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Octopus AIM VCT PLC  -  OOA   

Octopus AIM VCT PLC : Half-yearly Report

Released 16:43 26-Oct-2017

Octopus AIM VCT PLC : Half-yearly Report

Octopus AIM VCT Plc  

Half-Yearly Results

26 October 2017

Octopus AIM VCT plc, managed by Octopus Investments Limited, today announces the unaudited half-yearly results for the six months ended 31 August 2017.

These results were approved by the Board of Directors on 26 October 2017.

You may, in due course, view the Half-Yearly report in full at www.octopusinvestments.com. All other statutory information can also be found there.

Financial Summary

  Six months to
31 August 2017
Six months to
31 August 2016
Year to
28 February 2017
Net assets (£'000s) 115,856 91,832 99,915
Net profit after tax (£'000s) 6,355 6,915 15,123
Net asset value per share ("NAV") (p) 118.4 107.4 114.4
Ordinary Dividends paid in the period (p) 3.0 2.5 5.0
Total return* (%) 6.1 8.2 17.5
Interim Dividend proposed (p)** 2.5    

*The total return is calculated as the (movement in NAV + Dividends paid in the period) divided by the NAV at the beginning of the period.

**An interim dividend of 2.5p will be paid on 19 January 2018 to those shareholders on the register on 22 December 2017.

Chairman's Statement

I am pleased to present the half-yearly results for Octopus AIM VCT plc. In the past my interim statement has incorporated information about, for example, performance and portfolio activity, but this has now been set out separately below in the Interim Management Report. However, it seems sensible to make a few overall remarks.

The six months to 31 August 2017 has seen smaller companies outperform larger companies, continuing the trend seen at the end of 2016 and the beginning of 2017. This was despite a considerable degree of political uncertainty around the mechanics of Brexit and the upset caused by the General Election result in June which has resulted in more volatile market movements over the summer months. Since then the Government has published a consultative document on the Patient Capital Review, the purpose of which is to review funding support for small businesses of which VCTs are an integral part. Your Manager has participated in this process and the final outcome is awaited.

Your Board has declared a dividend of 2.5p, which will be paid on 19 January 2018 to those shareholders on the register on 22 December 2017.

Your Managers have made a number of new investments in the six month period and these are more fully explained within the Interim Management Report. There also appears to be a healthy pipeline of potential new investments, so at this stage it is probable that there will be more new holdings made in the second half of the year.

Shareholders will be aware that your Board decided to launch a new public offer of shares in June and the first allotment took place on 4 August 2017. On the basis of current evidence it seems that there may be good investment opportunities for the new funds, despite the fact that the market will be more prone to bouts of uncertainty as the Brexit negotiations unfold. Nevertheless the broad economic background currently remains favourable and your Board therefore hopes that the NAV can continue to rise.

Roger Smith
Chairman
26 October 2017

Interim Management Report

Overview
The six months to 31 August 2017 saw the progress in the Net Asset Value per share that we reported on in the annual report continue. Smaller companies enjoyed a particularly strong start to 2017 after a period when they had underperformed the FTSE 100, which had benefitted from its high exposure to foreign earnings in the final quarter of 2016. The outperformance of smaller companies was supported by some very good results in the March reporting season and has continued despite a considerable degree of political uncertainty around the mechanics of Brexit, which was further complicated by the General Election result in June. Against this background the NAV enjoyed strong gains in April and May before giving some of these back in the month of June and finishing the period still below its peak.

Fundraisings on AIM got off to a slow start in the first quarter of 2017 although they picked up throughout the period and remain strong as this report goes to press with the result that the VCT invested more in qualifying holdings in the six months than in the whole of the previous year. Once again, further fundraisings for existing businesses exceeded those for new issues, demonstrating that AIM continues to support its existing members. We announced a top-up offer to raise £4.3 million which closed to new applications, fully subscribed, at the beginning of March, well before the end of the tax year. A subsequent combined offer with Octopus AIM VCT 2 plc to raise up to £30million, with an over allotment facility of £10 million for the 2017/18 and 2018/19 tax years was launched in June. Further details can be found on Page 8. The supply of new issues and fundraisings has carried on improving and we believe that the increased flow of opportunities that we have seen as market participants became more familiar with current VCT rules will continue.

Performance
Adding back the 3.0p paid out in dividends in the period, the Net Asset Value has increased by 6.1% in the six months to 31 August 2017. This compares with a 9.1% rise in the Smaller Companies Index (ex Investment Trusts), a 5.3% increase in the FTSE All Share Index and a 12.2% rise in AIM, all on a total return basis. Smaller companies outperformed as they narrowed the valuation discount to the FTSE 100 that had widened in the aftermath of the Brexit vote and weaker sterling. Performance remained stock specific and heavily influenced by the announcement of news with the market remaining wary of early stage companies not yet making a profit, of which we hold a number in the portfolio, particularly in the pharmaceutical, medical device and technology sectors. This was a contributor to the fund lagging both AIM and the Smaller Companies Index in the period. It remained the case that most of the gains in the portfolio relied on progress being made by companies originally invested in at an early stage, and some of those have struggled to make that transformation with many taking longer than originally expected.

Many companies in the portfolio announced good results in March and were subsequently rewarded with share price gains, including several of the larger holdings which contributed the most to the rise in the NAV in the period. Breedon shares continued their outperformance following the acquisition of Hope Cement in 2016 which had doubled the size of the business and increased the geographical reach to cover most of the UK. Quixant's shares also had another good six months, helped by further reports of strong trading which led to further upgrades in forecasts. It has since reported a very strong set of interim results although the shares have now paused for breath to await the outcome for the year. We have taken some profit in the latter holding since the period end. Gear4music's shares were exceptionally strong performers as they reported profits and revenue growth ahead of expectations with rapid expansion of the European leg of the business demonstrating the potential for a much larger international business. GB Group's shares recovered from an earlier setback as investors focused on the size of the opportunity for international identity verification in an increasingly global world. Learning Technologies also made a significant acquisition which extends the company's geographical reach and increases the proportion of recurring revenues, in addition to announcing strong growth in its core business.

Notable detractors from performance in the period were Tasty, where rising food and staff costs resulted in significant downgrades to short term profit expectations and caused it to re-evaluate its new opening pipeline, and DP Poland which operates the Dominos Pizza franchise in Poland. The latter is better placed and starting to show the effective roll-out of its model with 50 owned and franchised stores. It had a successful placing to accelerate its opening programme towards profitability. We believe that the shares will recover once it shows that it has achieved critical mass. Vertu Motors continued to see its share price suffer bouts of pressure from fears around Brexit. Elsewhere, most of the drag on performance came from the earlier stage companies in the portfolio, particularly those that had setbacks or showed themselves in need of further cash to reach profitability. Oxford Pharmascience, Futura Medical, Midatech Pharma, Sphere, Tyratech and Microsaic all fall into this category with several of them publicly highlighting a need for further cash investment in order to achieve the necessary momentum in their businesses. Sphere Medical found that it was unable to raise sufficient funds on AIM and so announced the decision to de-list, causing us to sell our shares at a loss as the proposed structure would have led to the fund holding a private company which would cease to form part of the qualifying portfolio. Some others in this list have announced strategic reviews and will be presenting shareholders with action plans over the coming months.

However, there were also some earlier stage companies which performed well in the period, with good initial contributions from Faron and Maxcyte as well as an upturn in fortunes at MyCelx on the back of a more stable oil price and initial signs that the marketing agreement with Schlumberger could lead to significant future growth. The shares are now well above their low point although they have yet to regain their float price. WANdisco shares also performed well as the market started to appreciate the benefits of the IBM re-seller agreement and the progress towards breakeven.

Portfolio Activity
In the period under review, the Company made seven new qualifying investments totalling £5.32million in companies exposed to a wide range of industries. This represented a significant increase on the previous year when £3.4million was invested in the twelve months to February. The majority were loss-making at the time of investment although we expect several of them to reach profitability in the near to medium term. The new investments were Escape Hunt, Faron Pharmaceuticals, Maxcyte Group, Velocity Composites, DP Poland, Appscatter Group and FairFX Group. Three of these investments (Escape Hunt, Velocity and Appscatter) were new issues, three (Faron, FairFX and Maxcyte) were new investments for the VCT into existing AIM companies and DP Poland was a follow-on investment for the fund. Escape Hunt is a leisure company operating live escape games in premises around the world both through its own outlets and franchisees. Faron Pharmaceuticals is a drug development company with a drug in phase III trials to treat the often lethal Acute Respiratory Distress Syndrome suffered by trauma victims in A&E. Maxcyte is a pharmaceutical services company with particular technological expertise in the discovery, development, manufacture and commercialisation of cell-based medicines. Velocity Composites manages the supply of raw composite materials in prepared form to the production lines of Tier 1 aircraft component manufacturers. FairFX Group is a foreign exchange provider to both private individuals and corporations. Appscatter manages apps for corporate customers and app developers so that they are registered and distributed to over 50 global app stores which are all monitored for brand and piracy infringements and updated as necessary.

Your Managers continued to use non-qualifying investments to manage liquidity while awaiting new qualifying investment opportunities. Existing holdings for this purpose include some AIM non-qualifying stocks but we have added three holdings in UP Global Sourcing, Medica and Alfa Financial Software which are fully listed stocks and therefore allowed under the new regulations. In the period we also invested a further £7.2 million of the cash balances into Octopus managed portfolios of mixed equity and bond funds and £1.05 million into the FP Octopus UK Micro-Cap Fund, with the objective of obtaining a better return on our cash awaiting investment.

A number of disposals were made, which were a mixture of profit-taking from existing holdings such as Netcall and Restore, and outright sales as in the case of Work Group which had been suspended and changed its business so that it no longer qualified and Sphere which decided to raise funds as a private company as well as Ideagen. The result has been a net loss of £263,000. Since the period end we have taken profits in Quixant and Restore.

Transactions with Manager
Details of amounts paid to the Manager are disclosed in note 8 to the Financial Statements.

Share Buybacks
In the six months to 31 August 2017, the Company bought back 929,542 Ordinary shares for total consideration of £1,048,000. It is evident from the conversations which your Managers have that this facility remains an important consideration to investors. The Company remains committed to maintaining its policy of buying back shares at a 5% discount to NAV.

Share Issues and Fundraising
Your Board announced the intention to launch a new prospectus offer on 16 May 2017 to raise up to £30 million with a possible £10million over allotment facility in combination with Octopus AIM VCT 2 plc. This represents a fundraising of up to £24 million for this VCT. The offer launched on 16 June 2017 and two allotments have taken place with the issue of 10,986,600 shares and funds raised of £13.0 million, net of costs. The Board confirmed the use of the £10 million over allotment facility on 6 October 2017.

In addition 289,872 new ordinary shares were issued in August to shareholders who participated in the dividend reinvestment scheme (DRIS).

Dividend
On 4 August 2017, the Company paid a dividend of 3p per share, being the final dividend for the year ended 28 February 2017.

For the period to 31 August 2017, the Board has declared an interim dividend of 2.5p. This will be paid on 19 January 2018 to shareholders on the register on 22 December 2017.

It remains the Board's intention to maintain a minimum annual dividend payment of 5.0p per share or a 5% yield based on the period end share price, whichever is the greater. This will usually be paid in two instalments during each year.

Risks and Uncertainties
The principal risks and uncertainties are set out in Note 7.

Outlook
Politics continues to dominate the news and a minority Government post the general election is not obviously helpful to negotiating our way successfully out of the European Union. All of this has made the market more volatile since June and the NAV has given back some of its strong rise in the first three months of the period. Although it is only to be expected that the market will be more prone to bouts of uncertainty as the Brexit negotiations unfold, it remains the case that the economic Armageddon predicted by many in the immediate aftermath of the vote a year ago has not materialised and any effects of Brexit itself will be felt much further into the future than 2018.

In the first six months of the year we have seen some good results and a number of encouraging trading statements from companies in the portfolio which is mostly being reinforced in the Autumn interim results season. The portfolio now contains 74 holdings across a range of sectors with the balance weighted towards profitable companies which are continuing to pursue growth. The current fundraising will make cash available for new investments giving the VCT the chance to take advantage of any lowering of valuations in the new issue market that may arise as a result of market uncertainty. With the VCT 90% invested in qualifying companies for HMRC purposes your Manager can afford to be selective about new investments.

The AIM Team
Octopus Investments
26 October 2017

Investment Portfolio

Investee Company Sector Cost as at 31 August 2017 (£'000) Cumulative change in fair value (£'000) Fair Value at
31 August 2017 (£'000)
Movement in period ('£000) % equity held by Octopus AIM VCT plc % equity held by all funds managed by Octopus
Breedon Group plc Construction & Building 859 5,545 6,404 1,163 0.49% 2.47%
Quixant plc Technology Hardware 697 5,661 6,358 1,090 2.30% 5.98%
GB Group plc Support Services 715 3,765 4,480 1,041 1.32% 14.15%
Staffline Recruitment Group plc Support Services 334 4,105 4,439 422 0.76% 9.73%
Mattioli Woods plc Finance 529 2,778 3,307 277 1.13% 11.70%
Brooks Macdonald Group plc Finance 746 2,470 3,216 112 1.15% 2.92%
Gear4music Holdings plc Media 557 2,611 3,168 542 1.92% 5.48%
IDOX plc Software 353 2,497 2,850 (551) 1.53% 2.17%
Learning Technologies Group plc Support Services 1,319 1,424 2,743 292 1.03% 1.83%
RWS Holdings plc Support Services 367 2,222 2,589 523 0.27% 7.18%
Animalcare Group plc Pharmaceuticals & Biotech 306 1,774 2,080 72 0.92% 2.57%
DP Poland plc Leisure & Hotels 1,016 913 1,929 (580) 2.07% 3.59%
Craneware plc Software 183 1,562 1,745 104 2.20% 7.37%
Yu Group plc Utilities 705 1,029 1,734 591 0.51% 1.79%
Clinigen Group plc Pharmaceuticals & Biotech 935 794 1,729 445 3.17% 6.65%
Ergomed plc Pharmaceuticals & Biotech 1,440 164 1,604 (276) 2.71% 9.53%
Restore plc Support Services 427 1,154 1,581 411 0.13% 4.37%
Gooch & Housego plc Electronic & Electrical 490 1,089 1,579 152 0.29% 10.25%
Netcall plc Telecommunication Services 308 1,246 1,554 (340) 0.49% 15.25%
Cello Group plc Media 895 606 1,501 109 1.17% 3.94%
Advanced Medical Solutions Group plc Pharmaceuticals & Biotech 757 730 1,487 488 0.22% 9.26%
Next Fifteen Communications Group plc Media 687 679 1,366 89 0.45% 10.99%
EKF Diagnostics Holdings plc Health 931 370 1,301 305 1.19% 2.15%
Adept Telecom plc Telecommunication Services 601 686 1,287 (43) 1.81% 3.89%
appScatter Group plc Software 1,257 - 1,257 - 3.06% 5.36%
FairFX Group plc Software 948 245 1,193 245 1.05% 1.95%
Escher Group Holdings plc Software 1,003 176 1,179 295 3.13% 5.48%
Cambridge Cognition Holdings plc Health 601 566 1,167 506 4.19% 13.70%
Vertu Motors plc General Retailers 1,265 (105) 1,160 (100) 0.68% 4.81%
Escape Hunt plc Leisure & Hotels 988 66 1,054 65 3.61% 6.02%
Brady plc Software 947 65 1,012 (149) 1.79% 3.01%
Abcam plc Pharmaceuticals & Biotech 537 421 958 182 0.04% 2.58%
Judges Scientific plc Electronic & Electrical 314 619 933 108 0.82% 1.37%
Nasstar plc Software 481 408 889 72 1.67% 4.61%
CityFibre plc Telecommunication Services 1,025 (152) 873 148 0.26% 0.67%
LoopUp Group plc Software 480 374 854 144 1.17% 3.90%
Omega Diagnostics Group plc Health 465 377 842 134 3.01% 5.27%
Gamma Communications plc Telecommunication Services 488 320 808 177 0.14% 9.33%
Velocity Composites plc Industrial 799 - 799 - 2.63% 4.93%
SQS Software Quality Systems AG Software 291 474 765 (65) 0.42% 15.25%
MyCelx Technologies Corporation Oil Equipment 1,470 (737) 733 446 4.34% 9.19%
Faron Pharmaceuticals Oy   Pharmaceuticals & Biotech 344 335 679 335 0.35% 0.72%
Osirium Technologies plc Electronic & Electrical 750 (77) 673 144 4.63% 15.36%
TLA Worldwide plc Media 807 (141) 666 (545) 2.81% 4.69%
Vectura Group plc Pharmaceuticals & Biotech 498 159 657 (212) 0.09% 0.15%
Haydale Graphene Industries plc Chemicals 598 45 643 - 1.91% 6.99%
WANdisco plc Software 145 441 586 276 0.22% 0.36%
Tasty plc Leisure & Hotels 622 (56) 566 (997) 2.49% 4.36%
Scientific Digital Imaging plc Electronic & Electrical 179 357 536 89 2.49% 9.55%
Futura Medical plc Pharmaceuticals & Biotech 968 (433) 535 (331) 1.41% 7.88%
Mears Group plc Support Services 139 387 526 (80) 0.12% 0.14%
Iomart Group plc Software 268 205 473 41 0.14% 11.07%
Sinclair IS Pharma plc Pharmaceuticals & Biotech 765 (305) 460 (40) 0.32% 0.54%
Maxcyte Inc Pharmaceuticals & Biotech 511 (65) 446 (65) 2.55% 7.16%
UP Global Sourcing Holdings plc Household Goods & Textiles 273 171 444 171 0.26% 0.60%
Plastics Capital plc Engineering & Machinery 400 36 436 (80) 1.03% 7.68%
TP Group plc Engineering & Machinery 648 (315) 333 (80) 0.70% 2.92%
Access Intelligence plc Software 375 (75) 300 (19) 2.35% 4.65%
FreeAgent Holdings plc Media 277 13 290 (112) 0.81% 3.38%
Oxford Pharmascience Group plc Pharmaceuticals & Biotech 1,350 (1,148) 202 (162) 1.12% 3.31%
Midatech Pharma plc Pharmaceuticals & Biotech 600 (402) 198 (76) 0.46% 2.40%
Enteq Upstream plc Oil Services 1,032 (836) 196 - 1.67% 2.78%
Tyratech Inc Chemicals 600 (420) 180 (120) 5.46% 19.87%
Microsaic Systems plc Engineering & Machinery 1,084 (921) 163 (136) 5.99% 11.79%
Nektan Limited Software 845 (699) 146 51 1.75% 10.58%
Fusionex International plc Software 282 (164) 118 (157) 0.34% 0.57%
ReNeuron Group plc Pharmaceuticals & Biotech 324 (211) 113 (36) 0.20% 1.17%
Dods Group plc Media 203 (98) 105 (4) 0.24% 0.24%
Genedrive Plc Pharmaceuticals & Biotech 210 (127) 83 (16) 1.40% 2.34%
1Spatial plc Software 300 (270) 30 15 0.12% 0.21%
Proxama plc Software 763 (755) 8 (98) 0.22% 0.70%
Bond International Software plc Software 8 - 8 - n/a n/a
Total Quoted Investments   45,684 43,622 89,306 6,402    
 
Unquoted Investments
Hasgrove plc Media 88 132 220 70 0.74% 4.38%
Rated People Limited Software 354 (268) 86 - 0.51% 1.49%
Total Unquoted Investments   442 (136) 306 70    
 
Loan Note Investments
Nektan Limited Software 500 - 500 -    
Access Intelligence plc Software 120 - 120 -    
Total Loan Notes   620 - 620 -    
               
Total Fixed Asset Investments   46,746 43,486 90,232 6,472    
             
Current Asset Investments            
Octopus Portfolio Manager - Conservative Capital Growth 7,450 427 7,877 124    
Octopus Portfolio Manager - Defensive Capital Growth 7,450 304 7,754 105    
Octopus UK Micro Cap Growth Fund 2,250 518 2,768 352    
Total Current Asset Investments

 
17,150 1,249 18,399 581    
             
Total fixed and current asset investments     108,631      
Money Market Funds     4,295      
Cash at bank     10,179      
Debtors less creditors     (7,249)      
Total net assets     115,856      

Directors' Responsibility Statement

We confirm that to the best of our knowledge:

·      the half-yearly financial statements have been prepared in accordance with Financial Reporting Standard 104 Interim Financial Reporting issued by the Financial Reporting Council;

·      the half-yearly report includes a fair review of the information required by the Financial Conduct Authority's 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

Roger Smith
Chairman
26 October 2017

Income Statement

  Unaudited Unaudited Audited
  Six months to 31 August 2017 Six months to 31 August 2016 Year to 28 February 2017
  Revenue
£'000
Capital
£'000
Total
£'000
Revenue
£'000
Capital
£'000
Total
£'000
Revenue
£'000
Capital
£'000
Total
£'000
(Loss)/gain on disposal of fixed asset investments - (25) (25) - 78 78 - 1,178 1,178
Gain on valuation of fixed asset investment - 6,472 6,472 - 7,252 7,252 - 14,258 14,258
Gain on valuation of current asset investment - 581 581 - - - - 668 668
Investment income 442 - 442 432 - 432 858 - 858
Investment management fees (192) (575) (767) (148) (445) (593) (353) (1,059) (1,412)
Other expenses (348) - (348) (254) - (254) (427) - (427)
Profit/(loss) on ordinary activities before tax (98) 6,453 6,355 30 6,885 6,915 78 15,045 15,123
Taxation on profit/(loss) on ordinary activities - - - -  - - - - -
Profit/(loss) on ordinary activities after tax (98) 6,453 6,355 30  6,885 6,915 78 15,045 15,123
Earnings per share - basic and diluted (0.1)p 7.0p 6.9p 0.1p 8.3p 8.4p 0.1p 17.7p 17.8p

·      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 Company has no recognised gains or losses other than those disclosed in the income statement.

·      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 accompanying notes are an integral part of the half-yearly report.

Balance Sheet

  Unaudited Unaudited Audited
  As at 31 August 2017 As at 31 August 2016 As at 28 February 2017
  £'000 £'000 £'000 £'000 £'000 £'000
Fixed asset investments   90,232   73,210   79,919
Current assets:            
Current asset investments 18,399   6,622   9,568  
Money market securities 4,295   5,281   5,290  
Debtors 87   34   332  
Cash at bank 10,179   8,610   13,679  
  32,960   20,547   28,869  
Creditors: amounts falling due within one year (7,336)   (1,925)   (8,873)  
Net current assets   25,624   18,622   19,996
Net assets   115,856   91,832   99,915
             
Called up equity share capital   978   855   873
Share premium   48,650   32,620   35,422
Capital redemption reserve   54   37   45
Special distributable reserve   49,961   56,670   53,717
Capital reserve realised   (28,858)   (27,406)   (28,020)
Capital reserve unrealised   44,736   28,671   37,445
Revenue reserve   335   385   433
Total equity shareholders' funds   115,856   91,832   99,915
Net asset value per share   118.4p   107.4p   114.4p

The accompanying notes form an integral part of the financial statements.

The statements were approved by the Directors and authorised for issue on 26 October 2017 and are signed on their behalf by:

Roger Smith
Chairman
Company No: 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 2017 873 35,422 45 53,717 (28,020) 37,445 433 99,915
Management fee allocated as capital expenditure - - - - (575) - - (575)
Current period loss on disposal - - - - (25) - - (25)
Current period gains on fair value of investments - - - - - 7,053 - 7,053
Prior periods' holding losses now realised - - - - (238) 238 - -
Loss on ordinary activities after tax - - - - - - (98) (98)
Total comprehensive income for the period - - - - (838) 7,291 (98) 6,355
Contributions by and distributions to owners:            
Repurchase and cancellation of own shares (9) - 9 (1,047) - - - (1,047)
Issue of shares 114 14,037 - - - - - 14,151
Share issue costs - (809) - - - - - (809)
Dividends paid - - - (2,709) - - - (2,709)
Balance as at
31 August 2017
978 48,650 54 49,961 (28,858) 44,736 335 115,856
As at 1 March 2016 760 21,643 24 60,062 (26,158) 20,898 355 77,224
Management fee allocated as capital expenditure - - - - (445) - - (445)
Current period gain on disposal - - - - 78 - - 78
Current period gain on fair value of investments - - - - - 7,252 - 7,252
Prior periods' holding losses now realised - - - - (521) 521 - -
Profit on ordinary activities after tax - - - - - - 30 30
Total comprehensive income for the period - - - - (888) 7,773 30 6,915
Contributions by and distributions to owners:            
Repurchase and cancellation of own shares (13) - 13 (1,281) - - - (1,281)
Issue of shares 108 11,440 - - - - - 11,548
Share issue costs - (463) - - - - - (463)
Dividends paid - - - (2,111) - - - (2,111)
Balance as at
31 August 2016
855 32,620 37 56,670 (27,406) 28,671 385 91,832
                 
As at 1 March 2016 760 21,643 24 60,062 (26,518) 20,898 355 77,224
Management fee allocated as capital expenditure - - - - (1,059) - - (1,059)
Current period gains on disposal - - - - 1,178 - - 1,178
Current period gain on fair value of investments - - - - - 14,926 - 14,926
Prior periods' holding losses now realised - - - - (1,621) 1,621 - -
Profit on ordinary activities after tax - - - - - - 78 78
Total comprehensive income for the period - - - - (1,502) 16,547 78 15,123
Contributions by and distributions to owners:            
Repurchase and cancellation of own shares (21) - 21 (2,054) - - - (2,054)
Issue of shares 134 14,413 - - - - - 14,547
Share issue costs - (634) - - - - - (634)
Dividends paid - - - (4,291) - - - (4,291)
Balance as at
28 February 2017
873 35,422 45 53,717 (28,020) 37,445 433 99,915

Cash Flow Statement

  Unaudited
Six months to
31 August 2017

£'000
Unaudited
Six months to
31 August 2016
£'000
Audited
Year to
28 February 2017
£'000
Cash flows from operating activities      
Return on ordinary activities before tax 6,355 6,915 15,123
Adjustments for:      
Decrease/(increase) in debtors 245 14 (284)
(Decrease)/increase in creditors (1,537) (497) 6,451
(Loss)/gain on disposal of fixed assets 25 (78) (1,178)
Gain on valuation of fixed asset investments (6,472) (6,930) (14,258)
Gain on valuation of current asset investments (581) (322) (668)
Net cash generated from operating activities (1,965) (898) 5,186
       
Cash flows from investing activities      
Purchase of fixed asset investments (5,807) (2,145) (3,391)
Purchase of current asset investments (8,250) (6,300) (8,900)
Sale of fixed asset investments 1,941 521 3,486
Net cash flows from investing activities (12,116) (7,924) (8,805)
       
Cash flows from financing activities      
Purchase of own shares (1,047) (1,281) (2,054)
Share issues 13,342 11,085 13,913
Dividends paid (2,709) (2,111) (4,291)
Net cash flows from financing activities 9,586 7,693 7,568
       
(Decrease)/increase in cash and cash equivalents (4,495) (1,129) 3,949
Opening cash and cash equivalents 18,969 15,020 15,020
Closing cash and cash equivalents 14,474 13,891 18,969
       
Cash and cash equivalents comprise      
Cash at Bank 10,179 8,610 13,679
Money Market Funds 4,295 5,281 5,290
  14,474 13,891 18,969

Notes to the Half-Yearly Report

1.     Basis of preparation
       The unaudited half-yearly results which cover the six months to 31 August 2017 have been prepared in accordance with the Financial Reporting Council's (FRC) Financial Reporting Standard 104 Interim Financial Reporting (March 2015) and the Statement of Recommended Practice (SORP) for Investment Companies re-issued by the Association of Investment Companies in January 2017.

2.     Publication of non-statutory accounts
       The unaudited interim results for the six months ended 31 August 2017 do not constitute statutory accounts within the meaning of s.415 of the Companies Act 2006 and have not been delivered to the Registrar of Companies. The comparative figures for the year ended 28 February 2017 have been extracted from the audited financial statements for that year, which have been delivered to the Registrar of Companies. The independent auditor's report on those financial statements, in accordance with chapter 3 of part 16 of the Companies Act 2006, was unqualified. This half-yearly report has not been reviewed by the Company's auditor.

3.     Earnings per share
       The earnings per share at 31 August 2017 is calculated on the basis of 91,508,456 (28 February 2017: 84,880,191 and 31 August 2016: 82,606,763) shares, being the weighted average number of shares in issue during the period.

       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

  31 August 2017
£'000
31 August 2016
£'000
28 February 2017
£'000
Net assets 115,856 91,832 99,915
Shares in Issue 97,829,766 85,498,913 87,366,893
Net Asset Value per share 118.4p 107.4p 114.4p

       There are no potentially dilutive capital instruments in issue and, as such, the basic and diluted earnings per share are identical.

5.     Dividends
       The interim dividend declared of 2.5 pence per Ordinary share will be paid on 19 January 2018 to those shareholders on the register on 22 December 2017.

6.     Buybacks share issues
       During the six months ended 31 August 2017 the Company repurchased the following shares.

Date No of shares Price (p)
3 March 2017 174,092 109.3
13 April 2017 259,620 111.0
22 May 2017 232,278 116.0
29 June 2017 63,545 114.0
11 August 2017 200,007 113.5
Total 929,542  

  The weighted average price of all buybacks during the period was 112.7 pence per share.

  During the six months ended 31 August 2017 the Company issued the following shares.

Date No of shares Price (p)
3 March 2017 3,454,226 121.1
13 April 2017 195,145 123.0
4 August 2017 7,432,367 125.9
4 August 2017(DRIS) 289,872 118.9
15 August 2017 20,805 118.9
Total 11,392,415  

       The weighted average allotment price of all shares issued during the period was 124.2 pence per share.

7. 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 28 February 2017. Since the publication of those Accounts the Government has published a consultative document on the Patient Capital Review, the purpose of which is to review funding support for small businesses of which VCTs are an integral part. The final outcome of this Review is awaited. Subject to this matter, the Company's principal risks and uncertainties have not changed materially since the date of the Company's Annual Report and Accounts for the year ended 28 February 2017

8. 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 £767,000 payable to Octopus (28 February 2017: £1,412,000 and 31 August 2016: £593,000). At the period end there was £404,000 outstanding to Octopus (28 February 2017: £399,000 and 31 August 2016: £326,000).

       The Company has invested £8.3 million into Octopus managed funds, being the Octopus Portfolio Manager funds. To ensure that there is no duplication of management fees on investments, the Company receives a reduction in the management fee as a percentage of the value of these investments.

9. Post Balance Sheet Events
       The following events occurred between the Balance sheet date and the signing of this half-yearly report.

· Disposal of 65,400 shares in Restore plc for total consideration of £367,000.

· Disposal of 120,000 shares in Quixant plc for total consideration of £527,000.

· Disposal of 213,281 shares in UP GLobal Sourcing for total consideration of £175,000.

· Addition of 54,000 shares in Faron Pharmaceuticals for total consideration of £432,000.

· The Company issued 3,554,233 shares at a price of 125.0p per share on 8 September 2017.

· The Company repurchased 335,557 shares at a weighted average price of 113.3p per share.

10. Other Information
       This statement will be made available to all shareholders. Copies are also available from the registered office of the Company at 33 Holborn, London, EC1N 2HT, and will also be available to view on the Octopus website at www.octopusinvestments.com.




This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Octopus AIM VCT PLC via Globenewswire


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Octopus AIM VCT PLC : Half-yearly Report - RNS