Half-yearly report
Octopus Apollo VCT 3 plc
Half-Yearly Results
30 September 2010
Octopus Apollo VCT 3 plc, managed by Octopus Investments Limited, today
announces the Half-Yearly results for the six months ended 31 July 2010.
These results were approved by the Board of Directors on 30 September 2010.
You will shortly be able to view the Half-Yearly Report in full at
www.octopusinvestments.com by navigating to the VCT Meetings & Reports under the
'Services' section.
About Octopus Apollo VCT 3 plc
Octopus Apollo VCT 3 plc ("Apollo 3," "Company" or "Fund") is a venture capital
trust ("VCT") and is managed by Octopus Investments Limited ("Octopus").
The Fund was launched in July 2006 and raised over £27.1 million (£25.9 million
net of expenses) through an offer for subscription by the time it closed on 5
April 2008. The objective of the Fund is to invest in a diversified portfolio of
UK smaller companies in order to generate income and capital growth over the
long-term.
Venture Capital Trusts (VCTs)
VCTs were introduced in the Finance Act 1995 to provide a means for private
individuals to invest in unlisted companies in the UK. Subsequent Finance Acts
have introduced changes to VCT legislation. The tax benefits currently available
to eligible new investors in VCTs include:
·          upfront income tax relief of 30%
·          exemption from income tax on dividends paid; and
·          exemption from capital gains tax on disposals of shares in VCTs
The Company has been approved as a VCT by HM Revenue & Customs. In order to
maintain its approval, the Company must comply with certain requirements on a
continuing basis. Above all, the Company is required at all times to hold at
least 70% of its investments (as defined in the legislation) in VCT qualifying
holdings, of which at least 30% must comprise eligible Ordinary shares. For
this purpose, a 'VCT qualifying holding' consists of up to £1 million invested
in any one year in new shares or securities of a UK unquoted company (which may
be quoted on AIM) which is carrying on a qualifying trade, and whose gross
assets at the time of investment do not exceed a prescribed limit. The
definition of 'qualifying trade' excludes certain activities such as property
investment and development, financial services and asset leasing. The Company
will continue to ensure its compliance with these qualification requirements.
Financial Summary
Six months to 31 Six months to 31 Â Â Year to
 July 2010 July 2009   31 January 2010
Net assets (£'000s) 24,015 24,592 24,552
Net profit/(loss) after
tax (£'000s) (89) (124) 244
Net asset value per share
("NAV") 88.3p 90.2p 90.1p
Cumulative dividends
since launch - paid and
proposed 9.0p 6.0p 7.5p
Chairman's Statement
Introduction
I am pleased to present the half-yearly report of Octopus Apollo VCT 3 plc for
the period ended 31 July 2010.
Performance
At 31 July 2010 the NAV plus cumulative dividends paid of the Fund was 95.8p,
which compares to 96.1p at 31 January 2010. The performance of the Fund has been
relatively stable as the fair value of investments, which represent 79% of the
total Fund, remain unchanged at the period end.
Investment Portfolio
Since 31 January 2010 two new investments have been made. A qualifying
investment of £1,000,000 was made into Resilient Corporate Services Limited, a
company set up to invest in businesses operating in the business services arena.
The Fund also invested £350,000 into Carebase (Col) Limited, a company used to
purchase land in order to build a Care Home. This was a non-qualifying
investment for VCT purposes.
Post 31 July 2010, the cash invested into Vulcan Services II Limited, a company
previously set up to seek qualifying investments, has successfully been deployed
into Bluebell Telecom Limited, a company providing landline, mobile and data
solutions to businesses.
In terms of other opportunities, we are seeing good deal flow and are in
detailed discussions which may lead to a number of new investments that fit well
with the investment mandate of this VCT.
Investment Strategy
The Fund is being invested on the basis of taking less risk than a typical VCT.
Typically the Fund will receive its return from interest paid on secured loan
notes as well as an exposure to the value of the shares of a company. The
investment strategy is to derive sufficient return from the secured loan notes
to achieve the Fund's investment aims and to use the equity exposure to boost
returns. As portfolio companies are unquoted the Fund will receive a return
from an equity holding when a company is sold.
The Manager of the Fund aims to reduce risk by investing in well managed and
profitable businesses with strong recurring cash-flows. Furthermore with the
majority of the investment being made in the form of a secured loan, in the
event of the business failing, the Fund will rank ahead of unsecured creditors
and equity investors.
Change of Name
Following the approval from shareholders, on 12 August 2010 the Company changed
its name from Octopus Protected VCT plc to Octopus Apollo VCT 3 plc. This was to
align the Company with other VCTs that co-invest with this Company, namely,
Octopus Apollo VCT 1 plc, Octopus Apollo VCT 2 plc and Octopus Apollo VCT 4 plc.
Dividend and Dividend Policy
It is your Board's policy to strive to maintain a regular dividend flow where
possible and this primarily relies on the level of profitable realisations and
available cash reserves. However, given the prevailing economic climate this
cannot be guaranteed. That said, for the period ended 31 July 2010, the Board
has declared an interim dividend of 1.5p per share, payable from capital
reserves. This dividend will be paid to shareholders on 29 October 2010 who are
on the register on 8 October 2010.
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 is pleased to announce it has been
advised that Octopus Apollo VCT 3 plc is in compliance with the conditions laid
down by HMRC for maintaining approval as a VCT.
A key requirement is to now maintain at least the 70% qualifying investment
level. As at 31 July 2010, 76.0% 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 of the Notes to the
Half-Yearly Report on page â—.
Outlook
We are pleased with the portfolio of investments we have. They are performing
in-line with our expectations. The Investment Manager is in a position to
provide the support that these companies need, enabling them to contribute
strongly to the ongoing value of your VCT investment.
If you have any questions on any aspect of your investment, please call one of
the team on 0800 316 2347.
Tony Morgan
Chairman
30 September 2010
Investment Portfolio
%
equity
Movement Fair % held by
Cost of in value as equity all
investment valuation at 31 held funds
Unquoted as at 31 as at 31 July by managed
qualifying July 2010 July 2010 2010 Apollo by
investments Sector (£'000) (£'000) (£'000) 3 Octopus
Salus Care homes
Services I
Limited 2,000 - 2,000 15.70% 100.00%
Vulcan Oil & gas
Services II services
Limited 2,000 - 2,000 12.25% 49.00%
GreenCo Environmental
Services
Limited 2,000 - 2,000 8.20% 57.40%
PubCo Restaurants &
Services bars
Limited 2,000 - 2,000 11.40% 56.90%
Clifford Automotive
Thames Group
Limited 2,000 - 2,000 1.50% 8.00%
Bruce Dunlop Media
& Associates
Limited 1,018 - 1,018 1.74% 30.00%
Tristar Chauffeur
Limited services 1,000 - 1,000 1.25% 35.00%
Diagnos Automotive
Limited 1,000 - 1,000 0.00% 0.00%
CSL Dualcom Security
Limited devices 1,000 - 1,000 0.00% 0.00%
BusinessCo Business
Services 2 services
Limited 1,000 - 1,000 5.00% 49.00%
Ticketing Ticketing
Services 1
Limited 1,000 - 1,000 25.30% 100.00%
Ticketing Ticketing
Services 2
Limited 1,000 - 1,000 25.30% 100.00%
Resilient Business
Corporate services
Services
Limited 1,000 - 1,000 24.50% 49.00%
Hydrobolt Manufacturing
Limited 606 - 606 0.89% 43.30%
Total
unquoted
qualifying
investments  18,624 - 18,624
Quoted
qualifying
investments
British
Country Inns Restaurants &
plc bars 100 (16) 84
Total
qualifying
investments  18,724 (16) 18,708
Non
qualifying
invesments  350 - 350
Money market
funds  4,811 38 4,849
Cash at bank  149 - 149
Total fixed
income
securities  5,310 38 5,348
Total
investments  24,034 22 24,056
Debtors less
creditors    (41)
Total net
assets    24,015
Responsibility Statement of the Directors in respect of the Half-Yearly Report
We confirm that to the best of our knowledge:
* the half-yearly financial statements have been prepared in accordance with
the statement "Half-Yearly Financial Reports" issued by the UK Accounting
Standards Board;
* the half-yearly report includes a fair review of the information required by
the Financial Services Authority Disclosure and Transparency Rules, being:
      o 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.
      o a description of the principal risks and uncertainties for the
remaining six months of the year; and
      o 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
Tony Morgan
Chairman
30 September 2010
Income Statement
+----------------------------------------+
 | Six months to 31 July 2010 | Six months to 31 July 2009
| |
 | Revenue Capital Total| Revenue Capital Total
| |
        |       £'000        £'000        £'000|       £'000        £'000        £'000
| |
        |                        |
| |
(Loss)/gain | |
on disposal | |
of fixed | |
asset | |
investments | Â Â Â Â Â Â Â - Â Â Â Â Â Â Â - Â Â Â Â Â Â Â -| Â Â Â Â Â Â Â - Â Â Â Â Â Â Â - Â Â Â Â Â Â Â -
| |
(Loss)/gain | |
on disposal | |
of current | |
asset | |
investments | Â Â Â Â Â Â Â - Â Â Â Â Â Â Â - Â Â Â Â Â Â Â -| Â Â Â Â Â Â Â - Â Â Â Â Â Â Â (49) Â Â Â Â Â Â Â (49)
| |
 |                         |
| |
Gain/(loss) | |
on valuation | |
of current | |
asset | |
investments | Â Â Â Â Â Â Â - Â Â Â Â Â Â Â 38 Â Â Â Â Â Â Â 38| Â Â Â Â Â Â Â - Â Â Â Â Â Â Â 60 Â Â Â Â Â Â Â 60
| |
 |                         |
| |
Income | Â Â Â Â Â Â Â 324 Â Â Â Â Â Â Â - Â Â Â Â Â Â Â 324| Â Â Â Â Â Â Â 269 Â Â Â Â Â Â Â - Â Â Â Â Â Â Â 269
| |
 |                         |
| |
Investment | |
management | |
fees | Â Â Â Â Â Â Â (67) Â Â Â Â Â Â Â (202) Â Â Â Â Â Â Â (269)| Â Â Â Â Â Â Â (62) Â Â Â Â Â Â Â (186) Â Â Â Â Â Â Â (248)
| |
 |                         |
| |
Other | |
expenses |Â Â Â Â Â Â Â (182) Â Â Â Â Â Â Â - Â Â Â Â Â Â Â (182)|Â Â Â Â Â Â Â (156) Â Â Â Â Â Â Â - Â Â Â Â Â Â Â (156)
| |
 |                         |
| |
Profit/(loss)| |
on ordinary | |
activities | |
before tax | Â Â Â Â Â Â Â 75 Â Â Â Â Â Â Â (164) Â Â Â Â Â Â Â (89)| Â Â Â Â Â Â Â 51 Â Â Â Â Â Â Â (175) Â Â Â Â Â Â Â (124)
| |
 |                         |
| |
Taxation on | |
profit/(loss)| |
on ordinary | |
activities | Â Â Â Â Â Â Â - Â Â Â Â Â Â Â - Â Â Â Â Â Â Â -| Â Â Â Â Â Â Â - Â Â Â Â Â Â Â - Â Â Â Â Â Â Â -
| |
 |                         |
| |
Profit/(loss)| |
on ordinary | |
activities | |
after tax | Â Â Â Â Â Â Â 75 Â Â Â Â Â Â Â (164) Â Â Â Â Â Â Â (89)| Â Â Â Â Â Â Â 51 Â Â Â Â Â Â Â (175) Â Â Â Â Â Â Â (124)
| |
Earnings per | |
share - basic| |
and diluted |        0.3        (0.6)p        (0.3)p|        0.2p        (0.6)p        (0.4)p
+----------------------------------------+
 Year to 31 January 2010
        Revenue Capital Total
--------------------------------------------------
               £'000        £'000        £'000
(Loss)/gain on disposal of
fixed asset investments
(Loss)/gain on disposal of
current asset investments - 255 255
 - (28) (28)
Gain/(loss) on valuation of
current asset investments
 - 144 144
Income
 638 - 638
Investment management fees
 (124) (372) (496)
Other expenses
 (269) - (269)
--------------------------------------------------
Profit/(loss) on ordinary
activities before tax
 245 (1) 244
Taxation on profit/(loss) on
ordinary activities
 - - -
--------------------------------------------------
Profit/(loss) on ordinary
activities after tax
--------------------------------------------------
Earnings per share - basic and
diluted 245 (1) 244
 0.9p (0.0)p 0.9p
* 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 accompanying notes are an integral part of the half-yearly report
* The Company has no recognised gains or losses other than those disclosed in
the income statement.
Reconciliation of Movements in Shareholders' Funds
+----------------+
|Six months ended|Six months ended Year to
 | 31 July 2009| 31 July 2009 31 January 2010
| |
         | £'000| £'000 £'000
| |
Shareholders' funds at start | |
of period | 24,552| 25,139 25,139
| |
(Loss)/profit on ordinary | |
activities after tax | (89)| (124) 244
| |
Cancellation of own shares | (39)| (14) (13)
| |
Dividends paid | (409)| (409) (818)
| |
Shareholders' funds at end of | |
period | 24,015| 24,592 24,552
+----------------+
Balance Sheet
+----------------+
| As at 31 July| As at 31 July   As at 31 January
  | 2010| 2009 2010
| |
 |  £'000  £'000|  £'000  £'000  £'000  £'000
| |
  |    |
| |
 Fixed asset | |
investments* | Â Â Â 19,058| Â Â Â 11,190 Â Â Â 17,708
| |
 Current assets: |     |
| |
 Investments* |  4,849   | 13,379    6,305
| |
 Debtors |  10   |  153    243
| |
 Cash at bank |  149   |  114    374
| |
  |  5,008   | 13,646    6,922
| |
 Creditors: amounts | |
falling due within one | |
year | Â (51) Â Â | Â (244) Â Â Â (78)
| |
 Net current assets |    4,957|    13,402    6,844
| |
 Net assets |    24,015|    24,592    24,552
| |
  |     |
| |
 Called up equity share | |
capital | Â 2,721 Â Â | Â 2,726 Â Â Â 2,725
| |
 Capital redemption | |
reserve | Â 18 Â Â | Â 13 Â Â Â 13
| |
 Special distributable | |
reserve | Â 22,987 Â Â |Â 23,025 Â Â Â 22,617
| |
 Capital reserve - | |
realised |Â (1,435) Â Â | Â (570) Â Â Â (406)
| |
             - | |
unrealised | Â (405) Â Â | Â (490) Â Â Â (479)
| |
 Revenue reserve |  129   |  (112)    82
| |
 Total equity | |
shareholders' funds | Â Â Â 24,015| Â Â Â 24,592 Â Â Â 24,552
| |
 Net asset value per | |
share |    88.3p|    90.2p    90.1
+----------------+
 *Held at fair value through profit and loss
Cash Flow Statement
+----------------+
| Â Â Â Â Â Six months| Â Â Â Â Â Â Six months
| to| to
|      31 July|       31 July  Year to
 | 2010| 2009  31 January 2010
| |
         | £'000| £'000 £'000
| |
         |  |
| |
        Net cash | |
(outflow)/inflow from | |
operating activities | 79| (127) (375)
| |
         |  |
| |
        Taxation | -| - -
| |
 |  |
| |
        Financial investment| |
: | Â |
| |
        Purchase of fixed | |
asset investments | (1,350)| (6,500) (14,017)
| |
        Sale of fixed asset | |
investments | -| - 1,254
| |
         |  |
| |
        Management of liquid| |
resources: | Â |
| |
        Purchase of current | |
asset investments | (2,669)| (6,457) (9,847)
| |
         Sale of current | |
asset investments | 4,163| 9,936 20,505
| |
         |  |
| |
        Dividends paid | (409)| (409) (818)
| |
         |  |
| |
        Financing: |  |
| |
        Cancellation of own | |
shares | (39)| (14) (13)
| |
         | |
(Decrease)/increase in cash | |
at bank | (225)| (3,571) (3,311)
+----------------+
 Reconciliation of net cash flow to movement in net funds
+--------------+
| Â Â Â Â Â Six|
| months to| Â Â Â Â Â Â Six
| Â Â Â Â Â 31 July| months to 31 Â Â Â Â Â Â Â Â Â Â Â Year to
 | 2010| July 2009 31 January 2010
| |
 | £'000| £'000 £'000
| |
 (Decrease)/increase in | |
cash at bank | (225)| (3,571) (3,311)
| |
 (Decrease)/increase in | |
cash equivalents | (1,456)| (3,468) (10,542)
| |
 Opening net cash resources| 6,679| 20,532 20,532
| |
 Net cash resources at end | |
of period | 4,998| 13,493 6,679
+--------------+
 Reconciliation of profit before taxation to cash flow from operating activities
+----------------+
| Â Â Â Â Â Six months| Â Â Â Â Â Six months
| to| to
|      31 July|      31 July            Year to
 | 2010| 2009 31 January 20010
| |
 | £'000| £'000 £'000
| |
(Loss)/profit on ordinary| |
activities before tax | (89)| (124) 244
| |
Gain on disposal of fixed| |
asset investments | Â Â Â Â Â Â Â -| Â Â Â Â Â Â Â - (255)
| |
(Loss)/gain on disposal| |
of current asset| |
investments | Â Â Â Â Â Â Â -| Â Â Â Â Â Â Â 49 28
| |
(Gain)/loss on valuation | |
of current asset | |
investments | Â Â Â Â Â Â Â (38)| Â Â Â Â Â Â Â (60) (144)
| |
Decrease/(increase) in | |
debtors | 233| 59 (31)
| |
Decrease in creditors | (27)| (51) (217)
| |
Net cash (outflow)/inflow| |
from operating activities| 79| (127) (375)
+----------------+
Notes to the Half-Yearly Report
1.    Basis of preparation
The unaudited half-yearly results which cover the six months to 31 July 2010
have been prepared in accordance with the Accounting Standard Board's (ASB)
statement on half-yearly financial reports (July 2007) and adopting the
accounting policies set out in the statutory accounts of the Company for the
year ended 31 January 2010, which were prepared under UK GAAP and in accordance
with the Statement of Recommended Practice for Investment Companies issued by
the Association of Investment Companies in January 2009.
2.    Publication of non-statutory accounts
The unaudited half-yearly results for the six months ended 31 July 2010 do not
constitute statutory accounts within the meaning of s.415 of the Companies Act
2006 and have not been delivered to the Registrar of Companies. The comparative
figures for the year ended 31 January 2010 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 at 31 July 2010 are calculated on the basis of
27,244,887 (31 January 2010: 27,262,160 and 31 July 2009: 27,268,387) shares,
being the weighted average number of shares in issue during the year.
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
The net asset value per share is based on net assets as at 31 July 2010 divided
by 27,207,202 (31 January 2010: 27,256,003 and 31 July 2009: 27,256,003) shares
in issue at that date.
5.    Dividends
The interim dividend of 1.5 pence per share for the six months ending 31 July
2010 will be paid on 29 October 2010, to those shareholders on the register on
8 October 2010. This will be paid from capital reserves.
A final dividend, for the year ending 31 January 2010, of 1.5 pence per share
was paid on 4 August 2010 to shareholders on the register on 9 July 2010. This
was paid with 0.1p from revenue reserves and 1.4p from capital reserves.
6. Â Â Â Â 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 2010. 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. During the period, the
Company incurred management fees of £269,000 (31 January 2010: £496,000 and 31
July 2009: £248,000) payable to Octopus. At the period end there was £Nil (31
January 2010: £Nil and 31 July 2009: £Nil) outstanding to Octopus. Furthermore,
Octopus 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 £10,000 per annum for company
secretarial services.
8.    Copies of this statement are being sent to all shareholders. Copies are
also available from the registered office of the Company at 20 Old Bailey,
London, EC4M 7AN, and will also be available to view on the Investment Manager's
website at www.octopusinvestments.com.
[HUG#1448008]
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Octopus Apollo VCT 3 plc via Thomson Reuters ONE
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