Octopus AIM VCT PLC Annual Financial Report

 
TIDMOOA 
 
 
   Octopus AIM VCT plc 
 
   Final Results 
 
   20 May 2018 
 
   Octopus AIM VCT plc, managed by Octopus Investments Limited, today 
announces the final results for the year ended 28 February 2019. 
 
   These results were approved by the Board of Directors on 17 May 2019. 
 
   You may view the Annual Report in full at 
https://www.globenewswire.com/Tracker?data=5ujeMguFCkkyoeGMjiNCs2R6djj440zsh8t2VGOj8qyAZGZLGIJzs9G4pIFfzudMaN_FKrHfh6GowE9JKRGkr6-VgQ0Fdg_6oJ1UELTcMefSIC3Q11XAPb2g3obhbXpo 
www.octopusinvestments.com in due course. All other statutory 
information will also be found there. 
 
   Financial Summary 
 
 
 
 
                                            Year to            Year to 
                                        28 February 2019   28 February 2018 
-------------------------------------  -----------------  ----------------- 
Net assets (GBP'000)                             122,504            127,070 
-------------------------------------  -----------------  ----------------- 
Loss /profit after tax (GBP'000)                (13,097)              6,476 
-------------------------------------  -----------------  ----------------- 
Net asset value (NAV) per share (p)                101.0              116.1 
-------------------------------------  -----------------  ----------------- 
Dividends per share paid in year (p)                 5.5                5.5 
-------------------------------------  -----------------  ----------------- 
Total return(**) (%)                               (8.3)                6.3 
-------------------------------------  -----------------  ----------------- 
Final dividend proposed **(p)                        3.0                3.0 
-------------------------------------  -----------------  ----------------- 
 
 
   (*) Subject to shareholder approval at the Annual General Meeting, the 
proposed final dividend will be paid on 2 August 2019 to shareholders on 
the register on 5 July 2019. 
 
   (**) Total return is an alternative performance measure calculated as 
(movement in NAV per share + dividends paid in the period) divided by 
the NAV per share at the beginning of the period. 
 
   Chairman's Statement 
 
   Introduction 
 
   The year to 28 February 2019 saw the challenges around international 
trade politics and the eventual shape of any Brexit settlement intensify, 
particularly in the second half.  This led to an increasingly nervous 
and unsettled stock market as investors became less comfortable with 
risk and as a consequence smaller company shares underperformed as an 
asset class.  It was not all bad news however, and despite almost daily 
negative press, the UK economy continued to grow in 2018 with employment 
levels remaining high.  Post the period end, at the micro-level, many 
companies in the portfolio have been reporting good figures in the 
recent March results season.  The level of fundraisings on AIM has 
remained healthy, particularly in relation to existing companies raising 
new capital which exceeded the amount raised from new issues in the 
year.  Against this background the VCT made GBP10.6m of new VCT 
qualifying investments in the period. 
 
   During the year Andrew Buchanan, who had been involved in the management 
of this Company's investments since its launch in 1998, retired from 
Octopus.  I would like to take this opportunity to thank him on behalf 
of the Board for all his hard work and engagement over the years, and to 
wish him a happy retirement.  Your Company's investments will continue 
to be managed by the Octopus Smaller Companies team, members of which 
also have a long association with the Company dating back to the year 
2000. 
 
   In the year under review, your Company raised GBP17.4 million net of 
costs by the issue of new shares and continued to buy back shares from 
shareholders wishing to sell. 
 
   Performance 
 
   Adding back the 5.5p of dividends paid out in the year, the NAV per 
share total return was -8.3%. In the same twelve months the FTSE AIM All 
Share Index fell by 11.3%, the FTSE SmallCap (excluding investment 
companies) Index fell by 6.5% and the FTSE  All Share Index rose by 1.7%, 
all on a total return basis. 
 
   Once again stock specific factors had a significant impact on 
performance, both positive and negative, and these are covered in more 
detail in the Manager's report.  In addition, there was a sharp 
reduction in the valuation of growth stocks in the second half of the 
period, and this caused the fund to give up the gains that had been 
reported in the interim accounts with the fund suffering some 
particularly volatile months. 
 
   In the year under review AIM has raised GBP5.2bn of new capital, a 
decrease from the GBP6.9 billion raised in the previous year, but still 
demonstrating its ability to provide additional growth capital for its 
members.  Against this background the Investment Manager has invested 
GBP10.6 million into qualifying companies up from GBP8.4 million in the 
previous year. 
 
   Further details of performance are contained in the Investment Managers' 
Review below. 
 
   Dividends 
 
   An interim dividend of 2.5p was paid to shareholders in January 2019 in 
addition to the 3.0p final dividend that had been paid in July 2018. It 
is the Board's intention to continue to pay a minimum of 2.5p each half 
year and to adjust the final dividend annually, based on the year-end 
share price, so that shareholders receive either 5p per annum or a 5% 
yield, whichever is the greater at the time. The Board has considered 
the level of dividend in the context of recent share price movements and 
on this occasion has chosen to maintain the final dividend of 3.0p, 
which brings the total dividend for the year to 5.5p which is a 5.7% 
yield based on the share price of 96.0p on 28 February 2019 and greater 
than the targeted minimum of 5p. 
 
   Dividend Reinvestment Scheme 
 
   In common with many other VCTs in the industry, the Company has 
established a Dividend Reinvestment Scheme (DRIS). Some shareholders 
have already taken advantage of this opportunity. For investors who do 
not require income, but value the additional tax relief on their 
reinvested dividends, this is an attractive scheme and I hope more 
shareholders will find it useful. In the course of the year 889,210 new 
shares have been issued under this scheme. The dividend referred to 
above will be eligible for the DRIS. 
 
   Share Buybacks 
 
   During the year to 28 February 2019 the Company continued to buy back 
and cancel shares in the market from selling shareholders and purchased 
3,313,707 Ordinary shares for a total consideration of GBP3,596,915. We 
have maintained a discount of approximately 4.5% (equating to a 5.0% 
discount to the selling shareholder after costs), which the Board 
monitors and intends to retain as a policy which fairly balances the 
interests of both remaining and selling shareholders. Buybacks remain an 
essential practice for VCTs, as providing a means of selling is an 
important part of the initial investment decision and has enabled the 
Company to grow. As such I hope you will all support the appropriate 
resolution at the AGM. 
 
   Share Issues 
 
   On 13 April 2018 119,802 new shares were issued in connection with the 
2017/2018 prospectus offer which had closed fully subscribed.  An offer 
to raise up to GBP12 million with an overallotment facility of up to a 
further GBP6 million alongside the Octopus AIM VCT 2 plc was launched on 
3 August 2018. The offer closed to new applications on 28 September 2018 
fully subscribed, having raised the full GBP18 million. As at 28 
February 2019 there was GBP0.2m outstanding in the applications account 
to be allotted in the new tax year. 
 
   VCT Status 
 
   PricewaterhouseCoopers LLP (PwC) provides the Board and Investment 
Manager with advice concerning continuing compliance with HMRC 
regulations for VCTs. The Board has been advised that Octopus AIM VCT is 
in compliance with the conditions laid down by HMRC for maintaining 
approval as a VCT. A key requirement is to maintain at least a 70% 
qualifying investment level which will rise to 80% for financial years 
ending after 6 April 2019. As at 28 February 2019 some 89.6% of the 
portfolio as measured by HMRC rules was invested in qualifying 
investments. 
 
   Risks and Uncertainties 
 
   In accordance with the Listing Rules under which the Company operates 
the Board has to comment on the potential risks and uncertainties which 
could have a material impact on the Company's performance. A risk arises 
from the requirement to maintain compliance with HMRC regulations 
requiring 70% of the Company's assets to be invested in qualifying 
holdings which will rise to 80% by the year to 28 February 2020. Other 
risks include economic conditions which impact particularly on smaller 
companies in which the Company invests and this could have an adverse 
impact on share prices. Further details of the risks faced by the 
Company and the processes in place to mitigate them are set out in the 
Business Review of the Annual Report and Accounts. 
 
   Annual General Meeting (AGM) 
 
   The AGM will be held on 18 July 2019. I very much hope that you will be 
able to come. After the formal business our Investment Managers will 
make a presentation and there will be a chance for you to ask questions. 
At the AGM, a resolution will be proposed to extend the life of the 
Company until 2025 in order to preserve the VCT status of the Company. 
 
   Outlook 
 
   The newspapers are still dominated by negative stories about 
international trade tensions, domestic politics and the problem of what 
our future relationship with the European Union might eventually look 
like.  The heightened level of uncertainty now appears to be having an 
impact on business confidence, with reports of some companies deciding 
to delay investment. This has fuelled the recent increase in volatility 
in domestic stock market indices which were already un-nerved by stock 
market falls elsewhere in the world.  This volatility is likely to 

continue until the outlook becomes clearer although it is encouraging 
that UK economic growth has remained positive if unexciting in 2018, 
with a similar outlook currently being forecast for 2019. 
 
   The portfolio now contains 77 holdings across a range of sectors and 
many of them have already demonstrated their management's ability to 
grow their businesses successfully despite difficult market conditions. 
The balance of the portfolio towards profitable companies remains, and 
the cash available for new investments will allow us to take advantage 
of any future lowering of valuations resulting from the current period 
of share price weakness. 
 
   Roger Smith 
 
   Chairman 
 
   17 May 2019 
 
   Investment Manager's Review 
 
   Introduction 
 
   The year to 28 February 2019 was very much one of two halves, with the 
gains of the first half eroded in much more nervous market conditions 
between September and December. The tendency of the market to reward 
growth companies that exceeded expectations with higher share prices and 
higher ratings came to an end in the second half of the year as 
attention focused increasingly on risk in the face of increased 
uncertainty about the future international trade and possible 
repercussions of Brexit. Against this background smaller companies 
underperformed with investors favouring the relative security of the 
FTSE 100 with its superior liquidity and exposure to foreign currency 
earnings.  This had an impact on the NAV which more than reversed the 
earlier gain reported at the interim stage, resulting in a negative 
return for the year as a whole of 8.3%.  There have been some notable 
contributors to the portfolio, both positive and negative, but we are 
pleased to report the maintenance of the 5% yield objective. 
 
   In the year to 28 February 2019 AIM has continued to raise new capital 
for companies, both already quoted and new flotations, and your Company 
has deployed existing cash  throughout the year as well as raising 
GBP17.4 million net of costs for future investments. The rate at which 
cash was invested tailed off a little towards the end of 2018 and 2019 
had a slower start although we have seen a steady stream of existing AIM 
companies requiring further funds for growth as well as some earlier 
stage companies intending to float in the next twelve months, many of 
which will be VCT qualifying.  We have invested GBP0.9m since the year 
end. 
 
   The Alternative Investment Market 
 
   After two years of outperformance, AIM trailed larger company indices in 
the year, producing a total return of -11.3% in the twelve months to 
February. This was well behind the FTSE All Share Index which achieved a 
small positive return over the same period and behind the Smaller 
Companies Index (ex-Investment Trusts).  This reflected growing concerns 
about the possible effects on the domestic economy of a disorderly 
Brexit added to fears about international growth prospects which 
resulted in a much more cautious attitude to perceived risky assets such 
as smaller companies. Although the September results season was broadly 
supportive, attention focused on the valuations of some of the more 
highly rated growth stocks on AIM which had been large contributors to 
the Index's previous rise and which were unable to hang onto their 
ratings in a more cautious market. 
 
   Companies have continued to raise new capital throughout the year. In 
the twelve months to 28 February 2019 AIM raised a further GBP3.7 
billion of new capital for existing companies as well as a total of 
GBP1.5 billion for new companies floating on the market, demonstrating 
AIM's ability to provide finance for good growth companies as well as 
attracting new entrants. VCTs play a significant part in that funding 
process and we identify below the companies we have invested in during 
the second half of the year. 
 
   Performance 
 
   Adding back the dividends paid during the year to show the total return, 
the NAV decreased by 8.3% in the year (2018: 6.3% increase). This 
compares with a total return for the FTSE SmallCap Index ex-Investment 
Trusts of -6.5% and for the FTSE AIM All Share Index of -11.3%.  The 
FTSE All Share Index fared better, showing a positive total return of 
1.7%. It was a year of two halves and the fund gave up all of its first 
half gains and more in the second half when much more volatile market 
conditions caused smaller companies to underperform. Once again the 
market proved wary of smaller companies that have yet to make a profit 
(of which there are several in the VCT), although even more established 
companies meeting expectations were not immune from bouts of share price 
weakness, particularly those perceived as growth stocks on higher than 
average ratings. Breedon Aggregates and Learning Technologies, both top 
ten holdings, underperformed in the year for this reason despite 
delivering on profit expectations. GB Group also gave up some of its 
very good performance of the first half in the second half of the year 
although it still made a positive impact for the year as a whole. 
Investors were particularly unforgiving of companies that disappointed 
by missing market expectations and this led to significant share price 
weakness in some cases. 
 
   Craneware caught investors' attention as it started to demonstrate some 
initial revenues from its newly developed Trisus platform.  This extends 
the number of products that it can offer to US hospitals to increase 
their efficiency and is expected to lead to significantly increased 
revenues per hospital account.  The shares could not sustain their very 
high rating in the less certain market conditions at the end of 2018 but 
the company was still a significant contributor to performance for the 
year as a whole. Among the larger and more established companies, RWS, 
GB Group, Gamma and Next Fifteen Communications were all positive 
contributors for the year despite share price weakness in the second 
half. We continue to hold them for the longer-term growth opportunities 
that we feel they still have. Two recent investments, Creo Medical and 
the Panoply Holdings have both performed very well since we invested. 
 
   Some companies suffered from specific headwinds which resulted in poor 
share price performance. The biggest detractor from performance in the 
year was Gear4music.  A trading update in January 2019 revealed that 
they had suffered difficulties in fulfilling the level of demand they 
had experienced in the run up to Christmas. This resulted in lower sales 
than management had expected which will have a knock-on effect on 
margins and profits for the year to March 2019.  Investors took this 
very badly indeed despite the fact that the Group is still growing its 
sales by nearly 40% per annum and expanding its footprint in Europe. 
Another major disappointment in the second half of the year came from Yu 
Group, the supplier of energy to small and medium sized businesses. 
Post its listing on AIM in 2016, it had reported strong growth in 
revenue and profits and had produced a confident statement with its 
interim results in September 2018.  However, this was followed by a 
statement that the accounts and accounting practices were being reviewed 
and that the Group would be lossmaking for the year to December.  A 
further announcement in December did not really clarify the extent of 
the problem and in view of headwinds being reported by other alternative 
suppliers we sold the shares at a loss. Two other negative contributors 
were Velocity, which had a series of downgrades to forecasts followed by 
management changes, and DP Poland which reported increased competition 
from takeaway delivery aggregators pointing to a slower path to 
breakeven and a need for further funds.  Quixant shares fell after they 
failed to produce an expected upgrade to forecasts in the January 
trading update and instead guided analysts to a second half weighted 
2019.  We had taken some profits in the holding in the summer of 2018 
but still view this as a core holding for its longer term growth 
prospects. 
 
   After performing very well for most of the year, Staffline had a 
turnaround in its fortunes right at the end of the period and when it 
was a top five holding in the portfolio.  It was unable to publish its 
figures as expected at the end of January due to a last minute 
allegation over payment practices in its staffing division.  The shares 
fell by 40% before being suspended later that day.  After some weeks and 
an exhaustive investigation by its auditors it was able to put a 
statement out to the market and re-list its shares, allowing them to 
recover from their lows although not yet to the level they fell from. 
The shares in Staffline are shown in the accounts at the suspension 
price of 669p.  Further recovery should be possible once the audited 
accounts are published. At the time of writing the share price has 
improved to 861p. 
 
   Elsewhere, early stage companies yet to reach profitability once again 
held back performance of the NAV, some of which had setbacks or found 
themselves in need of cash to achieve the next milestone. Futura Medical, 
Osirium, Microsaic, Midatech Pharma and Haydale Graphene all came into 
that category. 
 
   There are a number of more recent constituents of the portfolio that 
have yet to make an impression in public markets and whose shares have 
underperformed while awaiting evidence of progress in their businesses. 
These include some recent new holdings from the past two years such as 
Trackwise Designs, Maestrano, Maxcyte, appScatter and Escape Hunt. 
Investing for a VCT involves backing companies when they are small and 
still at an early stage of development and share price progress depends 
on them being noticed by a wider circle of investors as they produce 
results and develop their businesses over time. Although the earlier 
stage companies in the portfolio represent a relatively small proportion 
by value we expect them to contribute to future performance when they 
start to demonstrate growth in their businesses. In the year under 

review there were some examples of companies that demonstrated that they 
had started to achieve that in the period and whose shares outperformed 
including Ixico, Scientific Digital Imaging, Access Intelligence, Beeks 
Financial Cloud, and Mycelx. The latter was helped by a stronger oil 
price and increased demand for its technology to clean hydrocarbons out 
of water which led to several upgrades to revenues during the year and 
the restoration of profitability.  The shares had a significant positive 
effect on the performance of the NAV. 
 
   The non-qualifying element of the equity portfolio comprises the funds 
raised in share offers awaiting deployment into qualifying investments. 
Further investments were made into Octopus Portfolio Manager and the 
Octopus UK Micro Cap Growth fund and a new investment was made into the 
Octopus Multi-Cap Income fund in the period. 
 
   Portfolio Activity 
 
   Having made twelve qualifying investments into eleven companies at a 
total cost of GBP8.1 million in the first half of the year, we added two 
further new qualifying holdings at a cost of GBP1.9 million in the 
second half, as well as two follow-on qualifying investment of GBP0.1 
million into Access Intelligence Group and GBP0.5 million into Maxcyte. 
Total investment of GBP10.6 million in qualifying investments for the 
year was considerably higher than last year's GBP8.4 million, reflecting 
a still healthy AIM market. 
 
   One of the two new qualifying investments, the Panoply Holdings plc, was 
a new issue. It helps its customers to increase the efficiency of their 
operations using technology such as artificial intelligence and software 
design.  The other, Falanx plc, is an existing AIM company. It informs, 
protects and defends businesses from the growing threat of cyber 
security breaches. 
 
   The manager continued to use non-qualifying investments to manage 
liquidity while awaiting new qualifying investment opportunities. We 
have held onto existing AIM holdings where we see the opportunity for 
further development but have invested any new funds raised into a 
mixture of the Octopus managed portfolios with a small proportion going 
into the FP Octopus UK Micro Cap Growth fund and the FP Octopus UK Multi 
Cap Income fund. This strategy is designed to obtain a better return on 
funds awaiting investment than the very low rates available on cash. 
 
   During the year we realised profits in holdings in Quixant, Learning 
Technologies, GB Group, Gooch and Housego, Beeks Financial, RWS Holdings 
and Creo Medical after good performances.  Escher Group, Sinclair Pharma, 
Free Agent, and CityFibre were all the subject of takeover bids for 
cash. In addition we sold the entire holdings in Faron Pharmaceuticals, 
Futura Medical and Yu Group and part of the holding in Diurnal at a 
loss. The holding in TLA was sold at a small profit over book cost. In 
all disposals raised GBP9.0 million in cash and made an aggregated 
profit on original cost of GBP1.6 million. 
 
   New VCT Regulations 
 
   The budget in November 2018 contained no significant changes to the VCT 
regulations. As a reminder, any funds raised in accounting periods 
beginning on or after 6th April 2018 should be 30% invested in 
qualifying holdings within 12 months of the end of the accounting period 
in which the shares were issued, and for financial years ending after 6 
April 2019 the portfolio will have to maintain a minimum qualifying 
investment of 80% (currently 70%). 
 
   We are determined to maintain a threshold of quality and to invest where 
we see the potential for returns from growth. However, the emphasis of 
the new regulations is definitely to encourage investment into earlier 
stage companies, and to that extent it seems likely that over a number 
of years the portfolio will see a rise in the number of younger 
companies receiving an initial investment. We would expect to invest 
further in those companies as they demonstrate their ability to grow. 
 
   At present there has been little change to the profile of the portfolio, 
as we continue to hold the larger market capitalisation companies, in 
which we invested several years ago as qualifying companies, or which we 
bought in the market prior to the rule changes where we see the 
potential for them to continue to grow. 
 
   In order to qualify companies must: 
 
   --      have fewer than 250 full time equivalent employees; and 
 
   --      have less than GBP15 million of gross assets at the time of 
investment and no more than GBP16 million immediately post investment; 
and 
 
   --      be less than seven years old from the date of their first 
commercial sale (or 10 years if a knowledge intensive company) if 
raising State Aided (ie VCT) funds for the first time; and 
 
   --      have raised no more than GBP5 million of State Aided funds in 
the previous 12 months and less than the lifetime limit of 
 
   GBP12 million (or from 6th April 2018 GBP10 million in 12 months and a 
GBP20 million lifetime limit if a knowledge intensive company); and 
 
   --      produce a business plan to show that the funds are being raised 
for growth and development. 
 
   The latest changes are to encourage VCTs to keep their investment rate 
up after raising money -- hence the 70% limit will rise to 80% from 28 
February 2020. However, allowing knowledge intensive companies to raise 
up to GBP10m of the GBP20m lifetime limit in a twelve month period 
rather than the existing GBP5m will improve flexibility as will the 
proposed change to the amount of time allowed for re-investment of cash 
from sales of qualifying holdings from six to twelve months. 
 
   Outlook and Future Prospects 
 
   Equity markets have got off to a better start to 2019, however all of 
the uncertainties about the eventual shape of our future relationship 
with the EU, domestic political instability and the resilience of our 
economic growth remain challenges at the present time and this means 
that markets are likely to remain volatile.  Against this background it 
is also unlikely that shares that suffered from sharp falls in their 
ratings in the final quarter of 2018 will recover these fully in the 
short term. 
 
   The portfolio now contains 77 holdings with investments across a range 
of sectors including several such as Craneware, RWS, Gooch and Housego, 
Cello, EKF Diagnostics, Mycelx and GB Group that have significant 
international exposure. There are a number of newer holdings that we 
expect to demonstrate progress over the coming twelve months and the 
balance of the portfolio towards profitable companies remains. The VCT 
currently has funds available for new investments which should allow us 
to take advantage of any dip in valuations resulting from current weak 
sentiment and we remain selective when viewing new investment 
opportunities. 
 
   Directors' Responsibilities Statement 
 
   The Directors are responsible for preparing the Annual Report and 
Accounts 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 are required to 
prepare the financial statements and have elected to prepare the 
Company's financial statements in accordance with United Kingdom 
Generally Accepted Accounting Practice (United Kingdom Accounting 
Standards and applicable law) including FRS 102 -- "The Financial 
Reporting Standard applicable in the UK and Republic of Ireland". 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 of the Company and of the profit or loss for the 
Company for that period. 
 
   In preparing these financial statements, the Directors are 
 
   required to: 
 
   --      select suitable accounting policies and then apply them 
consistently; 
 
   --      make judgements and accounting estimates that are reasonable and 
prudent; 
 
   --      state whether applicable UK accounting standards have been 
followed, subject to any material departures disclosed and explained in 
the financial statements; 
 
   --      prepare the financial statements on the going concern basis 
unless it is inappropriate to presume that the Company will continue in 
business; and 
 
   --      prepare a Strategic Report, a Director's Report and Director's 
Remuneration Report which comply with the requirements of the Companies 
Act 2006. 
 
   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. 
 
   The Directors are responsible for ensuring that the annual report and 
accounts, taken as a whole, are fair, balanced, understandable and 
provide the information necessary for shareholders to assess the 
Company's position and performance, business model and strategy. 
 
   Website Publication 
 
   The Directors are responsible for ensuring the Annual Report and the 
Accounts are made available on a website. Financial statements are 
published on the Company's website in accordance with legislation in the 
United Kingdom governing the preparation and dissemination of financial 
statements, which may vary from legislation in other jurisdictions. The 
maintenance and integrity of the Company's website is the responsibility 
of the Directors. The Directors' responsibility also extends to the 
ongoing integrity of the financial statements contained therein. 
 
   Directors' Responsibility Statement pursuant to DTR4 
 
   Roger Smith (Chairman), Stephen Hazell-Smith, Joanne Parfrey and Neal 
Ransome the Directors, confirm to the best of their knowledge that: 
 
   --      the financial statements have been prepared in accordance with 

the Financial Reporting Standard applicable in the United Kingdom and 
Republic of Ireland ("FRS 102") and give a true and fair view of the 
assets, liabilities, financial position and profit and loss of the 
Company; and 
 
   --      the Annual Report includes a fair review of the development and 
performance of the business and the financial position of the Company, 
together with a description of the principal risks and uncertainties 
that it faces. 
 
   For and on behalf of the Board 
 
   Roger Smith 
 
   Chairman 
 
   17 May 2019 
 
   NON-STATUTORY ACCOUNTS 
 
   The financial information set out below does not constitute the 
Company's statutory accounts for the years ended 28 February 2019 or 28 
February 2018 but is derived from those accounts. Statutory accounts for 
the year ended 28 February 2018 have been delivered to the Registrar of 
Companies and statutory accounts for the year ended 28 February 2019 
will be delivered to the Registrar of Companies in due course. The 
Auditor has reported on those accounts; their reports were (i) 
unqualified, (ii) did not include a reference to any matters to which 
the Auditor drew attention by way of emphasis without qualifying their 
report and (iii) did not contain a statement under Section 498 (2) or 
(3) of the Companies Act 2006. The text of the Auditor's reports can be 
found in the Company's full Annual Report and Accounts at 
www.octopusinvestments.com 
 
   Income Statement 
 
 
 
 
                                  Year to 28 February           Year to 28 February 
                                          2019                          2018 
----------------------------  ----------------------------  ---------------------------- 
                              Revenue   Capital    Total    Revenue   Capital    Total 
                               GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
----------------------------  --------  --------  --------  --------  --------  -------- 
(Loss)/gain on disposal 
 of fixed asset investments         --   (3,796)   (3,796)        --       477       477 
----------------------------  --------  --------  --------  --------  --------  -------- 
(Loss)/gain on valuation 
 of fixed asset investments         --   (7,701)   (7,701)        --     6,943     6,943 
----------------------------  --------  --------  --------  --------  --------  -------- 
Gain on valuation of 
 current asset investments          --        53        53        --       541       541 
----------------------------  --------  --------  --------  --------  --------  -------- 
Investment income                  794       307     1,101       843        --       843 
----------------------------  --------  --------  --------  --------  --------  -------- 
Investment management 
 fees                            (545)   (1,635)   (2,180)     (432)   (1,296)   (1,728) 
----------------------------  --------  --------  --------  --------  --------  -------- 
Other expenses                   (574)        --     (574)     (600)        --     (600) 
----------------------------  --------  --------  --------  --------  --------  -------- 
(Loss)/profit before 
 tax                             (325)  (12,772)  (13,097)     (189)     6,665     6,476 
----------------------------  --------  --------  --------  --------  --------  -------- 
Tax                                 --        --        --        --        --        -- 
----------------------------  --------  --------  --------  --------  --------  -------- 
(Loss)/profit after tax          (325)  (12,772)  (13,097)     (189)     6,665     6,476 
----------------------------  --------  --------  --------  --------  --------  -------- 
Earnings per share -- 
 basic and diluted              (0.3p)   (11.2p)   (11.5p)    (0.2p)      6.7p      6.5p 
----------------------------  --------  --------  --------  --------  --------  -------- 
 
 
   --      The 'Total' column of this statement represents the statutory 
Income Statement of the Company; the supplementary revenue return and 
capital return columns have been prepared in accordance with the AIC 
Statement of Recommended Practice. 
 
   --      All revenue and capital items in the above statement derive from 
continuing operations. 
 
   --      The Company has only one class of business and derives its 
income from investments made in shares and securities and from bank and 
money market funds, as well as OEIC funds. 
 
   The Company has no recognised gains or losses other than the results for 
the period as set out above. Accordingly a Statement of Comprehensive 
Income is not required. 
 
   Balance Sheet 
 
 
 
 
                             As at 28 February 2019    As at 28 February 2018 
---------------------------  -----------------------  ------------------------ 
                              GBP'000      GBP'000      GBP'000      GBP'000 
---------------------------  ----------  -----------  -----------  ----------- 
Fixed asset investments                       81,671                    91,247 
---------------------------  ----------  -----------  -----------  ----------- 
Current assets: 
---------------------------  ----------  -----------  -----------  ----------- 
   Investments                   28,852                    24,959 
---------------------------  ----------  -----------  -----------  ----------- 
   Money Market Funds             1,314                     4,300 
---------------------------  ----------  -----------  -----------  ----------- 
   Debtors                           71                        52 
---------------------------  ----------  -----------  -----------  ----------- 
   Cash at bank                  11,611                     7,475 
---------------------------  ----------  -----------  -----------  ----------- 
                                 41,848                    36,786 
---------------------------  ----------  -----------  -----------  ----------- 
Creditors: amounts falling 
 due within one year            (1,015)                     (963) 
---------------------------  ----------  -----------  -----------  ----------- 
Net current assets                            40,833                    35,823 
---------------------------  ----------  -----------  -----------  ----------- 
Net assets                                   122,504                   127,070 
---------------------------  ----------  -----------  -----------  ----------- 
 
Share capital                                  1,213                     1,094 
---------------------------  ----------  -----------  -----------  ----------- 
Share premium                                 81,368                    63,098 
---------------------------  ----------  -----------  -----------  ----------- 
Capital redemption reserve                        94                        61 
---------------------------  ----------  -----------  -----------  ----------- 
Special distributable 
 reserve                                      36,592                    46,483 
---------------------------  ----------  -----------  -----------  ----------- 
Capital reserve realised                    (28,999)                  (29,277) 
---------------------------  ----------  -----------  -----------  ----------- 
Capital reserve unrealised                    32,317                    45,367 
---------------------------  ----------  -----------  -----------  ----------- 
Revenue reserve                                 (81)                       244 
---------------------------  ----------  -----------  -----------  ----------- 
Total equity shareholders' 
 funds                                       122,504                   127,070 
---------------------------  ----------  -----------  -----------  ----------- 
NAV per share -- basic                        101.0p                    116.1p 
 and diluted 
---------------------------  ----------  -----------  -----------  ----------- 
 
 
   The statements were approved by the Directors and authorised for issue 
on 17 May 2019 and are signed on their behalf by: 
 
   Roger Smith 
 
   Chairman 
 
   Company number: 03477519 
 
   Statement of Changes in Equity 
 
 
 
 
                                                    Capital       Special        Capital       Capital 
                               Share     Share     redemption   distributable     reserve      reserve      Revenue 
                               Capital   premium    reserve      reserves(*)    realised(*)   unrealised   reserve(*)   Total 
                               GBP'000   GBP'000    GBP'000        GBP'000        GBP'000      GBP'000      GBP'000     GBP'000 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
As at 1 March 2018               1,094    63,098           61          46,483      (29,277)       45,367          244   127,070 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Management fee allocated 
 as capital expenditure             --        --           --              --       (1,635)           --           --        -- 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Current year losses 
 on disposal                        --        --           --              --       (3,796)           --           --   (3,796) 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Current period loss 
 on fair value of 
 investments                        --        --           --              --            --      (7,648)           --   (7,648) 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Capital investment 
 income                             --        --           --              --           307           --           --       307 

----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Loss on ordinary 
 activities after 
 tax                                --        --           --              --            --           --        (325)     (325) 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Total comprehensive 
 income for the year                --        --           --              --       (5,124)      (7,648)        (325)  (13,097) 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Contributions by 
 and distributions 
 to owners: 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Repurchase and cancellation 
 of own shares                    (33)        --           33         (3,597)            --           --           --   (3,597) 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Issue of shares                    152    19,392           --              --            --           --           --    19,544 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Share issue costs                   --   (1,122)           --              --            --           --           --   (1,122) 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Dividends paid                      --        --           --         (6,294)            --           --           --   (6,294) 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Total contributions 
 by and distributions 
 to owners                         119    18,270           33         (9,891)            --           --           --     8,531 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Other movements: 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Prior years' holding 
 gains now realised                 --        --           --              --         5,402      (5,402)           --        -- 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Total other movements               --        --           --              --         5,402      (5,402)           --        -- 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Balance as at 28 
 February 2019                   1,213    81,368           94          36,592      (28,999)       32,317         (81)   122,504 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
 
 
 
 
 
 
                                                    Capital       Special        Capital       Capital 
                               Share     Share     redemption   distributable     reserve      reserve      Revenue 
                               Capital   premium    reserve      reserves(*)    realised(*)   unrealised   reserve(*)   Total 
                               GBP'000   GBP'000    GBP'000        GBP'000        GBP'000      GBP'000      GBP'000     GBP'000 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
As at 1 March 2017                 873    35,422           45          53,717      (28,020)       37,445          433    99,915 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Management fee allocated 
 as capital expenditure             --        --           --              --       (1,296)           --           --   (1,296) 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Current year gains 
 on disposal                        --        --           --              --           477           --           --       477 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Current period gain 
 on fair value of 
 investments                        --        --           --              --            --        7,484           --     7,484 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Loss on ordinary 
 activities after 
 tax                                --        --           --              --            --           --        (189)     (189) 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Total comprehensive 
 income for the year                --        --           --              --         (819)        7,484        (189)     6,476 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Contributions by 
 and distributions 
 to owners: 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Repurchase and cancellation 
 of own shares                    (16)        --           16         (1,792)            --           --           --   (1,792) 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Issue of shares                    237    29,399           --              --            --           --           --    29,636 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Share issue costs                   --   (1,723)           --              --            --           --           --   (1,723) 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Dividends paid                      --        --           --         (5,442)            --           --           --   (5,442) 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Total contributions 
 by and distributions 
 to owners                         221    27,676           16         (7,234)            --           --           --    20,679 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Other movements: 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Prior years' holding 
 losses now realised                --        --           --              --         (438)          438           --        -- 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Total other movements               --        --           --              --         (438)          438           --        -- 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
Balance as at 28 
 February 2018                   1,094    63,098           61          46,483      (29,277)       45,367          244   127,070 
----------------------------  --------  --------  -----------  --------------  ------------  -----------  -----------  -------- 
 
 
   (*) Included in these reserves is an amount of GBP7,512,000 (2018: 
GBP17,450,000) which is considered distributable to shareholders. 
 
   Cash Flow Statement 
 
 
 
 
                                      Year to 28 February  Year to 28 February 
                                              2019                 2018 
                                            GBP'000              GBP'000 
------------------------------------  -------------------  ------------------- 
Cash flows from operating activities 
------------------------------------  -------------------  ------------------- 
Return on ordinary activities 
 before tax                                      (13,097)                6,476 
------------------------------------  -------------------  ------------------- 
Adjustments for: 
------------------------------------  -------------------  ------------------- 
(Increase)/decrease in debtors                       (19)                  280 
------------------------------------  -------------------  ------------------- 
Increase/(decrease) in creditors                       52              (7,910) 
------------------------------------  -------------------  ------------------- 
Loss/(gain) on disposal of fixed 
 asset investments                                  3,796                (477) 
------------------------------------  -------------------  ------------------- 
Loss/(gain) on valuation of fixed 
 asset investments                                  7,701              (6,943) 
------------------------------------  -------------------  ------------------- 
Gain on valuation of current asset 
 investments                                         (53)                (541) 
------------------------------------  -------------------  ------------------- 
Non-cash Distributions                              (307)                   -- 
------------------------------------  -------------------  ------------------- 
Cash from operations                              (1,927)              (9,115) 
------------------------------------  -------------------  ------------------- 
 
Cash flows from investing activities 

------------------------------------  -------------------  ------------------- 
Purchase of fixed asset investments              (10,581)              (8,947) 
------------------------------------  -------------------  ------------------- 
Gross investment in current asset 
 investments                                      (3,840)             (14,850) 
------------------------------------  -------------------  ------------------- 
Sale of fixed asset investments                     8,967                5,039 
------------------------------------  -------------------  ------------------- 
Net cash flows from investing 
 activities                                       (5,454)             (18,758) 
------------------------------------  -------------------  ------------------- 
 
Cash flows from financing activities 
------------------------------------  -------------------  ------------------- 
Purchase of own shares                            (3,597)              (1,792) 
------------------------------------  -------------------  ------------------- 
Share issues (net of costs of 
 GBP1,122,000)                                     17,438               27,164 
------------------------------------  -------------------  ------------------- 
Dividends paid                                    (5,310)              (4,693) 
------------------------------------  -------------------  ------------------- 
Net cash flows from financing 
 activities                                         8,531               20,679 
------------------------------------  -------------------  ------------------- 
 
Increase/(decrease) in cash and 
 cash equivalents                                   1,150              (7,194) 
------------------------------------  -------------------  ------------------- 
Opening cash and cash equivalents                  11,775               18,969 
------------------------------------  -------------------  ------------------- 
 
Closing cash and cash equivalents                  12,925               11,775 
------------------------------------  -------------------  ------------------- 
 
Cash and cash equivalents comprise 
------------------------------------  -------------------  ------------------- 
Cash at Bank                                       11,611                7,475 
------------------------------------  -------------------  ------------------- 
Money Market Funds                                  1,314                4,300 
------------------------------------  -------------------  ------------------- 
                                                   12,925               11,775 
------------------------------------  -------------------  ------------------- 
 
 
 
 

(END) Dow Jones Newswires

May 20, 2019 08:10 ET (12:10 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.