Annual Financial Report

Octopus AIM VCT plc

Final Results

20 May 2018

Octopus AIM VCT plc, managed by Octopus Investments Limited, today announces the final results for the year ended 28 February 2019.

These results were approved by the Board of Directors on 17 May 2019.

You may view the Annual Report in full at www.octopusinvestments.com in due course. All other statutory information will also be found there.

Financial Summary

	Year to 28 February 2019	Year to 28 February 2018
Net assets (£’000)	122,504	127,070
Loss /profit after tax (£’000)	(13,097)	6,476
Net asset value (NAV) per share (p)	101.0	116.1
Dividends per share paid in year (p)	5.5	5.5
Total return** (%)	(8.3)	6.3
Final dividend proposed **(p)	3.0	3.0

^*Subject to shareholder approval at the Annual General Meeting, the proposed final dividend will be paid on 2 August 2019 to shareholders on the register on 5 July 2019.

^**Total return is an alternative performance measure calculated as (movement in NAV per share + dividends paid in the period) divided by the NAV per share at the beginning of the period.

Chairman’s Statement

Introduction
The year to 28 February 2019 saw the challenges around international trade politics and the eventual shape of any Brexit settlement intensify, particularly in the second half.  This led to an increasingly nervous and unsettled stock market as investors became less comfortable with risk and as a consequence smaller company shares underperformed as an asset class.  It was not all bad news however, and despite almost daily negative press, the UK economy continued to grow in 2018 with employment levels remaining high.  Post the period end, at the micro-level, many companies in the portfolio have been reporting good figures in the recent March results season.  The level of fundraisings on AIM has remained healthy, particularly in relation to existing companies raising new capital which exceeded the amount raised from new issues in the year.  Against this background the VCT made £10.6m of new VCT qualifying investments in the period.

During the year Andrew Buchanan, who had been involved in the management of this Company’s investments since its launch in 1998, retired from Octopus.  I would like to take this opportunity to thank him on behalf of the Board for all his hard work and engagement over the years, and to wish him a happy retirement.  Your Company’s investments will continue to be managed by the Octopus Smaller Companies team, members of which also have a long association with the Company dating back to the year 2000. 

In the year under review, your Company raised £17.4 million net of costs by the issue of new shares and continued to buy back shares from shareholders wishing to sell.

Performance
Adding back the 5.5p of dividends paid out in the year, the NAV per share total return was -8.3%. In the same twelve months the FTSE AIM All Share Index fell by 11.3%, the FTSE SmallCap (excluding investment companies) Index fell by 6.5% and the FTSE  All Share Index rose by 1.7%, all on a total return basis.

Once again stock specific factors had a significant impact on performance, both positive and negative, and these are covered in more detail in the Manager’s report.  In addition, there was a sharp reduction in the valuation of growth stocks in the second half of the period, and this caused the fund to give up the gains that had been reported in the interim accounts with the fund suffering some particularly volatile months.

In the year under review AIM has raised £5.2bn of new capital, a decrease from the £6.9 billion raised in the previous year, but still demonstrating its ability to provide additional growth capital for its members.  Against this background the Investment Manager has invested £10.6 million into qualifying companies up from £8.4 million in the previous year.

Further details of performance are contained in the Investment Managers’ Review below.

Dividends
An interim dividend of 2.5p was paid to shareholders in January 2019 in addition to the 3.0p final dividend that had been paid in July 2018. It is the Board’s intention to continue to pay a minimum of 2.5p each half year and to adjust the final dividend annually, based on the year-end share price, so that shareholders receive either 5p per annum or a 5% yield, whichever is the greater at the time. The Board has considered the level of dividend in the context of recent share price movements and on this occasion has chosen to maintain the final dividend of 3.0p, which brings the total dividend for the year to 5.5p which is a 5.7% yield based on the share price of 96.0p on 28 February 2019 and greater than the targeted minimum of 5p.

Dividend Reinvestment Scheme
In common with many other VCTs in the industry, the Company has established a Dividend Reinvestment Scheme (DRIS). Some shareholders have already taken advantage of this opportunity. For investors who do not require income, but value the additional tax relief on their reinvested dividends, this is an attractive scheme and I hope more shareholders will find it useful. In the course of the year 889,210 new shares have been issued under this scheme. The dividend referred to above will be eligible for the DRIS.

Share Buybacks
During the year to 28 February 2019 the Company continued to buy back and cancel shares in the market from selling shareholders and purchased 3,313,707 Ordinary shares for a total consideration of £3,596,915. We have maintained a discount of approximately 4.5% (equating to a 5.0% discount to the selling shareholder after costs), which the Board monitors and intends to retain as a policy which fairly balances the interests of both remaining and selling shareholders. Buybacks remain an essential practice for VCTs, as providing a means of selling is an important part of the initial investment decision and has enabled the Company to grow. As such I hope you will all support the appropriate resolution at the AGM.

Share Issues
On 13 April 2018 119,802 new shares were issued in connection with the 2017/2018 prospectus offer which had closed fully subscribed.  An offer to raise up to £12 million with an overallotment facility of up to a further £6 million alongside the Octopus AIM VCT 2 plc was launched on 3 August 2018. The offer closed to new applications on 28 September 2018 fully subscribed, having raised the full £18 million. As at 28 February 2019 there was £0.2m outstanding in the applications account to be allotted in the new tax year.

VCT Status
PricewaterhouseCoopers LLP (PwC) provides the Board and Investment Manager with advice concerning continuing compliance with HMRC regulations for VCTs. The Board has been advised that Octopus AIM VCT is in compliance with the conditions laid down by HMRC for maintaining approval as a VCT. A key requirement is to maintain at least a 70% qualifying investment level which will rise to 80% for financial years ending after 6 April 2019. As at 28 February 2019 some 89.6% of the portfolio as measured by HMRC rules was invested in qualifying investments.

Risks and Uncertainties
In accordance with the Listing Rules under which the Company operates the Board has to comment on the potential risks and uncertainties which could have a material impact on the Company’s performance. A risk arises from the requirement to maintain compliance with HMRC regulations requiring 70% of the Company’s assets to be invested in qualifying holdings which will rise to 80% by the year to 28 February 2020. Other risks include economic conditions which impact particularly on smaller companies in which the Company invests and this could have an adverse impact on share prices. Further details of the risks faced by the Company and the processes in place to mitigate them are set out in the Business Review of the Annual Report and Accounts.

Annual General Meeting (AGM)
The AGM will be held on 18 July 2019. I very much hope that you will be able to come. After the formal business our Investment Managers will make a presentation and there will be a chance for you to ask questions. At the AGM, a resolution will be proposed to extend the life of the Company until 2025 in order to preserve the VCT status of the Company.

Outlook
The newspapers are still dominated by negative stories about international trade tensions, domestic politics and the problem of what our future relationship with the European Union might eventually look like.  The heightened level of uncertainty now appears to be having an impact on business confidence, with reports of some companies deciding to delay investment. This has fuelled the recent increase in volatility in domestic stock market indices which were already un-nerved by stock market falls elsewhere in the world.  This volatility is likely to continue until the outlook becomes clearer although it is encouraging that UK economic growth has remained positive if unexciting in 2018, with a similar outlook currently being forecast for 2019. 

The portfolio now contains 77 holdings across a range of sectors and many of them have already demonstrated their management’s ability to grow their businesses successfully despite difficult market conditions. The balance of the portfolio towards profitable companies remains, and the cash available for new investments will allow us to take advantage of any future lowering of valuations resulting from the current period of share price weakness.

Roger Smith
Chairman
17 May 2019

Investment Manager’s Review

Introduction
The year to 28 February 2019 was very much one of two halves, with the gains of the first half eroded in much more nervous market conditions between September and December. The tendency of the market to reward growth companies that exceeded expectations with higher share prices and higher ratings came to an end in the second half of the year as attention focused increasingly on risk in the face of increased uncertainty about the future international trade and possible repercussions of Brexit. Against this background smaller companies underperformed with investors favouring the relative security of the FTSE 100 with its superior liquidity and exposure to foreign currency earnings.  This had an impact on the NAV which more than reversed the earlier gain reported at the interim stage, resulting in a negative return for the year as a whole of 8.3%.  There have been some notable contributors to the portfolio, both positive and negative, but we are pleased to report the maintenance of the 5% yield objective.

In the year to 28 February 2019 AIM has continued to raise new capital for companies, both already quoted and new flotations, and your Company has deployed existing cash  throughout the year as well as raising £17.4 million net of costs for future investments. The rate at which cash was invested tailed off a little towards the end of 2018 and 2019 had a slower start although we have seen a steady stream of existing AIM companies requiring further funds for growth as well as some earlier stage companies intending to float in the next twelve months, many of which will be VCT qualifying.  We have invested £0.9m since the year end.

The Alternative Investment Market
After two years of outperformance, AIM trailed larger company indices in the year, producing a total return of -11.3% in the twelve months to February. This was well behind the FTSE All Share Index which achieved a small positive return over the same period and behind the Smaller Companies Index (ex-Investment Trusts).  This reflected growing concerns about the possible effects on the domestic economy of a disorderly Brexit added to fears about international growth prospects which resulted in a much more cautious attitude to perceived risky assets such as smaller companies. Although the September results season was broadly supportive, attention focused on the valuations of some of the more highly rated growth stocks on AIM which had been large contributors to the Index’s previous rise and which were unable to hang onto their ratings in a more cautious market.

Companies have continued to raise new capital throughout the year. In the twelve months to 28 February 2019 AIM raised a further £3.7 billion of new capital for existing companies as well as a total of £1.5 billion for new companies floating on the market, demonstrating AIM’s ability to provide finance for good growth companies as well as attracting new entrants. VCTs play a significant part in that funding process and we identify below the companies we have invested in during the second half of the year.

Performance
Adding back the dividends paid during the year to show the total return, the NAV decreased by 8.3% in the year (2018: 6.3% increase). This compares with a total return for the FTSE SmallCap Index ex-Investment Trusts of -6.5% and for the FTSE AIM All Share Index of -11.3%.  The FTSE All Share Index fared better, showing a positive total return of 1.7%. It was a year of two halves and the fund gave up all of its first half gains and more in the second half when much more volatile market conditions caused smaller companies to underperform. Once again the market proved wary of smaller companies that have yet to make a profit (of which there are several in the VCT), although even more established companies meeting expectations were not immune from bouts of share price weakness, particularly those perceived as growth stocks on higher than average ratings. Breedon Aggregates and Learning Technologies, both top ten holdings, underperformed in the year for this reason despite delivering on profit expectations. GB Group also gave up some of its very good performance of the first half in the second half of the year although it still made a positive impact for the year as a whole.  Investors were particularly unforgiving of companies that disappointed by missing market expectations and this led to significant share price weakness in some cases.

Craneware caught investors’ attention as it started to demonstrate some initial revenues from its newly developed Trisus platform.  This extends the number of products that it can offer to US hospitals to increase their efficiency and is expected to lead to significantly increased revenues per hospital account.  The shares could not sustain their very high rating in the less certain market conditions at the end of 2018 but the company was still a significant contributor to performance for the year as a whole. Among the larger and more established companies, RWS, GB Group, Gamma and Next Fifteen Communications were all positive contributors for the year despite share price weakness in the second half. We continue to hold them for the longer-term growth opportunities that we feel they still have. Two recent investments, Creo Medical and the Panoply Holdings have both performed very well since we invested.

Some companies suffered from specific headwinds which resulted in poor share price performance. The biggest detractor from performance in the year was Gear4music.  A trading update in January 2019 revealed that they had suffered difficulties in fulfilling the level of demand they had experienced in the run up to Christmas. This resulted in lower sales than management had expected which will have a knock-on effect on margins and profits for the year to March 2019.  Investors took this very badly indeed despite the fact that the Group is still growing its sales by nearly 40% per annum and expanding its footprint in Europe. Another major disappointment in the second half of the year came from Yu Group, the supplier of energy to small and medium sized businesses.  Post its listing on AIM in 2016, it had reported strong growth in revenue and profits and had produced a confident statement with its interim results in September 2018.  However, this was followed by a statement that the accounts and accounting practices were being reviewed and that the Group would be lossmaking for the year to December.  A further announcement in December did not really clarify the extent of the problem and in view of headwinds being reported by other alternative suppliers we sold the shares at a loss. Two other negative contributors were Velocity, which had a series of downgrades to forecasts followed by management changes, and DP Poland which reported increased competition from takeaway delivery aggregators pointing to a slower path to breakeven and a need for further funds.  Quixant shares fell after they failed to produce an expected upgrade to forecasts in the January trading update and instead guided analysts to a second half weighted 2019.  We had taken some profits in the holding in the summer of 2018 but still view this as a core holding for its longer term growth prospects.

After performing very well for most of the year, Staffline had a turnaround in its fortunes right at the end of the period and when it was a top five holding in the portfolio.  It was unable to publish its figures as expected at the end of January due to a last minute allegation over payment practices in its staffing division.  The shares fell by 40% before being suspended later that day.  After some weeks and an exhaustive investigation by its auditors it was able to put a statement out to the market and re-list its shares, allowing them to recover from their lows although not yet to the level they fell from.  The shares in Staffline are shown in the accounts at the suspension price of 669p.  Further recovery should be possible once the audited accounts are published. At the time of writing the share price has improved to 861p. 

Elsewhere, early stage companies yet to reach profitability once again held back performance of the NAV, some of which had setbacks or found themselves in need of cash to achieve the next milestone. Futura Medical, Osirium, Microsaic, Midatech Pharma and Haydale Graphene all came into that category. 

There are a number of more recent constituents of the portfolio that have yet to make an impression in public markets and whose shares have underperformed while awaiting evidence of progress in their businesses. These include some recent new holdings from the past two years such as Trackwise Designs, Maestrano, Maxcyte, appScatter and Escape Hunt. Investing for a VCT involves backing companies when they are small and still at an early stage of development and share price progress depends on them being noticed by a wider circle of investors as they produce results and develop their businesses over time. Although the earlier stage companies in the portfolio represent a relatively small proportion by value we expect them to contribute to future performance when they start to demonstrate growth in their businesses. In the year under review there were some examples of companies that demonstrated that they had started to achieve that in the period and whose shares outperformed including Ixico, Scientific Digital Imaging, Access Intelligence, Beeks Financial Cloud, and Mycelx. The latter was helped by a stronger oil price and increased demand for its technology to clean hydrocarbons out of water which led to several upgrades to revenues during the year and the restoration of profitability.  The shares had a significant positive effect on the performance of the NAV.

The non-qualifying element of the equity portfolio comprises the funds raised in share offers awaiting deployment into qualifying investments. Further investments were made into Octopus Portfolio Manager and the Octopus UK Micro Cap Growth fund and a new investment was made into the Octopus Multi-Cap Income fund in the period.

Portfolio Activity
Having made twelve qualifying investments into eleven companies at a total cost of £8.1 million in the first half of the year, we added two further new qualifying holdings at a cost of £1.9 million in the second half, as well as two follow-on qualifying investment of £0.1 million into Access Intelligence Group and £0.5 million into Maxcyte. Total investment of £10.6 million in qualifying investments for the year was considerably higher than last year’s £8.4 million, reflecting a still healthy AIM market.

One of the two new qualifying investments, the Panoply Holdings plc, was a new issue. It helps its customers to increase the efficiency of their operations using technology such as artificial intelligence and software design.  The other, Falanx plc, is an existing AIM company. It informs, protects and defends businesses from the growing threat of cyber security breaches.

The manager continued to use non-qualifying investments to manage liquidity while awaiting new qualifying investment opportunities. We have held onto existing AIM holdings where we see the opportunity for further development but have invested any new funds raised into a mixture of the Octopus managed portfolios with a small proportion going into the FP Octopus UK Micro Cap Growth fund and the FP Octopus UK Multi Cap Income fund. This strategy is designed to obtain a better return on funds awaiting investment than the very low rates available on cash.

During the year we realised profits in holdings in Quixant, Learning Technologies, GB Group, Gooch and Housego, Beeks Financial, RWS Holdings and Creo Medical after good performances.  Escher Group, Sinclair Pharma, Free Agent, and CityFibre were all the subject of takeover bids for cash. In addition we sold the entire holdings in Faron Pharmaceuticals, Futura Medical and Yu Group and part of the holding in Diurnal at a loss. The holding in TLA was sold at a small profit over book cost. In all disposals raised £9.0 million in cash and made an aggregated profit on original cost of £1.6 million.

New VCT Regulations
The budget in November 2018 contained no significant changes to the VCT regulations. As a reminder, any funds raised in accounting periods beginning on or after 6th April 2018 should be 30% invested in qualifying holdings within 12 months of the end of the accounting period in which the shares were issued, and for financial years ending after 6 April 2019 the portfolio will have to maintain a minimum qualifying investment of 80% (currently 70%).

We are determined to maintain a threshold of quality and to invest where we see the potential for returns from growth. However, the emphasis of the new regulations is definitely to encourage investment into earlier stage companies, and to that extent it seems likely that over a number of years the portfolio will see a rise in the number of younger companies receiving an initial investment. We would expect to invest further in those companies as they demonstrate their ability to grow.

At present there has been little change to the profile of the portfolio, as we continue to hold the larger market capitalisation companies, in which we invested several years ago as qualifying companies, or which we bought in the market prior to the rule changes where we see the potential for them to continue to grow.

In order to qualify companies must:

•      have fewer than 250 full time equivalent employees; and

•      have less than £15 million of gross assets at the time of investment and no more than £16 million immediately post investment; and

•      be less than seven years old from the date of their first commercial sale (or 10 years if a knowledge intensive company) if raising State Aided (ie VCT) funds for the first time; and

•      have raised no more than £5 million of State Aided funds in the previous 12 months and less than the lifetime limit of
£12 million (or from 6th April 2018 £10 million in 12 months and a £20 million lifetime limit if a knowledge intensive company); and

•      produce a business plan to show that the funds are being raised for growth and development.

The latest changes are to encourage VCTs to keep their investment rate up after raising money – hence the 70% limit will rise to 80% from 28 February 2020. However, allowing knowledge intensive companies to raise up to £10m of the £20m lifetime limit in a twelve month period rather than the existing £5m will improve flexibility as will the proposed change to the amount of time allowed for re-investment of cash from sales of qualifying holdings from six to twelve months.

Outlook and Future Prospects
Equity markets have got off to a better start to 2019, however all of the uncertainties about the eventual shape of our future relationship with the EU, domestic political instability and the resilience of our economic growth remain challenges at the present time and this means that markets are likely to remain volatile.  Against this background it is also unlikely that shares that suffered from sharp falls in their ratings in the final quarter of 2018 will recover these fully in the short term.

The portfolio now contains 77 holdings with investments across a range of sectors including several such as Craneware, RWS, Gooch and Housego, Cello, EKF Diagnostics, Mycelx and GB Group that have significant international exposure. There are a number of newer holdings that we expect to demonstrate progress over the coming twelve months and the balance of the portfolio towards profitable companies remains. The VCT currently has funds available for new investments which should allow us to take advantage of any dip in valuations resulting from current weak sentiment and we remain selective when viewing new investment opportunities.

Directors’ Responsibilities Statement

The Directors are responsible for preparing the Annual Report and Accounts 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 are required to prepare the financial statements and have elected to prepare the Company’s financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law) including FRS 102 – “The Financial Reporting Standard applicable in the UK and Republic of Ireland”. 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 of the Company and of the profit or loss for the Company for that period.

In preparing these financial statements, the Directors are
required to:

•      select suitable accounting policies and then apply them consistently;

•      make judgements and accounting estimates that are reasonable and prudent;

•      state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

•      prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and

•      prepare a Strategic Report, a Director’s Report and Director’s Remuneration Report which comply with the requirements of the Companies Act 2006.

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.

The Directors are responsible for ensuring that the annual report and accounts, taken as a whole, are fair, balanced, understandable and provide the information necessary for shareholders to assess the Company’s position and performance, business model and strategy.

Website Publication
The Directors are responsible for ensuring the Annual Report and the Accounts are made available on a website. Financial statements are published on the Company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein.

Directors’ Responsibility Statement pursuant to DTR4
Roger Smith (Chairman), Stephen Hazell-Smith, Joanne Parfrey and Neal Ransome the Directors, confirm to the best of their knowledge that:

•      the financial statements have been prepared in accordance with the Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland (“FRS 102”) and give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company; and

•      the Annual Report includes a fair review of the development and performance of the business and the financial position of the Company, together with a description of the principal risks and uncertainties that it faces.

For and on behalf of the Board

Roger Smith
Chairman
17 May 2019

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Company's statutory accounts for the years ended 28 February 2019 or 28 February 2018 but is derived from those accounts. Statutory accounts for the year ended 28 February 2018 have been delivered to the Registrar of Companies and statutory accounts for the year ended 28 February 2019 will be delivered to the Registrar of Companies in due course. The Auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditor's reports can be found in the Company's full Annual Report and Accounts at www.octopusinvestments.com

Income Statement

	Year to 28 February 2019			Year to 28 February 2018
	Revenue £’000	Capital £’000	Total £’000	Revenue £’000	Capital £’000	Total £’000
(Loss)/gain on disposal of fixed asset investments	–	(3,796)	(3,796)	–	477	477
(Loss)/gain on valuation of fixed asset investments	–	(7,701)	(7,701)	–	6,943	6,943
Gain on valuation of current asset investments	–	53	53	–	541	541
Investment income	794	307	1,101	843	–	843
Investment management fees	(545)	(1,635)	(2,180)	(432)	(1,296)	(1,728)
Other expenses	(574)	–	(574)	(600)	–	(600)
(Loss)/profit before tax	(325)	(12,772)	(13,097)	(189)	6,665	6,476
Tax	–	–	–	–	–	–
(Loss)/profit after tax	(325)	(12,772)	(13,097)	(189)	6,665	6,476
Earnings per share – basic and diluted	(0.3p)	(11.2p)	(11.5p)	(0.2p)	6.7p	6.5p

•      The ‘Total’ column of this statement represents the statutory Income Statement of the Company; the supplementary revenue return and capital return columns have been prepared in accordance with the AIC Statement of Recommended Practice.

•      All revenue and capital items in the above statement derive from continuing operations.

•      The Company has only one class of business and derives its income from investments made in shares and securities and from bank and money market funds, as well as OEIC funds.

The Company has no recognised gains or losses other than the results for the period as set out above. Accordingly a Statement of Comprehensive Income is not required.

Balance Sheet

	As at 28 February 2019		As at 28 February 2018
	£’000	£’000	£’000	£’000
Fixed asset investments		81,671		91,247
Current assets:
Investments	28,852		24,959
Money Market Funds	1,314		4,300
Debtors	71		52
Cash at bank	11,611		7,475
	41,848		36,786
Creditors: amounts falling due within one year	(1,015)		(963)
Net current assets		40,833		35,823
Net assets		122,504		127,070
Share capital		1,213		1,094
Share premium		81,368		63,098
Capital redemption reserve		94		61
Special distributable reserve		36,592		46,483
Capital reserve realised		(28,999)		(29,277)
Capital reserve unrealised		32,317		45,367
Revenue reserve		(81)		244
Total equity shareholders’ funds		122,504		127,070
NAV per share – basic and diluted		101.0p		116.1p

The statements were approved by the Directors and authorised for issue on 17 May 2019 and are signed on their behalf by:

Roger Smith
Chairman
Company number: 03477519

Statement of Changes in Equity

	Share Capital £’000	Share premium £’000	Capital redemption reserve £’000	Special distributable reserves* £’000	Capital reserve realised* £’000	Capital reserve unrealised £’000	Revenue reserve* £’000	Total £’000
As at 1 March 2018	1,094	63,098	61	46,483	(29,277)	45,367	244	127,070
Management fee allocated as capital expenditure	–	–	–	–	(1,635)	–	–	–
Current year losses on disposal	–	–	–	–	(3,796)	–	–	(3,796)
Current period loss on fair value of investments	–	–	–	–	–	(7,648)	–	(7,648)
Capital investment income	–	–	–	–	307	–	–	307
Loss on ordinary activities after tax	–	–	–	–	–	–	(325)	(325)
Total comprehensive income for the year	–	–	–	–	(5,124)	(7,648)	(325)	(13,097)
Contributions by and distributions to owners:
Repurchase and cancellation of own shares	(33)	–	33	(3,597)	–	–	–	(3,597)
Issue of shares	152	19,392	–	–	–	–	–	19,544
Share issue costs	–	(1,122)	–	–	–	–	–	(1,122)
Dividends paid	–	–	–	(6,294)	–	–	–	(6,294)
Total contributions by and distributions to owners	119	18,270	33	(9,891)	–	–	–	8,531
Other movements:
Prior years’ holding gains now realised	–	–	–	–	5,402	(5,402)	–	–
Total other movements	–	–	–	–	5,402	(5,402)	–	–
Balance as at 28 February 2019	1,213	81,368	94	36,592	(28,999)	32,317	(81)	122,504

	Share Capital £’000	Share premium £’000	Capital redemption reserve £’000	Special distributable reserves* £’000	Capital reserve realised* £’000	Capital reserve unrealised £’000	Revenue reserve* £’000	Total £’000
As at 1 March 2017	873	35,422	45	53,717	(28,020)	37,445	433	99,915
Management fee allocated as capital expenditure	–	–	–	–	(1,296)	–	–	(1,296)
Current year gains on disposal	–	–	–	–	477	–	–	477
Current period gain on fair value of investments	–	–	–	–	–	7,484	–	7,484
Loss on ordinary activities after tax	–	–	–	–	–	–	(189)	(189)
Total comprehensive income for the year	–	–	–	–	(819)	7,484	(189)	6,476
Contributions by and distributions to owners:
Repurchase and cancellation of own shares	(16)	–	16	(1,792)	–	–	–	(1,792)
Issue of shares	237	29,399	–	–	–	–	–	29,636
Share issue costs	–	(1,723)	–	–	–	–	–	(1,723)
Dividends paid	–	–	–	(5,442)	–	–	–	(5,442)
Total contributions by and distributions to owners	221	27,676	16	(7,234)	–	–	–	20,679
Other movements:
Prior years’ holding losses now realised	–	–	–	–	(438)	438	–	–
Total other movements	–	–	–	–	(438)	438	–	–
Balance as at 28 February 2018	1,094	63,098	61	46,483	(29,277)	45,367	244	127,070

^*Included in these reserves is an amount of £7,512,000 (2018: £17,450,000) which is considered distributable to shareholders.

Cash Flow Statement

	Year to 28 February 2019 £’000	Year to 28 February 2018 £’000
Cash flows from operating activities
Return on ordinary activities before tax	(13,097)	6,476
Adjustments for:
(Increase)/decrease in debtors	(19)	280
Increase/(decrease) in creditors	52	(7,910)
Loss/(gain) on disposal of fixed asset investments	3,796	(477)
Loss/(gain) on valuation of fixed asset investments	7,701	(6,943)
Gain on valuation of current asset investments	(53)	(541)
Non-cash Distributions	(307)	–
Cash from operations	(1,927)	(9,115)
Cash flows from investing activities
Purchase of fixed asset investments	(10,581)	(8,947)
Gross investment in current asset investments	(3,840)	(14,850)
Sale of fixed asset investments	8,967	5,039
Net cash flows from investing activities	(5,454)	(18,758)
Cash flows from financing activities
Purchase of own shares	(3,597)	(1,792)
Share issues (net of costs of £1,122,000)	17,438	27,164
Dividends paid	(5,310)	(4,693)
Net cash flows from financing activities	8,531	20,679
Increase/(decrease) in cash and cash equivalents	1,150	(7,194)
Opening cash and cash equivalents	11,775	18,969
Closing cash and cash equivalents	12,925	11,775
Cash and cash equivalents comprise
Cash at Bank	11,611	7,475
Money Market Funds	1,314	4,300
	12,925	11,775