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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Octopus Vct | LSE:OVCT | London | Ordinary Share | GB00B42T3254 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 88.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMOVCT Octopus VCT plc Final Results 3 June 2013 Octopus VCT plc, managed by Octopus Investments Limited, today announces the final results for the year ended 28 February 2013. These results were approved by the Board of Directors on 3 June 2013. You may, in due course, view the Annual Report in full at www.octopusinvestments.com. Chairman's Statement Introduction I am pleased to present the Annual Report of Octopus VCT plc for the year ended 28 February 2013. Performance The Company has had a good year and is trading in line with its objective of focusing more on capital preservation than a typical VCT. It is pleasing to report that the total return (being the net asset value ('NAV') plus cumulative dividends paid to date) has increased from 96.7 pence per share as at 29 February 2012 to 98.2 pence per share as at 28 February 2013. This 1.6% increase is due to interest income received on the Company's loan investments exceeding the standard running costs. Dividend Given the level of interest income earned during the year from investments, the Board has proposed a final dividend of 1.0 pence per share in respect of the year ended 28 February 2013 (2012: 1.0 pence per share). This dividend, if approved by shareholders at the AGM, will be paid on 24 July 2013 to shareholders on the register on 28 June 2013. Investment Portfolio A total of GBP17.8 million was invested in the year, all into companies which both the investment manager and Board deem in line with the investment policy of the Company, being a focus on capital preservation. GBP7.8 million of this total was invested into solar companies, including three follow-on investments into GreenCo Services 2, Shakti Power and Sula Power. To extend the Company's investments in the renewable energy sector, GBP4.0 million was invested into four companies that operate ground source heat pumps. The Company also diversified its portfolio by investing GBP3.5 million into three companies operating in the media sector. Two of these companies specialise in the commission and copyright of music scores for film and television projects, whilst the third company produces video games for video game publishers. Finally, GBP1.0m was invested into Mablaw 555, an engineering company trading as Technical Software Consultants, and GBP1.5m was invested into Healthcare Services and Technology. Loans to Salus Services Holdings 1 and Season Ticket Credit were fully repaid during the year, whilst partial loan repayments were made by Helaku Power and Michabo Power which, in total, returned GBP2.0m in cash back to the Company. A continued growth in the share price of the Company's only AIM quoted investment, EKF Diagnostics, has led to an unrealised gain of GBP82,000. This gain was partially offset by small revaluations in Quickfire Films and Quickfire Films 2, on reflection of their latest trading results. Therefore unrealised gains totalling GBP63,000 have been recognised for the year ended 28 February 2013. A full list of the Company's investment portfolio as at the year end is set out on page X. Investment Strategy As set out in the prospectus, the Company has adopted a strategy that is aimed at making investments that focus more on capital preservation than are typically available from investments in unquoted companies. The Qualifying Investments have been made into companies where the Octopus team has been confident that there was the opportunity to invest in a manner that should provide the Company with a high level of capital security. These companies typically have contractual revenues from financially sound customers or a revenue stream that is generated from predictable transactions with a range of customers. VCT Qualifying Status PricewaterhouseCoopers LLP provides the Board and Investment Manager with advice concerning ongoing compliance with Her Majesty's Revenue & Customs (HMRC) rules and regulations concerning VCTs. The Board has been advised that Octopus VCT plc is in compliance with the conditions laid down by HMRC for maintaining approval as a VCT. A key requirement is to reach at least the 70% qualifying investment level by the end of the third accounting period. As at 28 February 2013, 73.7% of the portfolio, as measured by HMRC rules, was invested in VCT qualifying investments. Annual General Meeting The Company's Annual General Meeting will take place on Wednesday, 10 July 2013 at 11.30 a.m. I look forward to meeting as many shareholders as possible at the meeting to be held at the offices of Octopus Investments Limited at 20 Old Bailey, London, EC4M 7AN. Directions to their offices can be found on their website: www.octopusinvestments.com. Electronic Communications Based on feedback from shareholders, and in order to reduce the cost of printing and the consequential impact on the environment, we now offer shareholders the opportunity to forgo their printed report and account documents in favour of receiving email or letter notification with details of how to view the documents online. If you would like to change the format in which you receive this report, please contact Octopus using the contact details provided on page X of this report. Outlook There remains economic uncertainty in the UK, posing a challenge to many businesses and investors. Your Board and Investment Manager remain focused on boosting growth and profitability in the underlying portfolio and we are pleased that the Company has a strong, diversified portfolio of companies that have continued to trade well despite the tough macroeconomic climate. We strongly believe that the investments will continue to develop, building on the strong foundations they have already established, and that the Company's NAV will continue to make steady progress and achieve its investment objectives. James Otter Chairman 3 June 2013 Investment Manager's Review Personal Service At Octopus, we 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. During this time of economic uncertainty, we consider it particularly important to be in regular contact with our investors and are working hard to manage your money in the current climate. Octopus Investments Limited was established in 2000 and has a strong commitment to both smaller companies and to VCTs. We currently manage 13 VCTs, including this Company, and manage nearly GBP340 million in the VCT sector. Octopus has over 230 employees and has previously been voted as 'Best VCT Provider of the Year' by the financial adviser industry. Investment Policy The investment approach of Octopus VCT plc is to seek investments that focus more on capital preservation than a typical VCT. Nearly all of the companies in which Octopus VCT invests operate in sectors where there is a high degree of predictability. Investments are sought in companies that have contractual revenues from financially sound customers and will provide an exit for shareholders within three to five years. Performance As at 28 February 2013 the total return (being the NAV ('net asset value') plus cumulative dividends paid) stood at 98.2 pence per share compared to 96.7 pence at 29 February 2012, an increase of 1.6%. This increase is partly due to strong interest income earned on loan investments, totalling GBP1,427,000 in the year, exceeding the standard running costs of the Company, totalling GBP543,000 in the year. Such strong returns allow for any gains on realisations and loan note redemption premiums to be paid out to shareholders by way of dividends, or recognised as an uplift to the value of your investment. Portfolio Review We have made significant advances in achieving the dual target of both ensuring Octopus VCT plc is in a qualifying position by the end of its third accounting period, and investing the cash and cash equivalents held as at 29 February 2012 into appropriate investments that will help the NAV to make progress in achieving the desired return for investors. Overall, GBP17.8 million was invested in the year into 19 companies operating in the sectors of solar energy sites, ground source heat pumps, media, engineering and healthcare technology. Of this total GBP7.8 million was invested into solar companies, three of which are follow-on investments into companies that have already constructed and are operating solar energy sites (Shakti Power, Sula Power and GreenCo Services 2). The other solar companies are currently seeking suitable sites in which to commence construction of solar facilities. To extend the Company's portfolio in the renewable energy sector, four new investments were made into Superior Heat, Tanganyika Heat, Caspian Heat and Erie Heat. These are companies which have or are currently seeking to construct and operate ground source heat pumps, utilising a different kind of renewable energy in heat. To diversify the portfolio, investments totalling GBP3.5 million were made into three media companies: 3AM Music and 5AM Music, both of which commission and copyright music scores for films and television projects; and Game Development and Management, which is involved in the production of video games for video game publishers. Finally, GBP1 million was invested into Mablaw 555, a company trading as Technical Software Consultants, which provides engineering solutions to detect cracks, primarily in the oil and gas industries, and GBP1.5 million into Healthcare Services and Technology, a company currently seeking an investment in the healthcare technology sector. All of these investments have been made bearing in mind the Company's mandate, being an emphasis on capital preservation. A strong appreciation of the share price in the Company's sole AIM quoted investment, EKF Diagnostics, and small downward revaluations in Quickfire Films and Quickfire Films 2, two of the Company's seven media investments, have led to total unrealised gains of GBP63,000 being recognised in the accounts for the year ended 28 February 2013. The revaluations in Quickfire and Quickfire Films 2 reflect their latest trading results but we remain confident in the performance of both companies overall. Outlook With continued economic uncertainty prevailing in the UK, many smaller and medium sized businesses are being subjected to the pressures of tough trading conditions and tight working capital. Banks are continuing to frustrate businesses with tight lending restrictions preventing them from growing as they otherwise might. This has presented us with a number of investment opportunities as we have found many businesses often prefer our approach of a more partnership orientated, intelligent form of investment. Now that the Company has invested the majority of its available funds, we remain optimistic both about the existing portfolio and future investment opportunities. We will continue to invest cautiously and in line with the mandate of this VCT and remain confident that our portfolio companies can deliver long term value to the Company. If you have any questions on any aspect of your investment, please call one of the team on 0800 316 2349. Benjamin Davis Investment Director Octopus Investments 3 June 2013 Investment Portfolio *100% loan based investment Valuation Methodology The unquoted investments held by Octopus VCT plc have no trading platform from which prices can be easily obtained. As a result, the methodology used in fair valuing the investments is the transaction price of the recent investment round. Subsequent adjustment to the fair value of unquoted investments has been made using sector multiples based on information as at 28 February 2013 where applicable, and adjustment to the fair value has also been made according to any significant under or over performance of the business. Quoted investments are valued at market bid price. No discounts are applied. If you would like to find out more regarding the International Private Equity and Venture Capital ('IPEVC') Valuation Guidelines, please visit the following website: www.privateequityvaluation.com. Largest Holdings Listed below are the 10 largest investments by value as at 28 February 2013: CSL DualCom Holdings Limited ('CSL') CSL is the UK's leading supplier of dual path signalling devices, which link burglar alarms to the police or a private security firm. The devices communicate using a telephone line or broadband connection and a wireless link. CSL has developed a number of new products for the sector, which have enabled the business to steadily grow its market share of new connections and its profitability since the initial investment. Further information can be found at the company's website www.csldual.com. Asset class Cost Valuation A Ordinary shares GBP300,000 GBP300,000 Loan stock GBP3,540,000 GBP3,540,000 Total GBP3,840,000 GBP3,840,000 Investment date: March 2011 Equity held: 1.4% Equity held by all funds managed by Octopus: 3.4% Last audited accounts: 31 March 2012 Revenues: GBP11.0 million Profit before interest & tax: GBP2.5 million Net assets: GBP5.7 million Income receivable recognised in year: GBP316,000 Valuation basis: Transaction price Helaku Power Limited ('Helaku') Helaku constructed and operates a solar renewable energy site at a selected location in Trevemper, Cornwall. Asset class Cost Valuation A Ordinary shares GBP500,000 GBP500,000 Loan stock GBP2,777,000 GBP2,777,000 Total GBP3,277,000 GBP3,277,000 Investment date: March 2011 Equity held: 25.0% Equity held by all funds managed by Octopus: 50.0% Last audited accounts: 31 December 2011 Revenues: GBP0.0 million Loss before interest & tax: GBP0.2 million Net assets: GBP1.8 million Income receivable recognised in year: GBP42,000 Valuation basis: Transaction price Borro Loan 2 Limited ('Borro') Founded in 2008, Borro is an online consumer finance business providing short term loans secured against high value assets to customers nationwide. Further information can be found at the company's website www.borro.com. Asset class Cost Valuation Loan stock GBP2,000,000 GBP2,000,000 Total GBP2,000,000 GBP2,000,000 Investment date: December 2011 Equity held: 0.0%* Equity held by all funds managed by Octopus: 0.0%* Last audited accounts: 31 December 2011 Revenues: GBPnil* Profit before interest & tax: GBPnil* Net assets: GBPnil* Income receivable recognised in year: GBP240,000 Valuation basis: Transaction price *Borro Loan 2 Limited is the loan book company and 100% subsidiary of Borro Limited, a company registered in England and whose results are publicly available from Companies House. Accordingly, Borro Loan 2 Limited has nil revenues and nominal net assets. Shakti Power Limited ('Shakti') Shakti constructed and operates a solar renewable energy site at a selected location in Dunsfold, Surrey. Asset class Cost Valuation Loan stock GBP1,665,000 GBP1,665,000 Total GBP1,665,000 GBP1,665,000 Initial investment date: July 2011 Equity held: 0.0% Equity held by all funds managed by Octopus: 100.0% Last audited accounts: 31 December 2011 Revenues GBP0.0 million Loss before interest & tax: GBP0.2 million Net assets: GBP3.5 million Income receivable recognised in year: GBP246,000 Valuation basis: Transaction price GreenCo Services 2 Limited ('GreenCo') GreenCo constructed and operates a solar renewable energy site at a selected location in South Brent, Devon. Asset class Cost Valuation Ordinary shares GBP1,600,000 GBP1,600,000 Total GBP1,600,000 GBP1,600,000 Investment date: November 2010 Equity held: 40.9% Equity held by all funds managed by Octopus: 100.0% Last unaudited accounts: 30 November 2011 Revenues: GBP0.0 million Loss before interest & tax: GBP0.0 million Net assets: GBP1.0 million Income receivable recognised in year: GBP2,000 Valuation basis: Transaction price 3AM Music Limited ('3AM') 3AM is managed by the Cutting Edge Group and commissions and owns copyrights to music scores for films and television projects. Asset class Cost Valuation Ordinary shares GBP1,500,000 GBP1,500,000 Total GBP1,500,000 GBP1,500,000 Investment date: August 2012 Equity held: 49.9% Equity held by all funds managed by Octopus: 100.0% Last unaudited accounts: 30 June 2012 Revenues: GBPnil Loss before interest & tax: GBP0.3 million Net assets: GBP1.7 million Income receivable recognised in year: GBPnil Valuation basis: Transaction price Healthcare Services and Technology Limited ('Healthcare Services and Technology') Healthcare Services and Technology is a company currently seeking a suitable investment within the healthcare technology sector. Asset class Cost Valuation Ordinary shares GBP150,000 GBP150,000 Loan stock GBP1,350,000 GBP1,350,000 Total GBP1,500,000 GBP1,500,000 Investment date: February 2013 Equity held: 49.9% Equity held by all funds managed by Octopus: 100.0% Last unaudited accounts: N/A revenues: N/A Loss before interest & tax: N/A Net assets: N/A Income receivable recognised in year: GBPnil Valuation basis: Transaction price The company's first set of annual accounts are due on 19 November 2014. Therefore no annual results were available at the date of this report. Donoma Power ('Donoma') Donoma constructed and operates a solar renewable energy site at a selected location in Hawton, Nottinghamshire. Asset class Cost Valuation Ordinary shares GBP1,220,000 GBP1,220,000 Total GBP1,220,000 GBP1,220,000 Investment date: April 2011 Equity held: 44.9% Equity held by all funds managed by Octopus: 100.0% Last audited accounts: 31 December 2012 Revenues: GBP1.7 million Profit before interest & tax: GBP0.6 million Net assets: GBP1.5 million Income receivable recognised in year: GBPnil Valuation basis: Transaction price 5AM Music Limited ('5AM') 5AM is managed by the Cutting Edge Group and commissions and owns copyrights to music scores for films and television projects. Asset class Cost Valuation Ordinary shares GBP1,000,000 GBP1,000,000 Total GBP1,000,000 GBP1,000,000 Investment date: April 2012 Equity held: 49.9% Equity held by all funds managed by Octopus: 100.0% Last unaudited accounts: 30 June 2012 Revenues: GBPnil Loss before interest & tax: GBP0.1 million Net assets: GBP1.9 million Income receivable recognised in year: GBPnil Valuation basis: Transaction price Atlantic Screen International Limited ('ASI') ASI commissions and owns copyrights to music scores for films and television programmes. Asset class Cost Valuation Ordinary shares GBP1,000,000 GBP1,000,000 Total GBP1,000,000 GBP1,000,000 Investment date: January 2011 Equity held: 49.9% Equity held by all funds managed by Octopus: 100.0% Last unaudited accounts: 31 December 2011 Revenues: GBPnil Loss before interest & tax: GBPnil Net assets: GBP2.0 million Income receivable recognised in year: GBPnil Valuation basis: Transaction price The following companies as listed on the investment portfolio table on page X also have a cost value and fair value of GBP1,000,000 at 28 February 2013. Further details of these companies including their latest report and accounts can be found at Companies House, at their website: www.companieshouse.gov.uk. -- Caspian Heat Ltd -- Erie Heat Ltd -- Game Development and Management Ltd -- Healthcare Education Business Services Ltd -- Horrebow Energy Ltd -- Huitzilopochtli Ltd -- Jokim Ltd -- Mablaw 555 Ltd -- Mallina Power Ltd -- MediaCo Business Services Ltd -- Misae Power Ltd -- Paivatar Power Ltd -- Personnel Advisory Services Ltd -- Resilient Corporate Services Ltd -- Saas Business Services Ltd -- Salus Services 2 Ltd -- Sula Power Ltd -- Superior Heat Ltd -- Tanganyika Heat Ltd Directors' Responsibilities Statement The Directors are responsible for preparing the Directors' Report, the Directors' 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: -- select suitable accounting policies and then apply them consistently; -- make judgments 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; and -- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. 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 and the Directors' remuneration report 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: -- there is no relevant audit information of which the Company's auditor is unaware; and -- the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information. To the best of my knowledge: -- the financial statements, prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable laws), give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and -- the management report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces. The financial statements are published at www.octopusinvestments.com, a website maintained by Octopus Investments. The maintenance and integrity of the website is, so far as it relates to the Company, the responsibility of Octopus Investments. The work carried out by the auditor does not involve consideration of the maintenance and integrity of the website and, accordingly, the auditor accepts no responsibility for any changes that have occurred to the accounts since they were originally presented on the website. Visitors to the website need to be aware that legislation in the United Kingdom governing the preparation and dissemination of the accounts differ from legislation in other jurisdictions. 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. On behalf of the board James Otter Chairman 3 June 2013 Income Statement Year to 28 February 2013 Revenue Capital Total Notes GBP'000 GBP'000 GBP'000 Fixed asset investment holding gain 9 - 63 63 Investment income 2 1,448 - 1,448 Investment management fees 17 - - - Other expenses 3 (543) - (543) Return on ordinary activities before tax 905 63 968 Taxation on return on ordinary activities 5 (210) - (210) Return on ordinary activities after tax 695 63 758 Earnings per share - basic and diluted 6 1.3p 0.1p 1.4p -- The 'Total' column of this statement is the profit and loss account of the Company; the supplementary revenue return and capital return columns have been prepared under guidance published by the Association of Investment Companies -- All revenue and capital items in the above statement derive from continuing operations -- The Company has only one class of business and derives its income from investments made in shares and securities and from bank and money market funds The Company has no recognised gains or losses other than the results for the year as set out above. The accompanying notes are an integral part of the financial statements. Income Statement Year to 29 February 2012 Revenue Capital Total Notes GBP'000 GBP'000 GBP'000 Fixed asset investment gain on disposal - 603 603 Fixed asset investment holding loss - (32) (32) Investment income 2 914 - 914 Investment management fees 17 - - - Other expenses 3 (732) - (732) Return on ordinary activities before tax 182 571 753 Taxation on return on ordinary activities 5 (18) - (18) Return on ordinary activities after tax 164 571 735 Earnings per share - basic and diluted 6 0.3p 1.1p 1.4p -- The 'Total' column of this statement is the profit and loss account of the Company; the supplementary revenue return and capital return columns have been prepared under guidance published by the Association of Investment Companies -- All revenue and capital items in the above statement derive from continuing operations -- The Company has only one class of business and derives its income from investments made in shares and securities and from bank and money market funds The Company has no recognised gains or losses other than the results for the year as set out above. The accompanying notes are an integral part of the financial statements. Reconciliation of Movements in Shareholders' Funds Year to Year to 28 February 2013 29 February 2012 Shareholders' funds at start of year 49,919 49,765 Return on ordinary activities after tax 758 735 Shares bought back for cancellation - (59) Dividends paid (1,042) (522) Shareholders' funds at end of year 49,635 49,919 The accompanying notes are an integral part of the financial statements. Balance Sheet As at 28 February 2013 As at 29 February 2012 Notes GBP'000 GBP'000 GBP'000 GBP'000 Fixed asset investments* 9 48,538 32,705 Current assets: Debtors 10 726 508 Investments - money market funds* 11 5 10,580 Cash at bank 712 6,236 1,443 17,324 Creditors: amounts falling due within one year 12 (346) (110) Net current assets 1,097 17,214 Total assets less current liabilities 49,635 49,919 Called up equity share capital 13 521 521 Special distributable reserve 14 48,568 48,589 Capital redemption reserve 14 1 1 Capital reserve holding gains 14 268 205 Capital reserve gains on disposal 14 - 603 Revenue reserve 14 277 - Total shareholders' funds 49,635 49,919 Net asset value 7 95.2p 95.7p per share * Held at fair value through profit and loss The accompanying notes are an integral part of the financial statements. The statements were approved by the Directors and authorised for issue on 3 June 2013 and are signed on their behalf by: James Otter Chairman Company No: 06948448 Cash Flow Statement Year to 28 February Year to 29 February Notes 2013 2012 GBP'000 GBP'000 Net cash inflow/(outflow) from operating activities 923 (312) Taxation (210) (45) Financial investment Purchase of fixed asset investments 9 (17,807) (30,465) Sale of fixed asset investments 9 2,037 6,946 Management of liquid resources Purchase of current asset investments 11 (1,017) (16,319) Sale of current asset investments 11 11,592 40,777 Dividends paid 8 (1,042) (522) Financing: Issue of own shares - - Share issue expenses - - Purchase of own shares - (59) (Decrease)/increase in cash (5,524) 1 The accompanying notes are an integral part of the financial statements. Reconciliation of return before Taxation to Cash Flow from Operating Activities Year to 28 February 2013 Year to 29 February 2012 GBP'000 GBP'000 Return on ordinary activities before tax 968 753 Increase in debtors (218) (496) Increase in creditors 236 2 Holding (gain)/loss on fixed asset investments (63) 32 Gain on disposal of fixed asset investments - (603) Inflow/(outflow) from operating activities 923 (312) Reconciliation of Net Cash Flow to Movement in Net Funds Year to 28 February 2013 Year to 29 February 2012 GBP'000 GBP'000 (Decrease)/increase in cash at bank (5,524) 1 Movement in cash equivalent securities (10,575) (24,458) Opening net funds 16,816 41,273 Net funds at 28 February 717 16,816 Net Funds at 28 February comprised: As at 28 February 2013 As at 29 February 2012 GBP'000 GBP'000 Cash at bank 712 6,236 Money market funds 5 10,580 Net Funds at 28 February 717 16,816 Notes to the Financial Statements 1. Principal accounting policies The financial statements have been prepared under the historical cost convention, except for the measurement at fair value of certain financial instruments, and in accordance with UK Generally Accepted Accounting Practice (UK GAAP), and the Statement of Recommended Practice (SORP) 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (revised 2009). The principal accounting policies have remained unchanged from those set out in the Company's 2012 Annual Report and financial statements. A summary of the principal accounting policies is set out below. The Company presents its income statement in a three column format to give shareholders additional detail of the performance of the Company, split between items of a revenue or capital nature. The preparation of the financial statements requires Management to make judgements and estimates that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Estimates and assumptions mainly relate to the fair valuation of the fixed asset investments particularly unquoted investments. Estimates are based on historical experience and other assumptions that are considered reasonable under the circumstances. The estimates and the assumptions are under continuous review with particular attention paid to the carrying value of the investments. Capital valuation policies are those that are most important to the depiction of the Company's financial position and that require the application of subjective and complex judgements, often as a result of the need to make estimates about the effects of matters that are inherently uncertain and may change in subsequent periods. The critical accounting policies that are declared will not necessarily result in material changes to the financial statements in any given period but rather contain a potential for material change. The main accounting and valuation policies used by the Company are disclosed below. Whilst not all of the significant accounting policies require subjective or complex judgements, the Company considers that the following accounting policies should be considered critical. The Company has designated all fixed asset investments as being held at fair value through profit or loss; therefore all gains and losses arising from investments held are attributable to financial assets held at fair value through profit or loss. Accordingly, all interest income, fee income, expenses and investment gains and losses are attributable to assets designated as being at fair value through profit or loss. Investments are regularly reviewed to ensure that the fair values are appropriately stated. Unquoted investments are valued in accordance with current IPEVC valuation guidelines, although this does rely on subjective estimates such as appropriate sector earnings multiples, forecast results of investee companies, asset values of the subsidiary companies of investee companies and liquidity or marketability of the investments held. Although the Company believes that the assumptions concerning the business environment and estimates of future cash flows are appropriate, changes in estimates and assumptions could require changes in the stated values. This could lead to additional changes in fair value in the future. Fixed asset investments Purchases and sales of investments are recognised in the financial statements at the date of the transaction (trade date). These investments will be managed and their performance evaluated on a fair value basis in accordance with a documented investment strategy and information about them has to be provided internally on that basis to the Board. Accordingly, as permitted by FRS 26, the investments will be designated as fair value through profit or loss (FVTPL) on the basis that they qualify as a group of assets managed, and whose performance is evaluated, on a fair value basis in accordance with a documented investment strategy. The Company's investments are measured at subsequent reporting dates at fair value. In the case of unquoted investments, fair value is established by using measures of value such as the price of recent transactions, earnings multiples and net assets. This is consistent with IPEVC valuation guidelines. Gains and losses arising from changes in fair value of investments are recognised as part of the capital return within the income statement and allocated to the capital reserve - holding gains/(losses). Fixed returns on non-equity shares and debt securities which are held at fair value are computed using the effective interest rate, to distinguish between the interest income receivable (which is disclosed as interest income within the revenue column of the Income Statement) and other fair value movements arising on these instruments (which are disclosed as holding gains within the capital column of the Income Statement. In the preparation of the valuations of assets the Directors are required to make judgements and estimates that are reasonable and incorporate their knowledge of the performance of the investee companies. Investments deemed to be associates, due to the shareholding and level of influence exerted over the Company are measured at fair value using a consistent methodology to the rest of the Company's portfolio as permitted by FRS 9. Current asset investments Current asset investments comprise money market funds and are designated as FVTPL. Gains and losses arising from changes in the fair value of investments are recognised as part of the capital return within the Income Statement and allocated to the capital reserve - gains/(losses) on disposal. The current asset investments are all invested with the Company's cash manager and are readily convertible into cash at the option of the Company. The current asset investments are held for trading, are actively managed and the performance is evaluated in accordance with a documented investment strategy. Information about them has to be provided internally on that basis to the Board. Income Fixed returns on non-equity shares and debt securities are recognised on a time apportionment basis (including time amortisation of any premium or discount to redemption) so as to reflect the effective interest rate, provided there is no reasonable doubt that payment will be received in due course. Income from fixed interest securities and deposit interest is included on an effective interest rate basis. Investment income includes interest earned on bank balances and money market funds and includes income tax withheld at source. Dividend income is shown net of any related tax credit. Dividends receivable are brought into account when the Company's right to receive payment is established and there is no reasonable doubt that payment will be received. Fixed returns on debt and money market funds are recognised provided there is no reasonable doubt that payment will be received in due course. Expenses All expenses are accounted for on an accruals basis. Expenses are charged wholly to revenue with the exception of the investment management fee which, where applicable, is charged 25% to the revenue account and 75% to the capital reserve to reflect, in the Directors' opinion, the expected long-term split of returns in the form of income and capital gains respectively from the investment portfolio. The transaction costs incurred when purchasing or selling assets are written off to the income statement in the period that they occur. Revenue and capital The revenue column of the income statement includes all income and revenue expenses of the Company. The capital column includes gains and losses on disposal and holding gains and losses on investments. Gains and losses arising from changes in fair value of investments are recognised as part of the capital return within the income statement. Taxation Corporation tax payable is applied to profits chargeable to corporation tax, if any, at the current rate. The tax effect of different items of income/gain and expenditure/loss is allocated between capital and revenue return on the "marginal" basis as recommended in the SORP. Deferred tax is recognised on an undiscounted basis in respect of all timing differences that have originated but not reversed at the balance sheet date or where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less tax. This is with the exception that deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Cash and liquid resources Cash, for the purposes of the cash flow statement, comprises cash in hand and deposits repayable on demand, less overdrafts payable on demand. Liquid resources are current asset investments which are disposable without curtailing or disrupting the business and are either readily convertible into known amounts of cash at or close to their carrying values or traded in an active market. Liquid resources comprise term deposits of less than one year (other than cash), and investments in money market managed funds. Loans and receivables The Company's loans and receivables are initially recognised at fair value which is usually transaction cost and subsequently measured at amortised cost using the effective interest method. Financing strategy and capital structure FRS 29 'Financial Instruments: Disclosures' comprises disclosures' relating to financial instruments. Capital is defined as shareholders' funds and our financial strategy in the medium term is to manage a level of cash that balances the risks of the business with optimising the return on equity. The Company currently has no borrowings nor does it anticipate that it will drawdown any borrowing facilities in the future to fund the acquisition of investments. The Company does not have any externally imposed capital requirements. The value of the managed capital is indicated in note 15. The Board considers the distributable reserves and the total return for the year when recommending a dividend. In addition, the Board is authorised to make market purchases up to a maximum of 5% of the issued ordinary share capital of the Company in accordance with Special Resolution 8 in order to maintain sufficient liquidity in the VCT. Financial instruments The Company's principal financial assets are its investments and the policies in relation to those assets are set out above. Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the entity after deducting all of its financial liabilities. Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity. Capital management is monitored and controlled using the internal control procedures set out on page X of this report. The capital being managed includes equity and fixed-interest investments, cash balances and liquid resources including debtors and creditors. The Company does not have any externally imposed capital requirements. Dividends Dividends payable are recognised as distributions in the financial statements when the Company's liability to make payment has been established. This liability is established for interim dividend when they are approved by the Board and for final dividends when they are approved by the shareholders. 2. Income Year to 28 February 2013 Year to 29 February 2012 GBP'000 GBP'000 Interest receivable on bank balances 10 26 Money market securities - dividend income 11 99 Loan note interest receivable 1,427 789 1,448 914 3. Other expenses Year to Year to 28 29 February February 2013 2012 GBP'000 GBP'000 Directors' remuneration 50 50 Fees payable to the Company's auditor for the audit of the financial statements 15 13 Fees payable to the Company's auditor for other services - tax compliance 3 3 Trail commission 252 433 UK Listing fees 6 5 Other expenses 217 228 543 732 The total expense ratio for the Company (as set out in the prospectus) for the year to 28 February 2013 was 0.6% (2012: 0.6%). 4. Directors' remuneration Year to 28 Year ended 29 February National February National 2013 Insurance 2012 Insurance GBP'000 GBP'000 GBP'000 GBP'000 Directors' emoluments James Otter (Chairman) 20 2 20 2 Charles Breese 15 1 15 1 Chris Hulatt (paid to Octopus Investments Limited) - - 10 - Martijn Kleibergen (paid to Octopus Investments Limited) 15 - 5 - 50 3 50 3 None of the Directors received any other remuneration or benefit from the Company during the year. The Company has no employees other than non-executive Directors. The average number of non-executive Directors in the year was three (2012: three). 5. Tax on ordinary activities The corporation tax charge for the period was GBP210,000 (2012: GBP18,000). The current tax charge for the period differs from the standard rate of corporation tax in the UK of 23.47% (2012: 20.08%). The differences are explained below. Current tax Year ended 28 February Year ended 29 February reconciliation: 2013 2012 GBP'000 GBP'000 Return on ordinary activities before tax 968 753 Current tax at 23.47% (2012: 20.08%) 227 151 Adjustment to prior year tax charge - 2 Income not taxable for tax purposes (17) (135) Total current tax charge 210 18 The company has excess management charges of GBPnil (2012: GBPnil) to carry forward to offset against future taxable profits. 6. Earnings per share The revenue earnings per share is based on 52,145,218 (2012: 52,192,487) shares, being the weighted average number of shares in issue during the year, and on a revenue return after tax of GBP695,000 (2012: GBP164,000). The capital earnings per share is based on 52,145,218 (2012: 52,192,487) shares, being the weighted average number of shares in issue during the year, and on a capital return after tax of GBP63,000 (2012: GBP571,000). The total earnings per share is based on 52,145,218 (2012: 52,192,487) shares, being the weighted average number of shares in issue during the year, and on a total return after tax of GBP758,000 (2012: GBP735,000). There are no potentially dilutive capital instruments in issue and, as such, the basic and diluted earnings per share are therefore identical. 7. Net asset value per share The calculation of net asset value per share as at 28 February 2013 is based on net assets of GBP49,635,000 (2012: GBP49,919,000) and 52,145,218 (2012: 52,145,218) Ordinary shares in issue at that date. 8. Dividends 28 29 February February 2013 2012 GBP'000 GBP'000 Recognised as distributions in the financial statements for the year Previous year's final dividend 521 522 Current year's interim dividend 521 - 1,042 522 28 February 2013 29 February 2012 GBP'000 GBP'000 Paid and proposed in respect of the year Interim dividend paid 521 - Final dividend 1.0p per share (2012: 1.0p per share) 521 521 1,042 521 The final dividend of 1.0p per share for the year ended 28 February 2013, subject to shareholder approval at the Annual General Meeting, will be paid on 24 July 2013 to shareholders on the register on 28 June 2013. 9. Fixed asset investments at fair value through profit or loss Financial Reporting Standard 29 Financial Instruments: Disclosures regarding financial instruments that are measured in the balance sheet at fair value; this requires disclosure of fair value measurements by level of the following fair value measurement hierarchy: Level 1: quoted prices in active markets for identical assets and liabilities. The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available, and those prices represent actual and regularly occurring market transactions on an arm's length basis. The quoted market price used for financial assets held is the current bid price. These instruments are included in level 1 and comprise money market funds and AIM quoted investments classified as held at fair value through profit or loss. Level 2: the fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. The Company holds no such investment in the current or prior year. Level 3: the fair value of financial instruments that are not traded in an active market (for example investments in unquoted companies) is determined by using valuation techniques such as earnings multiples. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. There have been no transfers between these classifications in the year (2012: none). The change in fair value for the current and previous year is recognised through the profit and loss account. All items held at fair value through profit or loss were designated as such upon initial recognition. Movements in investments at fair value through profit or loss during the year to 28 February 2013 are summarised below. Fixed asset investments: Level 1: AIM-quoted Equity investments Level 3: Unquoted equity investments Level 3: Unquoted loan investments Total unquoted investments GBP'000 GBP'000 GBP'000 GBP'000 Valuation and net book amount: Book cost at 1 March 2012 378 15,745 16,377 32,500 Cumulative revaluation 205 - - 205 Valuation at 1 March 2012 583 15,745 16,377 32,705 Movement in the year: Purchases at cost - 13,350 4,457 17,807 Proceeds from the sale of investments - (1,005) (1,032) (2,037) Change in fair value in year 82 (19) - 63 Closing fair value at 28 February 2013 665 28,071 19,802 48,538 Closing cost at 28 February 2013: 378 28,090 19,802 48,270 Closing holding loss at 28 February 2013: 287 (19) - 268 Valuation at 28 February 2013 665 28,071 19,802 48,538 Level 3 valuations include assumptions based on non-observable market data, such as discounts applied either to reflect impairment of financial assets held at the price of recent investment, or to adjust earnings multiples. The sensitivity of these valuations to a reasonable possible change in such assumptions is given in note 15. The loan and equity investments are considered to be one instrument due to the legal binding within the investment agreement. Further details of the fixed asset investments held by the Company are shown within the Investment Manager's Review on pages X to X. 10. Debtors As at 28 February 2013 As at 29 February 2012 GBP'000 GBP'000 Prepayments and accrued income 726 508 11. Current Asset Investments Current asset investments at 28 February 2013 comprised money market funds (29 February 2012: money market funds). As at 28 February 2013 As at 29 February 2012 GBP'000 GBP'000 Money market funds 5 10,580 5 10,580 All current asset investments held at the year end sit with the level 1 hierarchy for the purposes of FRS 29. Level 1 money market funds: Level 1 valuations are based on quoted prices (unadjusted) in active markets for identical assets or liabilities. At 28 February 2013 and 29 February 2012 there were no commitments in respect of investments approved by the Manager but not yet completed. 12. Creditors: amounts falling due within one year As at 28 February 2013 As at 29 February 2012 GBP'000 GBP'000 Corporation tax 210 16 Accruals 136 94 346 110 13. Share capital As at 28 February 2013 As at 29 February 2012 GBP'000 GBP'000 Authorised: 100,000,000 Ordinary shares of 1.00p 1,000 1,000 Allotted and fully paid up: 52,145,218 Ordinary shares of 1.00p (2012: 52,145,218) 521 521 The capital of the Company is managed in accordance with its investment policy with a view to the achievement of its investment objective as set on page X. The Company is not subject to any externally imposed capital requirements, other than those imposed by company law. During the year the Company did not issue any shares (2012: nil). During the year the Company did not repurchase any shares for cancellation (2012: 69,569 at a price of 84.4p) The total nominal value of the shares repurchased was GBPnil (2012: GBP695.69) representing 0.00% (2012: 0.13%) of the issued share capital. 14. Reserves *Reserves available for potential dividend The purpose of the special distributable reserve was to create a reserve which will be capable of being used by the Company to pay dividends and for the purpose of making repurchases of its own shares in the market with a view to narrowing the discount to net asset value at which the Company's Ordinary shares trade. In the event that the revenue reserve and capital reserve gains/(losses) on disposal do not have sufficient funds to pay dividends, these will be paid from the special distributable reserve. All fixed asset investments are designated as fair value through profit or loss at the time of acquisition, and all capital gains or losses on investments so designated. Given the nature of the Company's venture capital investments, the changes in fair value of such investments recognised in these financial statements are not considered to be readily convertible to cash in full at the balance sheet date and accordingly these gains are treated as holding gains or losses unrealised. When the Company revalues the investments still held during the period, any gains or losses arising are credited/ charged to the Capital reserve - holding gains/(losses). When an investment is sold any balance held on the Capital reserve - holding gains & losses is transferred to the Capital reserve - gains/(losses) on disposal as a movement in reserves. At 28 February 2013 there were no commitments in respect of investments approved by the Investment Manager but not yet completed. Reserves available for potential distribution by way of a dividend are: GBP'000 As at 1 March 2012 49,192 Movement in year (347) As at 28 February 2013 48,845 15. Financial instruments and risk management The Company's financial instruments comprise equity, investments, unquoted loans, cash balances and liquid resources including debtors and creditors. The Company holds financial assets in accordance with its investment policy of investing mainly in a portfolio of VCT qualifying unquoted securities whilst holding a proportion of its assets in cash or near-cash investments in order to provide a reserve of liquidity. Classification of financial instruments Octopus VCT plc held the following categories of financial instruments, all of which are included in the balance sheet at fair value, at 28 February 2013: 28 February 2013 29 February 2012 GBP'000 GBP'000 Assets at fair value through profit or loss Investments 48,538 32,705 Current asset investments 5 10,580 Total 48,543 43,285 Loans and receivables Cash at bank 712 6,236 Accrued income 719 499 Total 1,431 6,735 Liabilities at amortised cost Accruals and other creditors 346 110 Total 346 110 Fixed asset investments (see note 9) are valued at fair value. Unquoted investments are carried at fair value as determined by the Directors in accordance with current venture capital industry guidelines. The fair value of all other financial assets and liabilities is represented by their carrying value in the balance sheet. The Directors believe that the fair value of the assets held at the period-end is equal to their book value. In carrying on its investment activities, the Company is exposed to various types of risk associated with the financial instruments and markets in which it invests. The most significant types of financial risk facing the Company are price risk, interest rate risk, credit risk and liquidity risk. The Company's approach to managing these risks is set out below together with a description of the nature and amount of the financial instruments held at the balance sheet date. Market risk The Company's strategy for managing investment risk is determined with regard to the Company's investment objective, as outlined on page X. The management of market risk is part of the investment management process and is a central feature of venture capital investment. The Company's portfolio is managed in accordance with the policies and procedures described in the Directors' Report on pages X to X, having regard to the possible effects of adverse price movements, with the objective of maximising overall returns to shareholders. Investments in smaller companies, by their nature, usually involve a higher degree of risk than investments in larger companies quoted on a recognised stock exchange, though the risk can be mitigated to a certain extent by diversifying the portfolio across business sectors and asset classes. The overall disposition of the Company's assets is regularly monitored by the Board. Details of the Company's investment portfolio at the balance sheet date are set out on page X. 97.8% (29 February 2012: 64.3%) by value of the Company's net assets comprises investments in unquoted companies held at fair value. The valuation methods used by the Company include the application of a price/earnings ratio derived from listed companies with similar characteristics, and consequently the value of the unquoted element of the portfolio can be indirectly affected by price movements on the London Stock Exchange. A 10% overall increase in the valuation of the unquoted investments at 28 February 2013 would have increased net assets and the total profit for the year by GBP4,787,300 (29 February 2012: GBP3,212,100) an equivalent change in the opposite direction would have reduced net assets and the total profit for the year by the same amount. The Investment Manager considers that, as a number of the investment valuations are based on earnings multiples which are ascertained with reference to the individual sector multiple or similarly listed entities, it is considered that due to the diversity of the sectors, the 10% sensitivity discussed above provides the most meaningful potential impact of average multiple changes across the portfolio. Interest rate risk At the year end, some of the Company's financial assets are interest-bearing, some of which are at variable rates. As a result, the Company is exposed to fair value interest rate risk due to fluctuations in the prevailing levels of market interest rates. Fixed rate The table below summarises weighted average effective interest rates for the fixed interest-bearing financial instruments: As at 28 February 2013 As at 29 February 2012 Weighted Weighted average average time for time for Weighted which Weighted which average rate is average rate is Total fixed rate portfolio by interest fixed in Total fixed rate portfolio by interest fixed in value GBP'000 rate % years value GBP'000 rate % years Unquoted fixed-interest investments 19,802 10.0% 3 11,369 8.0% 3 Floating rate The Company's floating rate investments comprise cash held on interest-bearing deposit accounts and, where appropriate, within interest bearing money market funds. The benchmark rate which determines the rate of interest receivable on such investments is the bank base rate, which was 0.5% at 28 February 2013 (29 February 2012: 0.5%). The amounts held in floating rate investments at the balance sheet date were as follows: 28 February 2013 29 February 2012 GBP'000 GBP'000 Cash on deposit & money market funds 717 16,816 A 1% increase in the base rate would increase income receivable from these investments and the total return by GBP7,170 (2012: GBP168,160) on an annualised basis. Credit risk Credit risk is the risk that counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The Investment Manager and the Board carry out a regular review of counterparty risk. The carrying values of financial assets represent the maximum credit risk exposure at the balance sheet date. At 28 February 2013 the Company's financial assets exposed to credit risk comprised the following: 28 February 2013 29 February 2012 GBP000 GBP000 Cash on deposit 712 6,236 Investments in fixed rate investments 19,002 11,369 Money market funds 5 10,580 Accrued dividends and interest receivable 719 499 20,438 28,684 Credit risk relating to listed money market funds is mitigated by investing in a portfolio of investment instruments of high credit quality, comprising securities issued by the UK Government and major UK institutions. Credit risk relating to loans to and preference shares in unquoted companies is considered to be part of market risk. Credit risk arising on the sale of investments is considered to be small due to the short settlement and the contracted agreements in place with the settlement lawyers. The Company's interest-bearing deposit and current accounts are maintained with HSBC Bank plc and the Cooperative bank. The Investment Manager has in place a monitoring procedure in respect of counterparty risk which is reviewed on an ongoing basis. Should the credit quality or the financial position of either entity deteriorate significantly the Investment Manager will move the cash holdings to another bank. Other than cash or liquid money market funds, there were no significant concentrations of credit risk to counterparties at 28 February 2013 or 29 February 2012. Liquidity risk The Company's listed money market funds are considered to be readily realisable as they are of high credit quality as outlined above. The Company's liquidity risk is managed on a continuing basis by the Investment Manager in accordance with policies and procedures laid down by the Board. The Company's overall liquidity risks are monitored on a quarterly basis by the Board. The Company aims to maintain sufficient investments in cash and readily realisable securities at any time to pay accounts payable and accrued expenses as they fall due. At 28 February 2013 these investments were valued at GBP717,000 (2012: GBP16,816,000). 16. Post balance sheet events No significant events occurred between the balance sheet date and the signing of these financial statements. 17. Contingencies, guarantees and financial commitments Under the terms of the Investment Management agreement, Octopus is entitled to an annual management fee of 2.0% of net assets. However, the annual management fee will be rolled up (without interest) and will only be paid to Octopus once shareholders have received dividends and distributions during the life of the Company totalling or exceeding 105p per share. Octopus will only be entitled to receive an annual management fee for the period from the date on which shares are first allotted under the Offer until the date on which the general meeting is held (expected to be in August 2015) at which shareholders will be asked to approve a motion regarding the future of the company. In view of the early stage of the investment process, the Directors do not currently believe there is sufficient certainty that any management fee will be paid, and have therefore made no accrual in respect of any fee potentially payable. In relation to management fees, there was a contingent liability of GBP2,950,000 as at 28 February 2013 (2012: GBP1,950,000). Provided that an intermediary continues to act for a shareholder and the shareholder continues to be the beneficial owner of the shares, intermediaries will be paid an annual trail commission up to 0.5% of the initial net asset value. Trail commission of GBP252,000 was paid during the year (2012: GBP433,000) and there was GBP21,000 (2012: GBPnil) outstanding at the year end. There were no further contingencies, guarantees or financial commitments as at 28 February 2013 (2012: none). 18. Transactions with manager Octopus VCT plc has employed Octopus throughout the year as the investment Manager. Octopus provides investment management and administration & accounting services to the Company under a management agreement which runs for a period of five years with effect from 16 September 2009 and may be terminated at any time thereafter by not less than twelve months' notice given by either party. No compensation is payable in the event of terminating the agreement by either party if the required notice period is given. The fee payable, should insufficient notice be given, will be equal to the fee that would have been paid should continuous service be provided, or the required notice period was given. The administration and accounting fee is payable quarterly in arrears for a fee of 0.3% of the NAV calculated at annual intervals as at 28 February. During the year GBP149,000 (2012: GBP149,000) was paid to Octopus Investments and there was GBP37,000 outstanding at the balance sheet date (2012: GBPnil), for the accounting and administrative services. Octopus VCT plc has paid Octopus GBPnil in the year as a management fee and there is GBPnil outstanding at the balance sheet date. Octopus is entitled to an annual management fee of 2.0% of net assets. In order to ensure the alignment of interests between Octopus and shareholders, the annual management fee will be rolled up (without interest) and will only be paid to Octopus once shareholders have received dividends during the life of the Company and distributions totaling or exceeding 105p per share. Octopus will only be entitled to receive an annual management fee for the period from the date on which shares are first allotted under the Offer until the date on which the general meeting is held (expected to be in August 2015) at which shareholders will be asked to approve a motion regarding the future of the Company. In relation to management fees, there was a contingent liability of GBP2,950,000 as at 28 February 2013 (2012: GBP1,950,000). Octopus also provides secretarial services for an additional fee of GBP15,000 per annum. During the year GBP15,000 (2012: GBP15,000) was due to Octopus Investments Limited and there was GBP4,000 (2012: GBPnil) outstanding at the balance sheet date. Octopus will also be entitled to receive a performance related incentive fee of 20% on returns to shareholders in excess of 105p per share. The calculation of this fee is based wholly on the payment of cash proceeds to shareholders and will, therefore, not be paid until after the general meeting in 2015. No contingent liability has been recognised on the basis that the Board believe there is insufficient certainty that a fee will be payable and that no reliable measurement can be made. 19. Related party transactions Martijn Kleibergen, a non-executive director of Octopus VCT plc, is also an employee of Octopus Investments Limited. Martijn Kleibergen's Director's fee is payable to Octopus Investments Limited. Further details of Director's remuneration can be found in the Directors' remuneration report on page X. During the year to 28 February 2013, the Directors received the following dividends from the Company: Dividend received James Otter (Chairman) GBP106 Charles Breese GBP106 This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Octopus VCT PLC via Thomson Reuters ONE HUG#1706716
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