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Octopus Apollo VCT2 plc (OAP2)

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Tuesday 28 September, 2010

Octopus Apollo VCT2 plc

Half-yearly report






Octopus Apollo VCT 2 plc
Half-Yearly Results

28 September 2010

Octopus Apollo VCT 2 plc, managed by Octopus Investments Limited, today
announces the Half-Yearly results for the six months ended 31 July 2010.

These results were approved by the Board of Directors on 28 September 2010.

You may shortly 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 to|Six months to         Year to
                                    | 31 July 2010| 31 July 2009 31 January 2010
                                    |             |
                                    |             |
Net assets (£'000s)                 |        7,925|        7,980           8,167
                                    |             |
Net profit/(loss) after tax (£'000s)|         (24)|           31             306
                                    |             |
Net asset value per share ("NAV")   |       91.20p|       91.80p           94.0p
                                    |             |
Cumulative dividends since launch - |             |
paid and proposed                   |        7.25p|        3.25p           5.75p
                                    +-------------+

Chairman's Statement


Introduction
I am pleased to present the half-yearly report of Octopus Apollo VCT 2 plc for
the period ended 31 July 2010.

Performance
At 31 July 2010 the NAV plus cumulative dividends paid of the Fund was 96.95p,
which compares to 97.25p at 31 January 2010. The performance of the Fund has
been relatively stable as the fair value of investments, which represent 85% of
the total Fund, remain unchanged at the period end.

Investment Portfolio
Since 31 January 2010 one new investment has been made. The Fund invested
£110,000 into Carebase (Col) Limited, a company used to purchase land in order
to build a care home. This was an unqualified investment for VCT purposes.

Post 31 July 2010, the cash invested into Vulcan Services II Limited, a company
previously set up to seek qualifying investments, has successfully been deployed
into Bluebell Telecom Limited, a company providing landline, mobile and data
solutions to businesses.

In terms of other opportunities, we are seeing good deal flow and are in
detailed discussions which may lead to a number of new investments that fit well
with the investment mandate of this VCT.

Investment Strategy
The Fund is being invested on the basis of taking less risk than a typical VCT.
Typically the Fund will receive its return from interest paid on secured loan
notes as well as an exposure to the value of the shares of a company.  The
investment strategy is to derive sufficient return from the secured loan notes
to achieve the Fund's investment aims and to use the equity exposure to boost
returns.  As portfolio companies are unquoted, the Fund will receive a return
from an equity holding when a company is sold.

The Manager of the Fund aims to reduce risk by investing in well managed and
profitable businesses with strong recurring cash-flows.  Furthermore, with the
majority of the investment being made in the form of a secured loan, in the
event of the business failing, the Fund will rank ahead of unsecured creditors
and equity investors.

Dividend and Dividend Policy
It is your Board's policy to strive to maintain a regular dividend flow where
possible and this primarily relies on the level of profitable realisations and
available cash reserves. However, given the prevailing economic climate this
cannot be guaranteed. That said, for the period ended 31 July 2010, the Board
has declared an interim dividend of 1.5p per share, 0.5p payable from revenue
reserves and 1.0p payable from capital reserves. This dividend will be paid to
shareholders, on 29 October 2010, who are on the register on 8 October 2010.

VCT Qualifying Status
PricewaterhouseCoopers LLP provides the Board and Investment Manager with advice
concerning ongoing compliance with Her Majesty's Revenue & Customs (HMRC) rules
and regulations concerning VCTs. The Board has been advised that Octopus Apollo
VCT 2 plc is in compliance with the conditions laid down by HMRC for maintaining
approval as a VCT.

A key requirement is to now maintain at least the 70% qualifying investment
level. As at 31 July 2010, 82.0% of the portfolio, as measured by HMRC rules,
was invested in VCT qualifying investments.

Principal Risks and Uncertainties
The principal risks and uncertainties are set out in note 6 of the Notes to the
Half-Yearly Report on page.

Outlook
Your board is pleased with the development of the portfolio and expects the
underlying companies to perform steadily in the coming months.  The Investment
Manager continues to expand its resources and the scope of its business.  Your
board believes that Octopus Investments is well positioned to support portfolio
companies and identify attractive new investment opportunities, thus
contributing strongly to the ongoing value of your VCT investment.

If you have any questions on any aspect of your investment, please call one of
the team on 0800 316 2347.



Andrew Boyle
Chairman
28 September 2010

Investment Portfolio

                                                                        % equity
                                                           Fair          held by
                                   Cost of Movement in value as       %      all
                                investment   valuation   at 31   equity    funds
Unquoted                         as at 31    as at 31      July held by  managed
qualifying                      July 2010   July 2010     2010   Apollo       by
investments   Sector               (£'000)     (£'000)  (£'000)   VCT 2  Octopus

Clifford      Automotive
Thames Group
Limited                                966           -      966    1.5%     8.0%

Diagnos       Automotive
Limited                                825           -      825    0.0%     0.0%

PubCo         Restaurants &
Services      bars
Limited                                750           -      750   11.4%    56.9%

              Security
CSL Dualcom   devices                  700           -      700    0.0%     0.0%

Salus         Care homes
Services I
Limited                                614           -      614   15.7%   100.0%

Bruce Dunlop  Media
Associates                             509           -      509    1.7%    30.0%

Tristar       Chauffeur
Limited       services                 500           -      500    1.3%    35.0%

Vulcan        Oil and gas
Services II   services
Limited                                500           -      500   12.3%    49.0%

GreenCo       Environmental
Services
Limited                                500           -      500    8.2%    57.4%

BusinessCo    Business
Services 2    services
Limited                                200           -      200    5.0%    49.0%

Ticketing     Ticketing
Services 1    services
Limited                                200           -      200   25.3%   100.0%

Ticketing     Ticketing
Services 2    services
Limited                                200           -      200   25.3%   100.0%

Hydrobolt     Manufacturing
Limited                                197           -      197    0.9%    43.3%

Carebase      Care homes
Limited                                110           -      110    0.0%     0.0%

Total unquoted qualifying
investments                          6,771           -    6,771

Money market funds                   1,046           7    1,053

Cash at Bank                           111           -      111

Total money market securities
and cash at bank                     1,157           7    1,164

Total investments                    7,928           7    7,935

Debtors less creditors                                     (10)

Total net assets                                          7,925


Responsibility Statement of the Directors in respect of the Half-Yearly Report

We confirm that to the best of our knowledge:

  * the half-yearly financial statements have been prepared in accordance with
    the statement "Half-Yearly Financial Reports" issued by the UK Accounting
    Standards Board;


  * the half-yearly report includes a fair review of the information required by
    the Financial Services Authority Disclosure and Transparency Rules, being:


      o  an indication of the important events that have occurred during the
first six months of the financial year and their impact on the condensed set of
financial statements.
      o  a description of the principal risks and uncertainties for the
remaining six months of the year; and
      o  a description of related party transactions that have taken place in
the first six months of the current financial year, that may have materially
affected the financial position or performance of the Company during that period
and any changes in the related party transactions described in the last annual
report that could do so.

On behalf of the Board


Andrew Boyle
Chairman
28 September 2010

Income statement
                 +--------------------------------------+
                 |      Six months to 31 July 2010      |      Six months to 31 July 2009
                 |                                      |
                 |     Revenue      Capital        Total|     Revenue      Capital        Total
                 |                                      |
                 |       £'000        £'000        £'000|       £'000        £'000        £'000
                 |                                      |
                 |                                      |
                 |                                      |
Gain on disposal |                                      |
of fixed asset   |                                      |
investments      |           -            -            -|           -            -            -
                 |                                      |
                 |                                      |
                 |                                      |
Gain on disposal |                                      |
of current asset |                                      |
investments      |           -            -            -|        -               -            -
                 |                                      |
                 |                                      |
                 |                                      |
Gain/(loss) on   |                                      |
valuation of     |                                      |
current asset    |                                      |
investments      |           -            7            7|           -           63           63
                 |                                      |
                 |                                      |
                 |                                      |
Income           |         155            -          155|         128            -          128
                 |                                      |
                 |                                      |
                 |                                      |
       Investment|                                      |
management fees  |        (21)         (64)         (85)|        (20)         (60)         (80)
                 |                                      |
                 |                                      |
                 |                                      |
Other expenses   |       (101)            -        (101)|        (80)            -         (80)
                 |                                      |
                 |                                      |
                 |                                      |
Profit/(loss)  on|                                      |
ordinary         |                                      |
activities before|                                      |
tax              |          33         (57)         (24)|          28            3           31
                 |                                      |
                 |                                      |
                 |                                      |
Taxation       on|                                      |
profit/(loss)  on|                                      |
ordinary         |                                      |
activities       |           -            -            -|           -            -            -
                 |                                      |
                 |                                      |
                 |                                      |
Profit/(loss)  on|                                      |
ordinary         |                                      |
activities  after|                                      |
tax              |          33         (57)         (24)|          28            3           31
                 |                                      |
Earnings per     |                                      |
share - basic and|                                      |
diluted          |         0.4        (0.7)        (0.3)|        0.3p         0.0p         0.3p
                 +--------------------------------------+


                               Year to 31 January 2010

                                               Revenue      Capital        Total
                              --------------------------------------------------
                                                 £'000        £'000        £'000

Gain on disposal of fixed
asset investments

                                                     -          223          223

Gain on disposal of current
asset investments

                                                     -            7            7

Gain/(loss) on valuation of
current asset investments

                                                     -           61           61

Income

                                                   341            -          341

       Investment   management
fees

                                                  (40)        (120)        (160)

Other expenses

                                                 (157)            -        (157)
                              --------------------------------------------------
Profit/(loss)    on   ordinary
activities before tax

                                                   144          171          315

Taxation  on  profit/(loss) on
ordinary activities

                                                   (9)            -          (9)
--------------------------------------------------------------------------------
Profit/(loss)    on   ordinary
activities after tax
--------------------------------------------------------------------------------
Earnings per share - basic and
diluted                                            135          171          306
                              --------------------------------------------------
                                                  1.5p         2.0p         3.5p


  * The 'Total' column of this statement is the profit and loss account of the
    Company; the supplementary revenue return and capital return columns have
    been prepared under guidance published by the Association of Investment
    Companies.
  * All revenue and capital items in the above statement derive from continuing
    operations
  * The accompanying notes are an integral part of the half-yearly report
  * The Company has no recognised gains or losses other than those disclosed in
    the income statement.


Reconciliation of Movements in Shareholders' Funds
                              +----------------+
                              |Six months ended|Six months ended         Year to
                              |    31 July 2010|    31 July 2009 31 January 2010
                              |                |
                              |           £'000|           £'000           £'000
                              |                |
Shareholders' funds at start  |                |
of period                     |           8,167|           8,119           8,119
                              |                |
Profit/(loss) on ordinary     |                |
activities after tax          |            (24)|              31             306
                              |                |
Cancellation of own shares    |               -|            (83)            (84)
                              |                |
Dividends paid                |           (218)|            (87)           (174)
                              |                |
Shareholders' funds at end of |                |
period                        |           7,925|           7,980           8,167
                              +----------------+


Balance Sheet
                        +----------------+
                        |   As at 31 July|   As at 31 July      As at 31 January
                        |            2010|            2009                  2010
                        |                |
                        | £'000     £'000| £'000     £'000  £'000          £'000
                        |                |
                        |                |
                        |                |
 Fixed asset investments|           6,771|           5,147                 6,662
                        |                |
 Current assets:        |                |
                        |                |
 Investments*           | 1,053          | 2,761            1,421
                        |                |
 Debtors                |    10          |    58               42
                        |                |
 Cash at bank           |   111          |    59               94
                        |                |
                        | 1,174          | 2,878            1,557
                        |                |
 Creditors: amounts     |                |
falling due within one  |                |
year                    |  (20)          |  (45)             (52)
                        |                |
 Net current assets     |           1,154|           2,833                 1,505
                        |                |
                        |                |
                        |                |
 Net assets             |           7,925|           7,980                 8,167
                        |                |
                        |                |
                        |                |
 Called up equity share |                |
capital                 |   869          |   869              869
                        |                |
 Special distributable  |                |
reserve                 | 7,346          | 7,350            7,343
                        |                |
 Capital redemption     |                |
reserve                 |    16          |    16               16
                        |                |
 Capital reserve -      |                |
realised                | (258)          | (245)             (60)
                        |                |
              -         |                |
unrealised              | (122)          | (116)            (129)
                        |                |
 Revenue reserve        |    74          |   106              128
                        |                |
 Total equity           |                |
shareholders' funds     |           7,925|           7,980                 8,167
                        |                |
 Net asset value per    |                |
share                   |           91.2p|           91.8p                 94.0p
                        +----------------+



*Held at fair value through profit and loss


Cash flow statement
                                +-------------+
                                |          Six|
                                |    months to|          Six
                                |      31 July|months to 31              Year to
                                |         2010|    July 2009     31 January 2010
                                |             |
                                |        £'000|        £'000               £'000
                                |             |
                                |             |
                                |             |
        Net cash                |             |
(outflow)/inflow from operating |             |
activities                      |         (31)|         (44)                  35
                                |             |
                                |             |
                                |             |
        Taxation                |            -|            -                 (9)
                                |             |
                                |             |
                                |             |
        Financial investment:   |             |
                                |             |
        Purchase of  fixed asset|             |
investments                     |        (110)|      (2,575)             (4,965)
                                |             |
        Sale of fixed asset     |             |
investments                     |            -|            -               1,098
                                |             |
                                |             |
                                |             |
        Management of liquid    |             |
resources:                      |             |
                                |             |
        Purchase of current     |             |
asset investments               |        (250)|      (2,166)             (4,443)
                                |             |
        Sale of current asset   |             |
investments                     |          626|        3,439               7,061
                                |             |
                                |             |
                                |             |
        Dividends paid          |        (218)|         (87)               (174)
                                |             |
                                |             |
                                |             |
        Financing:              |             |
                                |             |
        Cancellation of own     |             |
shares                          |            -|         (83)                (84)
                                |             |
        (Decrease)/increase in  |             |
cash at bank                    |           17|      (1,516)             (1,481)
                                +-------------+




 Reconciliation of net cash flow to movement in net funds
                           +--------------+
                           |           Six|            Six
                           | months to 31 |  months to 31                Year to
                           |     July 2010|      July 2009       31 January 2010
                           |              |
                           |         £'000|          £'000                 £'000
                           |              |
 Increase/(decrease) in    |              |
cash at bank               |            17|        (1,516)               (1,481)
                           |              |
 Decrease in cash          |              |
equivalents                |         (368)|        (1,210)               (2,550)
                           |              |
 Opening net cash resources|         1,515|          5,546                 5,546
                           |              |
 Net cash resources at end |              |
of period                  |         1,164|          2,820                 1,515
                           +--------------+


 Reconciliation of profit before taxation to cash flow from operating activities
                          +---------------+
                          |     Six months|     Six months               Year to
                          |to 31 July 2010|to 31 July 2009       31 January 2010
                          |               |
                          |          £'000|          £'000                 £'000
                          |               |
Profit/(loss) on ordinary |               |
activities before tax     |           (24)|             31                   315
                          |               |
Gain on disposal of       |               |
current asset investments |              -|              -                   (7)
                          |               |
Gain on disposal of fixed |               |
asset investments         |              -|              -                 (223)
                          |               |
(Gain)/loss on valuation  |               |
of current asset          |               |
investments               |            (7)|           (63)                  (61)
                          |               |
Decrease/(increase) in    |               |
debtors                   |             32|             28                    44
                          |               |
(Decrease)/increase in    |               |
creditors                 |           (32)|           (40)                  (33)
                          |               |
Net cash (outflow)/inflow |               |
from operating activities |           (31)|           (44)                    35
                          +---------------+

Notes to the Half-Yearly Report

1.     Basis of preparation
The unaudited half-yearly results which cover the six months to 31 July 2010
have been prepared in accordance with the Accounting Standard Board's (ASB)
statement on half-yearly financial reports (July 2007) and adopting the
accounting policies set out in the statutory accounts of the Company for the
year ended 31 January 2010, which were prepared under UK GAAP and in accordance
with the Statement of Recommended Practice for Investment Companies issued by
the Association of Investment Companies in January 2009.


2.     Publication of non-statutory accounts
The unaudited half-yearly results for the six months ended 31 July 2010 do not
constitute statutory accounts within the meaning of s.415 of the Companies Act
2006 and have not been delivered to the Registrar of Companies. The comparative
figures for the year ended 31 January 2010 have been extracted from the audited
financial statements for that year, which have been delivered to the Registrar
of Companies. The independent auditor's report on those financial statements, in
accordance with chapter 3 of part 16 of the Companies Act, 2006 was unqualified.
This half-yearly report has not been reviewed by the Company's auditor.

3.     Earnings per share
The earnings per share at 31 July 2010 are calculated on the basis of 8,693,486
(31 January 2010: 8,751,722 and 31 July 2009: 8,861,898) shares, being the
weighted average number of shares in issue during the year.

There are no potentially dilutive capital instruments in issue and, therefore,
no diluted earnings per share figures are relevant. The basic and diluted
earnings per share are therefore identical.

4.     Net asset value per share
The net asset value per share is based on net assets as at 31 July 2010 divided
by 8,693,486 (31 January 2010: 8,693,486 and 31 July 2009: 8,693,486) Shares in
issue at that date.

5.     Dividends
The interim dividend of 1.5 pence per share for the six months ending 31 July
2010 will be paid on 29 October 2010, to those shareholders on the register on
8 October 2010. This will be paid 0.5p from revenue reserves and 1.0p from
capital reserves.

A final dividend, for the year ending 31 January 2010, of 2.5 pence per share
was paid on 09 July 2010 to shareholders on the register on 11 June 2010,
comprising a payment of 1.0 pence from revenue reserves and 1.5 pence from
capital 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 2010. The Company's principal risks and
uncertainties have not changed materially since the date of that report.


7.      Related Party Transactions
Octopus acts as the investment manager of the Company. Under the management
agreement, Octopus receives a fee of 2.0 per cent per annum of the net assets of
the Company for the investment management services. During the period, the
Company incurred management fees of £85,000 (31 January 2010: £160,000 and 31
July 2009: £80,000) payable to Octopus. At the period end there was £nil (31
January 2010: £nil and 31 July 2009: £nil) outstanding to Octopus.  Furthermore,
Octopus provides administration and company secretarial services to the
Company.  Octopus receives a fee of 0.3 per cent per annum of net assets of the
Company for administration services and £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 20 Old Bailey,
London, EC4M 7AN, and will also be available to view on the Investment Manager's
website at www.octopusinvestments.com.



[HUG#1447437]








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Source: Octopus Apollo VCT2 plc via Thomson Reuters ONE
  



                                                                                                                                                                                                                          

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