Octopus VCT 2 plc
AMENDMENT TO THE ANNOUNCEMENT RELEASED AT 19:00 ON 9 APRIL 2015
The document has been amended to alter the record date for payment of the dividend from 4 June 2015 to 5 June 2015. No other information has been changed.
Final Results
10 April 2015
Octopus VCT 2 plc, managed by Octopus Investments Limited ("Octopus"), today announces its final results for the year ended 31 December 2014.
These results were approved by the Board of Directors on 9 April 2015.
You may, in due course, view the Annual Report in full at www.octopusinvestments.com
Financial Summary
As at 31 December 2014 | As at 31 December 2013 | |
Net assets (£'000s) | 19,222 | 19,337 |
Return on ordinary activities after tax (£'000s) | 506 | 1,222 |
Net asset value (NAV) per share | 100.7p | 100.6p |
Total dividends paid to date | 2.5p | - |
Total return | 103.2p | 100.6p |
Proposed final dividend per share | 2.5p | 2.5p |
Subject to shareholder approval at the Annual General Meeting the dividend will be paid on 3 July 2015 to shareholders on the register on 5 June 2015.
Chairman's Statement
Introduction
I am pleased to present the Annual Report of Octopus VCT 2 plc for the year ended 31 December 2014.
Performance
During the year, the Net Asset Value (NAV) of the Company has increased from 100.6p per share to 100.7p per share, despite the payment of a dividend. After adding back the 2.5p final dividend paid in the year, the total return (NAV plus cumulative dividends paid) has risen by 2.6%, from 100.6p per share at 31 December 2013 to 103.2p per share as at 31 December 2014. This increase is largely due to the strong performance of the Company's solar investments which saw an uplift in valuation in the year.
Given the performance of your Company, your Board has proposed a final dividend of 2.5 pence per share in respect of the year ended 31 December 2014. This dividend, if approved by shareholders at the AGM, will be paid on 3 July 2015 to shareholders on the register on 5 June 2015.
In January 2015, the investments in Gretel Solar, Hedwig Solar, Klara Solar, Jutta Solar, Gerde Solar and Sula Power were exited as part of a large scale solar exit. This resulted in a considerable gain for the Company and the majority of this uplift was recognised in the valuations as at 31 December 2014, contributing to the uplift in NAV referred to above.
In February 2014, the 100% debt investment in Borro Loan 2 Limited was exited for capital proceeds of £1,000,000 plus all outstanding loan interest.
In the year to 31 December 2014, £200,000 of loan repayments were received from Shakti Power Limited.
In December 2014, £2.5m was invested, alongside Octopus Apollo VCT plc, in Byena Limited, an acquisition vehicle established to invest in a VCT qualifying company.
Buy-backs
During the period, the Company repurchased 139,000 shares at a weighted average price of 96.5p per share. Further details can be found in Note 11 of the accounts.
PricewaterhouseCoopers LLP provides the Board and Investment Manager with advice concerning ongoing compliance with HMRC rules and regulations concerning VCTs. The Board has been advised that the Company is compliant with the conditions laid down by HMRC for maintaining provisional approval as a VCT.
A key requirement is now to maintain the 70% qualifying investment level. As at 31 December 2014. 95.8% of the portfolio, as measured by HMRC rules, was invested in VCT qualifying investments.
Alternative Investment Fund Managers Directive ("AIFMD")
The Company became registered as a Small Registered UK Alternative Investment Fund Manager with the Financial Conduct Authority in April 2014. The Company's first submission under the Alternative Investment Fund Manager regime, for the period 1 October 2014 to 31 December 2014, was completed at the end of January 2015.
I look forward to meeting as many shareholders as possible at our Annual General Meeting on 18 June 2015 to be held at the offices of Octopus Investments Limited, 6th Floor, 33 Holborn, London, EC1N 2HT. The AGM will start at 3.30 p.m.
Outlook
Since the Company's launch we have seen major Government changes to the subsidy regime for solar companies and other renewables, and an economy which has until recently struggled to grow following the Global Financial Crisis. The general economic outlook is now more certain and the portfolio has been performing well,
Whilst the focus of this Company will remain on capital preservation and any new investments will be approached with caution, your Board and Investment Manager believe we can continue to progress and find suitable investments for the Company's mandate.
Ian Pearson
Chairman
9 April 2015
Investment Manager's Review
Personal Service
At Octopus we have a dual focus, on both managing your investments and keeping you informed throughout the investment process. We are committed to providing our investors with regular and open communication. Our updates are designed to keep you informed about the progress of your investment. The Company is managed by the Specialist Finance team at Octopus.
Octopus is an award winning investment manager, established in 2000, that has over £5.0 billion under management. Octopus has over 350 employees and was voted 'Best VCT Provider of the Year' by the financial adviser community in 2006 to 2010. We currently manage over £480 million across 8 VCTs, more than any other provider in the industry, and are expert in investing in UK smaller companies across a range of funds, tax structures and risk/return mandates.
Portfolio Performance
The Company saw an increase in its total return of 2.6% from 31 December 2013 to 31 December 2014. The NAV increased slightly from 100.6p per share to 100.7p per share and 2.5p of dividends were paid over the period, bringing the total return (NAV plus cumulative dividends) to 103.2p per share. This is largely due to upwards revaluations of a majority of the solar companies, seven of which were exited in January 2015. These companies were valued as at 31 December 2014 based on advanced knowledge of the price that would be received on exit.
Portfolio Review
In March 2014, Borro Loan 2 Limited was exited with the £1,000,000 being repaid in full along with all outstanding loan interest.
In addition, £200,000 of loan repayments were received in the year from Shakti Power Limited.
In December 2014, the Company invested £2,500,000, alongside Octopus Apollo VCT plc, in Byena, an acquisition vehicle set up to seek VCT qualifying investments on behalf of the Company.
Outlook
We are pleased with the overall performance of the portfolio in the year, particularly the solar investments. Despite no longer receiving the loan interest from Borro Loan 2 Limited, the portfolio has produced a small uplift in the NAV per share in the year under review.
Your Investment Manager is confident we can continue to see further progress in the Company.
If you have any questions on any aspect of your investment, please call one of the team on 0800 316 2295.
Grant Paul Florence
Octopus Investments Limited
9 April 2015
Directors' Responsibilities Statement
The Directors are responsible for preparing the Directors' Report, the Remuneration report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable laws). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the company for that period. In preparing these financial statements, the Directors are required to:
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
In so far as each of the Directors is aware:
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
To the best of my knowledge:
On behalf of the Board
Ian Pearson
Chairman
9 April 2015
Income Statement
Year to 31 December 2014 | ||||
Revenue | Capital | Total | ||
£'000 | £'000 | £'000 | ||
(Loss)/gain on disposal of fixed asset investments | - | - | - | |
Fixed asset investment holding gains/(losses) | - | 532 | 532 | |
Other income | 255 | - | 255 | |
Other expenses | (281) | - | (281) | |
Return on ordinary activities before tax | (26) | 532 | 506 | |
Taxation on return on ordinary activities | - | - | - | |
Return on ordinary activities after tax | (26) | 532 | 506 | |
Return per share - basic and diluted | (0.1p) | 2.8p | 2.7p |
The Company has no recognised gains or losses other than the results for the year as set out above.
Income Statement
Year to 31 December 2013 | ||||
Revenue | Capital | Total | ||
£'000 | £'000 | £'000 | ||
Loss on disposal of fixed asset investments | - | (168) | (168) | |
Fixed asset investment holding gains | - | 1,290 | 1,290 | |
Other income | 388 | - | 388 | |
Other expenses | (263) | - | (263) | |
Return on ordinary activities before tax | 125 | 1,122 | 1,247 | |
Taxation on return on ordinary activities | (25) | - | (25) | |
Return on ordinary activities after tax | 100 | 1,122 | 1,222 | |
Return per share - basic and diluted | 0.5p | 5.8p | 6.3p |
The Company had no recognised gains or losses other than the results for the period as set out above.
Reconciliation of Movements in Shareholders' Funds |
Year to 31 December 2014 | Year to 31 December 2013 | |
£'000 | £'000 | |
Shareholders' funds at start of year | 19,337 | 18,180 |
Return on ordinary activities after tax | 506 | 1,222 |
Purchase of own shares | (142) | (65) |
Dividends paid | (479) | - |
Shareholders' funds at end of year | 19,222 | 19,337 |
Balance Sheet | |||||
As at 31 December 2014 | As at 31 December 2013 | ||||
£'000 | £'000 | £'000 | £'000 | ||
Fixed asset investments* | 18,593 | 16,761 | |||
Current assets: | |||||
Debtors | 140 | 86 | |||
Cash at bank | 527 | 2,567 | |||
667 | 2,653 | ||||
Creditors: amounts falling due within one year | (38) | (77) | |||
Net current assets | 629 | 2,576 | |||
Net assets | 19,222 | 19,337 | |||
Called up equity share capital | 191 | 193 | |||
Special distributable reserve | 17,360 | 17,981 | |||
Capital redemption reserve | 3 | 1 | |||
Capital reserve - losses on disposals | (168) | (168) | |||
- holding gains | 1,822 | 1,290 | |||
Revenue reserve | 14 | 40 | |||
Total shareholders' funds | 19,222 | 19,337 | |||
Net asset value per share | 100.7p | 100.6p |
*Held at fair value through profit or loss
The statements were approved by the Directors and authorised for issue on 9 April 2015 and are signed on their behalf by:
Ian Pearson
Chairman
Company No: 07484406
Cash Flow Statement | |||
Year to 31 December 2014 | Year to 31 December 2013 | ||
£'000 | £'000 | ||
Net cash (ouflow)/inflow from operating activities | (107) | 119 | |
Financial investment: | |||
Purchase of fixed asset investments | (2,500) | - | |
Sale of fixed asset investments | 1,200 | 1,826 | |
Dividends paid | (479) | - | |
Tax paid | (12) | - | |
Financing: | |||
Purchase of own shares | (142) | (65) | |
(Decrease)/increase in cash resources at bank | (2,040) | 1,880 |
Reconciliation of Return before Taxation to Cash Flow from Operating Activities | |||
Year to 31 December 2014 | Year to 31 December 2013 | ||
£'000 | £'000 | ||
Return on ordinary activities before tax | 506 | 1,247 | |
Loss on disposal of fixed asset investments | - | 168 | |
Gain on valuation of fixed asset investments | (532) | (1,290) | |
Increase in debtors | (54) | (3) | |
Decrease in creditors | (27) | (3) | |
(Outflow)/Inflow from operating activities | (107) | 119 |
Reconciliation of Net Cash Flow to Movement in Net Funds | ||
Year to 31 December 2014 | Year to 31 December 2013 | |
£'000 | £'000 | |
(Decrease)/increase in cash resources at bank | (2,040) | 1,880 |
Opening net funds | 2,567 | 687 |
Net funds at 31 December | 527 | 2,567 |
Net funds comprised:
Year to 31 December 2014 | Year to 31 December 2013 | |
£'000 | £'000 | |
Cash at bank | 527 | 2,567 |
Net funds at 31 December | 527 | 2,567 |
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