OCTOPUS AIM VCT PLC 26 October 2021
Unaudited half-yearly report for the six months ended
These results were approved by the Board of Directors on
You may shortly view the half-yearly report in full by visiting https://octopusinvestments.com/our-products/venture-capital-trusts/octopus-aim-vcts/. All other statutory information will also be found there.
Financial Summary
| Six months to 31 August 2021 | Six months to 31 August 2020 | Year to 29 | |
| Net assets (£’000) | 190,132 | 135,002 | 182,156 |
| Profit after tax (£’000) | 18,928 | 15,088 | 50,850 |
| Net asset value (‘NAV’) per share (p) | 131.9 | 101.8 | 124.7 |
| NAV total return (%)* | 10.6 | 12.3 | 39.5 |
| Dividends paid in the period (p) | 6.0 | 3.0 | 5.5 |
| Dividend declared (p)*** | 2.5 | 2.5 | 3.5 |
| Special dividend declared (p)*** | – | – | 2.5 |
*Total Return is an alternative performance measure calculated as movement in NAV per share in the period plus dividends paid in the period, divided by the NAV per share at the beginning of the period.
**The interim dividend of 2.5p will be paid on
Chairman’s Statement
Having been appointed chairman at the Company’s Annual General Meeting in July, I am pleased to report the half-yearly results for
The Board has declared an interim dividend of 2.5p a share which will be paid on
The flow of potential VCT qualifying investments has continued and your Investment Manager has made thirteen qualifying investments in the period which are explained in more detail within the Interim Management Report. Reassuringly, AIM has fulfilled its function of raising capital for existing members throughout the pandemic, and as companies look beyond the crisis and plan their next phase of growth we have also seen the return of new issues.
The Board announced the launch of a new public offer of shares in August which has now closed having been fully subscribed very rapidly, raising £24 million gross for the fund. The strength of the UK’s post-pandemic economic recovery has slowed in recent weeks as a consequence of factors such as the impact of inflation, staff shortages, energy price rises and supply chain interruptions. These circumstances may well lead to further bouts of share price volatility. However, we are satisfied with the overall resilience of our existing portfolio, as demonstrated during the pandemic, and our Manager is confident that there will continue to be good investment opportunities for the new funds over the coming months.
Chairman
Interim Management Report
Overview
The six months to
The flow of capital raised by companies has built on the strength of 2020, supplemented by the return of new flotations. Stock market liquidity has been good and we have taken some profits from holdings that have performed particularly well. The Company has deployed existing cash through the period and launched a further fundraise of up to £24 million gross in August which closed fully subscribed in September.
Performance
Adding back the 6p of dividends paid in the period, the Net Asset Value increased by 10.6% in the six months to
The strongest theme driving returns in the period was upgrades to forecasts that had generally started 2021 reflecting the pandemic caution of 2020 rather than anticipating any strong recovery in trading. This extended across different sectors and included a large proportion of portfolio companies. Those companies exceeding expectations included Ergomed, EKF Diagnostics, Maxcyte, Cambridge Cognition and Animalcare in the healthcare sector. Cell based medicine specialist Maxcyte completed an oversubscribed £40 million fundraise and dual listed on Nasdaq. Renalytix, which had already gone down this pathway, also performed well as shareholders focused on the potential for its KidneyIntelX test. We have taken some profits in Ergomed and Renalytix shares.
Elsewhere, Learning Technologies successfully raised £82 million to acquire GP Strategies. The deal is earnings enhancing, adds significant scale to the business and the shares performed very well in the period. Gear4music continued its recent upgrade cycle although forecasts for the rest of the year remain conservative reflecting caution about the rate of growth now that the high street is open. Sosandar, another on-line retailer, also delivered better than expected figures. It has announced tie-ups with M&S and Next and trading has continued to be strong.
Breedon, Vertu Motors and
The largest detractors from performance in the period were Ilika, Trackwise, Spectral MD,
Portfolio Activity
In the period under review, the Company made thirteen qualifying investments at a total cost of £12.6 million. This was more than twice the £5.8 million invested in the corresponding period last year, reflecting the part that AIM has played in providing finance to its constituents as well as to new entrants as we emerged from the Coronavirus pandemic. Three of these were follow-on investments into existing holdings in Cloudcall, VR Education and Ilika totalling £1.6 million. Cloudcall had suffered during the pandemic with its principal customer group being in the recruitment sector. The money raised will put them back on a growth track as the business recovers. VR Education has announced a number of new customers for its Engage platform as a result of an accelerated move towards the use of virtual reality for remote meetings and events, particularly for large companies concerned about effective internal communications in a world where people are expecting to travel less. The money raised will help to accelerate this journey. Ilika (where we had previously taken some profits at higher levels) raised money to build its own production facility for solid state batteries as it emerges from its current R&D phase.
In contrast to previous periods, six of these investments totalling £8.4 million were into companies coming to AIM as new issues. In the
We also made three new qualifying investments totalling £2.3 million into existing AIM companies where we had been watching their progress for some time. Evgen Pharma had a funded trial for ARDS (acute respiratory distress syndrome) as well as compelling data for its sulphoraphane based compounds. Although the trial for Covid 19 treatment was not successful, the money raised was for its cancer studies which are still ongoing. Polarean is a specialist lung imaging company and Crimson Tide has software that audits health and safety measures such as facilities management for large organisations. In addition, we made a private company investment of £0.3 million into Eluceda, a company with detection technology used to protect brands from counterfeit.
We invested a further £1.65 million into the
A number of disposals in the period resulted in cash proceeds of £3 million and a net gain of £2 million since acquisition. These were a mixture of profits being taken on existing holdings such as Ergomed, Renalytix, GB Group, Gear 4 music, Trackwise, PCI Pal, Access Intelligence and
Unquoted Investments
The Company is able to make investments in unquoted companies intending to float. On
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
Share Issues and Fundraising
In this period 68,692 shares were issued in connection with the 2020/21 prospectus offer which closed fully subscribed in
On
In addition, 1,222,892 new ordinary shares were issued in
Dividend
On
For the period to
It is the Company’s objective 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 the shareholders receive either 5p per annum or a 5% yield based on share price, whichever is the greater at the time.
Risks and Uncertainties
The Company’s principal risks and uncertainties are set out in Note 7 to the unaudited financial statements.
Long-Term Responsible Investing
The investment team has always invested as long-term responsible shareholders and supported businesses in the process of improving the corporate governance structure. As part of the investment process, the team is incorporating a material risk review depending on the exposure of the underlying business where appropriate. These risks can span from environmental (emissions, energy management, waste, ecological impact), social (privacy, security, product quality, selling practices), human (labour, health and safety, diversity), business model (product design, supply chain, material sourcing) to leadership (ethics, competitive behaviour, regulatory, critical incidents, and risk management). The team assess the exposure and how well management is managing these material risks. The team believes that assessing these factors allows for informed investment analysis and it forms part of the investment strategy. The investment manager is taking its duty as a shareholder seriously and acting as a steward of capital. This includes regular engagement with the independent non- executive members of boards. The team’s stewardship and engagement policy can be found here (https://media.octopusinvestments.com/m/519bad6a06ce2d77/original/Octopus- Quoted-Smaller-Companies-Engagement-Policy.pdf).
Outlook
Economic consensus is still that a record contraction to the economy in 2020 will be matched by very strong growth in 2021 as a proportion of the corporate and household savings during the pandemic are spent. However, the strength of the recovery has brought its own pressures and the impact of inflation, staff shortages, supply chain interruptions, fiscal risks and the political risks in
The portfolio’s strength is that it is well diversified both in terms of sector exposure and of individual company concentration. It now contains 92 holdings across a range of sectors with the balance still weighted towards profitable companies that are pursuing growth strategies. There are a number of newer holdings that still need to demonstrate progress over the coming months in order to reach profitability. The newly raised funds available for investments should allow us to take advantage of any dip in valuations should sentiment weaken as well as supporting existing portfolio companies still on the journey to profitability where we can. As a result of an acceleration in the investment rate over the past six months the VCT is 95.0% invested in qualifying companies allowing us to be selective when viewing new investment opportunities.
The Octopus Quoted Smaller Companies Team
Octopus Investments
Directors’ Responsibilities 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
• the half-yearly financial statements give a true and fair view of the assets, liabilities, financial position, and profit or loss of the Company;
• 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.
• the half-yearly financial statements have not been audited or reviewed by the auditors.
On behalf of the Board
Chairman
Income Statement
| Unaudited Six months to 31 August 2021 | Unaudited Six months to | Audited Year to | |||||||
| Revenue £’000 | Capital £’000 | Total £’000 | Revenue £’000 | Capital £’000 | Total £’000 | Revenue £’000 | Capital £’000 | Total £’000 | |
| Gain on disposal of fixed asset investments | – | 618 | 618 | – | 1,118 | 1,118 | – | 4,361 | 4,361 |
| (Loss)/gain on disposal of current asset investments | – | (3) | (3) | – | (116) | (116) | – | 58 | 58 |
| Gain/(loss) on valuation of fixed asset investments | – | 17,114 | 17,114 | – | 14,585 | 14,585 | – | 44,908 | 44,908 |
| Gain on valuation of current asset investments | – | 2,516 | 2,516 | – | 543 | 543 | – | 3,655 | 3,655 |
| Investment income | 380 | 136 | 516 | 123 | – | 123 | 472 | 51 | 523 |
| Investment management fees | (363) | (1,088) | (1,451) | (224) | (672) | (896) | (487) | (1,461) | (1,948) |
| Other expenses | (382) | – | (382) | (269) | – | (269) | (707) | – | (707) |
| Profit before tax | (365) | 19,293 | 18,928 | (370) | 15,458 | 15,088 | (722) | 51,572 | 50,850 |
| Tax | _ | _ | _ | – | – | – | _ | _ | _ |
| Profit after tax | (365) | 19,293 | 18,928 | (370) | 15,458 | 15,088 | (722) | 51,572 | 50,850 |
| Earnings per share – basic and diluted | (0.3p) | 13.3p | 13.0p | (0.3p) | 11.7p | 11.4p | (0.5p) | 37.9p | 37.4p |
• 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 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.
Balance Sheet
| Unaudited As at 31 August 2021 | Unaudited As at | Audited As at | ||||
| £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | |
| Fixed asset investments | 157,318 | 98,498 | 129,915 | |||
| Current assets: | ||||||
| Investments | 18,772 | 12,327 | 16,212 | |||
| Money market funds | 1,326 | 1,326 | 1,326 | |||
| Debtors | 214 | 215 | 1,864 | |||
| Cash at bank | 13,955 | 23,241 | 33,724 | |||
| Cash at bank | 10,470 | 718 | 162 | |||
| 44,737 | 37,827 | 53,288 | ||||
| Creditors: amounts falling due within one year | (11,923) | (1,323) | (1,047) | |||
| Net current assets | 32,814 | 36,504 | 52,241 | |||
| Total assets less current liabilities | 190,132 | 135,002 | 182,156 | |||
| Called up equity share capital | 1,441 | 1,326 | 1,461 | |||
| Share premium | 59,673 | 75,666 | 57,966 | |||
| Capital redemption reserve | 205 | 147 | 173 | |||
| Special distributable reserve | 54,806 | 38,546 | 67,477 | |||
| Capital reserve realised | (20,714) | (24,985) | (21,945) | |||
| Capital reserve unrealised | 96,180 | 45,095 | 78,169 | |||
| Revenue reserve | (1,459) | (793) | (1,145) | |||
| Total equity shareholders’ funds | 190,132 | 135,002 | 182,156 | |||
| NAV per share – basic and diluted | 131.9p | 101.8p | 124.7p | |||
The statements were approved by the Directors and authorised for issue on
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 | 1,461 | 57,966 | 172 | 67,478 | (21,996) | 78,169 | (1,094) | 182,156 | ||
| Total comprehensive income for the period | – | – | – | – | (337) | 19,630 | (365) | 18,928 | ||
| Contributions by and distributions to owners: | ||||||||||
| Repurchase and cancellation of own shares | (33) | – | 33 | (4,039) | – | – | – | (4,039) | ||
| Issue of shares | 13 | 1,713 | – | – | – | – | – | 1,726 | ||
| Share issue costs | – | (6) | – | – | – | – | – | (6) | ||
| Dividends paid | – | – | – | (8,633) | – | – | (8,633) | |||
| Total contributions by and distributions to owners | (20) | 1,707 | 33 | (12,672) | – | – | – | (10,952) | ||
| Other movements: | ||||||||||
| Prior years’ holding gains now realised | – | – | – | – | 1,619 | (1,619) | – | – | ||
| Total other movements | – | – | – | – | 1,619 | (1,619) | – | – | ||
| Balance as at | 1,441 | 59,673 | 205 | 54,806 | (20,714) | 96,180 | (1,459) | 190,132 | ||
| * The sum of these reserves is an amount of £32,632,000 ( . | ||||||||||
| As at | 1,234 | 65,883 | 134 | 43,630 | (26,719) | 31,371 | (423) | 115,110 | ||
| Total comprehensive income for the period | – | – | – | – | 330 | 15,128 | (370) | 15,088 | ||
| Contributions by and distributions owners: | ||||||||||
| Repurchase and cancellation of own shares | (13) | – | 13 | (1,117) | – | – | – | (1,117) | ||
| Issue of shares | 105 | 10,438 | – | – | – | – | – | 10,543 | ||
| Share issue costs | – | (655) | – | – | – | – | – | (655) | ||
| Dividends paid | – | – | – | (3,967) | – | – | (3,967) | |||
| Total contributions by and distributions to owners | 92 | 9,783 | 13 | (5,084) | – | – | – | 4,804 | ||
| Other movements: | ||||||||||
| Prior years’ holding gains now realised | – | – | – | – | 1,404 | (1,404) | – | – | ||
| Total other movements | – | – | – | – | 1,404 | (1,404) | – | – | ||
| Balance as at | 1,326 | 75,666 | 147 | 38,546 | (24,985) | 45,095 | (793) | 135,002 | ||
| As at | 1,234 | 65,883 | 134 | 43,630 | (26,719) | 31,371 | (423) | 115,110 | ||
| Comprehensive income for the year: | ||||||||||
| Management fee allocated as capital expenditure | – | – | – | – | (1,461) | – | – | (1,461) | ||
| Current year gains on disposal | – | – | – | – | 4,419 | – | – | 4,419 | ||
| Current period gains on fair value of investments | – | – | – | – | – | 48,563 | – | 48,563 | ||
| Capital investment income | – | – | – | – | 51 | – | – | 51 | ||
| Loss after tax | – | – | – | – | – | – | (722) | (722) | ||
| Total comprehensive income for the year | – | – | – | – | 3,009 | 48,563 | (722) | 50,850 | ||
| Contributions by and distributions to owners: | ||||||||||
| Repurchase and cancellation of own shares | (39) | – | 39 | (3,940) | – | – | – | (3,940) | ||
| Issue of shares | 266 | 29,347 | – | – | – | – | – | 29,613 | ||
| Share issue costs | – | (1,842) | – | – | – | – | – | (1,842) | ||
| Dividends paid | – | – | – | (7,635) | – | – | – | (7,635) | ||
| Total contributions by and distributions to owners | 227 | 27,505 | 39 | (11,575) | – | – | – | 16,196 | ||
| Other movements: | ||||||||||
| Cancellation of share premium | – | (35,422) | – | 35,422 | – | – | – | – | ||
| Prior years’ holding gains now realised | – | – | – | – | 1,765 | (1,765) | – | – | ||
| Total other movements | – | (35,422) | – | 35,422 | 1,765 | (1,765) | – | – | ||
| Balance as at | 1,461 | 57,966 | 173 | 67,477 | (21,945) | 78,169 | (1,145) | 182,156 | ||
Cash Flow Statement
| Unaudited Six months to 31 August 2021 £’000 | Unaudited Six months to £’000 | Audited Year to £’000 | |
| Cash flows from operating activities | |||
| Profit before tax | 18,928 | 15,088 | 50,850 |
| Adjustments for: | |||
| (Increase)/decrease in debtors | 1,650 | (137) | (114) |
| Increase/(decrease) in creditors | 568 | (157) | 123 |
| Gain on disposal of fixed assets | (618) | (1,118) | (4,361) |
| Loss/(gain) on disposal of current assets | 3 | 116 | (58) |
| Gain on valuation of fixed asset investments | (17,114) | (14,585) | (44,908) |
| Gain on valuation of current asset investments | (2,516) | (543) | (3,655) |
| Non-cash distributions | (136) | – | (51) |
| Net cash generated from operating activities | 765 | (1,336) | (2,174) |
| Cash flows from investing activities | |||
| Purchase of fixed asset investments | (12,577) | (5,847) | (9,638) |
| Purchase of current asset investments | (1,650) | (541) | 9,070 |
| Sale of fixed asset investments | 3,041 | 4,751 | (5,040) |
| Sale of current asset investments | 1,604 | 13,500 | 17,400 |
| Net cash flows from investing activities | (9,582) | 11,863 | 11,792 |
| Cash flows from financing activities | |||
| Movement in applications account | 10,308 | (15,737) | (16,293) |
| Purchase of own shares | (4,039) | (1,117) | (3,940) |
| Share issues (net of costs) | 150 | 9,178 | 28,196 |
| Share issues costs | – | – | (1,842) |
| Dividends paid | (7,063) | (3,257) | (6,218) |
| Net cash flows from financing activities | (644) | (10,933) | (97) |
| Decrease/(increase) in cash and cash equivalents | (9,461) | (406) | 9,521 |
| Opening cash and cash equivalents | 35,212 | 25,691 | 25,691 |
| Closing cash and cash equivalents | 25,751 | 25,285 | 35,212 |
| Cash and cash equivalents comprise | |||
| Cash at bank | 13,955 | 23,241 | 33,724 |
| Applications cash | 10,470 | 718 | 162 |
| Money market funds | 1,326 | 1,326 | 1,326 |
| 25,751 | 25,285 | 35,212 |
Notes to the Half-Yearly Report
1. Basis of preparation
The unaudited half-yearly report which covers the six months to
The principal accounting policies have remained unchanged from those set out in the Company’s 2021 Annual Report and Accounts.
2. Publication of non-statutory accounts
The unaudited half-yearly report for the six months ended
3. Earnings per share
The earnings per share at
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 | |||
| Net assets (£’000) | 190,132 | 135,002 | 182,156 |
| Shares in Issue | 144,191,668 | 132,592,788 | 146,112,119 |
| Net Asset Value per share | 131.9p | 101.8p | 124.7p |
5. Dividends
The interim dividend declared of
6. Buybacks and share issues
During the six months ended
| Date | No. of shares | Price (p) | Cost (£) |
| 582,234 | 121.5 | 708,000 | |
| 873,887 | 126.0 | 1,101,000 | |
| 614,431 | 126.2 | 775,000 | |
| 286,885 | 129.4 | 371,000 | |
| 543,809 | 119.3 | 649,000 | |
| 356,433 | 122.0 | 435,000 | |
| Total | 3,257,679 | 4,039,000 |
The weighted average price of all buybacks during the period was
| Date | No. of shares | Price (p) | Gross proceeds (£) |
| 68,692 | 137.9 | 95,000 | |
| 45,644 | 132.8 | 61,000 | |
| 1,222,892 | 128.4 | 1,570,000 | |
| Total | 1,337,228 | 1,726,000 |
*Shares issued as a result of reduced adviser charges, and reduced annual management fee for Octopus Employees.
The weighted average allotment price of all shares issued during the period was
7. Principal risks and uncertainties
The Company’s principal risks are VCT qualifying status risk, valuation risk, investment risk, financial risk, regulatory and reputational risk, operational risk and economic and price risk. 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
8. Related party transactions
The Company has employed
The Company has invested £1.65 million into Octopus managed funds (
9. Post balance sheet events
The following events occurred between the Balance sheet date and the signing of these financial statements.
• Partial disposal of Ergomed plc for a consideration of £899,491;
• On
• A cancellation of Share Premium amounting to £58 million was granted on
• Full disposal of Parsley Box Group plc for a consideration of £30,293;
• Full disposal of Vectura Group plc for a consideration of £913,762;
• Partial disposal of ReNeuron Group plc for a consideration of £57,334.
10. Additional information
This report will be made available to all shareholders. Copies are also available from the registered office of the Company at 33
For further information please contact:
Tel: 44 (0) 20 3935 4186
© OMX, source
