Final Results
29/05/2024 07:00
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Octopus Apollo VCT plc
Final Results
Octopus Apollo VCT plc today announces the final results for the year ended 31
January 2024.
Octopus Apollo VCT plc (‘Apollo’ or 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 unquoted companies.
The Company is managed by Octopus Investments Limited (‘Octopus’ or the
‘Investment Manager’) via its investment team, Octopus Ventures.
KEY FINANCIALS
Year to 31 January 2024 Year to 31 January 2023
Net assets (£’000) £390,294 £349,493
(Loss)/profit after tax (£’000) £(435) £34,541
NAV per share (1) 50.5p 53.2p
Cumulative dividends paid since launch 87.4p 84.7p
Total value per share (2) 137.9p 137.9p
Dividends paid in the year 2.7p 2.6p
Dividend yield 5.1% 5.2%
Dividend declared (3) 1.3p 1.3p
Total return per share % (4) 0.0% 11.2%
1. NAV per share is an alternative performance measure (APM)
calculated as net assets divided by total number of shares, as described in
the glossary of terms.
2. Total value per share is an APM calculated by adding
together NAV per share and cumulative dividends paid since launch.
3. The declared second interim dividend of 1.3p per Ordinary
share for the year ended 31 January 2024 was paid on 2 May 2024 to all
Ordinary shareholders on the register on 12 April 2024.
4. Total return per share % is an APM calculated as movement
in NAV in the period plus dividends paid in the period, divided by the NAV at
the beginning of the period, as described in the glossary of terms.
CHAIR’S STATEMENT
Highlights
* Apollo’s latest fundraise: £50 million
* Five-year Total Return: 41.8%
Performance
I am pleased to present the annual results for Apollo for the year ended 31
January 2024. The net asset value (NAV) plus cumulative dividends per share at
31 January 2024 was 137.9p, which is flat on the prior year’s results from
31 January 2023. The NAV per share decreased during the year from 53.2p to
50.5p which represents, after adding back the 2.7p of dividends paid in the
year, a flat return for the year compared to 11.2% in the previous year. I am
satisfied with this stable and consistent result when it is set against the
challenging global macroeconomic backdrop of the past few years, and it is a
testament to the resilience of the underlying portfolio companies.
In the twelve months to 31 January 2024, we utilised £70.3 million of our
cash resources, comprising £33.0 million in new and follow-on investments,
£14.7 million in dividends (net of the Dividend Reinvestment Scheme), £7.4
million in management fees, £6.7 million in share buybacks, £4.5 million in
current asset investments, and £4.0 million in other running costs such as
accounting and administration services and trail commissions. The cash and
cash equivalents balance of £61.2 million at 31 January 2024 represented
15.7% of net assets at that date, compared to 14.1% at January 2023.
Dividends
It is your Board’s policy to maintain a regular dividend flow where possible
to take advantage of the tax-free distributions a VCT can provide, and work
towards the targeted 5% annual dividend yield policy.
I am pleased to confirm that the Board declared a second interim dividend of
1.3p per share in respect of the year ended 31 January 2024. This is in
addition to the 1.4p per share interim dividend paid during the year and
brought the total dividends declared to 2.7p per share for the year, a
tax-free yield of 5.1%. The dividend was paid on 2 May 2024 to shareholders
on the register at 12 April 2024. Since inception, we have now paid 88.7p in
tax-free dividends per share, including the recently paid dividend.
Apollo’s dividend reinvestment scheme (DRIS) was introduced in November 2014
and to date 20% of shareholders take advantage of it as it is an attractive
scheme for investors who would prefer to benefit from additional income tax
relief on their reinvested dividend. I hope that shareholders will find this
scheme beneficial. During the year to 31 January 2024, 8,713,356 shares were
issued under the DRIS, equating to a reinvested amount of £4.5 million.
Fundraise and share buybacks
On 16 November 2023, the Company launched a new offer to raise up to £35
million, with an over-allotment facility of up to £15 million. We were
pleased to raise £50 million utilising the over-allotment facility so the
offer closed fully subscribed on 19 March 2024. We would like to take this
opportunity to welcome all new shareholders and thank all existing
shareholders for their continued support. The success of the fundraise and
good performance led the Board to announce, on 19 April 2024, its intention to
increase the offer from £50 million to £85 million, with applications
re-opening on 29 April 2024.
Apollo has continued to buy back and cancel shares as required. Subject to
shareholder approval of resolution 11 at the forthcoming Annual General
Meeting (AGM), this facility will remain in place to provide liquidity to
investors who may wish to sell their shares, subject to Board discretion.
Details of the share buybacks undertaken during the year can be found in the
Directors’ Report.
Dividends, whether paid in cash or reinvested under the DRIS, and share
buybacks are always at the discretion of the Board, are never guaranteed and
may be reviewed when necessary.
VCT sunset clause
We were pleased in the November Autumn Statement that the Chancellor extended
the VCT sunset clause, meaning VCT relief will be available to subscribers for
shares issued before April 2035, rather than April 2025.
Board of Directors
Having completed a structured recruitment process, led and managed by an
independent, third-party specialist, I am pleased to announce the appointment
of Gillian Elcock as an independent Non-Executive Director of the Company, who
joined the Board on 1 December 2023. Gillian was the founder of Denny Ellison,
an independent investment research and training company, and was its Managing
Director for ten years. She is a Non-Executive Director of Melrose Industries
plc, International Biotechnology Trust plc and STS Global Income & Growth
Trust plc. She is also a member of the board of the CFA Society of the UK. We
look forward to benefiting from her wealth of experience.
AGM
The AGM will be held on 10 July 2024 at 10am. Full details of the business to
be conducted at the AGM are given in the Notice of the Meeting. Shareholders
may recall that in prior years, we have hosted an online shareholder event.
However, having conducted a review of attendance, this year we will have an
Investment Manager’s update at the AGM, supported by a filmed update from
the Investment Manager which will be available on the website at
https://octopusinvestments.com/apollovct/.
Shareholders’ views are important, and the Board encourages shareholders to
vote on the resolutions by using the proxy form, or electronically at
www.investorcentre.co.uk/eproxy. The Board has carefully considered the
business to be approved at the AGM and recommends shareholders to vote in
favour of all the resolutions being proposed.
Outlook
2023 has been another challenging year for the UK and global economies, so I
am satisfied to be able to announce a stable total return (NAV plus dividends
paid) for the Company. The geo-political turbulence and macro-economic
headwinds have impacted the underlying portfolio companies. We have seen
growth rates slow down resulting in lower valuations as companies work through
the tougher trading environment, including elongated sales cycles. Some have
proactively slowed their growth to reduce their cash burn and focus on
efficiency and profitability (where possible) due to the scarcity and higher
cost of capital. There have also been some company specific performance
issues, with several having been more affected than others by the
unpredictable market conditions. However, the recurring revenue models of most
of the companies in the portfolio have offered some protection against the
current market volatility.
We are starting to see some green shoots of recovery with more activity on the
listed markets, interest rates starting to stabilise and inflation beginning
to moderate. However, we anticipate a slow and unpredictable route to
recovery. The UK general election creates some uncertainty, global economies
are projected to experience growth below their typical rates and there is no
certainty on geopolitical stability.
The Octopus Ventures team continues to actively monitor the portfolio
companies to be able to understand the full impact of any challenges that may
arise. Members of the team typically take a seat on the Board of the companies
so that they can provide their expertise and introduce relevant contacts from
their network. The Octopus People and Talent team draws upon years of
experience to offer tailored advice and support to the portfolios’
management teams and equip them with the tools they need to succeed and grow
as a business.
VCTs have long provided a compelling opportunity for UK investors to invest in
businesses in a tax-efficient way, and we look forward to Apollo continuing to
do so in the coming year. I would like to conclude by thanking both the Board
and the Octopus team on behalf of all shareholders for their hard work.
Murray Steele
Chair
INVESTMENT MANAGER’S REVIEW
At Octopus our focus is on managing your investments and providing open
communication. Our annual and half year updates are designed to keep you
informed about the progress of your investment.
Investment Strategy
Most companies in the portfolio operate in sectors where there is a strong
opportunity for growth. In general, we invest in technology companies in the
software-as-a-service (SaaS) space that have recurring revenues from a diverse
base of customers. We also seek to invest in companies that will provide an
opportunity for Apollo to realise its investment typically within three to
seven years.
Apollo total value growth
The total value has seen a significant increase over the five years from
118.2p to 137.9p at 31 January 2024. This increase in total value of 19.7p
represents a 41.8% increase on the NAV of 47.1p as at 31 January 2019. A total
of over £77 million has also been distributed back to shareholders in the
form of tax-free dividends. This includes dividends reinvested as part of the
DRIS.
Focus on performance
Apollo made a flat total return per share in the year to 31 January 2024,
which I am satisfied with given the challenging economic environment. The NAV
per share decreased from 53.2p to 50.5p, solely because 2.7p per share of
dividends were paid in the period, representing a dividend yield of 5.1% and
bringing cumulative dividends paid as at 31 January 2024 to 87.4p and the
total return (NAV plus cumulative dividends) to 137.9p per share.
The performance over the five years to 31 January 2024 is shown below:
Year ended NAV Dividends paid in year Cumulative dividends NAV + cumulative dividends Total return %
31 January 2020 45.7p 3.0p 74.1p 119.8p 3.4%
31 January 2021 49.2p 2.3p 76.4p 125.6p 12.7%
31 January 2022 50.2p 5.7p 82.1p 132.3p 13.6%
31 January 2023 53.2p 2.6p 84.7p 137.9p 11.2%
31 January 2024 50.5p 2.7p 87.4p 137.9p 0.0%
Over the year, there have been valuation increases across 22 portfolio
companies, delivering a collective increase of £37.3 million. These increases
reflect businesses which have successfully grown their customer base and
revenues through the period. The majority of strong performers are the B2B
technology companies that Apollo has invested in over recent years, with
notable strong performers including Lodgify, Hasgrove and Dyscova.
Conversely, 18 companies saw a decrease in valuation, collectively totalling
£30.5 million. The businesses that saw the most significant reductions were
Ryte, Ubisecure, Sova and Delio. Growth has decelerated in all these companies
due to lengthening enterprise software sales cycles, as well as there being
some company-specific performance issues.
Although this resulted in a net increase in portfolio company valuations of
£6.8 million, the overall return for Apollo was flat due to the net impact of
share allotments, share buybacks, income received and expenditure.
As part of liquidity management, Apollo regularly invests in and withdraws
from MMFs in order to meet cash requirements. During the year, on a net basis,
an additional £5.6 million was invested in MMFs. Apollo also invested an
additional £4.5 million into the Sequoia Economic Infrastructure Fund (SEQI)
during the year. These investments, in combination with the previously held
investments in SEQI and the MMFs, took the total liquid investments at 31
January 2024 to £56.4 million (including interest earned during the year on
MMF deposits).
Disposals
Two profitable disposals completed in the year. Firstly, The Safeguarding
Company (TSC) being acquired by Tes Global, a provider of online educational
services and software. Apollo first invested in TSC in August 2019 and during
the investment period, TSC almost doubled its headcount and expanded its
product functionality and international presence. The exit offered Apollo a
2.5x total return on its equity investment. Then in November, Apollo sold its
shares in the listed company Ergomed plc, realising £5.1 million in proceeds
which represented a very strong 8.7x total return for Apollo. Both of these
saw Apollo exit its full shareholding in the companies.
Apollo also received deferred proceeds from the sale of Luther Pendragon
(which originally completed in 2022) and Countrywide Healthcare repaid the
loan that Apollo invested in 2014. In the year, all disposals and loan
repayments have in aggregate returned £18.3 million to Apollo.
Period ended 31 January 2020 Year ended 31 January 2021 Year ended 31 January 2022 Year ended 31 January 2023 Year ended 31 January 2024 Total
Dividends (£'000) 8,345 7,471 28,366 14,323 19,165 77,670
Disposal proceeds (£'000) 17,794 3,356 53,939 3,591 18,292 96,972
New and follow-on investments
Apollo completed follow-on investments in seven companies and made four new
investments. Together, these totalled £33 million (made up of £17.8 million
invested in the existing portfolio and £15.2 million in new companies). This
compares with nine new investments and eight follow-on investments in the year
to 31 January 2023, together totalling £69.4 million. This slowing of
investment rate is a result of a reduced volume of businesses seeking funding,
as they looked to reduce reliance on further funding or take steps to make
their existing capital go further in the more challenging macro-economic
environment.
Apollo’s new investments were in:
* Zipline Cloud Pty Ltd (t/a Pendula) £3.9 million – A two-way customer
communication software platform that helps organisations automate high impact
customer engagement to improve customer retention, satisfaction and drive
additional revenue.
* Vaultspeed £6.5 million – A data transformation automation software tool
for organisations undertaking complex IT projects.
* Magic Orange £2.2 million – A provider of IT Financial Management
software that allows customers to better understand and visualise their IT
spend through reporting dashboards.
* Harbiz £2.6 million – A customer engagement focused solution for wellness
professionals and small businesses, offering both booking and scheduling
services, as well as customer interaction to boost customer experience.
Q&A
How do you value a portfolio company?
Apollo’s unquoted portfolio companies are valued in accordance with UK
Generally Accepted Accounting
Practice (GAAP) accounting standards and the International Private Equity and
Venture Capital (IPEV) valuation guidelines. This means we value the portfolio
at Fair Value, with all companies being valued at least twice yearly, for our
interim (July) and annual (January) accounts.
What do you mean by ‘Fair Value’?
When we say Fair Value, we mean the price we expect people would be willing to
buy or sell an asset for, assuming they had all the information available we
do, are knowledgeable parties with no pre-existing relationship, and that the
transaction is carried out under the normal course of business.
What is the valuation process and what oversight is there?
The Octopus Investment Managers involved with the portfolio companies, usually
in the capacity of a Director or Observer on the Board, will draft a trading
update and then the Lead Fund Manager will meet with our dedicated valuations
team to offer a verbal update on each company.
The valuations team, utilising these portfolio updates, the portfolio
companies’ financial reports, progress towards their KPIs and analysing the
wider market in which they operate, will draft the initial valuation
proposals. These are then reviewed, challenged, and ultimately approved by our
Valuations Lead and Lead Fund Manager. These proposed valuations will then be
sent to the Octopus Valuations Committee and Apollo Board who will meet to
discuss them in detail, revise as necessary and ultimately sign them off.
There are also more high level valuation checkpoints throughout the year in
advance of share allotments, DRIS allotments, share buybacks and other
share-related transactions, which means that the portfolio’s valuation is
reviewed to ensure NAV is fairly represented prior to these corporate actions.
BDO LLP are the external auditors of Apollo and perform a statutory audit of
the annual accounts, which includes valuations. As part of our continuous
improvement processes, we periodically review the actual realised value of our
investments compared to their last holding value and refine our valuation
methodologies accordingly. This firmly underpins the robustness of the Apollo
valuation process.
Valuations
Methodologies include:
• ‘Price of Recent Investment’ (PRI) is utilised when there has been a
recent transaction which is generally assessed to be the best indicator of
Fair Value as of the transaction date;
• ‘Market approach’ involves the application of an appropriate multiple
to a performance measure (typically a revenue metric, but potentially also
profit) to derive the value of the business. The multiple is derived by
referring to comparable listed companies or comparable transactions; and
• ‘Scenario analysis’ is utilised where there is uncertainty around the
potential outcomes available to a company, so a probability-weighted scenario
analysis is considered.
Valuation methodology By value By number of companies
Market Approach 54.4% 51.2%
Scenario analysis 4.7% 19.4%
PRI 40.9% 23.3%
Write-off - 6.2%
Case studies
Lodgify
lodgify.com
Vacation rental software to help grow bookings
* £9.5 million invested to support product development.
* £30 million raised in Series B fundraise
* 100+ countries where Lodgify hosts have properties
Lodgify empowers vacation rental hosts with the tools to start and grow their
businesses independently. Its software-as-a-service platform enables hosts to
easily create a website, accept direct bookings and commission-free payments,
and is integrated with today’s popular booking channels like Airbnb, Vrbo,
and Booking.com. It centralises all guest reservations and communications into
a single, user-friendly interface so hosts can prioritise increasing occupancy
and providing excellent service to their guests.
In 2023, Lodgify launched its AI Assistant, a messaging tool designed to
enhance guest communications by generating personalised responses with a click
of a button. The company also recently announced its collaboration with
Google, automatically enabling Lodgify-powered websites to appear on top of
organic Google searches to further boost their visibility with high-intent
travellers.
ValueBlue
www.valueblue.com
Accelerating business transformation with enterprise architecture
* £10 million invested to scale the team and grow internationally.
* 220 customers experience more efficient and effective transformation
initiatives thanks to BlueDolphin
* 60% timesaving on project architecture design
* 45% reduction in operational IT spend achieved by businesses using
BlueDolphin
ValueBlue is the company behind BlueDolphin, an Enterprise Architecture (EA)
SaaS platform that helps organisations to plan, design and manage business
transformation. It allows more effective collaboration across the entire
business and drives successful outcomes for IT transformation projects.
ValueBlue helps organisations gain insight into their complex IT landscape,
spotting weaknesses, risks, and opportunities for improvement. Based on these
insights, ValueBlue is used to plan and execute transformation projects,
speeding up innovation and lowering project costs. The company was recently
named a Challenger in the 2023 Gartner Magic Gartner® Magic Quadrant™ for
EA tools.
Top ten investments by value as at 31 January 2024
We are pleased to report a net increase in the value of the portfolio of £6.8
million since 31 January 2023. This represents an increase of 2.2% on the
value of the portfolio at the start of the year, leaving total return flat
after the impact of income, expenses and other activities throughout the year.
Here, we set out the cost and valuation of the top ten holdings, which account
for over 54% of the value of the portfolio.
Portfolio: Investment cost (£’000) Total valuation including cost (£’000)
1 Natterbox £17,490 £37,558
2 Sova £12,250 £21,037
3 Lodgify £9,541 £19,445
4 Interact £308 £16,125
5 FableData £6,000 £15,000
6 MentionMe £15,000 £15,000
7 Tri £3,800 £14,791
8 ValueBlue £10,071 £13,926
9 FuseUniversal £8,000 £12,933
10 Turtl £10,000 £12,729
Top ten
1
N2JB Limited (trading as Natterbox)
Natterbox is a London-based provider of business-to-business cloud telephone
services that are uniquely integrated into Customer Resource Management (CRM)
software platforms, most notably Salesforce.
www.natterbox.com
Investment date: March 2018
Equity held: 8.5% (2023: 8.5%)
Valuation basis: Revenue multiple
Income received in year to 31 January 2024: £150,000 (2023: £150,000)
Last submitted accounts: 31 December 2022
Consolidated turnover: £17,092,000 (2021: £14,309,000)
Consolidated loss before tax: £(2,568,000) (2021: £(7,249,000))
Consolidated net assets: £1,022,000 (2021: £2,899,000)
2
Sova Assessment Limited
Sova Assessment is a UK based end-to-end digital candidate assessment SaaS
platform targeting large blue-chip organisations conducting large volumes of
hiring.
www.sovaassessment.com
Investment date: November 2020
Equity held: 37.2% (2023: 31.9%)
Valuation basis: Revenue multiple
Income received in year to 31 January 2024: £93,000 (2023: £83,000)
Last submitted accounts: 31 March 2023
Consolidated turnover: £5,611,000 (2022: £3,892,000)
Consolidated loss before tax: £(5,360,000) (2022: £(3,344,000))
Consolidated net assets: £(3,593,000) (2022: £(1,654,000))
3
Codebay Solutions Limited (trading as Lodgify)
Lodgify provides a SaaS platform for vacation rental hosts and property
managers to manage their business and process their bookings.
www.lodgify.com
Investment date: September 2022
Equity held: 11.9% (2023: 11.9%)
Valuation basis: Revenue multiple
Income received in year to 31 January 2024: n/a (2023: n/a)
Last submitted accounts: 31 December 2022
Consolidated turnover: €9,315,000 (2021: €6,084,000)
Consolidated loss before tax: €(6,239,000) (2021: €(1,291,000))
Consolidated net assets: €16,946,000 (2021: €4,183,000)
4
Hasgrove Limited
Hasgrove is the holding company for Interact, a SaaS business which provides
an intranet product which focuses on the communication and collaboration
requirements of large organisations.
www.interactsoftware.com
Investment date: December 2016
Equity held: 5.7% (2023: 5.4%)
Valuation basis: Revenue multiple
Income received in year to 31 January 2024: n/a (2023: n/a)
Last submitted accounts: 31 December 2022
Consolidated turnover: £29,388,000 (2021: £23,046,000)
Consolidated profit before tax: £8,099,000 (2021: £6,196,000)
Consolidated net assets: £13,136,000 (2021: £6,132,000)
5
Fable Data Limited
Fable Data provides anonymised, pan-European consumer transaction data and
analysis to institutional investors, businesses, governments and academics.
www.fabledata.com
Investment date: December 2022
Equity held: 6.2% (2023: 6.4%)
Valuation basis: Revenue multiple
Income received in year to 31 January 2024: n/a (2023: n/a)
Last submitted accounts: 31 December 2022
Consolidated turnover: Not available (1) (2021: Not available (1))
Consolidated loss before tax: Not available (1) (2021: Not available (1))
Consolidated net assets: £2,111,000 (2021: £(2,064,000))
6
Mention Me Limited
Mention Me is a referral engineering SaaS platform that helps business to
consumer (B2C) businesses acquire new customers more successfully through
their referral channel.
www.mention-me.com
Investment date: December 2021
Equity held: 19.4% (2023: 19.4%)
Valuation basis: Revenue multiple
Income received in year to 31 January 2024: n/a (2023: n/a)
Last submitted accounts: 31 December 2022
Consolidated turnover: £10,244,000 (2021: £8,043,000)
Consolidated loss before tax: (£5,621,000) (2021: (£2,765,000)
Consolidated net assets: £10,173,000 (2021: £10,162,000)
7
Triumph Holdings Limited
Triumph has developed a risk based quality management and monitoring platform
for the life sciences industry.
www.tritrials.com
Investment date: October 2018
Equity held: 52.0% (2023: 52.0%)
Valuation basis: Revenue multiple
Income received in year to 31 January 2024: £171,000 (2023: £132,000)
Last submitted accounts: 31 December 2022
Consolidated turnover: Not available (1) (2021: Not available (1))
Consolidated loss before tax: Not available (1) (2021: Not available (1))
Consolidated net assets: £2,875,000 (2021: £2,957,000)
8
Value Blue B.V.
Value Blue is a Netherlands based provider of enterprise architecture
management software, that is growing in the UK. The product allows companies
to map their existing technology architecture in a single location to easily
plan, collaborate and execute both large scale transformational and everyday
IT projects.
www.valueblue.com
Investment date: January 2022
Equity held: 20.3% (2023: 14.2%)
Valuation basis: Revenue multiple
Income received in year to 31 January 2024: £19,000 (2023: n/a)
Last submitted accounts: Not available (1)
Consolidated turnover: Not available (1) (2023: Not available (1))
Consolidated loss before tax: Not available (1) (2023: Not available (1))
Consolidated net assets: Not available (1) (2023: Not available (1))
9
Fuse Universal Limited
Fuse is a business-to-business software provider of a cloud-based learning
technology platform for corporates, founded in 2008 and based in London (with
further offices in South Africa and Australia).
www.fuseuniversal.com
Investment date: August 2019
Equity held: 0% (2023: 0%)
Valuation basis: Fair value of accrued return
Income received in year to 31 January 2024: £100,000 (2023: £100,000)
Last submitted accounts: 31 December 2022
Consolidated turnover: £9,338,000 (2021: £9,912,000)
Consolidated loss before tax: £(2,816,000) (2021: £(6,201,000))
Consolidated net assets: £(3,682,000) (2021: £(2,479,000))
10
Turtl Surf & Immerse Limited
Turtl is an enterprise SaaS product which enables corporates to produce high
quality, brand consistent and personalised marketing collateral at scale.
https://turtl.co/
Investment date: September 2021
Equity held: 13.6% (2023: 13.6%)
Valuation basis: Revenue multiple
Income received in year to 31 January 2024: n/a (2023: n/a)
Last submitted accounts: 31 December 2022
Consolidated turnover: £8,085,000 (2021: £6,153,000)
Consolidated loss before tax: £(4,401,000) (2021: £(2,098,000)
Consolidated net assets: £4,907,000 (2021: £9,189,000)
1. These numbers are not available per the latest public filings on Companies
House or the company is Non-U.K.
Outlook
There has been a slowing of growth across the portfolio, as companies look to
preserve cash and seek greater capital efficiency to extend cash runways. We
are reassured that the portfolio is well funded with around 30% of the
portfolio based on NAV not requiring further funding, as they are profitable,
and this increases to 80% with more than twelve months’ cash runway. As well
as a suppressed funding market, we have also seen similar in the exit
environment, with a substantial reduction in the number and value of merger
and acquisition (M&A) transactions over 2023*. Despite this, we were pleased
to successfully realise our holdings in the Safeguarding Company and Ergomed
in the period and we hope to see a continued series of profitable realisations
over the next year.
We have also seen a decline in Apollo’s investment rate when compared to the
prior year, as fewer businesses have looked to raise money due to limited
capital availability and the higher cost of capital. However, we are starting
to see signs of recovery, with a strong pipeline of exciting opportunities
converting into one new deal and six follow-on investments completing since
the year end.
Alongside this, we were delighted with the support we’ve received from
Apollo’s new and existing investors, with the latest fundraise closing fully
subscribed, including the over-allotment facility. These funds will allow
Apollo to continue to support the existing portfolio in their growth plans and
invest in new opportunities, which have great potential to become successful
and deliver good returns to shareholders.
The ongoing need for exciting, high-growth companies to raise funding for
growth provides ample opportunity to make successful future investments in
line with the existing now-proven strategy. We remain optimistic and confident
about Apollo’s future investment prospects and its current diverse
portfolio. We think this breadth of scope will provide Apollo with the
opportunities it needs for continued success.
*Source: Atomico, State of European Tech – December 2023 – p.226.
RISKS AND RISK MANAGEMENT
The Board assesses the risks faced by Apollo and, as a board, reviews the
mitigating controls and actions, and monitors the effectiveness of these
controls and actions.
Emerging and principal risks, and risk management
The Board is mindful of the ongoing risks and will continue to make sure that
appropriate safeguards are in place, in addition to monitoring the cash flow
forecasts to make sure that the Company has sufficient liquidity.
The Board carries out a regular review of the risk environment in which the
Company operates.
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 management and the
Board are currently monitoring:
* adverse changes in global macroeconomic environment;
* rising cost of living;
* geopolitical tensions; and
* climate change.
Principal risks
Risk Mitigation Change
Investment performance:
The focus of Apollo’s investments is in unquoted, small and medium-sized VCT qualifying companies which, by their nature, entail a higher level of risk and may have lower cash reserves than investments in larger quoted companies. Poor performance across these investments may impact Apollo’s ability to raise new funds from investors. Octopus has significant experience and a strong track record of investing in unquoted companies, and appropriate due diligence is undertaken on every new investment. A Increased exposures reflected in the previous period remain due to the difficult macro environment and challenging trading conditions for some portfolio companies continuing.
member of the Octopus Ventures team is typically appointed to the board of a portfolio company, and regular board reports are prepared by the portfolio company management
and examined by the Investment Manager. This arrangement allows Apollo to play a prominent role in a portfolio company’s ongoing development and strategy. Although
investment strategy is focused on B2B software, the overall risk in the portfolio is mitigated by diversifying investment across a wide spread of holdings in terms of the
underlying sub-sector served by the portfolio companies, and their financing stage, age, industry sector and business models. The Board reviews the investment portfolio
with the Investment Manager on a regular basis. The Investment Manager is incentivised to make sure Apollo performs well, via a Performance Incentive Fee (charged
annually) for exceeding certain performance hurdles.
Risk Mitigation Change
VCT qualifying status risk:
Apollo 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 Apollo 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 making an investment, the Investment Manager seeks assurance from Apollo’s VCT status adviser that the investment will meet the legislative requirements for VCT VCT status monitoring by independent advisers continues to reduce the risk of an issue causing a loss of VCT status.
investments. On an ongoing basis, the Investment Manager monitors Apollo’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 Apollo’s compliance with VCT regulations on a
bi-annual basis and reports its results to the Board.
Risk Mitigation Change
Operational – reliance on third parties:
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 Apollo’s No overall change in risk exposure on balance.
internal controls). These include controls that are designed to ensure that Apollo’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.
Risk Mitigation Change
Information security:
A lack of suitable controls 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 No overall change on balance, although cyber threat remains a significant risk area faced by all service providers.
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 it on relevant information security arrangements. Significant and relevant information security breaches are
escalated to the Board when they occur.
Risk Mitigation Change
Economic:
Events such as an economic recession, movement in interest rates, inflation, political instability and rising living costs could adversely affect some smaller companies’ valuations, as they may be more vulnerable to changes in trading conditions or the sectors in which they operate. This could result in a reduction in the value of Apollo’s assets. Apollo invests in a portfolio of companies serving markets across a diverse range of sectors, which helps to mitigate against the impact of performance in any one sector. Increased exposures reflected in the previous period remain as economic uncertainty persists through high inflation, high interest rates and other economic factors.
Apollo also maintains adequate liquidity to make sure that it can continue to provide follow-on investment to those portfolio companies that 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.
Risk Mitigation Change
Legislative:
A change to the VCT regulations could adversely impact Apollo by restricting the companies Apollo can invest in under its current strategy. Similarly, changes to VCT tax reliefs for investors could make VCTs less attractive and impact Apollo’s ability to raise further funds. Failure to adhere to other relevant legislation and regulation could result in reputational damage and/or fines. We are also pleased that the sunset clause in place for April 2025, regarding eligibility of VCTs for tax relief, has been extended and seems likely to be removed. 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 Risk exposure has continued to reduce since the previous period following the extension of the sunset clause to 2035 being agreed.
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 Apollo. Individuals receive ongoing training and external experts are engaged where required.
Risk Mitigation Change
Liquidity:
Apollo invests in smaller unquoted companies, which are inherently illiquid as there is no readily available market for these shares. 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. Apollo’s overall liquidity Risk exposure remains unchanged from the previous period.
levels are monitored on a quarterly basis by the Board, with close monitoring of available cash resources. Apollo maintains sufficient cash and readily realisable
securities, including MMFs and OEICs, which can be accessed at short notice. At 31 January 2024, 85% of current asset investments were held in MMFs, realisable within one
business day, and 15% in OEICs, realisable within seven business days.
Risk Mitigation Change
Valuation:
While investments within the portfolio are valued in accordance with International Private Equity and Venture Capital (IPEV) valuation guidelines, for smaller companies establishing a fair value can be difficult due to the lack of readily available market data for similar shares, resulting in limited number of external reference points. Valuations of portfolio companies are performed by appropriately experienced staff, with detailed knowledge of both the portfolio company and the market in which it Risk exposure remains unchanged from the previous period due to economic uncertainty within valuation modelling.
operates. These valuations are then subject to review and approval by the Octopus Valuations Committee, comprised of staff who are independent of Octopus Ventures and
with relevant knowledge of unquoted company valuations. The Board reviews valuations after they have been agreed by the Octopus Valuations Committee.
VIABILITY STATEMENT
In accordance with provision 36 of the AIC Code of Corporate Governance, the
Directors have assessed the prospects of the Company over a period of five
years, consistent with the expected investment holding period of a VCT
investor. 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 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 risks which may adversely impact its business model, future
performance, solvency or liquidity, and focused on the major factors which
affect the economic, regulatory and political environment. 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
above.
The Board has carried out robust stress testing of cash flows which included;
assessing the resilience of portfolio companies, including the requirement for
any future financial support; and the ability to pay dividends and buybacks.
The Board has additionally considered the ability of the Company to comply
with the ongoing conditions to make sure it maintains its VCT qualifying
status under its current investment policy.
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 31 January 2029.
The Board is mindful of the ongoing risks and will continue to make sure that
appropriate safeguards are in place, in addition to monitoring the cash flow
forecasts to make sure that the Company has sufficient liquidity.
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 law 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 (United Kingdom Accounting Standards and applicable laws)
including FRS 102 – “The Financial Reporting Standard applicable in the UK
and Republic of Ireland”. 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 Directors’ Report and Directors’
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 make sure that the financial statements and the Directors’
Remuneration Report 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.
Insofar 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 in accordance
with applicable law and regulations. Having taken advice from the Audit and
Risk Committee, the Directors consider the annual report and the financial
statements, taken as a whole, provide the information necessary to assess the
Company’s position, 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
Murray Steele
Chair
INCOME STATEMENT
Year ended 31 January 2024 Year ended 31 January 2023
Revenue £’000 Capital £’000 Total £’000 Revenue £’000 Capital £’000 Total £’000
Realised (loss)/gain on disposal of fixed asset investments - (876) (876) - 525 525
Change in fair value of fixed asset investments - 7,633 7,633 - 49,921 49,921
Change in fair value of current asset investments - 16 16 - (800) (800)
Investment income 4,260 - 4,260 2,257 11 2,268
Investment management fees (1,862) (5,601) (7,463) (1,437) (13,512) (14,949)
Other expenses (4,006) - (4,006) (2,431) - (2,431)
Foreign currency translation 1 - 1 7 - 7
(Loss)/profit before tax (1,607) 1,172 (435) (1,604) 36,145 34,541
Tax - - - - - -
(Loss)/profit after tax (1,607) 1,172 (435) (1,604) 36,145 34,541
(Loss)/earnings per share – basic and diluted (0.2p) 0.1p (0.1p) (0.3p) 6.3p 6.0p
* The ‘Total’ column of this statement is the profit and loss account of
Apollo; the revenue return and capital return columns have been prepared under
guidance published by the Association of Investment Companies.
* All revenue and capital items in the above statement derive from continuing
operations.
* Apollo has only one class of business and derives its income from
investments made in shares and securities and from bank and money market
funds.
Apollo has no other comprehensive income for the period.
The accompanying notes are an integral part of the financial statements.
BALANCE SHEET
As at 31 January 2024 As at 31 January 2023
£’000 £’000 £’000 £’000
Fixed asset investments 328,370 306,930
Current assets:
Investments 8,486 3,970
Money market funds 47,950 40,360
Debtors 3,752 4,866
Cash at bank 4,868 4,990
Applications cash 8,852 9,261
Total current assets 73,908 63,447
Current liabilities (11,984) (20,884)
Net current assets 61,924 42,563
Net assets 390,294 349,493
Share capital 773 657
Share premium 27,476 78,440
Special distributable reserve 266,132 174,061
Capital redemption reserve 172 159
Capital reserve realised (15,275) (20,136)
Capital reserve unrealised 115,343 119,032
Revenue reserve (4,327) (2,720)
Total shareholders' funds 390,294 349,493
Net asset value per share – basic and diluted 50.5p 53.2p
The statements were approved by the Directors and authorised for issue on 28
May 2024 and are signed on their behalf by:
Murray Steele
Chair
Company number: 05840377
The accompanying notes are an integral part of the financial statements.
STATEMENT OF CHANGES IN EQUITY
Share capital £’000 Share premium £’000 Special distributable reserves* £’000 Capital redemption reserve £’000 Capital reserve realised* £’000 Capital reserve unrealised £’000 Revenue reserve* £’000 Total £’000
As at 1 February 2023 657 78,440 174,061 159 (20,136) 119,032 (2,720) 349,493
Total comprehensive income for the year - - - - (6,477) 7,649 (1,607) (435)
Total contributions by and distributions to owners:
Repurchase and cancellation of own shares (13) - (6,743) 13 - - - (6,743)
Issue of shares 129 70,927 - - - - - 71,056
Share issue cost - (3,912) - - - - - (3,912)
Dividends paid - - (19,165) - - - - (19,165)
Total contributions by and distributions to owners: 116 67,015 (25,908) 13 - - - 41,236
Other movements:
Prior year fixed asset gains now realised - - - - 11,338 (11,338) - -
Cancellation of Share Premium - (117,979) 117,979 - - - - -
Total other movements - (117,979) 117,979 - 11,338 (11,338) - -
Balance as at 31 January 2024 773 27,476 266,132 172 (15,275) 115,343 (4,327) 390,294
* Included in these reserves is an amount of £246,530,000 (2023:
£151,204,000) which is considered distributable to shareholders per the
Companies Act.
The accompanying notes are an integral part of the financial statements.
Share capital £’000 Share premium £’000 Special distributable reserves* £’000 Capital redemption reserve £’000 Capital reserve realised* £’000 Capital reserve unrealised £’000 Revenue reserve* £’000 Total £’000
As at 1 February 2022 52,365 81,600 58,918 8,441 (5,197) 68,079 (1,247) 262,959
Total comprehensive income for the year - - - - (12,976) 49,121 (1,604) 34,541
Total contributions by and distributions to owners:
Repurchase and cancellation of own shares (17) - (8,220) 17 - - - (8,220)
Issue of shares 151 78,876 - - - - - 79,027
Share issue cost - (4,491) - - - - - (4,491)
Dividends paid - - (14,323) - - - - (14,323)
Total contributions by and distributions to owners: 134 74,385 (22,543) 17 - - - 51,993
Other movements:
Prior year fixed asset losses now realised - - - - (1,963) 1,963 - -
Cancellation of Share Premium - (77,545) 77,545 - - - - -
Cancellation of Capital Redemption Reserve - - 8,299 (8,299) - - - -
Share capital nominal value reduction (51,842) - 51,842 - - - - -
Transfer between reserves - - - - - (131) 131 -
Total other movements (51,842) (77,545) 137,686 (8,299) (1,963) 1,832 131 -
Balance as at 31 January 2023 657 78,440 174,061 159 (20,136) 119,032 (2,720) 349,493
*Included in these reserves is an amount of £151,204,000 (2022: £52,474,000)
which is considered distributable to shareholders per the Companies Act.
The accompanying notes are an integral part of the financial statements.
CASH FLOW STATEMENT
Year to 31 January 2024 £’000 Year to 31 January 2023 £’000
Cash flows from operating activities
(Loss)/ profit before tax (435) 34,541
Adjustments for:
Decrease/(increase) in debtors 1,114 (977)
(Decrease)/increase in creditors (8,490) 776
Loss/(gain) on disposal of fixed asset investments 876 (525)
Gain on valuation of fixed asset investments (7,633) (49,921)
(Gain)/ loss on valuation of current asset investments (17) 800
In-specie dividends – (11)
Net cash utilised in operating activities (14,585) (15,317)
Cash flows from investing activities
Purchase of fixed asset investments (32,975) (69,393)
Proceeds on sale of fixed asset investments 18,292 3,591
Purchase of current asset investments (4,499) –
Transfer of current asset investments* – 16,659
Net cash utilised in investing activities (19,182) (49,143)
Cash flows from financing activities
Movement in applications account (409) 8,746
Purchase of own shares (6,743) (8,220)
Proceeds from share issues 66,543 75,662
Cost of share issues (3,912) (4,491)
Dividends paid (net of DRIS) (14,653) (10,958)
Net cash generated from financing activities 40,826 60,739
Increase/(Decrease) in cash and cash equivalents 7,059 (3,721)
Opening cash and cash equivalents 54,611 58,332
Closing cash and cash equivalents 61,670 54,611
Cash and cash equivalents comprise
Cash at bank 4,868 4,990
Applications cash 8,852 9,261
Money market funds 47,950 40,360
Closing cash and cash equivalents 61,670 54,611
* During the year ended 31 January 2023 Octopus Portfolio Manager (OPM) began
the process of being closed down. The only investment remaining is in a
BlackRock MMF. The classification of this asset was therefore transferred from
an OEIC to a MMF within the accounts and is therefore classified as a cash
equivalent.
The accompanying notes are an integral part of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
1. Significant accounting policies
Apollo is a Public Limited Company (plc) incorporated in England and Wales and
its registered office is 33 Holborn, London, EC1N 2HT.
Apollo’s principal activity is to invest in a diverse portfolio of
predominantly unquoted 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 April 2021 with
consequential amendments)’.
The significant accounting policies have remained unchanged since those set
out in Apollo’s 2023 Annual Report and Accounts.
2. Investment income
Accounting policy
Fixed returns on non-equity shares and debt securities are recognised on a
time apportionment basis (including time amortisation of any premium or
discount to redemption), so as to reflect the effective interest rate,
provided it is considered probable that payment will be received in due
course. Income from fixed-interest securities and deposit interest is
accounted for on an effective interest rate method. Investment income includes
interest earned on MMFs. Dividend income is shown net of any related
tax credit.
Dividends receivable are brought into account when Apollo’s right to receive
payment is established and it is probable that payment will be received. Fixed
returns on debt are recognised provided it is probable that payment will be
received in due course. The nature of dividends received is assessed to
establish whether they are revenue or income dividends.
Disclosure
31 January 31 January
2024 2023
£’000 £’000
Loan note interest receivable 1,683 1,600
Dividends receivable MMF interest income In-specie dividend 576 2,001 - 354 303 11
4,260 2,268
3. Investment management fees
31 January 2024 31 January 2023
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Investment management fee 1,862 5,587 7,449 1,437 4,311 5,748
Investment performance fee - 14 14 - 9,201 9,201
1,862 5,601 7,463 1,437 13,512 14,949
For the purpose of the revenue and capital columns in the Income Statement,
the management fee has been allocated 25% to revenue and 75% to capital, in
line with the Board’s expected long-term split of returns in the form of
income and capital gains respectively from Apollo’s investment portfolio.
The investment performance fee, explained below, is allocated 100% to capital
as it is deemed that capital appreciation on investments has primarily driven
the total return of Apollo above the required hurdle rate at which the
performance fee is payable. The management fee, administration and accountancy
fees are calculated based on the NAV which is then multiplied by the number of
shares in issue, calculated on a daily basis.
Octopus provide investment management, accounting and administration services
and company secretarial services to Apollo under a management agreement which
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. The
basis upon which the management fee is calculated is disclosed within the
Annual report and financial statements.
Apollo has established a performance incentive scheme whereby the Investment
Manager is entitled to an annual performance related incentive fee in the
event that certain performance criteria are met. Further details of this
scheme are disclosed within the Annual report and financial statements. As at
31 January 2024 £14,000 was due to the Investment Manager by way of annual
performance fee (2023: £9,201,000).
4. Other expenses
Accounting policy
All expenses are accounted for on an accruals basis. Expenses are charged
wholly to revenue, apart from management fees charged 75% to capital and 25%
to revenue, performance fees charged wholly to capital and transaction costs.
Transaction costs incurred when purchasing or selling assets are written off
to the Income Statement in the period that they occur.
Disclosure
31 January 31 January
2024 2023
£’000 £’000
Audit fees 85 73
Accounting and administration services 1,117 862
Legal fees 12 33
Registrars' fees 106 127
Ongoing trail commission 1,011 767
Directors’ fees 140 135
Other administration expenses 582 434
Bad debt provision 953 –
4,006 2,431
The ongoing charges ratio of Apollo for the year to 31 January 2024 was 2.4%
(2023: 2.5%). Total annual running costs are capped at 2.75% of average net
assets (2023 cap: 3.3% of average net assets). This figure excludes any
extraordinary items, adviser charges, impairment of interest and performance
fees.
No non-audit services were provided by Apollo’s auditor.
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 in respect of all timing differences at the
reporting date. Timing differences are differences between taxable profits and
total comprehensive income as stated in the financial statements that arise
from the inclusion of income and expenses in tax assessments in periods
different from those in which they are recognised in financial statements.
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
31 January 2024 31 January 2023
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
(Loss)/profit before tax (1,607) 1,172 (435) (1,604) 36,145 34,541
Tax at 24% (2023: 19%) (386) 282 (104) (305) 6,867 6,562
Effects of:
Non-taxable dividend income (16) – (16) (67) (2) (69)
Non-taxable capital gains on valuations and disposals – (1,628) (1,628) – (9,432) (9,432)
Expenses not deductible for tax purposes – 14 14 – 7 7
Excess management expenses on which deferred tax not recognised 402 1,332 1,734 372 2,560 2,932
Total tax charge – – – – – –
Approved VCTs are exempt from tax on chargeable gains. Since the Directors
intend that Apollo 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. On 1
April 2023, the main rate of Corporation Tax was increased to 25%. Unrelieved
tax losses of £50,101,000 (2023: £42,887,000) are estimated to be carried
forward at 31 January 2024 (subject to completion of Apollo’s tax return)
and are available for offset against future taxable income, subject to
agreement with HMRC. Apollo has not recognised the deferred tax asset of
£12,525,000 (2023: £10,722,000) in respect of these tax losses because there
is insufficient forecast taxable income in excess of deductible expenses to
utilise these losses carried forward. There is no expiry period on these
deductible expenses under the UK HMRC legislation.
6. Dividends
Accounting policy
Dividends payable are recognised as distributions in the financial statements
when Apollo’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. Interim dividends to equity
shareholders are declared by the Directors.
Disclosure
31 January 31 January
2024 2023
£’000 £’000
Dividends paid in the year
Second interim dividend: 1.3p per share paid 28 April 2023 (2023: 1.3p per share) in respect of prior year 8,739 6,771
Interim dividend: 1.4p per share paid 14 December 2023 (2023: 1.3p) in respect of the current year 10,426 7,552
19,165 14,323
31 January 31 January
2024 2023
£’000 £’000
Dividends in respect of the year
Interim dividend: 1.4p per share paid 14 December 2023 (2023: 1.3p) 10,426 7,552
Second interim dividend: 1.3p paid 2 May 2024 (2023: 1.3p per share) 10,901 8,739
21,327 16,291
7. Earnings per share
31 January 2024 31 January 2023
Revenue Capital Total Revenue Capital Total
Loss/profit attributable to ordinary shareholders (£’000) (1,607) 1,172 (435) (1,604) 36,145 34,541
Earnings per ordinary share (p) (0.2p) 0.1p (0.1p) (0.3p) 6.3p 6.0p
The (loss)/earnings per share is based on 709,769,066 Ordinary shares (2023:
572,765,083), being the weighted average of shares in issue during the year.
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
31 January 31 January
2024 2023
Ordinary shares Ordinary shares
Net assets (£) 390,294,000 349,493,000
Shares in issue 772,743,612 657,239,253
Net asset value per share (p ) 50.5 53.2
There are no potentially dilutive capital instruments in issue and, as such,
the basic and diluted NAV per share are identical.
9. Transactions with the Investment Manager
Apollo has employed Octopus throughout the year as the Investment Manager.
Apollo has incurred £7,449,000 (2023: £5,748,000) in management fees due to
the Investment Manager in the year. At 31 January 2024 there was £1,989,000
outstanding (2023: £1,599,000). The management fee is payable quarterly in
arrears and is based on 2% of the NAV calculated daily from 31 January.
The Investment Manager is entitled to an annual performance-related incentive
fee, subject to the total return (NAV plus cumulative dividends paid) per
share being at least 100p at the end of the relevant period. This performance
fee is equal to 20% of the amount by which the NAV plus cumulative dividends
paid per share exceeds the higher of:
* The highest total return in previous accounting periods. This is currently
the return in the year to 31 January 2023 (137.9p).
* The total return as at 1 February 2012, plus the average Bank of England
interest rate to date, commencing 1 February 2012.
The Board considers that the liability becomes due at the point that the
performance criteria are met, which has happened at the end of this financial
year. In the year, Apollo incurred performance fees of £14,000 (2023:
£9,201,000). At 31 January 2024 there were £14,000 of outstanding
performance fees to be paid (2023: £9,201,000).
The Investment Manager also provides accounting and administrative services to
Apollo, payable quarterly in arrears, for a fee of 0.3% of the NAV calculated
daily. During the year £1,117,000 (2023: £862,000) was paid to the
Investment Manager, of which £298,000 (2023: £240,000) was outstanding at
the Balance Sheet date, for the accounting and administrative services. In
addition, the Investment Manager also provides company secretarial services
for a fee of £20,000 per annum (2023: £20,000).
10. Related party transactions
Several members of the Octopus investment team hold non-executive
directorships as part of their monitoring roles in Apollo’s portfolio
companies, but they have no controlling interests in those companies. The
Investment Manager receives transaction fees and directors’ fees from these
portfolio companies. During the year ended 31 January 2024, directors’ fees
of £821,000 attributable to the investments of Apollo were received by the
Investment Manager (2023: £686,000).
As at 31 January 2024, Octopus Investments Nominees Limited (OINL) held 315
shares (2023: 173,900) in Apollo as beneficial owner, having purchased these
from shareholders to protect their interests after delays or errors with
shareholder instructions and other similar administrative issues. Throughout
the period to 31 January 2024 OINL purchased 315 shares (2023: 384,179) at a
cost of £163 (2023: £183,363) and sold 173,900 shares (2023: 219,539) for
proceeds of £87,993 (2023: £103,040). This is classed as a related party
transaction as per the Listing Rules, 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.
11. 2024 financial information
The figures and financial information for the year ended 31 January 2024 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 31 January 2024 have been audited but have not yet
been delivered to the Registrar of Companies. The Auditors’ report on the
2024 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.
12. 2023 financial information
The figures and financial information for the period ended 31 January 2023 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.
13. 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.
14. General information
Registered in England & Wales. Company No. 05840377
LEI: 213800Y3XEIQ18DP3O53
15. Directors
Murray Steele (Chair), Christopher Powles, Alex Hambro, Claire Finn and
Gillian Elcock.
16. Secretary and registered office
Octopus Company Secretarial Services Limited
6(th) Floor, 33 Holborn, London EC1N 2HT