REG-Octopus Apollo VCT plc : Half-year Report <Origin Href="QuoteRef">OAP3.L</Origin>
28/09/2017 17:16
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Octopus Apollo VCT Plc
Half-Yearly Results
28 September 2017
Octopus Apollo VCT plc, managed by Octopus Investments Limited, today
announces the unaudited half-yearly results for the six months ended 31 July
2017.
These results were approved by the Board of Directors on 28 September 2017.
You may, in due course, view the Half-Yearly report in full at
www.octopusinvestments.com. All other statutory information can also be found
there.
Financial Headlines
Six months to 31 July 2017 Six months to 31 July 2016 Year to 31 January 2017
Net assets (£'000s) 155,341 152,139 141,799
Return on ordinary activities after tax (£'000s) 1,799 1,309 5,172
Net asset value ('NAV')* 62.2p 83.0p 63.2p
Cumulative dividends paid since launch (p per share)* 55.7p 32.5p 54.0p
Total return* 117.9p 115.5p 117.2p
Ordinary dividend declared in respect of period 1.6p 2.5p 1.7p
Special dividend declared - 16.5p -
*Comparative figures are for the Ordinary Share class only.
The interim dividend will be paid on 15 December 2017 to Shareholders on the
register on 24 November 2017, and will be eligible for the Dividend
Reinvestment Scheme (DRIS).
Chairman's Statement
I am pleased to present the half-yearly report of Octopus Apollo VCT for the
six months ended 31 July 2017.
The NAV total return including the 1.7p dividend paid in the period, increased
by 1.1% during the six months although the NAV decreased by 1.0p per share.
In keeping with the regular dividend policy, your Board has declared an
interim dividend of 1.6p which will be paid to shareholders in December.
During the period the portfolio performed broadly in line with expectations
with a small number of exceptions and there were five exits as explained in
further detail below.
There were follow-on funding rounds into seven existing investments and the
team currently has a strong pipeline of new investment opportunities so I
remain cautiously optimistic about the outlook, despite the political and
economic uncertainty resulting from Brexit negotiations.
Murray Steele
Chairman
28 September 2017
Interim Management Report
Overview
We are approaching the investment environment with caution at present given
the political and economic uncertainty relating to Europe. The portfolio is
not materially exposed to Europe so the most obvious risk appears to be that a
UK recession could result. However the investments are generally structured
with a higher component of lending than equity which provides an element of
downside protection.
Performance
In the six months under review the NAV Total Return, after adding back the
1.7p of dividends paid in the period, has increased 1.1% although the Net
Asset Value has decreased 1.6% to 62.2p per share, compared to 63.2p per share
at 31 January 2017. This generally positive performance is attributable to a
number of successful exits which will be discussed later in this statement, as
well as a continuation of the strong interest yield from loans made to
portfolio companies.
Portfolio Activity
The most significant drivers of change in value are the disposals described in
more detail below. Within the remaining portfolio the most positive
developments were in Eve Sleep, valued up by £0.6 million during the period,
based on the share price at the point of listing on the Alternative Investment
Market in April, and Swoon Editions (up £0.5 million) as it continues to grow
faster than forecasted. Unfortunately the investment in Spiralite was
written down to zero (from £1.4 million) as a result of entering
administration in July. The rest of the portfolio continues to perform
broadly in line with expectations.
During the six months to 31 July 2017, the Company made the following
disposals:
Initial Cost (£) Sale Proceeds (£) Gain/(Loss) on Sale (£)
Clifford Thames Group Limited 13,318,000 24,014,000 10,696,000
Aquaso Limited 3,500,000 3,907,000 407,000
The History Press 754,000 857,000 103,000
Haravar Limited 5,000,000 4,987,000 (13,000)
Galvara Limited 5,000,000 4,987,000 (13,000)
27,572,000 38,752,000 11,180,000
Clifford Thames was acquired by OEConnection LLC in June 2017, a US company
specialising in automotive technology for vehicle manufacturers. This
generated a strong return to Apollo of 1.8x cash invested over the three year
period since Lloyds Development Capital acquired the company in August 2014
and Apollo reinvested £14.4 million. The return includes the interest
income on the loan and the uplift in value of the shares.
In May 2017 Aquaso was sold to Eddyfi Technologies, a Canadian oil and gas
technology business. Aquaso is the holding company of Technical Software
Consultants ("TSC"), an oil and gas technology, services and manufacturing
business. Apollo originally invested £3 million in 2012 and provided a
further £0.5 million in January 2016 when the market conditions were
extremely challenging. The sale provided a return of 1.4x total cash
invested, including interest income earned on the loan. There was also an
earn-out which successfully concluded after 31 July, taking total returns to
1.5x.
The disposals of Galvara and Haravar related to acquisition vehicles which had
been established to acquire or develop a VCT qualifying trade, but for which
the opportunities being pursued did not materialise. The boards of those
companies consequently elected to liquidate them and return funds to Apollo.
The History Press was acquired as part of the Eclipse portfolio and has now
been sold.
Following the sale of SCM World to Gartner Inc in June 2016, an earn out was
successfully achieved resulting in a further £0.3 million of proceeds in
March 2017.
During the period £1.3 million was invested to provide follow-on funding
rounds to seven existing portfolio companies. The largest of these was £0.7
million invested in Oxifree, an oil and gas services business acquired as part
of the Eclipse portfolio.
Transactions with Manager
Details of amounts paid to the Manager are disclosed in note 7 to the
Financial Statements.
Share Buybacks
Your Company has continued to buy back shares. In the six months to July 2017,
the Company bought back 1,263,370 shares for total consideration of £754,000.
Share Issues and Fundraising
An Offer for Subscription was launched in November 2016 to raise up to £20
million, and closed fully subscribed in March 2017, eight months ahead of
schedule. After expenses, £16 million pounds was raised under the offer in
the period under review. In total, the offer raised £20.5 million net of
expenses.
Dividend and Dividend Policy
It is your Board's policy to maintain a regular dividend flow where possible
in order to take advantage of the tax free distributions a VCT is able to
provide.
Your Board has declared an interim dividend of 1.6p per share in respect of
the period ended 31 July 2017. The dividend will be payable on 15 December
2017 to shareholders on the register at 24 November 2017.
VCT Qualifying Status
PricewaterhouseCoopers LLP provides the Board and Investment Manager with
advice concerning ongoing compliance with Her Majesty's Revenue & Customs
('HMRC') rules and regulations concerning VCTs. The Board has been advised
that the Company is in compliance with the conditions set by HMRC for
maintaining approval as a VCT.
A key requirement is to ensure that at least 70% of the assets of the fund are
in VCT qualifying investments. As at 31 July 2017, 78% of the portfolio, as
measured by HMRC rules, was invested in VCT qualifying investments.
Principal Risks and Uncertainties
The principal risks and uncertainties are set out in note 6 to the half yearly
report and accounts.
Summary and Future Prospects
The political and economic environments remain uncertain as a result of exit
negotiations with the European Union. However the portfolio has generally
continued to perform well and the focus on investing a substantial part of the
capital in the form of loans further reduces volatility. The recent weakening
of the British Pound has not had a significant impact on the businesses we
have backed as they are generally UK based and do not have large unhedged
foreign currency exposures. As such, the returns to shareholders have shown
low volatility year on year, which is testament to the prudent investment
approach adopted by the Investment Manager. The investment team has an active
pipeline of new investment opportunities and we believe we can continue to
find suitable VCT qualifying investments.
Octopus Investments Limited
28 September 2017
Investment Portfolio
Sector Investment cost as at 31 July 2017 (£'000) Movement in fair value to Fair value as at Movement in fair value in period (£'000) % equity held by Apollo VCT % equity held by all funds managed by Octopus
31 July 2017 (£'000) 31 July 2017 (£'000)
Fixed asset investments
Vista Retail Support Limited Business Services 6,758 2,639 9,397 (160) 12.0 12.0
Healthcare and Services Technology Limited Healthcare & Education 7,186 328 7,514 (403) 10.0 10.0
Anglo European Group Limited Manufacturing & Engineering 5,000 (168) 4,832 40 26.7 26.7
Coupra Limited Business Services 5,000 (189) 4,811 (494) 9.8 9.8
Dyscova Limited Healthcare & Education 4,700 - 4,700 - 67.7 67.7
Countrywide Healthcare Services Limited Healthcare & Education 2,675 952 3,627 193 20.7 20.7
Kabardin Limited Energy 2,450 - 2,450 - 49.0 49.0
Red Poll Power Limited Energy 2,450 - 2,450 - 49.0 49.0
Valloire Power Limited Energy 2,450 - 2,450 - 49.0 49.0
Tanganyika Heat Limited Energy 4,108 (1,858) 2,250 (24) 50.0 50.0
Other (*) Various 36,319 (2,414) 33,905 (426)
Total fixed asset investments 79,096 (710) 78,386 (1,274)
Current asset investments
Octopus Portfolio Manager - Cash 32,000 4 32,004 4
Octopus Portfolio Manager - Cash Plus 19,000 112 19,112 112
Octopus Portfolio Manager - Defensive Capital Growth 19,000 74 19,074 74
Total current asset investments 70,000 190 70,190 190
Total fixed and current asset investments 148,576
Cash at bank 6,067
Debtors less creditors 698
Total net assets 155,341
*Comprises 43 other investments: Acquire Your Business Limited, Angelico Solar
Limited, Artesian Solutions Limited, Augean plc, Barrecore Limited,
Behaviometrics AB, Bramante Solar Limited, British Country Inns plc, Canaletto
Solar Limited, Cello Group plc, CurrencyFair Limited, Ecrebo Limited, EKF
Diagnostics plc, Ergomed plc, Eve Sleep Limited, Hasgrove Limited, Leonardo
Solar Limited, Luther Pendragon Limited, Mi-Pay Group plc, MIRACL Limited,
Modigliano Solar Limited, Nektan plc, Origami Energy Limited, Oxifree UK
Limited, Pirlo Solar Limited, Plastics Capital plc, PTB Films, Quickfire,
Quickfire2, Secret Escapes Limited, Segura Systems Limited, Sourceable
Limited, Superior Heat Limited, Tailsco Limited, Tanfield Group Limited, Time
Out Group plc, Tintoretto Solar Limited, Tiziano Solar Limited, Trafi Limited,
Vertu Motors plc, Winnipeg Heat (Caspian), Yu Group plc, Zynstra Limited.
Directors Responsibilities Statement
We confirm that to the best of our knowledge:
· the half-yearly financial statements have been prepared in accordance
with the Financial Reporting Standard 104 "Interim Financial Reporting" issued
by the Financial Reporting Council;
· the half-yearly report includes a fair review of the information
required by the Financial Conduct Authority's Disclosure and Transparency
Rules, being:
· an indication of the important events that have occurred during the
first six months of the financial year and their impact on the condensed set
of financial statements;
· a description of the principal risks and uncertainties for the
remaining six months of the year; and
· a description of related party transactions that have taken place in
the first six months of the current financial year, that may have materially
affected the financial position or performance of the Company during that
period and any changes in the related party transactions described in the last
annual report that could do so.
On behalf of the Board
Murray Steele
Chairman
28 September 2017
Income Statement
Unaudited Unaudited Audited
Six months to 31 July 2017 Six months to 31 July 2016 Year to 31 January 2017
Revenue Capital Total Revenue £'000 Capital £'000 Total £'000 Revenue £'000 Capital £'000 Total £'000
£'000 £'000 £'000
Gain on disposal of fixed asset investments - 3,701 3,701 - 987 987 - 2,658 2,658
Change in fair value of fixed asset investments - (1,274) (1,274) - 367 367 - 4,525 4,525
Change in fair value of current asset investments - 190 190 - - - - - -
Investment income 2,061 - 2,061 2,188 - 2,188 4,128 - 4,128
Investment management fees (341) (1,406) (1,747) (308) (1,097) (1,405) (647) (2,844) (3,491)
Other expenses (1,136) - (1,136) (758) - (758) (2,654) - (2,654)
FX translation - 4 4 - - - - 6 6
Return on ordinary activities before tax 584 1,215 1,799 1,122 257 1,379 827 4,345 5,172
Taxation on return on ordinary activities - - - (70) - (70) - - -
Return on ordinary activities after tax 584 1,215 1,799 1,052 257 1,309 827 4,345 5,172
Earnings per share - basic and diluted 0.2p 0.5p 0.7p 0.6p 0.2p 0.8p 0.5p 2.5p 3.0p
* The 'Total' column of this statement is the profit and loss account of the
Company; the supplementary revenue return and capital return columns have been
prepared under guidance published by the Association of Investment Companies.
* All revenue and capital items in the above statement derive from continuing
operations.
* The Company has only one class of business and derives its income from
investments made in shares and securities and from bank and money market
funds.
* The Company has no recognised gains or losses other than those disclosed in
the income statement.
* The accompanying notes are an integral part of the half-yearly report.
Balance Sheet
Unaudited As at 31 July 2017 Unaudited As at 31 July 2016 Audited As at 31 January 2017
£'000 £'000 £'000 £'000 £'000 £'000
Fixed asset investments 78,386 115,435 112,884
Current assets:
Investments 70,190 - -
Debtors 2,245 5,248 4,077
Cash at bank 6,067 35,632 29,229
78,502 40,880 33,306
Creditors: amounts falling due within one year (1,547) (4,176) (4,391)
Net current assets 76,955 36,704 28,915
Net assets 155,341 152,139 141,799
Share capital 25,138 16,745 22,603
Share premium 48,308 1,438 34,231
Special distributable reserve 71,149 128,328 76,144
Capital redemption reserve 2,958 2,672 2,832
Capital reserve realised 7,714 (1,087) (1,537)
Capital reserve unrealised (520) 2,988 7,520
Revenue reserve 584 1,055 -
Translation reserve 10 - 6
Total equity shareholders' funds 155,341 152,139 141,799
Net Asset Value per share 62.2p 83.0p 63.2p
The statements were approved by the Directors and authorised for issue on 28
September 2017 and are signed on their behalf by:
Murray Steele
Chairman
Company Number: 05840377
Statement of Changes in Equity
Share Capital £'000 Share Premium £'000 Special distributable reserves £'000 Capital Redemption Reserve £'000 Capital reserve realised £'000 Capital reserve unrealised £'000 Revenue reserve £'000 Translation reserve £'000 Total £'000
Six months to 31 July 2017
As at 1 February 2017 22,603 34,231 76,144 2,832 (1,537) 7,520 - 6 141,799
Comprehensive income for the period:
Management fee allocated as capital expenditure - - - - (1,406) - - - (1,406)
Current period gains on disposal - - - - 3,701 - - - 3,701
Current period gains on fair value of investments - - - - - (1,084) - - (1,084)
Current period currency gains - - - - - - - 4 4
Profit on ordinary activities after tax - - - - - - 584 584
Total comprehensive income for the period - - - - 2,295 (1,084) 584 4 1,799
Contributions by and distributions to owners:
Repurchase and cancellation of own shares (126) - (754) 126 - - - - (754)
Issue of shares 2,661 14,077 - - - - - - 16,738
Dividends paid - - (4,241) - - - - - (4,241)
Total contributions by and distributions to owners 2,535 14,077 (4,995) 126 - - - - 11,743
Other movements:
Prior period holding gains/losses now realised - - - - 6,956 (6,956) - - -
Total other movements - - - - 6,956 (6,956) - - -
As at 31 July 2017 25,138 48,308 71,149 2,958 7,714 (520) 584 10 155,341
Six months to 31 July 2016
As at 1 February 2016 13,896 48,893 60,748 2,557 (1,866) 3,510 3 - 127,741
Comprehensive income for the period:
Management fee allocated as capital expenditure - - - - (1,097) - - - (1,097)
Current period gains on disposal - - - - 987 - - - 987
Current period gains on fair value of investments - - - - - 367 - - 367
Profit on ordinary activities after tax - - - - - - 1,052 - 1,052
Total comprehensive income for the period - - - - (110) 367 1,052 - 1,309
Contributions by and distributions to owners:
Repurchase and cancellation of own shares (115) - (901) 115 - - - - (901)
Issue of shares 2,964 21,026 - - - - - - 23,990
Total contributions by and distributions to owners 2,849 21,026 (901) 115 - - - - 23,089
Other movements:
Prior period holding gains/losses now realised - - - - 889 (889) - - -
Cancellation of share premium - (68,481) 68,481 - - - - - -
Total other movements - (68,481) 68,481 - 889 (889) - - -
As at 31 July 2016 16,745 1,438 128,328 2,672 (1,087) 2,988 1,055 - 152,139
Year to 31 January 2017
As at 1 February 2016 13,896 48,893 60,748 2,557 (1,866) 3,510 3 - 127,741
Comprehensive income for the year:
Management fee allocated as capital expenditure - - - - (2,844) - - - (2,844)
Current year gains on disposal - - - - 2,658 - - - 2,658
Current year gains on fair value of investments - - - - - 4,525 - - 4,525
Current year currency gains - - - - - - - 6 6
Profit on ordinary activities after tax - - - - - - 827 - 827
Total comprehensive income for the year - - - - (186) 4,525 827 6 5,172
Contributions by and distributions to owners:
Repurchase and cancellation of own shares (275) - (1,955) 275 - - - - (1,955)
Issue of shares 5,446 35,706 - - - - - - 41,152
Dividends paid - - (36,711) - - - (830) - (37,541)
Total contributions by and distributions to owners 5,171 35,706 (38,666) 275 - - (830) - 1,656
Other movements:
Prior year holding gains/losses now realised - - - - 515 (515) - - -
Cancellation of Share Premium - (50,788) 50,788 - - - - - -
Cancellation of Deferred Shares - C shares (349) - 349 - - - - - -
Deferred shares created - D shares 156 - (156) - - - - - -
Shares issued on D share conversion 385 - (385) - - - - - -
Dividends paid on D share conversion - - (14,418) - - - - - 14,418
Acquisition of D share class (191) (17,693) 17,884 - - - - - -
Acquisition of Octopus Eclipse VCT plc 3,535 18,113 - - - - - - 21,648
Total other movements 3,536 (50,368) 54,062 - 515 (515) - - 7,230
As at 31 January 2017 22,603 34,231 76,144 2,832 (1,537) 7,520 - 6 141,799
Cash Flow Statement
Unaudited Six months to Unaudited Six months to 31 July 2016 £'000 Audited Year to 31 January 2017 £'000
31 July 2017 £'000
Cash flows from operating activities:
Return on ordinary activities after tax 1,799 1,309 5,172
Adjustments for:
Decrease in debtors 1,832 57 1,228
Decrease in creditors (2,844) (291) (76)
Debtors obtained from transaction - - 848
Creditors obtained from transaction - - (157)
Gain on disposal of fixed assets (3,701) (987) (2,658)
Loss/(Gain) on valuation of fixed asset investments 1,274 (367) (4,525)
Gain on valuation of current asset investments (190) - -
Cash from operations (1,830) (209) (168)
Cash flows from investing activities:
Cash acquired from transaction - - 622
Purchase of fixed asset investments (1,348) (9,000) (9,269)
Purchase of current asset investments (72,000) - -
Sale of fixed asset investments 38,273 11,547 40,531
Sale of current asset investments 2,000 - -
Dividend paid to exiting D shareholders - - (14,418)
Net cash flows from investing activities (33,075) 2,547 17,466
Cash flows from financing activities:
Purchase of own shares (754) (901) (1,955)
Share issues 16,738 23,990 41,152
Dividends Paid (4,241) - (37,541)
Net cash flows from financing activities 11,743 23,089 (1,656)
(Decrease)/Increase in cash and cash equivalents (23,162) 25,357 18,954
Opening cash and cash equivalents 29,229 10,275 10,275
Closing cash and cash equivalents 6,067 35,632 29,229
Cash and cash equivalents comprise:
Cash at Bank 6,067 35,632 29,229
Notes to the Half-Yearly Report
1. Basis of preparation
The unaudited half-yearly results which cover the six months to 31
July 2017 have been prepared in accordance with the Financial Reporting
Council's (FRC) Financial Reporting Standard 104 Interim Financial Reporting
(March 2015) and the Statement of Recommended Practice for Investment
Companies, re-issued by the Association of Investment Companies in January
2017.
2. Publication of non-statutory accounts
The unaudited half-yearly results for the six months ended 31 July
2017 do not constitute Statutory Accounts within the meaning of s.415 of the
Companies Act 2006. The comparative figures for the year ended 31 January 2017
have been extracted from the audited financial statements for that year, which
have been delivered to the Registrar of Companies. The independent auditor's
report on those financial statements, in accordance with chapter 3 of part 16
of the Companies Act 2006, was unqualified. This half-yearly report has not
been reviewed by the Company's auditor.
3. Earnings per share
The earnings per share is based on 243,295,650 shares, being the
weighted average number of shares in issue during the period (31 January 2017:
169,230,581; 31 July 2016: 172,098,191 including Ordinary Shares and D
Ordinary Shares).
There are no potentially dilutive capital instruments in issue and,
therefore, no diluted earnings per share figures are relevant. The basic and
diluted earnings per share are therefore identical.
4. Net asset value per share
31 July 2017 31 July 2016 31 January 2017
Net Assets (£) 155,341,000 134,526,000 141,799,000
Shares in Issue 249,818,756 162,042,257 224,470,119
Net Asset Value per share (p) 62.2 83.0 63.2
5. Dividends
A final dividend, for the year ended 31 January 2017, of 1.7p per
share was paid on 28 July 2017 to shareholders on the register on 30 June
2017.
The interim dividend of 1.6p per share for the six months ending 31
July 2017 will be paid on 15 December 2017, to those shareholders on the
register on 24 November 2017.
6. Principal Risks and Uncertainties
The Company's assets consist of equity and fixed-rate interest
investments, cash and liquid resources. Its principal risks are therefore
market risk, credit risk and liquidity risk. Other risks faced by the Company
include economic, loss of approval as a VCT, investment and strategic,
regulatory, reputational, operational and financial risks. These risks, and
the way in which they are managed, are described in more detail in the
Company's Annual Report and Accounts for the year ended 31 January 2017. The
Company's principal risks and uncertainties have not changed materially since
the date
of that report.
7. Related Party Transactions
Octopus acts as the investment manager of the Company. Under the
management agreement, Octopus receives a fee of 2.0 per cent per annum of the
net assets of the Company for the investment management services.
The Company has incurred management fees of £1,494,000 during the
period to 31 July 2017 (31 July 2016: £1,232,000; 31 January 2017:
£2,588,000).
A performance fee of £253,000 has been incurred during the period to
31 July 2017 (31 July 2016: £173,000; 31 January 2017: £903,000).
Octopus also provides administration and company secretarial services
to the Company. Octopus receives a fee of 0.3 per cent per annum of net assets
of the Company for administration services and £20,000 per annum for company
secretarial services.
The Company has invested £70 million into Octopus managed funds,
being the Octopus Portfolio Manager funds. To ensure the Company is not double
charged management fees on these products, the Company receives a reduction in
the management fee as a percentage of the value of these investments.
8. Post balance sheet events
Since 31 July 2017 the Company has issued the following shares:
Date Number of Shares Issued Price per share (p)
8 August 2017 53,415 61.5
9. Other Information
A version of this statement will be made available to all
shareholders. Copies are also available from the registered office of the
Company at 33 Holborn, London, EC1N 2HT, and will also be available to view on
the Investment Manager's website at www.octopusinvestments.com.
This announcement is distributed by Nasdaq Corporate Solutions on behalf of
Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for
the content, accuracy and originality of the information contained therein.
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