Final Results

Octopus AIM VCT 2 plc

Final Results

Octopus AIM VCT 2 plc today announces the final results for the year ended 30 November 2022.

Octopus AIM VCT 2 plc (the ‘Company’) is a venture capital trust (‘VCT’) which aims to provide shareholders with attractive tax-free dividends and long-term capital growth by investing in a diverse portfolio of predominantly AIM-traded companies. The Company is managed by Octopus Investments Limited (‘Octopus’ or the ‘Investment Manager’).

Financial Summary

	30 November 2022		30 November 2021
Net assets (£’000)		101,794	134,854
(Loss)/profit after tax (£’000)		(36,695)	18,088
Net asset value (NAV) per share (p)		61.6	90.8
Dividends per share paid in year (p)		4.2	5.9
Total return (%)1		(27.5)	16.6
Final dividend proposed (p)2		2.3	2.1
Ongoing Charges (%)3		2.2	1.8

¹Total return is an alternative performance measure calculated as movement in NAV per share in the period plus dividends paid in the period, divided by the NAV per share at the beginning of the period.
²Subject to shareholder approval at the Annual General Meeting, the proposed final dividend will be paid on 25 May 2023 to shareholders on the register on 5 May 2023.
³Ongoing Charges is an alternative performance measure calculated using the AIC recommended methodology, refer to the Annual Report for commentary on the movement.

Chair’s statement

Introduction
Firstly, I would like to welcome all new shareholders who have joined us in the past year.

The year to 30 November 2022 has been an extremely challenging period for stock markets in general, and smaller companies in particular, with the AIM Index recording its worst performance since the financial crisis of 2008. Further, while the portfolio benefited during the pandemic from its substantial exposure to technology and healthcare stocks, the period under review saw a significant reversal of these trends.

The year started nervously as the Omicron variant stalled the opening up of the economy both here and abroad, intensifying existing pressures on supply chains and the labour market which had started to emerge in 2021. Inflation, already perceived as a problem, was stoked by the dramatic increase in European energy prices as a result of the Russian invasion of Ukraine in February. Interest rates, which started the period at 0.1%, had risen to 3% by the end of November. Political upheaval which resulted in two changes of Prime Minister did not help, with the autumn mini-budget pushing the market to new lows in October before it started to recover towards the end of 2022. Against this background, the net asset value (NAV), which had already fallen by 20.0% on a total return basis in the first half of the year, declined further, ending the year 27.5% behind on a total return basis, in line with the AIM Index.

In the year under review AIM raised £2.3 billion of new capital, a substantial decrease on the £8.7 billion raised in the previous year, reflecting volatile market conditions. After the previous year, when the number of new issues had recovered very strongly, the majority of fundraisings in 2022 were for existing AIM companies seeking further capital. Your Investment Manager made £6.3 million of new qualifying investments, down from a record £11.5 million the previous year. Although both economic and geopolitical risks remain, market sentiment has improved more recently, with market commentators and economists taking a more optimistic stance on inflation and interest rates. Your Investment Manager reports a pipeline of potential new issues expected to come to the market in 2023.

Performance
The NAV on 30 November 2022 was 61.6p per share, a sharp decline from the NAV of 90.8p per share reported at 30 November 2021. Adding back the 4.2p of dividends paid in the year, to adjust the year-end NAV to 65.8p, gives a total return decrease of 27.5%. In the same year, the FTSE AIM All-Share Index fell by 27.5%, the FTSE SmallCap (excluding investment companies) Index fell by 13.5% and the FTSE All-Share Index rose by 6.5%, all on a total return basis.

Once again stock-specific factors had a significant impact on performance, and these are covered in more detail in the Investment Manager’s Review. In addition, as inflation and interest rates rose, stock market volatility increased with a marked rotation away from more highly rated growth stocks. This favoured larger companies with the FTSE All-Share Index helped to a positive return by its concentration of large energy stocks and pharmaceutical companies at the top of the index. Appetite for risk waned still further with the result that some of the earlier stage companies exposed to the new economy (emerging, high-growth industries expected to boost economic growth and productivity), saw their share prices collapse regardless of any positive news flow. The purpose of a VCT is to provide capital for small growth companies and those companies exposed to the new economy make up a significant proportion of our investment portfolio and so these trends worked against us in the year under review.

Dividends
In November 2022 an interim dividend of 2.1p was paid to all shareholders. The Board is recommending a final dividend in respect of the year to 30 November 2022 of 2.3p per share, totalling 4.4p in respect of the year, which is a 5% yield on the prior year closing share price of 88.0p, all paid from special distributable reserves. Subject to the approval of shareholders at the AGM, the dividend will be paid on 25 May 2023 to shareholders on the register on 5 May 2023. It remains the Board’s intention to maintain a minimum annual dividend payment of 3.6p per share or a 5% yield based on the prior year-end share price, whichever is greater. This will usually be paid in two instalments during each year.

Shareholders are encouraged to ensure that the details held for them by the registrar remain accurate and to check whether they have received all dividends payable to them. This is particularly important for those who move house or change their bank account or email address. We are aware that some dividends remain unclaimed by shareholders, so if you believe you are impacted by this, please contact our registrar, Computershare, at the details provided in the Annual Report.

Cancellation of share premium account
At the last Annual General Meeting, shareholders voted to cancel share premium to increase the pool of distributable reserves by the amount of £54.6 million. This is a regular occurrence to enable the continued payment of dividends and buyback of shares.

Board changes
During the year we welcomed Brad Ormsby to the Board and said goodbye to Alastair Ritchie. We thank him for his years of service to the Board, and wish him well in his retirement.

Dividend reinvestment scheme
In common with a number of other VCTs, the Company has established a dividend reinvestment scheme (DRIS) following approval at the AGM in 2014. Some shareholders have already taken advantage of this opportunity. For investors who do not need income, but value the additional tax relief on their reinvested dividends, this is an attractive scheme and I hope that more shareholders will find it useful. Over the course of the year 1,829,150 new shares have been issued under this scheme, returning £1.2 million to the Company. The final dividend referred to above will be eligible for the DRIS.

Share buybacks
During the year to 30 November 2022 the Company continued to buy back shares in the market from selling shareholders and purchased 4,494,597 Ordinary shares for a total consideration of £3.1 million. We have maintained a discount of approximately 4.5% to NAV (equating to up to a 5% discount to the selling shareholder after costs), which the Board monitors and intends to retain as a policy which fairly balances the interests of both remaining and selling shareholders. Buybacks remain an essential practice for VCTs, as providing a means of selling is an important part of the initial investment decision and has enabled the Company to grow. As such, I hope you will all support the appropriate resolution at the AGM.

Share issues
During the year the remaining balance of the fundraise launched in September 2021 was allotted in April 2022 for a post tax year end allotment when a further 106,610 shares were issued, raising £0.1 million after costs.

On 22 September 2022, a prospectus offer was launched alongside Octopus AIM VCT plc to raise a combined total of up to £20 million, with a £10 million over-allotment facility. This prospectus closed to further applications on 13 October 2022. 19,104,227 shares were issued under that fundraise, raising £11.6 million after costs. During the current year a total of 21,086,872 shares were issued, raising £12.9 million after costs.

Liquidity
The issue of liquidity within investment funds has remained a topic of discussion this year. Shareholders may be interested to know that at the year end 29.6% of the Company’s net assets were held in cash or collective investment funds, providing short-term liquidity, 63.1% in individual quoted shares and 7.9% was held in unquoted single company investments. Shareholders should be aware that a proportion of the quoted securities may have limited liquidity owing to the size of the portfolio company and the overall proportion held by the Company.

VCT status
Shoosmiths LLP provide the Board and Investment Manager with advice concerning continuing compliance with HMRC regulations for VCTs. The Board has been advised that the Company is in compliance with the conditions laid down by HMRC for maintaining approval as a VCT. From 1 December 2020 a key requirement is to maintain at least an 80% qualifying investment level, up from the previous level of 70%. As at 30 November 2022, 87.3% of the Company’s portfolio was in qualifying investments.

Annual General Meeting and shareholder event
The Annual General Meeting (‘AGM’) will take place on 26 April 2023 at 12.00pm. Further information can be found in the Notice of Annual General Meeting. We will also be hosting a virtual shareholder event prior to the AGM, on 19 April 2023 at 1.00pm. This will enable shareholders to receive an update from the Investment Manager and provide an opportunity for questions to the Board and the Investment Manager.

There will not be a presentation from the Investment Manager at the AGM itself. Formal notices will be sent to shareholders by their preferred method (email or post) and shareholders are encouraged to submit their votes by proxy. We always welcome questions from our shareholders at the AGM. Please send these via email to [e-mail] by 5.00pm on 21 April 2023. At the AGM a resolution will be proposed to extend the life of the Company.

If your shares are held through a nominee account, formal notices will be sent to your nominee. However, further details on any shareholder event, including how to register can be found at www.octopusinvestments.com.

Outlook
There has been a noticeable shift in investor risk appetite as we have moved into 2023 and share prices are now reacting more positively to encouraging news flow. Recession fears have eased, with most economists suggesting a shorter and shallower downturn than was being predicted three months ago. The labour market remains relatively tight, but corporate earnings continue to hold up better than many analysts were predicting, reinforcing the Investment Manager’s belief that any further impact on corporate earnings is largely reflected in current depressed share prices. Central to the recovery in share prices is the expectation that the interest rate cycle will peak during the first half of 2023, with two further increases likely before the summer.

The portfolio contains 87 holdings across a range of sectors with exposure to some exciting new technologies in the environmental and healthcare sectors. Many of these are still well funded, although the challenge of raising further capital in the current market environment cannot be dismissed. The balance of the portfolio towards profitable companies remains, and the Investment Manager expects to find good opportunities to invest newly raised cash at attractive valuations.

Keith Mullins
Chair
10 March 2023

Investment Manager’s review

Introduction
The increased stock market volatility that we had begun to see this time last year intensified as the year under review progressed. After a long period when markets had been driven by growth and momentum, this was the year that investors rotated into less highly rated sectors such as banks and energy as protection against rising inflation and the prospect of rather higher interest rates and energy costs. This caused the retreat of AIM growth stocks which was a key factor in the underperformance against the wider stock market both of the AIM Index and the Company’s net asset value (NAV) after a very positive two years during the pandemic. In addition, as appetite for risk faded, some of the earlier stage investments in the VCTs suffered de-ratings. By the end of the period AIM shares were valued at levels previously visited around the time of the financial crisis. Since the period end some confidence has been restored, helped by some encouraging January trading updates.

Against this background, AIM fundraisings slowed from previously high levels as companies looking to float paused in response to lower valuation expectations for their businesses. However, AIM continued to raise capital for its existing members which enabled many early-stage companies to fund the next stage of their development.

The Alternative Investment Market
AIM was by far the worst performing UK index in 2022. In the 12 months to November 2022 the AIM Index fell by 27.5% compared with a decrease of 13.5% for the FTSE SmallCap index (excluding investment companies) and a rise of 6.5% for the FTSE All-Share Index all on a total return basis. Part of the reason for this was the very small number of stocks that contributed to the positive performance of the larger company indices – without the top ten holdings in the market by size the return of the rest of the market would have been a 10.4% fall and those ten holdings were mostly large pharmaceutical companies and energy stocks. AIM has no natural exposure to those types of stocks but it does have a high exposure to growth stocks in the software, technology and healthcare sectors. This counted against it as sentiment moved against highly rated growth stocks as inflationary pressures intensified. The effect was more pronounced at the larger end of AIM where a narrow band of around 12 large and established growth stocks suffered savage de-ratings. Although VCTs have additional constraints on what they can invest in, the AIM Index is considered to be the most appropriate broad equity market index for comparative purposes, given the nature of the underlying investments. The FTSE SmallCap and All-Share indexes provide wider market context. There were some quite sharp movements away from growth and momentum-driven shares as investors sought value in more traditional sectors.

In the half yearly report we highlighted the success of AIM in raising new capital for its existing members while highlighting a more recent drop in activity, particularly new flotations, as a result of market volatility. The bar chart shows this lull did not improve in the second half of the year. In the year to 30 November 2022 AIM raised £2.7 billion of new capital for existing companies, which compares to a figure of £6.8 billion the previous year.

It was disappointing to see AIM raise only £0.3 billion for new listings, a significant decrease from the figure of £1.9 billion in the previous year. Anecdotally we are still hearing about a healthy pipeline of new issues from brokers and we hope that the current more settled feel to the market gives them confidence to float. VCTs play a significant part in the funding process and we identify below the companies we have invested in during the year, which include many that are developing technologies to help solve the climate and healthcare problems that face us.

Performance
Adding back the 4.2p of dividends paid in the year, the NAV total return decreased by 27.5%. This compares with a fall in the FTSE AIM All-Share Index of 27.5%, a fall in the FTSE SmallCap (excluding investment companies) of 13.5% and a rise in the FTSE All-Share Index of 6.5% on a total return basis. It was another year characterised by individual months of significant market volatility as investors reacted to unfolding events. The year started with investors having to confront rising inflationary and interest rate expectations as global economies responded to unprecedented growth in demand with all the resulting pressures on supply chains and labour markets. The invasion of Ukraine by Russia in February added a steep rise in energy costs with the result that consensus moved from inflation being transitory to a longer-term issue. As a consequence, interest rate expectations rose more rapidly than had previously been anticipated, culminating in a further spike in rate predictions to levels above 6%, exacerbated by the political turmoil resulting from the autumn mini-budget. Against this background, performance in the FTSE All-Share Index was confined mainly to a very narrow cohort of the largest energy and pharmaceutical stocks with smaller companies lagging significantly in contrast to the well-established long-term trend. This goes some way to explain the extent of the fall in the NAV in the year as some of the higher-rated growth shares in the portfolio came under pressure even though the tone of statements continued to be positive. The earlier stage and very small companies were also affected by a general reduction in the risk appetite of investors.

Among the larger, profitable holdings in the portfolio several were caught by the very savage de-rating of larger AIM growth stocks in the period caused by poor market sentiment in the face of sharp rises in interest rates and inflation. GB Group (GBG), Breedon and Learning Technologies Group were all affected, as were others such as RWS, Craneware and Next Fifteen although the impact on the performance of the fund was less for these and other similarly affected smaller holdings.

The biggest contributor to the negative return in the year was GBG, a leading global player in identity verification. GBG has been a long-term successful investment where we have taken profits in the past and continue to believe it will deliver growth and positive returns for the VCT in the future. Its share price was impacted, partly by slower than hoped for growth as some of the froth came off the digital economy as the Covid effect of lockdowns waned and partly in reaction to the acquisition of US-based Acuant, an expensive acquisition albeit with good long-term strategic benefits. It ended the period on a valuation multiple well below its historic average and at a level not seen since the financial crisis. Breedon suffered from worries about the cost of energy for its cement works and some concerns about the depth of a recession on its revenues. Fears that Learning Technologies would see its customers cut back on spending on employees in the event of a recession also weighed on its share price. Both of the latter companies produced upgrades to 2022 forecasts as the year progressed, leaving their shares trading at the bottom end of the longer-term valuation range. EKF Diagnostics and Animalcare were also significant contributors to negative returns in the year. EKF’s profits are shrinking back to pre-Covid levels after a period of significant revenues and profits from Covid test kits, but it remains a profitable provider of point of care tests and we expect its shares to recover as profits start to grow again. Animalcare has found the development and launch of new animal drugs less easy during lockdowns but remains focused on invigorating its growth.

The portfolio has very little exposure to the consumer, but where it does this has hurt performance in the year. Gear4Music had enjoyed a very strong period of trading during the pandemic when demand for musical instruments soared and high street competitors were closed. This masked some of the underlying challenges posed by Brexit and supply problems in China, which impacted profits and margins that the management has spent the past two years working through. It should be able to show some of the benefits of this process in 2023. Sosandar has continued to achieve successive profitable months in 2023 as well as significant growth in its sales through Next, M&S and John Lewis. None of this progress was reflected in the share price performance.

TPX Impact and Trackwise Designs were two very disappointing performers in the year. TPX Impact had been growing strongly as a result of demand from various government departments for its digital transformation expertise and the efficiencies to be gained from it. However, it was caught by a shortage of skilled technical labour which delayed contract delivery and eroded margins as it had to fill the gap with outside contractors. A new chief executive is now in charge and some of the labour pressures have eased, giving us confidence that the business can recover. Demand from customers remains good and the business is well funded. The situation at Trackwise Designs was more serious. It had built a new factory to fulfil a very large contract from electric vehicle manufacturer Arrival. There were delays to the contract which now is unlikely to be drawn down in a meaningful way in the foreseeable future. This has affected the funding of the factory and forced the company to raise money at a moment when stock market sentiment towards early-stage businesses was very poor. This resulted in significant dilution for us as existing shareholders although it does now give the company the chance to win other customer business for its facility.

As appetite for risk diminished during the year, the early-stage companies in the portfolio tended to see their share prices suffer, regardless of any progress made with technology or commercialisation. We recognise that many of them will take time to demonstrate progress and will only be rewarded by share price gains when they do so. The majority are still well funded and so will have the chance to develop their technologies, many of which aim to solve climate and healthcare challenges. Two big fallers in the year were Ilika, which is in the early stages of commercialising its efficient solid state battery technology, and Renalytix, which is awaiting FDA approval for its KidneyIntelX AI test and which has already received breakthrough device designation from the FDA. There are others in diagnostics such as Verici Dx, GENinCode, Lunglife AI; Creo Medical in medical instruments; and Maxcyte in cell therapy.

Investing for a VCT involves backing companies when they are small and still at an early stage of development and share price progress depends on them being noticed by a wider circle of investors as they produce results and develop their businesses over time. This quite often takes longer than expected and they remain potentially vulnerable until they achieve profitability.

There have been some instances of more resilient performance despite the market conditions outlined above. The share price of Ergomed has been volatile over the year but it has broadly held its value as profits have been upgraded. We have taken some profits to manage the size of the holding although we still see plenty of scope for organic growth to continue and build further value for shareholders. Netcall, Quixant and Judges Scientific have all maintained good momentum in their businesses and been rewarded with higher share prices. In our private company holdings both Popsa and Hasgrove had their valuations increased over the year; Popsa was valued upwards during the period due to the removal of a liquidity discount which had been applied in the prior year. This discount was removed following third party validation of this price, with money raised at this level in the current period. Hasgrove as it has added to its recurring revenues and increased the amount of cash on its balance sheet which outweighed the fall in comparables. This, coupled with general market weakness that impacted quoted company share price performance, resulted in an increased proportion of unquoted investments in the portfolio. The bases of valuation of unquoted holdings and movements subsequent to the year end is set out in note 10 to the financial statements.

Portfolio activity
Having made seven qualifying investments at a total cost of £4.6 million in the first half of the year, we added two new qualifying investments totalling £1.5 million as well as one follow-on investment totalling £0.2 million in the second half of the year. This made a total investment of £6.3 million in qualifying investments for the year, a decrease on last year’s £11.5 million, reflecting a slower AIM market for both fundraisings and new issues. Post the year end, we have invested a further £1.2 million in two qualifying investments.

Of the seven first half investments, three were follow-on investments in The British Honey Company, Verici Dx and Oberon Investments Group and three were new entrants to AIM, Libertine Holdings, Strip Tinning Holdings and Clean Power Hydrogen. In addition, we made a new qualifying investment in Velocys, which is an existing AIM company whose progress we have been watching for some time.

We invested in two new issues in the second half of the year. In July, we made a £1.2 million investment in Equipmake Holdings, the electrification specialists focusing on retrofitting diesel buses with electric drivetrains and a new entrant to AIM. In November, we invested £0.3 million in Northcoders Group, a market-leading provider of training programmes for software coding and an existing AIM-listed company. Additionally, we made one further issue in the second half of the year, which was a £0.2 million investment in Intelligent Ultrasound Group.

During the year we took profits into rising share prices, selling part of our holdings in Advanced Medical Solutions Group and Next Fifteen Communications. We also sold our entire holdings in Diurnal Group, Midatech Pharma, Synairgen and Trellus Health. As a result of takeover bids, we sold our holdings in both Clinigen Group and Cloudcall Group in the first half of the year. All disposals made a £0.1 million profit over original cost and generated £2.2 million of cash proceeds.

Non-qualifying investments are used to manage liquidity while awaiting new qualifying investment opportunities. Although we still hold some existing non-qualifying AIM holdings where we see the opportunity for further share price progress, we continued to reduce some of these holdings in the year under review. During the year we increased our holdings in the FP Octopus Micro-Cap Fund and the FP Octopus Future Generation Fund, investing a total of £0.3 million over the period.

VCT regulations
There have been no further changes to the VCT regulations since publication of the previous set of audited accounts. As a reminder, the current requirements are that 30% of any funds raised should be invested in qualifying holdings within 12 months of the end of the accounting period in which the shares were issued, and the Company has to maintain a minimum of 80% of the portfolio (at cost) invested in qualifying holdings. We are determined to maintain a threshold of quality and to invest where we see the potential for returns from growth. At present there has been only gradual change to the profile of the portfolio, as we continue to hold the larger market capitalisation companies, in which we invested several years ago as qualifying companies, or which we bought in the market prior to the rule changes where we see the potential for them to continue to grow.

In order to qualify, companies must:

• have fewer than 250 full time equivalent employees; and
• have less than £15 million of gross assets at the time of investment and no more than £16 million immediately post investment; and
• be less than seven years old from the date of its first commercial sale (or ten years if a knowledge intensive company) if raising state aided (i.e. VCT) funds for the first time; and
• have raised no more than £5 million of state aided funds in the previous 12 months and less than the lifetime limit of £12 million (or since 6 April 2018 £10 million in 12 months, £20 million lifetime limit if a knowledge intensive company); and
• produce a business plan to show that the funds are being raised for growth and development.
  

Outlook and future prospects
Sentiment has improved since the November year end, helped by a restoration of political stability, a re-assessment of the level of peak interest rates and early signs that inflation is going to fall from here, although it remains well above the long-term 2% target. Energy costs remain high but the worst fears of power shortages have not been realised. More than half the companies in the portfolio have updated us on trading since the period end, with many of these reassuring. Meanwhile we are starting to see companies considering floating on AIM in the short to medium term as well as VCT qualifying opportunities to invest in existing AIM companies. We believe the current cautious market conditions will provide opportunities to invest the VCT’s cash at attractive valuations.

The portfolio now contains 87 holdings with investments across a range of sectors including both domestic and international exposure. The balance towards profitable companies remains and many of these are still trading well and are valued towards the bottom of their long-term average therefore we still see good growth potential when the market recovers.

The Octopus Quoted Companies team
Octopus Investments Limited
10 March 2023

Viability statement
As part of their continuing programme of monitoring risk the Directors have assessed the prospects of the Company over a longer period than the 12 months required by the ‘going concern’ provision. The Board conducted this review for a period of five years, which was considered to be a reasonable time horizon given that the Company has raised funds under an offer for subscription which closed to new applications on 22 September 2022 and, under VCT rules, subscribing investors are required to hold their investment for a five-year period in order to benefit from the associated tax reliefs. The Board regularly considers the Company’s strategy, including investor demand for the Company’s shares, and a five-year period is considered to be a reasonable time horizon for this.

The Board carried out a robust assessment of the emerging and principal risks facing the Company and its current position. This includes the impact of the cost of living crisis, the unstable economic environment and any other risks which may adversely impact its business model such as future performance, solvency or liquidity. Particular consideration was given to the Company’s reliance on, and close working relationship with, the Investment Manager. The principal risks faced by the Company and the procedures in place to monitor and mitigate them are set out in the Annual Report.

The Board has also considered the liquidity of the underlying investments and the Company’s cash flow projections and found these to be realistic and reasonable. The Company’s cash flow includes cash equivalents which are short-term, highly liquid investments.

Based on the above assessment the Board confirms that it has a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five-year period to 30 November 2027.

Principal risks, risk management and regulatory environment

The Board carries out a regular review of the risk environment in which the Company operates. The Board seeks to mitigate risks by setting policy, reviewing performance and monitoring progress and compliance. In the mitigation and management of these risks, the Board applies the principles detailed in the Financial Reporting Council’s Guidance on Risk Management, Internal Control and Related Financial and Business reporting. Detailed below are what the Board deems to be the principal risks of the Company and the mitigating actions in relation to those risks.

Risk	Mitigation
Investment risk: The focus of the Company’s investments is into VCT qualifying companies quoted on AIM and the AQSE exchange, which by their nature entail a higher level of risk and lower liquidity than investments in larger quoted companies.	The Investment Manager has significant experience and a strong track record of investing in AIM and AQSE companies, and appropriate due diligence is undertaken on every new investment. The overall risk in the portfolio is mitigated by maintaining a wide spread of holdings in terms of financing stage, age, industry sector and business models. The Board reviews the investment portfolio with the Investment Manager on a regular basis.
VCT qualifying status risk: The Company is required at all times to observe the conditions for the maintenance of HMRC approved VCT status. The loss of such approval could lead to the Company and its investors losing access to the tax benefits associated with VCT status and, in certain circumstances, to investors being required to repay the initial income tax relief on their investment.	Prior to investment, the Investment Manager seeks assurance from the Company’s VCT status adviser that the investment will meet the legislative requirements for VCT investments. On an ongoing basis, the Investment Manager monitors the Company’s compliance with VCT regulations on a current and forecast basis to ensure ongoing compliance with VCT legislation. Regular updates are provided to the Board throughout the year. The VCT status adviser formally reviews the Company’s compliance with VCT regulations on a bi-annual basis and reports its results to the Board.
Operational risk: The Board is reliant on the Investment Manager to manage investments effectively, and manage the services of a number of third parties, in particular the registrar and tax advisors. A failure of the systems or controls at the Investment Manager or third-party providers could lead to an inability to provide accurate reporting and to ensure adherence to VCT and other regulatory rules.	The Board reviews the system of internal control, both financial and non-financial, operated by the Investment Manager (to the extent the latter are relevant to the Company’s internal controls). These include controls that are designed to ensure that the Company’s assets are safeguarded and that proper accounting records are maintained, as well as any regulatory reporting. Feedback on other third parties is reported to the Board on at least an annual basis, including adherence to service level agreements where relevant.
Information security: A loss of key data could result in a data breach and fines. The Board is reliant on the Investment Manager and third parties to take appropriate measures to prevent a loss of confidential customer information.	Annual due diligence is conducted on third parties which includes a review of their controls for information security. The Investment Manager has a dedicated information security team and a third party is engaged to provide continual protection in this area. A security framework is in place to help prevent malicious events. The Investment Manager reports to the Board on an annual basis to update them on relevant information security arrangements. Significant and relevant information security breaches are escalated to the Board when they occur.
Economic: Events such as an economic recession, movement in interest rates, inflation, political instability and rising living costs could cause volatility in the market, adversely impacting the valuation of investments. This could result in a reduction in the value of the Company’s assets.	The Company invests in a diverse portfolio of companies across a range of sectors, which helps to mitigate against the impact of performance in any one sector. The Company also maintains adequate liquidity to ensure that it can continue to provide follow-on investment to those portfolio companies which require it and which is supported by the individual investment case. The Investment Manager monitors the impact of macroeconomic conditions on an ongoing basis and provides updates to the Board at least quarterly.
Legislative: A change to the VCT regulations could adversely impact the Company by restricting the companies the Company can invest in under its current strategy. Similarly, changes to VCT tax reliefs for investors could make VCTs less attractive and impact the Company’s ability to raise further funds. Failure to adhere with other relevant legislation and regulation could result in reputational damage and/or fines.	The Investment Manager engages with HM Treasury and industry bodies to demonstrate the positive benefits of VCTs in terms of growing UK companies, creating jobs and increasing tax revenue, and to help shape any change to VCT legislation. The Investment Manager employs individuals with expertise across the legislation and regulation relevant to the Company. Individuals receive ongoing training and external experts are engaged where required.
Liquidity: The risk that the Company’s available cash will not be sufficient to meet its financial obligations. The Company invests into smaller companies, which are inherently less liquid than stocks on the main market. Therefore, these may be difficult to realise for their fair market value at short notice.	The Investment Manager prepares cash flow forecasts to ensure cash levels are maintained in accordance with policies agreed with the Board. The Company’s overall liquidity levels are monitored on a quarterly basis by the Board, with close monitoring of available cash resources. The Company maintains sufficient cash and readily realisable securities, including money market funds and OEICs, which can be accessed at short notice. At 30 November 2022, 20.4% of net assets was held in cash and cash equivalents, realisable within one business day, and 9.2% in OEICs, realisable in four business days.
Valuation: For smaller companies or illiquid shares, establishing a fair value can be difficult due to the lack of readily available market data for similar shares, resulting in limited number of external reference points.	Investments in companies traded on AIM and AQSE exchange are valued by the Investment Manager using closing bid prices as reported on Bloomberg. Where investments are in unquoted companies or where there are indicators the bid price is not appropriate, alternative valuation techniques are used in accordance with the IPEV guidelines. Valuations of unquoted portfolio companies are performed by appropriately experienced staff, with detailed knowledge of both the portfolio company and the market in which it operates. These valuations are then subject to review and approval by the Octopus Valuations Committee, comprised of staff who are independent of the Investment team and with relevant knowledge of unquoted company valuations. The Board reviews valuations after they have been agreed by the Octopus Valuations Committee.

Emerging risks
The Board has considered emerging risks. The Board seeks to mitigate emerging risks and those noted below by setting policy, regular review of performance and monitoring progress and compliance.

The following are some of the potential emerging risks management and the Board are currently monitoring:

•        Adverse changes in global macroeconomic environment
•        Rising cost of living
•        Geo-political protectionism
•        Climate change

Directors’ responsibility 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 (GAAP), including Financial Reporting Standard 102 – ‘The Financial Reporting Standard Applicable in the United Kingdom and Republic of Ireland’ (FRS 102), (United Kingdom accounting standards and applicable law). Under company law the Directors Must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and
• prepare a Strategic Report, a 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, to disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for ensuring that the annual report and accounts, taken as a whole, are fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s performance, business model and strategy.

In so far as each of the Directors is aware:

• there is no relevant audit information of which the Company’s auditor is unaware; and
• the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.

The Directors are responsible for preparing the annual report and accounts in accordance with applicable law and regulations. Having taken advice from the Audit Committee, the Directors are of the opinion that this report as a whole provides the necessary information to assess the Company’s performance, business model and strategy and is fair, balanced and understandable.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors confirm that, to the best of their knowledge:

• the financial statements, prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including FRS 102, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
• the annual report and accounts (including the Strategic Report), give a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

On behalf of the Board

Keith Mullins
Chair
10 March 2023

Income statement

	Year to 30 November 2022			Year to 30 November 2021
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£’000	£’000	£'000	£’000	£’000
(Loss)/gain on disposal of fixed asset investments	-	(32)	(32)	-	2,123	2,123
Gain on disposal of current asset investments	-	-	-	-	33	33
(Loss)/gain on valuation of fixed asset investments	-	( 31,821 )	( 31,821 )	-	15,662	15,662
(Loss)/gain on valuation of current asset investments	-	( 2,946 )	( 2,946 )	-	2,304	2,304
Investment Income	589	19	608	481	109	590
Investment management fees	(481)	(1,443)	(1,924)	(493)	(1,478)	(1,971)
Other expenses	(580)	-	(580)	(653)	-	(653)
(Loss)/profit before tax	(472)	(36,223)	(36,695)	(665)	18,753	18,088
Tax	-	-	-	-	-	-
Total comprehensive (loss) /income after tax	(472)	(36,223)	(36,695)	(665)	18,753	18,088
Earnings per share – basic and diluted	(0.3p)	(24.5p)	(24.8p)	(0.5p)	13.8p	13.3p

• The ‘Total’ column of this statement represents the statutory income statement of the Company; the supplementary revenue return and capital return columns have been prepared in accordance with the AIC Statement of Recommended Practice.
• All revenue and capital items in the above statement derive from continuing operations.
• The Company has only one class of business and derives its income from investments made in shares and securities and from bank and money market funds, as well as OEIC funds.

The Company has no recognised gains or losses other than the results for the period as set out above. Accordingly, a statement of comprehensive income is not required.

Balance sheet

	As at 30 November 2022		As at 30 November 2021
	£’000	£’000	£’000	£’000
Fixed asset investments		72,249		100,036
Current assets:
Investments	9,399		11,993
Money market funds	3,515		3,487
Debtors	205		185
Cash at bank	17,217		19,915
	30,336		35,580
Creditors: amounts falling due within one year	( 79 1)		(762)
Net current assets		29,545		34,818
Total assets less current liabilities		101,794		134,854
Called up equity share capital		1 7		15
Share premium		12,904		54,600
Capital redemption reserve		3		2
Special distributable reserve		76,154		30,826
Capital reserve realised		(5,843)		(4,533)
Capital reserve unrealised		21,190		56,103
Revenue reserve		(2,631)		(2,159)
Total equity shareholders’ funds		101,794		134,854
NAV per share – basic and diluted		61.6p		90.8p

The statements were approved by the Directors and authorised for issue on 10 March 2023 and are signed on their behalf by:

Keith Mullins
Chair
Company No: 05528235

Statement of changes in equity

	Share capital £’000	Share premium £’000		Capital redemption reserve £’000	Special distributable reserves* £’000	Capital reserve – realised* £’000	Capital reserve – unrealised £’000	Revenue reserve* £’000	Total £’000
As at 1 December 2021	15		54,600	2	30,826	(4,533)	56,103	(2,159)	134,854
Comprehensive income for the year:
Management fee allocated as capital expenditure	-		-	-	-	(1,443)	-	-	(1,443)
Current year loss on disposal	-		-	-	-	(32)	-	-	(32)
Current year loss on fair value of investments	-		-	-	-	-	(34,767)	-	(34,767)
Capital investment income	-		-	-	-	19	-	-	19
Loss after tax	-		-	-	-	-	-	(472)	(472)
Total comprehensive loss for the year	-		-	-	-	(1,456)	(34,767)	(472)	(36,695)
Contributions by and distributions to owners:	-		-	-	-	-	-	-	-
Repurchase and cancellation of own shares	(1)		-	1	(3,117)	-	-	-	(3,117)
Issue of shares	3		13,698	-	-	-	-	-	13,701
Share issue costs	-		(794)	-	-	-	-	-	(794)
Dividends paid	-		-	-	(6,155)	-	-	-	(6,155)
Total contributions by and distributions to owners	2		12,904	1	(9,272)	-	-	-	3,635
Other movements:
Cancellation of share premium	-		(54,600)	-	54,600	-	-	-	-
Prior years’ holding gains now realised	-		-	-	-	146	(146)	-	-
Total other movements	-		(54,600)	-	54,600	146	(146)	-	-
Balance as at 30 November 2022	17		12,904	3	76,154	(5,843)	21,190	(2,631)	101,794

	Share capital £’000	Share premium £’000	Capital redemption reserve £’000	Special distributable reserves* £’000	Capital reserve – realised* £’000	Capital reserve – unrealised £’000	Revenue reserve* £’000		Total £’000
As at 1 December 2020	13	37,758	1	35,051	(7,492)	40,309		(1,494)		104,146
Comprehensive income for the year:
Management fee allocated as capital expenditure	-	-	-	-	(1,478)	-		-		(1,478)
Current year gains on disposal	-	-	-	-	2,156	-		-		2,156
Current year gains on fair value of investments	-	-	-	-	-	17,966		-		17,966
Capital investment income	-	-	-	-	109	-		-		109
Loss after tax	-	-	-	-	-	-		(665)		(665)
Total comprehensive income for the year	-	-	-	-	787	17,966		(665)		18,088
Contributions by and distributions to owners:
Repurchase and cancellation of own shares	(1)	-	1	(4,973)	-	-		-		(4,973)
Issue of shares	3	27,725	-	-	-	-		-		27,728
Share issue costs	-	(1,683)	-	-	-	-		-		(1,683)
Dividends paid	-	-	-	(8,452)	-	-		-		(8,452)
Total contributions by and distributions to owners	2	26,042	1	(13,425)	-	-		-		12,620
Other m ovements:
Cancellation of share premium	-	(9,200)	-	9,200	-	-		-		-
Prior years’ holding gains now realised	-	-	-	-	2,172	(2,172)		-		-
Total other movements	-	(9,200)	-	9,200	2,172	(2,172)		-		-
Balance as at 30 November 2021	15	54,600	2	30,826	(4,533)	56,103		(2,159)		134,854

*Included within these reserves is an amount of £67,680,000 (2021: £24,134,000) which is considered distributable to shareholders.

Cash flow statement

	Year to 30 November 2022	Year to 30 November 2021
	£'000	£'000
Cash flows from operating activities
Profit/(loss) on ordinary activities before tax	(36,695)	18,088
Adjustments for:
(Increase) in debtors	(20)	(65)
(Decrease)/increase in creditors	(196)	173
Loss/(gain) on disposal of fixed assets	32	(2,123)
(Gain) on disposal of current asset investments	–	(33)
Loss/(gain) on valuation of fixed asset investments	31,821	(15,662)
Loss/(gain) on valuation of current asset investments	2,946	(2,304)
Non-cash distributions	(19)	(109)
Cash used in operations	(2,131)	(2,035)
Income taxes paid	–	–
Net cash used in operating activities	(2,131)	(2,035)
Cash flows from investing activities
Purchase of fixed asset investments	(6,071)	(12,332)
Proceeds from sale of fixed asset investments	2,249	6,085
Purchase of current asset investments	(352)	(2,620)
Proceeds from sale of current asset investments	-	3,360
Total cash flows used in investing activities	(4,174)	(5,507)
Cash flows from financing activities
Purchase of own shares	(3,117)	(4,973)
Share issues	12,502	26,086
Share issue costs	(794)	(1,683)
Dividends paid net of DRIS	(4,956)	(6,810)
Total cash flows from financing activities	3,635	12,620
(Decrease)/ i ncrease in cash and cash equivalents	(2,670)	5,078
Opening cash and cash equivalents	23,402	18,324
Closing cash and cash equivalents	20,732	23,402
Closing cash and cash equivalents is represented by:
Cash at bank	17,217	19,915
Money market funds	3,515	3,487
Total cash and cash equivalents	20,732	23,402

Notes to the financial statements

1.   Principal accounting policies
The Company is a Public Limited Company (‘plc’) incorporated in England and Wales and its registered office is 6th Floor, 33 Holborn, London, EC1N 2HT.

The Company’s principal activity is to invest in a diverse portfolio of predominantly AIM-traded companies with the objective of providing shareholders with attractive tax-free dividends and long-term capital growth.

Basis of preparation
The financial statements have been prepared under the historical cost convention, except for the measurement at fair value of certain financial instruments, and in accordance with UK Generally Accepted Accounting Practice (GAAP), including Financial Reporting Standard 102 – ‘The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland’ (FRS 102), and with the Companies Act 2006 and the Statement of Recommended Practice (SORP) ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts (issued 2014 and updated in October 2019 with consequential amendments).’

The principal accounting policies have remained unchanged since those set out in the Company’s 2021 annual report and accounts. A summary of the principal accounting policies is set out below.

2.   Income
Accounting policy
Investment income includes interest earned on money market securities and shown net of income tax withheld at source. Dividend income is shown net of any related tax credit. Dividends are allocated to revenue or capital depending on whether the dividend is of a revenue or capital nature.

Dividends receivable are recognised when the Company’s right to receive payment is established and it is probable that payment will be received. Fixed returns on debt and money market securities are recognised on a time apportionment basis so as to reflect the effective yield, provided there is no reasonable doubt that payment will be received in due course.

Disclosure

	30 November	30 November
	2022	2021
	£’000	£’000
Dividends receivable from fixed asset investments	522	451
In-specie dividend*	19	109
Loan note interest receivable	30	30
Income receivable on money market securities and bank balances	37	-
	608	590

*The Company received shares in Verici Dx plc as a result of an in-specie dividend from EKF Diagnostics Holdings plc. In the prior period the Company received shares in Trellus Health plc as a result of an in-specie dividend from EKF Diagnostics Holdings plc. These have been treated as capital income.

3.   Investment management fees

	30 November 2022			30 November 2021
	Revenue	Capital	Total	Revenue	Capital	Total
	£’000	£’000	£’000	£’000	£’000	£’000
Investment management fees	481	1,443	1,924	493	1,478	1,971

Octopus provide investment management and accounting and administration services to the Company under a management agreement which initially ran for a period of five years with effect from 6 October 2005 and may be terminated at any time thereafter by not less than 12 months’ notice given by either party. No compensation is payable in the event of terminating the agreement by either party, if the required notice period is given. The fee payable, should insufficient notice be given, will be equal to the fee that would have been paid should continuous service be provided, or the required notice period was given. The management fee is an annual charge and is set at 2% of the Company’s net assets.

During the year Octopus charged gross management fees of £2,266,000 (2021: £2,494,000). When the various allowances detailed below are included, the net management fee for the year is £1,924,000 (2021: £1,971,000). At the year end there was £395,000 payable to Octopus (2021: £560,000). Octopus received £186,000 as a result of upfront fees charged on allotments of Ordinary shares (2021: £419,000). The decrease in upfront fees this year has proportionately decreased in line with the value of allotments in the year.

The Company pays ongoing adviser charges to independent financial advisers (IFAs). Ongoing adviser charges are an ongoing fee of up to 0.5% per annum of the amount invested for a maximum of nine years paid to Advisers who are on an advised and ongoing fee structure. The Company is rebated for this cost by way of a reduction in the annual management fee. For the year to 30 November 2022 the rebate received was £133,000 (2021: £227,000).

The Company also facilitates upfront fees to IFAs where an investor has invested through a financial adviser and has received upfront advice. Where an investor agrees to an upfront fee only, the Company can facilitate a payment of an initial adviser charge of up to 4.5% of the investment amount. If the investor chooses to pay their intermediary/adviser less than the maximum initial adviser charge, the remaining amount will be used for the issue and allotment of additional new shares for the investor. In these circumstances the Company does not facilitate ongoing annual payments. To ensure that the Company is not financially disadvantaged by such payment, a notional ongoing adviser charge equivalent to 0.5% per annum of the amount invested will be deemed to have been paid by the Company for a period of nine years. The Company is rebated for this cost, also by way of a reduction in the annual management fee. For the year to 30 November 2022 the rebate received was £152,000 (2021: £233,000).

The Company also receives a reduction in the management fee for the investments in other Octopus managed funds, being the Multi Cap, Micro Cap Growth and Future Generations products, to ensure the Company is not double charged on these products. This amounted to £57,000 for the year to 30 November 2022 (2021: £63,000).

The management fee has been allocated 25% to revenue and 75% to capital, in line with the Board’s expected long-term return in the form of income and capital gains respectively from the Company’s investment portfolio.

4.   Other expenses
Accounting policy
All expenses are accounted for on an accruals basis.

The transaction costs incurred when purchasing or selling assets are written off to the income statement in the period that they occur.

Disclosure

	30 November	30 November
	2022	2021
	£’000	£’000
IFA charges	133	227
Directors’ remuneration	106	92
Registrar fees	47	50
Audit fees	42	36
VCT monitoring fees	3	17
Printing and postage	10	21
Legal and professional fees	16	13
Directors’ and officers’ liability insurance	12	18
Broker’s fees	7	7
Other administration expenses	2 04	172
	5 80	653

The fees payable to the Company’s auditor above are stated net of VAT and the VAT is included within other administration expenses.

The ongoing charges of the Company were 2.2% of average net assets during the year to 30 November 2022 (2021: 1.8%).

5.   Tax
Accounting policy
Current tax is recognised for the amount of income tax payable in respect of the taxable profit/(loss) for the current or past reporting periods using the current UK corporation tax rate. The tax effect of different items of income/gain and expenditure/loss is allocated between capital and revenue return on the ‘marginal’ basis as recommended in the SORP.

Deferred tax is recognised on an undiscounted basis in respect of all timing differences that have originated but not reversed at the balance sheet date, except as otherwise indicated.

Deferred tax assets are only recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Disclosure
The corporation tax charge for the year was £nil (2021: £nil).

	30 November	30 November
	2022	2021
	£’000	£’000
(Loss)/profit before tax	( 36,695 )	18,088
Current tax at 19.00% (2021:19.00%)	( 6,972 )	3,437
Effects of
Non-taxable income	(11 0 )	(106)
Non-taxbale capital gains	6,608	(3,823)
Non-deductible expenses	6	2
Excess management expenses on which deferred tax not recognised	468	490
Total tax charge	-	-

Approved VCTs are exempt from tax on capital gains within the Company. Since the Board intends that the Company will continue to conduct its affairs so as to maintain its approval as a VCT, no deferred tax has been provided in respect of any capital gains or losses arising on the revaluation or disposal of investments.

In March 2021, the UK Government announced that from 1 April 2023, the main rate of corporation tax will be increased to 25%. Consequently, deferred tax has been calculated at the year end using a tax rate of 25%. As at 30 November 2022, there is an unrecognised deferred tax asset of £4,616,000 (2021: £4,008,000) in respect of surplus management expenses, based on a prospective tax rate of 25% (2021: 25%). This deferred tax asset could in future be used against taxable profits.

Provided the Company continues to maintain its current investment profile, it is unlikely that the expenses will be utilised and that the Company will obtain any benefit from this asset.

6.   Dividends
Accounting policy
Dividends payable are recognised as distributions in the financial statements when the Company’s liability to make a payment has been established. This liability is established on the record date, the date on which those shareholders on the share register are entitled to the dividend.

Disclosure

	30 November	30 November
	2022	2021
	£’000	£’000
Dividends paid on O rdinary shares during the year
2021 Final dividend – 2.1p per share paid 27 May 2022 (2021: 2.1p per share)	3,080	2,804
2022 Interim dividend – 2.1p per share paid 10 November 2022 (2021: 2.1p per share)	3, 0 7 5	3,121
2022 Special dividend – Nil (2021: 1.7p per share)	-	2,527
	6,155	8,452

During the year £1,199,000 (2021: £1,642,000) of dividends were reinvested under the DRIS.

Under Section 32 of FRS 102 ‘Events After the end of the Reporting Period’, dividends payable at year end are not recognised as a liability. Details of these dividends and all other dividends declared in the year are set out below.

	30 November	30 November
	2022	2021
	£’000	£’000
Dividends paid and proposed
2022 Interim dividend – 2.1p per share paid 10 November 2022 (2021: 2.1p per share)	3,075	3,121
2022 Special dividend – Nil (2021: 1.7p)	-	2,527
Final proposed dividend – 2.3p per share payable 25 May 2023 (2021: 2.1p share)	3,773	3,080
	6,848	8,728

The above proposed final dividend is based on the number of shares in issue at the date of this report. The actual dividend paid may differ from this number as the dividend payable will be based on the number of shares in issue on the record date and will reflect any changes in the share capital between the year end and the record date.

7.   Earnings per share

	30 November 2022			30 November 2021
	Revenue	Capital	Total	Revenue	Capital	Total
	£’000	£’000	£’000	£’000	£’000	£’000
Profit/(loss) attributable to Ordinary shareholders	( 472 )	( 36,223 )	( 36,695 )	(665)	18,753	18,088
Earnings per Ordinary share (p)	(0. 3 p )	(2 4 . 5 p )	(2 4 . 8 p )	(0.5p)	13.8p	13.3p

The profit/(loss) per share is based on 147,948,350 (2021: 135,902,032) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year, and the loss on ordinary activities after tax for the year of £36,695,000 (2021: profit of £18,088,000).

There are no potentially dilutive capital instruments in issue and, as such, the basic and diluted earnings per share are identical.

8.   Net asset value per share

	30 November	30 November
	2022	2021
Net assets (£’000)	101,794	134,854
Shares in issue	165,172,844	148,580,569
NAV per share (p)	61.6	90.8

There are no potentially dilutive capital instruments in issue and, as such, the basic and diluted NAV per share are identical.

9.   Post balance sheet events
The following events occurred between the balance sheet date and the signing of these financial statements:

• an investment of £100,000 into Equipmake Holdings plc
• an investment of £1,059,000 into Itaconix plc
• an investment of £500,000 into FP Octopus UK Micro Cap Growth Fund
• an investment of £500,000 into FP Octopus UK Multi Cap Income
• an investment of £60,000 into FP Octopus UK Future Generations Fund
• partial disposal of 24,000 shares in WANdisco plc for total consideration of £196,000
• full disposal of 3,679,810 shares in TP Group plc for total consideration of £83,000
  

Subsequent to the year end and in accordance with the bases of valuation, unquoted investments have been revalued resulting in a reduction in NAV of 0.6 pence per share which has been reflected in weekly disclosures of NAV from 9 January 2023.

The following shares have been bought back since the year end:

• 15 December 2022: 274,131 shares at a price of 57.9p per share
• 19 January 2023: 436,267 shares at a price of 57.7p per share
• 16 February 2023: 432,226 shares at a price of 58.5p per share
  

10.   Related party transactions
The Company has employed Octopus Investments Limited (‘Octopus’ or ‘the Investment Manager’) throughout the period as Investment Manager. Octopus have also been appointed as Custodian of the Company’s investments under a Custodian Agreement. The Company has been charged £1,924,000 by Octopus as a management fee in the year to 30 November 2022 (2021: £1,971,000). The management fee is payable quarterly and is based on 2% of net assets at quarterly intervals.

The Company receives a reduction in the management fee for the investments in other Octopus managed funds, being the Multi Cap Income Fund, Micro Cap Growth Fund and Future Generations Fund, to ensure the Company is not double charged on these products. This amounted to £57,000 in the year to 30 November 2022 (2021: £63,000). For further details please refer to note 3. Details of amounts invested in Octopus managed funds can be found in the Annual Report.

As at 30 November 2022, Octopus Investments Nominees Limited (OINL) held 4,284 shares (2021: nil) in the Company as beneficial owner, having purchased these at a cost of £3,000 (2021: £nil) from shareholders in order to correct errors. Throughout the period to 30 November 2022 OINL purchased 7,916 shares (2021: nil) at a cost of £6,000 (2021: £nil) and sold 3,632 shares (2021: nil) for proceeds of £3,000 (2021: £nil). This is classed as a related party transaction as Octopus, the Investment Manager, and OINL are part of the same group of companies. Any such future transactions, where OINL takes over the legal and beneficial ownership of Company shares will be announced to the market and disclosed in annual and half yearly reports.

Details of the Directors and their remuneration can be found in the Directors’ Remuneration Report.

11.   2022 financial information
The figures and financial information for the year ended 30 November 2022 are extracted from the Company’s annual financial statements for the period and do not constitute statutory accounts. The Company’s annual financial statements for the year to 30 November 2022 have been audited but have not yet been delivered to the Registrar of Companies. The Auditors’ report on the 2022 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.   2021 financial information
The figures and financial information for the period ended 30 November 2021 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 March 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. 05528235
LEI: 213800BW27BKJCI35L17

15.   Directors
Keith Mullins (Chair), Andrew Raynor, Elizabeth Kennedy and Brad Ormsby

16.   Secretary and registered office
Octopus Company Secretarial Services Limited
33 Holborn, London EC1N 2HT