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Octopus Eclipse VCT 2 plc (ECL2)

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Wednesday 30 September, 2009

Octopus Eclipse VCT 2 plc

Half-yearly report





Octopus Eclipse VCT 2 plc
Half-Yearly Results

30 September 2009

Octopus Eclipse VCT 2 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 29 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 to    Year to
                               Six months to  31 July 2008 31 January
                                31 July 2008                     2009
Net assets (£'000s)                   13,171        17,426     13,444
Net profit/(loss) after tax
(£'000s)                                 101       (2,631)    (5,694)
Net asset value per share
("NAV")                                71.5p        92.20p     72.90p
Cumulative dividends since
launch - paid and proposed             16.5p        13.25p     15.25p


Octopus Eclipse VCT 2 plc ("Eclipse 2", "Company" or "Fund") is a
venture capital trust ("VCT") which aims to provide shareholders with
attractive tax-free dividends and long-term capital growth, by
investing in a diverse portfolio of unquoted and AIM-quoted
companies.  The Company is managed by Octopus Investments Limited
("Octopus" or "Manager").

Eclipse 2 was launched in January 2005 and raised over £18.4 million
(£17.7 million net of expenses) through an offer for subscription.
The Company co-invests with other funds managed by Octopus. This
allows Eclipse 2 to invest in a wider range of opportunities and in
larger and more developed companies than are typically available to a
single VCT.

The table below  shows the movement  in NAV and  lists the  dividends
that have been paid since the launch of Eclipse 2:

                        Dividends paid
Period Ended        NAV      in period NAV + cumulative dividends
31 July 2005     94.90p              -                     94.90p
31 January 2006  95.00p              -                     95.00p
31 July 2006     95.20p          1.25p                     96.45p
31 January 2007 115.90p              -                    117.15p
31 July 2007    121.90p          1.00p                    124.15p
31 January 2008 110.70p          3.00p                    115.95p
31 July 2008     92.20p          5.00p                    102.45p
31 January 2009  72.90p          3.00p                     86.15p
31 July 2009     71.50p          2.00p                     86.75p


Chairman's Statement

I am pleased to report the Half-year report for the period ended 31
July 2009 for Octopus Eclipse VCT 2 plc.

Results
During the period to 31 July 2009, the total return (being NAV plus
cumulative dividends paid) has increased from 86.2p to 86.8p, an
increase of 0.7%.  Following the decline in net asset value in the
last financial year we have seen some stability return to financial
markets and this is reflected in the performance in the first half of
the year. As previously anticipated, there have been no new
realisations in the period and the movement in NAV reflects some
small valuation uplifts in the listed and unlisted portfolios.

Portfolio
As it stands, the Fund is invested in 17 unquoted and 15 AIM-quoted
companies and is almost fully invested. The focus remains on the
existing portfolio, which will continue to be supported where
appropriate, and no new additions to the portfolio are envisaged in
the near future. By value, 64.1% of the Company's net assets are in
unquoted investments, 14.2% in AIM-quoted investments and 20.5% of
the Company's net assets are currently in cash or cash equivalents.

Unquoted
Although our current portfolio companies undoubtedly still face tough
trading conditions, they are all taking sensible steps and cutting
costs to protect their profit margins. However credit conditions
remain tight and consequently there have been a number of follow-on
investments in support of portfolio companies, namely Bruce Dunlop
(£18,000), First Sports Group (£30,000), The History Press
(£165,000), Lilestone Holdings (£49,000), Promotion space (£64,000)
and SweetCred (£81,000).  One of the key advantages we have over many
listed funds is that the Manager has a board seat on the majority of
our portfolio companies. This allows the Manager to keep a close eye
on trading and take action where needed.

Despite the tough economic environment, a number of our portfolio
companies continue to show encouraging progress, most notably CSL
Dualcom, Audio Visual Machines, Hydrobolt, Kendal and Promotion
Space. Overall there has been an uplift in the valuation of the
unquoted portfolio of £124,000 during the period, with individual
movements set out in the table on page 5.

On another note, Covion, which we exited during the year ended
January 2008, provided the Eclipse 2 with an earn-out of £47,000 in
the period.

AIM-quoted
The AIM market has staged a recovery since the market lows reached in
March 2009, however it still remains approximately 50% below the
highs achieved during 2007.  Although investor interest in the
smaller AIM companies remains scarce, the market has started to
recognise those businesses that have successfully navigated the
prevailing economic conditions and continued to grow profitably.
Once investor appetite for risk returns, we expect share prices of
small companies to respond and the valuation discount to the FTSE
All-Share to narrow further.

As at 31 July 2009 the AIM element of the portfolio consisted of 15
holdings totalling £1,875,000 by value and this accounted for 14.2%
of the investment portfolio.  There were no new investments during
the period, however we exited two stocks.  We made the decision to
sell Optimisa during the period, realising a loss of £81,000, as we
feared the trading environment for the company was going to
deteriorate further.  We also exited Concateno, which received a bid
approach from US quoted Inverness Medical in July.  This realised a
gain of £22,000.

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 11.

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. In the current
economic climate achieving full valuations for our investments on
exit can be challenging.  We therefore continue to place priority on
maintaining a suitable quantum of cash reserves.  Taking these
factors into account, for the period ended 31 July 2009, the Board
has declared an interim dividend of 1.25p per share. This dividend
will be paid to shareholder on 30 October 2009, who are on the
register on 9 October 2009.

Outlook
Despite the recent improvement in stock markets we remain cautious
about the wider economic environment and the impact this may have on
portfolio companies. This could be reflected directly through trading
or indirectly through the availability of credit. We also need to
ensure that where appropriate, portfolio companies have sufficient
resources to take advantage of the opportunities that will present
themselves. For this reason we will continue to maintain our strategy
of seeking to keep an appropriate level of liquidity in the Fund to
provide support for the portfolio going forward.



Marc Vlessing
Chairman
29 September 2009

Investment Portfolio

                                                               Change in               %
                                                               Valuation          equity
                                                                  in the       % held by
                                                      Carrying    period  equity     all
                                           Unrealised value at   (£'000) held by   funds
Unquoted                        Investment     profit  31 July           Eclipse managed
Qualifying                         at cost    /(loss)     2009                 2      by
Investments  Sector                (£'000)    (£'000)  (£'000)                   Octopus
The History  Publishing              1,323          -    1,323         -    9.7%   60.0%
Press
Limited
Luther       Media & Marketing       1,000        318    1,318       318   18.8%   37.6%
Pendragon    Services
Limited
CSL DualCom  Technology &              589        470    1,059       119    7.3%   45.8%
Limited      Telecommunications
Promotion    Media & Marketing         719          -      719         -    5.2%   41.5%
Space        Services
Limited
First Sports General Retailers       1,240      (585)      655         -   18.5%   40.0%
Group
Limited
The Kendal   Consumer Products         576         31      607        31    5.7%   15.9%
Group
Limited
Audio Visual Technology &              454          -      454         -    6.9%   43.1%
Machines     Telecommunications
Limited
Sweet Cred   Consumer Products         845      (420)      425         -    6.3%   45.0%
Holdings
Limited
Tristar      Transport Services        446       (46)      400      (46)    4.5%   30.0%
Worldwide
Limited
Perfect      Leisure & Hotels          800      (400)      400         -   10.5%   34.3%
Pizza
Limited
T4 Holdings  Media & Marketing         711      (385)      326      (52)    7.3%   41.7%
Limited      Services
Hydrobolt    Manufacturing             258          -      258         -    3.0%   43.5%
Limited
Convivial    Leisure & Hotels          350      (100)      250      (23)    2.1%    8.2%
London Pubs
Plc
Lilestone    Consumer Products         861      (737)      124     (184)    6.9%   24.0%
Holdings
Limited
Bruce Dunlop Media & Marketing         190       (83)      107      (54)    1.6%   30.0%
& Associates Services
Limited
Blanc        Leisure & Hotels           62       (46)       16        15    0.7%    3.3%
Brasseries
Limited
Red-M Group  Technology &              300      (300)        -         -
Limited      Telecommunications
Total unquoted qualifying
investments                         10,724    (2,283)    8,441       124
AIM-quoted
Qualifying
Investments
Healthcare   Recruitment               150        396      546       153    0.3%    2.4%
Locums plc
Plastics     Engineering             1,067      (800)      267      (21)    4.0%   18.6%
Capital plc
Pressure     Engineering               135        (5)      130      (63)    0.8%   11.5%
Technologies
plc
Interquest   Recruitment               171       (43)      128        34    1.0%    5.9%
plc
CBG Group    Financial Services        310      (185)      125     (160)    1.4%   19.3%
plc
Hasgrove plc Media & Marketing         200       (83)      117      (12)    0.7%   11.4%
             Services
Cohort plc   Engineering                85         31      116        21    0.2%    3.2%

Vertu Motors General Retailers         150       (50)      100        71    0.3%    8.9%
plc
Tanfield     Engineering               120       (46)       74        36    0.0%    0.6%
Group plc
Brulines     Support services           92       (21)       71      (15)    0.3%    8.4%
(Holdings)
plc
Hexagon      Recruitment               431      (362)       69      (34)    1.4%   14.3%
Human
Capital plc
Northern     Construction &            200      (135)       65      (12)    0.7%    6.7%
Bear plc     Materials
Autoclenz    Support Services          206      (157)       49        25    1.6%   12.8%
plc
Invocas plc  Financial Services         50       (40)       10       (3)    0.2%    1.2%

Cantono plc  Technology &              300      (300)        -       (4)    0.1%    0.9%
             Telecommunications
Total AIM-quoted qualifying
investments                          3,667    (1,800)    1,867        16
Non-qualifying unquoted
investments                              1          -        1         -
Non-qualifying AIM-quoted
investments                             21       (13)        8         1
Total non-qualifying
investments                             22       (13)        9         1
Money market
securities                           3,156      (548)    2,608        35
Cash at bank                            96          -       96         -
Total
investments                         17,665    (4,644)   13,021       176
Net current
assets                                                     150
Total net
assets                                                  13,171



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

Marc Vlessing
Chairman
29 September 2009


Income Statement

              Six months to 31 July  Six months to 31 July
                      2009                   2008           Year to 31 January 2009
              Revenue Capital Total Revenue Capital   Total Revenue Capital   Total
                £'000   £'000 £'000   £'000   £'000   £'000   £'000   £'000   £'000

Gain/(loss)
on disposal
of fixed
asset
investments         -      74    74       -       -       -       - (1,644) (1,644)
Gain on
disposal of
current asset
investments         -       -     -       -       -       -       -      11      11

Gain/(loss)
on valuation
of fixed
asset
investments         -     141   141       - (2,470) (2,470)       - (3,868) (3,868)
Gain/(loss)
on valuation
of current
asset
investments         -      35    35       -    (16)    (16)       -   (139)   (139)

Income            132       -   132     239       -     239     537       -     537

Investment
management
fees             (33)   (100) (133)    (64)   (192)   (256)   (119)   (359)   (478)
VAT
management
fee rebate          -       -     -                              42     128     170

Other
expenses        (148)       - (148)   (128)       -   (128)   (283)       -   (283)

(Loss)/profit
on ordinary
activities
before tax       (49)     150   101      47 (2,678) (2,631)     177 (5,871) (5,694)

Taxation on
profit on
ordinary
activities          -       -     -       -       -       -       -       -       -

(Loss)/profit
on ordinary
activities
after tax        (49)     150   101      47 (2,678) (2,631)     177 (5,871) (5,694)
Earnings per
share - basic
and diluted    (0.3)p    0.8p  0.5p    0.3p (14.0)p (13.7)p    0.9p (31.0)p (30.1)p




  * 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
                             ended 31 July ended 31 July   Year to 31
                                      2009          2008 January 2009
                                     £'000         £'000        £'000
Shareholders' funds at start
of period                           13,444        20,928       20,928
Profit/(loss) on ordinary
activities after tax                   101       (2,631)      (5,694)
Net proceeds of share issue             51           468          487
Cancellation of own shares            (55)         (387)        (744)
Dividends paid                       (370)         (952)      (1,533)
Shareholders' funds at end
of period                           13,171        17,426       13,444





Balance Sheet

                           As at 31 July  As at 31 July       As at 31
                                    2009           2008   January 2009
                            £'000  £'000   £'000  £'000   £'000  £'000

Fixed asset investments           10,317         12,817         10,117
Current assets:
Money market securities     2,608          4,610          3,156
Debtors                       272             45            187
Cash at bank                   96            107            130
                            2,969          4,762                 3,473
Creditors: amounts
falling due within one
year                        (122)          (153)          (146)
Net current assets                 2,854          4,609          3,327

Net assets                        13,171         17,426         13,444

Called up equity share
capital                     1,842          1,891          1,844
Share premium                 853            808            808
Special distributable
reserve                    14,974         15,386         13,112
Capital redemption
reserve                       101             45             92
Capital reserve -
Realised                    (461)              -          1,436

- Unrealised              (4,188)        (2,935)        (4,039)
Revenue reserve                50          2,231            191
Total equity
shareholders' funds               13,171         17,426         13,444
Net asset value per share          71.5p          92.2p          72.9p





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            (259)           242          180

Financial investment :
Purchase of fixed asset
investments                          (407)       (1,071)      (1,411)
Disposal of fixed asset
investments                            423             8            8

Management of liquid
resources:
Purchase of current asset
investments                          (271)       (1,330)      (3,136)
Sale of current asset
investments                            854             -        5,779

Dividends                            (370)         (952)      (1,533)

Financing :
Issue of own shares                     53           487          490
Share issue expenses                   (2)          (19)          (3)
Cancellation of own shares            (55)         (387)        (744)
Decrease in cash at bank              (34)       (3,022)        (370)






Reconciliation of Net Cash Flow to Movement in Net Funds

                             Six months to Six months to   Year to 31
                              31 July 2009  31 July 2008 January 2009
                                     £'000         £'000        £'000
Decrease in cash at bank              (34)       (3,022)        (370)
(Decrease)/increase in cash
equivalents                          (548)         1,315      (2,768)
Opening net cash resources           3,286         6,424        6,424
Net cash resources at end of
period                               2,704         4,717        3,286






Reconciliation of Profit before Taxation to Cash Flow from Operating
Activities

                                Six months
                                to 31 July Six months to   Year to 31
                                      2009  31 July 2008 January 2009
                                     £'000         £'000        £'000
Profit/(loss) on ordinary
activities before tax                  101       (2,631)      (5,694)
(Gain)/loss on disposal of
fixed asset investments               (74)             -        1,644
Gain on disposal of current
asset investments                        -             -         (11)
(Gain)/loss  on valuation of
fixed asset investments              (141)         2,470        3,868
(Gain)/loss on valuation of
current asset investment              (35)            16          139
(Increase)/decrease in debtors        (78)           830          688
Decrease in creditors                 (32)         (443)        (454)
Net cash (outflow)/inflow from
operating activities                 (259)           242          180


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 2009 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.         Earnings per share
The earnings per share at 31 July 2009 is calculated on the basis of
18,473,994 (31 January 2009: 18,932,260 and 31 July 2008: 19,191,116)
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 18,424,677 (31 January 2009: 18,442,669 and 31 July
2008: 18,569,454) shares in issue at that date.

5.         Dividends
The interim dividend of 1.25 pence per share for the six months
ending 31 July 2009 will be paid on 30 October 2009, to those
shareholders on the register on 9 October 2009. This will be paid
from Capital reserves.

A final dividend, for the year ending 31 January 2009, of 2.0 pence
per share was paid on 25 June 2009 to shareholders on the register on
29 May 2009. This was paid with 0.5p from revenue reserves and 1.5p
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 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
£133,000 (31 January 2009: £478,000 and 31 July 2008: £256,000)
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 £10,000 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.

---END OF MESSAGE---




This announcement was originally distributed by Hugin. The issuer is 
solely responsible for the content of this announcement.




                                                                                                                                                                                                 

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