets 33,848 48,759
Total assets less current liabilities 115,383 129,109
Called up equity share capital 2,282 2,038
Share premium 16,226 18,041
Capital redemption reserve 408 341
Special distributable reserve 118,070 124,213
Capital reserve realised (33,351) (24,622)
Capital reserve unrealised 12,081 10,470
Revenue reserve (333) (1,372)
Total equity shareholders’ funds 115,383 129,109
NAV per share – basic and diluted 50.6p 63.3p
(1)Cash held but not yet allotted.
The statements were approved by the Directors and authorised for issue on 20
June 2025 and are signed on their behalf by:
Neal Ransome
Chair
Company number: 03477519
The accompanying notes are an integral part of the Financial Statements.
Statement of changes in equity
Share capital Share premium Capital redemption reserve Special distributable reserves (1) Capital reserve realised (1) Capital reserve unrealised Revenue reserve (1) Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
As at 1 March 2024 2,038 18,041 341 124,213 (24,622) 10,470 (1,372) 129,109
Comprehensive income for the year:
Management fee allocated as capital expenditure - - - - (1,561) - - (1,561)
Current period gain on disposal - - - - 1,059 - - 1,059
Current period loss on revaluation of investments - - - - - (6,616) - (6,616)
Profit after tax - - - - - - 1,039 1,039
Total comprehensive loss for the year - - - - (502) (6,616) 1,039 (6,079)
Contributions by and distributions to owners:
Repurchase and cancellation of own shares (67) - 67 (3,687) - - - (3,687)
Issue of shares 311 17,114 - - - - - 17,425
Share issue costs - (864) - - - - - (864)
Dividends paid - - - (20,521) - - - (20,521)
Total contributions by and distributions to owners: 244 16,250 67 (24,208) - - - (7,647)
Other movements:
Cancellation of share premium - (18,065) - 18,065 - - - -
Prior years’ holding gains now realised - - - - (8,228) 8,228 - -
Total other movements - (18,065) - 18,065 (8,228) 8,228 - -
Balance as at 28 February 2025 2,282 16,226 408 118,070 (33,351) 12,081 (333) 115,383
Share capital Share premium Capital redemption reserve Special distributable reserves (1) Capital reserve realised (1) Capital reserve unrealised Revenue reserve (1) Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
As at 1 March 2023 1,798 18,924 279 118,015 (23,143) 27,545 (2,196) 141,222
Comprehensive income for the year:
Management fee allocated as capital expenditure - - - - (1,666) - - (1,666)
Current period gain on disposal - - - - 571 - - 571
Current period loss on revaluation of investments - - - - - (17,459) - (17,459)
Profit after tax - - - - - - 824 824
Total comprehensive loss for the year - - - - (1,095) (17,459) 824 (17,730)
Contributions by and distributions to owners:
Repurchase and cancellation of own shares (62) - 62 (4,083) - - - (4,083)
Issue of shares 302 20,082 - - - - - 20,384
Share issue costs - (1,158) - - - - - (1,158)
Dividends paid - - - (9,526) - - - (9,526)
Total contributions by and distributions to owners: 240 18,924 62 (13,609) - - - 5,617
Other movements:
Cancellation of share premium - (19,807) - 19,807 - - - -
Prior years’ holding gains now realised - - - - 2,871 (2,871) - -
Transfer in reserves - - - - (3,255) 3,255 - -
Total other movements - (19,807) - 19,807 (384) 384 - -
Balance as at 29 February 2024 2,038 18,041 341 124,213 (24,622) 10,470 (1,372) 129,109
(1)Included within these reserves is an amount of £84,386,000 (2024:
£98,219,000) which is considered distributable to shareholders. The Income
Taxes Act 2007 restricts distribution of capital from reserves created by the
conversion of the share premium account into a special distributable reserve
until the third anniversary of the share allotment that led to the creation of
that part of the share premium account. As at 28 February 2025, £50,328,000
of the special reserve is distributable under this restriction.
The accompanying notes are an integral part of the Financial Statements.
Cash flow statement
Year to 28 February 2025 Year to 29 February 2024
£'000 £'000
Cash flows from operating activities
Loss before tax (6,079) (17,734)
Adjustments for:
Decrease in debtors 414 131
Increase/(decrease) in creditors 466 (134)
Gain on disposal of fixed asset investments (1,059) (813)
Loss on disposal of current asset investments – 246
Loss on valuation of fixed asset investments 6,264 16,322
Loss on valuation of current asset investments 352 1,137
Net cash generated from/(utilised in) operating activities 358 (845)
Cash flows from investing activities
Purchase of fixed asset investments (11,280) (7,149)
Proceeds from sale of fixed asset investments 4,890 13,517
Purchase of current asset investments (1,008) (1,080)
Proceeds from sale of current asset investments 270 1,988
Total cash flows (utilised in)/generated from investing activities (7,128) 7,276
Cash flows from financing activities
Movement in applications account 4,346 (1)
Purchase of own shares (3,687) (4,083)
Proceeds from share issues (net of DRIS) 13,678 18,558
Share issue costs (864) (1,157)
Dividends paid (net of DRIS) (16,774) (7,700)
Net cash flows (utilised in)/generated from financing activities (3,301) 5,617
(Decrease)/increase in cash and cash equivalents (10,071) 12,048
Opening cash and cash equivalents 34,921 22,873
Closing cash and cash equivalents 24,850 34,921
Cash and cash equivalents is represented by:
Cash at bank 2,296 1,276
Applications cash 4,350 4
Money market funds 18,204 33,641
Total cash and cash equivalents 24,850 34,921
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.
The following shares have been allotted since the year end:
• 27 March 2025: 8,893,138 shares at a price of 52.2p per
share.
• 22 May 2025: 43,183 shares at a price of 50.1p per share.
The following shares have been bought back since the year end:
• 20 March 2025: 1,053,974 shares at a price of 47.37p per
share.
• 16 April 2025: 888,536 shares at a price of 45.45p per
share.
• 15 May 2025: 590,908 shares at a price of 47.27p per share.
• 19 June 2025: 774,234 shares at a price of 49.59p per
share.
Notes to the financial statements
1. Significant accounting policies
The Company is a Public Limited Company (plc) incorporated in England and
Wales and its registered office is 33 Holborn, London EC1N 2HT.
The Company’s principal activity is to invest in a diverse portfolio of
predominantly AIM-traded companies with the aim 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).’
The significant accounting policies have remained unchanged from those set out
in the Company’s 2024 annual report and accounts.
2. Income
Accounting policy
Investment income includes interest earned on money market securities is 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 brought into account 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
28 February 29 February
2025 2024
£’000 £’000
Dividends receivable from fixed asset investments 906 866
Loan note interest receivable 111 41
Income receivable on money market securities 1,192 1,153
2,209 2,060
3. Investment management fees
28 February 2025 29 February 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Investment management fee 518 1,561 2,079 555 1,666 2,221
Octopus provides investment management and accounting and administration
services to the Company under a management agreement which initially ran with
Close Investment Limited from 3 February 1998 and was then novated to Octopus
for a period of five years with effect from 29 July 2008 and may be
terminated at any time thereafter by not less than twelve 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 set at 2% of
the Company’s net assets, less deductions outlined below, calculated on a
quarterly basis. The Investment Manager is not entitled to any annual
performance incentive scheme.
During the year Octopus charged gross management fees of £2,469,000 (2024:
£2,614,000). When the various allowances detailed below are included, the net
management fees for the year are £2,079,000 (2024: £2,221,000). At the
year-end there was £503,000 payable to Octopus (2024: £499,000). Octopus
received £165,000 as a result of upfront fees charged on allotments of
Ordinary shares (2024: £243,000).
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 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 28 February 2025 the rebate received
was £131,000 (2024: £140,000).
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 make
sure that the Company is not financially disadvantaged by such payment, a
notional ongoing adviser charge equivalent to 0.5% per annum 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 28 February 2025 the rebate received was £171,000 (2024:
£171,000).
The Company also receives a reduction in the management fee for the
investments in other Octopus managed funds, being the Multi Cap, Micro Cap and
Future Generations products, to ensure the Company is not double charged on
these products. This amounted to £86,000 for the year to 28 February 2025
(2024: £80,000).
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.
Disclosure
28 February 29 February
2025 2024
£’000 £’000
IFA charges 131 140
Directors’ remuneration 108 103
Registrars’ fees 56 69
Audit fees 49 48
Directors’ and officers’ liability insurance 49 49
Printing and postage 19 19
VCT monitoring fees 14 17
Broker’s fees 6 6
Other administration expenses 220 230
652 681
The fees payable to the Company’s auditor 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 2.3% of average net assets during the
year to 28 February 2025 (2024: 2.1%). Ongoing charges are calculated using
the AIC methodology and exclude exceptional costs and trail commission.
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.
The corporation tax charge for the year was £nil (2024: £nil).
Disclosure
28 February 29 February
2025 2024
Tax reconcilation £’000 £’000
Loss before tax (6,079) (17,734)
Current tax at 25% (2024: 24.49%) (1,519) (4,329)
Effects of
Non-taxable income (525) (492)
Non-taxbale capital gains 1,389 4,123
Non-deductible expenses 9 (6)
Excess management expenses on which deferred tax not recognised 646 704
Total tax charge - -
Approved VCTs are exempt from tax on capital gains within the Company. Since
the Directors intend 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.
As at 28 February 2025 there is an unrecognised deferred tax asset of
£7,558,000 (2024: £7,210,000) in respect of accumulated surplus management
expenses of £30,232,000 (2024: £28,841,000), based on a prospective
corporation tax rate of 25% (2024: 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.
6. Dividends
Accounting policy
Dividends payable are recognised as distributions in the financial statements
when the Company’s liability to make 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
28 February 29 February
2025 2024
£’000 £’000
Dividends paid on Ordinary shares during the year
Final dividend – 2.5p paid 15 August 2024 (2024: 2.5p) 5,044 4,451
Special dividend – 4.9p paid 15 August 2024 (2024: nil) 9,886 –
Interim dividend – 2.5p paid 10 January 2025 (2024: 2.5p) 5,591 5,075
20,521 9,526
During the year £3,747,000 (2024: £1,826,000) of dividends were reinvested under the DRIS.
28 February 29 February
2025 2024
£’000 £’000
Dividends paid and proposed in respect of the year
Interim dividend – 2.5p paid 10 January 2024 (2024: 2.5p) 5,591 5,075
Special dividend proposed – nil (2024: 4.9p) – 9,934
Final dividend proposed – 2.5p payable 28 August 2025 (2024: 2.5p) 5,704 5,068
11,295 20,077
Under Section 32 of FRS 102 ‘Events After Balance Sheet Date’, dividends payable at year end are not recognised as a liability in the financial statements. The above proposed final dividend is based on the number of shares in issue at the date of this report. The actual dividend paid will 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
28 February 2025 29 February 2024
Revenue Capital Total Revenue Capital Total
Loss attributable to ordinary shareholders (£’000) 1,039 (7,118) (6,079) 824 (18,558) (17,734)
Earnings per ordinary share (p) 0.5p (3.4p) (2.9p) 0.4p (10.0p) (9.6p)
The earnings per share is based on 209,959,577 Ordinary shares (2024:
185,664,255, being the weighted average number of shares in issue during the
year), and the loss on ordinary activities after tax for the year of
£6,079,000 (2024: loss £17,734,000).
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
28 February 29 February
2025 2024
Net assets (£’000) 115,383 129,109
Shares in issue 228,158,686 203,828,309
NAV per share (p) 50.6 63.3
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 28 February 2025, Octopus Investments Nominees Limited (OINL) held nil
shares (2024: nil) in the Company as beneficial owner from shareholders to
protect their interests after delays or errors with shareholder instructions
and other similar administrative tasks. Throughout the period to 28 February
2025 OINL purchased nil shares (2024: 2,791) at a cost of £nil (2024:
£2,000) and sold nil shares (2024: 10,389) for proceeds of £nil (2024:
£7,000). 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.
Octopus received £nil (2024: £nil) transaction fees and directors’ fees
from portfolio companies.
The Company holds £4,350,000 (2024: £4,000) of cash on behalf of the Company
and AIM VCT 2 plc, in accordance with their joint prospectus. Of this,
£2,610,000 (2024: £2,000) is attributable to the Company.
10. 2025 financial information
The figures and financial information for the year ended 28 February 2025 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 28 February 2025 have been audited but have not yet
been delivered to the Registrar of Companies. The Auditors’ report on the
2025 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. 2024 financial information
The figures and financial information for the year ended 29 February 2024 are
complied 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
June 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. 03477519
LEI: 213800C5JHJUQLAFP619
14. Directors
Neal Ransome (Chair), Andrew Boteler, Joanne Parfrey, and Louise Nash
15. Secretary and registered office
Octopus Company Secretarial Services Limited
33 Holborn, London EC1N 2HTRecent news on Octopus AIM VCT
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