CORRECTION to the RNS released on 18 September 2020, 10:05 a.m. : The interim dividend payment date stated in the Chairman's statement was incorrect, it should have been "will be paid to shareholders on 15 January 2021" and not the incorrect date of 7 January 2021. The rest of the announcement remains unchanged as corrected below.
Octopus Apollo VCT Plc
Half-Yearly Results
18 September 2020
Octopus Apollo VCT plc, managed by Octopus Investments Limited, today announces its unaudited half-yearly results for the six months ended 31 July 2020.
These results were approved by the Board of Directors on 18 September 2020.
You may, in due course, view the Half-Yearly report in full at www.octopusinvestments.com. All other statutory information can also be found there.
Financial Headlines
Six months to
31 July 2020 |
Six months to 31 July 2019 |
Year to 31 January 2020 |
|
Net assets (£’000s) | 141,330 | 122,093 | 132,373 |
Return on ordinary activities after tax (£’000s) | 1,891 | 1,433 | 4,144 |
Net asset value per share (‘NAV’) | 46.1 | 46.2 | 45.7 |
Cumulative dividends paid since launch (p per share) | 74.1 | 72.6 | 74.1 |
NAV plus cumulative dividends paid (p) | 120.2 | 118.8 | 119.8 |
Total return %* | 0.9 | 1.3 | 3.4 |
Ordinary dividend paid in period (p) ** | - | 1.5 | 3.0 |
Ordinary dividend declared in the period (p) *** | 1.2 | 1.5 | 1.1 |
*Total return is calculated as (movement in NAV + dividends paid in the period) divided by the NAV at the beginning of the period.
**A dividend of 1.1p was paid on 7 September 2020. See note 8 for information on Post Balance Sheet Events.
***The interim dividend will be paid on 15 January 2021 to shareholders on the register at 29 December 2020.
Chairman’s Statement
I am pleased to present the half-yearly report of Octopus Apollo VCT for the six months ended 31 July 2020.
The Total Return increased by 0.9% during the six months. In keeping with the regular dividend policy, the Board has declared an interim dividend of 1.2p which will be paid to shareholders on 15 January 2021.
The six months to 31 July 2020 have been a volatile and uncertain period for the economy and for businesses operating within this environment. During this period, the Board has kept the impact of the pandemic on the Company closely under review and has incorporated the effects and response to coronavirus as part of our regular Board agenda. On 2 April 2020, due to the coronavirus pandemic, we reviewed the portfolio since the year ended 31 January 2020 and this led to us announce a reduction in the NAV per share from 45.7p to 42.9p. Since then, the coronavirus pandemic along with the lockdown continued to impose great uncertainty for UK companies. Although there have been a range of impacts on the portfolio companies over the last months, the overall portfolio has shown great resilience as a result of the low exposure to sectors that have been severely impacted (e.g. leisure and travel) and a strong focus on technology companies.
In the six month period, the Company invested £2.7 million in follow-on funding rounds into two existing investments, with one further investment made after the end of the period which will be reflected in the full year report. The overall performance in the period ultimately delivered modest growth, demonstrating the robustness of the portfolio against a backdrop of unprecedented uncertainty. Although the climate remains uncertain, I remain optimistic for the future given the composition of the portfolio and recent performance.
Murray Steele
Chairman
18 September 2020
Interim Management Report
Performance
In the six months under review the NAV Total Return has increased by 0.9%. This performance is mainly attributable to positive fair value movements in particular in the newer growth capital part of the portfolio, offset by adverse movements in the fair value of a number of legacy assets in the portfolio, in particular energy-generating assets.
Portfolio Activity
In the period under review the value of the portfolio has increased by £3.3 million, excluding additions. This increase is mainly driven by Veeqo Limited (£2.2 million valuation increase, N2JB Limited (trading as Natterbox) (£2.2 million valuation increase) and Fiscaltec Group Limited (£1.4 million valuation increase) partially offset by valuation decreases of £2.8 million on the Reserve Power portfolio (Kabardin Limited, Valloire Limited and Red Poll Power Limited) and £3.5 million for Rotolight Group Limited. There were other smaller valuation adjustments across the portfolio which in aggregate contributed to an overall increase in the value of the portfolio.
During the period £2.7 million was invested into the following follow-on investments:
• N2JB Limited (trading as Natterbox) £2.5 million – a London-based provider of business to business cloud telephony services that are uniquely integrated into Customer Resource Management (“CRM”) software platforms; and
• Trafi Limited £0.2 million – a provider of Mobility-as-a-Service to residents acting as an alternative to private hire vehicles.
Transactions with Manager
Details of amounts paid to the Manager are disclosed in note 7 to the financial statements.
Share Buybacks
The Company has continued to buy back shares as required. In the six months to July 2020, the Company bought back 4,637,730 Ordinary shares for total consideration of £1.9 million.
Dividend and Dividend Policy
It is the Board’s policy to maintain a regular dividend flow where possible in order to take advantage of the tax free distributions a VCT is able to provide.
The Board has declared an interim dividend of 1.2p per Ordinary share in respect of the period ended 31 July 2020. The dividend will be payable on 15 January 2021 to Ordinary shareholders on the register at 29 December 2020.
VCT Qualifying Status
PricewaterhouseCoopers LLP provides the Board and Investment Manager with advice concerning ongoing compliance with Her Majesty’s Revenue & Customs (‘HMRC’) rules and regulations concerning VCTs. The Board has been advised that the Company is in compliance with the conditions set by HMRC for maintaining approval as a VCT.
A key requirement is to ensure that at least 80% of the assets of the fund are in VCT qualifying investments. As at 31 July 2020, 90.3% of the portfolio, as measured by HMRC rules, was invested in VCT qualifying investments.
The Finance Act 2018 made a number of changes to VCT rules on qualifying holdings, with the main change being VCTs are now required to hold at least 80% of its investments in VCT qualifying holdings, up from 70%. This applies to accounting periods starting on or after 6 April 2019, so for Apollo these rules apply from 1st February 2020.
Principal Risks and Uncertainties
The principal risks and uncertainties are described in detail within the strategic report in the Company’s annual report for the year ended 31 January 2020.
Summary and Future Prospects
The political and economic environment continues to be very uncertain in the UK primarily as a result of the ongoing coronavirus pandemic. To date the impact on the portfolio has been limited as a result of the Investment Manager’s defensive approach to structuring investments and the focus on technology investments which should be more resilient to the lockdown measures which have been imposed. The investment team remains highly vigilant in carefully monitoring the situation and any potential impact, directly or indirectly, on the portfolio to ensure the safety and robustness of the underlying assets and, indeed, their employees.
The sub-portfolio of investments completed after the significant change in VCT rules in 2017 is performing strongly and now represents the largest component and driver of performance in the Company, at 52.8% of the total invested portfolio, which provides further optimism for the future. The investment team has primarily made follow-on investments during this period, but we have developed a strong pipeline of new VCT-qualifying investment opportunities that we anticipate being able to complete in the coming months.
Richard Court
Octopus Investments Limited
18 September 2020
Investment Portfolio
Top 10 Investments | Sector | Investment cost as at 31 July 2020 £’000 |
Total movement in fair value to 31 July 2020
£’000 |
Fair value as at 31 July 2020 £’000 |
Movement in fair value in period
£’000 |
% equity held by Apollo VCT | % equity held by all funds managed by Octopus |
Fixed asset investments | |||||||
Natterbox (N2JB Limited) | Technology | 10,490 | 6,451 | 16,941 | 2,155 | 9.0 | 9.0 |
Healthcare and Services Technology Limited | Healthcare | 7,186 | 2,355 | 9,541 | 1,045 | 10.0 | 10.0 |
Ubisecure Holdings Limited | Technology | 4,950 | 3,231 | 8,181 | 1,055 | 30.0 | 30.0 |
Simply Cook Limited | Consumer Products | 6,750 | 767 | 7,517 | 767 | 23.5 | 23.5 |
Countrywide Healthcare Services Holdings Limited | Healthcare | 2,675 | 3,871 | 6,546 | 1,189 | 20.7 | 20.7 |
Anglo European Group Limited | Manufacturing | 5,000 | 1,364 | 6,364 | (588) | 26.7 | 26.7 |
Veeqo Limited | Technology | 3,300 | 2,576 | 5,876 | 2,181 | 19.7 | 19.7 |
Fuse Limited | Technology | 5,000 | 387 | 5,387 | 219 | 0.0 | 0.0 |
One team Logic Limited | Technology | 3,200 | 1,314 | 4,514 | 1,136 | 15.5 | 15.5 |
Fiscaltec Limited | Technology | 3,000 | 1,500 | 4,500 | 1,404 | 13.5 | 13.5 |
Other* | Various | 52,623 | (17,500) | 35,123 | (7,256) | ||
Total investments | 104,174 | 6,316 | 110,490 | 3,307 | |||
Current asset investments | 25,659 | ||||||
Cash at bank | 3,656 | ||||||
Debtors less creditors | 1,525 | ||||||
Total net assets | 141,330 |
* Comprises 40 other investments: Acquire Your Business Limited, Angelico Solar Limited, Artesian Solutions Limited, Augean plc, Barrecore Limited, Behaviometrics AB, Bramante Solar Limited, British Country Inns plc, Canaletto Solar Limited, Cello Group plc, CurrencyFair Limited, Dyscova Limited, Ecrebo Limited, EKF Diagnostics Holdings plc, Ergomed plc, Eve Sleep plc, Hasgrove Limited, Kabardin Limited, Leonardo Solar Limited, Luther Pendragon Limited, Mi-Pay Group plc, Modigliani Solar Limited, Nektan plc, Origami Energy Limited, Oxifree Group Holding Limited, Pirlo Solar Limited, Red Poll Power Limited, Renalytix plc, Rotolight Group Limited, Secret Escapes Limited, Segura Systems Limited, Sourceable Limited (Swoon Editions), Superior Heat Limited, Tintoretto Solar Limited, Tiziano Solar Limited, Trafi Limited, Triumph Holdings Limited, Valloire Power Limited, Vertu Motors plc, Winnipeg Heat Limited.
Directors’ Responsibilities Statement
We confirm that to the best of our knowledge:
• the half-yearly financial statements have been prepared in accordance with the Financial Reporting Standard 104 “Interim Financial Reporting” issued by the Financial Reporting Council;
• the half-yearly financial statements give a true and fair view of the assets, liabilities, financial position, and profit or loss of the Company;
• the half-yearly report includes a fair review of the information required by the Financial Conduct Authority’s Disclosure and Transparency Rules, being:
• an indication of the important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements;
• a description of the principal risks and uncertainties for the remaining six months of the year; and
• a description of related party transactions that have taken place in the first six months of the current financial year, that may have materially affected the financial position or performance of the Company during that period and any changes in the related party transactions described in the last annual report that could do so.
On behalf of the Board
Murray Steele
Chairman
18 September 2020
Income Statement
Unaudited | Unaudited | Audited | |||||||
Six months to 31 July 2020 | Six months to 31 July 2019 | Year to 31 January 2020 | |||||||
Revenue £’000 |
Capital £’000 |
Total £’000 |
Revenue £’000 |
Capital £’000 |
Total £’000 |
Revenue £’000 |
Capital £’000 |
Total £’000 |
|
Realised gain on disposal of fixed asset investments | – | – | – | – | 6 | 6 | – | 4,872 | 4,872 |
Realised gain on disposal of current asset investments | – | – | – | _ | 46 | 46 | _ | 46 | 46 |
Change in fair value of fixed asset investments | – | 3,306 | 3,306 | – | 1,849 | 1,849 | – | 1,641 | 1,641 |
Change in fair value of current asset investments | – | 9 | 9 | – | 179 | 179 | – | 261 | 261 |
Investment income | 1,580 | – | 1,580 | 1,573 | – | 1,573 | 3,309 | – | 3,309 |
Investment management fees (see note 7) | (313) | (1,307) | (1,620) | (266) | (1,932) | (2,198) | (559) | (3,411) | (3,970) |
Other expenses | (1,384) | – | (1,384) | (22) | – | (22) | (2,015) | – | (2,015) |
Profit before tax | (117) | 2,008 | 1,891 | 1,285 | 148 | 1,433 | 735 | 3,409 | 4,144 |
Tax | – | – | – | – | – | – | – | – | – |
Profit after tax | (117) | 2,008 | 1,891 | 1,285 | 148 | 1,433 | 735 | 3,409 | 4,144 |
Earnings per share – basic and diluted | 0.0p | 0.6p | 0.6p | 0.5p | 0.1p | 0.6p | 0.3p | 1.3p | 1.6p |
• The ‘Total’ column of this statement is the profit and loss account of the Company; the supplementary revenue return and capital return columns have been prepared under guidance published by the Association of Investment Companies.
• All revenue and capital items in the above statement derive from continuing operations.
• The Company has no recognised gains or losses other than those disclosed in the income statement.
• The accompanying notes are an integral part of the half-yearly report.
Balance Sheet
Unaudited
As at 31 July 2020 |
Unaudited As at 31 July 2019 |
Audited As at 31 January 2020 |
||||
£’000 | £’000 | £’000 | £’000 | £’000 | £’000 | |
Fixed asset investments | 110,490 | 93,372 | 104,534 | |||
Current assets: | ||||||
Investments | 25,659 | 13,567 | 13,649 | |||
Debtors | 2,881 | 2,405 | 1,982 | |||
Cash at bank | 3,656 | 20,288 | 16,637 | |||
32,196 | 32,260 | 32,268 | ||||
Creditors: amounts falling due within one year | (1,356) | (7,539) | (4,429) | |||
Net current assets | 30,840 | 28,721 | 27,839 | |||
Net assets | 141,330 | 122,093 | 132,373 | |||
Share capital | 30,637 | 26,430 | 28,994 | |||
Share premium | 77,822 | 59,620 | 70,947 | |||
Special distributable reserve | 15,060 | 23,142 | 16,975 | |||
Capital redemption reserve | 5,509 | 4,465 | 5,046 | |||
Capital reserve realised | 4,407 | 4,691 | 5,714 | |||
Capital reserve unrealised | 8,012 | 2,460 | 4,697 | |||
Revenue reserve | (117) | 1,285 | – | |||
Total equity shareholders’ funds | 141,330 | 122,093 | 132,373 | |||
Net asset value per share | 46.1p | 46.2p | 45.7p |
The statements were approved by the Directors and authorised for issue on 18 September 2020 and are signed on their behalf by:
Murray Steele
Chairman
Company Number: 05840377
Statement of Changes in Equity
Share capital
£’000 |
Share premium
£’000 |
Special distributable reserves
£’000 |
Capital redemption reserve
£’000 |
Capital reserve realised
£’000 |
Capital reserve unrealised
£’000 |
Revenue reserve
£’000 |
Total
£’000 |
|||
As at 1 February 2020 | 28,994 | 70,947 | 16,975 | 5,046 | 5,714 | 4,697 | – | 132,373 | ||
Total comprehensive income for the period: | – | – | – | – | (1,307) | 3,315 | (117) | 1,891 | ||
Contributions by and distributions to owners: | ||||||||||
Repurchase and cancellation of own shares | (464) | – | (1,915) | 463 | – | – | – | (1,916) | ||
Issue of shares | 2,107 | 6,875 | – | – | – | – | – | 8,982 | ||
Dividends paid | – | – | – | – | – | – | – | – | ||
Total contributions by and distributions to owners | 1,643 | 6,875 | (1,915) | 463 | – | – | – | 7,066 | ||
Other movements: | ||||||||||
Prior period holding gains/(losses) now realised | – | – | – | – | – | – | - | – | ||
Total other movements | – | – | – | – | – | – | - | – | ||
As at 31 July 2020 | 30,637 | 77,822 | 15,060 | 5,509 | 4,407 | 8,012 | (117) | 141,330 | ||
Share Capital
£’000 |
Share Premium
£’000 |
Special distributable reserves
£’000 |
Capital Redemption Reserve
£’000 |
Capital reserve realised
£’000 |
Capital reserve unrealised
£’000 |
Revenue reserve
£’000 |
Total
£’000 |
|||
As at 1 February 2019 | 25,250 | 53,256 | 29,602 | 3,914 | 7,698 | (696) | – | 119,024 | ||
Total comprehensive income for the period: | – | – | – | – | (1,879) | 2,028 | 1,285 | 1,878 | ||
Contributions by and distributions to owners: | ||||||||||
Repurchase and cancellation of own shares | (551) | – | (2,478) | 551 | – | – | – | (2,478) | ||
Issue of shares | 1,731 | 6,364 | – | – | – | – | – | 8,095 | ||
Dividends paid | – | – | (3,982) | – | – | – | – | (3,982) | ||
Total contributions by and distributions to owners | 1,180 | 6,364 | (6,460) | 551 | – | – | – | 1,635 | ||
Other movements: | ||||||||||
Prior period holding losses now realised | – | – | – | – | (1,128) | 1,128 | – | – | ||
Total other movements | – | – | – | – | (1,128) | 1,128 | - | – | ||
As at 31 July 2019 | 26,430 | 59,620 | 23,142 | 4,465 | 4,691 | 2,460 | 1,285 | 122,093 |
Share Capital
£’000 |
Share Premium
£’000 |
Special distributable reserves
£’000 |
Capital Redemption Reserve
£’000 |
Capital reserve realised
£’000 |
Capital reserve unrealised
£’000 |
Revenue reserve
£’000 |
Total
£’000 |
|
As at 1 February 2019 | 25,250 | 53,256 | 29,602 | 3,914 | 7,698 | (696) | – | 119,024 |
Total comprehensive income for the year: | – | – | – | – | 1,507 | 1,902 | 735 | 4,144 |
Contributions by and distributions to owners: | ||||||||
Repurchase and cancellation of own shares | (1,132) | – | (5,017) | 1,132 | – | – | – | (5,017) |
Issue of shares | 4,876 | 18,376 | – | – | – | – | – | 23,252 |
Share issue cost | – | (685) | – | – | – | – | – | (685) |
Dividends paid | – | – | (7,610) | – | – | – | (735) | (8,345) |
Total contributions by and distributions to owners | 3,744 | 17,691 | (12,627) | 1,132 | – | – | (735) | 9,205 |
Other movements: | ||||||||
Prior year holding losses now realised | – | – | – | – | (3,491) | 3,491 | – | – |
Total other movements | – | – | – | – | (3,491) | 3,491 | – | – |
As at 31 January 2020 | 28,994 | 70,947 | 16,975 | 5,046 | 5,714 | 4,697 | – | 132,373 |
Cash Flow Statement
Unaudited
Six months to 31 July 2020 £’000 |
Unaudited Six months to 31 July 2019 £’000 |
Audited Year to 31 January 2020 £’000 |
|
Cash flows from operating activities: | |||
Profit after tax | 1,891 | 1,433 | 4,144 |
Adjustments for: | |||
(Increase)/decrease in debtors | (1,001) | 176 | 598 |
(Decrease)/increase in creditors | (2,973) | 1,918 | 2,790 |
Gain on disposal of fixed assets | - | (6) | (4,872) |
Gain on revaluation of fixed asset investments | (3,306) | (1,849) | (1,641) |
Gain on disposal of current assets | - | (46) | (46) |
Gain on revaluation of current asset investments | (9) | (179) | (261) |
Cash from operations | (5,398) | 1,447 | 712 |
Cash flows from investing activities: | |||
Purchase of fixed asset investments | (2,650) | (11,477) | (29,277) |
Purchase of current asset investments | (12,000) | – | – |
Disposal of current asset investments | - | 5,000 | 5,000 |
Disposal of fixed asset investments | - | 6,498 | 17,794 |
Net cash flows from investing activities | (14,650) | 21 | (6,483) |
(6,483) | |||
Cash flows from financing activities: | |||
Purchase of own shares | (1,915) | (2,478) | (5,017) |
Share issues | 8,982 | 8,095 | 21,042 |
Dividends paid | - | - | (6,820) |
Net cash flows from financing activities | 7,067 | 5,617 | 9,205 |
(Decrease)/ increase in cash and cash equivalents | (12,981) | 7,085 | 3,434 |
Opening cash and cash equivalents | 16,637 | 13,203 | 13,203 |
13,203 | |||
Closing cash and cash equivalents | 3,656 | 20,288 | 16,637 |
Notes to the Half-Yearly Report
1. Basis of preparation
The unaudited half-yearly report which cover the six months to 31 July 2020 has been prepared in accordance with the Financial Reporting Council’s (FRC) Financial Reporting Standard 104 “Interim Financial Reporting” (March 2018) and the Statement of Recommended Practice for Investment Companies, re-issued by the Association of Investment Companies in February 2018.
The Directors consider it appropriate to adopt the going concern basis of accounting. The Directors have not identified any material uncertainties to the company’s ability to continue to adopt the going concern basis over a period of at least twelve months from the date of approval of the financial statements. In reaching this conclusion the Directors have had regard to the potential impact on the economy and the Company of the current Coronavirus pandemic.
The principal accounting policies have remained unchanged from those set out in the Company’s 2020 Annual Report and Accounts.
2. Publication of non-statutory accounts
The unaudited half-yearly report for the six months ended 31 July 2020 does not constitute Statutory Accounts within the meaning of s.415 of the Companies Act 2006. The comparative figures for the year ended 31 January 2020 have been extracted from the audited financial statements for that year, which have been delivered to the Registrar of Companies. The independent auditor’s report on those financial statements, in accordance with chapter 3 of part 16 of the Companies Act 2006, was unqualified. This half-yearly report has not been reviewed by the Company’s auditor.
3. Earnings per share
The earnings per share is based on 300,616,820 shares, being the weighted average number of shares in issue during the period (31 January 2020: 264,800,099; 31 July 2019: 252,299,145).
There are no potentially dilutive capital instruments in issue and, therefore, no diluted earnings per share figures are relevant. The basic and diluted earnings per share are therefore identical.
4. Net asset value per share
31 July 2020 | 31 July 2019 | 31 January 2020 | |
Net assets (£) | 141,330,000 | 122,093,000 | 132,373,000 |
Shares in Issue | 306,367,852 | 264,300,126 | 289,936,208 |
Net asset value per share (p) | 46.1 | 46.2 | 45.7 |
5. Dividends
The interim dividend of 1.2p per share for the six months ending 31 July 2020 will be paid on 15 January 2021, to those shareholders on the register on 29 December 2020.
6 . Principal risks and uncertainties
The principal risks and uncertainties faced by the Company are described in detail within the strategic report in the Company’s annual report for the year ended 31 January 2020.
The principal risks include loss of VCT status, investment risk, valuation risk, financial risk, economic risk, internal control risk, regulatory risk, cash flow risk, market risk liquidity risk and price risk. The Board has also considered emerging risks, including the Coronavirus pandemic, which the Board seeks to mitigate by setting policy and reviewing performance.
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 annum of the net assets of the Company for the investment management services.
The Company has incurred management fees of £1,620,000 during the period to 31 July 2020 (31 July 2019: £2,198,000; 31 January 2020: £3,970,000).
During the period the Company has incurred performance fees of £368,000 (31 July 2019: £211,000, an adjustment of £870,000 was also made for historic performance fees; 31 January 2020: £1,740,000) which are included in the above management fees.
Octopus also provides administration and company secretarial services to the Company. Octopus receives a fee of 0.3% per annum of net assets of the Company for administration services and £20,000 per annum for company secretarial services.
The Company receives certain reductions in the management fee, including for investments in other Octopus managed funds, to ensure the Company is not double charged on these products. These rebates amounted to £57,000 for the current period (31 July 2019: £111,000; 31 January 2020 £236,000).
8. Post balance sheet events
A dividend of 1.1p was paid on 7 September 2020 to all ordinary shareholders who were on register on 14 August 2020. This caused NAV to decrease from 46.1p to 45.0p.
On 7 September, 1,400,927 Ordinary Shares were issued at a price of 45.0p per share to shareholders who elected to receive Ordinary Shares under the Dividend Reinvestment Scheme as an alternative to the 1.1p dividend.
The Company invested a total of £0.7 million into one follow-on investment. The Company also received £0.6 million for the disposal of one investment.
9. Additional Information
An online version of this report will be available to view on the Investment Manager’s website at www.octopusinvestments.com. Hard copy versions are available on request from the registered office of the Company at 33 Holborn, London, EC1N 2HT.