Octopus VCT 2 PLC

Octopus VCT 2 PLC : Final Results

Octopus VCT 2 PLC : Final Results

Octopus VCT 2 plc  

Final Results  

9 April 2015

Octopus VCT 2 plc, managed by Octopus Investments Limited ("Octopus"), today announces its final results for the year ended 31 December 2014.

These results were approved by the Board of Directors on 9 April 2015.

You may, in due course, view the Annual Report in full at www.octopusinvestments.com

Financial Summary

  As at
31 December 2014
As at
31 December 2013
     
Net assets (£'000s) 19,222 19,337
Return on ordinary activities after tax (£'000s) 506 1,222
Net asset value (NAV) per share 100.7p 100.6p
Total dividends paid to date 2.5p -
Total return 103.2p 100.6p
Proposed final dividend per share 2.5p 2.5p

Subject to shareholder approval at the Annual General Meeting the dividend will be paid on 3 July 2015 to shareholders on the register on 4 June 2015.

Chairman's Statement

Introduction
I am pleased to present the Annual Report of Octopus VCT 2 plc for the year ended 31 December 2014.

Performance
During the year, the Net Asset Value (NAV) of the Company has increased from 100.6p per share to 100.7p per share, despite the payment of a dividend. After adding back the 2.5p final dividend paid in the year, the total return (NAV plus cumulative dividends paid) has risen by 2.6%, from 100.6p per share at 31 December 2013 to 103.2p per share as at 31 December 2014. This increase is largely due to the strong performance of the Company's solar investments which saw an uplift in valuation in the year.

Dividend

Given the performance of your Company, your Board has proposed a final dividend of 2.5 pence per share in respect of the year ended 31 December 2014. This dividend, if approved by shareholders at the AGM, will be paid on 3 July 2015 to shareholders on the register on 4 June 2015.

Investment Portfolio

In January 2015, the investments in Gretel Solar, Hedwig Solar, Klara Solar, Jutta Solar, Gerde Solar and Sula Power were exited as part of a large scale solar exit. This resulted in a considerable gain for the Company and the majority of this uplift was recognised in the valuations as at 31 December 2014, contributing to the uplift in NAV referred to above.

In February 2014, the 100% debt investment in Borro Loan 2 Limited was exited for capital proceeds of £1,000,000 plus all outstanding loan interest.

In the year to 31 December 2014, £200,000 of loan repayments were received from Shakti Power Limited.

In December 2014, £2.5m was invested, alongside Octopus Apollo VCT plc, in Byena Limited, an acquisition vehicle established to invest in a VCT qualifying company.

Buy-backs
During the period, the Company repurchased 139,000 shares at a weighted average price of 96.5p per share. Further details can be found in Note 11 of the accounts.

VCT Qualifying Status

PricewaterhouseCoopers LLP provides the Board and Investment Manager with advice concerning ongoing compliance with HMRC rules and regulations concerning VCTs.  The Board has been advised that the Company is compliant with the conditions laid down by HMRC for maintaining provisional approval as a VCT. 

A key requirement is now to maintain the 70% qualifying investment level. As at 31 December 2014. 95.8% of the portfolio, as measured by HMRC rules, was invested in VCT qualifying investments.

Alternative Investment Fund Managers Directive ("AIFMD")

The Company became registered as a Small Registered UK Alternative Investment Fund Manager with the Financial Conduct Authority in April 2014. The Company's first submission under the Alternative Investment Fund Manager regime, for the period 1 October 2014 to 31 December 2014, was completed at the end of January 2015.

Annual General Meeting

I look forward to meeting as many shareholders as possible at our Annual General Meeting on 18 June 2015 to be held at the offices of Octopus Investments Limited, 6th Floor, 33 Holborn, London, EC1N 2HT. The AGM will start at 3.30 p.m.

Outlook
Since the Company's launch we have seen major Government changes to the subsidy regime for solar companies and other renewables, and an economy which has until recently struggled to grow following the Global Financial Crisis. The general economic outlook is now more certain and the portfolio has been performing well,

Whilst the focus of this Company will remain on capital preservation and any new investments will be approached with caution, your Board and Investment Manager believe we can continue to progress and find suitable investments for the Company's mandate.

Ian Pearson
Chairman
9 April 2015

Investment Manager's Review

Personal Service
At Octopus we have a dual focus, on both managing your investments and keeping you informed throughout the investment process. We are committed to providing our investors with regular and open communication. Our updates are designed to keep you informed about the progress of your investment. The Company is managed by the Specialist Finance team at Octopus.

Octopus is an award winning investment manager, established in 2000, that has over £5.0 billion under management. Octopus has over 350 employees and was voted 'Best VCT Provider of the Year' by the financial adviser community in 2006 to 2010. We currently manage over £480 million across 8 VCTs, more than any other provider in the industry, and are expert in investing in UK smaller companies across a range of funds, tax structures and risk/return mandates.

 

Portfolio Performance
The Company saw an increase in its total return of 2.6% from 31 December 2013 to 31 December 2014. The NAV increased slightly from 100.6p per share to 100.7p per share and 2.5p of dividends were paid over the period, bringing the total return (NAV plus cumulative dividends) to 103.2p per share.  This is largely due to upwards revaluations of a majority of the solar companies, seven of which were exited in January 2015. These companies were valued as at 31 December 2014 based on advanced knowledge of the price that would be received on exit.

Portfolio Review
In March 2014, Borro Loan 2 Limited was exited with the £1,000,000 being repaid in full along with all outstanding loan interest.

In addition, £200,000 of loan repayments were received in the year from Shakti Power Limited.

In December 2014, the Company invested £2,500,000, alongside Octopus Apollo VCT plc, in Byena, an acquisition vehicle set up to seek VCT qualifying investments on behalf of the Company.

Outlook
We are pleased with the overall performance of the portfolio in the year, particularly the solar investments. Despite no longer receiving the loan interest from Borro Loan 2 Limited, the portfolio has produced a small uplift in the NAV per share in the year under review.

Your Investment Manager is confident we can continue to see further progress in the Company.

If you have any questions on any aspect of your investment, please call one of the team on 0800 316 2295.

Grant Paul Florence
Octopus Investments Limited
9 April 2015

Directors' Responsibilities Statement

The Directors are responsible for preparing the Directors' Report, the Remuneration report and the financial statements in accordance with applicable law and regulations.

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 laws). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the company for that period. In preparing these financial statements, the Directors are required to:

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and 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.

In so far as each of the Directors is aware:

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

To the best of my knowledge:

On behalf of the Board

Ian Pearson
Chairman

9 April 2015

Income Statement

    Year to 31 December 2014
    Revenue Capital Total
    £'000 £'000 £'000
         
(Loss)/gain on disposal of fixed asset investments   - - -
         
Fixed asset investment holding gains/(losses)   - 532 532
         
Other income   255 - 255
         
Other expenses   (281) - (281)
         
Return on ordinary activities before tax   (26) 532 506
         
Taxation on return on ordinary activities   - - -
         
Return on ordinary activities after tax   (26) 532 506
Return per share - basic and diluted   (0.1p) 2.8p 2.7p

The Company has no recognised gains or losses other than the results for the year as set out above.

Income Statement

    Year to 31 December 2013
    Revenue Capital Total
    £'000 £'000 £'000
         
Loss on disposal of fixed asset investments   - (168) (168)
         
Fixed asset investment holding gains   - 1,290 1,290
         
Other income   388 - 388
         
Other expenses   (263) - (263)
         
Return on ordinary activities before tax   125 1,122 1,247
         
Taxation on return on ordinary activities   (25) - (25)
         
Return on ordinary activities after tax   100 1,122 1,222
Return per share - basic and diluted   0.5p 5.8p 6.3p

The Company had no recognised gains or losses other than the results for the period as set out above.

Reconciliation of Movements in Shareholders' Funds

 

  Year to 31 December 2014 Year to 31
December 2013
  £'000 £'000
Shareholders' funds at start of year 19,337 18,180
Return on ordinary activities after tax 506 1,222
Purchase of own shares (142) (65)
Dividends paid (479) -
Shareholders' funds at end of year 19,222 19,337

Balance Sheet

 
    As at 31 December 2014 As at 31 December 2013
    £'000 £'000 £'000 £'000
Fixed asset investments*     18,593   16,761
           
Current assets:          
Debtors   140   86  
Cash at bank   527   2,567  
    667   2,653  
Creditors: amounts falling due within one year   (38)   (77)  
Net current assets     629   2,576
Net assets     19,222   19,337
           
Called up equity share capital     191   193
Special distributable reserve     17,360   17,981
Capital redemption reserve     3   1
Capital reserve - losses on disposals     (168)   (168)
  -  holding gains     1,822   1,290
Revenue reserve     14   40
Total shareholders' funds     19,222   19,337
Net asset value per share     100.7p   100.6p

*Held at fair value through profit or loss

The statements were approved by the Directors and authorised for issue on 9 April 2015 and are signed on their behalf by:

Ian Pearson
Chairman
Company No: 07484406

Cash Flow Statement

 
    Year to 31 December 2014 Year to 31 December 2013
    £'000 £'000
       
Net cash (ouflow)/inflow from operating activities   (107) 119
       
Financial investment:      
Purchase of fixed asset investments   (2,500) -
Sale of fixed asset investments   1,200 1,826
       
Dividends paid   (479) -
       
Tax paid   (12) -
       
Financing:      
Purchase of own shares   (142) (65)
(Decrease)/increase in cash resources at bank   (2,040) 1,880

Reconciliation of Return before Taxation to Cash Flow from Operating Activities

 
  Year to 31 December 2014 Year to 31 December 2013  
  £'000 £'000  
Return on ordinary activities before tax 506 1,247  
Loss on disposal of fixed asset investments - 168  
Gain on valuation of fixed asset investments (532) (1,290)  
Increase in debtors (54) (3)  
Decrease in creditors (27) (3)  
(Outflow)/Inflow from operating activities (107) 119  

Reconciliation of Net Cash Flow to Movement in Net Funds

 
  Year to 31 December 2014 Year to 31 December 2013
  £'000 £'000
(Decrease)/increase in cash resources at bank (2,040) 1,880
Opening net funds 2,567 687
Net funds at 31 December 527 2,567

Net funds comprised:

  Year to 31 December 2014 Year to 31 December 2013
  £'000 £'000
Cash at bank 527 2,567
Net funds at 31 December 527 2,567



This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Octopus VCT 2 PLC via Globenewswire

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