Half-yearly report

 
TIDMECL3 
 
Octopus Eclipse VCT 3 plc 
Half-Yearly Results 
 
29 April 2009 
 
Octopus Eclipse VCT 3 plc, managed by Octopus Investments Limited, 
today announces the Half-Yearly results for the six months ended 28 
February 2009. 
 
These results were approved by the Board of Directors on 29 April 
2009. 
 
You may view the Half-Yearly Report in full at 
www.octopusinvestments.com by navigating to the VCT Meetings & 
Reports under the 'Services' section. 
 
Financial Summary 
 
 
                                              Six months to   Year to 
                             Six months to 28   29 February 31 August 
                                February 2009          2008      2008 
 
Net assets (GBP'000s)                   GBP19,779       GBP27,735   GBP23,002 
Net loss after tax (GBP'000s)          GBP(2,640)      GBP(1,619)  GBP(6,058) 
Net asset  value  per  share 
("NAV")                                 67.6p         94.1p     78.0p 
Cumulative dividends since 
launch - paid and proposed               5.7p          2.2p      4.7p 
 
 
Octopus Eclipse VCT 3 plc ("Eclipse 3", "Fund" or "Company") is a 
venture capital trust ("VCT") which aims to provide shareholders with 
attractive tax-free dividends and long-term capital growth. 
 
Eclipse 3 invests primarily in unquoted and AIM-quoted companies and 
aims to deliver absolute returns on its investments.  Eclipse 3 was 
launched in August 2005 and raised approximately GBP29.1 million (GBP28.7 
million net of expenses) through an offer for subscription. The 
Investment Manager is Octopus Investments Limited ("Octopus" or 
"Manager"). 
 
Eclipse 3 co-invests with the three other Eclipse funds which are all 
managed by the same investment team at Octopus. This is viewed as a 
benefit as it means Eclipse 3 will not only be able to invest in a 
wider range of opportunities but also in larger and more developed 
companies than are typically available to a single VCT. 
 
The table below shows the movement in net asset value per share 
("NAV") and lists the dividends that have been paid since the launch 
of Eclipse 3: 
 
                        Dividends paid 
Period Ended        NAV      in period NAV + cumulative dividends 
28 February 2006  94.9p              -                      94.9p 
31 August 2006    95.7p              -                      95.7p 
28 February 2007 103.0p           0.7p                     103.7p 
31 August 2007   101.1p              -                     101.8p 
29 February 2008  94.1p           1.5p                      96.3p 
31 August 2008    78.0p           1.0p                      81.2p 
28 February 2009  67.6p           1.5p                      72.3p 
 
 
Chairman's Statement 
 
Since the publication of the results for the year ended 31 August 
2008, the overall environment for small companies, both AIM-quoted 
and unquoted, has continued to be challenging and is expected to 
remain so during 2009. Many of our portfolio companies, notably in 
the consumer and leisure arena, have already felt some impact from 
the credit crunch and economic slowdown. Others, which have not yet 
seen an impact, remain cautious about future prospects, given the 
level of uncertainty about the direction of the economy. The harsh 
economic conditions are demanding on smaller companies both in terms 
of management and financial resources. Our focus will remain on 
supporting those companies that have robust business models with 
strong management teams that can manage through the present climate 
and capitalise on opportunities which will arise. These businesses 
should create attractive investment returns over the longer term. 
 
Results 
During the period to 28 February 2009, the total return (being NAV 
plus dividends paid) has fallen from 81.2p to 72.3p, a decline of 
11.0%.  Although this decline is disappointing in absolute terms, it 
reflects similar falls across the financial markets both domestically 
and globally over the last 6 months or so.  By comparison, the FTSE 
All-Share index fell 32.7% and the FTSE AIM All-Share index fell by 
51.5%.  The portfolio has a broad sector spread, but its larger 
exposures by valuation are media & marketing and engineering & 
machinery which have inevitably felt the brunt of the current 
downturn 
 
Portfolio 
As it stands, the Fund is invested in 15 unquoted and 15 AIM-quoted 
companies and is almost fully invested. It is not therefore envisaged 
that many new investments will be completed in the foreseeable 
future, although the Manager continues to look out for opportunities 
that present exceptional value in the current market. The existing 
portfolio will continue to be supported where appropriate. By value, 
62.3% of the Company's net assets are in unquoted investments, 9.7% 
in AIM-quoted investments and 27.9% of the Company's net assets are 
currently in cash or near cash. 
 
Unquoted 
During the period under review two follow-on investments into 
existing portfolio companies were made. GBP191,800 was invested as loan 
stock into The History Press and GBP186,100 into SweetCred, in each 
case to support ongoing working capital requirements. SweetCred has 
been particularly impacted by the lack of available credit finance to 
fund imports, even where customers have placed orders. 
 
It is particularly disappointing to report the loss of our investment 
in The Grill Group, owner of the Smollensky's chain of restaurants. 
This investment was made in 2007 and had been struggling as sales 
levels began to decline with the onset of the economic downturn. 
Considerable efforts were made to reduce the number of units managed 
and to turn around performance.  The Manager also tried to find 
buyers for the whole business, which looked achievable until the 
severe downturn experienced in September 2008.  Given the weak 
economic outlook for consumer spending in 2009, the Manager decided 
that further investment could not be justified and a sale of the 
business occurred.  The price of the sale provided no recovery for 
any of the Octopus funds and Eclipse 3 realised a loss of GBP2,175,000, 
of which GBP647,000 had previously been provided. 
 
A number of downward valuation adjustments have been made, which 
reflect both specific company performance and the fall in valuation 
multiples. In the current environment this is not a surprise but the 
Manager is working hard to support the portfolio so that each company 
is well placed to progress when the economy turns. The valuation of 
CSL Dualcom has been uplifted to reflect continuing good progress of 
this investment.  In addition, it is also worth noting that, whilst 
valuations across the portfolio have been carefully evaluated, 
several other investments have made positive underlying progress 
during the period, including Audio Visual Machines, Promotion Space 
and Hydrobolt. 
 
In April the Fund received GBP65,000 as further proceeds following the 
sale in 2007 of James Harvard International.  This payment was based 
on performance following the acquisition by Hays Plc.  In addition 
CSL have repaid the GBP250,000 loan, which was advanced in August 2008. 
 
Looking ahead, in the current credit and economic environment we have 
to be conscious that the funding options for portfolio companies are 
more restricted than usual. Whilst we aim to balance the Fund's 
strategic aims, at the present time we are attaching greater weight 
to the need for liquidity within the Fund to support further 
investment, where appropriate. 
 
AIM-quoted 
The well publicised banking crisis and the ensuing deteriorating 
economic outlook has had a severe impact on the AIM market.  As is 
usual during periods of uncertainty, investors shun small companies 
in favour of larger and more liquid investments.  However, as you 
will be aware, these have fared little better as the banking crisis 
has unfolded. 
 
The AIM portfolio, accounted for 9.7% of the investment portfolio by 
valuation.  Price falls in smaller quoted companies have been severe, 
and due to the illiquidity of some of the stocks, this has compounded 
the problem, resulting in a staggering fall of 51.5% in the FTSE AIM 
All-Share over the period to February 2009.  Price falls largely 
reflect market de-ratings rather than stock specific issues.  Whilst 
the economic outlook remains a concern, all bar one of the 
investments in the Company's AIM portfolio are established, 
profitable companies which should not need to rely on access to 
further funding.  Furthermore, many of the AIM investments are 
engaged in business activities that have demonstrated robust pricing 
power and will not be reliant on the ebb and flow of the wider 
economy.  For example, Healthcare Locums PLC, Pressure Technologies 
PLC and Cohort PLC all announced profits in excess of market 
expectations during the last twelve months and continue to trade 
well.  With this in mind, we remain confident about the longer term 
prospects of the underlying AIM holdings within the portfolio. 
 
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 August 2008. The Company's principal 
risks and uncertainties have not changed materially since the date of 
that report. 
 
Dividend and Dividend Policy 
It is your Board's policy to strive to maintain a regular dividend 
flow where possible and this primarily relies on the level of 
profitable realisations and available cash reserves. However, in 
these economic climates this cannot always be guaranteed. That said, 
for the period ended 28 February 2009, the Board has declared an 
interim dividend of 1p per share, payable from revenue reserves. This 
dividend will be paid to shareholders, on 25 June 2009, who are on 
the register on 29 May 2009. 
 
Change of Name 
During November, shareholders voted in favour of changing the name of 
the Company from Eclipse VCT 3 plc to Octopus Eclipse VCT 3 plc. With 
a wide range of Octopus funds now under management, it was considered 
appropriate that the name of the Company should reflect the name of 
Octopus so as to avoid confusion in the market place. 
 
Shareholders should be reminded, however, that current Directors will 
remain in office and their independence from Octopus is in no way 
affected. 
 
VAT on Management Fees 
The Government has announced that VCTs will be exempt from paying VAT 
on investment management fees with effect from 1 October 2008.  This 
follows a European Court of Justice Judgement against the Government 
in a case relating to VAT payable by investment trusts.  It is now 
fully expected that a VAT repayment will be obtained for VAT paid on 
management fees for the last three years.  However, the extent and 
timing of repayments is not yet known. A claim has been submitted to 
HMRC by Octopus on behalf of the VCT.  For the purposes of these 
accounts, and with guidance from our advisers at Octopus, we have 
accrued an anticipated VAT rebate of GBP200,000. 
 
Outlook 
Experience of previous recessionary periods shows that further 
financial support for existing investments has to be considered very 
carefully and is dependent on having a strong business model and 
exceptional management team. 
 
We will continue to consider investments in sound companies and to 
support existing holdings that merit capital for sensible expansion 
plans, including well priced acquisitions.  Taking a longer term 
view, which a VCT affords, we expect economic conditions to improve, 
enabling the portfolio to develop and generate successful exits that 
will bring rewards for shareholders. 
 
If you have any questions on any aspect of your investment, please 
call one of the team on 0800 316 2347. 
 
 
Greg Melgaard 
Chairman 
29 April 2009 
 
Investment Portfolio Review 
 
 
+-------------------------------------------------------------------------------------------------------------+ 
|                       |                  |          |             |           |         |         | % equity| 
|                       |                  |          |             |   Carrying|Change in|         |  held by| 
|                       |                  |          |             |value at 28|valuation|         |all funds| 
|                       |                  |Investment|   Unrealised|  February |   in the| % equity|  managed| 
|Unquoted Qualifying    |                  |   at cost|profit/(loss)|       2009|   period|  held by|       by| 
|Investments            |Sector            |   (GBP'000)|      (GBP'000)|    (GBP'000)|   (GBP'000|Eclipse 3|  Octopus| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|The History Press      |Publishing        |          |             |           |         |         |         | 
|Limited                |                  |     1,863|            -|      1,863|        -|    15.2%|    60.0%| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|CSL DualCom Limited    |Technology &      |          |             |           |         |         |         | 
|                       |Telecommunications|       945|          787|      1,732|      603|    11.5%|    45.8%| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Promotion Space Limited|Media & Marketing |          |             |           |         |         |         | 
|                       |Services          |     1,678|            -|      1,678|        -|    12.3%|    38.0%| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Hydrobolt Limited      |Engineering &     |          |             |           |         |         |         | 
|                       |Machinery         |     1,396|            -|      1,396|        -|    16.3%|    48.1%| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Bruce Dunlop &         |Media & Marketing |          |             |           |         |         |         | 
|Associates             |Services          |          |             |           |         |         |         | 
|International Limited  |                  |     1,250|        (215)|      1,035|    (215)|    11.7%|    33.3%| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Vulcan Services Limited|Engineering &     |          |             |           |         |         |         | 
|                       |Machinery         |     1,000|            -|      1,000|        -|    24.5%|    49.0%| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Tristar Worldwide      |Transport Services|          |             |           |         |         |         | 
|Limited                |                  |     1,000|            -|      1,000|        -|    10.0%|    35.0%| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|SweetCred Holdings     |Consumer Products |          |             |           |         |         |         | 
|Limited                |                  |     1,863|      (1,025)|        838|  (1,025)|     7.7%|    24.5%| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Audio Visual Machines  |Technology &      |          |             |           |         |         |         | 
|Limited                |Telecommunications|       711|            -|        711|    (217)|    10.8%|    45.0%| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|T4 Holdings Limited    |Media & Marketing |          |             |           |         |         |         | 
|                       |Services          |     1,079|        (506)|        573|    (159)|    11.1%|    41.7%| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Perfect Pizza Limited  |Leisure & Hotels  |       372|        (185)|        187|    (184)|     4.9%|    34.3%| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|The Capital Pub Company|Leisure & Hotels  |          |             |           |         |         |         | 
|2 plc                  |                  |       200|         (44)|        156|        1|     1.2%|     8.2%| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Lilestone Holdings     |General Retail    |          |             |           |         |         |         | 
|Limited                |                  |       375|        (281)|         94|    (281)|     2.7%|    22.0%| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Blanc Brasseries       |Leisure & Hotels  |          |             |           |         |         |         | 
|Holdings plc           |                  |        55|         (55)|          -|     (28)|     0.7%|     3.3%| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Red-M Group Limited    |Technology &      |          |             |           |         |         |         | 
|                       |Telecommunications|       241|        (241)|          -|        -|    1.35%|     7.6%| 
|------------------------------------------+----------+-------------+-----------+---------+-------------------| 
|Total unquoted qualifying investments     |    14,028|      (1,765)|     12,263|  (1,505)|              |    | 
|------------------------------------------+----------+-------------+-----------+---------+-------------------| 
|                       |                  |          |             |           |         |         | % equity| 
|                       |                  |          |             |   Carrying|Change in|         |  held by| 
|                       |                  |          |             |value at 28|valuation|         |all funds| 
|                       |                  |Investment|   Unrealised|   February|   in the| % equity|  managed| 
|AIM-quoted Qualifying  |                  |   at cost|profit/(loss)|       2009|   period|  held by|       by| 
|Investments            |Sector            |   (GBP'000)|      (GBP'000)|    (GBP'000)|   (GBP'000|Eclipse 3|  Octopus| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|CBG Group plc          |General Financial |       381|         (70)|        311|    (122)|     1.8%|    18.1%| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Hasgrove plc           |Media & Marketing |       400|        (160)|        240|     (83)|     1.5%|    10.5%| 
|                       |Services          |          |             |           |         |         |         | 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Pressure Technologies  |Engineering &     |       165|           71|        236|     (66)|     1.0%|    11.0%| 
|plc                    |Machinery         |          |             |           |         |         |         | 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Healthcare Locums plc  |Support Services  |       100|          116|        216|      (2)|     0.2%|     2.5%| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Hexagon Human Capital  |Support Services  |       677|        (465)|        212|    (310)|     2.5%|    15.7%| 
|plc                    |                  |          |             |           |         |         |         | 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Plastics Capital plc   |Engineering &     |       500|        (355)|        145|    (195)|     1.9%|    17.9%| 
|                       |Machinery         |          |             |           |         |         |         | 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Brulines (Holdings) plc|Support Services  |       148|         (17)|        131|     (61)|     0.4%|     7.9%| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Northern Bear plc      |Construction &    |       299|        (169)|        130|     (18)|     1.1%|     7.7%| 
|                       |Materials         |          |             |           |         |         |         | 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Concateno plc          |Support Services  |        85|          (3)|         82|     (66)|     0.1%|     0.9%| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Cohort plc             |Engineering &     |        68|            9|         77|     (36)|     0.1%|     0.9%| 
|                       |Machinery         |          |             |           |         |         |         | 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Vertu Motors plc       |General Retail    |       250|        (196)|         54|     (54)|     0.5%|     7.7%| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Tanfield Group plc     |Engineering &     |       130|         (78)|         52|        3|     0.2%|     3.0%| 
|                       |Machinery         |          |             |           |         |         |         | 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Invocas plc            |General Financial |        40|         (24)|         16|     (13)|     0.1%|     1.3%| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Autoclenz plc          |Support Services  |       125|        (111)|         14|      (9)|     1.0%|    12.8%| 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Cantono plc            |Technology &      |       420|        (418)|          2|     (65)|     0.1%|     2.7%| 
|                       |Telecommunications|          |             |           |         |         |         | 
|------------------------------------------+----------+-------------+-----------+---------+-------------------| 
|Total AIM-quoted qualifying investments   |     3,787|      (1,869)|      1,918|  (1,097)|              |    | 
|------------------------------------------+----------+-------------+-----------+---------+--------------+----| 
|Non-qualifying unquoted investments       |         2|           65|         67|       65|              |    | 
|------------------------------------------+----------+-------------+-----------+---------+--------------+----| 
|Non-qualifying AIM-quoted investments     |        21|         (13)|          8|      (2)|              |    | 
|------------------------------------------+----------+-------------+-----------+---------+--------------+----| 
|Total non-qualifying investments          |        23|           52|         75|       63|              |    | 
|------------------------------------------+----------+-------------+-----------+---------+-------------------| 
|Fixed income securities & cash at bank    |     5,763|        (381)|      5,382|    (424)|         |         | 
|------------------------------------------+----------+-------------+-----------+---------+---------+---------| 
|Total investments      |                  |    23,601|      (3,963)|     19,638|  (2,963)|         |         | 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Net current assets     |                  |          |             |        141|         |         |         | 
|-----------------------+------------------+----------+-------------+-----------+---------+---------+---------| 
|Total net assets       |                  |          |             |     19,779|         |         |         | 
+-------------------------------------------------------------------------------------------------------------+ 
 
 
 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 "Half-Yearly Financial Reports" 
    issued by the UK Accounting Standards Board; 
 
 
 
  * the half-yearly report includes a fair review of the information 
    required by the Financial Services Authority Disclosure and 
    Transparency Rules, being: 
 
 
o       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. 
o       a description of the principal risks and uncertainties for 
the remaining six months of the year; and 
o       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 
Greg Melgaard 
Chairman 
29 April 2009 
 
 
Income Statement 
                 Six months to 28        Six months to 29 
                   February 2009           February 2008      Year to 31 August 2008 
              Revenue Capital   Total Revenue Capital   Total Revenue Capital   Total 
                GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
 
(Loss)/gain 
on disposal 
of fixed 
asset 
investments         -    (50)    (50)       -     222     222       -     222     222 
Gain on 
disposal of 
current asset 
investments         -       7       7       -      99      99       -     134     134 
 
Loss on 
valuation of 
fixed asset 
investments         - (2,539) (2,539)       - (1,808) (1,808)       - (5,949) (5,949) 
(Loss)/gain 
on valuation 
of current 
asset 
investments         -   (424)   (424)       -      46      46       -    (46)    (46) 
 
Income            562       -     562     346       -     346     603       -     603 
 
Investment 
management 
fees             (62)   (187)   (249)    (87)   (263)   (350)   (176)   (529)   (705) 
VAT 
management 
fee rebate         50     150     200       -       -       -       -       -       - 
 
Other 
expenses        (150)       -   (150)   (174)       -   (174)   (317)       -   (317) 
 
Profit/(loss) 
on ordinary 
activities 
before tax        400 (3,043) (2,643)      85 (1,704) (1,619)     110 (6,168) (6,058) 
 
Taxation on 
profit/(loss) 
on ordinary 
activities          3       -       3       -       -       -       -       -       - 
 
Profit/(loss) 
on ordinary 
activities 
after tax         403 (3,043) (2,640)      85 (1,704) (1,619)     110 (6,168) (6,058) 
Return per 
share - basic 
and diluted      1.4p (10.3)p  (8.9)p    0.3p  (5.8)p  (5.5)p    0.4p (20.9)p (20.5)p 
 
 
 
 
  * 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 accompanying notes are an integral part of the half-yearly 
    report 
  * The Company has no recognised gains or losses other than those 
    disclosed in the income statement. 
 
 
 
 
Reconciliation of Movements in Shareholders' Funds 
                                               Six months 
                           Six months ended      ended 29  Year to 31 
                          28  February 2009 February 2008 August 2008 
                                      GBP'000         GBP'000       GBP'000 
Shareholders' funds at 
start of period                      23,002        29,825      29,825 
Loss on ordinary 
activities after tax                (2,640)       (1,619)     (6,058) 
Cancellation of own 
shares                                (142)          (28)        (28) 
Dividends paid                        (441)         (443)       (737) 
Shareholders' funds at 
end of period                        19,779        27,735      23,002 
 
 
 
Balance Sheet 
                                As at 28      As at 29       As at 31 
                           February 2009 February 2008    August 2008 
                            GBP'000  GBP'000  GBP'000  GBP'000   GBP'000  GBP'000 
 
Fixed asset investments           14,256        16,892         16,646 
Current assets: 
Investments - money 
market securities           5,100        10,235          6,222 
Debtors                       313           200            206 
Cash at bank                  281           490             55 
                                   5,694 10,925          6,483 
Creditors: amounts 
falling due within one 
year                               (171)   (82)          (127) 
Net current assets                 5,523        10,843          6,356 
 
Net assets                        19,779        27,735         23,002 
 
Called up equity share 
capital                     2,925         2,947          2,947 
Share premium                   -             -              - 
Special distributable 
reserve                    24,920        25,061         25,061 
Capital redemption 
reserve                        28             6              6 
Capital reserve - 
Realised                  (4,696)         (112)          (577) 
 
                   - 
Unrealised                (3,962)         (376)        (4,595) 
Revenue reserve               564           209            160 
Total equity 
shareholders' funds               19,779        27,735         23,002 
Net asset value per share          67.6p         94.1p          78.0p 
 
 
 
Cash Flow Statement 
                                Six months to Six months to   Year to 
                                  28 February   29 February 31 August 
                                         2009          2008      2008 
                                        GBP'000         GBP'000     GBP'000 
 
Net cash inflow/(outflow) from 
operating activities                      300         (119)     (334) 
 
Financial investment : 
Purchase of fixed asset 
investments                             (457)       (8,319)  (12,221) 
Sale of fixed asset investments           258         2,362     2,383 
 
Management of liquid resources: 
Purchase of current asset 
investments                           (1,744)       (6,594)  (10,351) 
Sale of current asset 
investments                             2,449        13,585    21,298 
 
Taxation                                    3             -         - 
 
Dividends                               (441)         (443)     (738) 
 
Financing: 
Repurchase of own shares                (142)          (28)      (28) 
Increase in cash at bank                  226           444         9 
 
 
 
 
 
Reconciliation of net cash flow to movement in net funds 
                        Six months to 28 Six months to 29  Year to 31 
                           February 2009    February 2008 August 2008 
                                   GBP'000            GBP'000       GBP'000 
Increase in cash at 
bank                                 226              444           9 
Decrease in cash 
equivalents                      (1,122)          (6,845)    (10,859) 
Opening net cash 
resources                          6,277           17,126      17,127 
Net funds at period 
end                                5,381           10,725       6,277 
 
 
 
 
Reconciliation of profit before taxation to cash flow from operating 
activities 
                              Six months to Six months to 
                                28 February   29 February  Year to 31 
                                       2009          2008 August 2008 
                                      GBP'000         GBP'000       GBP'000 
Loss on ordinary activities 
before tax                          (2,643)       (1,619)     (6,058) 
Loss/(gain)  on  disposal  of 
fixed asset investments                  50         (222)       5,949 
(Gain)/loss  on  disposal  of 
current asset investments               (7)          (99)          46 
Loss/(gain) on valuation of 
fixed asset investments               2,539         1,808       (222) 
Loss/(gain) on valuation of 
current asset investments               424          (46)       (134) 
(Increase)/decrease in 
debtors                               (107)            54          35 
Increase in creditors                    44             5          50 
Inflow/(outflow) from 
operating activities                    300         (119)       (334) 
 
 
Notes to the Half-Yearly Report 
 
1.         Basis of preparation 
The unaudited half-yearly results which cover the six months to 28 
February 2009 have been prepared in accordance with the Accounting 
Standard Board's (ASB) statement on half-yearly financial reports 
(July 2007) and adopting the accounting policies set out in the 
statutory accounts of the Company for the year ended 31 August 2008, 
which were prepared under UK GAAP and in accordance with the 
Statement of Recommended Practice for Investment Companies issued by 
the Association of Investment Companies in July 2003, revised in 
December 2005. 
 
2.         Publication of non-statutory accounts 
The unaudited half-yearly results for the six months ended 28 
February 2009 do not constitute statutory accounts within the meaning 
of Section 240 of the Companies Act 1985 and have not been delivered 
to the Registrar of Companies. The comparative figures for the year 
ended 31 August 2008 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 under Section 235 of the Companies Act 1985 was 
unqualified. This half-yearly report has not been reviewed by the 
Company's auditor. 
 
3.         Earnings per share 
The revenue return per share is based on the net revenue return on 
ordinary activities after taxation of GBP403,000 (31 August 2008: 
GBP110,000 and 29 February 2008: GBP85,000) whilst the capital loss is 
based on the capital loss on ordinary activities after taxation of 
GBP(3,043,000) (31 August 2008: GBP(6,168,000) and 29 February 2008: 
GBP(1,704,000)). This is in respect of 29,419,223 (31 August 2008: 
29,482,415, 29 February 2008: 29,505,588) being the weighted average 
number of shares, in issue during the period. 
 
There are no potentially dilutive capital instruments in issue and, 
therefore, no diluted returns per share figures are relevant. 
 
4.         Net asset value per share 
The calculation of net asset value per share as at 28 February 2009 
is based on net assets of GBP19,779,000 (31 August 2008: GBP23,002,000 
and 29 February 2008: GBP27,735,000) divided by the 29,263,173 (31 
August 2008: 29,479,384,     29 February 2008: 29,479,384) shares in 
issue at that date. 
 
5.         Dividends 
The interim dividend of 1 pence per share for the six months ending 
28 February 2008 will be paid on 25 June 2009, to those shareholders 
on the register on 29 May 2009. This will be paid from revenue 
reserves. A final dividend, for the year ending 31 August 2008, of 
1.5 pence per share was paid on 5 January 2009 to shareholders who 
were on the register on 5 December 2008. This was paid wholly from 
capital reserves. 
 
6.         Buybacks 
During the six months ended 28 February 2009 the Company bought back 
216,211 shares at a weighted average 
price of 65.3 pence per share. No shares were issued during the 
period. 
 
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 cent per 
annum of the net assets of the Company for the investment management 
services. During the period, the Company incurred management fees of 
GBP249,000 (31 August 2008: GBP705,000 and 29 February 2008: GBP350,000) 
payable to Octopus. At the period end there was GBPnil (31 August 2008: 
Nil and 29 February 2008: Nil) outstanding to Octopus. 
 
8.         Copies of this statement are being sent to all 
shareholders. Copies are also available from the registered office of 
the Company at 8 Angel Court, London, EC2R 7HP, and will also be 
available to view on the Investment Manager's website at 
www.octopusinvestments.com 
 
=--END OF MESSAGE--- 
 
 
 
 
This announcement was originally distributed by Hugin. The issuer is 
solely responsible for the content of this announcement.