Octopus Apollo VCT plc : Final Results
Octopus Apollo VCT Plc
Final Results
16 May 2014
Octopus Apollo VCT plc, managed by Octopus Investments Limited, today announces the final results for the year ended 31 January 2014.
These results were approved by the Board of Directors on 15 May 2014.
You may, in due course, view the Annual Report in full at www.octopusinvestments.com. All other statutory information can also be found there.
Financial Summary
| Year to 31 January 2014 | Year to 31 January 2013 | |
| Net assets (£'000s) | 63,905 | 47,774 |
| Return on ordinary activities after tax (£'000s) | 1,751 | 223 |
| Net asset value per share (NAV) | 86.8p | 89.3p |
| Cumulative dividends paid since launch | 22.5p | 17.5p |
| Total return (NAV plus cumulative dividends paid) | 109.3p | 106.8p |
| Proposed final dividend | 2.5p | 2.5p |
Your Board has proposed a final dividend of 2.5 pence per share in respect of the year ended 31 January 2014. If approved at the AGM, this dividend will be paid on 22 July 2014 to shareholders on the register on 27 June 2014.
Key Dates
Final dividend payment date 22 July 2014
Annual General Meeting 8 July 2014 (3.00 p.m. at 20 Old Bailey, London,
EC4M 7AN)
Half-yearly results to 31 July 2014 published September 2014
Annual results to 31 January 2015 announced May 2015
Annual Report and financial statements published May 2015
Chairman's Statement
Introduction
I am pleased to present the annual report of Octopus Apollo VCT plc for the year ended 31 January 2014.
Performance
The net asset value ('NAV") has fallen from 89.3 pence per share as at 31 January 2013 to 86.8 pence per share as at 31 January 2014. After adding back the 5.0p of dividends paid in the year, the total return (NAV plus cumulative dividends paid) has risen by 2.3%, from 106.8 pence per share as at 31 January 2013 to 109.3 pence per share as at 31 January 2014.
The merger of the Octopus Apollo VCTs in 2012 was designed to deliver cost savings and strategic benefits to all shareholders. It was anticipated that the costs of the merger, £320,000, would be recovered within sixteen months. I am pleased to report that merger-related cost savings of £329,000 were made in the year ended 31 January 2014. As these benefits are delivered and the Company continues to receive a consistent level of loan interest income, your Board and Investment Manager expect the total return to continue to make progress.
The Company's 2011/2012 investments into six solar companies performed well during the period, leading to a combined upward revaluation of £963,000. In addition, solid trading for CSL Dualcom, Technical Software Consultants, Tristar Worldwide, 3AM Music and Atlantic Screen International led to further upward revaluations totalling £220,000. Post year end the Company realised in full its holding in Hydrobolt. An uplift of £646,000 was recognised on this investment during the year.
These gains were partially offset by prudent downward revaluations for Bruce Dunlop and Associates, Resilient Corporate Services, Clifford Thames and Callstream, formerly known as Bluebell, totalling £713,000. As a result, an overall positive revaluation, both realised and unrealised, of £1,116,000 has been recognised in these financial statements. This compares with gains of £398,000 in the year ended 31 January 2013.
Dividend and Dividend Policy
It is your Board's policy to maintain a regular dividend flow where possible in order to take advantage of the tax free distributions a VCT is able to provide.
Given the performance of your Company your Board has proposed a final dividend of 2.5 pence per share in respect of the year ended 31 January 2014. This will bring the total dividends paid during the year to 5 pence, in line with the dividend policy outlined in the 2012 prospectus.
Investment Portfolio
During the year, the Company invested a total of £16,500,000, of which £14,000,000 was invested in Terido, a trading partnership managed by Octopus Investments which supports a range of secured asset backed lending in sectors including residential property and solar. In February 2013, £1,500,000 was invested in Healthcare Services and Technology ("HST"), an acquisition vehicle focused on finding qualifying investments in the healthcare sector. A follow on investment in HST of £1,000,000 was subsequently made in January 2014.
The Company received £3,308,000 from part and full disposals over the period. This includes £990,000 from the disposal of Salus Services 2. There were also part disposals in Callstream for proceeds of £1,341,000, Hydrobolt for proceeds of £700,000, Sula Power for proceeds of £249,000 and British Country Inns for proceeds of £28,000.
The Company's investment portfolio is set out on page X. All of the investments are discussed further in the Investment Manager's Review on pages X to X.
The Company, by the year end, had invested sufficiently in order to meet all the requirements for it to fully qualify as a VCT. The Investment Manager now has the opportunity to make a limited number of further investments with the aim of accelerating the NAV of the Company over the foreseeable future.
Investment Strategy
As set out in the prospectus, the aim of the Company is to make investments that focus more on capital preservation than a typical VCT. To date the Investment Manager has been successful in achieving this aim, as evidenced by the positive return on ordinary activities.
Typically the structure of the investments is weighted more heavily towards loan based instruments as opposed to equity. Such investments provide fixed returns and payments are generally ranked above most other creditors, allowing for future visibility and security. This strategy also reduces the downward risk that is an intrinsic element of an equity investment.
Having passed its five year qualifying period, it is the intention of the Board that the Company should remain as a VCT and continue to invest in accordance with the original investment mandate.
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 the Company is in compliance with the conditions laid down by HMRC for maintaining approval as a VCT.
A key requirement is now to maintain the 70% qualifying investment level. As at 31 January 2014, 76.2% of the portfolio, as measured by HMRC rules, was invested in VCT qualifying investments.
Annual General Meeting
The Company's Annual General Meeting will take place on 8 July 2014 at 3.00 p.m. I look forward to welcoming you to the meeting which will be held at the offices of Octopus Investments Limited at 20 Old Bailey, London, EC4M 7AN. Directions to their office can be found by visiting their website at: www.octopusinvestments.com.
Electronic Communications
Based on feedback from shareholders, and in order to reduce the cost of printing and the consequential impact on the environment, we now offer shareholders the opportunity to forgo their printed report and account documents in favour of receiving electronic or mail notification with details of how to view the documents online. If you would like to change the format in which you receive this report, please complete the form enclosed with this annual report or contact Octopus or Capita using the contact details provided on page X of this report.
Outlook
There is now no doubt that the UK economy is in recovery, which is a marked improvement from the economic outlook this time last year. Banks are beginning to lend more to businesses, but this remains on a restricted basis; in addition, many companies continue to prefer the more partnership-style of investment offered by VCTs . The value of the Company grew consistently throughout the recent prolonged recession, which is testament to the prudent investment approach adopted by the fund management team. This investment approach of capital preservation will continue as the Manager seeks further investments to continue to grow the value of the Company.
Murray Steele
Chairman
15 May 2014
Investment Manager's Review
Personal Service
At Octopus we focus on both managing your investments and keeping you informed throughout the investment process. We are committed to providing our investors with regular and open communication. Our updates are designed to keep you informed about the progress of your investment.
Octopus Investments Limited was established in 2000 and has a strong commitment to both smaller companies and to VCTs. We currently manage 13 VCTs, including this VCT, and manage over £340 million in the VCT sector. Octopus has over 250 employees. The investment team that manages the portfolio of your Company is comprised of X managers, with additional support from specialist investment teams and support staff.
Investment Policy
The investment approach of Octopus Apollo VCT plc is to invest with a focus on capital preservation. The majority of companies in which Apollo invests operate in sectors where there is a high degree of predictability. Ideally, we seek companies that have contractual revenues from financially sound customers and will provide an exit to the Company within three to five years.
Performance
The Company made a net return per share of 2.3% between 31 January 2013 and 31 January 2014. Whilst the NAV decreased slightly from 89.3p per share to 86.8p per share, 5.0p of dividends were paid over the period, bringing cumulative dividends paid to date to 22.5p and the total return (NAV plus cumulative dividends) to 109.3p pence per share.
The disposal of Salus Services 2, in addition to the part disposal of British Country Inns and loan repayments from Callstream, Hydrobolt and Sula Power led to £3,274,000 of cash inflows back to the Company.
The Company's investments into six solar companies in 2011 and 2012, being Shakti Power, Aashman Power, Kala Power, Sula Power, Donoma Power and Tonatiuh Trading 1, performed well during the period, leading to a combined upward revaluation for these six companies of £963,000. Solid trading for CSL Dualcom, Technical Software Consultants, Tristar Worldwide, 3AM Music and Atlantic Screen International led to further upward revaluations totalling £220,000. These gains were partially offset by prudent downward revaluations for Bruce Dunlop and Associates, which is experiencing challenging trading conditions, solar company Resilient Corporate Services, and small fair value adjustments for Clifford Thames (which continues to trade well) and Callstream; together these downwards adjustments totalled £713,000.
Post year end the Company realised in full its holding in Hydrobolt, representing a strong profitable exit over a six-year hold period. An uplift of £646,000 was recognised on this investment during the year. In addition, post year end the Company received full repayment of its £3.5 million loan to Borro.
The majority of investments in the portfolio are loan-based, from which a steady flow of interest is received into the Company. This is now at the level whereby interest receipts more than offset the running costs of the Company. These returns will allow for any gains on realisations and loan note redemption premiums to be paid out to shareholders by way of dividends or recognised as an uplift to the value of your investment.
Portfolio Review
New VCT qualifying investments totalling £2.5 million have been made in Healthcare Services and Technology during the period, a company which is seeking a qualifying investment in the healthcare sector. In addition £14 million was invested in Terido, a trading partnership managed by Octopus Investments which supports a range of secured asset backed lending in sectors including residential property and solar. The Company's participation in the partnership is expected to provide a more secure return to the Company than the alternatives of bank deposits or money market funds. In addition, the Company's investment in Terido can be accessed at short notice should it require these funds to make other investments or pay running costs of the Company. Terido invests in a significant number of individual companies and is structured as a partnership, meaning Apollo's concentration tests are measured on the basis of these underlying investments by Terido, rather than on the total £14 million investment amount. As this investment is in a limited liability partnership it is treated as a non-qualifying investment for the purposes of HMRC's VCT regulations as it does not constitute interests in shares and securities and therefore falls outside the VCT rule that no holding in a company should exceed 15% of its total investments.
The Company's investments in Erie Heat and Winnipeg Heat, originally intended for deployment into ground source heat pump opportunities, have now been redeployed into two new anaerobic digestion sites, where construction is currently underway. Anaerobic digestion sites offer a similar asset-backed, capital preservation opportunity to ground source heat pump or solar sites.
Outlook
Over the past year the UK economy has entered a period of recovery - with growth of between 0.7% and 0.9% per quarter for the year to 31 March 2014. Other positive indicators include continuing increasing consumer confidence and low inflation, as measured by the Consumer Price Index, which in February 2014 fell to 1.7%, its lowest point in over four years. This is encouraging for both consumers and businesses.
Against this backdrop, banks are beginning to be more active in again lending to small and medium-sized businesses, although our experience is that demand for funding still far outstrips supply; this presents our investment team with a number of ongoing investment opportunities suitable for the investment mandate of Apollo.
The Company's portfolio, constructed on a basis of capital preservation, has weathered the difficult economic conditions of the past few years and has continued to grow in value; it is well positioned for further growth as conditions continue to improve. We will continue to invest in line with the Company's mandate of capital preservation and are optimistic about the Company's current portfolio and future investment prospects.
If you have any questions on any aspect of your investment, please call one of the team on 0800 316 2347.
Benjamin Davis
Octopus Investments Limited
15 May 2014
Valuation Methodology
Initial measurement
The investments held by Apollo are all unquoted and as such there is no trading platform from which prices can be easily obtained. Financial assets are measured at fair value. The initial best estimate of fair value of a financial asset that is either quoted or not quoted in an active market is the transaction price of the recent round (i.e. cost).
Subsequent measurement
Subsequent adjustment to the fair value of unquoted investments has been made using sector multiples where applicable, based on information as at 31 January 2014. In some cases the multiples have been compared to equivalent companies where it is believed that this is more appropriate than a sector multiple. In instances where an investment has predictable future cash flows, discounted cash flow valuations are used to support the fair value.
In accordance with our interpretation of the IPEVC valuation guidelines, investments made within 12 months are usually kept at cost, unless performance indicates that fair value has changed.
If you would like to find out more regarding the IPEVC valuation guidelines, please visit their website at: www.privateequityvaluation.com.
Investment Portfolio
| Investments | Sector | Investment cost as at 31 January 2014 (£'000) | Movement in fair value to 31 January 2014 (£'000) | Fair value as at 31 January 2014 (£'000) | Movement in fair value in year (£'000) | % equity held by Apollo VCT | % equity held by all funds managed by Octopus | |
| Terido LLP * | Asset backed lending | 14,000 | - | 14,000 | - | 0.0% | 0.0% | |
| Clifford Thames Group Limited | Automotive software & data | 7,197 | 399 | 7,596 | (103) | 7.6% | 7.6% | |
| CSL Dualcom Limited | Security devices | 6,911 | 48 | 6,959 | 48 | 2.0% | 3.4% | |
| Borro Loan 2 Limited** | Consumer finance | 3,500 | - | 3,500 | - | 0.0% | 0.0% | |
| Healthcare Services and Technology Limited | Healthcare Technology | 2,500 | - | 2,500 | - | 49.9% | 100.0% | |
| Shakti Power Limited | Solar | 1,825 | 360 | 2,185 | 360 | 47.7% | 100.0% | |
| Mablaw 555 Limited ('Technical Software Consultants) | Engineering | 2,000 | 30 | 2,030 | 30 | 6.6% | 10.0% | |
| Callstream Limited | Telecommunicat-ions | 1,797 | 211 | 2,008 | (8) | 6.5% | 6.5% | |
| Erie Heat Limited | Anaerobic digestion | 2,000 | - | 2,000 | - | 49.9% | 100.0% | |
| Winnipeg Heat Limited | Anaerobic digestion | 2,000 | - | 2,000 | - | 49.9% | 100.0% | |
| Resilient Corporate Services Limited | Solar | 2,000 | (252) | 1,748 | (252) | 41.2% | 100.0% | |
| Hydrobolt Limited | Manufacturing | 453 | 1,014 | 1,467 | 646 | 4.6% | 43.3% | |
| Aashman Power Limited | Solar | 950 | 215 | 1,165 | 214 | 32.0% | 100.0% | |
| Project Tristar Limited | Chauffeur services | 798 | 156 | 954 | 63 | 3.9% | 35.0% | |
| Kala Power Limited | Solar | 708 | 159 | 867 | 160 | 26.0% | 100.0% | |
| Sula Power Limited | Solar | 626 | 22 | 648 | 22 | 3.2% | 100.0% | |
| Atlantic Screen International Limited | Media | 600 | 34 | 634 | 34 | 30% | 100.0% | |
| Donoma Power Limited | Solar | 500 | 113 | 613 | 113 | 18.0% | 100.0% | |
| 3AM Music Limited | Media | 500 | 45 | 545 | 45 | 33.3% | 100.0% | |
| Tonatiuh Trading 1 Limited | Solar | 420 | 95 | 515 | 94 | 17.0% | 100.0% | |
| Bruce Dunlop and Associates International Limited | Media | 1,368 | (1,018) | 350 | (350) | 5.1% | 30.0% | |
| British Country Inns plc | Restaurants & bars | 44 | (22) | 22 | - | 1.3% | 1.3% | |
| Total qualifying investments | 52,697 | 1,609 | 54,306 | 1,116 | ||||
| Money market funds | 4,254 | |||||||
| Cash at bank | 7,910 | |||||||
| Debtors less creditors | (2,565) | |||||||
| Total net assets | 63,905 | |||||||
*Participation in trading partner representing 8% of the LLP at 31 January 2014
**100% debt investment
Review of Investments
At 31 January 2014 Apollo's portfolio comprised investments in 22 unquoted companies. The unquoted investments are in Ordinary shares with full voting rights as well as loan note securities and a participation in a limited liability partnership.
Unquoted investments are valued in accordance with the valuation methodology and the accounting policy set out on page X, which takes account of current industry guidelines for the valuation of venture capital portfolios and is compliant with IPEVC Valuations guidelines and current financial reporting standards.
Ten Largest Holdings
Listed below are the ten largest investments by value as at 31 January 2014:
Terido LLP
Terido is a trading partnership managed by Octopus Investments which supports a range of secured asset backed lending in sectors including residential property and solar. Terido invests in a significant number of individual companies in order to ensure diversification for the partnership. Apollo's investment in Terido can be accessed at short notice should Apollo require these funds to make other investments or pay running costs of the Company.
| Asset class | Cost | Valuation | ||
| Participation | £14,000,000 | £14,000,000 | ||
| Total | £14,000,000 | £14,000,000 |
Investment date: June 2013
Equity held: 0.0%
Last audited accounts: 31 March 2013
Revenues: £4.4 million
Profit before interest & tax: £3.6 million
Net assets: £148.2 million
Income receivable recognised in year: £372,000
Valuation basis: Transaction cost
Clifford Thames Group Limited (Clifford Thames)
Clifford Thames is a market-leading provider of consultancy, business outsourcing, software and data services for the automotive industry, and is a key partner of most of the world's leading car manufacturers. With offices in eight countries, Clifford Thames has a well-established and impressive client list including Ford, GM Europe, Jaguar Land Rover, Mazda and Fiat. Further information can be found at the company's website www.clifford-thames.com.
| Asset class | Cost | Valuation | ||
| A Ordinary shares | £2,133,500 | £2,857,000 | ||
| B preference shares | £13,500 | £19,000 | ||
| Loan stock | £5,050,000 | £4,720,000 | ||
| Total | £7,197,000 | £7,596,000 |
Investment date: January 2010
Equity held: 7.6%
Last audited accounts: 31 March 2013
Revenues: £46.9 million
Profit before interest & tax: £2.2 million
Net assets: £14.9 million
Income receivable recognised in year: £560,000
Valuation basis: Earnings multiple
CSL DualCom Limited ('CSL')
CSL is the UK's leading supplier of dual path signalling devices, which link burglar alarms to the police or a private security firm. The devices communicate using both a telephone line or broadband connection and a wireless link. CSL has developed a number of new products for the sector, which have enabled the business to steadily grow its market share of new connections and its profitability since the initial investment. Further information can be found at the company's website www.csldual.com.
| Asset class | Cost | Valuation | ||
| Ordinary shares | £192 | £48,000 | ||
| Loan stock | £6,910,808 | £6,911,000 | ||
| Total | £6,911,000 | £6,959,000 |
Investment date: February 2009
Equity held: 2.0%
Last audited accounts: 31 March 2013
Revenues: £12.5 million
Profit before interest & tax: £2.3 million
Net assets: £8.1 million
Income receivable recognised in year: £622.000
Valuation basis: Earnings multiple
Borro Loan 2 Limited ('Borro')
Founded in 2008, Borro is an online consumer finance business, providing short term asset secured loans to customers nationwide. Further information can be found at the company's website www.borro.com.
| Asset class | Cost | Valuation | ||
| Loan stock | £3,500,000 | £3,500,000 | ||
| Total | £3,500,000 | £3,500,000 |
Investment date: December 2011
Equity held: 0.0%
Last audited accounts: 31 December 2012
Revenues: £3,809,000*
Profit before interest & tax: £nil*
Net assets: £1*
Income receivable recognised in year: £485,000
Valuation basis: Transaction cost
*Borro Loan 2 Limited is the loan book company and a 100% subsidiary of 'Borro Limited', a company registered in England and whose results are publically available from Companies House. Accordingly, Borro Loan 2 Limited has nil revenues and nominal net assets.
Healthcare Services and Technology Limited
Healthcare Services and Technology is an acquisition vehicle seeking a qualifying investment in the healthcare sector.
| Asset class | Cost | Valuation | ||
| Ordinary shares | £2,500,000 | £2,500,000 | ||
| Total | £2,500,000 | £2,500,000 |
Investment date: February 2014
Equity held: 49.9%
Last unaudited accounts: n/a
Revenues: £n/a
Loss before interest & tax: £n/a
Net assets: £n/a
Income receivable recognised in year: £nil
Valuation basis: Transaction cost
Shakti Power Limited ('Shakti')
Shakti Power Limited has constructed and operates a solar renewable energy site at a carefully selected location in Dunsfold, Surrey.
| Asset class | Cost | Valuation | ||
| A Ordinary shares | £1,825,000 | £2,185,000 | ||
| Total | £1,825,000 | £2,185,000 |
Investment date: December 2011
Equity held: 47.7%
Last audited accounts: 31 December 2012
Revenues: £0.7 million
Profit before interest & tax: £41,000
Net assets: £3.5 million
Income receivable recognised in year: £nil
Valuation basis: Discounted Cash Flow
Mablaw 555 Limited ('Technical Software Consultants')
Technical Software Consultants designs and manufactures equipment to solve a range of oil and gas industry inspection needs, including crack sizing, structural monitoring and stress mapping. Further information can be found at the company's website www.tscinspectionsystems.com.
| Asset class | Cost | Valuation | ||
| A Ordinary shares | £100 | £30,100 | ||
| B Ordinary shares | £199,900 | £199,900 | ||
| Loan stock | £1,800,000 | £1,800,000 | ||
| Total | £2,000,000 | £2,030,000 |
Investment date: April 2012
Equity held: 6.6%
Last audited accounts: 31 March 2013
Revenues: £3.6m
Profit before interest & tax: £0.2m
Net assets: £0.6m
Income receivable recognised in year: £196,000
Valuation basis: Earnings multiple
Callstream Limited ("Callstream, formerly Bluebell Telecom Services Limited)
Callstream provides landline, mobile and data solutions to businesses, helping to cut costs and improve efficiency through simple rationalisation and more effective deployment of voice and data services. Further information can be found at the company's website www.callstream.com.
| Asset class | Cost | Valuation | ||
| A2 shares | £317,000 | £552,000 | ||
| Ordinary shares | £50,000 | £131,000 | ||
| Loan stock | £1,430,000 | £1,325,000 | ||
| Total | £1,797,000 | £2,008,000 |
Investment date: September 2010
Equity held: 6.5%
Last audited accounts: 30 April 2013
Revenues: £13.3 million
Profit before interest & tax: £1.9 million
Net assets: £5.0 million
Income receivable recognised in year: £404,000
Valuation basis: Earnings multiple
Erie Heat Limited ('Erie')
Erie is in the process of constructing, and will operate, an anaerobic digestion plant in Lincolnshire.
| Asset class | Cost | Valuation | ||
| A Ordinary shares | £600,000 | £600,000 | ||
| Loan stock | £1,400,000 | £1,400,000 | ||
| Total | £2,000,000 | £2,000,000 |
Investment date: April 2012
Equity held: 49.9%
Last unaudited accounts: 28 February 2013
Revenues: £nil
Profit before interest & tax: £109
Net assets: £0.6 million
Income receivable recognised in year: £8,000
Valuation basis: Transaction cost
Winnipeg Heat Limited ('Winnipeg')
Winnipeg is in the process of constructing, and will operate, an anaerobic digestion plant in Yorkshire.
| Asset class | Cost | Valuation | ||
| A Ordinary shares | £600,000 | £600,000 | ||
| Loan stock | £1,400,000 | £1,400,000 | ||
| Total | £2,000,000 | £2,000,000 |
Investment date: April 2012
Equity held: 49.9%
Last unaudited accounts: 28 February 2013
Revenues: £nil
Profit before interest & tax: £86
Net assets: £0.5 million
Income receivable recognised in year: £17,000
Valuation basis: Transaction cost
Directors' Responsibilities Statement
The Directors are responsible for preparing the Strategic Report, Directors' Report, Directors' Remuneration Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable laws). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent; and
- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements.
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 and the Directors' Remuneration report 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 confirm that:
- so far as each Director is aware, there is no relevant audit information of which the Company's auditor is unaware; and
- the Directors have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.
The Directors are responsible for preparing the annual report in accordance with applicable law and regulations. Having taken advice from the Audit Committee, the Directors consider the annual report and the financial statements, taken as a whole, provide the information necessary to assess the Company's performance, business model and strategy and is fair, balanced and understandable.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
To the best of our knowledge:
- the financial statements, prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable laws), give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
- the annual report, including the strategic report, includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.
On behalf of the Board
Murray Steele
Chairman
15 May 2014
| Income Statement | ||||
| Year ended 31 January 2014 | ||||
| Revenue | Capital | Total | ||
| Notes | £'000 | £'000 | £'000 | |
| Realised loss on disposal of fixed asset investments | 10 | - | (10) | (10) |
| Fixed asset investment holding gains | 10 | - | 1,116 | 1,116 |
| Investment income | 2 | 2,979 | - | 2,979 |
| Investment management fees | 3 | (273) | (1,194) | (1,467) |
| Other expenses | 4 | (707) | - | (707) |
| Return on ordinary activities before tax | 1,999 | (88) | 1,911 | |
| Taxation on return on ordinary activities | 6 | (400) | 240 | (160) |
| Return on ordinary activities after tax | 1,599 | 152 | 1,751 | |
| Earnings per share - basic and diluted | 8 | 2.3p | 0.2p | 2.5p |
- The 'Total' column of this statement is the profit and loss account of the Company; the 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 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.
The Company has no recognised gains or losses other than the results for the year as set out above.
The accompanying notes are an integral part of the financial statements.
| Income Statement | ||||
| Year ended 31 January 2013 | ||||
| Revenue | Capital | Total | ||
| Notes | £'000 | £'000 | £'000 | |
| Realised gain on disposal of fixed asset investments | 10 | - | 23 | 23 |
| Fixed asset investment holding gains | 10 | - | 375 | 375 |
| Investment income | 2 | 1,678 | - | 1,678 |
| Investment management fees | 3 | (167) | (893) | (1,060) |
| Other expenses | 4 | (770) | - | (770) |
| Return on ordinary activities before tax | 741 | (495) | 246 | |
| Taxation on return on ordinary activities | 6 | (201) | 178 | (23) |
| Return on ordinary activities after tax | 540 | (317) | 223 | |
| Earnings per share - basic and diluted | 8 | 1.5p | (0.9)p | 0.6p |
- The 'Total' column of this statement is the profit and loss account of the Company; the 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 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
The Company has no recognised gains or losses other than the results for the year as set out above.
The accompanying notes are an integral part of the financial statements.
| Reconciliation of Movements in Shareholders' Funds | ||
| Year ended 31 January 2014 | Year ended 31 January 2013 | |
| £'000 | £'000 | |
| Shareholders' funds at start of year | 47,774 | 24,337 |
| Return on ordinary activities after tax | 1,751 | 223 |
| Shares issued upon acquisition of assets and liabilities of Octopus Apollo VCT 1, 2 and 4 plc | - | 26,522 |
| Stamp duty on shares issued | - | (31) |
| Issue of shares | 20,585 | 2,835 |
| Enhanced buyback | (737) | - |
| Purchase of own shares | (1,859) | (4,233) |
| Dividends paid | (3,609) | (1,879) |
| Shareholders' funds at end of year | 63,905 | 47,774 |
The Company has no recognised gains or losses other than the results for the year as set out above.
| Balance Sheet | |||||
| As at 31 January 2014 | As at 31 January 2013 | ||||
| Notes | £'000 | £'000 | £'000 | £'000 | |
| Fixed asset investments* | 10 | 54,306 | 39,976 | ||
| Current assets: | |||||
| Debtors | 11 | 1,653 | 936 | ||
| Investments - money market funds* | 12 | 4,254 | 4,737 | ||
| Cash at bank | 7,910 | 3,863 | |||
| 13,817 | 9,536 | ||||
| Creditors: amounts falling due within one year | 13 | (4,218) | (1,738) | ||
| Net current assets | 9,599 | 7,798 | |||
| Total assets less current liabilities | 63,905 | 47,774 | |||
| Called up equity share capital | 14 | 7,362 | 5,350 | ||
| Share premium | 15 | 35,140 | 2,488 | ||
| Special distributable reserve | 15 | 19,116 | 39,911 | ||
| Capital redemption reserve | 15 | 2,704 | 594 | ||
| Capital reserve gains & losses on disposal | 15 | (2,445) | (1,213) | ||
| Capital reserve holding gains & losses | 15 | 2,028 | 644 | ||
| Revenue reserve | 15 | - | - | ||
| Total shareholders' funds | 63,905 | 47,774 | |||
| Net asset value per share | 9 | 86.8p | 89.3p | ||
*Held at fair value through profit or loss
The statements were approved by the Directors and authorised for issue on 15 May 2014 and are signed on their behalf by:
Murray Steele
Chairman
Company number: 05840377
Cash Flow Statement | |||
| Year to 31 January 2014 | Year to 31 January 2013 | ||
| Notes | £'000 | £'000 | |
| Net cash inflow from operating activities | (89) | 192 | |
| Taxation | 6 | - | - |
| Financial investment: | |||
| Purchase of fixed asset investments | 10 | (16,500) | (4,283) |
| Sale of fixed asset investments | 10 | 3,276 | 5,326 |
| Dividends paid | 7 | (3,609) | (1,879) |
| Management of liquid resources: | |||
| Purchase of current asset investments | 12 | (17) | (5,478) |
| Sale of current asset investments | 12 | 500 | 3,800 |
| Current asset investments acquired on acquisition of net assets of Octopus Apollo VCT 1, 2 and 4 plc | - | 1,454 | |
| Financing | |||
| Enhanced share buyback | (737) | - | |
| Purchase of own shares | 14 | (1,859) | (4,233) |
| Cash received on acquisition of net assets of Octopus Apollo VCT 1, 2 and 4 plc | - | 3,672 | |
| Stamp duty on shares issued to acquire net assets of Octopus Apollo VCT 1, 2 and 4 plc | - | (31) | |
| Cash received from fund raising top-up offer not allotted shares | 13 | 2,497 | 1,041 |
| Issue of own shares | 14 | 20,585 | 2,835 |
| Increase in cash | 4,047 | 2,416 | |
| Reconciliation of Return after Taxation to Cash Flow from Operating Activities | ||
| Year to 31 January 2014 | Year to 31 January 2013 | |
| £'000 | £'000 | |
| Return on ordinary activities after tax | 1,751 | 223 |
| (Increase)/decrease in debtors | (717) | 39 |
| (Decrease)/increase in creditors | (17) | 328 |
| Loss/(gain) on disposal of fixed assets | 10 | (23) |
| Holding (gain)/loss on fixed asset investments | (1,116) | (375) |
| Inflow from operating activities | (89) | 192 |
| Reconciliation of Net Cash Flow to Movement in Net Funds | |||
| Year to 31 January 2014 | Year to 31 January 2013 | ||
| £'000 | £'000 | ||
| Increase in cash at bank | 4,047 | 2,416 | |
| Movement in cash equivalent securities | (483) | 1,678 | |
| Opening net funds | 8,600 | 4,506 | |
| Net funds at 31 January | 12,164 | 8,600 | |
Net Funds at 31 January comprised:
| As at 31 January 2014 | As at 31 January 2013 | |
| £'000 | £'000 | |
| Cash at bank | 7,910 | 3,863 |
| Money market funds | 4,254 | 4,737 |
| Net funds at 31 January | 12,164 | 8,600 |
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Octopus Apollo VCT plc via Globenewswire
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