Octopus Apollo VCT 1 plc
Half-Yearly Results
28 September 2009
Octopus Apollo VCT 1 plc, managed by Octopus Investments Limited,
today announces the Half-Yearly results for the six months ended 31
July 2009.
These results were approved by the Board of Directors on 25 September
2009.
You may view the Half-Yearly Report in full at
www.octopusinvestments.com by navigating to the VCT Meetings &
Reports under the 'Services' section.
Financial Summary
Six months Year to
Six months to to 31 January
31 July 2009 31 July 2008 2009
Net assets (£'000s) 7,980 8,223 8,119
Net profit/(loss) after tax
(£'000s) 32 (66) (106)
Net asset value per share
("NAV") 91.80p 93.20p 92.30p
Cumulative dividends since
launch - paid and proposed 3.25p 1.25p 2.25p
Octopus Apollo VCT 1 plc ("Apollo 1", "Company" or "Fund") is a
venture capital trust ("VCT") and is managed by Octopus Investments
Limited ("Octopus").
The Fund was launched in May 2006 together with Octopus Apollo VCT 2
plc. Both companies have identical constitutions, boards of directors
and investment policies, and together launched an offer for
subscription comprising 25,000,000 ordinary shares each, or
50,000,000 in aggregate (the "Offer"). The Offer closed on 5 April
2007 having raised £17.6 million in aggregate (£16.8 million net of
expenses). 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.
The table below shows the movement in NAV per share and lists the
dividends that have been paid and proposed since the launch of Apollo
1:
Dividend paid NAV + cumulative
Period Ended NAV in period dividends
31 January 2007 93.40p - 93.40p
31 July 2007 94.40p - 94.40p
31 January 2008 94.70p - 94.70p
31 July 2008 93.20p 0.75p 93.95p
31 January 2009 92.30p 0.50p 93.55p
31 July 2009 91.80p 1.0p 94.05p
Chairman's Statement
Introduction
I am pleased to present the half year report of Octopus Apollo VCT 1
plc for the period ended 31 July 2009.
Performance
At 31 July 2009 the total return (being NAV plus cumulative dividends
paid) of the fund was 94.1p, which compares to 93.6p at 31 January
2009. The performance of the Fund has been relatively stable because
a large proportion of its assets are held in cash and cash equivalent
securities. Investments have been made as discussed below but these
are unchanged in value at the period end.
Investment Portfolio
As mentioned in the Annual Report, since 31 January 2009 six
investments have been made. The Fund invested £700,000 into CSL
Dualcom Limited and £825,000 in to Diagnos Limited. Furthermore, a
total of £800,000 was invested into four companies that have been
established to seek suitable qualifying investments across a range of
sectors.
Over the period, we have focused on providing support to existing
portfolio companies. We contributed a small investment into portfolio
company Bruce Dunlop as part of a rights issue and continue to work
with all companies to help steer them through the downturn.
In the context of the tough economic environment, most portfolio
companies are making progress or holding steady. Furthermore, since
the end of the period, the Board is pleased to announce the
successful sale of Funeral Services Partnerships. In total the
investment returned circa 1.4 times the initial investment of
£875,000. Further details of this exit will be provided in the
Annual Report for the year ended 31 January 2010.
New Investments
CSL DualCom Limited
CSL DualCom (www.csldual.com) is the UK's leading supplier of dual
path signalling devices, which link burglar alarms to the police or a
private security firm. The devices communicate using a telephone line
or broadband connection and a wireless link from Vodafone, which has
been a partner since 2000.
Diagnos Limited
Diagnos (www.autologic-diagnos.co.uk) develops and sells
sophisticated automotive diagnostic software and hardware that
enables independent mechanics, dealerships and garages to service and
repair vehicles. Mechanics require a diagnostic tool to communicate
with the in-car computer in order to measure, monitor and, where
necessary, fix the electronic process or system.
In terms of new investments, we are seeing reasonable deal flow and
are at offer stage for a number of new deals.
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.
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 2009, the Board has declared an interim
dividend of 1p per share, payable from revenue reserves. This
dividend will be paid to shareholders, on 30 October 2009, who are on
the register on 9 October 2009.
VCT Qualifying Status
PricewaterhouseCoopers LLP provides the Board and Investment Manager
with advice on the ongoing compliance with HMRC rules and regulations
concerning VCTs. As at 31 July 2009, over 43.2% of the portfolio
(as measured by HMRC rules) was invested in VCT qualifying
investments. The Manager does not foresee any issues with reaching
the required investment hurdle of 70% before the third anniversary of
the end of the financial year in which investors subscribed to the
Fund.
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 16.
Outlook
While the Fund is insulated from the stock market, all companies face
challenging trading conditions. In this environment, it is the good
companies with strong management teams and sound business models,
such as those in your portfolio, that have the best chance of
succeeding.
The Investment Manager is in a strong position to provide the support
that companies need, which is especially crucial while banks refuse
to lend or impose high lending terms. Our strategy is focused on
strengthening businesses for the future through guidance and funding.
In these ways, we are working to ensure ongoing value from your VCT
investment.
If you have any questions on any aspect of your investment, please
call one of the team on 0800 316 2347.
Andrew Boyle
Chairman
25 September 2009
Investment Portfolio
%
equity
% held by
Carrying equity all
value at held funds
Unquoted Investment Unrealised 31 July by managed
qualifying at cost profit/(loss) 2009 Apollo by
investments Sector (£'000) (£'000) (£'000) 1 Octopus
Funeral
Services Funeral
Partnerships Services 875 - 875 2.2% 6.8%
Diagnos
Limited Automotive 825 - 825 N/A N/A
Bruce Dunlop
Associates Media 750 - 750 0.9% 33.3%
Security
CSL Dualcom devices 700 - 700 N/A N/A
Vulcan
Services II Oil & Gas
Limited Services 500 - 500 12.3% 49.0%
Tristar Chauffeur
Limited Services 500 - 500 1.25% 35.0%
Salus
Services I
Limited Healthcare 200 - 200 5.0% 49%
PubCo
Services
Limited Restaurants 200 - 200 5.0% 49%
GreenCo
Services
Limited Environmental 200 - 200 5.0% 49%
BusinessCo
Services Business
Limited services 200 - 200 5.0% 49%
Hydrobolt
Limited Manufacturing 197 - 197 0.9% 48.1%
Total unquoted qualifying
investments 5,147 - 5,147
Bonds 428 10 438
Floating rate notes 1,154 - 1,154
Money market funds 1,116 53 1,169
Cash at Bank 59 - 59
Total money market
securities and cash
at bank 2,757 63 2,820
Total investments 7,904 63 7,967
Net current assets 13
Total net assets 7,980
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:
* 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
Andrew Boyle
Chairman
25 September 2009
Income Statement
Six months to 31 July Six months to 31 July Year to 31 January
2009 2008 2009
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gain on
disposal of
current asset
investments - - - - - - - 19 19
Gain/(loss)
on valuation
of current
asset
investments - 63 63 - (42) (42) - (206) (206)
Income 128 - 128 181 - 181 461 - 461
Investment
management
fees (20) (60) (80) (25) (73) (98) (47) (143) (190)
VAT
management
fee rebate - - - - - - 9 26 35
Other
expenses (80) - (80) (107) - (107) (225) - (225)
Profit/(loss)
on ordinary
activities
before tax 28 3 31 49 (115) (66) 198 (304) (106)
Taxation on
profit/(loss)
on ordinary
activities - - - - - - (86) 86 -
Profit/(loss)
on ordinary
activities
after tax 28 3 31 49 (115) (66) 112 (218) (106)
Return per
share - basic
and diluted 0.3p 0.0p 0.3p 0.6p (1.3)p (0.7)p 1.3p (2.5p) (1.2p)
* 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 Six months Year to
ended ended 31 January
31 July 2009 31 July 2008 2009
£'000 £'000 £'000
Shareholders' funds at start of
period 8,119 8,355 8,355
Profit/(loss) on ordinary
activities after tax 31 (66) (106)
Cancellation of own shares (83) - (20)
Dividends paid (87) (66) (110)
Shareholders' funds at end of
period 7,980 8,223 8,119
Balance Sheet
As at 31
As at 31 January
As at 31 July 2009 July 2008 2009
£'000 £'000 £'000 £'000 £'000 £'000
Fixed asset investments 5,147 2,072 2,572
Current assets:
Money market securities 2,761 6,001 3,971
Debtors 58 97 86
Cash at bank 59 76 1,575
2,878 6,174 5632
Creditors: amounts
falling due within one
year (45) (23) (85)
Net current assets 2,833 6,151 5,547
Net assets 7,980 8,223 8,119
Called up equity share
capital 869 882 879
Special distributable
reserve 7,350 7,451 7,429
Capital redemption
reserve 16 4 6
Capital reserve -
Realised (245) (193) (275)
- Unrealised (116) 18 -
Revenue Reserve 106 61 80
Total equity
shareholders' funds 7,980 8,223 8,119
Net asset value per share 91.8p 93.2p 92.3p
Cash flow statement
Six months
to Six months to Year to 31
31 July 2009 31 July 2008 January 2009
£'000 £'000 £'000
Net cash (outflow)/inflow
from operating activities (44) (64) 114
Financial investment:
Purchase of fixed asset
investments (2,575) (196) -
Management of liquid
resources:
Net sale/(purchase) of money
market securities (2,166) 394 (3,431)
Sale of current asset
investments 3,439 - 5,710
Dividends paid (87) (66) (110)
Financing:
Cancellation of own shares (83) - (20)
(Decrease)/increase in cash
at bank (1,516) 68 1,566
Reconciliation of net cash flow to movement in net funds
Six months
Six months to to 31 July Year to 31
31 July 2009 2008 January 2009
£'000 £'000 £'000
(Decrease)/increase in cash at
bank (1,516) 68 1,566
Decrease in cash equivalents (1,210) (437) (2,466)
Opening net cash resources 5,546 6,446 6,446
Net cash resources at end of
period 2,820 6,077 5,546
Reconciliation of profit before taxation to cash flow from operating
activities
Six months Six months
to 31 July to 31 July Year to 31
2009 2008 January 2009
£'000 £'000 £'000
Profit/(loss) on ordinary
activities before tax 31 (66) (106)
Gain on disposal of current
asset investments - - (19)
(Gain)/loss on valuation of
current asset investments (63) 42 206
Decrease/(increase) in debtors 28 (1) 10
(Decrease)/increase in
creditors (40) (39) 23
Net cash (outflow)/inflow from
operating activities (44) (64) 114
Notes to the Half-Yearly Report
1. Basis of preparation
The unaudited half-yearly results which cover the six months to 31
July 2009 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 2009,
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
2009 do not constitute statutory accounts within the meaning of
Section 240 of the Companies Act 1985 and have not been delivered to
the Registrar of Companies. The comparative figures for the year
ended 31 January 2008 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 under Section 235 of the Companies Act 1985 was
unqualified. This half-yearly report has not been reviewed by the
Company's auditor.
3. Return per share
The return per share at 31 July 2009 are calculated on the basis of
8,861,898 (31 January 2009: 8,813,950 and 31 July 2008: 8,818,986)
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 return 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
2009 divided by 8,693,486 (31 January 2009: 8,793,986 and 31 July
2008: 8,818,986) Shares in issue at that date.
5. Dividends
The interim dividend of 1 pence per share for the six months ending
31 July 2009 will be paid on 31 October 2009, to those shareholders
on the register on 9 October 2009. This will be paid from revenue
reserves.
A final dividend, for the year ending 31 January 2009, of 1 pence per
share was paid on 31 July 2009 to shareholders on the register on 3
July 2009. This was paid wholly from revenue reserves.
6. 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 2009. 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
£80,000 (31 January 2009: £190,000 and 31 July 2008: £98,000) payable
to Octopus. At the period end there was £Nil (31 January 2008: Nil
and 31 July 2008: Nil) outstanding to Octopus. Furthermore, Octopus
Investments Limited provides administration and company secretarial
services to the Company. Octopus Investments Limited receives a fee
of 0.3 per cent per annum of net assets of the Company for
administration services and £7,500 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 8 Angel Court, London, EC2R 7HP, and will also be
available to view on the Investment Manager's website at
www.octopusinvestments.com.
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