Half-year report

Octopus Apollo VCT Plc  

Half-Yearly Results

24 September 2021

Octopus Apollo VCT plc, managed by Octopus Investments Limited, today announces its unaudited half-yearly results for the six months ended 31 July 2021.

These results were approved by the Board of Directors on 24 September 2021.

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

Financial Headlines

	Six months to 31 July 2021	Six months to 31 July 2020	Year to 31 January 2021
Net assets (£’000s)	225,544	141,330	168,237
Return on ordinary activities after tax (£’000s)	12,790	1,891	19,767
Net asset value per share (‘NAV’)	51.0	46.1	49.2
Cumulative dividends paid since launch (p per share)	77.7	74.1	76.4
NAV plus cumulative dividends paid (p)	128.7	120.2	125.6
Total return %*	6.3	0.9	12.7
Ordinary dividend paid in period (p)	1.3	-	2.3
Ordinary dividend declared in the period (p) **	1.3	1.2	2.5
Special dividend declared in the period (p) **	3.1	-	-

^*Total return is calculated as (movement in NAV + dividends paid in the period) divided by the NAV at the beginning of the period.

^**The interim dividend of 1.3p and special dividend of 3.1p will be paid on 14 January 2022 to shareholders on the register at 31 December 2021.

Chair’s Statement

I am pleased to present the half-yearly report of Octopus Apollo VCT for the six months ended 31 July 2021. The NAV Total Return increased by 6.3% during the six months. In keeping with the regular dividend policy, your Board has declared an interim dividend of 1.3p which will be paid to shareholders on 14 January 2022. Additionally, following a number of recent profitable disposals, your Board is declaring a special dividend of 3.1p which will be paid at the same time as the interim dividend.

In the six months to 31 July 2021 the VCT has had another successful period, showing strong value creation driven by growth in the majority of the Company’s investment portfolio. This is particularly pleasing against the ongoing backdrop of the pandemic and the inherent uncertainty and disruption that continued throughout the period. The portfolio has continued to show resilience, benefitting from its high exposure to the technology sector, and this has led to the 6.3% increase in NAV Total Return.

In the six-month period, the Company invested £6.8 million in two new investments and £2.6 million of follow-on capital into two existing investee companies to fund their growth plans. The Company has also disposed of several investments across the older, legacy portfolio as well as making successful exits of more recently acquired assets, generating total proceeds of £33.4 million.

Since the reporting date, the Company has invested £13.3 million in two new investments and £3 million in a follow-on investment. I remain optimistic for the future given the composition of the portfolio and recent performance.

Murray Steele

Chair        

24 September 2021

Interim Management Report

Performance

In the six months under review, the NAV Total Return has increased by 6.3%. This performance is attributable to positive fair value movements across the majority of the investments in the portfolio but, in particular, continued strong contribution from the newer technology-focused investments, which now make up most of the portfolio.

The value of the portfolio has increased by £16.7 million, excluding additions. The largest contributors were Perfect Ward Limited (£3.4 million valuation increase), Sova Assessment Limited (£2.1 million valuation increase) and Dyscova Limited (£2.0 million valuation increase), supported by positive contributions from other investments across all parts of the portfolio.

Portfolio Activity

During the period £6.8 million was invested into two new investments:

• Perfect Ward Limited: £4.0 million - a digital quality inspection platform designed to drive improvements in quality and care across clinical environments.

• Zapnito Limited £2.8 million – an expert community management SaaS platform, which provides business to business customers with the ability to deliver knowledge, expert content and active forums within online community networks.

During the period £2.6 million was invested into two follow-on investments, the majority of which was into:

• N2JB Limited (trading as Natterbox): £2.5 million – a provider of business to business cloud telephony services that are uniquely integrated into Customer Resource Management (“CRM”) software platforms.

Since the reporting date, the Company has invested £13.3 million in two new investments and £3 million in a follow-on investment. There has also been one partial disposal generating £0.3 million of proceeds.

Transactions with Manager

Details of amounts paid to the Manager are disclosed in note 7 to the financial statements.

Share Buybacks

The Company has continued to buy back shares as required. In the six months to July 2021, the Company bought back 12,617,575 Ordinary shares for total consideration of £6 million.

Dividend and Dividend Policy

It is the 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.

The Board has declared an interim dividend of 1.3p per Ordinary share in respect of the period ended 31 July 2021. The dividend will be payable on 14 January 2022 to Ordinary shareholders on the register at 31 December 2021. In addition, following some profitable disposals of holdings, your Board is declaring a special dividend of 3.1p which will be paid at the same time as the interim dividend.

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 80% of the assets of the fund are in VCT qualifying investments. As at 31 July 2021, 92.9% of the portfolio, as measured by HMRC rules, was invested in VCT qualifying investments.

Principal Risks and Uncertainties

The principal risks and uncertainties are described in detail within the strategic report in the Company’s annual report for the year ended 31 January 2021.

Summary and Future Prospects

The economic environment continues to be somewhat uncertain in the UK, even as we emerge from what is hoped will be the worst of the pandemic and as recovery continues. To date the impact on the portfolio has been very limited, noting the Investment Manager’s focus on technology investments which have demonstrated they are more resilient to the lockdown and other measures which were imposed. Indeed, the technology sector as a whole has seen a number of benefits, as companies increase adoption of software in response to the societal and logistical challenges posed by the pandemic. The investment team remains highly vigilant in case of any future economic deterioration, including a strong focus on the safety and robustness of the companies invested in and, indeed, their employees. However, we believe that the portfolio is well-positioned, and we remain confident of adding new and exciting investments to the portfolio in the coming months and years.

Richard Court

Octopus Investments Limited

24 September 2021

Investment Portfolio

Top 10 Investments	Sector	Investment cost as at 31 July 2021 £’000	Total movement in fair value to 31 July 2021 £’000	Fair value as at 31 July 2021 £’000	Movement in fair value in period £’000	% equity held by Apollo VCT
Fixed asset investments
Natterbox (N2JB Limited)	Technology	15,490	8,762	24,252	491	9.0
Ubisecure Holdings Limited	Technology	5,575	5,833	11,408	1,412	30.0
Veeqo Limited	Technology	4,350	5,860	10,210	661	19.7
Anglo European Group Limited	Manufacturing	5,000	3,167	8,167	893	26.7
Perfect Ward Limited	Technology	4,000	3,423	7,423	3,423	17.5
One Team Logic Limited	Technology	3,700	3,714	7,414	1,382	15.5
Countrywide Healthcare Services Holdings Limited	Healthcare	2,675	4,603	7,278	(962)	20.7
Hasgrove Limited	Business Services	322	6,496	6,818	1,364	5.4
Sova Assessment Limited	Technology	3,000	3,701	6,701	2,142	20.1
Ryte GmbH	Technology	4,547	1,427	5,974	442	15.2
Other	Various	39,273	3,160	42,433	5,482
Total investments		87,932	50,146	138,078	16,730
Current asset investments				21,864
Cash at bank				68,407
Debtors less creditors				(2,805)
Total net assets				225,544

Investment Portfolio at Cost

Investments	Sector	Investment cost as at 31 July 2021 £’000	Amount invested in the six months ending 31 July 2021 £’000
Natterbox (N2JB Limited)	Technology	15,490	2,500
Ubisecure Holdings Limited	Technology	5,575	-
Anglo European Group Limited	Manufacturing	5,000	-
Fuse Universal Limited	Technology	5,000	-
Dyscova Limited	Healthcare	4,700	-
Rotolight Group Limited	Consumer Goods	4,600	-
Ryte GmbH	Technology	4,547	-
Veeqo Limited	Technology	4,350	-
Perfect Ward Limited	Technology	4,000	4,000
Triumph Holdings Limited	Technology	3,800	-
One Team Logic Limited	Technology	3,700	-
Sova Assessment Limited	Technology	3,000	-
Fiscaltec Group Limited	Technology	3,000	-
Zapnito Limited	Technology	2,750	2,750
Countrywide Healthcare Services Holdings Limited	Healthcare	2,675	-
Oxifree Group Holding Limited	Manufacturing	2,279	-
Superior Heat Limited	Energy	1,961	-
Artesian Solutions Limited	Technology	1,805	-
Secret Escapes Limited	Hospitality	1,181	-
Luther Pendragon Limited	Business Services	1,140	-
Behaviometrics AB	Technology	847	-
Eve Sleep plc	Consumer Goods	832	-
Trafi Limited	Technology	712	-
EKF Diagnostics Holdings plc	Healthcare	678	-
Origami Energy Limited	Energy	674	39
CurrencyFair Limited	Financial Services	657	-
Vertu Motors plc	Retail	639	-
Ergomed plc	Biotech/Pharma	557	-
Segura Systems Limited	Technology	393	-
Ecrebo Limited	Technology	366	-
Hasgrove Limited	Business Services	322	-
Nektan plc	Technology	276	-
Augean plc	Business Services	158	-
Renalytix AI plc	Healthcare	139	-
Trellus Health Limited	Healthcare	62	-
British Country Inns plc	Hospitality	44	-
Verici DX Limited	Healthcare	23	-
Total		87,932	9,289

Directors’ Responsibilities Statement

We confirm that to the best of our knowledge:

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

•        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.

On behalf of the Board

Murray Steele

Chairman

24 September 2021

Income Statement

	Unaudited			Unaudited			Audited
	Six months to 31 July 2021			Six months to 31 July 2020			Year to 31 January 2021
	Revenue £’000	Capital £’000	Total £’000	Revenue £’000	Capital £’000	Total £’000	Revenue £’000	Capital £’000	Total £’000
Realised gain on disposal of fixed asset investments	–	1,571	1,571	–	–	–	–	946	946
Realised gain on disposal of current asset investments	–	–	–	_	–	–	_	(3)	(3)
Change in fair value of fixed asset investments	–	16,729	16,729	–	3,306	3,306	–	25,857	25,857
Change in fair value of current asset investments	–	208	208	–	9	9	–	10	10
Investment income	1,272	85	1,357	1,580	–	1,580	2,063	–	2,603
Investment management fees (see note 7)	(572)	(5,166)	(5,738)	(313)	(1,307)	(1,620)	(653)	(6,885)	(7,538)
Other expenses	(1,337)	–	(1,337)	(1,384)	–	(1,384)	(1,568)	–	(1,568)
Profit before tax	(637)	13,427	12,790	(117)	2,008	1,891	(158)	19,925	19,767
Tax	–	–	–	–	–	–	–	–	–
Profit after tax	(637)	13,427	12,790	(117)	2,008	1,891	(158)	19,925	19,767
Earnings per share – basic and diluted	(0.2)p	3.4p	3.2p	0.0p	0.6p	0.6p	(0.1)p	6.5p	6.4p

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

Balance Sheet

	Unaudited As at 31 July 2021		Unaudited As at 31 July 2020		Audited As at 31 January 2021
	£’000	£’000	£’000	£’000	£’000	£’000
Fixed asset investments		138,078		110,490		143,832
Current assets:
Investments	21,864		25,659		16,657
Debtors	2,276		2,881		2,335
Cash at bank	68,407		3,656		14,680
	92,547		32,196		33,672
Creditors: amounts falling due within one year	(5,081)		(1,356)		(9,267)
Net current assets		87,466		30,840		24,405
Net assets		225,544		141,330		168,237
Share capital		44,224		30,637		34,206
Share premium		90,150		77,822		45,141
Special distributable reserve		40,625		15,060		52,397
Capital redemption reserve		7,577		5,509		6,315
Capital reserve realised		(9,009)		4,407		(9,046)
Capital reserve unrealised		52,772		8,012		39,382
Revenue reserve		(795)		(117)		(158)
Total equity shareholders’ funds		225,544		141,330		168,237
Net asset value per share		51.0p		46.1p		49.2p

The statements were approved by the Directors and authorised for issue on 24 September 2021 and are signed on their behalf by:

Murray Steele

Chairman

Company Number: 05840377

Statement of Changes in Equity

	Share capital £’000	Share premium £’000	Special distributable reserves £’000	Capital redemption reserve £’000	Capital reserve realised £’000	Capital reserve unrealised £’000	Revenue reserve £’000		Total £’000
As at 1 February 2021	34,206	45,141	52,397	6,315	(9,046)	39,382	(158)		168,237
Total comprehensive income for the period:	–	–	–	–	(3,510)	16,937	(637)		12,790
Contributions by and distributions to owners:
Repurchase and cancellation of own shares	(1,262)	–	(6,046)	1,262	–	–	–		(6,046)
Issue of shares	11,280	46,768	–	–	–	–	–		58,048
Share issue cost	-	(1,759)	-	-	-	-	-		(1,759)
Dividends paid	–	–	(5,726)	–	–	–	–		(5,726)
Total contributions by and distributions to owners	10,018	45,009	(11,772)	1,262	–	–	–		44,517
Other movements:
Prior period holding gains now realised	–	–	–	–	3,547	(3,547)	-		–
Total other movements	–	–	–	–	3,547	(3,547)	-		–
As at 31 July 2021	44,224	90,150	40,625	7,577	(9,009)	52,772	(795)		225,544
	Share Capital £’000	Share Premium £’000	Special distributable reserves £’000	Capital Redemption Reserve £’000	Capital reserve realised £’000	Capital reserve unrealised £’000	Revenue reserve £’000		Total £’000
As at 1 February 2020	28,994	70,947	16,975	5,046	5,714	4,697	–		132,373
Total comprehensive income for the period:	–	–	–	–	(1,307)	3,315	(117)		1,891
Contributions by and distributions to owners:
Repurchase and cancellation of own shares	(464)	–	(1,915)	463	–	–	–		(1,916)
Issue of shares	2,107	7,175	–	–	–	–	–		9,282
Share issue cost	-	(300)	-	-	-	-	-		(300)
Dividends paid	–	–	–	–	–	–	–		–
Total contributions by and distributions to owners	1,643	6,875	(1,915)	463	–	–	–		7,066
Other movements:
Prior period holding losses now realised	–	–	–	–	–	–	-		–
Total other movements	–	–	–	–	–	–	-		–
As at 31 July 2020	30,637	77,822	15,060	5,509	4,407	8,012	(117)		141,330

	Share Capital £’000	Share Premium £’000	Special distributable reserves £’000	Capital Redemption Reserve £’000	Capital reserve realised £’000	Capital reserve unrealised £’000	Revenue reserve £’000	Total £’000
As at 1 February 2020	28,994	70,947	16,975	5,046	5,714	4,697	–	132,373
Total comprehensive income for the year:	–	–	–	–	(5,942)	25,867	(158)	19,767
Contributions by and distributions to owners:
Repurchase and cancellation of own shares	(1,269)	–	(5,414)	1,269	–	–	–	(5,414)
Issue of shares	6,481	23,070	–	–	–	–	–	29,551
Share issue cost	–	(569)	–	–	–	–	–	(569)
Dividends paid	–	–	(7,471)	–	–	–	–	(7,471)
Total contributions by and distributions to owners	5,212	22,501	(12,885)	1,269	–	–	–	16,097
Other movements:
Prior year holding gains now realised	–	–	–	–	942	(942)	–	–
Transfer between reserves	–	–	–	–	(9,760)	9,760	–	–
Cancellation of share premium	–	(48,307)	48,307	–	–	–	–	–
Total other movements	–	(48,307)	48,307	–	(8,818)	8,818	–	–
As at 31 January 2021	34,206	45,141	52,397	6,315	(9,046)	39,382	(158)	168,237

Cash Flow Statement

	Unaudited Six months to 31 July 2021 £’000	Unaudited Six months to 31 July 2020 £’000	Audited Year to 31 January 2021 £’000
Cash flows from operating activities:
Profit after tax	12,790	1,891	19,767
Adjustments for:
Decrease/(increase) in debtors	60	(1,001)	(353)
(Decrease)/increase in creditors	(1,126)	(409)	4,343
Gain on disposal of fixed assets	(1,571)	-	(946)
Gain on revaluation of fixed asset investments	(16,729)	(3,306)	(25,857)
Gain on disposal of current assets	-	-	3
Gain on revaluation of current asset investments	(208)	(9)	(10)
Cash from operations	(6,784)	(2,834)	(3,053)
Cash flows from investing activities:
Purchase of fixed asset investments	(9,374)	(2,650)	(15,851)
Purchase of current asset investments	(5,000)	(12,000)	(12,000)
Proceeds from sale of current asset investments	-	-	9,000
Proceeds from sale of fixed asset investments	33,429	-	3,356
Net cash flows from investing activities	19,055	(14,650)	(15,495)
			(6,483)
Cash flows from financing activities:
Movement in applications account	(3,061)	(2,564)	495
Purchase of own shares	(6,046)	(1,915)	(5,414)
Proceeds from share issues	56,734	9,282	28,108
Cost from share issues	(1,759)	(300)	(569)
Dividends paid (Net of DRIS)	(4,412)	-	(6,029)
Net cash flows from financing activities	41,456	4,503	16,591
Increase/(decrease) in cash and cash equivalents	53,727	(12,981)	(1,957)
Opening cash and cash equivalents	14,680	16,637	16,637
			13,203
Closing cash and cash equivalents	68,407	3,656	14,680

Notes to the Half-Yearly Report

1.        Basis of preparation

The unaudited half-yearly report which covers the six months to 31 July 2021 has been prepared in accordance with the Financial Reporting Council’s (FRC) Financial Reporting Standard 104 “Interim Financial Reporting” (March 2018) and the Statement of Recommended Practice for Investment Companies, re-issued by the Association of Investment Companies in February 2018.

The Directors consider it appropriate to adopt the going concern basis of accounting. The Directors have not identified any material uncertainties to the Company’s ability to continue to adopt the going concern basis over a period of at least twelve months from the date of approval of the financial statements. In reaching this conclusion the Directors have had regard to the potential impact on the economy and the Company of the current Coronavirus pandemic.

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 31 July 2021 does not constitute Statutory Accounts within the meaning of s.415 of the Companies Act 2006. The comparative figures for the year ended 31 January 2021 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 is based on 399,977,423 shares, being the weighted average number of shares in issue during the period (31 January 2021: 308,643,164; 31 July 2020: 300,616,820).

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 identical.

4.        Net asset value per share

	31 July 2021	31 July 2020	31 January 2021
Net assets (£)	225,544,000	141,330,000	168,237,000
Shares in Issue	442,236,991	306,367,852	342,057,670
Net asset value per share (p)	51.0	46.1	49.2

5.        Dividends

The interim dividend of 1.3p and the special dividend of 3.1p per share will be paid on 14 January 2022, to those shareholders on the register on 31 December 2021.

6. Principal risks and uncertainties

The principal risks and uncertainties faced by the Company are described in detail within the strategic report in the Company’s annual report for the year ended 31 January 2021.

The principal risks include loss of VCT status, investment risk, valuation risk, financial risk, economic risk, internal control risk, regulatory risk, cash flow risk, market risk liquidity risk and price risk. The Board has also considered emerging risks, including the Coronavirus pandemic, which the Board seeks to mitigate by setting policy and reviewing performance.

7.         Related party transactions

Octopus acts as the investment manager of the Company. Under the management agreement, Octopus receives a fee of 2.0% per annum of the net assets of the Company for the investment management services.

The Company has incurred management fees of £2,288,000 during the period to 31 July 2021 (31 July 2020: £1,253,000; 31 January 2021: £2,612,000). Included in the £2,288,000, there is an amount of £324,000 which has arisen from a recalculation of historic management fees in accordance with the management agreement.

During the period the Company has also incurred performance fees of £3,449,000 (31 July 2020: £368,000; 31 January 2021: £4,926,000).

Octopus also provides administration and company secretarial services to the Company. Octopus receives a fee of 0.3% per annum of net assets of the Company for administration services and £20,000 per annum for company secretarial services.

The Company receives certain reductions in the management fee, including for investments in other Octopus managed funds, to ensure the Company is not double charged on these products. There were no rebates for the current period (31 July 2020: £57,000; 31 January 2021 £140,000).

8. Post balance sheet events

The Company invested a total of £13.3 million in two new investments and £3 million in a follow-on investment. The Company also received £0.3 million for the partial disposal of an investment.

9. Additional Information

An online version of this report will be available to view on the Investment Manager’s website at .