TIDMOIAA
Octopus IHT AIM VCT plc
Half-Yearly Results
28 July 2010
Octopus IHT AIM VCT plc, managed by Octopus Investments Limited, today announces
the Half-Yearly results for the six months ended 31 May 2010.
These results were approved by the Board of Directors on 27 July 2010.
You will shortly be able to view the Half-Yearly Report in full at
www.octopusinvestments.com by navigating to Services, Investor Services, Venture
Capital Trusts, Octopus IHT AIM VCT. All other statutory information will also
be found there.
About Octopus IHT AIM VCT PLC
Octopus IHT AIM VCT PLC (the "Company" or "Fund") is a venture capital trust
("VCT") which aims to provide shareholders with attractive tax-free dividends
and long-term capital growth.
The Investment Manager is Octopus Investments Limited ("Octopus" or "Manager").
The Company was launched as Close IHT AIM VCT PLC in March 2006 and raised GBP25
million through an offer for subscription.
Financial Summary
Six months to Six months to Year to
31 May 2010 31 May 2009 30 November 2009
Net assets ( GBP'000s) 10,043 16,726 10,783
Net profit/(loss) after tax
( GBP'000s) (538) 1,266 1,484
Net asset value per share ("NAV") 65.1p 68.4p 69.5p
Dividend per share - paid in period 1.0p 1.0p 2.0p
Cumulative dividends paid since
launch 8.4p 6.4p 7.4p
The table below lists the dividends that have been paid since the launch of the
Company and adds the cumulative total of dividends paid to the NAV of the
Company:
A shares pence per share
Total dividends paid during the period to 30 November
2006* 1.4p
Total dividends paid during the period to 31 May 2007 1.0p
Total dividends paid during the period to 30 November
2007 1.0p
Total dividends paid during the period to 31 May 2008 1.0p
Total dividends paid during the period to 30 November
2008 1.0p
Total dividends paid during the period to 31 May 2009 1.0p
Total dividends paid during the period to 30 November
2009 1.0p
Total dividends paid during the period to 31 May 2010 1.0p
=-------------------------------------------------------------------------------
Total dividends 8.4p
NAV at 31 May 2010 65.1p
=-------------------------------------------------------------------------------
NAV plus cumulative dividends paid as at 31 May 2010 73.5p
* Investors subscribing by 17 January 2006 were entitled to this dividend.
Investors subscribing thereafter were not entitled to this first dividend.
Chairman's Statement
Overview
The six month period to 31 May 2010 has been a frustrating one for your
Company. In the annual report I commented on the recovery in share prices from
their lows in the middle of 2009 and expressed a hope that now that the news
coming out of investee companies had improved, further growth in the NAV of your
Company could be achieved. Yet despite clear signs that earnings have bottomed
and that upgrades are now exceeding downgrades by a considerable margin,
appetite for smaller company shares has still not returned, and the NAV has
remained depressed, with shareholders still waiting for their patience to be
rewarded.
On a more encouraging note, there are signs that new issues are beginning to
reappear now that the general election is out of the way, although the two
investments made in the period were in existing AIM companies, there is a
continuing source of deal-flow as the banks are still unwilling to lend. There
is also increasing evidence of corporate takeover activity, suggesting that
companies feel that profits have now bottomed, making takeover activity less
risky, as well as supporting our view that there is value in current share
prices.
Performance
Over the six months to 31 May 2010, adding back the 1p dividend paid in the
period, the NAV decreased by 4.9%. In comparison, the FTSE Small Cap Index ex
investment trusts decreased by 2.7% and the FTSE AIM All-Share Index increased
by 5.0%. The performance of AIM was flattered by its high resource stock
weighting, but it is nevertheless disappointing that smaller company share
prices have been sluggish and that this has affected the performance of the NAV
in the period.
The changes in the portfolio over the period and since the period end have
mostly come about as a result of bid activity, which has been gathering momentum
as value among smaller companies has deepened. Research Now was bid for in
December, and more recently Melorio and Innovision have been the subject of cash
offers. Telephonetics has been bid for by Netcall, and the Fund has subscribed
for new qualifying Netcall shares to reinvest some of the cash being paid to
shareholders as part of the takeover deal. News from existing investee companies
has been mostly positive, with continued upgrades for Vertu Motors, which has
now acquired a Scottish operation and still trades at a substantial discount to
its net asset value, reflecting caution about consumer exposure. Animalcare has
also been trading ahead of expectations, reflecting the strength of its
veterinary drugs division and we have taken some profits to reduce the overall
size of the holding. Profits have also been taken in Advanced Computer Software,
Brulines and Pressure Technologies. The latter is suffering from a lack of
orders from oil exploration companies, but has a strong balance sheet with net
cash.
Three new investments totalling GBP524,000 were made in the period. Two are VCT
qualifying, Snacktime, a vending machine operator in commercial premises, and
Access Intelligence, a small software company specialising in compliance
software for the food manufacturing and financial sectors. The third
investment, RWS Holdings, is a non qualifying holding in a specialist patent
translation business. Since the period end the Fund has made two further
investments in Netcall, a call centre software provider which is merging with
Telephonetics and a new investment in EKF Diagnostics, a European manufacturer
and distributor of point of care diagnostics devices.
Proposed Merger with Octopus Second AIM VCT
A circular was posted to all shareholders in July outlining a proposal to merge
the Company and Octopus Second AIM VCT so as to create a single, larger VCT. In
addition, the Company is proposing to raise up to GBP10m by way of an offer to
provide funds for new investments at what the Directors believe is an
advantageous point in the investment cycle. This merger is being carried out
under section 110 of the Insolvency Act 1986, which means that Octopus Second
AIM VCT will eventually be wound up. In the meantime this VCT takes on both the
assets and liabilities of Second AIM VCT in return for issuing shares to former
Second AIM VCT shareholders. Importantly, it also means that the merger will be
conducted outside the provisions of The City Code on Takeovers and Mergers.
Whilst writing I thought that I might reiterate a few points from the circular.
The board has taken the opportunity to tidy up the name of the shares so that
the single class of shares will be known as Ordinary shares. In addition I am
sure that you have read that this VCT will change its name as the board think
that reference to IHT in the present name is no longer relevant, and indeed
unhelpful, now that the Distribution in Specie was completed over a year ago.
All this means that you will receive a new share certificate in due course. If
you hold your shares in CREST, then your holding will be automatically updated.
Dividend Policy
It is your Board's policy to strive to maintain a regular dividend flow where
possible and this primarily relies on the level of profitable realisations and
available cash reserves. Following the merger, the Board intends to continue the
policy of making regular dividend distributions to shareholders from the income
and capital gains generated by the portfolio and will have an objective of
paying annual dividends of 5% of the average share price in each financial
period. The Board will make a decision about a dividend following the merger.
Strategy
The Board's strategy is to maintain an appropriate level of liquidity in the
balance sheet to achieve four aims:
· to take advantage of new investment opportunities as they arise;
· to support further investment in existing portfolio companies if
required;
· to assist liquidity in the shares through the buy-back facility; and
· to support a consistent dividend flow.
Principal Risks and Uncertainties
The principal risks and uncertainties are set out in note 8 of the Notes to the
Half-Yearly Report on page ?.
Outlook
After the initial bounce in equities on relief that the whole financial system
did not implode in 2009, the tone of the market has become much more cautious in
recent months. Attention has focused on sovereign debt levels and the possible
waning strength of the US recovery and the Chinese economy at an international
level, and in the UK, on the severity of Government spending cuts. Against this
background, smaller companies, which are perceived as higher risk, have fallen
out of favour again, and they are now trading at discounts to larger company
shares. This is at odds with the news flow which is coming from small
companies. Upgrades to profit expectations are far exceeding downgrades and the
emergence of bidders for companies points to increased confidence that the worst
is past, as well as the value available. Banks are still unwilling to lend and
this is expected to lead to opportunities to make investments at attractive
valuations in the coming months, and regain the lost ground of the past two
years.
Keith Richard Mullins
Chairman
27 July 2010
Investment Portfolio
%
Change in % Equity
Cost of Unrealised Valuation valuation Equity held by
Investments Sector investment profit/ as at 31 in the held by all
as at 31 (loss) May 2010 period Octopus funds
May 2010 ( GBP'000) ( GBP'000) ( GBP'000) IHT AIM managed
VCT by
Octopus
=------------------------------------------------------------------------------------------
Animalcare Pharmaceutical &
Group plc Healthcare 241 239 480 79 2.2% 9.1%
Advanced Software &
Computer Computer Services
Software plc 270 207 477 (55) 0.4% 2.3%
IS Pharma plc Pharmaceuticals &
Biotechnology 505 (46) 459 (134) 2.1% 7.4%
Melorio plc Support Services 201 247 448 187 0.5% 3.2%
Craneware plc Software &
Computer Services 121 249 370 63 0.4% 1.5%
Chime Media
Communications
plc 440 (102) 338 (36) 0.2% 0.5%
Brulines plc Support Services 365 (29) 336 (59) 1.0% 4.6%
Managed Maintenance
Support Contractor
Services plc 367 (57) 310 (24) 2.8% 11.3%
Vertu Motors General Retaillers
plc 502 (226) 276 (33) 0.4% 3.5%
Pressure Industrial
Technologies Engineering
plc 208 53 261 (58) 1.2% 8.2%
Preaespe plc Media 367 (110) 257 (37) 1.0% 4.7%
Mount Industrial
Engineering Engineering
plc 360 (103) 257 (5) 2.2% 8.1%
Clarity Software &
Commerce Computer Services
Solutions plc 310 (62) 248 (23) 2.0% 8.6%
Hasgrove plc Media 436 (194) 242 34 2.0% 11.5%
Idox plc Software &
Computer Services 158 68 226 (5) 0.6% 3.0%
Tasty plc Travel & Leisure 334 (111) 223 (89) 2.9% 4.4%
Bond Intl Software &
Software plc Computer Services 244 (24) 220 (24) 0.9% 3.9%
Colliers CRE Real Estate
plc Services 195 10 205 10 0.7% 3.2%
CBG Group plc Financial Services 637 (435) 202 (64) 3.4% 17.1%
Access Software &
Intelligence Computer Services
plc 230 (35) 195 (35) 1.8% 9.5%
SnackTime plc Restaurants & Food 190 (21) 169 (21) 1.0% 11.0%
Lombard Pharmaceutical &
Medical Healthcare
Technologies
plc 384 (240) 144 (23) 0.7% 2.3%
Omega Healthcare
Diagnostics Equipment &
plc Services 101 25 126 (46) 2.4% 17.9%
Innovision Events Specialists
Research &
Technology plc 120 - 120 (20) 0.7% 7.0%
Twenty plc Media 501 (395) 106 63 4.5% 15.2%
Plastics Manufacturing
Capital plc 357 (257) 100 (46) 1.3% 17.6%
RWS Holdings Translation
plc services 104 (4) 100 (4) 0.1% 3.8%
Telephonetics Telecommunications
plc 305 (206) 99 8 1.4% 7.2%
Optare plc Manufacturing 568 (473) 95 (19) 0.7% 2.1%
Work Group plc Support Services 473 (397) 76 12 2.1% 6.2%
Adept Telecom Telecommunications
plc 501 (430) 71 (7) 1.7% 4.4%
Jelf Group plc Financial Services 122 (80) 42 (3) 0.1% 0.6%
Clerkenwell
Ventures plc Restaurants & Food 63 (30) 33 8 0.0% 0.0%
Individual
Restaurant
Company plc Restaurants & Food 146 (128) 18 (1) 0.2% 1.1%
Hexagon Human Support Services
Capital plc 422 (422) - (56) 1.2% 13.7%
FishWorks plc Restaurants & Food 184 (184) - - 2.7% 6.8%
=------------------------------------------------------------------------------------------
AIM-quoted
investments 11,032 (3,703) 7,329 (463)
Money Market
Funds 2,659 - 2,659 -
=------------------------------------------------------------------------------------------
Total
Investments 13,691 (3,703) 9,988
Cash at Bank 91
Debtors less
creditors (36)
=------------------------------------------------------------------------------------------
Total Assets 10,043
Responsibility Statement of the Directors in respect of the half-yearly report
We confirm that to the best of our knowledge:
· the half-yearly financial statements have been prepared in
accordance with the statement "Half-Yearly Financial Reports" issued by the UK
Accounting Standards Board;
· the half-yearly report includes a fair review of the information
required by the Financial Services Authority Disclosure and Transparency Rules,
being:
o an indication of the important events that have occurred during the
first six months of the financial year and their impact on the condensed set of
financial statements;
o a description of the principal risks and uncertainties for the remaining
six months of the year; and
o a description of related party transactions that have taken place in the
first six months of the current financial year, that may have materially
affected the financial position or performance of the Company during that period
and any changes in the related party transactions described in the last annual
report that could do so.
On behalf of the Board
Keith Richard Mullins
Chairman
27 July 2010
Income Statement
+----------------------+
| Six months to 31 May |Six months to 31 May Year to 30 November
| 2010 | 2009 2009
| |
|Revenue Capital Total| Revenue Capital Total Revenue Capital Total
| |
| GBP'000 GBP'000 GBP'000| GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
| |
| |
| |
Gain on | |
disposal of | |
fixed asset | |
investments | - 69 69| - 215 215 - 903 903
| |
Gain on | |
disposal of | |
current asset| |
investments | - 10 10| - 21 21 - 68 68
| |
| |
| |
(Loss)/gain | |
on valuation | |
of fixed | |
asset | |
investments | - (463) (463)| - 1,162 1,162 - 642 642
| |
Gain/(loss) | |
on valuation | |
of current | |
asset | |
investments | - - -| - 94 94 - 111 111
| |
| |
| |
Income | 41 - 41| 95 - 95 195 - 195
| |
| |
| |
Investment | |
management | |
fees | (27) (80) (107)| (40) (119) (159) (65) (196) (261)
| |
VAT | |
management | |
fee rebate | - - -| - - - 12 37 49
| |
| |
| |
Other | |
expenses | (88) - (88)| (162) - (162) (218) - (218)
| |
| |
| |
(Loss)/profit| |
on ordinary | |
activities | |
before tax | (74) (464) (538)| (107) 1,373 1,266 (76) 1,565 1,489
| |
| |
| |
Taxation on | |
(loss)/profit| |
on ordinary | |
activities | - - -| - - - (5) - (5)
| |
| |
| |
(Loss)/profit| |
on ordinary | |
activities | |
after tax | (74) (464) (538)| (107) 1,373 1,266 (81) 1,565 1,484
| |
Return per | |
share - basic| |
and diluted | (0.5)p (3.0)p (3.5)p| (0.4)p 5.6p 5.1p (0.4)p 7.8p 7.4p
+----------------------+
· 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 accompanying notes are an integral part of the half-yearly
report
· The Company has no recognised gains or losses other than those
disclosed in the income statement.
Reconciliation of Movements in Shareholders' Funds
+-----------------+
|Six months to 31 |Six months to 31 Year to 30 November
| May 2010| May 2009 2009
| |
| GBP'000| GBP'000 GBP'000
| |
Shareholders' funds at | |
start of period | 10,783| 16,049 16,049
| |
Profit/(loss) on | |
ordinary activities | |
after tax | (538)| 1,266 1,484
| |
Distribution in Specie | -| - (5,644)
| |
Purchase of own shares | (49)| (343) (703)
| |
Dividends paid | (153)| (246) (403
| |
Shareholders' funds at | |
end of period | 10,043| 16,726 10,783
+-----------------+
Balance Sheet
+---------------+
| As at 31 May | As at 31 May As at 30 November
| 2010 | 2009 2009
| |
| GBP'000 GBP'000| GBP'000 GBP'000 GBP'000 GBP'000
| |
| |
| |
Fixed asset investments | 7,329| 12,748 8,632
| |
Current assets: | |
| |
Money market securities | 2,659 | 3,725 1,838
| |
Debtors | 9 | 297 249
| |
Cash at bank | 91 | 97 186
| |
| 2,759 | 4,119 2,273
| |
Creditors: amounts falling | |
due within one year | (45) | (141) (122)
| |
Net current assets | 2,714| 3,978 2,151
| |
| |
| |
Net assets | 10,043| 16,726 10,783
| |
| |
| |
Called up equity share | |
capital | 2 | 2 2
| |
Special distributable | |
reserve |14,313 | 23,300 14, 364
| |
Capital redemption reserve | - | - -
| |
Own shares held in treasury| (467) | (110) (467)
| |
Capital reserve - Realised | (32) |(1,834) (305)
| |
- Unrealised |(3704) |(4,613) (2,814)
| |
Revenue reserve | (69) | (19) 3
| |
Total equity shareholders' | |
funds | 10,043| 16,726 10,783
| |
Net asset value per share | 65.1p| 68.4p 69.5p
+---------------+
Cash Flow Statement
+----------------+
| Six months to| Six months to Year to 30
| 31 May 2010| 31 May 2009 November 2009
| |
| GBP'000| GBP'000 GBP'000
| |
| |
| |
Net Cash (outflow)/inflow | |
from operating activities | 9| (149) (125)
| |
| |
| |
Taxation: UK Corporation tax| |
paid | -| - (9)
| |
| |
| |
Financial investment | |
| |
Purchase of fixed asset | |
investments | (530)| (1,796) (2,865)
| |
Disposal of fixed asset | |
investments | 1,438| 2,544 1,846
| |
| |
| |
Management of liquid | |
resources | |
| |
Purchase of current asset | |
investments | (3,103)| (340) (2,340)
| |
Disposal of current asset | |
investments | 2,293| - 4,607
| |
| |
| |
Equity dividends paid | |
| |
Dividends paid | (153)| (246) (403)
| |
Distribution in Specie | -| - (249)
| |
| |
| |
Financing | |
| |
Purchase of own shares | (49)| (343) (703)
| |
| |
=---------------------------+----------------+----------------------------------
(Decrease)/increase in cash | |
at bank | (95)| (330) (241)
+----------------+
Reconciliation of Net Cash Flow to Movement in Net Cash Resources
+---------------+
| Six months to| Six months to Year to 30
| 31 May 2010| 31 May 2009 November 2009
| |
| GBP'000| GBP'000 GBP'000
| |
(Decrease)/increase in cash | |
at bank | (95)| (330) (241)
| |
Decrease in cash equivalents | 821| (1,324) (3,211)
| |
Opening net cash resources | 2,024| 5,476 5,476
| |
Net cash resources at end of | |
period | 2,750| 3,822 2,024
+---------------+
Reconciliation of Operating Profit before Taxation to Cash Flow from Operating
Activities
+---------------+
| | Six months
| Six months to| to 31 May
| 31 May 2010| 2009 Year to 30 November 2009
| |
| GBP'000| GBP'000 GBP'000
| |
(Loss)/ gain on | |
ordinary activities | |
before tax | (538)| 1,266 1,330
| |
Gain on disposal of| |
fixed asset investments| (69)| (215) (1,565)
| |
Gain on disposal of| |
current asset| |
investments | (10)| (21) -
| |
Loss/(gain) on | |
valuation of fixed | |
asset investments | 463| (1,162) -
| |
Gain on valuation of | |
current asset | |
investments | -| (94) -
| |
Decrease/(Increase) in | |
debtors | 240| (4) 44
| |
(Decrease)/increase in | |
creditors | (77)| 81 66
| |
Net cash | |
inflow/(outflow) from | |
operating activities | 9| (149) (125)
+---------------+
Notes to the Half-Yearly Report
1. Basis of preparation
The unaudited half-yearly results which cover the six months to 31 May 2010 have
been prepared in accordance with the Accounting Standard Board's (ASB) statement
on half-yearly financial reports (July 2007) and adopting the accounting
policies set out in the statutory accounts of the Company for the year ended 30
November 2009, which were prepared under UK GAAP and in accordance with the
Statement of Recommended Practice for Investment Companies issued by the
Association of Investment Companies in January 2010.
2. Publication of non-statutory accounts
The unaudited half-yearly results for the six months ended 31 May 2010 do not
constitute statutory accounts within the meaning of Section 240 of the Companies
Act 1985 and have not been delivered to the Registrar of Companies. The
comparative figures for the year ended 30 November 2009 have been extracted from
the audited financial statements for that year, which have been delivered to the
Registrar of Companies. The independent auditor's report on those financial
statements under Section 235 of the Companies Act 1985 was unqualified. This
half-yearly report has not been reviewed by the Company's auditor.
3. Earnings per share
The earnings per share at 31 May 2010 are calculated on the basis of 15,382,920
(30 November 2009: 20,051,665 and 31 May 2009: 24,637,783) being the weighted
average number of A (& B) Ordinary shares, in issue during the period.
There are no potentially dilutive capital instruments in issue and, therefore,
no diluted returns per share figures are relevant.
4. Net asset value per share
The net asset value per share is based on net assets as at 31 May 2010 divided
by 15,426,098 A (30 November 2009: 15,508,642 A and 31 May 2009: 24,233,398 A &
B) Ordinary shares in issue at that date.
5. Dividends
Following the merger, the Board intends to continue the policy of making regular
dividend distributions to shareholders from the income and capital gains
generated by the portfolio and will have an objective of paying annual dividends
of 5% of the average share price in each financial period.
A final dividend, for the year ending 30 November 2009, of 1 pence per A
Ordinary share was paid on 7 May 2010 to shareholders who were on the register
on 16 April 2010.
6. Buybacks
During the six months ended 31 May 2010 the Company repurchased the following
shares:
· 65,125 A Ordinary shares to be held in Treasury, at a price of 61.0p
· 17,419 A Ordinary shares to be cancelled, at a price of 59.5p
On 25 May 2010 the 840,019 A Ordinary shares held in Treasury were cancelled.
No shares were issued during the period.
8. Principal risks and uncertainties
The Company's assets consist of equity and floating-rate interest investments,
cash and liquid resources. Its principal risks are therefore market risk, credit
risk and liquidity risk. Other risks faced by the Company include economic, loss
of approval as a VCT, investment and strategic, regulatory, reputational,
operational and financial risks. These risks, and the way in which they are
managed, are described in more detail in the Company's Annual Report and
Accounts for the year ended 30 November 2009. The Company's principal risks and
uncertainties have not changed materially since the date of that report.
9. Related party transactions
Octopus acts as the investment manager of the Company. Under the management
agreement, Octopus receives a fee of 2.0 per cent per annum of the net assets of
the Company for the investment management services. During the period, the
Company incurred management fees of GBP106,000 (30 November 2009: GBP260,000 and 31
May 2009: GBP159,000). At the period end there was GBPnil (30 November 2009: GBP54,000
and 31 May 2009: Nil) outstanding to Octopus.
10. Copies of this statement are being sent to all shareholders. Copies are
also available from the registered office of the Company at 8 Angel Court,
London, EC2R 7HP, and will also be available to view on the Investment Manager's
website at www.octopusinvestments.com.
[HUG#1434404]
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 IHT AIM VCT PLC via Thomson Reuters ONE
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