Source - GNW

Octopus Apollo VCT Plc  

 

Half-Yearly Results

07 October 2016

Octopus Apollo VCT plc, managed by Octopus Investments Limited, today announces the half-yearly results for the six months ended 31 July 2016.

These results were approved by the Board of Directors on 5 October 2016.

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 Headlines

  Ordinary Shares D Ordinary Shares
     
Net Asset Value (NAV) at 31 July 2016 83.0p 92.3p
Cumulative dividends paid since launch 32.5p 5.0p*
NAV plus cumulative dividends paid 115.5p 97.3p
Interim dividend declared for the half-year to 31 July 2016 2.5p -
Special dividend declared 16.5p -
     

* Cumulative dividends paid since launch include dividends paid by Octopus VCT 2 plc prior to the merger with the Company on 27 January 2016.

The interim dividend will be paid on 2 December 2016 to all Apollo Ordinary Shareholders on the register on 11 November 2016, including D Ordinary Shareholders who elected to convert their D Ordinary Shares to Apollo Ordinary Shares. Both dividends referred to above will be eligible for the Dividend Reinvestment Scheme (DRIS).

Financial Summary

Ordinary Shares

 
Six months to
31 July 2016
Six months to 31 July 2015 Year to 31 January 2016
       
Net assets (£'000s) 134,526 134,238* 109,854
Return on ordinary activities after tax (£'000s) 1,583 1,494* 2,828
Net asset value per share ("NAV") (p) 83.0 83.6 82.3
Cumulative dividends paid since launch (p per share) 32.5 30.0 32.5
Total return (p per share) 115.5 113.6 114.8
Ordinary dividends declared in respect of period (p per share) 2.5 2.5 5.0
Special dividend declared (p per share) 16.5 - -
       

*Includes C Ordinary Shares, which converted to Ordinary Shares on 21 August 2015

The interim dividend of 2.5p will be paid on 2 December 2016 to all Ordinary Shareholders on the register on 11 November 2016. Both dividends referred to above will be eligible for the Dividend Reinvestment Scheme (DRIS).

D Ordinary Shares

 
Six months to
31 July 2016
Period to
31 January 2016
 
Net assets (£'000s) 17,613 17,887
Return on ordinary activities after tax (£'000s) (274) 3
Net asset value per share ("NAV") (p) 92.3 93.7
Cumulative dividends paid since launch* (p per share)* 5.0 5.0
Total return (p per share) 97.3 98.7
     

* Cumulative dividends paid since launch include dividends paid by Octopus VCT 2 plc prior to the merger with the Company on 27 January 2016.

Chairman's Statement

I am pleased to present the half-yearly report of Octopus Apollo VCT for the six months ended 31 July 2016.

Performance

Over the last six months the Net Asset Value of the Ordinary Shares has increased 1.2% to 83.0p per share, compared to 82.3p per share at 31 January 2016. This positive performance is attributable to a number of successful exits which will be discussed later in this statement, as well as increased interest received on loans held. 

The Net Asset Value of the D Ordinary Shares has decreased by 1.5%, due to a further downward valuation in our anaerobic digestion investments Winnipeg and Tanganyika, as well as a decrease in the valuation of Superior Heat.

Fundraising                                                                                                           

The Company launched an Offer for Subscription to raise up to £30 million, with an overallotment facility of a further £10 million, in November 2015. We are pleased to announce that this offer closed to new applications, fully subscribed nearly two months earlier than planned, on 9 September 2016. In order to continue to make new investments and optimise future cash flows, your Board is recommending launching a new Offer for Subscription to raise up to £20 million in November.

Conversion of D Ordinary Shares and D Ordinary Share Dividend

In August 2016 the Company completed the final stage of the merger with Octopus VCT 2 plc ("OVCT 2") by paying a dividend of 92.3p per share to those D Ordinary shareholders who elected to exit, and converting the remaining D Ordinary shares into Ordinary shares. Shareholders who elected to convert their D Ordinary shares to Ordinary shares did so at a conversion ratio of 1.11205, based on NAVs of 83.0p and 92.3p for the Ordinary and D Ordinary shares, respectively, resulting in the issue of 3,850,093 Ordinary shares. Holders of 15,620,519 D Ordinary shares elected to exit, resulting in a dividend payment of £14.4 million. On completion of these transactions, the net assets of the enlarged VCT were approximately £138 million.

Investment Portfolio 

The first stage of the merger with OVCT 2 on 27 January 2016 resulted in the Company acquiring its £17.3 million investment portfolio which had been invested under a similar mandate to Apollo's.

During the six months to 31 July 2016, the Ordinary shares made the following disposals:

  Initial Cost (£) Sale Proceeds (£) Gain/(Loss) on Sale (£)
3AM Music 2,000,000 1,742,000 (258,000)
5AM Music 850,000 622,000 (228,000)
Callstream Group 472,000 947,000 475,000
Project Tristar 798,000 2,191,000 1,393,000
SCM World 5,000,000 5,425,000 425,000
    10,927,000 1,807,000

SCM World was acquired by Gartner Inc, a US quoted company with strategic overlap in the supply chain advisory sector.  The majority shareholders of the business took the decision to sell, based on the valuation offered. The overall annualised return to Apollo, including loan interest and dividends was 18%.  The other disposals related to investments that had been in the portfolio for several years.  In the case of Tristar and Callstream, the annualised returns including proceeds received over the lifetime of the investment were 17% and 19% respectively. 

In the same period, the Company has invested £9 million into eight companies seeking to develop solar farms in Sardinia. The project plans are being reviewed in detail at present with a view to commencing the building work in the final quarter of 2016. This follows the successful track record Apollo has had with UK solar investments. 

More recently, Apollo completed its investment into Spectra during July. Spectra is a manufacturer and distributor of medical equipment for elderly or obese patients being cared for in their homes. 

Another investment also completed in July was into ISG, a specialist service provider to large organisations such as supermarkets, which installs and maintains Wi-Fi and related connectivity systems.  

Since the period end, CSL Dualcom has been acquired by a private equity consortium.  Apollo had invested £10.8 million over three funding rounds and this was the second largest holding in the fund.  The annualised return from equity and loans over the life of the investment was 12%.

Investment Strategy and Proposed Merger with Octopus Eclipse VCT plc

Historically, the structure of investments has typically been weighted more heavily towards loan based instruments than equity. This has been providing fixed returns, with payments generally ranked above most other creditors, allowing for future visibility and security. This strategy has enabled Apollo to reduce the downward risk that is an intrinsic element of an equity investment. However the minority equity stake also enables some level of participation in any upside performance.

As set out in the prospectus, the aim of the Company is to make investments to achieve an appropriate balance of income and capital growth, having regard for VCT legislation. To date the Investment Manager has been successful in achieving this aim, as evidenced by the positive return on ordinary activities. In view of the changes to VCT investment rules in 2015, the Board has been reviewing the investment strategy to ensure the Company continues to comply with the regulations. In light of the smaller potential universe of VCT qualifying companies going forward, this is expected to result in Apollo converging with the investment approach adopted by Octopus Eclipse VCT plc, and as such, your Board is recommending a merger. Full benefits will be laid out to shareholders in due course, providing them with the opportunity to vote on the proposal. The Board firmly believes in the merits of a merger for Apollo shareholders which would notably increase the portfolio of VCT qualifying companies and provide additional investment opportunities.

Dividend Policy and Special Dividend

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. Hence an interim dividend of 2.5p per Ordinary share has been declared in respect of the six months ended 31 July 2016.

In addition to this, and in view of the profits generated on the disposal of a number of portfolio companies, as referred to above, I am delighted to inform you that your Board has declared a special dividend of 16.5p per Ordinary Share. Both the interim and special dividend will be paid on 2 December 2016 to Ordinary shareholders on the register at 11 November 2016.

This follows the 2.5p final dividend that was paid to Ordinary Shareholders on 26 August 2016 in respect of the year ended 31 January 2016.

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 set by HMRC for maintaining approval as a VCT.

A key requirement is to ensure that at least 70% of the assets of the fund are in VCT qualifying investments. As at 31 July 2016, 86% of the portfolio, as measured by HMRC rules, was invested in VCT qualifying investments.

Principal Risks and Uncertainties

The principal risks and uncertainties are set out in Note 6 of the Notes to the Half-Yearly Report.

Outlook

Since the Company's launch we have seen significant Government changes to the subsidy regime for the renewable energy sector and an economy which has until recently struggled to grow following the global financial crisis. 
Following the referendum on membership of the European Union in June we have entered another period of economic uncertainty, however against this backdrop the portfolio has generally continued to perform well. The recent weakening of the British Pound has not had a significant impact on the businesses we have backed as they are generally UK based and do not have large unhedged foreign currency exposures.  As such, the returns to shareholders have shown low volatility year on year, which is testament to the prudent investment approach adopted by the Investment Manager.  The impact of the changes in VCT investment rules which came into force within the last year has been to reduce the size of the available market for investment opportunities by preventing new investments in management buy-outs and the energy sector.  Your Board and Investment Manager continue to monitor such regulatory developments and their impact on the investment strategy. We believe we can continue to find suitable VCT qualifying investments and are therefore pleased to be recommending a new £20 million fundraise and a merger with Octopus Eclipse VCT.

Murray Steele
Chairman             
5 October 2016

Investment Portfolio

Investments Held - Consolidated

InvestmentsSectorInvestment cost as at 31 July 2016 (£'000)Movement in fair value to 31 July 2016 (£'000)Fair value as at 31 July 2016 (£'000)Movement in fair value in period% equity held by Apollo VCT% equity held by all funds managed by Octopus
Clifford Thames Group Limited Automotive Software & data 13,318 2,260 15,578 208 13.0 13.0
CSL DualCom Holdings Limited Security devices 10,806 523 11,329 116 3.2 3.2
Vista Retail Support Limited Retail support services 6,758 2,378 9,136 551 12.0 12.0
Healthcare Services and Technology Limited Healthcare 7,186 759 7,945 (105) 10.0 10.0
Anglo European Group Limited Manufacturing 5,000 - 5,000 - 26.7 26.7
Byena Limited Investment Company 5,000 - 5,000 - 99.9 99.9
Coupra Limited Information Technology 5,000 - 5,000 - 9.8 9.8
Emercor Limited Investment Company 5,000 - 5,000 - 99.9 99.9
Finnavor Limited Investment Company 5,000 - 5,000 - 99.9 99.9
Galvara Limited Investment Company 5,000 - 5,000 - 99.9 99.9
Other* Various 44,374 (2,927) 41,447 (403)    
         
Total fixed asset investments112,4422,993115,435367    
Cash at bank       35,632     
Debtors less creditors       1,072     
Total net assets   152,139   

*Comprises 25 other investments: Acquire Your Business Ltd, Angelico Solar Limited, Aquaso Limited, Atlantic Screen International Limited, Bramante Solar Limited, British Country Inns plc, Canaletto Solar Limited, Countrywide Healthcare Services Limited, Dyscova Limited, EKF Diagnostics plc, Havara Limited, Kabardin Limited, Leonardo Solar Limited, Modigliano Solar Limited, Pirlo Solar Limited, PTB Films, Quickfire, Quickfire2, Red Poll Power Limited, Superior Heat Limited, Tanganyika Heat Limited, Tintoretto Solar Limited, Tiziano Solar Limited, Valloire Power Limited, and Winnipeg Heat (Caspian).

Investments Held - Ordinary Shares

InvestmentsSectorInvestment cost as at 31 July 2016 (£'000)Movement in fair value to 31 July 2016 (£'000)Fair value as at 31 July 2016 (£'000)Movement in fair value in period
Clifford Thames Group Limited Automotive Software & data 13,318 2,260 15,578 208
CSL DualCom Holdings Limited Security devices 10,806 523 11,329 116
Vista Retail Support Limited Retail support services 6,758 2,378 9,136 551
Healthcare Services and Technology Limited Healthcare 7,186 759 7,945 (105)
Anglo European Group Limited Manufacturing 5,000 - 5,000 -
Galvara Limited Investment Company 5,000 - 5,000 -
Countrywide Healthcare Services Limited Healthcare 2,675 547 3,222 173
Aquaso Limited Oil & Gas Services 3,500 (500) 3,000 -
Byena Limited Investment Company 2,500 - 2,500 -
Coupra Limited Information Technology 2,500 - 2,500 -
Other*   36,434 (2,597) 33,837 (198)
     
Total fixed asset investments95,6773,37099,047745
Cash at bank       35,632  
Debtors less creditors       (153)  
Total net assets   134,526 

*Comprises 25 other investments

Investments Held - D Ordinary Shares

InvestmentsSectorInvestment cost as at 31 July 2016 (£'000)Movement in fair value to 31 July 2016 (£'000)Fair value as at 31 July 2016 (£'000)Movement in fair value in period
Byena Limited Investment Company 2,500 - 2,500 -
Coupra Limited Information Technology 2,500 - 2,500 -
Emercor Limited Investment Company 2,500 - 2,500 -
Finnavor Limited Investment Company 2,500 - 2,500 -
Haravar Limited Investment Company 2,500 - 2,500 -
Winnipeg Heat Limited (Caspian) Anaerobic Digestion 1,351 (80) 1,271 (80)
Tanganyika Heat Limited Anaerobic Digestion 1,172 (225) 947 (225)
Superior Heat Limited Ground Source Heat 961 (66) 895 (67)
Acquire Your Business Ltd Business Services 561 (6) 555 (6)
Atlantic Screen International Media 220 - 220 -
     
Total fixed asset investments16,765(377)16,388(378)
Cash at bank       -  
Debtors less creditors       1,225  
Total net assets   17,613 


Responsibility Statement of the Directors in respect of the Half-Yearly Report

We confirm that to the best of our knowledge:

  • the half-yearly financial statements have been prepared in accordance with the statement "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

Murray Steele
Chairman
5 October 2016


Income Statement - Consolidated

 Six months to 31 July 2016 Six months to 31 July 2015 Year to 31 January 2016
 RevenueCapitalTotal Revenue Capital Total Revenue Capital Total
  £'000£'000£'000 £'000 £'000 £'000 £'000 £'000 £'000
                   
Realised gain on disposal of fixed asset investments -987987 - 478 478 - 1,112 1,112
                 
Fixed asset investment holding gains -367367 - 899 899 - 1,776 1,776
                 
Investment income 2,188-2,188 2,244 - 2,244 4,524 - 4,524
                 
Investment management fees (308)(1,097)(1,405) (355) (1,065) (1,420) (595) (2,182) (2,777)
                 
Other expenses (758)-(758) (666) - (666) (1,625) - (1,625)
                 
Return on ordinary activities before tax1,1222571,379 1,223 312 1,535  

2,304
706 3,010
                 
Taxation on return on ordinary activities (70)-(70) (41) - (41) (615) 436 (179)
                 
Return on ordinary activities after tax1,0522571,309 1,182 312 1,494 1,689 1,142 2,831
Earnings per share - basic and diluted0.6p0.2p0.8p 0.8p 0.2p 1.0p 1.2p 0.8p 2.0p
  • 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 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 those disclosed in the income statement.
  • The accompanying notes are an integral part of the half-yearly report.

Income Statement - Ordinary Shares

Six months to 31 July 2016 Six months to 31 July 2015* Year to January 2016
RevenueCapitalTotal Revenue Capital Total Revenue Capital Total
£'000£'000£'000 £'000 £'000 £'000 £'000 £'000 £'000
                   
Realised gain on disposal of fixed asset investments -921921 - 478 478 - 1,112 1,112
                 
Fixed asset investment holding gains -745745 - 899 899 - 1,776 1,776
                 
Investment income 2,058-2,058 2,244 - 2,244 4,524 - 4,524
                 
Investment management fees (308)(1,097)(1,405) (355) (1,065) (1,420) (595) (2,182) (2,777)
                 
Other expenses (666)-(666) (666) - (666) (1,628) - (1,628)
                 
Return on ordinary activities before tax1,0845691,653  

1,223
312 1,535  

2,301
706 3,007
                 
Taxation on return on ordinary activities (70)-(70) (41) - (41) (615) 436 (179)
                 
Return on ordinary activities after tax1,0145691,583 1,182 312 1,494 1,686 1,142 2,828
Earnings per share - basic and diluted0.7p0.4p1.1p 0.8p 0.2p 1.0p 1.2p 0.8p 2.0p

*Comparative figures as at 31 July 2015 include the C Ordinary Shares, which converted to Ordinary Shares on 21 August 2015

  • The 'Total' column of this statement is the profit and loss account of the Ordinary Share portfolio; 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 Ordinary Share portfolio 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 Ordinary Share portfolio has no recognised gains or losses other than those disclosed in the income statement.
  • The accompanying notes are an integral part of the half-yearly report.

Income Statement - D Ordinary Shares

 Six months to 31 July 2016 Year to 31 January 2016
 RevenueCapitalTotal Revenue Capital Total
  £'000£'000£'000 £'000 £'000 £'000
             
Realised gain on disposal of fixed asset investments -6666 - - -
           
Fixed asset investment holdinglosses -(378)(378) - - -
           
Investment income 130-130 - - -
           
Investment management fees --- - - -
           
Other expenses (92)-(92) 3 - 3
           
Return on ordinary activities before tax38(312)(274) 3 - 3
           
Taxation on return on ordinary activities --- - - -
           
Return on ordinary activities after tax38(312)(274) 3 - 3
Earnings per share - basic and diluted0.2p(1.6)p(1.4)p  0.0p 0.0p 0.0p
  • The 'Total' column of this statement is the profit and loss account of the D Ordinary share portfolio; 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 D Ordinary share portfolio 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 D Ordinary share portfolio has no recognised gains or losses other than those disclosed in the income statement.
  • The accompanying notes are an integral part of the half-yearly report.

Statement of Changes in Equity - Consolidated

Share CapitalShare PremiumSpecial distributable reservesCapital Redemption ReserveCapital reserve realisedCapital reserve unrealisedRevenue reserveTotal
£'000£'000£'000£'000£'000£'000£'000£'000
Six months ended 31 July 2016                
As at 1 February 2016 13,896   48,893          60,748            2,557 (1,866)         3,510            3 127,741
Management fee allocated as capital expenditure   -    -    -  - (1,097)                -             -  (1,097)
Current year gains on disposal   -    - -                   -   987                -             -  987
Current period gain on fair value of investments     -   -                   -                   -             -           367             - 368
Prior years' holding gains/losses now realised    -    -                   -                   -  889         (889)             -          -
Profit on ordinary activities after tax  -    -                   -                   -             -                -      1,052 1,052
Total other comprehensive income for the year  -    -                   -                   -             -                -             -             -
Contributions by and distributions to owners      
Repurchase and cancellation of own shares (115) -             (901)               115             -                -             -  (901)
Cancellation of Share Premium    - (68,481)          68,481                   -             -                -             -             -
Issue of shares  2,964 21,026                   -                   -             -                -             - 23,990
Dividends paid    -    -                   -                   -             -                -             -             -
As at 31 July 201616,745  1,438        128,328            2,672 (1,087)         2,988      1,055 152,139
Six months ended 31 July 2015               
As at 1 February 2015 8,636 54,306          53,989            2,101  (2,019)         2,521         286 119,820
Management fee allocated as capital expenditure     -    -     -     - (1,065)     -     -  (1,065)
Current year (loss)/gains on disposal   -    -                   -                   -  478                -             -  478
Current period losses on fair value of investments   -    -                   -                   -             -           899             -   899
Prior years' holding gains/losses now realised   -    -                   -                   -   93           (93)             -             -
Profit on ordinary activities after tax   -   -                   -                   -             -                -         925  925
Total other comprehensive income for the year   -    -    -    -    -    -   -   -
Contributions by and distributions to owners:
Repurchase and cancellation of own shares (63)   -   (501)   63  -    -  -  (501)
Issue of shares  1,928  14,251     -       -    -     -      - 16,179
Cash received for shares to be issued    -    - - - - - - -
Dividends paid - -          (2,497) - - - - (2,497)
As at 31 July 201510,501  68,557  50,991   2,164 (2,513)   3,327 1,211 134,238
Year ended 31 January 2016                
As at 1 February 2015  8,636 54,306  53,989   2,101 (2,019)  2,521         286 119,820
Management fee allocated as capital expenditure - - - - (2,182) - - (2,182)
Current year gains on disposal - - - -  1,112 - - 1,112
Current period gain on fair value of investments - - - - -         1,776 -  1,776
Prior years' holding gains/losses now realised - - - -  787         (787) - -
Capital expenses tax against tax charge - - - -  436 - -  436
Profit on ordinary activities after tax - - - - - -      1,689 1,689
Total other comprehensive income for the year - - - - - - - -
Contributions by and distributions to owners                
Repurchase and cancellation of own shares (456) -          (3,597)               456 - - - (3,597)
Cancellation of Share Premium - (50,414)  50,414 - - - - -
Issue of shares 3,902  44,652 - - - - - 48,554
Issue of new shares on C ordinary share conversion 1,814  349 (2,163) - - - - -
Dividend paid - C ordinary share conversion - -  (34,249) - - - - (34,249)
Dividends paid - -  (3,646) - - - (1,972) (5,618)
As at 31 January 2016 13,896 48,893   60,748   2,557 (1,866) 3,510   3 127,741

Statement of Changes in Equity - Ordinary Shares

Share CapitalShare PremiumSpecial distributable reservesCapital Redemption ReserveCapital reserve realisedCapital reserve unrealisedRevenue reserveTotal
£'000£'000£'000£'000£'000£'000£'000£'000
Six months to 31 July 2016        
As at 1 February 2016 13,705 31,200 60,748  2,557 (1,866)  3,510 -  109,854
Management fee allocated as capital expenditure - - - - (1,097) - -  (1,097)
Current year gains on disposal - - - -  921 - -  921
Current period gain on fair value of investments - - - - -   745 - 746
Prior years' holding gains/losses now realised - - - -  889   (889) -  -
Profit on ordinary activities after tax - - - - - -   1,014  1,014
Total other comprehensive income for the year - - - - - - - -
Contributions by and distributions to owners
Repurchase and cancellation of own shares  (115) -   (901) 115 - - -  (901)
Cancellation of Share Premium -  (50,788)  50,788 - - - - -
Issue of shares  2,964  21,026 - - - - -  23,990
Dividends paid - - - - - - - -
Balance as at 31 July 201616,554 1,438  110,635   2,672 (1,153)   3,366  1,014 134,526
Six months to 31 July 2015
As at 1 February 2015  8,636 54,306   53,989    2,101 (2,019)  2,521   286 119,820
Management fee allocated as capital expenditure - - - - (1,065) - -  (1,065)
Current year (loss)/gains on disposal - - - -  478 - -   478
Current period losses on fair value of investments - - - - -    899 -    899
Prior years' holding gains/losses now realised - - - -   93    (93) - -
Profit on ordinary activities after tax - - - - - -  925   925
Total other comprehensive income for the year - - - - - - -    -
Contributions by and distributions to owners:
Repurchase and cancellation of own shares  (63) -  (501)  63 - - -  (501)
Issue of shares  1,928 14,251 - - - - -   16,179
Cash received for shares to be issued - - - - - - -   -
Dividends paid - -  (2,497) - - - -   (2,497)
Balance as at 31 July 2015*10,501  68,557  50,991  2,164 (2,513)  3,327  1,211 134,238
Year to 31 January 2016
As at 1 February 2015 8,636  54,306  53,989  2,101 (2,019)  2,521  286 119,820
Management fee allocated as capital expenditure - - - - (2,182) - -  (2,182)
Current year gains on disposal - - - -  1,112 - -  1,112
Current period gain on fair value of investments - - - - - 1,776 -  1,776
Prior years' holding gains/losses now realised - - - -  787  (787) -   -
Capital expenses tax against tax charge - - - -  436 - - 436
Profit on ordinary activities after tax - - - - - - 1,686  1,686
Total other comprehensive income for the year - - - - - - -     -
Contributions by and distributions to owners
Repurchase and cancellation of own shares (456) -  (3,597)   456 - - - (3,597)
Cancellation of Share Premium -  (50,414)  50,414 - - - - -
Issue of shares  3,711  26,959 - - - - - 30,670
Issue of new shares on C ordinary share conversion 1,814  349 (2,163) - - - - -
Dividend paid - C ordinary share conversion - -  (34,249) - - - -  (34,249)
Dividends paid - -  (3,646) - - -  (1,972)   (5,618)
Balance as at 31 January 201613,705 31,200  60,748  2,557 (1,866)  3,510 -109,854

*Figures to 31 July 2015 include the C Ordinary Shares, which converted to Ordinary Shares on 21 August 2015

Statement of Changes in Equity - D Ordinary Shares

Share CapitalShare PremiumSpecial distributable reservesCapital Redemption ReserveCapital reserve realisedCapital reserve unrealisedRevenue reserveTotal
£'000£'000£'000£'000£'000£'000£'000£'000
Six months to 31 July 2016
As at 1 February 2016 191 17,693 - - - -              3       17,887
Management fee allocated as capital expenditure - - - - - - - -
Current year gains on disposal - - - -  66 - -             66
Current period gain on fair value of investments - - - - -           (378) -          (378)
Prior years' holding gains/losses now realised - - - - - - - -
Profit on ordinary activities after tax - - - - - -            38             38
Total other comprehensive income for the year - - - - - - -                -
Contributions by and distributions to owners
Repurchase and cancellation of own shares - - - - - - - -
Cancellation of Share Premium -  (17,693) 17,693 - - - - -
Issue of shares - - - - - - - -
Dividends paid - - - - - - - -
As at 31 July 2016191  -  17,693 -  66   (378)  41 17,613
Year to 31 January 2016
As at 1 February 2015 - - - - - - - -
Management fee allocated as capital expenditure - - - - - - - -
Current year gains on disposal - - - - - - - -
Current period gain on fair value of investments - - - - - - - -
Prior years' holding gains/losses now realised - - - - - - - -
Capital expenses tax against tax charge - - - - - - - -
Profit on ordinary activities after tax - - - - - -              3               3
Total other comprehensive income for the year - - - - - - - -
Contributions by and distributions to owners               
Repurchase and cancellation of own shares - - - - - - - -
Cancellation of Share Premium - - - - - - - -
Issue of shares 191 17,693 - - - - -       17,884
Dividend paid - C ordinary share conversion - - - - - - - -
Dividends paid - - - - - - - -
As at 31 January 2016 191 17,693 ----             3       17,887

Statement of Financial Position - Consolidated

  As at 31 July 2016 As at 31 July 2015 As at 31 January 2016
 £'000£'000 £'000 £'000 £'000 £'000
             
Fixed asset investments*  115,435   109,524   116,628
Current assets:           
Debtors 5,248  2,957   5,305  
Cash at bank 35,632  25,419   10,275  
  40,880  28,376   15,580  
Creditors: amounts falling due within one year (4,176)  (3,662)   (4,467)  
Net current assets  36,704   24,714   11,113
Net assets 152,139   134,238   127,741
            
Called up equity share capital  16,745   10,501   13,896
Share premium  1,438   68,557   48,893
Special distributable reserve  128,328   50,991   60,748
Capital redemption reserve  2,672   2,164   2,557
Capital reserve gains & losses on disposal  (1,087)   (2,513)   (1,866)
Capital reserve holding gains & losses  2,988   3,327   3,510
Revenue reserve  1,055   1,211   3
Total equity shareholders' funds 152,139   134,238   127,741
Net asset value per share          

*Held at fair value through profit and loss

The statements were approved by the Directors and authorised for issue on 5 October 2016 and are signed on their behalf by:

Murray Steele
Chairman
Company Number: 05840377

Statement of Financial Position - Ordinary Shares

  As at 31 July 2016 As at 31 July 2015** As at 31 January 2016
 £'000£'000 £'000 £'000 £'000 £'000
             
Fixed asset investments*  99,047   109,524   99,306
Current assets:           
Debtors 3,962  2,957   5,042  
Cash at bank 35,632  25,419   10,275  
  39,594  28,376   15,317  
Creditors: amounts falling due within one year (4,115)  (3,662)   (4,769)  
Net current assets  35,479   24,714   10,548
Total assets less current liabilities 134,526   134,238   109,854
            
Called up equity share capital  16,554   10,501   13,705
Share premium  1,438   68,557   31,200
Special distributable reserve  110,635   50,991   60,748
Capital redemption reserve  2,672   2,164   2,557
Capital reserve gains & losses on disposal  (1,153)   (2,513)   (1,866)
Capital reserve holding gains & losses  3,366   3,327   3,510
Revenue reserve  1,014   1,211   -
Total equity shareholders' funds 134,526   134,238   109,854

*Held at fair value through profit and loss
**Comparative figures as at 31 July 2015 include the C Ordinary Shares, which converted to Ordinary Shares on 21 August 2015.

Statement of Financial Position - D Ordinary Shares

  As at 31 July 2016 As at 31 January 2016
 £'000£'000 £'000 £'000
         
Fixed asset investments*  16,388   17,322
Current assets:       
Debtors 1,286  667  
Cash at bank -  -  
  1,286  667  
Creditors: amounts falling due within one year (61)  (102)  
Net current assets  1,225   565
Total assets less current liabilities 17,613   17,887
        
Called up equity share capital  191   191
Share premium  -   17,693
Special distributable reserve  17,693   -
Capital redemption reserve  -   -
Capital reserve gains & losses on disposal  66   -
Capital reserve holding gains & losses  (378)   -
Revenue reserve  41   3
Total equity shareholders' funds 17,613   17,887

*Held at fair value through profit and loss

Cash Flow Statement - Consolidated

Six months to 31 July 2016 Six months to 31 July 2015 Year to 31 January 2016
  £'000 £'000 £'000
Cash flows from operating activities
Return on ordinary activities before tax              1,379             1,494                 2,831
Adjustments for:
Decrease/(increase) in debtors                  57              (332)               (2,423)
(Decrease)/increase in creditors              (291)              (703)                    102
Debtors obtained from transaction                     -                     -                    382
Creditors obtained from transaction                     -                     -                  (123)
Gain/(loss) on disposal of fixed assets              (987)           (1,271)               (1,112)
(Gain)/loss on valuation of fixed asset investments              (367)              (106)               (1,776)
Cash from operations             (209)              (918)               (2,119)
Income taxes paid                (70)  -  -
Net cash generated from operating activities             (279)              (918)               (2,119)
Cash flows from investing activities
Cash acquired from transaction                     -                     -                    303
Purchase of fixed asset investments            (9,000)          (17,500)             (53,650)
Sale of fixed asset investments            11,547             9,392               57,271
Net cash flows from investing activities             2,547           (8,108)                 3,924
Cash flows from financing activities
Purchase of own shares              (901)              (498)               (3,597)
Share issues            23,990            16,041               30,670
Dividends Paid                     -           (2,362)             (39,867)
Net cash flows from financing activities           23,089            13,181             (12,794)
       
(Decrease)/Increase in cash and cash equivalents           25,357             4,155             (10,989)
Opening cash and cash equivalents            10,275            21,264               21,264
       
Closing cash and cash equivalents           35,632            25,419               10,275
Cash and cash equivalents comprise
Cash at Bank            35,632            25,419               10,275
           35,632            25,419               10,275

  
  


Notes to the Half-Yearly Report

  1. Basis of preparation

                   
The unaudited half-yearly results which cover the six months to 31 July 2016 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 for Investment Companies issued by the Association of Investment Companies in November 2014.

  1. Publication of non-statutory accounts

The unaudited half-yearly results for the six months ended 31 July 2016 do not constitute Statutory Accounts within the meaning of s.415 of the Companies Act 2006. The comparative figures for the year ended 31 January 2016 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.

  1. Earnings per Share

The earnings per share for the combined fund is based on 172,098,191 shares, being the weighted average number of shares in issue during the period, including Ordinary shares and D Ordinary Shares (31 January 2016: 137,876,260 including Ordinary Shares, D Ordinary Shares and Deferred Shares; 31 July 2015: 144,813,898 including Ordinary Shares and C Ordinary Shares).

The earnings per share for the Ordinary Shares is based on 153,015,465 shares, being the weighted average number of Ordinary Shares in issue during the period (31 January 2016: 137,667,134 including Ordinary Shares and Deferred Shares; 31 July 2015: 144,813,898, including C Ordinary Shares).

The earnings per share for the D Ordinary Shares is based on 19,082,726 shares, being the weighted average number of D Ordinary Shares in issue during the period (31 January 2016: 19,082,726).

There are no potentially dilutive capital instruments in issue and, therefore, no diluted earnings per share figures are relevant. The basic and diluted earnings per share are therefore identical.

  1. Net asset value per share

Ordinary Shares

  31 July 2016 31 July 2015 31 January 2016
Net Assets (£) 134,526,000 83,468,000 109,854,000
Shares in Issue 162,042,257 99,830,660 133,555,641
Net Asset Value per share (p) 83.0 83.6 82.3

D Ordinary Shares

  31 July 2016 31 July 2015 31 January 2016
Net Assets (£) 17,613,000 - 17,887,000
Shares in Issue 19,082,726 - 19,082,726
Net Asset Value per share (p) 92.3 - 93.7

C Ordinary Shares

  31 July 2016 31 July 2015 31 January 2016
Net Assets (£) - 50,770,000 -
Shares in Issue - 51,805,819 -
Net Asset Value per share (p) - 98.0 -

                   

  1. Dividends

A final dividend, for the year ended 31 January 2016, of 2.5p per share was paid on 26 August 2016 to Ordinary Shareholders on the register on 12 August 2016.

Both the special dividend of 16.5p per share and the interim dividend of 2.5p per share for the six months ending 31 July 2016 will be paid on 2 December 2016, to those shareholders on the register on 11 November 2016. These dividends will be paid to all Apollo Ordinary Shareholders including D Ordinary Shareholders who elected to convert their D Ordinary Shares to Apollo Ordinary Shares.

  1. Principal Risks and Uncertainties

The Company's assets consist of equity and fixed-rate interest investments, cash and liquid resources. Its principal risks are therefore market risk, credit risk and liquidity risk. Other risks faced by the Company include economic, loss of approval as a VCT, investment and strategic, regulatory, reputational, operational and financial risks. These risks, and the way in which they are managed, are described in more detail in the Company's Annual Report and Accounts for the year ended 31 January 2016. The Company's principal risks and uncertainties have not changed materially since the date of that report.

  1. 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.

Apollo has incurred management fees of £1,232,000 in respect of the Ordinary Shares during the period to 31 July 2016 (31 July 2015: £1,420,000; 31 January 2016: £2,380,000).

Apollo has also incurred performance fees of £173,000 in respect of the Ordinary Shares during the period to 31 July 2016 (31 July 2015: £nil; 31 January 2016: £397,000). An accrual in respect of the C Ordinary shares at 31 July 2015 was not incurred as the performance criteria required was not met.

The D Ordinary Shares incurred management fees of £nil (31 January 2016: £nil).

Octopus also provides administration and company secretarial services to the Company. Octopus receives a fee of 0.3 per cent per annum of net assets of the Company for administration services and £10,000 per annum for company secretarial services.

  1. Post balance sheet events

Since 31 July 2016 the following significant events have taken place:

  • On 5 August 2016, a dividend of 92.3p was paid on 15,620,519 D Ordinary Shares totalling £14,400,000, where the shareholder had elected to exit their investment in accordance with the announcement made on 1 June 2016;
  • On 5 August 2016, in accordance with the announcement made on 1 June 2016, the remaining 3,462,207 D Ordinary Shares were converted to Ordinary Shares at a NAV 83.0p resulting in a conversion ratio of 1.11205 and an issue of 3,850,093 Ordinary Shares.
  • On 12 August 2016 the holding in CSL Dualcom was sold for £13.8 million, a net gain of £1 million.

Since 31 July 2016 the Company has issued the following shares:

Date Number of Shares Issued Price per share (p)
10 August 2016 4,387,618 87.4
26 August 2016 685,018* 87.4
19 September 2016 4,830,359 84.8

*Shares issued under the Dividend Reinvestment Scheme as an alternative to the final dividend for the year ended 31 January 2016.

Since 31 July 2016 the Company has bought back the following shares:

Date Number of Shares Purchased Price per share (p)
7 September 2016 240,079 77.0
     
  1. Other Information

A version of 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 Investment Manager's website at www.octopusinvestments.com.

Shareholder Information and Contact Details

The Company, formerly named Octopus Apollo VCT 3 plc, was launched in July 2006 and raised over £27.1 million (£25.9 million net of expenses) through an offer for subscription by the time it closed on 5 April 2007. On 27 September 2012, the Company acquired the net assets of Octopus Apollo VCT 1 plc, Octopus Apollo VCT 2 plc and Octopus Apollo VCT 4 plc. On the same day, the Company was renamed Octopus Apollo VCT plc. On 28 November 2014 the Company acquired the net assets of Octopus VCT plc in consideration for the issue of 52,035,840 C Ordinary Shares. olders of C Ordinary Shares were given an opportunity to exit their investment in August 2015. The shares of C Ordinary shareholders who did not exit their investment had their C Ordinary shares converted to Ordinary shares at a conversion ratio of 1.17506. On 27 January 2016 the Company acquired the net assets of Octopus VCT 2 plc. Holders of D Ordinary Shares were given an opportunity to exit their investment in August 2016. The shares of D Ordinary shareholders who did not exit their investment had their D Ordinary shares converted to Ordinary shares at a conversion ratio of 1.11205. 

The objective of the Company is to invest in a diversified portfolio of UK smaller companies in order to generate income and capital growth over the long-term.

The Company launched an offer for subscription on 2 November 2015 to raise £30 million, with an over allotment facility of £10 million. This offer closed, fully subscribed, on 9 September 2016.

Further details of the Company's progress are discussed in the Chairman's Statement.

Venture Capital Trusts (VCTs)

VCTs were introduced in the Finance Act 1995 to provide a means for private individuals to invest in unquoted companies in the UK.  Subsequent Finance Acts have introduced changes to VCT legislation. The tax benefits currently available to eligible new investors in VCTs include:

  • up to 30% up-front income tax relief;

·                     exemption from income tax on dividends paid; and
·                     exemption from capital gains tax on disposals of shares in VCTs.

The Company has been approved as a VCT by HMRC.  In order to maintain its approval the Company must comply with certain requirements of the Income Tax Act 2007 on a continuing basis, specifically the provisions of chapter 3 and, in particular, s280A:

  • at least 70% of the Company's investments must comprise 'qualifying holdings' (as defined in the legislation);
  • for cash raised pre 6 April 2011 at least 30% of the 70% of qualifying holdings must be invested into Ordinary Shares with no preferential rights;
  • for cash raised post 5 April 2011 at least 70% of the 70% of qualifying holdings must be invested into Ordinary Shares with no preferential rights;
  • no single investment made can exceed 15% of the total Company value; and
  • a minimum of 10% of each Qualifying Investment must be in Ordinary Shares with no preferential rights.

New VCT Regulations

VCTs have always been subject to UK regulations, not least as they confer tax benefits on investors.  In recent years these regulations have become subject themselves to European State Aid rules.  The Chancellor proposed new rules in his Summer Budget in July 2015 and, following discussions with European authorities in Brussels, these became law following the granting of Royal Assent in November 2015.  These are in addition to existing rules which already limited investment to companies with gross assets of no more than £15 million, 250 employees and where no more than £5 million of State Aided funds had been raised within the past 12 months.

The new rules now in force relate to the age of companies receiving a first investment, a lifetime limit on State Aided funds and rules designed to target any funds raised on a company's growth. They also recognise that there is a class of company which is 'knowledge intensive' and therefore hungrier for capital, and some of the limits are more generous for these types of companies.

To summarise the changes, in order to qualify companies must:

  • have fewer than 250 full time equivalent employees; and
  • have less than £15 million of gross assets at the time of investment and no more than £16 million immediately post investment; and
  • be less than seven years old (or 10 years if a knowledge intensive company) if raising State Aided funds for the first time; and
  • have raised no more than £5 million of State Aided funds in the previous 12 months and less than the lifetime limit of £12 million (or £20 million if a knowledge intensive company); and
  • produce a business plan to show that its funds are being raised for growth.

Follow-on investments are allowed to provide further capital for an existing investment up to the lifetime limit, and in certain circumstances a company may obtain clearance to raise money to develop a new business or market. Money raised from VCTs is not allowed to be used for acquisitions (unless they qualify too), or to buy out debt or existing equity. In addition, non-qualifying purchases of AIM shares are no longer allowed.

Dividends
Dividends will be paid by the Registrar on behalf of the Company. Shareholders who wish to have dividends paid directly into their bank account rather than by cheque to their registered address can complete a mandate form for this purpose. Queries relating to dividends, shareholdings and requests for mandate forms should be directed to the Company's Registrar, Capita Asset Services, by calling 0371 664 0300 (calls cost 10p per minute plus network extras. Lines are open Monday-Friday 9.00am-5.30pm), or by writing to them at:

Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU




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 Apollo VCT plc via Globenewswire

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