Octopus AIM VCT PLC : Final Results
Octopus AIM VCT plc
Final Results
4 June 2015
Octopus AIM VCT plc, managed by Octopus Investments Limited, today announces the final results for the year ended 28 February 2015.
These results were approved by the Board of Directors on 3 June 2015.
You may, in due course, view the Annual Report in full at www.octopusinvestments.com by navigating to Investor, Venture Capital Trusts, Octopus AIM VCT plc. All other statutory information will also be found there.
Financial Summary
| As at 28 February 2015 | As at 28 February 2014 | |
| Net assets (£'000) | 72,612 | 69,730 |
| Net profit after tax (£'000) | (5,226) | 19,148 |
| Net asset value (NAV) per share | 110.2p | 125.2p |
| Dividends per share paid in year | 5.5p | 5.0p |
| Final proposed dividend | 2.8p | 3.0p |
| Special Dividend | 4.0p | N/A |
*If approved at the AGM, a final dividend of 2.8p will be paid on 7 August 2015 to those shareholders on the register on 3 July 2015. In addition, the Board has declared a special dividend of 4.0p which will also be paid on 7 August 2015 to those shareholders on the register on 3 July 2015.
Acting Chairman's Statement
IntroductionUnfortunately your chairman, Michael Reeve, is unwell at present, so he has asked that I report to shareholders in these accounts on his behalf. I know that we all wish him a speedy recovery.
The year to February 2015 was more difficult than expected a year ago, with share prices more volatile and trading conditions more challenging as the stock market reacted to uncertainty caused by events in the Ukraine and Greece as well by the Scottish Referendum and the General Election. The Net Asset Value fell by 7.7% in the period if the 5.5p paid out in tax free dividends are added back. In terms of the portfolio, the impact was most severe in the first half which followed on from a year of exceptional outperformance by the VCT and by smaller companies generally. Adding back the dividends paid out to investors, the NAV was broadly stable in the second half.
Fundraising
In the year to 28 February 2015 we have raised a total of £13.8 million of new capital. This figure is made up, first, of £4.1 million raised under the Top Up Offer, which closed on 28 March 2014, when 3,071,322 new shares were issued. Secondly, in the 2014/15 tax year up to 28 February 2015, your Company has issued 8,573,743 new shares raising £9.7 million. In addition, your company has issued 6,278,281 new shares since 28 February 2015 raising a further £7.1 million, under the continuing prospectus offer, which remains open and can raise approximately up to a further £1.2 million before reaching the maximum of £18 million.
Share Buy Backs
In the year ended 28 February 2015 we bought back 715,794 shares. The average month end discount to Net Asset Value at which your shares have traded through the year has been 6.1 per cent compared to the closing monthly bid price which is broadly in line with the Board's policy of 5 per cent.
Performance
Adding back the 5.5p of dividends paid out in the year, the Net Asset value fell by 7.7%, which is disappointing despite coming in the wake of a substantial increase in the previous 12 months. This compares with a fall in the AIM index of 19%, a fall in the Smallcap Index ex Investment Trusts of 3.4% and a rise in the FT All Share Index of 5.6%, all on a total return basis.
As these figures suggest it has been larger companies' shares which have performed relatively well, despite the UK economy expanding, which would normally be a background conducive to good performance by smaller company shares. However, that was not the case as increasingly through the year investors became more risk averse, more worried about both international conflicts and the Scottish referendum, and more wary of smaller companies. This is despite the companies themselves continuing, on the whole, to report good trading results. In this environment the more mature companies in the portfolio performed well, but the overall result was affected by the earlier stage investments whose share prices were weak.
Despite the performance of the AIM index, there has been a steady flow of new companies coming to the market. In the period, AIM has raised £5.6 billion in new capital, which is a substantial increase on the previous year. I hope that trend continues, not only as it provides a pipeline of potential investments for the portfolio, but also because it indicates a healthy UK economy with companies and their managements seeing opportunities and wanting to deploy additional capital.
As ever performance is driven by specific stocks and, despite the dearth of takeover situations generally, the portfolio has recently sold its largest holding, Advanced Computer Software. The company was taken over at a price of 140p per share in March. Since the original investment in this start-up in 2008 was at 17p, this represents a profit on the total holding of around £3.7 million. On behalf of long-term shareholders, I thank the management of Advanced Computer Software for their efforts. This is the second time that your Investment Manager has backed the team which created Advanced Computer Software. Both investments have been profitable experiences for the Company.
In the interim accounts I reported that we had invested £1.4 million in qualifying holdings, namely Learning Technologies Group and Ergomed. In the second half of the year we invested a further £2.2 million in qualifying investments which included three new holdings in Microsaic, Midatech and Ideagen together with three follow-on investments into Proxama, Access Intelligence and Nektan. The last two were both in the format of convertible loan notes. In addition we invested £2.1m in non-qualifying holdings in the year.
We made disposals totalling £3.85 million at a net profit of £1.74 million. We sold our entire holdings in Immunodiagnostics, Emis, Synectics and Cohort and took profits from several other holdings including Breedon Aggregates, Proxama, Skyepharma and Matchtech.
Further details of performance are contained in the Investment Managers' Review.
Your Company, like all Venture Capital Trusts, invests in smaller companies, which by their nature are riskier than more established larger companies and hence attract the tax concessions, which encourage such investment.
Dividend
An interim dividend of 2.5p was paid to shareholders in January 2015. It is your Board's intention to continue to pay a minimum of 2.5p each half year and to adjust on an annual basis, based on the year-end share price, the final dividend so that shareholders receive either 5p per annum or a 5 per cent yield, whichever is the greater at the time. This will enable dividends to progress with a rising NAV, whilst maintaining the minimum historic level. Your Board has pleasure in recommending a final dividend of 2.8p, equivalent to an annualised yield of 5 per cent based on the share price of 105p on 27th February 2015.
In addition, in the light of the exceptional profit realised by the takeover of Advanced Computer Software, your Board has decided to pay a special dividend of an additional 4.0p per share, over and above the normal final dividend of 2.8p. The record date for the both dividends is 3rd July 2015 and the payment date 7th August 2015.
VCT Status
PricewaterhouseCoopers LLP provides your Board and Investment Manager with advice concerning continuing compliance with HMRC regulations for VCTs. Your Board has been advised that Octopus AIM VCT is in compliance with the conditions laid down by HMRC for maintaining approval as a VCT.
A key requirement is to maintain at least a 70 per cent qualifying investment level. As at 28 February 2015 some 93 per cent of the portfolio as measured by HMRC rules was invested in qualifying investments.
Risks and uncertainties
In accordance with the Listing Rules under which your Company operates your Board has to comment on the potential risks and uncertainties which could have a material impact on the Company's performance. A risk arises from the requirement to maintain compliance with HMRC regulations requiring 70 per cent of your Company's assets to be invested in qualifying holdings. Other risks include economic conditions which impact particularly on smaller companies in which your Company invests and this could have an adverse impact on share prices.
AIFMD was introduced under EU Legislation to increase transparency of reporting by Alternative Investment Funds (AIFs) and to ensure that national regulators have the information they require to monitor financial systems within their jurisdictions. In accordance with this legislation, the Company applied to the Financial Conduct Authority to register as its own Alternative Investment Fund Manager and confirmation of the registration was received on 14 April 2014. The Company is required to make an annual report, which sets out aggregate investments made, principal exposures, liquidity and risk management.
Annual General Meeting
The Annual General Meeting will be held on Thursday, 16 July 2015. I very much hope that you will be able to come. After the formal business our Investment Managers will make a presentation. At the Annual General Meeting, a resolution will be proposed to extend the life of the Company until 2021 in order to preserve the ability of the company to conduct Top Up offers in the future.
The stockmarket has reacted positively to the news of a Conservative majority following the recent General Election although there are still international concerns that persist, particularly around the timing and outcome of a referendum on our European membership. However, economic activity should benefit from monetary stimulus in Europe and lower oil prices as well as from the return of real wage rises here at home. We are therefore optimistic that that the UK economy can show good growth in 2015.
A recovery in investor sentiment should help to increase the valuation of the portfolio as well as encouraging new companies to join AIM. In March, the Budget proposed some adjustments to VCT investment rules, which the industry is discussing with HMRC and the Treasury at present. We expect this to be clarified by the end of the summer. Despite this, we are still seeing a pipeline of potential flotations and other fundraisings on AIM and are optimistic that there will be suitable opportunities to deploy the new capital of around £17 million, raised in the current offer, into qualifying investments over the next year or two. Meanwhile, your Fund Managers will continue to invest a proportion of the cash into non-qualifying investments.
Roger Smith
Acting Chairman
3 June 2015
Strategic Report
The Directors are required by the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 to include a Strategic Report to Shareholders.
The following sections form part of the Strategic Report:
- Our Strategy
- Investment Manager's Review
- Business Review
The purpose of the report is to provide Shareholders with sufficient information to enable them to assess the extent to which the Directors have performed their legal duty to promote the success of the Company in accordance with section 172 of the Companies Act.
Our Strategy
The Company's Objective
The objective of the Company is to invest in a broad range of predominantly AIM-quoted companies in order to generate income and long-term capital growth. Investments are made selectively across a range of sectors in companies that have the potential to grow and enhance their value.
Investment Policy
The Company's investment policy has been designed to enable it to comply with the VCT qualifying conditions. The Board intends that the long-term disposition of the Company's assets will be not less than 80 per cent in a portfolio of qualifying AIM, ISDX Growth Market traded investments or unquoted companies where the management view an initial public offering (IPO) on AIM or the ISDX Growth Market is a short to medium term objective. Now that the qualifying target has been achieved the Board intends that approximately 20 per cent of its funds will be invested in non-qualifying investments generally comprising other AIM companies, gilts, floating rate securities and short-term money market deposits with, or issued by, major companies and institutions with a minimum Moody's long term debt rating of 'A'. A proportion of the 20 per cent could be invested in an authorised UK smaller company fund managed by Octopus or direct in equity investments and bonds. This 20 per cent will provide a reserve of liquidity which should maximise the Company's flexibility as to the timing of investment acquisitions and disposals, dividend payments and share buybacks.
Risk is spread by investing in a number of different businesses across a range of industry sectors using a mixture of securities. The maximum amount invested in any one company is limited to the amount permitted pursuant to VCT legislation in a fiscal year and no more than 15 per cent of the Company's assets, at cost, will be invested in the same company. The value of an individual investment is expected to increase over time as a result of trading progress and a continuous assessment is made of its suitability for sale. However, shareholders should be aware that the Company's qualifying investments are held with a view to long-term capital growth as well as income and will often have limited marketability; as a result it is possible that individual holdings may grow in value to the point where they represent a significantly higher proportion of total assets prior to a realisation opportunity being available.
The Company's Articles permit borrowings of amounts up to 10 per cent of the sum equal to the aggregate of the amount paid up on the allotted or issued share capital of the Company and the amount standing to the credit of the capital and revenue reserves of the Company (whether or not distributable) after adding thereto or deducting therefrom any balance to the credit or debit of the profit and loss account. However, investments will normally be made using the Company's equity shareholders' funds and it is not intended that the Company will take on any borrowings.
No material changes may be made to the Company's investment policy described above without the prior approval of shareholders by the passing of an Ordinary Resolution. The Directors will continually monitor the investment process and ensure compliance with the investment policy.
Future prospects
The Company's performance record reflects the success of the strategy set out above and has allowed the Company to maintain the dividend payments to shareholders in line with the Dividend Policy. The Board believes the Company's business model will enable it to continue to deliver the targeted regular tax-free annual dividends referred to in the Acting Chairman's statement. The Outlook statements in both the Acting Chairman's statement and the Investment Manager's Review respectively provides further comments on the future prospects of the Company.
On behalf of the Board
Roger Smith
Acting Chairman
3 June 2015
Investment Manager's Review
Introduction
At the interim stage we reported that the stock market had become a more difficult place after an exuberant six months leading up to February 2014. This more cautious tone persisted for the remainder of the year, with the result that the NAV total return remained flat in the second half of the year and failed to make up any of the losses of the first half. Share prices of earlier stage companies needing cash to fulfil growth plans were particularly badly affected and we talk about some examples in the portfolio later on in this report. More established and profitable companies saw their share prices advance despite market conditions and these contributed positively to the performance of the NAV in the year.
More encouragingly AIM once again raised more money for companies than the previous year and although prices became heady for a while in 2014, they have now settled down to what we consider to be more realistic levels and we are told that the pipeline of new issues for 2015 remains strong.
There are signs that takeover activity, which had been at an all-time low in 2013, has begun to return to the market. We saw a bid for Advanced Computer Software Group, the largest holding in the portfolio, in December which achieved a total gain from the investment for the Company of £3.7 million and has prompted the Board to pay the special dividend mentioned in the Acting Chairman's statement. We continue to balance the portfolio between existing maturing investments and the new, younger ones, which we make with the new funds raised.
The Alternative Investment Market
The year to 28 February 2015 was much more challenging than the previous twelve months which had seen record returns for smaller company investors. The market paused for breath after a sustained rise and began to focus more closely on some of the economic and political issues which remain today in both the international and domestic arenas. As far as AIM was concerned the most important of these was the collapse in the oil price to below $50 a barrel by November and the dismal performance of the AIM Index in 2014 was largely accounted for by an associated fall in resource stocks. AIM fell by 17% in the 2014 calendar year and Professors Dimson and Marsh concluded, in compiling the Numis Smaller Companies Index, that this fall would have been 7% without the effect of resource and oil stocks. The other negative impact was from a handful of large index constituents such as Quindell and ASOS which had a disproportionate effect in the year. AIM has some large constituents at the top of the Index which increases its volatility and are not relevant for your Company.
However, 2014 was not all bad news for AIM as it remained firmly open for fundraising by companies, particularly for new issues seeking to tap public markets for the first time. You will see from the bar chart below that activity was particularly strong in the first half of the year when companies were being floated on high multiples. Reality set in at the end of the second quarter when high prices for new issues became harder for companies to achieve, but the flow of secondary issues continued, with many of these being VCT qualifying. The ability of AIM to attract a range of new issues and to raise further funds for small growing companies is its most important characteristic as far as the VCT is concerned. There were moments in the first half of 2014 when valuations of new issues became too high to be attractive, but because this Company has well established existing holdings, it did not need to invest in these and could afford to wait for valuations to settle down later on in the year.
Performance
At the interim stage we reported a fall in the NAV total return of 7.7% and talked about a market largely unable to make its mind up about what it wanted to do where smaller company shares struggled to perform. Disappointingly this continued to be the case in the second half of the year with the result that the NAV ended the year at the same level if the 2.5p dividend paid in the second half is added back. This compares with a total return for the FTSE SmallCap Index of -3.4% and for AIM of -19%. The FTSE All Share Index performed better in the period, rising by 5.6% on the same basis. The period from September to November was particularly challenging for smaller company shares, as factors as diverse as the Ukrainian situation and the problems of Greek debt in the international arena and the Scottish Referendum in the domestic arena and a dramatic slide in the oil price removed the appetite for risk and led to a more general underperformance of smaller company shares.
Within the portfolio it was the older, more established and already profitable companies that tended to perform best in these market conditions, with a number of the not yet profitable earlier stage companies seeing their share prices suffer. Two holdings which stand out for their negative contributions in the year under review are WANdisco and Mycelx, both of which had performed extremely well in the previous year when market conditions were different.
WANdisco floated in 2011 at 180p and its share price made rapid gains as the market became excited by its technology enabling simultaneous access, use and editing of the same computer code as well as its newer 'big data' product, which protects networks from failure. Having taken early profits in the shares we decided to keep a qualifying holding in the company, which has interesting partners in the 'big data' world and some very large international customers, who are expected to drive significant revenues in time. Until those revenues start to come through the shares are vulnerable, particularly at moments when the company is perceived to need cash. It announced in December that it had raised $25 million giving it time to demonstrate that new contracts will indeed deliver revenues. We have held onto our remaining shares.
Mycelx was the other company, whose shares saw a reversal in fortunes, ending 2014 in fundraising mode and with its shares below the original issue price. It raised $12 million in December and we have added to our holding with some non-qualifying shares. It has a strong pipeline of significant contracts as well as some smaller ones, but is suffering from having disappointed market expectations in 2014 and, with the oil price having fallen as far as $50 a barrel, forecasts have also been cut for 2015 and beyond. Many of these delayed contracts are with oil companies, but the need for an easy to deploy mechanism to clean hydrocarbons out of waste water to meet ever more stringent environmental standards, remains. Revenues are still significantly higher than they were at the time the company floated and we expect the delayed contracts to start to arrive once the hiatus caused by the oil price collapse has subsided.
On the positive side some of the more established holdings in the portfolio enjoyed strong share price gains in the year and almost made up for the poor performers. Advanced Computer Software's shares responded to a series of upgrades to forecasts and have since strengthened further as the result of a bid for the company at 140p a share. The management have guided it from being a small software company in 2008 to a substantial supplier of software and computer services to both the public and private sectors today. We first invested at 17p and have taken profits in the shares along the way. Another established qualifying holding that has done very well in the period is Breedon Aggregates where upgrades to forecasts have resulted from a slow improvement in market conditions combined with management actions to increase margins. Among the smaller qualifying holdings Cambridge Cognition improved its profitability under new management and saw its share price recover to above its issue price. Netcall and Quixant both performed well and Nasstar responded well to news of strong trading. Nektan floated at a premium to our investment cost and we have supported the company in a recent fundraising, which is designed to give the Group the necessary funds to expand in Europe and the US. It has signed a series of contracts although it has yet to generate any significant revenues from them.
The non-qualifying element of the equity portfolio came into its own in the year as our strategy of investing in larger more liquid, profitable companies to counterbalance new earlier stage qualifying holdings paid off. Emis, Skyepharma, SQS, Restore and Goals Soccer Centres all did well.
Portfolio Activity
There was a steady flow of qualifying investment opportunities throughout the year although the new issues market was a little more volatile with price expectations very high at the end of the first quarter. We were able to stand back from the market because the Company remained well over its 70% qualifying threshold for HMRC purposes. Prices have been more realistic towards the end of 2014 and there is no sign that they are becoming inflated again since the period end.
In addition to the two qualifying investments which your Company made in the first half of the year, Learning Technologies and Ergomed, which were discussed at the time of the interim, there were six further qualifying investments made in the second half. Three of these were follow on investments into Proxama, Access Intelligence and Nektan and the other three were new holdings, being Microsaic, Midatech and Ideagen. In total £3.2 million was invested into qualifying holdings in the year. Microsaic is an existing AIM company making diagnostic equipment. It is not yet profitable although it has some very exciting technology and is beginning to grow its sales. Access Intelligence, Proxama and Nektan were all raising further funds to develop their businesses and Nektan combined this with a float in October. Midatech is a newly floated pharmaceutical company which is not yet profitable and Ideagen is a growing, profitable and already listed AIM software company.
In addition we added £2.1 million of non-qualifying investments in the year. We added to the holdings in Brady and GB Group and took a new holding in Skyephama. The latter performed well and we sold part of the holding at a profit.
During the year we made disposals of £3.85 million realising an overall profit over book cost of £1.74 million. We sold the non-qualifying holding in EMIS in its entirety and took significant profits in the holding in Matchtech which had become a large non-qualifying holding after two years of good performance. We also took profits in Sinclair IS Pharma, Skyepharma and Plus 500. In the qualifying portfolio we top-sliced the holdings in Advanced Computer Software and Breedon Aggregates to prevent them becoming too large a proportion of the portfolio and took some profits in Quixant, Omega Diagnostics and Proxama after the shares performed well.
Outlook
There are signs that investor confidence may be recovering after the General Election. In time this improvement in sentiment should filter down to smaller companies, which are still valued at a discount to their larger peers. The UK remains a growing economy and many of the business service companies in the portfolio should also start to benefit from increased consumer demand as real wages start to rise. Although we have been taking profits in some of the more mature holdings, the equity portion of the portfolio is still more than 85% by value invested in profitable companies and more than 60% in companies paying a dividend as at the end of April.
Better sentiment also suggests that capital raisings and flotations will remain a significant feature of AIM in the year when the market celebrates its twentieth birthday. The takeover of Advanced Computer Software Group and the successful fundraising has increased the cash weighting in the portfolio to around 30% in the short term. We are conscious that this causes a drag on performance so a proportion will be invested in non-qualifying investments over the coming months as we find situations that fit our criteria. However, our priority will remain investing our cash into qualifying investments provided that both business plans and valuations offer the prospect of good positive returns for shareholders. We would hope to have made several new qualifying investments by the time that the interim report is sent to you in October.
The AIM Team
Octopus Investments Limited
3 June 2015
Investment Portfolio
| Investments | Sector | Cost as at 28 February 2015 (£'000) | Cumulative change in fair value (£'000) | Fair Value at 28 February 2015 (£'000) | Movement in year ('£000) | % equity held by AIM VCT plc | % equity held by all funds managed by Octopus |
| Advanced Comp Software plc | Software | 577 | 3,470 | 4,047 | 428 | 0.6% | 1.0% |
| Breedon Aggregates Limited | Construction & Building | 859 | 2,557 | 3,416 | 627 | 0.7% | 1.2% |
| Staffline Recruitment plc | Support Services | 341 | 2,966 | 3,307 | 465 | 1.4% | 10.4% |
| Quixant plc | Technology Hardware | 697 | 1,452 | 2,149 | (45) | 2.3% | 6.5% |
| Brooks MacDonald Group plc | Finance | 744 | 1,398 | 2,142 | (215) | 1.1% | 5.9% |
| Netcall plc | Telecommunication Services | 437 | 1,699 | 2,136 | 392 | 2.6% | 4.5% |
| Tasty plc | Leisure & Hotels | 621 | 1,432 | 2,053 | 417 | 2.8% | 5.2% |
| Mattioli Woods plc | Finance | 528 | 1,479 | 2,007 | 297 | 1.9% | 3.0% |
| Idox plc | Software | 353 | 1,547 | 1,900 | 0 | 1.3% | 3.8% |
| GB Group plc | Support Services | 714 | 1,186 | 1,900 | 302 | 1.0% | 6.7% |
| TLA Worldwide plc | Media | 807 | 928 | 1,735 | 282 | 3.2% | 7.0% |
| Vertu Motors plc | General Retailers | 1,265 | 295 | 1,560 | (120) | 0.8% | 6.6% |
| EKF Diagnostics plc | Health | 931 | 384 | 1,315 | (678) | 1.3% | 3.9% |
| Brady plc | Software | 947 | 332 | 1,279 | 312 | 1.8% | 3.1% |
| Nektan plc | Software | 845 | 374 | 1,219 | 254 | 3.0% | 14.3% |
| Ergomed plc | Pharmaceuticals & Biotech | 1,200 | 15 | 1,215 | 15 | 2.6% | 9.4% |
| RWS Holdings plc | Support Services | 367 | 758 | 1,125 | (69) | 0.3% | 5.3% |
| Cello Group plc | Media | 895 | 195 | 1,090 | 97 | 1.4% | 6.4% |
| Animalcare Group plc | Food Producers & Processors | 306 | 740 | 1,046 | 209 | 2.6% | 6.8% |
| Escher Group Holdings plc | Software | 1,003 | 29 | 1,032 | (825) | 3.2% | 5.5% |
| MyCelx Technologies plc | Oil Equipment | 1,470 | (456) | 1,014 | (1,575) | 5.3% | 12.3% |
| Restore Group plc | Support Services | 467 | 527 | 994 | 371 | 0.4% | 8.9% |
| DP Poland plc | Leisure & Hotels | 546 | 337 | 883 | 319 | 3.8% | 6.4% |
| Judges Scientific plc | Electronic & Electrical | 314 | 543 | 857 | (280) | 0.8% | 1.4% |
| Bond International plc | Software | 354 | 479 | 833 | 91 | 2.2% | 3.3% |
| Gooch & Housego plc | Electronic & Electrical | 489 | 333 | 822 | (41) | 0.5% | 8.4% |
| Nasstar plc | Software | 480 | 336 | 816 | 72 | 2.6% | 7.5% |
| Skyepharma plc | Pharmaceuticals & Biotech | 596 | 215 | 811 | 215 | 0.3% | 0.7% |
| SQS Software plc | Software | 291 | 461 | 752 | 3 | 0.4% | 10.8% |
| Craneware plc | Software | 183 | 528 | 711 | (90) | 0.5% | 1.8% |
| Fusionex International plc | Software | 282 | 407 | 689 | (531) | 0.4% | 1.5% |
| Midatech Pharma plc | Pharmaceuticals & Biotech | 600 | 56 | 656 | 56 | 0.8% | 3.6% |
| Adept Telecom plc | Telecommunication Services | 600 | 17 | 617 | 103 | 1.9% | 3.8% |
| Cambridge Cognition Group plc | Health | 600 | (26) | 574 | 77 | 5.1% | 18.0% |
| Sinclair Pharma plc | Pharmaceuticals & Biotech | 765 | (200) | 565 | 65 | 0.4% | 0.7% |
| Proxama plc | Software | 763 | (214) | 549 | (1,094) | 3.0% | 12.1% |
| Mears Group plc | Support Services | 139 | 398 | 537 | (81) | 0.1% | 0.1% |
| WANdisco plc | Software | 241 | 292 | 533 | (1,219) | 0.5% | 1.9% |
| Omega Diagnostics plc | Health | 464 | 61 | 525 | (659) | 3.5% | 6.1% |
| Goals Soccer Centres plc | Leisure & Hotels | 205 | 262 | 467 | 36 | 0.3% | 2.6% |
| Matchtech Group plc | Support Services | 148 | 297 | 445 | (101) | 0.3% | 10.9% |
| Plus 500 Limited | Finance | 84 | 359 | 443 | 73 | 0.1% | 0.2% |
| Plastics Capital plc | Engineering & Machinery | 400 | 40 | 440 | (48) | 1.1% | 11.9% |
| Ideagen plc | Software | 360 | 37 | 397 | 37 | 0.6% | 6.2% |
| Learning Technologies Group plc | Support Services | 481 | (93) | 388 | 88 | 0.5% | 0.9% |
| Futura Medical plc | Pharmaceuticals & Biotech | 613 | (242) | 371 | (263) | 1.1% | 5.6% |
| Rated People Limited * | Software | 354 | 0 | 354 | 0 | 1.4% | 4.1% |
| Microsaic plc | Engineering & Machinery | 325 | 12 | 337 | 12 | 1.2% | 8.4% |
| Access Intelligence plc | Software | 495 | (188) | 307 | 0 | 3.2% | 9.6% |
| Iomart Group plc | Software | 268 | 37 | 305 | 37 | 0.1% | 5.7% |
| Altitude Group plc | Media | 600 | (333) | 267 | 83 | 3.9% | 4.5% |
| Vianet Group plc | Support Services | 359 | (119) | 240 | 21 | 1.1% | 4.7% |
| Chime Communications plc | Media | 194 | 45 | 239 | (76) | 0.1% | 0.3% |
| Corac plc | Engineering & Machinery | 648 | (435) | 213 | (412) | 1.3% | 6.4% |
| Lombard Medical Technologies plc | Health | 408 | (202) | 206 | (233) | 0.4% | 0.7% |
| Tangent Communications plc | Support Services | 578 | (405) | 173 | (347) | 2.1% | 4.7% |
| Clean Air Power Limited | Industrial | 485 | (324) | 161 | (305) | 2.0% | 9.9% |
| Enteq Upstream plc | Oil Services | 1,032 | (882) | 150 | (315) | 1.7% | 3.8% |
| Hasgrove plc * | Media | 88 | (9) | 79 | 0 | 2.2% | 13.0% |
| Enables IT Group plc | Software | 300 | (225) | 75 | (175) | 3.1% | 11.2% |
| Tanfield Group plc | Engineering & Machinery | 226 | (165) | 61 | 9 | 0.2% | 0.6% |
| Woodspeen plc * | Support Services | 350 | (292) | 58 | (58) | 5.4% | 11.2% |
| Dods Group plc | Media | 203 | (148) | 55 | 32 | 0.2% | 0.2% |
| Work Group plc | Support Services | 943 | (896) | 47 | (47) | 4.1% | 6.1% |
| Synarbor plc * | Support Services | 15 | 7 | 22 | 0 | 0.8% | 0.8% |
| Total investments | 34,243 | 23,468 | 57,711 | (4,005) | |||
| Money market funds | 454 | ||||||
| Total fixed asset investments and money market funds | 58,165 | ||||||
| Cash at bank | 14,992 | ||||||
| Debtors less creditors | (545) | ||||||
| Total net assets | 72,612 |
*Unquoted investments classified as level 3.
Top ten holdings
Listed below are the ten largest investments, valued at bid price, as at 28 February 2015:
Advanced Computer Software Plc
Advanced Computer Software Plc provides software to the Healthcare Sector and other commercial markets.
Initial investment date: July 2008
Cost: £577,000
Valuation: £4,047,000
Equity held: 0.6 per cent
Last audited accounts: 28 February 2014
Revenue: £203.2 million
Profit before tax: £12.1 million
Net assets: £167.8 million
Breedon Aggregates Limited
Breedon Aggregates supplies a diverse range of products to the construction and building sectors from a number of quarries and other sites in the Midlands and Scotland.
Initial investment date: August 2010
Cost: £859,000
Valuation: £3,416,000
Equity held: 0.7 per cent
Last audited accounts: 31 December 2014
Revenue: £269.7 million
Profit before tax: £21.4 million
Net assets: £167.2 million
Staffline Recruitment Plc
Staffline is a provider of labour to employers.
Initial investment date: December 2004
Cost: £341,000
Valuation: £3,307,000
Equity held: 1.4 per cent
Last audited accounts: 31 December 2014
Revenue: £503.2 million
Profit before tax: £18.6 million
Net assets: £66.6 million
Quixant Plc
Quixant designs and manufactures advanced PC based computer systems for the gaming industry.
Initial investment date: September 2013
Cost: £697,000
Valuation: £2,149,000
Equity held: 2.3 per cent
Last audited accounts: 31 December 2014
Revenue: $31.9 million
Profit before tax: $7.1 million
Net assets: $20.5 million
Brooks MacDonald Group Plc
Brooks MacDonald is a provider of asset management and financial consulting services with a particular emphasis on the pensions market.
Initial investment date: March 2005
Cost: £746,000
Valuation: £2,142,000
Equity held: 1.1 per cent
Last audited accounts: 30 June 2014
Revenue: £69.1 million
Profit before tax: £13.3 million
Net assets: £67.5 million
Netcall Plc
Netcall provides software and telephony services particularly to call centres and public sector bodies to manage an efficient process.
Initial investment date:
Cost: £437,000
Valuation: £2,136,000
Equity held: 2.6 per cent
Last audited accounts: 30 June 2014
Revenue: £16.9 million
Profit before tax: £2.2 million
Net assets: £20.2 million
Tasty Plc
Tasty is the operator of Wildwood and Dim T restaurants.
Initial investment date: May 2007
Cost: £621,000
Valuation: £2,053,000
Equity held: 2.8 per cent
Last audited accounts: 28 December 2014
Revenue: £29.7 million
Profit before tax: £2.6 million
Net assets: £19.6 million
Mattioli Woods Plc
Mattioli Woods is a financial advisor and investment manager and administrator, particularly of pension funds.
Initial investment date: August 2011
Cost: £528,000
Valuation: £2,007,000
Equity held: 1.9 per cent
Last audited accounts: 31 May 2014
Revenue: £29.4 million
Profit before tax: £5.1 million
Net assets: £35.5 million
Idox Plc
Idox is a leading software and information management solutions provider, mainly to the public and engineering sectors.
Initial investment date: May 2008
Cost: £353,000
Valuation: £1,900,000
Equity held: 1.3 per cent
Last audited accounts: 31 October 2014
Revenue: £61.0 million
Profit before tax: £7.6 million
Net assets: £48.6 million
GB Group Plc
GB Group is specialises in ID verification to help customers avoid ID theft and fraud and to verify the age and circumstances of both customers and employees for regulatory and commercial reasons.
Initial investment date: May 2012
Cost: £714,000
Valuation: £1,900,000
Equity held: 1.0 per cent
Last audited accounts: 31 March 2014
Revenue: £41.8 million
Profit before tax: £4.0 million
Net assets: £34.5 million
Directors' Responsibilities Statement
The Directors are responsible for preparing the Strategic Report, Directors' Report, Directors' Remuneration Report and the financial statements in accordance with applicable law and regulations. They are also responsible for ensuring that the annual report includes information required by the Listing Rules of the Financial Conduct Authority.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom accounting standards and applicable 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 of the Company and of the 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 judgments 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, 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 confirm that:
- so far as each Director is aware, there is no relevant audit information of which the Company's auditor is unaware; and
- the Directors have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.
The Directors are responsible for preparing the annual report in accordance with applicable law and regulations. The Directors consider the annual report and the financial statements, taken as a whole, provides the information necessary to assess the Company's performance, business model and strategy and is fair, balanced and understandable.
The Directors are responsible for ensuring the annual report and the financial statements are made available on the Company's website. Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.
The Directors confirm, to the best of their knowledge:
- that the financial statements, prepared in accordance with UK Generally Accepted Accounting Practice, (United Kingdom Standard and applicable laws), give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company taken as a whole; and
- the annual report, including the strategic report, includes a fair review of the development and performance of the business and the financial position of the Company taken as a whole, together with a description of the principal risks and uncertainties that it faces.
On Behalf of the Board
Roger Smith
Acting Chairman
3 June 2015
| Income Statement | |||||||
| Year to 28 February 2015 | Year to 28 February 2014 | ||||||
| Revenue | Capital | Total | Revenue | Capital | Total | ||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
| (Loss)/gain on disposal of fixed asset investments | - | (298) | (298) | - | 882 | 882 | |
| (Loss)/gain on valuation of fixed asset investments | - | (4,005) | (4,005) | - | 18,919 | 18,919 | |
| Investment Income | 703 | - | 703 | 584 | - | 584 | |
| Investment management fees | (302) | (906) | (1,208) | (243) | (730) | (973) | |
| Other expenses | (418) | - | (418) | (264) | - | (264) | |
| (Loss)/profit on ordinary activities before tax | (17) | (5,209) | (5,226) | 77 | 19,071 | 19,148 | |
| Taxation on (loss)/profit on ordinary activities | - | - | - | - | - | - | |
| (Loss)/profit on ordinary activities after tax | (17) | (5,209) | (5,226) | 77 | 19,071 | 19,148 | |
| (Loss)/earnings per share - basic and diluted | 0.0p | (8.8p) | (8.8p) | 0.1p | 36.8p | 36.9p | |
- the 'Total' column of this statement represents the statutory Profit and Loss account 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
The Company has no recognised gains or losses other than the results for the period as set out above. Accordingly a statement of recognised gains and losses is not required.
Other than revaluation movements arising on investments held at fair value through the profit and loss account, there were no differences between the profit/(loss) as stated above and at historical cost.
Balance sheet
| As at 28 February 2015 | As at 28 February 2014 | ||||
| £'000 | £'000 | £'000 | £'000 | ||
| Fixed asset investments* | 57,711 | 60,568 | |||
| Current assets: | |||||
| Investments* | 454 | 453 | |||
| Debtors | 203 | 254 | |||
| Cash at bank | 14,992 | 8,629 | |||
| 15,649 | 9,336 | ||||
| Creditors: amounts falling due within one year | (748) | (174) | |||
| Net current assets | 14,901 | 9,162 | |||
| Net assets | 72,612 | 69,730 | |||
| Called up equity share capital | 656 | 547 | |||
| Shares to be issued | 319 | 1,327 | |||
| Share premium | 13,951 | 873 | |||
| Capital redemption reserve | 9 | 2 | |||
| Special distributable reserve | 63,684 | 64,455 | |||
| Capital reserve realised | (29,810) | (27,338) | |||
| Capital reserve unrealised | 23,468 | 29,512 | |||
| Revenue reserve | 335 | 352 | |||
| Total equity shareholders' funds | 72,612 | 69,730 | |||
| Net asset value per share - basic and diluted | 110.2p | 125.2p | |||
* held at fair value through profit & loss (FVTPL)
The statements were approved by the Directors and authorised for issue on 3 June 2015 and are signed on their behalf by:
Roger Smith
Acting Chairman
Company number: 03477519
Reconciliation of movement in Shareholders' Funds
| Year to 28 February 2015 | Year to 28 February 2014 | |
| £'000 | £'000 | |
| Shareholders' funds at start of year | 69,730 | 44,123 |
| (Loss)/profit on ordinary activities after tax | (5,226) | 19,148 |
| Share capital bought back | (771) | (1,203) |
| Issue of shares (net of share issue costs) | 13,194 | 9,371 |
| (Decrease)/increase in shares to be issued | (1,008) | 925 |
| Dividends paid | (3,307) | (2,634) |
| Shareholders' funds at end of year | 72,612 | 69,730 |
Cash flow statement
| Year to 28 February 2015 £'000 | Year to 28 February 2014 £'000 | |
| Net Cash outflow from operating activities | (298) | (844) |
| Taxation | - | - |
| Financial investment: | ||
| Purchase of fixed asset investments | (5,291) | (6,728) |
| Sale of fixed asset investments | 3,845 | 3,474 |
| Net cash outflow from investing activities | (1,446) | (3,254) |
| Equity dividends paid | (3,307) | (2,634) |
| Management of liquid resources: | ||
| Purchase of current asset investments | (1) | (5,914) |
| Sale of current asset investments | - | 11,260 |
| Net cash (outflow)/inflow from management of liquid resources | (1) | 5,346 |
| Net cash outflow before financing | (5,052) | (1,386) |
| Financing | ||
| Proceeds from issue of shares (net of costs of £639,000) | 13,194 | 9,371 |
| (Decrease)/increase in shares to be issued | (1,008) | 925 |
| Purchase of own shares | (771) | (1,122) |
| Net cash inflow from financing activities | 11,415 | 9,174 |
| Increase in cash | 6,363 | 7,788 |
| Reconciliation of Profit before Taxation to Cash Flow from Operating Activities | |||
| Year to 28 February 2015 | Year to 28 February 2014 | ||
| £'000 | £'000 | ||
| (Loss)/profit on ordinary activities before tax | (5,226) | 19,148 | |
| Decrease/(increase) in debtors | 51 | (183) | |
| Increase/(decrease) in creditors | 574 | (8) | |
| Loss/(gain) on disposal of fixed asset investments | 298 | (882) | |
| Loss/(gain) on valuation of fixed asset investments | 4,005 | (18,919) | |
| Outflow from operating activities | (298) | (844) | |
| Reconciliation of Net Cash Flow to Movement in Net Funds | |||
| Year to 28 February 2015 | Year to 28 February 2014 | ||
| £'000 | £'000 | ||
| Increase in cash at bank | 6,363 | 7,788 | |
| Movement in cash equivalent securities | 1 | (5,346) | |
| Opening net funds | 9,082 | 6,640 | |
| Net funds at 28 February | 15,446 | 9,082 | |
Analysis of changes in Net Funds:
| As at 1 March 2014 | Cash Flows | As at 28 February 2015 | |
| Cash at Bank | 8,629 | 6,363 | 14,992 |
| Money market funds | 453 | 1 | 454 |
| Net funds | 9,082 | 6,364 | 15,446 |
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Octopus AIM VCT PLC via Globenewswire
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