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Half-year report

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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 www.octopusinvestments.com. 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 www.octopusinvestments.com.