Annual report and
accounts for the
year ended
28 February 2023
Company number: 03477519
For UK investors only
Octopus AIM VCT plc
Octopus AIM VCT plc (the ‘Company’) is a venture capital trust
(VCT) which aims to provide shareholders with attractive
tax-free dividends and long-term capital growth by investing
in a diverse portfolio of predominantly AIM-traded companies.
The Company is managed by Octopus Investments Limited
(‘Octopus’ or the ‘Investment Manager’).
Contents
Financial summary and key dates 1
Strategic report
• Chair’s statement 2
• Investment Manager’s review 4
• The Investment Manager 16
• Section 172(1) statement 18
• Business review 20
• Risk and risk management 25
Details of Directors 28
Directors’ report 29
Corporate governance report 33
Audit Committee report 37
Directors’ remuneration report 39
Directors’ responsibility statement 42
Independent auditor’s report 43
Income statement 49
Balance sheet 50
Statement of changes in equity 51
Cash flow statement 52
Notes to the financial statements 53
Shareholder information and contact details 68
Glossary of terms 73
Directors and advisers 74
Notice of Annual General Meeting 75
1
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Year to
28 February 2023
Year to
28 February 2022
Net assets (£’000)
141,222
168,169
(Loss) after tax (£’000)
(33,414)
(19,459)
Net asset value (NAV) per share (p)
78.5
104.8
Dividends per share paid in year (p)
5.5
8.5
Total return (%)
1
(19.8)
(9.1)
Final dividend proposed (p)
2
2.5
3.0
Ongoing charges (%)
3
2.1
1.9
1
Total return is an alternative performance measure calculated as movement in NAV per share in the period plus dividends paid in the period, divided by the NAV per share
at the beginning of the period.
2
The proposed final dividend will be paid on 10 August 2023 to shareholders on the register on 28 July 2023.
3
Ongoing charges is an alternative performance measure calculated using the AIC recommended methodology.
Definitions of key terms and alternative performance measures shown above and throughout this report are shown in the Glossary
of Terms on page 73.
Key dates
Shareholder event 13 July 2023
Annual General Meeting 20 July 2023
Final dividend payment date 10 August 2023
Half-yearly results to 31 August 2023 published November 2023
Financial summary
2
Octopus AIM VCT plc Annual report 2023
Introduction
Firstly, I would like to welcome all new shareholders who have
joined us in the past year, and to assure you that the Company’s
performance this year has not been typical for us. As explained
further below, market turbulence this year has been particularly
harsh on smaller companies in some of the key sectors in
which we invest, and this has led to a material reduction in the
Company’s Net Asset Value.
The year to 28 February 2023 turned out to be another challenging
period for stock markets in general and for smaller companies
in particular. It started as Russia had just launched its invasion
of Ukraine, causing an immediate shock to the global economy,
and in particular a surge in European energy and food prices
driving up inflation, which was already on the rise as economies
emerged from the covid pandemic of 2021. By the half-year,
inflation was nearing 10%, the Bank of England had raised its
base rate from 0.5% in February to 1.75% and the Company’s net
asset value (NAV) had fallen by 14.6% on a total return basis as
investors withdrew from smaller companies, which are generally
perceived to be riskier assets. The second half was overshadowed
by domestic political turmoil and an autumn budget that caused
further financial instability as expectations for peak interest rates
rose above 6% at one stage before falling back towards the end
of the year as some semblance of stability returned. Interest rates
ended the period at 4% and are now expected to peak in the first
half of the current year. Against this background the NAV gave
up further ground and finished the year 19.8% down on a total
return basis.
In the context of this backdrop, the AIM market raised
£2.1 billion of new capital in the year under review for both new
and existing AIM companies, a substantial decrease on the
£8.3 billion raised in the previous year. After the previous year,
when the number of new issues had been buoyant coming out
of covid, the majority of fundraisings in the year under review
were for existing AIM companies seeking further capital. It
was not surprising, therefore, that your Investment Manager
made fewer qualifying investments, investing a total of
£4.9 million in the period, well down from the record £21.6 million
invested in the previous year. The Investment Manager and your
Board were both clear that the relative shortage of investment
opportunities should not be used as an excuse to lower the
rigorous investment criteria that are applied when making new
investments.
Performance
The NAV on 28 February 2023 was 78.5p per share, a significant
decrease on the NAV of 104.8p per share reported at 28 February
2022. Adding back the 5.5p of dividends paid in the year gives
a total negative return of 19.8%. In the same year, the FTSE
AIM All-Share Index fell by 16.1%, the FTSE SmallCap (excluding
investment companies) Index fell by 5.8% and the FTSE All-Share
Index rose by 7.3%, all on a total return basis. AIM was the worst
performing UK Index, with the FTSE All-Share’s positive return
narrowly based and reliant on a few very large companies in
the energy and pharmaceutical sectors. AIM trailed the FTSE
SmallCap (excluding investment companies) Index because of
the poor performance of AIM’s larger constituents which suered
the greatest de-ratings.
Once again stock specific factors had a significant impact on our
performance, both positive and negative, and these are covered
in more detail in the Investment Manager’s review. As fears about
high inflation and the extent of likely interest rate rises increased,
so did stock market volatility, causing growth stocks to devalue
further as the year progressed. In addition, the deterioration in
appetite for risk which had been apparent since the end of 2021
intensified, resulting in some significant falls in the share prices of
earlier stage companies exposed to the new economy. In some
cases raising further capital proved dicult except at a deep
discount and resulted in companies having to accept much lower
valuations. The purpose of a VCT is to provide capital for small
growing companies and as a result those companies exposed to
the new economy in the software, technology and healthcare
sectors make up a significant proportion of our investment
portfolio. This worked against us in the period.
Dividends
In January 2023 an interim dividend for the year to 28 February
2023 of 2.5p was paid to all shareholders. This was in addition to
the 3.0p final dividend that had been paid in August 2022 and
which related to the previous financial year ended 28 February
2022. The Board has considered the level of dividend in the
context of the NAV fall during the period and on this occasion
is recommending a final dividend of 2.5p, which brings the total
dividends for the year to 28 February 2023 to 5.0p which is a 6.7%
yield based on the share price of 74.5p on 28 February 2023. It
remains the Board’s target to pay an annual dividend of 5.0p or
5% of the year end share price, whichever is greater at the time.
Cancellation of share premium account
At the last Annual General Meeting, shareholders voted to cancel
share premium to increase the pool of distributable reserves to
the amount of £25.6 million. This is a regular occurrence, and
common practice, to enable the continued payment of dividends
and buyback of shares. A further resolution to cancel share
premium is being proposed at this year’s Annual General Meeting.
Dividend reinvestment scheme
In common with many other VCTs in the industry, the Company
has established a Dividend Reinvestment Scheme (‘DRIS’). Many
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 2,122,937 new shares have been issued under
this scheme, returning £1.8 million to the Company. The final
dividend referred to above will be eligible for the DRIS.
Chair’s statement
3
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Share buybacks
During the year to 28 February 2023 the Company continued
to buy back shares in the market from selling shareholders and
purchased 4,312,810 ordinary shares for a total consideration of
£3.6 million. We have maintained a discount of approximately
4.5% to NAV (equating to up 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 22 September 2022, a prospectus offer was launched
alongside Octopus AIM VCT 2 plc to raise a combined total of
up to £20 million, with a £10 million over-allotment facility. This
prospectus closed to further applications on 13 October 2022.
There was strong appetite for the share issue, and it closed fully
subscribed on 13 October 2022. The Company issued 21,311,806
shares under the oer, raising £17.3 million after costs.
VCT status
Shoosmiths LLP were engaged throughout the year to provide
the Board and Investment Manager with advice concerning
continuing compliance with HMRC regulations for VCTs. The
Board has been advised that the Company is in compliance with
the conditions laid down by HMRC for maintaining approval as a
VCT. A key requirement is to maintain at least an 80% qualifying
investment level. As at 28 February 2023, 88.6% of the Company’s
portfolio was in VCT qualifying investments.
In 2015 the government introduced a VCT sunset clause in order to
comply with EU State Aid requirements. This clause provides that
income tax relief will no longer be given to new VCT subscriptions
made on or after 6 April 2025, unless the relevant legislation is
renewed by an HM Treasury order. The VCT community has been
campaigning to get this clause revoked, and in September 2022
the Chancellor of the Exchequer announced that the sunset
clause would be extended beyond 2025. While there has been
no further update or announcement from the government
since September, the VCT community remains confident that
the sunset clause will be revoked, enabling VCTs to continue to
fulfil the important role that they play in the funding of small UK
growth companies.
Annual General Meeting (AGM)
The AGM will take place on 20 July 2023 at 10.30am. Further
information can be found in the Directors’ Report and Notice of
Annual General Meeting on pages 29 and 75 respectively. We will
also be hosting a virtual shareholder event prior to the AGM, on
13 July 2023 at 11.00am. This will enable shareholders to receive an
update from the Investment Manager and provide an opportunity
for questions to the Board and the Investment Manager. There will
not be a presentation from the Investment Manager at the AGM
itself. Formal notices will be sent to shareholders by their preferred
method (email or post) and shareholders are encouraged to
submit their votes by proxy. We always welcome questions from
our shareholders at the AGM. Please send any questions via
email to AimAGM@octopusinvestments.com by 5.00pm on
14 July 2023.
Outlook
2023 started with a degree of cautious optimism and a
noticeable improvement in investor appetite. However, the
collapse of Silicon Valley Bank and the enforced takeover of
Credit Suisse in March, demonstrated the continued fragility of
investor confidence despite banks generally being in a much
better shape than they were at the time of the 2007/8 financial
crisis. Inflation remains high although it is expected to fall from
current levels which should enable interest rates to peak in the
next few months. It now seems as if the UK may have avoided
the prospect of a formal recession as GDP projections have been
adjusted upwards, with any trough now expected to be shallow.
Company statements have been robust in the first results
season of the year and forecasts are mostly conservatively set
at this stage. Valuations have not yet recovered from last year’s
falls, leaving many of the larger and faster growing shares in
the portfolio on ratings well below their long-term averages.
The Investment Manager’s assessment is that the underlying
businesses of these companies are generally robust, giving good
prospects for uplifts in valuations as overall market sentiment
improves.
The portfolio contains 88 holdings across a range of sectors with
exposure to some exciting new technologies in the environmental
and healthcare sectors in particular. Many of these companies
remain well funded, although the challenge of raising further
capital in the current market environment cannot be dismissed.
The balance of the portfolio towards profitable companies
remains, and the Investment Manager remains confident
that there will continue to be sucient opportunities to invest
our funds in good companies seeking more growth capital at
attractive valuations.
Neal Ransome
Chair
6 June 2023
4
Octopus AIM VCT plc Annual report 2023
Introduction
The 12 months under review was an extremely challenging time
for investors who had to contend with the Russian invasion of
Ukraine, rapidly rising inflation and interest rates, and a squeeze
on consumer incomes combined with a constant threat of
recession. This resulted in volatile stock markets with investors
seeking safety in less highly rated sectors such as banks and
energy. It caused the retreat of AIM growth stocks, which was
a key factor in the fall in the net asset value (NAV) which ended
the year with a negative total return of 19.8%, slightly behind
AIM itself. In addition, as appetite for risk diminished, some of
the earlier stage investments in the portfolio suered de-ratings.
Solid January trading updates caused a brief recovery in optimism
although this proved transitory in the face of the collapse of
Silicon Valley Bank and the enforced takeover of Credit Suisse just
after the year end. Fragile investor confidence has left AIM shares
valued at levels previously visited around the time of the 2007/8
financial crisis despite a mostly encouraging results season post
the year end.
Against this background AIM fundraisings slowed dramatically
as the year unfolded as companies looking to float paused in
response to lower valuation expectations for their businesses.
However, AIM still successfully raised capital for its existing
members, enabling them to fund the next stage of their
development.
The Alternative Investment Market
Following a strong year for the financial markets in 2021, 2022
proved to be a rather turbulent year in many ways. In addition
to global headwinds, the UK market suered from continued
concerns about inflation, increasing interest rates, and the
looming threat of a long recession. This directly impacted
fundraising levels and the number of new IPOs across all UK
indices, both large and small. However, smaller company indices
were particularly impacted by the equity market de-rating as
sentiment moved sharply away from growth and momentum
driven stocks and investors sought out a narrow group of
pharmaceutical and energy stocks in the FTSE 100. AIM’s high
exposure to growth stocks in the software, technology, new
economy and healthcare sectors counted against it over the
period and it was the worst performing index, with its largest
constituents faring particularly badly. Conversely, the FTSE
SmallCap Index (ex investment companies) fared better as it
did not have exposure to the larger companies that held back
AIM. In the 12 months to 28 February 2023 the AIM Index fell
16.1% compared with a fall of 5.8% for the FTSE SmallCap index
(excluding investment companies) and an increase of 7.3% for
the FTSE All-Share Index on a total return basis. Although VCTs
have additional constraints on what they can invest in, the AIM
index is considered to be the most appropriate broad equity
market index for comparative purposes, given the nature of the
underlying investments. The FTSE SmallCap and All-Share indices
provide wider market context.
The market for fundraising and new IPOs remained quiet
throughout the year. Disappointingly, in the year to 28 February
2023, AIM raised £2.0 billion of new capital for existing companies
which compares to a figure of £8.3 billion the previous year. The
bar chart on the next page shows that the monthly figures were
lower than the previous year. Not surprisingly, there were only
13 new IPOs compared to 88 in the previous year. AIM raised
£0.1 billion for new listings, a significant decrease on the figure of
£1.9 billion in the previous year.
We are still hearing about potential new issues from
brokers and we hope that the current more volatile market
conditions do not aect this. VCTs play a significant part
in the funding process and we identify, on the following
pages, the companies we have invested in during the year,
which include many that are developing technologies to
help solve the climate and healthcare problems that face us.
Investment Manager’s
review
5
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
The graph below shows the total fundraising by AIM that has been undertaken in the 12 months to 28 February 2023 and the prior
year comparison.
Funds raised on AIM (£m)
0
200
400
600
800
1,000
1,200
1,400
1,600
FebruaryJanuaryDecemberNovemberOctoberSeptemberAugustJulyJuneMayAprilMarch
Year ended 28 February 2023
Year ended 28 February 2022
Source: London Stock Exchange
Performance
Adding back the 5.5p of dividends paid in the year, the NAV total return fell by 19.8%. This compares with a fall in the FTSE AIM All-Share
Index of 16.1%, a fall in the FTSE SmallCap (excluding investment companies) of 5.8% and a rise in the FTSE All-Share Index of 7.3%, all
on a total return basis. It was another year characterised by individual months of significant market volatility as investors reacted to
unfolding events. The year opened when Russia had just invaded Ukraine, which added a steep rise in energy and food costs to existing
price inflation caused by a post-pandemic shortage of labour and supply chain diculties. As a result, consensus moved from inflation
being seen as transitory to a longer-term issue, and central banks reacted by indicating that interest rates would have to rise further
and faster than had previously been expected. The situation was unfortunately exacerbated in the second half by political instability,
with market reactions to the autumn budget causing peak interest rate expectations to rise above 6%, much further than had been
anticipated, disrupting the gilt and property markets. Faced with these conditions and uncertainties, investors continued their previous
moves away from smaller company investments and concentrated their attention on a very narrow cohort of the largest energy and
pharmaceutical companies, causing AIM and smaller companies to lag significantly in contrast to the well-established long-term trend.
This impacted both the larger growth stocks in the portfolio, which were de-rated even when the tone of their outlook statements
continued to be positive, as well as early-stage technology companies needing cash to fulfil their growth ambitions and contributed
to the underperformance of the NAV compared with the FTSE AIM All-Share. More details on the performance of individual holdings
can be seen on pages 9 to 11.
Among the larger, profitable holdings in the portfolio, several were caught by the dramatic de-rating of larger AIM growth stocks in
the period caused by poor market sentiment in the face of sharp rises in interest rates and inflation. GB Group (‘GBG’) and Learning
Technologies Group were in the top ten fallers, and others such as RWS, Advanced Medical Solutions and Next Fifteen were also
aected although the impact on the performance of the fund was less for these and other smaller holdings.
6
Octopus AIM VCT plc Annual report 2023
Performance continued
One of the biggest contributors to the negative return in the year
was GBG, a leading global player in identity verification. GBG has
been a long-term successful investment where we have taken
profits in the past and continue to believe it will deliver growth
and positive returns for the Company in the future. Its share price
was impacted partly by slower than hoped for growth as some
of the froth came o the digital economy as the eect of covid
lockdowns waned and partly in reaction to the acquisition of
US-based Acuant, an expensive acquisition albeit with good
long-term strategic benefits. It ended the period on a valuation
multiple well below its historic average and at a level not seen since
the 2007/8 financial crisis. Fears that Learning Technologies would
see its customers cut back on spending on employees in the event
of a recession weighed on its share price. It produced upgrades to
2022 forecasts as the year progressed, leaving the shares trading
at the bottom end of the longer-term valuation range. EKF
Diagnostics and Animalcare were also significant contributors to
negative returns in the year. EKF’s profits have shrunk back to
pre-covid levels after a period of significant revenues and profits
from covid test kits, but it remains a profitable provider of point
of care tests and we expect its shares to recover as profits start to
grow again. Animalcare has found the development and launch
of new animal drugs less easy during lockdowns but remains
focused on invigorating its growth.
TPX Impact and Trackwise Designs were two very disappointing
performers in the year. TPX Impact had been growing strongly as
a result of demand from various government departments for its
digital transformation expertise and the eciencies to be gained
from it. However, it was caught by a shortage of skilled technical
labour which delayed contract delivery and eroded margins as it
had to fill the gap with outside contractors. A new chief executive
is now in charge and some of the labour pressures have eased,
giving us confidence that the business can recover. Demand from
customers remains good and the business is well funded. The
situation at Trackwise Designs was more serious. The company
built a new factory to fulfil a very large contract from electric
vehicle manufacturer Arrival. Disappointingly, the order was
revised downwards at the end of last year which impacted the
funding allocated to the factory build and forced the company
to raise money at a moment when stock sentiment towards
early stage businesses was very poor. This resulted in significant
dilution for us as existing shareholders although it does now give
the company the chance to win other customer business for its
new facility.
The portfolio has very little exposure to the consumer, but where it
does this has tended to hurt performance in the year. Gear4Music
had enjoyed a very strong period of trading during the pandemic
when demand for musical instruments soared and high street
competitors were closed. This masked some of the underlying
challenges posed by Brexit and supply problems in China, which
impacted profits and margins that the management has spent
the past two years working through. It should be able to show
some of the benefits of this process in 2023. Sosandar, another
consumer-focused company, has continued to achieve successive
profitable months in 2023 as well as significant growth in its sales
through Next, M&S and John Lewis and most recently Sainsbury’s.
Although the shares were not a significant drag on performance
in the year, they still don’t reflect the scale of the progress made
by the business.
It has been another very tough period for early-stage businesses
yet to reach profitability, with the priority to make sure they have
enough funding to develop their technologies and get them to
a self-supporting stage. Share prices have come under pressure
even where funding is not an immediate problem and progress has
remained on track, such as in the cases of LungLife, GENinCode,
Velocys and Maxcyte. There have been some dramatic reactions
where early-stage companies have disappointed investors, such
as with CPH2 which has been slower than expected to develop a
working model of its membrane-free electrolyser. Two other big
fallers were Libertine, which had gone to a large premium to its
IPO price before falling back as investors appreciated how early
stage its innovative drive train is, despite having some serious
partners, and Ilika where its Stereax solid state battery has seen
slower scale-up demand than originally expected. We had taken
profits in Ilika at higher levels the previous year.
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. This quite often takes longer than expected and these
companies remain potentially vulnerable until they achieve
profitability – something we experienced with Creo Medical this
year, which was forced to raise money on a much lower valuation
as VCTs were no longer able to finance it. The relatively good
news is that it is now funded to develop its innovative endoscopic
instruments.
There have been some instances of more resilient performance
despite the market conditions outlined above. The share price of
Ergomed has been volatile over the year but it has broadly held its
value as profits have been upgraded. We have taken some profits
to manage the size of the holding although we still see plenty of
scope for organic growth to continue and build further value for
shareholders, particularly as the shares have fallen back since the
year end. Equipmake made a strong debut on AIM and has been
a strong contributor to performance and Netcall, Quixant and
Judges Scientific have all maintained good momentum in their
businesses and been rewarded with higher share prices. In our
private company holdings, Hasgrove had its valuation increased
over the year as it grew its recurring revenues and cash despite
a fall in the valuation metrics used. By contrast, the quoted peer
group for Popsa was devalued in the second half and as a result
we wrote down its valuation in the year. The business continues
to grow well and cash spending is well under control. The bases
of valuation of unquoted holdings and movements subsequent
to the year end is set out in note 10 to the financial statements.
Investment Manager’s review continued
7
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Portfolio activity
Having made four qualifying investments at a total cost of
£2.4 million in the first half of the year, we added a further
four qualifying investments totalling £2.5 million in the second
half. This made a total investment of £4.9 million in qualifying
investments for the year, a decrease on last year’s £21.6 million.
However, it should be pointed out that FY2022 had represented
a record year for deployment, with a large selection of existing
and new companies turning to public markets to strengthen their
balance sheets as we came out of the covid pandemic.
In the first half of the year we made four qualifying investments;
three were follow-ons into Oberon Investments Group plc, The
British Honey Company and Verici Dx plc, and one was a new
investment, Equipmake Holdings plc. In the second half, we
invested in two new companies and two existing investments. We
invested £0.4 million into Northcoders Group plc, a Manchester-
based provider of training programmes for software coding. The
funds raised will be used to expand the list of courses oered to
individuals, to include Cyber Security and Platform Engineering,
among others. The company has an exciting opportunity to form
a meaningful part of the upskilling agenda across the UK. We
invested £1.6 million into Itaconix plc, which is a leading producer
of plant-based additives for a range of consumer products, from
detergents to shampoos. Itaconix’s natural polymers help to
decarbonise products, whilst providing improved performance,
safety and sustainability. The company raised a total of
£10.5 million in a heavily over-subscribed share placing, which will
be used to support a range of growth initiatives, including the
development of new products and applications for its technology.
We invested a further £0.3 million into Intelligent Ultrasound
Group plc, the ‘classroom-to-clinic’ provider of training and
AI-enabled medical simulation products. The company raised
£5.2 million, which will support the ongoing development
of several tech-enabled products which assist ultrasound
practitioners and vastly improve the eciency of the scanning
process. We invested a further £0.2 million into Equipmake, the
electric drivetrain specialists focusing on retrofitting carbon-
intensive vehicles and aeroplanes, most notably diesel buses.
The company had its IPO in July 2022, and successfully raised a
further £6.2 million in January 2023, expanding its shareholder
base. We opted to make a small further investment given the
exciting progress the team are making.
During the year we took profits in several holdings. We sold part
of our holdings in Advanced Medical Solutions, Next 15 Group
and WANdisco. Two holdings, Clinigen Group and TP Group,
were subject to successful cash takeover bids, Clinigen at a profit
though frustratingly TP Group was at a substantial loss. We also
fully exited from investments in Diurnal, Merit Group, Synairgen
and Midatech, and sold our non-qualifying position in Tasty.
In all, disposals made a £0.5 million loss over original cost and
generated £2.5 million of cash proceeds.
Non-qualifying investments are used to manage liquidity while
awaiting new qualifying investment opportunities. Although we
still hold some existing non-qualifying AIM holdings where we see
the opportunity for further share price progress, we continued
to reduce some of these holdings in the year under review. In the
year under review £0.8 million was invested into the FP Octopus
Micro Cap Growth Fund, £0.7 million into the FP Octopus Multi
Cap Income Fund and £0.4 million into the FP Octopus Future
Generation Fund at lower share prices than our previous
investments. Recent adverse market conditions meant that these
funds had a negative impact on returns in the year although we
believe they are well positioned to have a positive impact once
the investment environment improves. The balance of the cash
is now held in two money market funds to earn a better return
as VCTs are not permitted to earn significant amounts of interest
on bank deposits.
Liquidity
The issue of liquidity within investment funds has remained a topic
of discussion this year. Shareholders may be interested to know
that at the year end 66.6% of the Company’s net assets were
held in individual quoted shares, 6.1% were held in unquoted single
company investments and 27.7% were held in cash or collective
investment funds providing short-term liquidity. Shareholders
should be aware that a proportion of the quoted holdings may
have limited liquidity owing to the size of the investee company
and the overall proportion held by the Company.
VCT regulations
There have been no further changes to the VCT regulations since
the publication of the previous set of audited accounts. The key
requirements are that 30% of funds raised should be invested in
qualifying holdings within 12 months of the end of the accounting
period in which the shares were issued, and the Company has to
maintain a minimum of 80% of the portfolio (at cost) invested in
qualifying holdings. We are determined to maintain a threshold
of quality and to invest where we see the potential for returns
from growth. Over time there has been a gradual change to the
profile of the portfolio towards earlier-stage companies, although
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;
• have less than £15 million of gross assets at the time of
investment and no more than £16 million immediately post
investment;
• be less than seven years old from the date of their first
commercial sale (or ten years if a knowledge intensive
company) if raising State Aided (i.e. VCT) funds for the first
time;
• have raised no more than £5 million of State Aided funds
in the previous 12 months and less than the lifetime limit of
£12 million (or £10 million in 12 months and a £20 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.
8
Octopus AIM VCT plc Annual report 2023
Outlook and future prospects
Sentiment is slowly recovering after the latest market setback
as prompted by the collapse of Silicon Valley Bank although
nervousness around the financial health of some US banks
remains. On the positive side, banking risk ratios are much more
exacting than at the time of the 2007/8 financial crisis and there
are signs that the very rapid rise in interest rates which precipitated
the current stress may be reaching their peak. However, inflation,
which is still widely expected to fall rapidly from here, remains an
issue with no immediate prospect of achieving the Government’s
2% target, which might hold back the scale of any cuts in rates
from the peak, still predicted to be later this year. Energy costs
remain high but the worst fears of winter power shortages were
not realised.
More than half the companies in the portfolio have updated us
on trading since the period end, with many of these reassuring.
Meanwhile we are starting to see companies considering
floating on AIM in the medium term as well as VCT qualifying
opportunities to invest in existing AIM companies. We believe the
current cautious market conditions will provide opportunities to
invest the VCT’s cash at attractive valuations.
The portfolio contains 88 holdings with investments across a
range of sectors including both domestic and international
exposure and the balance towards profitable companies remains.
The Octopus Quoted Companies team
6 June 2023
Investment Manager’s review continued
9
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Investment portfolio
Portfolio company Sector
Book cost
as at
28 February
2023
£’000
Cumulative
change in
fair value
£’000
Fair value
as at
28 February
2023
£’000
Movement
in year
£’000
% equity
held by
Octopus
AIM VCT
plc
% equity
held by
all funds
managed
by Octopus
Fair value
as a % of
Octopus
AIM VCT
NAV
Ergomed plc Pharmaceuticals & Biotechnology 1,176 7,0 4 6 8,222 (327) 1.44% 9.24% 5.82%
Learning Technologies Group plc Software & Computer Services 1,051 5,484 6,535 (1,628) 0.59% 6.28% 4.63%
Breedon Group plc Construction & Materials 859 4,214 5,073 (823) 0.42% 5.49% 3.59%
Judges Scientific plc Electronic & Electrical Equipment 314 4,343 4,657 1,028 0.79% 1.32% 3.30%
SDI Group plc Electronic & Electrical Equipment 179 3,950 4,129 558 2.15% 3.58% 2.92%
Brooks Macdonald Group plc Investment Banking & Brokerage
Services
746 2,396 3,142 (435) 0.96% 16.52% 2.22%
Idox plc Software & Computer Services 353 2,556 2,909 (178) 1.03% 2.27% 2.06%
Equipmake Holdings plc Industrial Engineering 1,950 885 2,835 885 4.78% 8.12% 2.01%
Netcall plc Software & Computer Services 308 2,475 2,783 947 1.85% 3.30% 1.97%
GB Group plc Software & Computer Services 505 2,247 2,752 (1,857) 0.33% 5.83% 1.95%
Sosandar plc Retailers 1,853 863 2,716 (121) 4.86% 11.49% 1.92%
Libertine Holdings plc Industrial Engineering 3,000 (300) 2,700 (1,800) 10.77% 18.14% 1.91%
Mattioli Woods plc Investment Banking & Brokerage
Services
529 1,728 2,257 (851) 0.77% 10.35% 1.60%
Next Fifteen Communications Group
plc
Media 453 1,800 2,253 (741) 0.22% 12.11% 1.60%
Quixant plc Technology Hardware & Equipment 587 1,629 2,216 598 1.92% 3.19% 1.57%
Craneware plc Health Care Providers 183 1,915 2,098 (303) 0.39% 1.64% 1.49%
Intelligent Ultrasound Group plc Medical Equipment & Services 2,168 (178) 1,990 595 6.62% 11.03% 1.41%
MaxCyte Inc. Pharmaceuticals & Biotechnology 1,035 842 1,877 (336) 0.48% 1.32% 1.33%
Feedback plc Medical Equipment & Services 1,500 313 1,813 504 7.55% 12.75% 1.28%
Vertu Motors plc Retailers 1,265 351 1,616 16 0.76% 1.73% 1.14%
PCI-Pal plc Software & Computer Services 1,098 482 1,580 (31) 4.64% 7. 74% 1.12%
Itaconix plc Industrial Support Services 1,588 (31) 1,557 (31) 4.62% 10.73% 1.10%
EKF Diagnostics Holdings plc Medical Equipment & Services 931 592 1,523 (1,147) 1.22% 2.74% 1.08%
Diaceutics plc Health Care Providers 930 452 1,382 171 1.45% 2.51% 0.98%
Access Intelligence plc Software & Computer Services 678 611 1,289 (429) 1.25% 2.13% 0.91%
Beeks Financial Cloud Group plc Software & Computer Services 450 829 1,279 (135) 1.38% 5.16% 0.91%
Spectral MD Holdings Ltd Health Care Providers 2,115 (1,075) 1,040 (107) 2.63% 7.69% 0.74%
Ilika plc Electronic & Electrical Equipment 1,058 (45) 1,013 (1,308) 1.34% 2.23% 0.72%
Cambridge Cognition Holdings plc Health Care Providers 601 368 969 (43) 2.46% 4.11% 0.69%
Animalcare Group plc Pharmaceuticals & Biotechnology 306 646 952 (765) 0.92% 2.83% 0.67%
Clean Power Hydrogen plc Alternative Energy 1,800 (880) 920 (1,400) 1.49% 2.48% 0.65%
Ixico plc Pharmaceuticals & Biotechnology 1,046 (150) 896 (710) 7. 72 % 12.87% 0.63%
RWS Holdings plc Industrial Support Services 143 725 868 (253) 0.06% 4.57% 0.61%
Gamma Communications plc Telecommunications Service Providers 274 561 835 (221) 0.07% 6.73% 0.59%
Adept Technology Group plc Software & Computer Services 601 231 832 60 1.71% 3.14% 0.59%
LungLife AI Inc. Pharmaceuticals & Biotechnology 2,079 (1,252) 827 (1,299) 4.63% 7. 72 % 0.59%
Oberon Investments Group plc Investment Banking & Brokerage
Services
864 (220) 644 (460) 3.54% 9.91% 0.46%
ENGAGE XR Holdings plc Software & Computer Services 1,879 (1,262) 617 (1,079) 2.94% 8.13% 0.44%
Restore plc Industrial Support Services 256 355 611 (204) 0.14% 12.33% 0.43%
WANdisco plc Software & Computer Services 79 504 583 432 0.07% 0.11% 0.41%
GENinCode plc Medical Equipment & Services 1,200 (627) 573 (136) 2.85% 4.74% 0.41%
Velocys plc Alternative Energy 996 (498) 498 (172) 0.89% 1.50% 0.35%
Gooch & Housego plc Technology Hardware & Equipment 422 71 493 (542) 0.41% 12.19% 0.35%
10
Octopus AIM VCT plc Annual report 2023
Portfolio company Sector
Book cost
as at
28 February
2023
£’000
Cumulative
change in
fair value
£’000
Fair value
as at
28 February
2023
£’000
Movement
in year
£’000
% equity
held by
Octopus
AIM VCT
plc
% equity
held by
all funds
managed
by Octopus
Fair value
as a % of
Octopus
AIM VCT
NAV
Crimson Tide plc Software & Computer Services 567 (76) 491 75 2.87% 4.79% 0.35%
Evgen Pharma plc Pharmaceuticals & Biotechnology 1,050 (564) 486 (39) 4.77% 7.96% 0.34%
Advanced Medical Solutions Group plc Medical Equipment & Services 284 155 439 (427) 0.08% 12.64% 0.31%
Fusion Antibodies plc Health Care Providers 745 (344) 401 (222) 3.42% 5.71% 0.28%
Velocity Composites plc Aerospace & Defense 799 (414) 385 188 2.55% 4.24% 0.27%
DP Poland plc Travel & Leisure 1,016 (637) 379 119 0.66% 1.11% 0.27%
Northcoders Group plc Software & Computer Services 380 (13) 367 (13) 1.58% 2.63% 0.26%
Gear4music Holdings plc Leisure Goods 529 (183) 346 (1,442) 1.81% 3.02% 0.25%
Gelion plc Electronic & Electrical Equipment 1,140 (810) 330 (496) 0.73% 1.21% 0.23%
Creo Medical Group plc Medical Equipment & Services 1,471 (1,141) 330 (1,176) 0.34% 0.99% 0.23%
Renalytix plc Health Care Providers 288 40 328 (396) 0.24% 0.56% 0.23%
TPXimpact Holdings plc Software & Computer Services 979 (668) 311 (2,204) 1.44% 2.40% 0.22%
Polarean Imaging plc Medical Equipment & Services 687 (384) 303 (304) 0.54% 0.90% 0.21%
KRM22 plc Closed End Investments 681 (388) 293 (6) 1.91% 3.18% 0.21%
Mears Group plc Industrial Support Services 139 119 258 12 0.11% 0.63% 0.18%
MyCelx Technologies Corporation Oil, Gas & Coal 1,470 (1,258) 212 (277) 3.54% 13.38% 0.15%
Verici Dx plc Pharmaceuticals & Biotechnology 651 (451) 200 (875) 1.61% 2.78% 0.14%
Cordel Group Software & Computer Services 443 (251) 192 (30) 1.73% 2.89% 0.14%
ReNeuron Group plc Pharmaceuticals & Biotechnology 1,485 (1,312) 173 (347) 3.03% 5.06% 0.12%
DXS International plc Software & Computer Services 300 (150) 150 (356) 7.7 7% 12.95% 0.11%
XP Factory plc Travel & Leisure 988 (842) 146 (37) 0.49% 0.81% 0.10%
Glantus Holdings plc Industrial Support Services 1,800 (1,659) 141 (1,200) 3.45% 5.75% 0.10%
Strip Tinning Holdings plc Electronic & Electrical Equipment 506 (369) 137 (314) 1.77% 2.95% 0.10%
Staine Group plc Industrial Support Services 334 (198) 136 (42) 0.22% 0.22% 0.10%
The British Honey Company plc General Retailers 1,321 (1,187) 134 (1,084) 7.12 % 11.86% 0.09%
Falanx Cyber Security Limited Industrial Support Services 900 (771) 129 (156) 5.70% 9.50% 0.09%
Enteq Upstream plc Oil, Gas & Coal 1,032 (908) 124 (15) 1.48% 2.47% 0.09%
Genedrive plc Pharmaceuticals & Biotechnology 361 (257) 104 41 0.49% 0.81% 0.07%
Rosslyn Data Technologies plc Software & Computer Services 429 (382) 47 (228) 2.52% 4.21% 0.03%
1Spatial plc Software & Computer Services 300 (253) 47 7 0.09% 3.75% 0.03%
Tasty plc Travel & Leisure 515 (479) 36 61 0.84% 1.61% 0.03%
In The Style plc Retailers 1,000 (967) 33 (417) 0.95% 1.59% 0.02%
Abingdon Health plc Medical Equipment & Services 521 (491) 30 (27) 0.45% 0.74% 0.02%
Trackwise Designs plc Technology Hardware & Equipment 1,934 (1,907) 27 (1,533) 0.42% 0.70% 0.02%
Osirium Technologies plc Software & Computer Services 1,350 (1,324) 26 (16) 0.76% 1.26% 0.02%
LoopUp Group plc Software & Computer Services 296 (285) 11 (11) 0.16% 0.26% 0.01%
Microsaic Systems plc Electronic & Electrical Equipment 1,384 (1,374) 10 (18) 0.41% 0.68% 0.01%
Haydale Graphene Industries plc Industrial Materials 598 (592) 6 (10) 0.05% 0.08% 0.00%
Location Sciences Group plc Software & Computer Services 765 (764) 1 0 0.01% 0.02% 0.00%
Total quoted investments 72,846 21,207 94,053 (27,293)
Investment portfolio continued
Investment Manager’s review continued
11
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Portfolio company
Book cost
as at
28 February
2023
£’000
Cumulative
change in
fair value
£’000
Fair value
as at
28 February
2023
£’000
Movement
in year
£’000
% equity
held by
Octopus
AIM VCT
plc
% equity
held by
all funds
managed
by Octopus
Fair value
as a % of
Octopus
AIM VCT
NAV
Unquoted equity investments
Hasgrove plc 88 3,915 4,003 582 2.63% 14.31% 3.20%
Popsa Holdings Limited 1,590 2,082 3,672 (1,705) 6.44% 10.74% 2.03%
Eluceda Limited 300 (138) 162 (78) 2.40% 4.01% 0.14%
The Food Marketplace Ltd 300 (150) 150 (90) 6.60% 10.99% 0.14%
Rated People Limited 354 (327) 27 (22) 0.11% 0.32% 0.03%
Airnow plc 1,256 (1,256) 0 0 0.41% 0.73% 0.00%
3,888 4,126 8,014 (1,313)
Loan notes
Osirium Technologies plc 600 0 600 0 N/A N/A 0.42%
600 0 600 0
Total fixed asset investments 77,334 25,333 102,667 (28,606)
Current asset investments
FP Octopus UK Micro Cap Growth Fund 6,378 1,736 8,114 (1,589) N/A N/A 5.75%
FP Octopus UK Multi Cap Income 6,639 624 7, 26 3 (547) N/A N/A 5.14%
FP Octopus UK Future Generations Fund 960 (149) 811 (97) N/A N/A 0.57%
Total current asset investments 13,977 2,211 16,188 (2,233)
Total fixed and current asset investments 118,855
Money market funds 21,433
Cash at bank 1,440
Debtors less creditors (506)
Total net assets 141,222
Investment portfolio continued
12
Octopus AIM VCT plc Annual report 2023
Top ten holdings
Listed below are the ten largest investments by value, which comprise of eight quoted level 1 investments which are valued at
bid price and two level 3 investments which are valued in accordance with IPEV guidelines (explained further on page 59), as at
28 February 2023.
Ergomed plc
Ergomed provides highly specialised services to the pharmaceutical industry, operating in over 65 countries.
Initial investment date:
Cost:
Valuation:
Equity held:
Fair value as a % of NAV:
Last audited accounts:
Revenue:
Profit before tax:
Net assets:
Dividend received in year:
July 2014
£1,176,000
£8,222,000
1.44%
5.82%
31 December 2022
£145.3 million
£18.0 million
£84.7 million
£nil
Learning Technologies Group plc
Learning Technologies provides a comprehensive and integrated range of e-learning services and technologies to corporate and
government clients.
Initial investment date:
Cost:
Valuation:
Equity held:
Fair value as a % of NAV:
Last audited accounts:
Revenue:
Profit before tax:
Net assets:
Dividend received in year:
June 2011
£1,051,000
£6,535,000
0.59%
4.63%
31 December 2022
£596.9 million
£40.5 million
£426.3 million
£0.04 million
learning
technologies
group
Breedon Group plc
Breedon Group is a leading construction material group operating in Great Britain and Ireland.
Initial investment date:
Cost:
Valuation:
Equity held:
Fair value as a % of NAV:
Last audited accounts:
Revenue:
Profit before tax:
Net assets:
Dividend received in year:
August 2010
£859,000
£5,073,000
0.42%
3.59%
31 December 2022
£1,396.3 million
£135.8 million
£1,043.8 million
£0.08 million
Investment Manager’s review continued
13
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Judges Scientific plc
Judges Scientific is a group of scientific instrumentation businesses, serving a vast array of academic and industrial customers across
the globe.
Initial investment date:
Cost:
Valuation:
Equity held:
Fair value as a % of NAV:
Last audited accounts:
Revenue:
Profit before tax:
Net assets:
Dividend received in year:
May 2012
£314,000
£4,657,000
0.79%
3.30%
31 December 2022
£113.2 million
£16.0 million
£54.5 million
£0.03 million
SDI Group plc
SDI designs and manufactures specialist scientific products for use in a wide range of markets including life sciences, healthcare and
consumer manufacturing.
Initial investment date:
Cost:
Valuation:
Equity held:
Fair value as a % of NAV:
Last audited accounts:
Revenue:
Profit before tax:
Net assets:
Dividend received in year:
November 2015
£179,000
£4,129,000
2.15%
2.92%
30 April 2022
£49.7 million
£9.9 million
£35.8 million
£nil
Hasgrove plc (unquoted)
Hasgrove is the holding company for Interact, a SaaS business which provides an intranet product which focuses on the communication
and collaboration requirements of large organisations.
Initial investment date:
Cost:
Valuation:
Equity held:
Fair value as a % of NAV:
Last audited accounts:
Revenue:
Profit before tax:
Net assets:
Dividend received in year:
September 2016
£88,000
£4,003,000
3.20%
2.83%
31 December 2021
£23.0 million
£6.2 million
£6.1 million
£nil
Top ten holdings continued
14
Octopus AIM VCT plc Annual report 2023
Popsa Holdings Ltd (unquoted)
Popsa is a software technology company enabling consumers to create photobooks on mobile devices from various sources.
Initial investment date:
Cost:
Valuation:
Equity held:
Fair value as a % of NAV:
Last audited accounts:
Revenue:
Loss before tax:
Net assets:
Dividend received in year:
April 2018
£1,590,000
£3,672,000
6.44%
2.03%
31 December 2021
£25.4 million
£3.7 million
£12 million
£nil
Brooks Macdonald Group plc
Brooks Macdonald is a provider of wealth and investment management services, operating from oces across the United Kingdom.
Initial investment date:
Cost:
Valuation:
Equity held:
Fair value as a % of NAV:
Last audited accounts:
Revenue:
Profit before tax:
Net assets:
Dividend received in year:
March 2005
£746,000
£3,142,000
0.96%
2.22%
30 June 2022
£122.2 million
£29.5 million
£148.4 million
£0.1 million
Idox plc
Idox is a leading supplier of specialist information management software with a particular focus on the public sector.
Initial investment date:
Cost:
Valuation:
Equity held:
Fair value as a % of NAV:
Last audited accounts:
Revenue:
Profit before tax:
Net assets:
Dividend received in year:
May 2007
£353,000
£2,909,000
1.03%
2.06%
31 October 2022
£66.2 million
£6.6 million
£67.4 million
£0.02 million
Equipmake Holdings plc
Equipmake is a UK-based technology company that has developed a range of electrification products for the provision of electric vehicle
drivetrains.
Initial investment date:
Cost:
Valuation:
Equity held:
Fair value as a % of NAV:
Last audited accounts:
Revenue:
Loss before tax:
Net liabilities:
Dividend received in year:
July 2022
£1,950,000
£2,835,000
4.78%
2.01%
31 May 2022
£3.7 million
£5.2 million
£1.0 million
£nil
Top ten holdings continued
Investment Manager’s review continued
15
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Sector analysis
The graph below shows the top ten sectors the equity portfolio was invested in by value as at 28 February 2023. It also shows the sectors of
the AIM market as a whole as at 28 February 2023:
0%
10%
20%
30%
40%
50%
60%
AIM VCT plc
AIM market
Other
1
Technology Hardware
and Equipment
Retailers
Construction
and Materials
Industrial Engineering
Investment Banking
and Brokerage Services
Healthcare Providers
Medical Equipment
and Services
Electronic and
Electrical Equipment
Pharmaceuticals and
Biotechnology
Software and
Computer Services
The graph below shows the top ten sectors the equity portfolio was invested in by value as at 28 February 2022. It also shows the sectors
of the AIM market as a whole as at 28 February 2022:
0%
10%
20%
30%
40%
50%
60%
AIM VCT plc
AIM market
Other
Technology Hardware
and Equipment
Industrial Engineering
Retailers
Construction
and Materials
Healthcare
Providers
Investment Banking and
Brokerage Services
Medical Equipment
and Services
Electronic and
Electrical Equipment
Pharmaceuticals and
Biotechnology
Software and
Computer Services
1
Other includes Technology, Hardware and Equipment, Media, Alternative Energy, Telecommunications Service Providers, Travel and Leisure, Aerospace and Defence,
Leisure Goods, Closed End Investments, Oil, Gas and Coal, and Industrial Materials.
16
Octopus AIM VCT plc Annual report 2023
The Investment Manager
Personal service
Octopus was established in 2000 and has a strong commitment
to both smaller companies and to VCTs. Octopus Investments
Limited also acts as Investment Manager to four other listed
investment companies and has a total of over 12.8 billion of
funds under management. If you have any questions about this
report, or if it would help to speak to one of the fund managers,
please do not hesitate to contact us on 0800 316 2295.
The Quoted Companies team at Octopus comprises:
Kate Tidbury
Kate is the lead manager of the Octopus AIM VCTs and has over
35 years’ experience within the UK quoted smaller companies
market. Kate started her City career in 1986 as a research analyst
with Sheppards and Chase followed by Panmure Gordon. From
1993 she was an Investment Manager responsible for managing
ethical and smaller companies’ funds with the Co-operative
Bank and Colonial First State Investments. In 2000, she joined
the AIM team at Close Brothers Group and was involved in the
management of multiple AIM portfolios including the AIM VCTs.
In 2008, she joined Octopus and is focused primarily on the
management of the AIM VCT portfolios. Kate provides investment
management support across all the Quoted Companies team
portfolios.
Mark Symington
Mark is a fund manager on the Quoted Companies team, focusing
predominantly on the Octopus AIM VCTs. Mark joined Octopus
in 2012, having worked previously at asset manager Warwick
Wealth in South Africa. He graduated from the University of Cape
Town in 2010 with a Bcom in Economics and Finance. In addition,
Mark provides analytical and investment management support
across all the Quoted Companies team portfolios.
Dominic Weller
Dominic is a fund manager on the Quoted Companies team. He
provides analytical and investment support across all the Quoted
Companies team portfolios and co-manages the FP Octopus UK
Future Generations Fund, FP Octopus UK Micro Cap Growth Fund,
FP Octopus UK Multi Cap Income Fund and the Octopus AIM
VCTs. He is a member of the Octopus Investments Responsible
Investment Committee and leads the team’s stewardship eorts.
He is a CFA charterholder.
Freda Isingoma
Freda started her career as an Investment Analyst at Charterhouse
CCF before joining the Quoted Companies team at Close Brothers
in 2001, focused on managing the AIM VCT, inheritance tax and
smaller companies portfolios. In 2008 she moved to South Africa
to join Investec Asset Management, where she co-managed
the Africa Fund (a listed equity portfolio investing across Africa).
In 2010 she ventured into entrepreneurship launching a beauty
service brand in South Africa, and more recently a UK-based art
investment business specialising in providing investment and
ecosystem impact solutions for the African art market. She joined
Octopus in January 2022 and is focused primarily on the AIM
VCT portfolios.
Richard Power
With overall responsibility for the Quoted Companies team
at Octopus, Richard has over 25 years’ experience of smaller
company investing. He is lead manager of the FP Octopus UK
Micro Cap Growth Fund and also oversees the investment process
within the team which includes the AIM IHT portfolios, and AIM
VCTs. Richard is also co-manager on the FP Octopus UK Multi Cap
Income and FP Octopus UK Future Generation Funds. Richard
started his career in 1995 at Duncan Lawrie, where he managed
a successful small companies fund. He subsequently joined Close
Brothers to manage a smaller companies investment trust before
moving to Octopus to head up the Quoted Companies team
in 2004.
Chris McVey
Chris is the lead manager of the Octopus Multi Cap Income
Fund and has been a specialist within the quoted UK smaller
companies market for over 20 years. In 2016, he joined Octopus
from Citigroup, where he was most recently a UK Small and
Mid-Cap Equity research analyst focusing across a variety of
sectors. Prior to this he spent almost seven years on the Smaller
Companies team at Gartmore Investment Management as an
investment manager and analyst. Chris works across all the
Quoted Company portfolios. He is lead manager on the FP
Octopus UK Multi Cap Income Fund, and a co-manager on the
FP Octopus UK Micro Cap Growth and FP Octopus UK Future
Generation Funds.
Edward Griths
Edward is an experienced portfolio manager, with a City career
spanning over 20 years. Having previously worked at Schroders
Investment Management Pension Funds and State Street, he
joined Octopus in 2004 to launch the company’s AIM Inheritance
Tax Service. Edward is involved primarily in the management of
the AIM Inheritance Tax Service portfolios for private individuals
and provides investment management and trading support
across all the Quoted Companies team portfolios.
Stephen Henderson
Steve is an experienced portfolio manager, with over 15 years in
the City. He joined Octopus in 2008 as a graduate trainee and
moved to the Quoted Companies team in 2011. Steve is involved
primarily in the management of the Octopus AIM Inheritance
Tax Service and Octopus AIM Inheritance Tax ISA portfolios. He
conducts analysis across AIM with a particular interest in the legal
sector, having graduated with a law degree from the University
of Nottingham. Steve provides investment and trading support
across all the Quoted Companies team portfolios.
Jessica Sweeney
Jessica joined Octopus in 2014 having graduated from the
University of Liverpool the same year, where she studied
International Business. She worked in multiple operations
functions across Octopus, before moving to the Quoted
Companies team in 2018 to co-manage the AIM Inheritance
Tax portfolios. Jessica provides investment and trading support
across all the Quoted Companies team mandates.
17
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Charles Lucas
Charles joined Octopus in 2011 from LV= Asset Management,
having previously worked in the Personal Pensions and SIPP space
for GE Life and LV=. Charles initially joined Octopus as a member
of the operations team, later working as a Project Manager for
MiFID II. He joined the Quoted Companies team as a Product
Development Analyst to enhance trading capabilities and
performance analytics.
The Investment Manager and responsible
investment
Octopus is an accredited B Corp and signatory to the
internationally recognised Principles for Responsible Investment,
demonstrating Octopus’ commitment to responsible investment
and to creating a more sustainable financial system.
The investment team make investments that can be a catalyst
for positive, meaningful change. The team believe that in the
future, some of the most successful companies will be a force
for good, and that in today’s hyperconnected transparent world,
how a company behaves is just as important as what it does.
Mission
While the Company doesn’t target specific sustainability goals
or objectives, the team look for companies which will play an
integral role in our future. The purpose of a VCT is to provide
capital for small growth companies. Companies exposed to the
new economy and technologies make up a significant proportion
of the portfolio, which includes those focused on building a
sustainable planet, revitalising healthcare and empowering
people. Examples of this include:
• Ergomed – helping to develop treatments for some of the
world’s rarest diseases.
• Ilika – a pioneer in a ground-breaking solid state battery
technology designed to meet the specific demands of a wide
range of applications.
• Feedback – a specialist medical imaging technology
company providing innovative software and systems.
• Learning Technologies – a group of businesses who provide
innovative learning technology solutions.
Materiality of risks to investments
As part of the investment process, the team incorporate a
material risk review of sustainability issues. These risks include:
• Environmental: emissions, energy management, waste,
ecological impact.
• Social: privacy, security, product quality, selling practices.
• Human: labour, health and safety, diversity.
• Business model: product design, supply chain, material
sourcing.
• Leadership: ethics, competitive behaviour, regulatory, critical
incidents, and risk management.
The team consider the exposure to these risks and how well
portfolio companies are managing them. Disclosures relating to
climate risks are set out in ‘climate-related matters’ on page 27.
Responsibility
As part of the investment management approach, the team
discuss the portfolio companies’ strategy, financial performance,
data disclosures, capital structure and corporate governance
with the management teams. Existing governance structures
may not be mature (given the small size of portfolio companies),
so the team assess whether weaknesses exist and if the company
management can address these weaknesses. The team take part
in consultations on remuneration and challenge non-executive
directors to align with company objectives, aiming to influence
by giving feedback to corporate advisers and meeting with non-
executive directors and voting on resolutions at general meetings.
When it comes to voting, all holdings are covered by Institutional
Shareholder Services (ISS), a leading global advisory firm. The
team consider the independent research ISS provides and discuss
votes as a team to create long-term shareholder value.
18
Octopus AIM VCT plc Annual report 2023
Introduction
The purpose of the report is to provide shareholders with sucient
information to enable them to assess the extent to which the
Directors have performed their legal duty to act in good faith
and to promote the success of the Company in accordance
with Section 172 of the Companies Act 2006 for the benefit of
shareholders as a whole, as set out in the Strategic Report on
pages 18 and 19. KPIs on performance are on pages 22 and 23.
The directors of a company are required to act in the way they
consider will most likely promote the success of the company for
the benefit of its members as a whole. In doing this, Section 172(1)
requires a director to have regard, amongst other matters, to the:
• likely consequences of any decisions in the long term;
• need to act fairly as between members of the company;
• need to foster the company’s business relationships with
suppliers, customers and others;
• impact of the company’s operations on the community and
environment;
• desirability of the company maintaining a reputation for high
standards of business conduct; and
• interests of the company’s employees.
In discharging the Board’s Section 172 duties regard has been
given to the above factors. The Board also has regard to other
factors where relevant. By considering the Company’s purpose
and objectives together with its strategic priorities and having a
process in place for decision-making, the Board aims to ensure
that decision-making is consistent and predictable.
As a Venture Capital Trust, Octopus AIM VCT plc has no
employees. However, the Directors assessed the impact of
the Company’s activities on other stakeholders. The Company
considers its shareholders, the Investment Manager, portfolio
companies and other service providers to be its key stakeholders.
Shareholder engagement
Shareholder engagement is given high priority by the Board.
The Company engages with its shareholders via various media
including, but not limited to, the Annual General Meeting (AGM),
the annual report and accounts and market announcements.
The AGM gives shareholders the opportunity to exercise their
right to vote on resolutions and engage with the Board and the
Investment Manager. Last year, on 12 July 2022, the Company
held an online shareholder event which gave shareholders the
opportunity to hear directly from the Investment Manager and
the Board, prior to the AGM which was held on 21 July 2022.
There will be a similar shareholder event this year, to be held on
13 July 2023, in advance of the AGM on 20 July 2023. The voting
results from all General Meetings are published on the Company’s
website.
The Board regularly disseminates information to shareholders,
including a weekly NAV, and through RIS releases on the
London Stock Exchange. Shareholders receive the annual
report and accounts which aims to provide a full understanding
of the Company’s activities and results. This information,
together with the half-yearly reports, prospectus and other
shareholder information, is published via the London Stock
Exchange and on the Investment Manager’s website at
www.octopusinvestments.com.
The Board always welcomes questions from our shareholders at
the AGM. To make sure we are able to respond to any questions
you may have for either the Investment Manager or the Board, we
would request that you please send these via email to
AimAGM@octopusinvestments.com by 5.00pm on 12 July 2023.
Provision 4 of the 2018 UK Corporate Governance Code requires a
company which has received 20% or more of votes cast against
a resolution to explain, when announcing the voting results,
what actions it intends to take to consult shareholders in order
to understand the reasons behind the result. The Company
continues to monitor the 20% threshold for votes cast against
Board recommendations for a resolution but has not yet been
required to take any actions in this regard.
Engagement with the Investment Manager
It is normal practice for Venture Capital Trusts to delegate
authority for day-to-day management of the Company to an
Investment Manager and then to engage with the Investment
Manager in setting, approving and overseeing the execution of
the business strategy and related policies and all administration
and control functions. The Investment Manager attends the
scheduled quarterly Board meetings, and other ad-hoc meetings
as appropriate, of the Company, ensuring an open dialogue.
At every Board meeting a review of financial and operational
performance, as well as legal and regulatory compliance, is
undertaken. The Board also reviews other areas over the course
of the financial year including the Company’s business strategy;
key risks; stakeholder-related matters; diversity and inclusivity;
environmental matters; corporate responsibility; and governance,
compliance and legal matters. The Board formally reviews the
performance of the Investment Manager on an annual basis. This
is done by all Board members completing an annual questionnaire
and discussing the outcome before concluding.
Engagement with portfolio companies
The Company’s performance is directly linked to the performance
of its underlying portfolio companies. The Board has delegated the
monitoring of its portfolio companies to the Investment Manager
which engages with portfolio companies through a programme
of regular company meetings as part of its investment process.
The Board has also given the Investment Manager discretionary
authority to vote on portfolio company resolutions on its behalf
as part of its approach to corporate governance.
Section 172(1) statement
19
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Engagement with other key stakeholders and
environment
The Investment Manager is the Company’s key business partner,
with responsibility for the provision of investment management,
administration, custody and company secretarial services.
During the period the Board received sucient information to
assist in understanding the interests and views of the Company’s
key stakeholders; investors, portfolio companies and service
providers to the Company, including the auditor, lawyers
and registrar.
The Board recognises the importance of ESG (environmental,
social and governance matters) and the Octopus Group, of
which the Investment Manager forms a part, certified as a B
Corp in February 2021. B Corp certification is a designation that
a business is meeting high standards of verified performance,
accountability and transparency on factors from employee
benefits and charitable giving to supply chain practices and
input materials. Certified B Corps are recognised as leaders in
the global movement for an inclusive, equitable and regenerative
economy.
The Investment Manager is continuing to develop processes
and practices that deliver on ESG principles. This includes the
development and implementation of internal processes and
checks in line with the UN Principles for Responsible Investing
(UNPRI) and working towards meeting the requirements of
the UK Stewardship Code managed by the Financial Reporting
Council (FRC). The Investment Manager will continue to monitor
the ESG practices of existing portfolio companies and over
the coming year we will review our portfolio to confirm our
compliance with these expectations. An example of this is the
ongoing assessment of the carbon emission levels of companies
within the portfolio, and their progression towards furthering
sustainability and environmental goals regarding net zero
ambition and decarbonisation.
The Board has moved to a largely paperless operation over the
past 36 months, and the increasing use of conferencing platforms
has reduced travel in relation to the Company’s activities.
Key decisions made during the year
Some of the key decisions made by the Company during the year
that required the Board to take into consideration Section 172(1)
factors include:
• In line with the Company’s objectives, on 22 September 2022,
the Board issued an oer for subscription of shares. This was
discussed with the Investment Manager, and allowed new
and existing shareholders to invest in the Company.
• The Company continued to buy back shares, providing
liquidity to shareholders who wished to sell their shares. The
Board maintained a discount of approximately 4.5% to NAV,
therefore balancing the interests of both remaining and
selling shareholders.
• The Board looks to create shareholder value. During
the year, following targets agreed with the Investment
Manager, dividends totalling 5.5p were paid to shareholders
(comprising a final dividend of 2.5p in respect of the previous
financial year, and an interim dividend of 3.0p in respect of
this financial year).
20
Octopus AIM VCT plc Annual report 2023
The Company’s objective
The objective of the Company is to invest in a broad range of
Alternative Investment Market (‘AIM’) or Aquis Stock Exchange
(‘AQSE’) (previously known as New Securities Stock (‘NEX’)
Exchange) traded companies in order to provide shareholders
with attractive tax-free dividends and long-term capital
growth. Investments are made selectively across a range of
sectors in qualifying companies that have the potential to grow
and enhance their value.
The Company has been approved as a Venture Capital Trust by
HMRC under Section 259 of the Income Taxes Act 2007. The shares
of the Company were first admitted to the Ocial List of the UK
Listing Authority and trading on the London Stock Exchange on
17 March 1998 and can be found under the TIDM code ‘OOA’. The
Company is premium listed.
Investment policy
The Company’s investment policy has been designed and
updated to ensure continuing compliance with the VCT qualifying
conditions. The Board intends that the long-term disposition
of the Company’s assets will be at least 85% in a portfolio of
qualifying AIM, AQSE traded investments or unquoted companies
where in the short to medium term, the management views an
initial public oering (‘IPO’) on AIM or AQSE.
The non-qualifying balance (approximately 11% of its net assets)
will be invested in permitted investments held for short-term
liquidity, generally comprising short-term cash or money market
deposits with a minimum Moody’s long-term debt rating of ‘A’.
A proportion of the balance can be invested in funds managed
by Octopus or other direct equity investments. This provides
a reserve of liquidity which should maximise the Company’s
flexibility as to the timing of investments, disposals, dividend
payments and share buybacks.
Risk is spread by investing in a number of dierent businesses
across a range of industry sectors. The maximum amount
invested in any one company is limited to the amount permitted
pursuant to VCT legislation in a fiscal year and no more than 15%
of the value of its investment at the time of investment. The value
of an individual investment is expected to increase over time as a
result of trading progress and a continuous assessment is made
of its suitability for sale. However, shareholders should be aware
that the Company’s qualifying investments are held with a view
to long-term capital growth as well as income and will often
have limited marketability; as a result it is possible that individual
holdings may grow in value, to the point where they represent a
significantly higher proportion of total assets prior to a realisation
opportunity being available.
The Company’s Articles permit borrowings of amounts up to
10% of the adjusted share capital and reserves (as defined in
the Company’s Articles). However, investments will normally be
made using the Company’s equity shareholders’ funds and it is
not intended that the Company will take on any borrowings.
No material changes may be made to the Company’s
investment policy described above without the prior approval
of shareholders by the passing of an Ordinary Resolution. The
Directors will continually monitor the investment process and
ensure compliance with the investment policy.
Future prospects
The Company’s longer-term performance record has allowed the
Company to maintain the dividend payments to shareholders in
line with the dividend policy set out on page 2. The Board believes
the Company’s business model will enable it to continue to deliver
the targeted regular tax-free annual dividends referred to in the
Chair’s Statement. We have seen another year of uncertainty due
to the cost of living crisis and the unstable economic environment
and the Company performed marginally less well than the
FTSE AIM All-Share Index. The FTSE All-Share performed better
due to large energy and pharmaceutical companies. However,
the Company has a strong cash position which enables us
to invest in new companies and support existing companies.
The outlook statements in both the Chair’s Statement and the
Investment Manager’s Review on pages 3 and 8 respectively
provide further details on the more immediate prospects of
the Company.
Performance
The Board is responsible for the Company’s investment strategy
and performance, although the management of the Company’s
investment portfolio is delegated to Octopus through the
investment management agreement, as referred to in the
Directors’ Report.
The graph on the following page compares the total return of
the Company over the period from February 2005 to February
2023 with the total return from notional investments in the FTSE
All-Share Index, FTSE AIM All-Share Index and FTSE SmallCap
(excluding investment companies) Index over the same period.
The FTSE AIM All-Share Index is a stock market index consisting
of all companies quoted on the Alternative Investment Market
and the FTSE SmallCap Index is an index of small market
capitalisation companies. The Directors consider these to be
the most appropriate benchmarks but would remind investors
that approximately 15.7% of the FTSE AIM All-Share index is
attributable to resources, investment vehicles and property
sector stocks in which VCTs cannot invest. VCTs are also limited
to investing into companies with certain size and age restrictions.
The inclusion of the FTSE All-Share Index is to provide a wider stock
market context. Investors should be reminded that shares in VCTs
generally continue to trade at a discount to the NAVs.
Business review
21
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Octopus AIM VCT plc – Portfolio performance
380
360
340
320
300
280
260
240
220
200
180
160
140
120
100
80
60
40
20
Value of £100 investment (£)
NAV return + reinvestment of all dividends (net of upfront tax relief), based on notional investment of
£100 on 1 March 2005
FTSE All-Share total return, based on £100 notional investment on 1 March 2005 and the reinvestment of all income
FTSE SmallCap ex investment trusts total return, based on £100 notional investment on 1 March 2005 and
the reinvestment of all income
FTSE AIM All-Share total return, based on £100 notional investment on 1 March 2005 and the reinvestment of all income
Feb 05
Feb 06
Feb 07
Feb 08
Feb 09
Feb 10
Feb 11
Feb 12
Feb 13
Feb 14
Feb 15
Feb 16
Feb 17
Feb 18
Feb 19
Feb 20
Feb 21
Feb 22
Feb 23
22
Octopus AIM VCT plc Annual report 2023
Results and dividend
Year ended
28 February 2023
£’000
Year ended
28 February 2022
£’000
Net loss attributable to shareholders
(33,414)
(19,459)
Distributions:
Interim dividend paid: 2.5p (2022: 2.5p)
4,501
4,031
Proposed final dividend: 2.5p (2022: 3.0p)
4,462
4,775
The proposed final dividend of 2.5p for the year ended 28 February 2023 will be paid on 10 August 2023 to shareholders on the register
on 28 July 2023 subject to approval at the AGM.
Key Performance Indicators (‘KPIs’)
As a VCT, the Company’s objective is to provide shareholders with attractive dividends and capital return by investing its funds in a
broad spread of predominantly quoted UK companies which meet the relevant criteria for VCTs.
The Board has identified five key performance measures to assess the Company’s success in meeting these objectives. Some of these
are classified as alternative performance measures (‘APMs’
1
) in line with Financial Reporting Council (‘FRC’) guidance. The glossary of
terms on page 73 has further details:
1. NAV per share;
2. total return per share;
3. dividends per share payable in respect of the year;
4. ongoing charges; and
5. qualifying % under VCT rules.
1. NAV per share
The NAV per share of the Company is the sum of the underlying assets less the liabilities of the Company divided by the total
number of shares in issue.
Current year
(pence per share)
Prior year
(pence per share) Reason for movement
78.5 104.8 The NAV per share has decreased from last year’s value of 104.8p to
78.5p. This fall of 25.1% is the result of a market-driven fall in valuations.
2. Total return per share
1
Total return is calculated as movement in NAV per share in the period plus dividends paid in the period, divided by the NAV per
share at the beginning of the period. Total return per share enables shareholders to evaluate more clearly the performance of
the Company, as it reflects the underlying value of the portfolio at the reporting date. This is the most widely used measure of
performance in the VCT sector.
Current year % Prior year % Reason for movement
(19.8) (9.1) As previously considered, the NAV per share has decreased from last
year’s value of 104.8p to 78.5p. This gave a total negative return of 19.8%
or 20.8p per share, after adding back dividends of 5.5p paid in the year.
The Board notes that for the year under review this was behind the FTSE AIM All-Share Index total return figure of a negative 16.1%.
The Board remains confident about achieving the long-term objective of the Company. Performance is also measured against the
FTSE SmallCap Index and the FTSE All-Share Index, with the latter being provided for wider stock market context. This is also shown
on the graph on the previous page. In the year under review the FTSE SmallCap Index fell by 5.8% and the FTSE All-Share Index rose
by 7.3%, all on a total return basis. These indices have been adopted as comparative indices. Further details on performance can
be found within the Investment Manager’s Review on pages 4 to 15.
Business review continued
23
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
3. Dividends per share payable in respect of the year
The Company has a target of paying an annual dividend of 5.0p per share or a 5% yield based on the year-end share price,
whichever is greater at the time.
Current year
(pence per share)
Prior year
(pence per share) Reason for movement
5.0 5.5 Last year the Company declared ordinary dividends of 5.5p per share
and no special dividend. This year the Company has declared ordinary
dividends of 5.0p per share and no special dividend. This reduction in
dividend is a reflection of the fall in NAV in the period but results in a
higher yield than the prior period
The 5.0p dividends declared for the year gives an annual yield of 6.7% based on the year-end share price of 74.5p, which exceeds
the Board’s target of 5% yield. Dividends will be paid semi-annually. It remains the intention of the Board to continue this policy,
subject to available cash and distributable reserves. However, this is not a guarantee, and no projection or forecast is expressed
or implied. A full list of dividends paid can be found in the table on page 70.
4. Ongoing charges
1
The ongoing charges ratio has been calculated using the AIC recommended methodology and excludes exceptional costs and trail
commission. The ratio is calculated by expressing ongoing charges for the year as a percentage of average net asset value during
the year.
Current year % Prior year % Reason for movement
2.1 1.9 The ongoing charges ratio has increased from last year primarily due to
the fall in average net assets over the period combined with a lag in the
reduction of the management fee, which will be seen in the next period.
The ongoing charges of the Company for the year to 28 February 2023 is in line with the Board expectations. The expenses incurred
by the Company are summarised in notes 3 and 4 to the financial statements on pages 55 and 56.
5. Qualifying % under VCT rules
The Company must comply with VCT legislation laid down by HMRC. A key requirement is to maintain at least an 80% qualifying
investment level.
Current year % Prior year % Reason for movement
88.6 90.8 88.6% (as measured by HMRC rules) by value of the Company’s
investments was represented at the end of the period by shares or
securities comprised in qualifying holdings of the Company. The
qualification level decreased by 2.2%. Further details on VCT regulations
can be found within the Investment Manager’s Review on page 7.
The Chair’s Statement, on pages 2 and 3, includes a review of the Company’s activities and future prospects; further details are
also provided within the Investment Manager’s Review on pages 4 to 15.
1
These KPIs are defined as alternative performance measures (‘APMs’) and are defined in more detail in the Glossary of Terms on page 73.
24
Octopus AIM VCT plc Annual report 2023
Viability statement
In accordance with provision 4.31 of the UK Corporate Governance
Code 2018, the Directors have assessed the prospects of the
Company over a longer period than the 12 months required by
the ‘going concern’ provision. The Board conducted this review for
a period of five years, which was considered to be a reasonable
time horizon given that the Company has raised funds under
an oer for subscription which closed to new applications on
13 October 2022 and, under VCT rules, subscribing investors are
required to hold their investment for a five-year period in order
to benefit from the associated tax reliefs. The Board regularly
considers the Company’s strategy, including investor demand for
the Company’s shares, and a five-year period is considered to be
a reasonable time horizon for this.
The Board carried out a robust assessment of the emerging
and principal risks facing the Company and its current position.
This includes the impact of the cost of living crisis, the unstable
economic environment and any other risks which may adversely
impact its business model, future performance, solvency or
liquidity. Particular consideration was given to the Company’s
reliance on, and close working relationship with, the Investment
Manager. The principal risks faced by the Company and the
procedures in place to monitor and mitigate them are set out on
the following pages.
The Board has also considered the liquidity of the underlying
investments and the Company’s cash flow projections
considering the material inflows and outflows of the Company
including investment activity, buybacks, dividends and fees and
found these to be realistic and reasonable. The Company’s cash
flow includes cash equivalents which are short-term, highly liquid
investments.
Based on the above assessment the Board confirms that it has
a reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due over
the five-year period to 28 February 2028.
Business review continued
25
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Principal risks, risk management and regulatory environment
In accordance with the Listing Rules under which the Company operates, the Board is required to comment on the potential risks and
uncertainties which could have a material impact on the Company’s performance.
The Board carries out a review of the risk environment in which the Company operates. The main areas of risk identified by the Board
are as follows:
Risk Mitigation
Investment performance: The focus of the
Company’s investments is into VCT qualifying
companies quoted on AIM and the AQSE, which
by their nature entail a higher level of risk and
lower liquidity than investments in larger quoted
companies.
The Investment Manager has significant experience and a strong track record
of investing in AIM and AQSE companies, and appropriate due diligence
is undertaken on every new investment. The overall risk in the portfolio is
mitigated by maintaining a wide spread of holdings in terms of financing stage,
age, industry sector and business models. The Board reviews the investment
portfolio with the Investment Manager on a regular basis.
VCT qualifying status risk: The Company is
required at all times to observe the conditions
for the maintenance of HMRC approved VCT
status. The loss of such approval could lead to
the Company and its investors losing access
to the tax benefits associated with VCT status
and, in certain circumstances, to investors being
required to repay the initial income tax relief on
their investment.
Prior to investment, the Investment Manager seeks assurance from the
Company’s VCT status adviser that the investment will meet the legislative
requirements for VCT investments.
On an ongoing basis, the Investment Manager monitors the Company’s
compliance with VCT regulations on a current and forecast basis to ensure
ongoing compliance with VCT legislation. Regular updates are provided to the
Board throughout the year.
The VCT status adviser formally reviews the Company’s compliance with VCT
regulations on a bi-annual basis and reports their results to the Board.
Operational risk (reliance on Octopus): The
Board is reliant on the Investment Manager to
manage investments eectively, and manage
the services of a number of third parties, in
particular the registrar and tax advisers. A failure
of the systems or controls at the Investment
Manager or third-party providers could lead
to an inability to provide accurate reporting
and to ensure adherence to VCT and other
regulatory rules.
The Board reviews the system of internal control, both financial and non-
financial, operated by the Investment Manager (to the extent the latter are
relevant to the Company’s internal controls). These include controls that are
designed to ensure that the Company’s assets are safeguarded, that proper
accounting records are maintained, and that regulatory reporting requirements
are met. Feedback on other third parties is reported to the Board on at least an
annual basis, including adherence to Service Level Agreements where relevant.
Information security: A loss of key data could
result in a data breach and fines. The Board is
reliant on the Investment Manager and third
parties to take appropriate measures to prevent
a loss of confidential customer information.
Annual due diligence is conducted on third parties which includes a review of
their controls for information security. The Investment Manager has a dedicated
information security team and a third party is engaged to provide continual
protection in this area. A security framework is in place to help prevent malicious
events. The Investment Manager reports to the Board on an annual basis
to update them on relevant information security arrangements. Significant
and relevant information security breaches are escalated to the Board when
they occur.
Economic and price risk: Events such as an
economic recession, movement in interest rates,
inflation, political instability and rising living costs
could cause volatility in the market, adversely
impacting the valuation of investments. This
could result in a reduction in the value of the
Company’s assets.
The Company invests in a diverse portfolio of companies across a range of
sectors, which helps to mitigate against the impact of performance in any one
sector. The Company also maintains adequate liquidity to make sure it can
continue to provide follow-on investment to those portfolio companies which
require it and which is supported by the individual investment case.
The Investment Manager monitors the impact of macroeconomic conditions
on an ongoing basis and provides updates to the Board at least quarterly.
Risk and risk management
26
Octopus AIM VCT plc Annual report 2023
Regulatory and reputational risk/legislative:
A change to the VCT regulations could adversely
impact the Company by restricting the
companies the Company can invest in under
its current strategy. Similarly, changes to VCT
tax reliefs for investors could make VCTs less
attractive and impact the Company’s ability to
raise further funds.
Failure to adhere with other relevant legislation
and regulation could result in reputational
damage and/or fines.
The Investment Manager engages with HM Treasury and industry bodies to
demonstrate the positive benefits of VCTs in terms of growing UK companies,
creating jobs and increasing tax revenue, and to help shape any change to
VCT legislation.
The Investment Manager employs individuals with expertise across the legislation
and regulation relevant to the Company. Individuals receive ongoing training
and external experts are engaged where required.
Liquidity/cash flow risk: The risk that the
Company’s available cash will not be sucient
to meet its financial obligations. The Company
invests into smaller companies, which are
inherently less liquid than stocks on the main
market. Therefore, these may be dicult to
realise for their fair market value at short notice.
The Investment Manager prepares cash flow forecasts to make sure cash
levels are maintained in accordance with policies agreed with the Board.
The Company’s overall liquidity levels are monitored on a quarterly basis by
the Board, with close monitoring of available cash resources. The Company
maintains sucient cash and readily realisable securities, including money
market funds and OEICs, which can be accessed at short notice. As at 28
February 2023, 16.2% of net assets were held in cash and cash equivalents and
11.5% in OEICs, realisable in four business days.
Valuation risk: For smaller companies or illiquid
shares, establishing a fair value can be dicult
due to the lack of readily available market data
for similar shares, resulting in a limited number of
external reference points.
Investments in companies traded on AIM and AQSE are valued by the
Investment Manager using closing bid prices as reported on Bloomberg. Where
investments are in unquoted companies or where there are indicators bid price
is not appropriate, alternative valuation techniques are used in accordance
with the International Private Equity and Venture Capital (IPEV) guidelines.
Valuations of unquoted portfolio companies are performed by appropriately
experienced sta, with detailed knowledge of both the portfolio company and
the market in which it operates. These valuations are then subject to review and
approval by the Octopus Valuations Committee, comprised of sta who are
independent of the Investment team and with relevant knowledge of unquoted
company valuations. The Board reviews valuations after they have been agreed
by the Octopus Valuations Committee.
Investment in FP Octopus UK Micro Cap Growth Fund, FP Octopus UK Multi
Cap Income Fund and FP Octopus UK Future Generations Fund are all valued
with reference to the daily prices which are published by Fund Partners, the
Authorised Corporate Director.
Emerging risks
The Board has considered emerging risks. The Board seeks to mitigate emerging risks and those noted below by setting policy, regular
review of performance and monitoring progress and compliance. In the mitigation and management of these risks, the Board applies
the principles detailed in the Financial Reporting Council’s Guidance on Risk Management, Internal Control and Related Financial and
Business Reporting.
The following are some of the potential emerging risks that the Board and the Investment Manager are currently monitoring:
• Adverse changes in global macroeconomic environment.
• Rising cost of living.
• Geo-political protectionism.
• Climate change.
Gender and diversity
The Board of Directors comprises one female and three male Non-Executive Directors with considerable experience of the
VCT industry. The gender, diversity and constitution of the Board is reviewed on an annual basis. If a new Director was to be appointed,
Risk and risk management continued
Principal risks, risk management and regulatory environment (continued)
27
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
the appointment would be made on the basis of expertise and
knowledge, with the objective of complementing the skillset of
existing Directors. Any future appointments will also have regard
to the FCA’s policy on Diversity and Inclusion, published in April
2022 to take eect for accounting periods commencing after
1 April 2022.
Employee, human rights, social and community
issues, environment policy and greenhouse gas
emissions
The Board’s policy on employee, human rights, social and
community issues, environment policy and greenhouse gas
emissions is discussed in the Directors’ Report on page 29.
Climate-related matters
Whilst not a requirement, the Board has chosen to continue
evolving its disclosures in line with the recommendations of the
Task Force on Climate-related Financial Disclosures (‘TCFD’) and
has given some initial disclosure under the main headings below,
which will continue to evolve over future periods:
• Governance: Day-to-day management of the portfolio, and
oversight of investment decisions, sits within the Investment
Manager’s governance structures. On an annual basis the
Octopus Responsible Investment Committee (‘ORIC’)
(comprised of an Octopus Founder, the Chief Investment
Ocer, the Heads of the Investment Teams and Head of
Impact and Sustainability) reviews climate-related risks and
opportunities that have been identified as being financially
material to the management of the Company. The prior
review highlighted that whilst the Company must consider
physical risks, transition risk would be the focus, given the
potential for the Company to influence legal, technology and
market changes through its decision-making powers over
which investments to make.
• Strategy: The Company makes investments into a range
of sectors but the companies receiving funding are small
companies specifically listed on AIM. Exposure to climate-
related risks is assessed on a deal-by-deal basis by the
investment team. The analysis considers transition risks and
the physical risks and impacts of climate change for industries
and sectors where this has been identified as a material
issue. The team are also focused on identifying investment
opportunities in companies that are well positioned to benefit
from the transition to a lower carbon economy.
• Risk management: The investment team use guidance
from the Sustainability Accounting Standards Board (‘SASB’)
to identify climate-related risks. Where potential material
climate-related risks have been identified, the investment
team assess how well the risk is managed by the company
through further due diligence. This is raised to the Investment
Committee, where appropriate, as part of the investment
process and is continually monitored.
• Metrics: Where relevant for the industry and sector, the
team review metrics reported by the Company to understand
material exposures, how they are being managed and
Company performance. This includes areas such as energy
management, energy use, carbon footprint disclosures and
commitments to appropriate carbon reduction pathways for
the sector and industry.
On an aggregated level, the Company’s most material
climate risk relates to carbon emission; this is due to the
underlying portfolio companies having to adapt their
business models to successfully transition to a lower/zero
carbon footprint. As such, the team have taken steps to
measure Scope 1 and 2 greenhouse gas emissions. Scope
1 emissions are those directly from Company-owned
and controlled resources. Scope 2 emissions are indirect
emissions from the generation of purchased energy, from a
utility provider. While the ultimate goal is to reduce portfolio
emissions to minimise these risks, the immediate goal is to
increase data coverage to 100% (currently 85% of portfolio
companies have been measured) within the next two years.
We are evolving the best way of reporting portfolio emissions
and we will continue to assess how best to present carbon
intensity measures in future reporting periods.
Current greenhouse gas (‘GHG’) emissions
1
:
• Scope 1 GHG emissions (tonnes CO
2
e): 1,917,6 84
• Scope 2 GHG emissions (tonnes CO
2
e): 170,499
The Responsible Investment approach of the Investment Manager
is detailed on page 17.
Consumer Duty
The Directors are aware of the Investment Manager’s
obligations to comply with the FCA’s Consumer Duty rules and
principles introduced in 2022 and coming into force in 2023.
Firms subject to Consumer Duty must ensure they are acting to
deliver good outcomes for consumers and that this is reflected
in their strategies, governance, leadership and policies. The
Investment Manager is currently undergoing a review of its
existing practices to identify any adaptations needed in order
to comply with the Consumer Duty principles. The Company is
not directly captured by Consumer Duty, however the Directors
will receive updates from the Investment Manager in order to
monitor how the Investment Manager is meeting its obligations.
The strategic report was approved on behalf of the Board by:
Neal Ransome
Chair
6 June 2023
1
The source of the figures quoted are ISS ESG. The methodology was developed over three years with the Swiss Federal Institute of Technology and includes about 800 sector
and sub-sector specific models. The numbers quoted are the total reported emissions of the portfolio companies that have published this information.
28
Octopus AIM VCT plc Annual report 2023
The Board comprises four Directors, all of whom are independent
of the Investment Manager. The Directors operate in a non-
executive capacity and are responsible for overseeing the
investment strategy of the Company. The Board has wide
experience of investment in both smaller growing companies and
larger quoted companies. All Directors are members of the Audit
Committee.
Neal Ransome (Chair)
Neal Ransome is a chartered accountant and was a partner at
PwC from 1996 to 2013. He was Chief Operating Ocer of PwC’s
Advisory business and led its Pharmaceutical and Healthcare
Corporate Finance practice. Neal was formerly a director of
Quercus (General Partner) Limited, a unit trust invested in
healthcare properties, and Parity Group Plc, an AIM-listed
professional services company. He is currently non-executive
chair of Proven VCT plc, which invests in unquoted companies,
and a non-executive director of Polar Capital Global Healthcare
Trust Plc. He is also a trustee and director of The Conservation
Volunteers, a UK charity dedicated to connecting people and
green spaces. Neal became a Director of the Company in 2016
and was appointed as Chair of Octopus AIM VCT plc in 2021.
Stephen Hazell-Smith
Stephen Hazell-Smith was the Managing Director of Close
Investment Limited until September 2001, having previously
founded Rutherford Asset Management in 1993. Prior to this
he gained experience of investment in smaller companies at
GT Investment Management where he was responsible for
launching its first UK equity fund. He also worked at Mercury
Asset Management from 1989 to 1992 and was the chair of PLUS
Markets Group PLC from 2005 to 2010. He is a director of PFP
Capital Limited and Puma VCT 13 plc. Prior to its merger with
Octopus AIM VCT plc in 2010 he was chair of Octopus Phoenix
VCT plc. Stephen became a Director of the Company in 1998.
Joanne Parfrey
Joanne Parfrey has a degree in Chemistry from Oxford University
and is an accountant by training. Joanne spent a number of
years in corporate finance with BOC Group plc and Elementis plc
before moving to private equity in 2000, joining LGV Capital. She
was formerly a non-executive director of Guy’s and St Thomas’
Enterprises Limited and Essentia Trading Limited. She is currently
chair of Babraham Research Campus Limited, a non-executive
of the Worldwide Healthcare Trust plc, audit chair of Henderson
International Income Trust plc, audit chair of Start Codon Limited
and audit chair of Ieso Digital Health Limited. Joanne became a
Director of the Company in 2016.
Andrew Boteler
Andrew Boteler is a chartered accountant and was formerly Chief
Financial Ocer of Gooch & Housego plc and Finance Director
of Riverford Organic Farmers Limited, one of the largest organic
fresh food retailers in the UK. In July 2021 Andrew became a
non-executive director of LungLife AI, Inc and holds the positions
of chair of the audit committee, chair of the remuneration
committee and senior independent director. Andrew has over
25 years’ experience working in the manufacturing sector, the last
19 being spent with high technology manufacturing companies.
Andrew became a Director of the Company in 2020 and was
appointed Chair of the Audit Committee in 2021.
Details of Directors
29
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
The Directors present their report and the audited financial
statements for the year ended 28 February 2023. The Corporate
Governance Report on pages 33 to 36 and the Audit Committee
Report on pages 37 and 38 form a part of this Directors’ Report.
The Directors consider that the annual report and accounts, taken
as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company’s
position, performance, business model and strategy.
Directors
Brief biographical notes on the Directors are given on page 28.
In accordance with the Articles of Association of the Company
and the Association Investment Companies Code of Corporate
Governance, Mr Boteler, Mr Hazell-Smith, Mr Ransome and Ms
Parfrey will retire as Directors at the forthcoming AGM, and
being eligible, oer themselves for re-election. Following a formal
performance evaluation as part of the Board evaluation, further
details of which can be found on page 34, the Board believes that
all the Directors continue to be eective non-executive Directors,
providing considerable experience and continuity to the Company
and demonstrating commitment to their roles.
Directors’ and ocers’ liability insurance
The Company has, as permitted by s236 of the Companies Act
2006, maintained insurance cover on behalf of the Directors and
Secretary indemnifying them against certain liabilities which may
be incurred by them in relation to the Company.
VCT regulations
Compliance with required rules and regulations is considered
when all investment decisions are made. The Company is further
monitored on a continual basis to ensure compliance. The main
criteria which the Company must adhere to are outlined below:
The Company is required at all times to hold at least 80% of
its investments (as defined in the legislation) in VCT qualifying
holdings, of which at least 70% must comprise eligible
Ordinary shares.
For this purpose, a ‘VCT qualifying holding’ consists of up to
£5 million invested in any one year in new shares or securities
of a UK AIM traded company or an unquoted company which
is carrying on a qualifying trade, and whose gross assets and
number of employees at the time of investment do not exceed
a prescribed limit. The definition of ‘qualifying trade’ excludes
certain activities such as property investment and development,
some financial services and asset leasing.
The Finance Act 2014 amended the VCT rules in respect of VCT
shares issued on or after 6 April 2014, such that VCT status will
be withdrawn if a dividend is paid (or other forms of distribution
or payments are made to investors) from the capital received
by the VCT from that issue within three years of the end of the
accounting period in which shares were issued to investors. This
may reduce the amount of distributable reserves available to
the Company to fund dividends and share buybacks. However,
with share premium cancellations when necessary, the Company
currently has sucient distributable reserves to allow dividends to
continue to be paid at a level in line with the Company’s current
dividend policy.
The Finance Act 2016 introduced a number of changes to VCT
rules to bring the legislation into line with EU State Aid Risk Finance
Guidelines. The legislation introduced new criteria which stipulate
a lifetime cap on the total amount of State Aid investment a
company can receive, the age of companies which are eligible for
investment and specific requirements relating to the use of the
funds raised. See page 7 of the Investment Manager’s Review for
a summary of the requirements.
The Finance Act 2018 made further changes to VCT rules. As
referred to earlier on page 7, the Company is required to hold
at least 80% of its investments in VCT qualifying holdings as of
the last accounting period. The legislation also introduced a new
deadline by which the Company must invest at least 30% of
the money raised from the issue of shares in qualifying holdings
within 12 months of the end of the accounting period in which the
shares were issued.
The Company has maintained compliance with VCT legislation
for the year under review and intends to continue to do so for
future periods.
Going concern
The Company’s business activities and the factors likely to aect
its future development, performance and position are set out
in the Chair’s Statement on pages 2 and 3 and the Investment
Manager’s Review on pages 4 to 15. Further details on the
management of financial risk may be found in the Business
Review on page 20 and in note 16 to the financial statements.
The Board receives regular reports from the Investment Manager
and the Directors have a reasonable expectation that the
Company has adequate resources to continue in operational
existence for a period of at least 12 months. As discussed in the
Viability Statement on page 24, the Directors have considered
the Company’s cash flow projections in a range of scenarios,
including both continuation of normal levels of fundraising as well
as potential no fundraise scenarios. In both scenarios the Board is
confident in the ability of the Company to maintain its VCT status
and meet liabilities as they fall due. Some of the ways in which
the Board could manage the operations of the Company include
adjusting investment strategy and careful consideration of non-
committed cash outflows, including dividends and buybacks.
They are satisfied that no material uncertainties leading to
significant doubt about going concern have been identified. It
is appropriate to continue to adopt the going concern basis in
preparing the financial statements.
Directors’ report
30
Octopus AIM VCT plc Annual report 2023
Going concern continued
The assets of the Company include securities, a large proportion
of which are readily realisable and, accordingly, the Company
has adequate financial resources to continue to satisfy the
expenses of commitments under share buybacks and to remain
in operational existence for a period of at least 12 months.
A resolution will be put to the Company’s AGM to approve the
Company continuing as a venture capital trust. A continuation
vote has been approved annually since 2011.
Dividend
The proposed final dividend of 2.5p for the year ended
28 February 2023 will be paid on 10 August 2023 to shareholders on
the register on 28 July 2023, subject to approval by shareholders
at the AGM being held on 20 July 2023, as set out in the Strategic
Report.
Management
The Company has in place an agreement with Octopus to act
as Investment Manager which is central to the ability of the
Company to continue in business. The principal terms of the
Company’s management agreement with Octopus are set out
in note 3 to the financial statements. The Investment Manager
also provides secretarial, administrative and custodian services
to the Company. Octopus is not entitled to any performance fee.
There are no other contracts which are deemed to be essential to
the business of the Company.
As required by the Listing Rules, the Directors confirm that, in their
opinion, the continuing appointment of Octopus as Investment
Manager is in the best interest of the shareholders as a whole. In
reaching this conclusion the Directors have taken into account
the performance of the investment portfolio and the ability of
the Investment Manager to produce satisfactory investment
performance in the future. No Director has an interest in any
contract to which the Company is a party.
The Board has delegated the routine management of decisions,
such as the payment of running costs, to Octopus. Investment
decisions are discussed with the Board.
Whistleblowing
The Board has considered the arrangements implemented by
the Investment Manager to encourage sta of the Investment
Manager or Company Secretary of the Company to raise
concerns, in confidence, within their organisation about possible
improprieties in matters of financial reporting or other matters.
It is satisfied that adequate arrangements are in place to allow
an independent investigation, and follow-on action where
necessary, to take place within the organisation.
Employee, human rights, social and community
issues
The Board seeks to conduct the Company’s aairs responsibly.
The Company is required by company law to provide details of
employee, human rights, social and community issues, including
information about any policies it has in relation to these matters
and the eectiveness of such policies. As an externally managed
investment company with no employees the Company does not
maintain specific policies in relation to these matters.
Environment policy and greenhouse gas
emissions
The day-to-day operations of the Company are outsourced to
the Investment Manager, and consequently the Company does
not have its own environmental policy, relying instead on the
Investment Manager’s environmental strategy. The Company
does, however, recognise the importance of conducting its
business, including investment decisions, in a manner that is
environmentally responsible. The Company does not produce
any reportable emissions as the fund management is outsourced
to Octopus with no physical assets or property held by the
Company. As the Company has no employees or operations, it is
not responsible for any direct emissions, and as it uses less than
40,000 kWh of energy during the reporting year it is exempt from
SECR reporting requirements.
Financial risk management
The most significant financial risks arising from the Company’s
financial instruments are price risk, interest rate risk, credit
risk and liquidity risk. The policies for managing these risks are
regularly reviewed by the Board and full details can be found in
note 16 to the financial statements.
Bribery Act
Octopus has an Anti-Bribery policy which introduced robust
procedures to ensure full compliance with the Bribery Act 2010
and to ensure that the highest standards of professional ethical
conduct are maintained. All employees and those working for, or
on behalf of, the firm are aware of their legal obligations when
conducting Company business.
Share capital
The Company’s share capital as at 28 February 2023 comprised
179,802,084 Ordinary shares of 1p each.
The voting rights of the Ordinary shares on a show of hands is
one vote for each member present or represented, the voting
rights on a poll are one vote for each share held. There are no
restrictions on the transfer of the Ordinary shares and there are
no shares that carry special rights with regard to the control of
the Company.
Directors’ report continued
31
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Share issues and open oers
On 22 September 2022, a prospectus offer was launched
alongside Octopus AIM VCT 2 plc to raise a combined
total of up to £20 million with a £10 million over-allotment
facility. This prospectus closed to further applications on
13 October 2022, being fully subscribed. 21,311,806 shares were
issued as part of the prospectus oer in the period, raising
£17.3 million after costs for the Company.
During the year 2,122,937 shares were issued to those
shareholders who elected to receive shares under the Dividend
Reinvestment Scheme as an alternative to dividends. This raised
£1.8 million.
An additional 199,628 shares were issued to shareholders as a
result of reduced adviser charges, and to Octopus employee
shareholders as a result of a rebate of part of the annual
management fee. These shares were issued to those investors
who, in accordance with the adviser charging terms contained in
each fundraising document oered to the public and published
since 31 December 2012 following the introduction of the retail
distribution, had chosen to pay their adviser less than the 0.5%
ongoing adviser charge; and to employees, who have been
rebated the annual management charge.
Share buybacks and redemptions
During the year, the Company purchased for cancellation 4,312,810
shares at a weighted average price of 82.7p (2022: 6,271,209 shares
with a nominal value of 1p for cancellation, at a weighted average
price of 119.6p) for a total consideration of £3.6 million (2022:
£7.5 million). This represents 2.4% of the closing share capital.
These were repurchased in accordance with the Company’s
share buyback facility in an attempt to assist the marketability
of the shares and prevent the shares trading at a wide discount
to the NAV.
Post balance sheet events
A full list of post balance sheet events since 28 February 2023
can be found in note 17 to the financial statements on page 66.
Rights attaching to the shares and restrictions
on voting and transfer
Subject to any suspension or abrogation of rights pursuant
to relevant law or the Company’s Articles of Association, the
Ordinary shares confer on their holders (other than the Company
in respect of any Treasury shares) the following principal rights:
(a) the right to receive profits available for distribution, such
dividends as may be agreed to be paid (in the case of a
final dividend in an amount not exceeding the amount
recommended by the Board as approved by shareholders in
a general meeting or in the case of an interim dividend in an
amount determined by the Board). All dividends unclaimed
for a period of 12 years after having become due for payment
are forfeited automatically and cease to remain owing by
the Company;
(b) the right, on a return of assets on a liquidation, reduction
of capital or otherwise, to share in the surplus assets of the
Company remaining after payment of its liabilities pari passu
with the other holders of Ordinary shares; and
(c) the right to receive notice of and to attend and speak and
vote in person or by proxy at any general meeting of the
Company. On a show of hands, every member present or
represented and voting has one vote, and on a poll, every
member present or represented and voting has one vote
for every share of which that member is the holder. The
appointment of a proxy must be received not less than
48 hours before the time of the holding of the relevant
meeting or adjourned meeting or, in the case of a poll
taken otherwise than at or on the same day as the relevant
meeting or adjourned meeting, be received after the poll has
been demanded and not less than 24 hours before the time
appointed for the taking of the poll.
These rights can be suspended. If a member, or any other person
appearing to be interested in shares held by that member,
has failed to comply within the time limits specified in the
Company’s Articles of Association with a notice pursuant to s793
of the Companies Act 2006 (notice by the Company requiring
information about interests in its shares), the Company can,
until the default ceases, suspend the right to attend and speak
and vote at a general meeting. If the shares represent at least
0.25% of their class the Company can also withhold any dividend
or other money payable in respect of the shares (without any
obligation to pay interest) and refuse to accept certain transfers
of the relevant shares. Shareholders, either alone or with other
shareholders, have other rights as set out in the Company’s
Articles of Association and in company law (principally the
Companies Act 2006).
A member may choose whether his shares are evidenced by
share certificates (certificated shares) or held in electronic
(uncertificated) form in CREST (the UK electronic settlement
system). Any member may transfer all or any of his shares,
subject in the case of certificated shares to the rules set out in the
Company’s Articles of Association or in the case of uncertificated
shares to the regulations governing the operation of CREST (which
allow the Directors to refuse to register a transfer as therein set
out); the transferor remains the holder of the shares until the
name of the transferee is entered in the Register of Members.
The Directors may refuse to register a transfer of certificated
shares in favour of more than four persons jointly or where there
is no adequate evidence of ownership or the transfer is not duly
stamped (if so required). The Directors may also refuse to register
an Ordinary share transfer if it is in respect of a certificated
share which is not fully paid up or on which the Company has a
lien provided that, where the share transfer is in respect of any
share admitted to the Ocial List maintained by the UK Listing
Authority, any such discretion may not be exercised so as to
32
Octopus AIM VCT plc Annual report 2023
prevent dealings taking place on an open and proper basis, or
if, in the opinion of the Directors (and with the concurrence of
the UK Listing Authority), exceptional circumstances so warrant,
provided that the exercise of such power will not disturb the
market in those shares. Whilst there are no squeeze-out and
sell-out rules relating to the shares in the Company’s Articles
of Association, shareholders are subject to the compulsory
acquisition provisions in s974 to s991 of the Companies Act 2006.
Independent auditor and disclosure of information
to auditor
BDO LLP is the appointed auditor of the Company and oer
themselves for re-appointment. A resolution to re-appoint BDO
LLP as auditor and to authorise the Directors to determine their
remuneration will be proposed at the forthcoming AGM.
As far as the Directors are aware, there is no relevant audit
information of which the auditor is unaware and the Directors
have taken all the steps they ought to have taken as a Director
in order to make them aware of any relevant audit information
and to establish that the Company’s auditor is aware of that
information.
Resolutions being put to shareholders in 2023
Directors’ authority to allot shares, to disapply
pre-emption rights
The authority proposed under Resolution 10 is required so that
the Directors may oer existing shareholders the opportunity
to add to their investment or to oer potential shareholders an
opportunity to invest in the Company in a cost-ecient manner.
Any consequent modest increase in the size of the Company will,
in the opinion of the Directors, be in the interests of shareholders
generally. Any issue proceeds will be available for investment in
line with the Company’s investment policy and may be used, in
part, to purchase Ordinary shares in the market.
Resolution 10 renews the Directors’ authority to allot Ordinary
shares. Such authority would expire 15 months after the date of
the passing of the Resolution or, if earlier, the conclusion of the
next AGM of the Company, giving the Directors authority to allot
up to 20% of the Company’s issued share capital at the date
of the Notice of AGM. This authority is in addition to existing
authorities. The Board intends to utilise this authority in respect
of the Company’s fundraising activities. Any shares allotted under
this authority would be issued at prices at or above NAV.
Resolution 11 authorises the Directors to allot Ordinary shares in
connection with the Dividend Re-investment Scheme (DRIS), up
to 3% of the Company’s issued share capital at the date of the
Notice of AGM. Such authority will expire 15 months after the
passing of the Resolution or, if earlier, the conclusion of the next
AGM of the Company.
Resolutions 12 and 13 renew and extend the Directors’ authority
to allot equity securities for cash without pre-emption rights
applying in certain circumstances. These Resolutions will
authorise the Directors, until the date falling 15 months after the
date of the passing of the Resolution or, if earlier, the conclusion
of the next AGM of the Company, to issue Ordinary shares for
cash without pre-emption rights applying by way of an oer
to existing shareholders, or re-issuing shares out of Treasury up
to a maximum of Ordinary shares (representing approximately
0% of the Company’s issued share capital as at the date of this
report). These powers will be exercised only if, in the opinion of the
Directors, it would be in the best interests of shareholders, as a
whole. Any shares allotted under this authority would be issued
at prices at or above NAV.
Directors’ authority to make market purchase of its
own shares
The authority proposed under Resolution 14 is required so that
the Directors may make purchases of up to 26,756,048 Ordinary
shares (representing approximately 14.99% of the Company’s
issued share capital as at the date of the Notice of AGM) and the
Resolution seeks renewal of such authority until the next AGM (or
the expiry of 15 months, if earlier). Any shares bought back under
this authority will be at a price determined by the Board (subject
to a minimum of 1p (being the nominal value of such shares) and
a maximum of 5% above the average mid-market quotation for
such shares on the London Stock Exchange and the applicable
regulations thereunder). This power will be exercised only if, in
the opinion of the Directors, a repurchase would be in the best
interests of shareholders as a whole. Any shares repurchased
under this authority will either be cancelled or held in Treasury for
future re-sale in appropriate market conditions.
Substantial shareholdings
As at the date of this report, no disclosures of major shareholdings
had been made to the Company under Disclosure Guidance and
Transparency Rule 5 (Vote Holder and Issuer Notification Rules).
Cancellation of share premium account
The Board considers it appropriate to obtain shareholders’
approval for the cancellation of the amount standing to the
share premium account of the Company, at the date of the
Court Order, to create (subject to Court approval) a pool of
distributable reserves. A Special Resolution to this eect is being
proposed at Resolution 15.
On behalf of the Board
Neal Ransome
Chair
6 June 2023
Directors’ report continued
33
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
1
Please see the AIC Code at www.theaic.co.uk.
The Board of the Company has considered the principles and
recommendations of the Association of Investment Companies
Code of Corporate Governance (‘AIC Code’). The AIC Code
addresses the Principles and Provisions set out in the UK
Corporate Governance Code (‘UK Code’), as well as setting out
additional Provisions on issues that are of specific relevance to
the Company.
The Board considers that reporting against the principles and
provisions of the AIC Code, which has been endorsed by the
Financial Reporting Council, provides more relevant information
to shareholders.
Corporate governance within the closed-ended investment
company industry diers from that of other companies. In
addition, VCTs dier from most other investment companies in
that they have, developed over many years, a complex range of
additional legal, tax and regulatory requirements.
Octopus AIM VCT plc, as a VCT and closed-ended investment
company, has particular factors which have an impact on its
governance arrangements. The Company:
• outsources all day-to-day activities (such as portfolio
management, administration, accounting, custody and
company secretarial). This means that it is governed
entirely by a Board of Non-Executive Directors. In these
circumstances, the proper oversight of these relationships is
the key aspect of achieving good corporate governance;
• does not have executive directors or employees. As a
consequence, the only ‘corporate memory’ is that of the
non-executive Directors; and
• does not have customers, only shareholders.
The AIC Code deals with matters such as the relationship with
the Investment Manager and other service providers. In practice,
most of the time spent by the Board of a well-functioning
investment company should be spent on matters of general
corporate governance (e.g. the investment strategy, policy and
performance) which is what we do.
1
The Company is committed to maintaining high standards in
corporate governance. The Directors consider that the Company
has, throughout the year under review, complied with the
provisions set out in the AIC Code with the exceptions set out in
the Compliance Statement on page 36.
Board of Directors
The Company has a Board of four non-executive Directors, all
of whom are considered to be independent. The Board meets
at least four times a year, and on other occasions as required,
to review the investment performance and monitor compliance
with the investment policy laid down by the Board.
The Board has a formal schedule of matters specifically reserved
for its decision which include:
• the consideration and approval of future developments or
changes to the investment policy, including risk and asset
allocation;
• consideration of corporate strategy;
• approval of the appropriate dividend to be paid to the
shareholders;
• the appointment, evaluation, removal and remuneration of
the Investment Manager;
• the performance of the Company, including monitoring of
the discount of the NAV to the share price; and
• monitoring shareholder profiles and considering shareholder
communications.
The Chair leads the Board in the determination of its strategy and
in the achievement of its objectives. The Chair is responsible for
organising the business of the Board, ensuring its eectiveness
and setting its agenda, and has no involvement in the day-to-day
business of the Company. He facilitates the eective contribution
of the Directors and ensures that they receive accurate, timely
and clear information and that they communicate eectively
with shareholders.
The Company Secretarial function is discharged by Octopus
Company Secretarial Services Limited which is responsible
for advising the Board, through the Chair, on all governance
matters. All of the Directors have access to the advice and
services of the Company Secretary, which has administrative
responsibility for the meetings of the Board and its committees.
Directors may also take independent professional advice at
the Company’s expense where necessary in the performance of
their duties.
As all of the Directors are non-executive, it is not considered
necessary to identify a member of the Board as the senior
independent director of the Company.
The Company’s Articles of Association and the schedule of
matters reserved for the Board for decision provide that the
appointment and removal of the Company Secretary is a matter
for the full Board.
Corporate governance
report
34
Octopus AIM VCT plc Annual report 2023
Board of Directors continued
During the year the following meetings were held as part of the regular programme of meetings:
Full Board
meetings held
No. of meetings
attended
Audit Committee
meetings held
Audit Committee
meetings
attended
Stephen Hazell-Smith 5 4 2 2
Joanne Parfrey 5 5 2 2
Neal Ransome 5 5 2 2
Andrew Boteler 5 5 2 2
Additional meetings were held as required to address specific issues, including approval of the Company’s annual report and accounts
and half-yearly report.
Performance evaluation and independence of Directors
Each year a formal performance evaluation is undertaken of the Board, its Committee and the Directors in the form of a questionnaire
completed by each Director. The Chair provides a summary of the findings to the Board, which is discussed and an action
plan agreed. During the year no issues were identified requiring an action plan. The performance of the Chair is evaluated by the
other Directors.
Length of service
Date of original appointment Due date for election/re-election
Stephen Hazell-Smith 02/02/1998 AGM 2023
Joanne Parfrey 06/10/2016 AGM 2023
Neal Ransome 06/10/2016 AGM 2023
Andrew Boteler 19/03/2020 AGM 2023
Length of service of the Chair and other Directors is one of a number of factors taken into account when considering the contribution
and ongoing independence of the Board, both individually and in terms of overall composition. The Board considers the experience,
range of skills, knowledge of the Company and its operating environment and diversity of the Directors. Accordingly, the Board’s policy
on tenure is that the term the Chair and other Directors serve on the Board should not be restricted to a fixed time limit in order to
ensure sucient corporate memory and consistent adherence to strategy. We believe (in line with the AIC Code) that members of the
Board are independent in character and judgement with respect to their duties to the shareholders.
The Company’s Articles of Association require that one-third of Directors should retire by rotation each year and seek re-election at the
AGM and that Directors appointed by the Board should seek re-appointment at the next AGM. The Directors have agreed to submit
themselves for annual re-election. This practice was followed during the year under review.
Notwithstanding the policy for one-third of the Directors to retire at each AGM, in order to follow best practice, all Directors stand for
re-election annually. The Companies Act allows shareholders in a general meeting by Ordinary Resolution (requiring a simple majority
of the persons voting on the relevant Resolution) to remove any Director before the expiration of his or her period of oce, but without
prejudice to any claim for damages which the Director may have for breach of any contract of service between him or her and the
Company.
Corporate governance report continued
35
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Powers of the Directors
Subject to the provisions of the Companies Act 2006, the
Memorandum and Articles of Association of the Company and
any directions given by shareholders by Special Resolution, the
Articles of Association specify that the business of the Company
is to be managed by the Directors, who may exercise all the
powers of the Company, whether relating to the management
of the business or not. In particular, the Directors may exercise on
behalf of the Company its powers to purchase its own shares to
the extent permitted by shareholders.
Authority was given at the Company’s 2022 AGM to
make market purchases of up to 14.99% of the issued
Ordinary share capital at any time up to the 2023 AGM and
otherwise on the terms set out in the relevant resolution. A
renewed authority is being sought at the 2023 AGM, as set
out in the Notice of Meeting.
Board committees
There is no formal Management Engagement Committee
as matters of this nature are dealt with by the independent
non-executive Directors. The Board does not have a separate
Remuneration Committee as the Company has no employees
or executive directors. Detailed information relating to the
remuneration of Directors is given in the Directors’ Remuneration
Report on pages 39 to 41. The Board does not have a separate
Nomination Committee as there has not been a requirement for
a committee. Whilst diversity considerations would normally be
a function of a Nomination Committee, these are dealt with by
the Board as a whole on an annual basis.
The Board has appointed one committee to make
recommendations to the Board in a specific area:
Audit Committee
Andrew Boteler is Chair of the Audit Committee and all
Directors are members of this Committee. The Board confirms
that, in accordance with the recommendation of the AIC
Code, at least one member of the Audit Committee has
recent and relevant financial experience. Andrew Boteler, as
Audit Chair, Neal Ransome and Joanne Parfrey are Chartered
Accountants and the Board is confident that the Committee as a
whole has competence relevant to the sector in which the
Company operates.
The Audit Committee Report is given on pages 37 and 38.
Internal controls
The purpose of these controls is to make sure that proper
accounting records are maintained, the Company’s assets are
safeguarded and the financial information used within the
business and for publication is accurate and reliable; such a
system can only provide reasonable and not absolute assurance
against material misstatement or loss. The system of internal
controls is designed to manage rather than eliminate the risk
of failure to achieve the business objectives. The Board regularly
reviews financial results and investment performance with its
Investment Manager.
The Board delegates the identification of appropriate
opportunities and the investment of funds to the Investment
Manager. The Board regularly review reports upon the
investments made and on the status of existing investments.
The Investment Manager is also engaged to carry out the
accounting and custodian functions of the Company. All quoted
investments are held in CREST. Unquoted investments are held in
certificated form.
The Directors confirm that they have established a continuing
process throughout the year and up to the date of this report for
identifying, evaluating and managing the significant potential
risks faced by the Company and have reviewed and were
satisfied with the eectiveness of the internal control systems.
As part of this process, an annual review of the internal control
systems is carried out, by Octopus, in accordance with the
Financial Reporting Council’s Guidance on Risk Management,
Internal Control and Related Financial and Business Reporting.
As explained in the Audit Committee Report, the Board does not
consider it necessary to maintain an internal audit function.
Internal control systems include the production and review of
monthly bank reconciliations and management accounts. All
outflows made from the VCT’s accounts require the authority of
two signatories from Octopus. The Investment Manager is subject
to ongoing review by the Octopus Compliance Department.
Financial risk management, objectives and
policies
The Company is exposed to the risks arising from its operational
and investment activities. Further details can be found in note 16
to the financial statements.
Statement of voting at the Annual General
Meeting
The most significant portion of the votes cast against a resolution
at the 2022 AGM were for the resolutions relating to the approval
of the Directors’ Remuneration Report (3.50% of votes cast) and
re-appointment of BDO LLP as auditor (2.69% of votes cast). No
communication was received from shareholders giving reasons
for the votes against the resolutions.
Shareholders’ views are always welcomed and considered by the
Board. The methods of contacting the Board are set out below.
36
Octopus AIM VCT plc Annual report 2023
Relations with shareholders
The Board will be holding a virtual shareholder event on 13 July
2023 at 11.00am to enable shareholders to receive an update from
the Investment Manager. This will also provide an opportunity for
shareholders to ask questions of the Board relating to the AGM
resolutions and annual report and accounts.
We always welcome questions from our shareholders at the AGM,
which will take place on 20 July 2023 at 10.30am. To make sure
we are able to respond to any questions you may have for either
the Investment Manager or AIM VCT Board, please send these
via email to AimAGM@octopusinvestments.com by 5.00pm
on 14 July 2023. The Board is also happy to respond to any written
queries made by shareholders during the course of the year and
can be contacted at 33 Holborn, London EC1N 2HT. Alternatively,
please call the team at Octopus to answer any queries. They can
be contacted on 0800 316 2295.
Compliance statement
The Board recognises the importance of good governance. With
the exception of the limited items outlined below, the Board
believes, for the year ended 28 February 2023, the Company has
complied with the principles and provisions of the AIC Code:
1. The Company does not have a senior independent director.
The Board does not consider this necessary for the size of the
Company.
2. The Chair is a member of the Audit Committee, which is
considered appropriate as he has significant experience as a
chartered accountant, and there being only four Directors.
3. The Company does not have a separate Nomination
Committee due to the relatively small size and structure of
the Company. Appointments are dealt with by the full Board
as and when appropriate.
4. The Company does not have a Remuneration Committee
given the size of the Company and as it does not have any
executive directors. The whole Board deals with any matters
pertaining to remuneration.
5. The Company has no major shareholders, therefore
shareholders are not given the opportunity to meet any
non-executive Directors at a specific meeting other than
the AGM, or other designated shareholder events, but are
welcome to contact the Board or the Investment Manager
at any time.
By Order of the Board
Neal Ransome
Chair
6 June 2023
Corporate governance report continued
37
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
This report is submitted in accordance with the AIC Code in
respect of the year ended 28 February 2023 and describes the
work of the Audit Committee in discharging its responsibilities.
The Committee’s key objective is the provision of eective
governance of the appropriateness of the Company’s financial
reporting, the performance of the auditor and the management
of the internal control and business risks systems. The Directors
forming the Audit Committee can be found on page 35.
Matters considered by the Audit Committee in
the year
The Audit Committee’s terms of reference include the following
responsibilities:
• reviewing and making recommendations to the Board in
relation to the Company’s published annual report and
financial statements and other formal announcements
relating to the Company’s financial performance;
• reviewing and making recommendations to the Board
in relation to the Investment Manager’s internal controls
(including internal financial control) and risk management
systems to the extent they are relevant to the Company’s
internal controls;
• periodically considering the need for an internal audit
function;
• making recommendations to the Board in relation to the
appointment, re-appointment and removal of the external
auditor and approving the remuneration and terms of
engagement of the external auditor;
• reviewing and monitoring the external auditor’s independence
and objectivity and the eectiveness of the audit process,
taking into consideration relevant UK professional regulatory
requirements;
• monitoring the extent to which the external auditor is
engaged to supply non-audit services; and
• ensuring that the Investment Manager has arrangements
in place for the investigation and follow-up of any concerns
raised confidentially by sta in relation to propriety of
financial reporting or other matters.
The Committee reviews its terms of reference and its eectiveness
annually and recommends to the Board any changes required as
a result of the review. The terms of reference are available on
request from the Company Secretary. The Committee meets
twice per year and has direct access to BDO LLP, the Company’s
external auditor.
Auditor appointment
The Audit Committee undertook a competitive audit tender
process in 2019 as required for all Public Interest Entities who
have had the same auditor for ten years, following which BDO
were re-appointed. When considering whether to recommend
the re-appointment of the external auditor, the Committee
takes into account the tenure of the current auditor in addition
to comparing the fees charged to similar sized VCTs. The current
auditor was first appointed in 2008 under the name of PKF (UK)
LLP, which subsequently merged with BDO LLP, and has held the
position for nearly 15 years. Peter Smith, the current Audit Partner,
has been involved for five years and therefore this is his final year.
Independence and objectivity of the auditor
Non-audit services were not provided by the external auditor and
therefore the Audit Committee does not believe there are any
influences on their independence or objectivity.
When considering the eectiveness of the external audit, the
Board considered the quality and content of the Audit Plan
and Report provided to the Committee by the Auditor and the
resultant reporting and discussions on topics raised. Further
consideration is also given as part of the annual Board evaluation.
Auditor evaluation
The eectiveness of the external audit is assessed as part of the
Board evaluation conducted annually and by the quality and
content of the Audit Plan and Report provided to the Committee
by the Auditor and the resultant discussions on topics raised.
The Committee also challenges the Auditor when present at a
Committee meeting, if appropriate. The Audit Committee is
satisfied that BDO LLP provided eective challenge in carrying
out its responsibilities.
Once the Committee has made a recommendation to the Board,
in relation to the appointment of the external auditor, this is then
ratified at the AGM through an Ordinary Resolution.
Internal audit
The Company does not have an independent internal audit
function as it is not deemed appropriate given the size of the
Company and the nature of the Company’s business. However,
the Committee considers annually whether there is a need for
such a function and if so would recommend this to the Board.
Octopus has an internal audit function which reports to the
Board annually on the outcome of the internal audits that have
taken place. Any significant issues arising from the Octopus
internal audit that aect the Company would be raised to the
Committee immediately. Octopus’ Compliance Department also
reports regularly to the Board.
The Committee will monitor the significant risks at each meeting
and will work closely with the internal auditor to mitigate the risks
and the resultant impact.
Audit Committee report
38
Octopus AIM VCT plc Annual report 2023
Significant issues
The Audit Committee is responsible for considering significant
issues in relation to the financial statements. The Committee has
identified the most significant risks for the Company as:
• Valuation and ownership of investments: The Committee
gives special audit consideration to the valuation of
investments and supporting data provided by the Investment
Manager. The impact of this risk would be a large gain or
loss in the Company’s results. The valuations are supported
variously by stock market quotations, portfolio company
audited accounts and third-party evidence (where relevant).
These, together with reconciliations and independent
confirmations performed by the auditor, give comfort to the
Audit Committee.
• Management override of financial controls: The
Committee specifically reviews all significant accounting
estimates that form part of the financial statements and
considers any material judgements applied by management
during the completion of the financial statements.
• Recognition and categorisation of revenue from
investments: Investment income is the Company’s main
source of revenue. The revenue return is recognised when the
Company’s right to the return is established in accordance
with the Statement of Recommended Practice, as either
revenue or capital income. The Investment Manager confirms
to the Audit Committee that the revenues are recognised
appropriately.
In addition to the above, the Committee has also considered the
implications of inflation and high interest rates. As at the date of
issuing this report, whilst the Committee anticipates short-term
market volatility aecting the underlying investments, it does
not consider that this will have an impact upon the long-term
viability of the Company. This is discussed further in the Viability
Statement on page 24.
These issues were discussed with the Investment Manager and the
auditor at the conclusion of the audit of the financial statements.
The Committee has considered the whole Annual Report
and Accounts for the period ended 28 February 2023 and has
reported to the Board that it considers them to be fair, balanced
and understandable, providing the information necessary for
shareholders to assess the Company’s performance, business
model and strategy.
The Audit Committee is also responsible for considering and
reporting on any significant issues that arise in relation to the
audit of the financial statements. The Audit Committee can
confirm that there were no significant issues to report to the
shareholders in respect of the audit of the financial statements
to 28 February 2023.
Andrew Boteler
Audit Committee Chair
6 June 2023
Audit Committee report continued
39
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Introduction
This report is submitted in accordance with Regulation 3 of the
Large and Medium-sized Companies and Groups (Accounts
and Reports) (Amendment) Regulations 2013 (‘Regulations’) in
respect of the year ended 28 February 2023.
The Company’s auditor, BDO LLP, is required to give their opinion
on certain information included in this report, comprising
the Directors’ emoluments section and shareholdings below,
and their report on these and other matters is set out on pages
43 to 48.
Consideration by the Directors of matters
relating to Directors’ remuneration
The Board as a whole considers Directors’ remuneration and has
not appointed a separate committee in this respect.
The Board has not sought advice or services from any external
person in respect of its consideration of Directors’ remuneration
during the year although the Directors expect from time to time
to review the fees against those paid to the Board of Directors of
other VCTs. The Company does not have a chief executive ocer,
senior management or any employees.
Directors’ remuneration policy report
The Board consists entirely of Non-Executive Directors, who meet
at least quarterly and on other occasions as necessary, to deal
with the important aspects of the Company’s aairs. Directors are
appointed with the expectation that they will serve for a period of
at least three years. All Directors are subject to election at the first
AGM after their appointment and one-third of all Directors are
subject to retirement by rotation at the AGMs. However, as best
practice, all the Directors retire and stand for re-election annually.
Re-election will be recommended by the Board but is dependent
upon shareholder votes.
Each Director received a letter of appointment. A Director may
resign at any time by giving three months’ notice in writing to
the Board. None of the Directors are entitled to compensation
payable upon early termination of their contract other than in
respect of any unexpired notice period.
The Company’s policy is that the fees payable to the Directors
should reflect the time spent by the Board on the Company’s
aairs and the responsibilities borne by the Directors. They should
be sucient to attract candidates of high calibre to be recruited.
The policy is for the Chair of the Board and the Chair of the Audit
Committee to be paid higher fees than the other Directors in
recognition of their more onerous roles. The Remuneration policy
is to review the Directors’ fees from time to time, benchmarking
the fees against other VCT boards, although such review will
not necessarily result in any changes. Due to the nature of the
Company, there are no employees other than the Directors
and therefore no such issues to consider when determining the
Directors’ remuneration.
The Company’s policy is for the Directors to be remunerated
in the form of fees, payable monthly in arrears. The fees are
not specifically related to the Directors’ performance, either
individually or collectively. There are no long-term incentive
schemes, share option schemes or pension schemes in place.
The Board is also entitled to be repaid all reasonable travelling,
subsistence and other expenses incurred by them respectively
whilst conducting their duties as Directors. No other remuneration
or compensation was paid or payable by the Company during the
year to any of the current Directors. There will be no payment
for loss of oce unless approved by a separate shareholder
resolution.
An Ordinary Resolution to approve the remuneration policy of
the Company was put to, and approved by, shareholders at the
2020 AGM and therefore a resolution will be put to the 2023 AGM
seeking approval. The policy will remain in force for a three-year
period. The Board will review the remuneration of the Directors
if thought appropriate and monitors competitors in the VCT
industry on an annual basis.
Statement of voting at the Annual General
Meeting
The 2022 Directors’ Remuneration Report was presented to the
AGM in July 2022 and received shareholder approval following a
vote by way of a poll. 96.5% of the votes cast were in favour of the
Directors’ Remuneration Report or at the Chair’s discretion, 3.5%
were against the resolution and 72,737 votes were withheld. The
proxy forms returned to the Registrars contained no explanation
for the votes against the resolution.
Shareholders’ views are always considered by the Board, and the
methods of contacting the Board are set out on page 36.
Annual remuneration report
This section of the report is subject to approval by a
simple majority of shareholders at the AGM in July 2023, as in
previous years.
Directors’ remuneration
report
40
Octopus AIM VCT plc Annual report 2023
Company performance
The Board is responsible for the Company’s investment strategy and performance, although the management of the Company’s
investment portfolio is delegated to Octopus through the investment management agreement, as referred to in the Directors’ Report.
The performance graph on page 21 also shows the performance of the Company on a total return basis, compared to the performance
of the FTSE AIM All-Share Index, the FTSE SmallCap (excluding investment companies) Index and the FTSE All-Share Index.
Directors’ Fees (audited)
The amount of each Director’s fees for the year were:
Year ended
28 February 2023
£
Year ended
28 February 2022
£
Stephen Hazell-Smith
22,500
21,500
Joanne Parfrey
22,500
21,500
Neal Ransome
27,500
25,500
Andrew Boteler
25,000
23,000
Roger Smith (resigned 22 July 2021)
–
10,500
Total
97,500
102,000
The Directors do not receive any other form of emoluments in addition to the Directors’ fees, their total remuneration is not linked to
the performance of the Company and no bonuses were or will be paid to the Directors.
The Chair of the Company and Audit Committee Chair receive additional remuneration over the basic Directors’ fee in recognition of
the additional responsibilities and time commitment, and additionally, to be fair and comparable to similar VCTs.
Following a review, the Board agreed the following fee rates with eect from 1 March 2023: Chair of the Board £29,150; Chair of the
Audit Committee £26,500; and all other Directors £23,850. These fee rates represent an increase of 6.0%, compared to a 9.2% increase
in CPI over the preceding year.
Directors’ Fees annual percentage change
2023 % change 2022 % change 2021 % change
Stephen Hazell-Smith 4.7% 7.5% 0.0%
Joanne Parfrey 4.7% 7.5% 0.0%
Neal Ransome 7.8% 13.3% 0.0%
Andrew Boteler 8.7% 15.0% N/A
Roger Smith (resigned 22 July 2021) N/A (58.0%) 0.0%
Directors’ remuneration report continued
41
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Relative importance of spend on pay
The actual expenditure in the current year is as follows:
Year to
28 February 2023
£’000
Year to
28 February 2022
£’000 % change
Total dividends paid
9,276
12,663 (26.7%)
Total buybacks
3,567
7,522 (52.6%)
Total directors’ fees
98
102 (3.9%)
There were no other significant payments during the year relevant to understanding the relative importance of spend on pay.
Directors’ interest in shares (audited)
There are no guidelines or requirements for Directors to own shares in the Company. The interests of the Directors, and their connected
persons, in shares of the Company during the year (in respect of which transactions are notifiable under Disclosure Guidance and
Transparency Rule 3.1.2) in the issued Ordinary shares of 1p are shown in the table below:
Ordinary shares of 1p each
28 February 2023
Ordinary shares of 1p each
28 February 2022
Stephen Hazell-Smith
139,003
139,003
Neal Ransome
47,377
35,251
Joanne Parfrey
33,911
18,754
Andrew Boteler
30,853
18,727
All of the shares held by the Directors, or their connected persons, were held beneficially, in their own name. There have been no
changes in the Directors’ share interests between 28 February 2023 and the date of this report.
Shareholders’ proxy voting information
As required by Schedule 8:23 of the Regulations, the votes received for the AGM in 2022 were as follows:
For (including discretionary) Against
No. of
Shares %
No. of
Shares %
Approval of Directors’ Remuneration Report 3,930,547 96.50 142,403 3.50
By Order of the Board
Neal Ransome
Chair
6 June 2023
42
Octopus AIM VCT plc Annual report 2023
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
aairs 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 sucient 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 Investment Manager’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’ responsibilities pursuant to Disclosure
Guidance and Transparency Rule 4 (DTR4)
Neal Ransome (Chair), Andrew Boteler, Stephen Hazell-Smith
and Joanne Parfrey, 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.
By Order of the Board
Neal Ransome
Chair
6 June 2023
43
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Opinion on the financial statements
In our opinion the financial statements:
• give a true and fair view of the state of the Company’s aairs
as at 28 February 2023 and of its loss for the year then ended;
• have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice;
• have been prepared in accordance with the requirements of
the Companies Act 2006.
We have audited the financial statements of Octopus AIM
VCT plc (the ‘Company’) for the year ended 28 February 2023
which comprise the Income Statement, the Balance Sheet,
the Statement of Changes in Equity, the Cash flow Statement
and Notes to the financial statements, including a summary of
significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and
United Kingdom Accounting Standards, including Financial
Reporting Standard 102 The Financial Reporting Standard
applicable in the UK and Republic of Ireland (United Kingdom
Generally Accepted Accounting Practice).
Basis for opinion
Following the recommendation of the audit committee,
we were appointed at the AGM on 15 July 2020 to audit the
financial statements for the year ended 28 February 2022 and
subsequent financial periods. The period of total uninterrupted
engagement including retenders and reappointments is 14
years, covering the years ended 28 February 2009 to 28 February
2022. We remain independent of the Company in accordance
with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with these
requirements. The non-audit services prohibited by that standard
were not provided to the Company.
Independence
Following the recommendation of the audit committee,
we were appointed at the AGM on 15 July 2020 to audit the
financial statements for the year ended 28 February 2022 and
subsequent financial periods. The period of total uninterrupted
engagement including retenders and reappointments is 14
years, covering the years ended 28 February 2009 to 28 February
2022. We remain independent of the Company in accordance
with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with these
requirements. The non-audit services prohibited by that standard
were not provided to the Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that
the Directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate. Our
evaluation of the Directors’ assessment of the Company’s ability
to continue to adopt the going concern basis of accounting
included:
• Obtaining the VCT compliance reports during the year and
as at year end and reviewing their calculations to check that
the Company was meeting its requirements to retain VCT
status
• Reviewing and challenging the forecasted cash flows that
support the Directors’ assessment of going concern.
• Evaluating management’s method of assessing going
concern in light of market volatility having regard to the
liquidity of the investment portfolio;
• Calculating financial ratios to consider the financial health of
the Company.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Company’s ability to continue as a going concern for a period of
at least twelve months from when the financial statements are
authorised for issue.
In relation to the Company’s reporting on how it has applied the
UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the Directors’ statement in
the financial statements about whether the Directors considered
it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections
of this report.
Independent auditor’s
report to the members of
Octopus AIM VCT plc
44
Octopus AIM VCT plc Annual report 2023
Overview
2023 2022
Key audit matters Valuation and Ownership of Investments
Materiality
£1,412,000 (2022: £1,470,000) based on 1% (2022: 1%) of net assets (2022: 1% of adjusted net assets)
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s system of internal
control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management
override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk
of material misstatement.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified, including those which had the greatest eect on: the overall audit strategy, the allocation of resources in
the audit, and directing the eorts of the engagement team. This matter were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter.
Key Audit Matter How the scope of our audit addressed the key audit matter
Valuation and ownership of investments (Notes 1
and 10 to the financial statements)
The investment portfolio comprises of quoted and
unquoted investments.
The Investment Manager’s fee is based on of the
value of the net assets of the fund, as shown in
note 3.
As the Investment Manager is also responsible for
preparing the valuation of investments for the
financial statements, there is a potential risk of
misstatement in the investment valuations.
There is a risk that the investment balance includes
investments which are no longer owned by the
Company or that the bid price or last price used to
value the investment is incorrect.
There is a high level of estimation uncertainty
involved in determining the unquoted investment
valuations.
There is an inherent risk of management override
arising from the unquoted investment valuations
being prepared by the Investment Manager, who is
remunerated based on a percentage of the value of
the net assets of the fund, as shown in note 3.
We performed the following procedures:
In respect of 100% of quoted equity investments we have:
We responded to this matter by testing the valuation and ownership of
the whole portfolio of quoted investments. We performed the following
procedures:
• Confirmed the year-end bid price was used by agreeing to externally
quoted prices;
• Assessing if there were contra indicators, such as liquidity considerations,
to suggest bid price is not the most appropriate indication of fair value
by considering the realisation period for individual holdings;
• Recalculating the valuation by multiplying the number of shares held per
the statement obtained from the custodian by the valuation per share;
• Obtained direct confirmation of the number of shares held per equity
investment from the custodian regarding all investments held at the
balance sheet date. Agreed shares to reconciliation performed by the
investment manager.
In respect of a sample of unquoted investments we have:
For all Investments in our sample we:
• Challenged and corroborated the inputs to the valuation with reference
to management information of investee companies, market data and
our own understanding and assessed the impact of the estimation
uncertainty concerning these assumptions and the disclosure of these
uncertainties in the financial statements;
• Reviewed the historical financial statements and any recent management
information available to support assumptions about maintainable
revenues, earnings or cash flows used in the valuations;
• Considered the revenue or earnings multiples applied and the discounts
applied by reference to observable listed company market data; and
Independent auditor’s report to the members of
Octopus AIM VCT plc continued
45
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
• Challenged the consistency and appropriateness of adjustments made
to such market data in establishing the revenue, cash flow or earnings
multiple applied in arriving at the valuations adopted by considering the
individual performance of investee companies against plan and relative
to the peer group, the market and sector in which the investee company
operates and other factors as appropriate.
Where appropriate, we performed a sensitivity analysis by developing our
own point estimate where we considered that alternative input assumptions
could reasonably have been applied and we considered the overall impact of
such sensitivities on the portfolio of investments in determining whether the
valuations as a whole are reasonable and free from bias.
Key observations:
Based on the procedures performed we consider the investment valuations
and ownership to be appropriate considering the level of estimation
uncertainty.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the eect of misstatements. We
consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of
reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality
level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not
necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their eect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality
as follows:
Company Financial statements
2023
£m
2022
£m
Materiality
£1,412,000 £1,470,000
Basis for determining materiality
1% of net assets (2022: 1% of net assets adjusted to exclude fund raising
during the year)
Rationale for the benchmark applied
Net asset value is the primary measure used by the users in assessing
the performance of the Company as an investment entity. In setting
materiality, we have had regard to the nature and disposition of the
investment portfolio. Given that the VCT’s portfolio is comprised primarily
of quoted investments, we have applied a percentage of 1% of adjusted
net assets value. The benchmark used in the prior year is lower than the
net asset value to take into account cash that was raised from fund raising
in close proximity to the prior year-end. The net asset benchmark was not
adjusted in the current year as there was no cash from recent fund raises
as at the year end.
Performance materiality
£1,059,000 £1,103,000
Basis for determining performance materiality
75% of materiality,
The level of performance materiality applied was set after having considered
a number of factors including the expected total value of known and likely
misstatements and the level of transactions in the year.
46
Octopus AIM VCT plc Annual report 2023
Lower Testing Threshold
Whilst the majority of long-term returns are expected to arise from capital, we consider that on-going costs and revenue returns are
still important to users of the financial statements, despite being considerably smaller in magnitude. Thus, we have set a lower testing
threshold for those items impacting revenue return of £328,000 which is based on 10% of gross expenditure. (2022: £383,000)..
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit dierences in excess of £70,000 (2022: £75,000).
We also agreed to report dierences below this threshold that, in our view, warranted reporting on qualitative grounds.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the annual report
and accounts, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of
the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance
Statement specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit.
Going concern and longer-
term viability
• The Directors’ statement with regards the appropriateness of adopting the going concern
basis of accounting and any material uncertainties; and
• The Directors’ explanation as to its assessment of the entity’s prospects, the period this
assessment covers and why they period is appropriate
Other Code provisions
• Directors’ statement on fair, balanced and understandable;
• Board’s confirmation that it has carried out a robust assessment of the emerging and
principal risks;
• The section of the annual report that describes the review of eectiveness of risk
management and internal control systems ; and
• The section describing the work of the audit committee
Independent auditor’s report to the members of
Octopus AIM VCT plc continued
47
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies
Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic report and the Directors’ report for the financial year
for which the financial statements are prepared is consistent with the financial statements;
and
• the Strategic report and the Directors’ report have been prepared in accordance with
applicable legal requirements.
In the light of the knowledge and understanding of the Company and its environment obtained
in the course of the audit, we have not identified material misstatements in the strategic report
or the Directors’ report.
Directors’ remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has been properly
prepared in accordance with the Companies Act 2006.
Matters on which we
are required to report by
exception
We have nothing to report in respect of the following matters in relation to which the Companies
Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept, or returns adequate for our audit have
not been received from branches not visited by us; or
• the financial statements and the part of the Directors’ remuneration report to be audited
are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ responsibility statement, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either
intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below:
We gained an understanding of the legal and regulatory framework applicable to the Company and the industry in which it operates,
and considered the risk of acts by the Company which were contrary to applicable laws and regulations, including fraud. These included
but were not limited to compliance with Companies Act 2006, the FCA listing and DTR rules, the principles of the UK Corporate
Governance Code, industry practice represented by the Statement of Recommended Practice: Financial Statements of Investment
Trust Companies and Venture Capital Trusts (‘the SORP’) issued in November 2014 and updated in February 2018 with consequential
amendments and FRS 102. We also considered the Company’s qualification as a VCT under UK tax legislation.
48
Octopus AIM VCT plc Annual report 2023
We considered areas where the financial statements could be
susceptible to material misstatement. Our audit work focussed
on the valuation of unquoted investments as described in the key
audit matters section of this report, where the risk of material
misstatement due to fraud is the greatest. We also:
• Obtained independent evidence to support the ownership of
investments
• Recalculated investment management fees in total
• Obtained independent confirmation of bank balances.
We focused on laws and regulations that could give rise to a
material misstatement in the Company financial statements.
Our tests included, but were not limited to:
• Obtaining an understanding of the control environment in
monitoring compliance with laws and regulations;
• Agreement of the financial statement disclosures to
underlying supporting documentation;
• Enquiries of management;
• Review of minutes of board meetings throughout the period;
• Obtaining and reviewing independent reports prepared for
the Company on compliance with the relevant tests in order
to maintain its qualifying status as a VCT.
We addressed the risk of management override of internal
controls, including testing journals and evaluating whether there
was evidence of bias by the Directors that represented a risk of
material misstatement due to fraud..
We also communicated relevant identified laws and regulations
and potential fraud risks to all engagement team members and
remained alert to any indications of fraud or non-compliance
with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of
material misstatement in the financial statements, recognising
that the risk of not detecting a material misstatement due
to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for
example, forgery, misrepresentations or through collusion. There
are inherent limitations in the audit procedures performed and
the further removed non-compliance with laws and regulations
is from the events and transactions reflected in the financial
statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the
Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities
This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might
state to the Company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and
the Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Peter Smith (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
06 June 2023
BDO LLP is a limited liability partnership registered in England and
Wales (with registered number OC305127).
Independent auditor’s report to the members of
Octopus AIM VCT plc continued
49
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Year to 28 February 2023
Year to 28 February 2022
Notes
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Gain on disposal of fixed asset
investments
10
– 207 207
– 1,001 1,001
Loss on disposal of current asset
investments
– – –
– (2) (2)
Loss on valuation of fixed asset
investments
10
– (29,192) (29,192)
– (17, 203) (17,203)
Loss on valuation of current asset
investments
– (2,233) (2,233)
– (313) (313)
Investment income 2
1,068 24 1,092
760 134 894
Investment management fees 3
(650) (1,949) (2,599)
(765) (2,296) (3,061)
Other expenses 4
(689) – (689)
(775) – (775)
Loss before tax (271) (33,143) (33,414)
(780) (18,679) (19,459)
Tax 6
– – –
– – –
Total comprehensive loss after tax (271) (33,143) (33,414)
(780) (18,679) (19,459)
Earnings per share – basic and
diluted
8
(0.2p) (20.0p) (20.2p)
(0.5p) (12.4p) (12.9p)
• 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.
The notes on pages 53 to 67 form an integral part of these financial statements.
Income statement
50
Octopus AIM VCT plc Annual report 2023
As at 28 February 2023
As at 28 February 2022
Notes £’000 £’000 £’000 £’000
Fixed asset investments 10
102,667
129,226
Current assets:
Investments 11
16,188
16,543
Money market funds 11
21,433
1,326
Debtors 12
354
329
Applications cash
1
11
3
246
Cash at bank 11
1,437
21,910
39,415
40,354
Creditors: amounts falling due within
one year
13
(860)
(1,411)
Net current assets
38,555
38,943
Total assets less current liabilities 141,222
168,169
Called up equity share capital 14
1,798
1,605
Share premium
18,924
25,450
Capital redemption reserve
279
236
Special distributable reserve
118,015
105,258
Capital reserve realised
(23,143)
(20,762)
Capital reserve unrealised
27,545
58,307
Revenue reserve
(2,196)
(1,925)
Total equity shareholders’ funds 141,222
168,169
NAV per share – basic and diluted
9
78.5p
104.8p
1
Cash held but not yet allotted.
The statements were approved by the Directors and authorised for issue on 6 June 2023 and are signed on their behalf by:
Neal Ransome
Chair
Company number: 03477519
The Notes on pages 53 to 67 form an integral part of these financial statements.
Balance sheet
51
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Share
capital
£’000
Share
premium
£’000
Capital
redemption
reserve
£’000
Special
distributable
reserves
1
£’000
Capital
reserve
realised
1
£’000
Capital
reserve
unrealised
£’000
Revenue
reserve
1
£’000
Total
£’000
As at 1 March 2022 1,605 25,450 236 105,258 (20,762) 58,307 (1,925) 168,169
Comprehensive income for the year:
Management fee allocated as capital
expenditure
– – – – (1,949) – – (1,949)
Current period gain on disposal – – – – 207 – – 207
Current period loss on revaluation of
investments
– – – – – (31,425) – (31,425)
Capital investment income – – – – 24 – – 24
Loss after tax – – – – – – (271) (271)
Total comprehensive loss for the year – – – – (1,718) (31,425) (271) (33,414)
Contributions by and distributions to
owners:
Repurchase and cancellation of own
shares
(43) – 43 (3,567) – – – (3,567)
Issue of shares 236 19,742 – – – – – 19,978
Share issue costs – (668) – – – – – (668)
Dividends paid – – – (9,276) – – – (9,276)
Total contributions by and
distributions to owners:
193 19,074 43 (12,843) – – – 6,467
Other movements
– –
Cancellation of share premium – (25,600) – 25,600 – – – –
Prior years’ holding gains now realised – – – – (663) 663 – –
Total other movements – (25,600) – 25,600 (663) 663 – –
Balance as at 28 February 2023 1,798 18,924 279 118,015 (23,143) 27,545 (2,196) 141,222
As at 1 March 2021 1,461 57,966 173 67,47 7 (21,945) 78,169 (1,145) 182,156
Comprehensive income for the year:
Management fee allocated as capital
expenditure
– – – – (2,296) – – (2,296)
Current period gain on disposal – – – – 999 – – 999
Current period loss on revaluation of
investments
– – – – – (17,516) – (17,516)
Capital investment income – – – – 134 – – 134
Loss after tax – – – – – – (780) (780)
Total comprehensive loss for the year – – – – (1,163) (17,516) (780) (19,459)
Contributions by and distributions to
owners:
Repurchase and cancellation of own
shares
(63) – 63 (7,522) – – – (7,522)
Issue of shares 207 27,030 – – – – – 27, 237
Share issue costs – (1,580) – – – – – (1,580)
Dividends paid – – – (12,663) – – – (12,663)
Total contributions by and
distributions to owners:
144 25,450 63 (20,185) – – – 5,472
Other movements
–
Cancellation of share premium – (5 7,966) – 57,966 – – – –
Prior years’ holding gains now realised – – – – 2,346 (2,346) – –
Total other movements – (57,966) – 57,966 2,346 (2,346) – –
Balance as at 28 February 2022 1,605 25,450 236 105,258 (20,762) 58,307 (1,925) 168,169
1
Included in these reserves is an amount of £92,676,000 (2022: £82,571,000) which is considered distributable to shareholders.
Statement of changes in
equity
52
Octopus AIM VCT plc Annual report 2023
Notes
Year to 28 February 2023
£’000
Year to 28 February 2022
£’000
Cash flows from operating activities
Loss before tax
(33,414)
(19,459)
Adjustments for:
Increase in debtors
(25)
(136)
(Decrease)/increase in creditors
(794)
470
Gain on disposal of fixed asset investments 10
(207)
(1,001)
Loss on disposal of current asset investments
–
2
Loss on valuation of fixed asset investments 10
29,192
17,203
Loss on valuation of current asset investments
2,233
313
Non-cash distributions 2
(24)
(134)
Cash utilised in operations (3,039)
(2,742)
Income taxes paid
–
–
Net cash utilised in operating activities (3,039)
(2,742)
Cash flows from investing activities
Purchase of fixed asset investments 10
(4,880)
(21,639)
Proceeds from sale of fixed asset investments 10
2,478
7,932
Purchase of current asset investments
(1,878)
(2,250)
Proceeds from sale of current asset investments
–
1,604
Net cash flows utilised in investing activities (4,280)
(14,353)
Cash flows from financing activities
Movement in applications account 13
243
(106)
Purchase of own shares 14
(3,567)
(7,522)
Proceeds from share issues 14
18,217
25,657
Share issue costs
(668)
(2,342)
Dividends paid (net of DRIS) 7
(7,515)
(10,321)
Net cash flows from financing activities 6,710
5,366
Decrease in cash and cash equivalents (609)
(11,730)
Opening cash and cash equivalents
23,482
35,212
Closing cash and cash equivalents 22,873
23,482
Cash and cash equivalents is represented by:
Cash at bank 11
1,437
21,910
Applications cash 11
3
246
Money market funds 11
21,433
1,326
Total cash and cash equivalents
22,873
23,482
The notes on pages 53 to 67 form an integral part of these financial statements.
53
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
1. Principal accounting policies
The Company is a Public Limited Company (plc) incorporated
in England and Wales and its registered oce is 33 Holborn,
London EC1N 2HT.
The Company’s principal activity is to invest in a diverse
portfolio of predominantly AIM-traded companies with
the aim of providing shareholders with attractive tax-free
dividends and long-term capital growth.
Basis of preparation
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 (‘GAAP’),
including Financial Reporting Standard 102 – The Financial
Reporting Standard applicable in the United Kingdom and
Republic of Ireland’ (‘FRS 102’), and with the Companies Act
2006 and the Statement of Recommended Practice (‘SORP’)
‘Financial Statements of Investment Trust Companies and
Venture Capital Trusts (issued 2014 and updated in October
2019 with consequential amendments)’.
The principal accounting policies have remained unchanged
from those set out in the Company’s 2022 annual report and
accounts. A summary of the principal accounting policies is
set out below.
FRS 102 Sections 11 and 12 have been adopted with regard to
the Company’s financial instruments. The Company holds
all fixed asset investments at fair value through profit or loss
(‘FVTPL’); therefore all gains and losses arising from such
investments held are attributable to financial assets held at
FVTPL. Accordingly, all interest income, fee income, expenses
and gains and losses on investments are attributable to
assets held at FVTPL.
Going concern
After reviewing the Company’s forecasts and expectations,
the Directors have a reasonable expectation that
the Company has adequate resources to continue in
operational existence for the foreseeable future. The Company
has sucient cash and liquid resources to meet its liabilities as
they fall due and methods through which it could manage its
operations include adjusting investment strategy and careful
consideration of non-committed cash outflows, including
dividends and buybacks. The Company therefore continues
to adopt the going concern basis in preparing its financial
statements. In reaching this conclusion the Directors have
had regard to the potential impact of economic instability on
the Company. See the Director’s Report on pages 29 to 32 for
further details.
Revenue and capital
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 as required by the SORP.
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.
Upon disposal of investments, gains relating to the assets are
transferred from the capital reserve unrealised to the capital
reserve realised.
Key judgements and estimates
The preparation of the financial statements requires the
Board to make judgements and estimates that aect 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.
Investment valuation policies are important to the depiction
of the Company’s financial position and require the
application of subjective and complex judgements, notably
with regard to unquoted holdings, often as a result of the
need to make estimates about the eects of matters that
are inherently uncertain and may change in subsequent
periods. The main accounting and valuation policies used by
the Company are disclosed below.
Investments are regularly reviewed to ensure that the fair
values are appropriately stated. Unquoted investments are
valued in accordance with current IPEV guidelines, although
this does rely on subjective estimates such as appropriate
sector earnings multiples, forecast results of portfolio
companies, asset values of the subsidiary companies of
portfolio companies and liquidity or marketability of the
investments held.
Although the Company believes that the assumptions
concerning the business environment and estimate 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
(see note 10).
54
Octopus AIM VCT plc Annual report 2023
1. Principal accounting policies continued
Financial instruments
The Company’s principal financial assets are its investments
and the policies in relation to those assets are set out above
and in note 10. 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.
The Company’s trade receivables are initially recognised
at fair value which is normally transaction cost and
subsequently measured at amortised cost.
Financing strategy and capital structure
Capital management is monitored and controlled by
forecasting income and expenditure over both the short
and medium terms to enable investments to be made
at the same time as controlling short-term liquidity. The
investments being managed include equity and short-term
liquidity comprises cash and cash equivalents including
debtors and creditors.
The Company defines capital as shareholders’ funds and
its 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 enter into
any borrowing facilities in the future to fund the acquisition
of investments.
As the Company is registered as an AIFM, it is subject
to externally imposed capital requirements, namely if
the value of assets under management (‘AUM’) exceeds
€250 million then an additional amount of Company funds
equal to 0.02% of the excess over €250 million (subject to a
cap of €10 million capital requirement) will be required.
Cash and liquid resources
Cash, for the purposes of the cash flow statement,
comprises cash at bank. Cash equivalents 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. This comprises investments
in money market funds subject to insignificant changes in
fair value. The Company holds £3,000 (2022: £246,000) of
cash on behalf of the Company and Octopus AIM VCT 2
plc. Of this, £2,000 (2022: £148,000) is attributable to the
Company. This cash is held in an applications bank account
until shares are issued. A corresponding creditor is recognised
in note 13 on page 62.
Reserves
Called up equity share capital – represents the nominal
value of shares that have been issued.
Share premium account – includes any premiums received
on issue of share capital. Any transaction costs associated
with the issuing of shares are deducted from share premium.
Special distributable reserve – includes cancelled share
premium available for distribution.
Capital reserve realised – when an investment is sold,
any balance held in capital reserve unrealised is transferred
to capital reserve realised on disposal, as a movement in
reserves. The portion of the management fee allocated to
capital expenditure is also included in this reserve.
Capital reserve unrealised – when the Company revalues
the investments still held during the period, any gains or losses
arising are credited/charged to capital reserve unrealised.
Capital redemption reserve – represents the nominal value
of shares bought back from shareholders and cancelled from
share capital.
Revenue reserve – net revenue profits and losses of the
Company.
Functional and presentational currency
The financial statements are presented in sterling (£). The
functional currency is also sterling (£).
55
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
2. Income
Accounting policy
Investment income includes interest earned on money market securities is shown net of income tax withheld at source. Dividend
income is shown net of any related tax credit. Dividends are allocated to revenue or capital depending on whether the dividend
is of a revenue or capital nature.
Dividends receivable are brought into account when the Company’s right to receive payment is established and it is probable that
payment will be received. Fixed returns on debt and money market securities are recognised on a time apportionment basis so as
to reflect the eective yield, provided there is no reasonable doubt that payment will be received in due course.
Disclosure
28 February 2023
£’000
28 February 2022
£’000
Dividends receivable from fixed asset investments
834
715
In-specie dividend
1
24
134
Loan note interest receivable
45
45
Income receivable on money market securities
189
–
1,092
894
1
The Company received shares in Verici Dx PLC as a result of an in-specie dividend from EKF Diagnostics Holdings plc. In the prior period the Company received shares
in Trellus Health plc as a result of an in-specie dividend from EKF Diagnostics Holdings PLC. These have been treated as capital income.
3. Investment management fees
28 February 2023
28 February 2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Investment management fee
650 1,949 2,599
765 2,296 3,061
Octopus provides investment management and accounting and administration services to the Company under a management
agreement which initially ran with Close Investment Limited from 3 February 1998 and was then novated to Octopus for a period of
five years with eect from 29 July 2008 and may be terminated at any time thereafter by not less than 12 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 insucient 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 management fee is an annual charge set at 2% of the Company’s
net assets, less deductions outlined below, calculated on a quarterly basis.
During the year Octopus charged gross management fees of £3,067,000 (2022: £3,723,000). When the various allowances detailed
below are included, the net management fees for the year are £2,599,000 (2022: £3,061,000). At the year end there was £580,000
payable to Octopus (2022: £834,000). Octopus received £282,000 as a result of upfront fees charged on allotments of Ordinary
shares (2022: £515,000).
The Company now pays ongoing adviser charges to independent financial advisers (‘IFAs’). Ongoing adviser charges are an
ongoing fee of up to 0.5% per annum for a maximum of nine years paid to advisers who are on an advised and ongoing fee
structure. The Company is rebated for this cost by way of a reduction in the annual management fee. For the year to 28 February
2023 the rebate received was £183,000 (2022: £290,000).
56
Octopus AIM VCT plc Annual report 2023
3. Investment management fees continued
The Company also facilitates upfront fees to IFAs where an investor has invested through a financial adviser and has received
upfront advice. Where an investor agrees to an upfront fee only, the Company can facilitate a payment of an initial adviser charge
of up to 4.5% of the investment amount. If the investor chooses to pay their intermediary/adviser less than the maximum initial
adviser charge, the remaining amount will be used for the issue and allotment of additional new shares for the investor. In these
circumstances the Company does not facilitate ongoing annual payments. To make sure that the Company is not financially
disadvantaged by such payment, a notional ongoing adviser charge equivalent to 0.5% per annum will be deemed to have been
paid by the Company for a period of nine years. The Company is rebated for this cost, also by way of a reduction in the annual
management fee. For the year to 28 February 2023 the rebate received was £202,000 (2022: £272,000).
The Company also receives a reduction in the management fee for the investments into other Octopus managed funds, being
the Multi Cap, Micro Cap and Future Generations products, to ensure the Company is not double charged on these products. This
amounted to £83,000 for the year to 28 February 2023 (2022: £100,000).
The management fee has been allocated 25% to revenue and 75% to capital, in line with the Board’s expected long-term return
in the form of income and capital gains respectively from the Company’s investment portfolio.
4. Other expenses
Accounting policy
All expenses are accounted for on an accruals basis.
The transaction costs incurred when purchasing or selling assets are written o to the income statement in the period that
they occur.
Disclosure
28 February 2023
£’000
28 February 2022
£’000
IFA charges
183
290
Directors' remuneration
98
102
Registrars' fees
65
55
Audit fees
43
36
Printing and postage
23
18
VCT monitoring fees
13
21
Directors’ and ocers’ liability insurance
50
19
Broker’s fees
6
6
Other administration expenses
208
228
689
775
The fees payable to the Company’s auditor are stated net of VAT and the VAT is included within other administration expenses.
The ongoing charges of the Company were 2.1% of average net assets during the year to 28 February 2023 (2022: 1.9%). Ongoing
charges are calculated using the AIC methodology and exclude exceptional costs and trail commission.
57
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
5. Directors’ remuneration
Directors were paid £98,000 in the year to 28 February 2023 (2022: £102,000). This excludes Employer’s National Insurance
contributions of £8,000 (2022: £8,000). None of the Directors received any other remuneration, pension contributions or benefits
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 four (2022: four).
6. Tax
Accounting policy
Corporation tax payable is applied to profits chargeable to corporation tax, if any, at the current rate. The tax eect of dierent
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 dierences that have originated but not reversed at
the balance sheet date, except as otherwise indicated.
Deferred tax assets are only recognised to the extent that it is probable that they will be recovered against the reversal of deferred
tax liabilities or other future taxable profits.
The corporation tax charge for the year was £nil (2022: £nil).
Disclosure
Tax reconciliation
28 February 2023
£’000
28 February 2022
£’000
Loss before tax
(33,414)
(19,459)
Current tax at 19.0% (2022: 19.0%)
(6,349)
(3,697)
Eects of
Non-taxable income
(199)
(161)
Non-taxable capital gains
5,932
3,138
Non-deductible expenses
(4)
(3)
Excess management expenses on which deferred tax
not recognised
620
723
Total tax charge –
–
Approved VCTs are exempt from tax on capital gains within the Company. Since the Directors intend that the Company will
continue to conduct its aairs so as to maintain its approval as a VCT, no deferred tax has been provided in respect of any capital
gains or losses arising on the revaluation or disposal of investments.
As at 28 February 2023 there is an unrecognised deferred tax asset of £6,551,000 (2022: £5,758,000) in respect of accumulated
surplus management expenses of £26,204,000 (2022: £23,030,000), based on a prospective corporation tax rate of 25% (2022:
25%). This deferred tax asset could in future be used against taxable profits.
Provided the Company continues to maintain its current investment profile, it is unlikely that the expenses will be utilised and that
the Company will obtain any benefit from this asset.
58
Octopus AIM VCT plc Annual report 2023
7. Dividends
Accounting policy
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 on the record date, the date on which those shareholders on the share register are
entitled to the dividend.
Disclosure
28 February 2023
£’000
28 February 2022
£’000
Dividends paid on Ordinary shares during the year
Final dividend – 3.0p paid 12 August 2022 (2022: 3.5p)
4,775
5,035
Special dividend – Nil (2022: 2.5p) – 3,597
Interim dividend – 2.5p paid 12 January 2023 (2022: 2.5p)
4,501
4,031
9,276
12,663
During the year £1,761,000 (2022: £2,342,000) of dividends were reinvested under the DRIS, see note 14.
28 February 2023
£’000
28 February 2022
£’000
Dividends paid and proposed in respect of the year
Interim dividend – 2.5p paid 12 January 2023 (2022: 2.5p)
4,501
4,031
Final dividend proposed : 2.5p payable 10 August 2023
(2022: 3.0p)
4,462
4,795
8,963
8,826
Under Section 32 of FRS 102 ‘Events After Balance Sheet Date’, dividends payable at year end are not recognised as a liability in
the financial statements.
The above proposed final dividend is based on the number of shares in issue at the date of this report. The actual dividend paid
may dier from this number as the dividend payable will be based on the number of shares in issue on the record date and will
reflect any changes in the share capital between the year end and the record date.
8. Earnings per share
28 February 2023
28 February 2022
Revenue Capital Total Revenue Capital Total
Loss attributable to ordinary shareholders
(£’000)
(271) (33,143) (33,414)
(780) (18,679) (19,459)
Earnings per ordinary share (p)
(0.2p) (20.0p) (20.2p)
(0.5p) (12.4p) (12.9p)
The earnings per share is based on 165,688,082 Ordinary shares (2022: 151,132,679), being the weighted average number of shares
in issue during the year, and the loss on ordinary activities after tax for the year of £33,414,000 (2022: loss £19,459,000).
There are no potentially dilutive capital instruments in issue and, as such, the basic and diluted earnings per share are identical.
59
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
9. Net asset value per share
28 February 2023
28 February 2022
Net assets (£’000)
141,222
168,169
Shares in issue
179,802,084
160,480,523
NAV per share (p)
78.5
104.8
There are no potentially dilutive capital instruments in issue and, as such, the basic and diluted NAV per share are identical.
10. Fixed asset investments
The Company’s principal financial assets are its investments and the policies in relation to those assets are set out below.
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 102, the investments are measured as 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 investments quoted on a recognised stock exchange, fair value is established by reference to the closing bid price
on the relevant date or the last traded price, depending upon convention of the exchange on which the investment is quoted. In
the case of unquoted investments fair value is established by assessing dierent methods of valuation, such as price of recent
transaction, earnings multiples, discounted cash flows and net assets. Where price of recent investment is used as a starting
point for estimating fair value at subsequent measurement dates, this has been benchmarked using an appropriate valuation
technique. These methodologies are consistent with IPEV 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 unrealised. The Investment Manager reviews changes in fair value of investments
for any permanent reductions in value and will give consideration to whether these losses should be transferred to the capital
reserve realised.
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 portfolio companies.
Fair value hierarchy
Paragraph 34.22 of FRS 102 recognises a hierarchy of fair value measurements, for financial instruments measured at fair value in
the balance sheet, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities
(Level 1) and the lowest priority to unobservable inputs (Level 3). This methodology is adopted by the Company and requires
disclosure of financial instruments to be dependent on the lowest significant applicable input as laid out below:
Level 1: The unadjusted, fully accessible and current quoted price in an active market for identical assets or liabilities that an entity
can access at the measurement date.
Level 2: Inputs for similar assets or liabilities other than the quoted prices included in Level 1 that are directly or indirectly observable,
which exist for the duration of the period of investment.
Level 3: This is where inputs are unobservable, where no active market is available and recent transactions for identical instruments
do not provide a good estimate of fair value for the asset or liability.
60
Octopus AIM VCT plc Annual report 2023
10. Fixed asset investments continued
Level 1:
Quoted equity
investments
£’000
Level 3:
Unquoted
investments
£’000
Total
£’000
Cost at 1 March 2022 70,876 4,488 75,364
Opening unrealised gain at 1 March 2022 48,423 5,439 53,862
Valuation at 1 March 2022 119,299 9,927 129,226
Purchases at cost 4,880 – 4,880
In-specie dividend 24 – 24
Disposal proceeds (2,478) – (2,478)
Profit on realisation of investments 207 – 207
Change in fair value in year (27, 879) (1,313) (29,192)
Closing valuation at 28 February 2023 94,053 8,614 102,667
Cost at 28 February 2023 72,846 4,488 7 7,33 4
Closing unrealised gain at 28 February 2023 21,207 4,126 25,333
Valuation at 28 February 2023 94,053 8,614 102,667
The Company received £2,478,000 (2022: 6,260,000) from investments sold in the year. The book cost of these investments when
they were purchased was £2,934,000 (2022: 3,109,000). These investments have been revalued over time and until they were sold
any unrealised gains/losses were included in the fair value of the investments.
Level 1 valuations are valued in accordance with the closing bid price on the relevant date. Further details of the fixed asset
investments held by the Company are shown within the Investment Manager’s Review.
Level 3 investments are reported at fair value in accordance with FRS 102 Sections 11 and 12, which is determined in accordance with
the latest IPEV guidelines. In estimating fair value, there is an element of judgement, notably in deriving reasonable assumptions,
and it is possible that, if dierent assumptions were to be used, dierent valuations could have been attributed to some of the
Company’s investments. Level 3 investments include £600,000 (2022: £600,000) of loan notes held at cost, which is deemed to
be current fair value.
The Company holds six unquoted investments which are classified as Level 3 in terms of fair value hierarchy. These are valued based
on a range of valuation methodologies, determined on an investment-specific basis. The price of recent investment is used where a
transaction has occurred suciently close to the reporting date to make this the most reliable indicator of fair value. Where recent
investment is not deemed to indicate the most reliable indicator of fair value i.e. the most recent investment is too distant from
the reporting date for this to be deemed a reasonable indicator, other market-based approaches including earnings multiples,
annualised recurring revenues, discounted cash flows or net assets are used to determine a fair value for the investments. See
below for our analysis:
FRS 102 requires the Directors to consider the impact of changing one or more of the inputs used as part of the valuation process to
reasonable possible alternative assumptions. The Company’s holdings in Hasgrove plc and Popsa Holdings Ltd make up over 95%
of the market value of the Level 3 investments on the balance sheet and therefore we have taken into account these valuations
when considering possible alternative assumptions. Given Popsa Holdings Ltd is based on the price of a recent transaction there
are no variable inputs included in the valuation and as a result there is nothing to adjust. See below for the results of our analysis:
61
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Valuation technique Portfolio company Input Base case
Change in
input
Change in
fair value of
investments
(£m)
Revenue multiple Hasgrove plc Revenue multiple 4.5
0.5x 0.4
(0.5x) (0.4)
EV/Sales multiple Popsa Holdings Ltd EV/Sales multiple 2.0
0.2x 0.3
(0.2x) (0.3)
The Board and the Investment Manager believe that the valuations as at 28 February 2023 reflect the most reasonable assumptions
at that date, giving due regard to all information available from each portfolio company.
All capital gains or losses on investments are classified at FVTPL (‘fair value through profit and loss’). 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.
At 28 February 2023 there were no commitments in respect of investments approved by the Investment Manager but not yet completed
(2022: £nil). The transaction costs incurred when purchasing or selling assets are written o to the income statement in the period
that they occur.
11. Current asset investments and cash at bank
Accounting policy
For the purposes of the cash flow statement, cash at bank comprises cash in hand and deposits repayable on demand, less
overdrafts payable on demand. Cash equivalents are short-term, highly liquid investments that are readily convertible to known
amounts of cash and that are subject to an insignificant risk of changes in value. Therefore, an investment normally qualifies as a
cash equivalent only when it has a short maturity of, say, three months or less from the date of acquisition. Bank overdrafts are
normally considered financing activities similar to borrowings. However, if they are repayable on demand and form an integral
part of an entity’s cash management, bank overdrafts are a component of cash and cash equivalents. This comprises government
securities, investment grade bonds and investments in money market funds.
Current asset investments on the balance sheet comprise of investments in Open Ended Investment Companies (OEICs), money
market funds and deposits and are designated as FVTPL. Gains and losses arising from changes in fair value of current investments
are recognised as part of the capital return within the income statement and allocated to the capital reserve unrealised.
The current asset investments are readily convertible into cash at the choice of the Company within seven days. The current asset
investments are held for trading, are actively managed and the performance is evaluated on a fair value basis in accordance with
a documented investment strategy. Information about them has to be provided internally on that basis to the Board.
62
Octopus AIM VCT plc Annual report 2023
11. Current asset investments and cash at bank continued
Disclosure
Current asset investments at 28 February 2023 and at 28 February 2022 comprised of money market funds
1
and deposits and
OEICs. These fall into Level 1 of the fair value hierarchy as defined in the fixed asset investment accounting policy in note 10 above.
28 February 2023
£’000
28 February 2022
£’000
OEICs:
FP Octopus UK Micro Cap Growth Fund
8,114
8,935
FP Octopus UK Multi Cap Income Fund
7,263
7,060
FP Octopus UK Future Generations Fund
811
548
Total OEICs 16,188
16,543
Money market funds
1
21,433
1,326
Total current asset investments 37,621
17,869
Applications cash 3
246
Cash at bank 1,437
21,910
Total 39,061
40,025
1
Money market funds represent money held pending investment and can be accessed with one working day’s notice.
12. Debtors
28 February 2023
£’000
28 February 2022
£’000
Other debtors
58
95
Prepayments and accrued income
296
234
Total 354
329
13. Creditors: amounts falling due within one year
28 February 2023
£’000
28 February 2022
£’000
Accruals
827
1,141
Other creditors
25
268
Trade creditors
8
2
Total 860
1,411
Creditors includes £3,000 (2022: £246,000) cash held on behalf of the Company and Octopus AIM VCT 2 plc (also managed by
Octopus Investments). This cash is held in an applications bank account until shares are issued, of this £2,000 (2022: £148,000) is
attributable to the Company.
14. Share capital
28 February 2023
£’000
28 February 2022
£’000
Allotted and fully paid up:
179,802,084 Ordinary shares of 1.0p (2022: 160,480,523)
1,798
1,605
Closing cost and valuation at 28 February 1,798
1,605
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 out on page 20. As the Company is registered as an AIFM, it is subject to externally imposed capital requirements
63
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
of €300,000. If the value of assets under management (‘AUM’) exceeds €250 million then an additional amount of Company
funds equal to 0.02% of the excess over €250 million (subject to a cap of €10 million capital requirement) will be required.
During the year the Company repurchased the following shares to be cancelled:
Date Number of shares
Price per share
(p)
Total cost of shares
repurchased
(£)
24 March 2022 513,628 99.2 510,000
21 April 2022 220,376 99.7 220,000
12 May 2022 48,702 91.3 44,000
23 June 2022 366,396 85.8 314,000
27 July 2022 317,753 86.1 274,000
18 August 2022 148,390 86.5 128,000
15 September 2022 178,462 84.8 151,000
27 October 2022 809,066 76.6 620,000
17 November 2022 357, 347 79.5 284,000
15 December 2022 282,998 75.3 213,000
19 January 2023 678,177 75.1 509,000
16 February 2023 391,515 76.5 300,000
Total 4,312,810 3,567,000
The total nominal value of the shares repurchased for cancellation was £43,128 representing 2.4% of the issued share capital.
The Company issued the following shares during the year to 28 February 2023:
Date Number of shares
Price per share
(p)
Net proceeds of
shares issued
(£)
14 April 2022
1
144,759 110.8 151,000
12 August 2022
1
54,869 89.3 49,000
12 August 2022
2
999,538 89.3 893,000
14 November 2022 21,311,806 87 17,349,000
13 January 2023
2
1,123,399 7 7.3 868,000
Totals 23,634,371 19,310,000
1
Shares issued as a result of reduced adviser charges, and reduced annual management fee for Octopus employees.
2
Shares issued under the Dividend Reinvestment Scheme (DRIS).
Excluding the value of shares issued under the DRIS, the total value net of share issue costs was £17,549,000 (2022: £23,315,000).
This is shown in the cash flow statement.
64
Octopus AIM VCT plc Annual report 2023
15. Financial instruments and risk management
The Company’s financial instruments comprise of equity investments, loan notes, OEICs, cash balances, investments in money
market funds and debtors and creditors. The Company holds financial assets in accordance with its investment policy of
investing mainly in a portfolio of VCT qualifying AIM-traded securities whilst holding a proportion of its assets in cash or near-cash
investments in order to provide a reserve of liquidity.
28 February 2023
£’000
28 February 2022
£’000
Financial assets at fair value through profit or loss
Fixed asset investments
102,667
129,226
Money market securities
21,433
1,326
OEICs
16,188
16,543
Total financial assets at fair value through profit
or loss
140,288
147,095
Financial assets measured at amortised cost
Cash at bank
1,440
22,156
Debtors
354
329
Total financial assets measured at amortised cost 1,794
22,485
Financial liabilities measured at amortised cost
Creditors
(860)
(1,411)
Total financial liabilities measured at amortised cost (860)
(1,411)
The Company holds six qualifying, unquoted investments: Popsa Holdings Limited, Rated People Limited, Airnow plc, The Food
Marketplace, Eluceda Limited and Hasgrove plc, which delisted from AIM in 2013. The Company also holds one unquoted loan
note investment in Osirium Technologies plc valued at £600,000 held at cost. Unquoted investments and loan notes are included
in fixed asset investments in the table above.
Fixed and current asset investments (see notes 10 and 11) are initially recognised at FVTPL (‘fair value through profit and loss’). For
quoted investments this is bid price. The Directors believe that the fair value of the assets held at the year end is equal to their
book value. Unquoted investments are valued in accordance with IPEV Guidelines.
The Company’s creditors and debtors are initially recognised at fair value, which is usually the transaction cost, and subsequently
measured at amortised cost using the eective interest method.
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 year end is equal to their book value.
16. Financial risk management
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 20. 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
Corporate Governance Statement on pages 33 to 36, having regard to the possible eects of adverse price movements, and other
macroeconomic eects on the market such as the ongoing pandemic and war in Ukraine, 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
65
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
the portfolio across business sectors and asset classes. The Company’s portfolio is well diversified with holdings in technology,
industrials, pharmaceuticals, support services and many more growing sectors. 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 in the Investment Manager’s Review on
pages 9 to 11.
By value, 67% (2022: 71%) of the Company’s net assets comprises equity securities listed on the London Stock Exchange or
admitted to trading on AIM. In the context of the continued short-term market volatility caused by the cost of living crisis and the
unstable economic environment, we have maintained the sensitivity analysis at 20%, consistent with 2022. Therefore, a decrease
in the bid price of these securities as at 28 February 2023 would have decreased net assets and the total return for the year by
£18,811,000 (2022: £23,860,000); and an equivalent change in the opposite direction would have increased net assets for the year
by the same amount.
OEIC investments comprised 11% of the Company’s net assets by value (2022: 10%). A 20% decrease (2022: 20%) in the price of
these securities at 28 February 2023 would have decreased net assets by £3,238,000 (2022: £3,309,000); and an equivalent change
in the opposite direction would have increased net assets for the year by the same amount.
Unquoted investments comprised 6% of the Company’s net assets by value (2022: 6%). A 20% decrease (2022: 20%) in the
price of these securities at 28 February 2023 would have decreased net assets by £1,723,000 (2022: £1,985,000); and an equivalent
change in the opposite direction would have increased net assets for the year by the same amount. The Directors consider this
to not be significant.
Interest rate risk
Some of the Company’s financial assets are interest-bearing. As a result, the Company is exposed to fair value interest rate risk
due to fluctuations in the prevailing levels of market interest rates.
Floating rate
The Company’s floating rate investments comprise cash held on interest-bearing deposit accounts and, where appropriate,
within interest bearing money market securities. The benchmark rate which determines the rate of interest receivable on such
investments is the bank base rate, which was 4.0% at 28 February 2023 (2022: 0.5%). The amounts held in floating rate investments
at the balance sheet date were as follows:
28 February 2023
£’000
28 February 2022
£’000
Money market funds
21,433
1,326
Cash at bank
1,440
22,156
22,873
23,482
Every 1% increase in the base rate would increase income receivable from these investments for the year by £214,000 (2022:
£235,000).
Credit risk
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has
entered into with the Company. Octopus 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.
Other than cash, loan notes or liquid money market funds, there were no significant concentrations of credit risk to counterparties
at 28 February 2023 or 28 February 2022. By value, no individual bank holding or fixed rate note investment exceeded 1% of the
Company’s net assets at 28 February 2023 (2022: 13%).
The Company’s interest-bearing deposit and current accounts are maintained with HSBC and BlackRock. The risk of loss to this
cash is deemed to be low due to the historical credit ratings and a current Moody’s rating of A2 for HSBC and A3 for BlackRock
cash funds. 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 HSBC or BlackRock deteriorate significantly, the Investment
Manager will move the cash holdings to another bank.
66
Octopus AIM VCT plc Annual report 2023
16. Financial risk management continued
Credit risk relating to listed money market securities
is mitigated by investing in a portfolio of investment
instruments of high credit quality, comprising securities
issued by the UK Government and major UK companies and
institutions.
Those assets of the Company which are traded on recognised
stock exchanges are held on the Company’s behalf by third-
party sub-custodians (for example, BlackRock in the case
of listed money market securities and Octopus Investments
Limited in the case of quoted equity securities). Bankruptcy
or insolvency of a custodian could cause the Company’s
rights with respect to securities held by the custodian to be
delayed or limited or by bankruptcy proceedings.
Liquidity risk
The Company’s financial assets include investments in AIM-
traded companies, which by their nature involve a higher
degree of risk than investments on the main market, as well
as unquoted securities which are not traded on a recognised
stock exchange and which generally may be illiquid. As a
result, the Company may not be able to realise some of its
investments in these instruments quickly at an amount close
to their fair value in order to meet its liquidity requirements,
or to respond to specific events such as deterioration in the
creditworthiness of any particular issuer.
The Company’s listed money market securities are considered
to be readily realisable as they are of high credit quality as
outlined above.
The Company’s OEIC investments are considered to be
readily realisable as under the terms of the product, funds
can be withdrawn at any point and received within seven
working days. There is a risk that the value of the investment
will fall, but this is monitored continually by the Investment
Manager.
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 maintains sucient investments in cash and
readily realisable securities to pay accounts payable and
accrued expenses. At 28 February 2023 these investments
were valued at £39,061,000 (2022: £40,025,000). The
Company has no debt, therefore no maturity analysis is
required.
17. Post balance sheet events
The following events occurred between the balance sheet
date and the signing of these financial statements.
• A follow-on investment totalling £600,000 completed in
FP Octopus UK Micro Cap Growth Fund.
• A partial disposal of 5,040 shares in Judges Scientific plc
for total consideration of £439,000.
• A partial disposal of 172,200 shares in Quixant plc for
total consideration of £301,000.
• A partial disposal of 180,000 shares in Genedrive plc for
total consideration of £53,000.
• A full disposal of 500,000 shares in Itsarm plc (formerly
In The Style Group plc) for total consideration of £2,000.
• A full disposal of 428,811 shares in AdEPT Technology
Group plc for total consideration of £862,000.
• A partial disposal of 120,000 shares in Intelligent
Ultrasound Group plc for total consideration of £19,000.
• A partial disposal of 152,066 shares in FP Octopus UK
Multi Cap Income for total consideration of £180,000.
The following shares have been bought back since the
year end:
• 16 March 2023: 459,683 shares at a price of 72.5p per
share.
• 20 April 2023: 558,866 shares at a price of 72.5p per
share.
• 18 May 2023: 290,881 shares at a price of 71.9p per share.
18. Contingencies, guarantees and financial
commitments
At 28 February 2023 there were no commitments in respect
of investments approved by the Investment Manager but not
yet completed (2022: £nil).
19. Related party transactions
The Company has employed Octopus throughout the year
as Investment Manager. Octopus has also been appointed
the custodian of the Company’s investments under a
custodian agreement.
The Company has paid Octopus £2,599,000 (2022:
£3,061,000) in the year as a management fee. The
management fee is payable quarterly in arrears and is based
on 2.0% of net assets at six-month intervals.
67
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
The Company receives a reduction in the management fee
for the investments in other Octopus managed funds, being
the Octopus Portfolio Manager, Multi Cap Income Fund, Micro
Cap Growth Fund and Future Generations Fund, to ensure
the Company is not double charged on these products. This
amounted to £83,000 in the year to 28 February 2023 (2022:
£100,000). For further details please refer to note 3. Details of
amounts invested in Octopus managed funds can be found
on page 62.
Octopus received £nil (2022: £nil) transaction fees and
directors’ fees from portfolio companies.
The Company holds £3,000 (2022: £246,000) of cash on
behalf of the Company and AIM VCT 2 plc. Of this, £2,000
(2022: £161,000) is attributable to the Company.
In the year, Octopus Investments Nominees Limited (‘OINL’)
purchased Company shares from shareholders to protect
their interests after delays or errors with shareholder
instructions and other similar administrative issues, on the
understanding that shares will be sold back to the Company
in subsequent share buybacks.
As at 28 February 2023, Octopus Investments Nominees
Limited (‘OINL’) held 7,598 shares (2022: 889) in the Company
as beneficial owner, having purchased these at a cost of
£7,000 (2022: £nil). Throughout the period to 28 February
2023 OINL purchased 9,875 shares (2022: 889) at a cost of
£9,000 (2022: £1,000) and sold 3,166 shares (2022: nil) for
proceeds of £3,000 (2022: £nil). This is classed as a related
party transaction as Octopus, the Investment Manager and
OINL are part of the same group of companies. Any such
future transactions, where OINL takes over the legal and
beneficial ownership of Company shares, will be announced
to the market and disclosed in annual and half-yearly reports.
68
Octopus AIM VCT plc Annual report 2023
Octopus AIM VCT plc was launched as Close AIM VCT PLC in
the spring of 1998 and raised £10.1 million from private investors
through an issue of Ordinary shares.
Between October 2000 and March 2001 a further £20.0 million
was raised through an issue of C shares. Furthermore, between
16 March 2004 and final closing on 5 April 2004 the Company
raised £3.3 million by way of a D share issue.
The C Shares were merged and converted into Ordinary shares
on 31 May 2004 at a conversion ratio determined by a price
mechanism related to the respective net assets per share of both
the Ordinary shares and C shares at 29 February 2004 (which
resulted in C Shareholders receiving 1.0765 Ordinary shares for
each C share held).
A further £15.0 million was raised between 6 January 2005 and
8 April 2005 through an issue of new D shares.
On 31 May 2008, the Ordinary shares converted into D shares at a
conversion ratio of 0.5448 D shares for each Ordinary share. All of
the D shares were then re-designated into new Ordinary shares.
With eect from 1 August 2008, the management of the
Company was transferred to Octopus.
On 4 August 2010, the share capital was restructured and each
existing Ordinary share of 50p was subdivided into one Ordinary
share of 1p and one deferred share of 49p. The deferred shares
had no economic value and were bought back by the Company
for an aggregate amount of 1p and cancelled.
On 12 August 2010, following approval at the Extraordinary
General Meeting on 4 August 2010, shareholders of Octopus
Phoenix VCT had their shares converted into Octopus AIM VCT
shares on a relative NAV basis using the conversion factor of
0.42972672. On the same day, Octopus Phoenix VCT was placed
into members’ voluntary liquidation.
The oer for subscription in the prospectus dated 9 July 2010
relating to the issue of new shares in connection with the merger
with Octopus Phoenix VCT Plc was extended by a supplemental
prospectus and closed on 19 April 2011 raising £10 million. A
subsequent oer raised £1.9 million, closing on 5 April 2012.
A further oer was launched on 25 April 2012 and closed on
31 July 2012. The oer resulted in the issue of 2,843,092 new
shares, raising a total of £2.6 million.
On 23 October 2012, the Company announced an Enhanced
Buyback Facility (EBB) in respect of up to 50% of the issued share
capital. The EBB closed on 31 January 2013. As a result of the
EBB, the Company repurchased 10,801,537 Ordinary shares and
10,289,443 new Ordinary shares were issued.
An oer for subscription of up to £10 million, which opened on
1 February 2013 and closed on 17 December 2013, raised
£9.4 million. The Company opened a non-prospectus oer to
raise £4.1 million that opened on 2 February 2014 and closed fully
subscribed on 28 March 2014.
A combined fundraise with Octopus AIM VCT 2 plc by way of an
issue of new shares was launched on 29 August 2014 to raise up to
£12 million with an over-allotment facility of £6 million. This oer
closed, fully subscribed, on 1 July 2015.
A further combined fundraise with Octopus AIM VCT 2 plc by way
of an issue of new shares was launched on 21 December 2015 to
raise up to £12 million with an over-allotment facility of £6 million.
This oer closed, fully subscribed, on 3 October 2016.
An oer for subscription to raise up to £4.3 million by way of an
issue of new shares was launched on 6 February 2017. This oer
closed to new applications, fully subscribed, on 27 February 2017.
A further combined oer for subscription with Octopus AIM VCT
2 plc was launched on 16 June 2017 to raise up to £18 million with
an over-allotment of £6 million. This oer closed, fully subscribed,
on 10 November 2017.
A combined fund raise with Octopus AIM VCT 2 plc by way of an
issue of new shares was launched on 3 August 2018 to raise up
to £12 million for the Company with an over-allotment facility of
£6 million. This oer closed, fully subscribed, on 28 September
2018.
A combined fund raise with Octopus AIM VCT 2 plc by way of an
issue of new shares was launched on 29 November 2019 to raise up
to £12 million for the Company with an over-allotment facility of
£6 million. This oer closed, fully subscribed, on 27 February 2020.
A combined fund raise with Octopus AIM VCT 2 plc by way of an
issue of new shares was launched on 20 August 2020 to raise up
to £12 million for the Company with an over-allotment facility of
£6 million. This oer closed, fully subscribed, on 30 November
2020.
On 19 August 2021, a prospectus oer was launched alongside
Octopus AIM VCT 2 plc to raise a combined total of up to
£30 million with a £10 million over-allotment facility. This
prospectus oer closed, fully subscribed, on 13 September 2021.
On 22 September 2022, a prospectus offer was launched
alongside Octopus AIM VCT plc to raise a combined total of
up to £20 million with a £10 million over-allotment facility. This
prospectus closed to further applications on 13 October 2022.
69
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
About VCTs
VCTs were introduced in the Finance Act 1995 to provide a means
for private individuals to invest in unlisted companies in the
UK. Subsequent Finance Acts have introduced changes to VCT
legislation. The tax benefits currently available to eligible new
investors in VCTs include:
• up to 30% upfront income tax relief;
• exemption from income tax on dividends paid; and
• exemption from capital gains tax on disposals of shares
in VCTs.
The Company has been approved as a VCT by HMRC. In order to
maintain its approval, the Company must comply with certain
requirements on a continuing basis including the provisions of
chapter 3 of the Income Tax Act 2007; in particular s280A:
• at least 80% of the Company’s investments must comprise
‘qualifying holdings’
1
(as defined in the legislation);
• at least 70% of the qualifying holdings must be invested into
Ordinary shares with no preferential rights (30% for funds
invested before 6 April 2011);
• no single investment made can exceed 15% of the total
company value at the time of investment; and
• a minimum of 10% of each qualifying investment must be in
Ordinary shares with no preferential rights.
1
A ‘qualifying holding’ consists of up to £5 million invested in any one year in new
shares or securities in a company admitted to trading on AIM (or an unquoted UK
company) which is carrying on a qualifying trade and whose gross assets do not
exceed a prescribed limit at the time of investment. The definition of a ‘qualifying
trade’ excludes certain activities such as property investment and development,
financial services and asset leasing.
Dividends
Dividends will be paid by the Registrar on behalf of the
Company. Shareholders who wish to have dividends paid
directly into their bank account rather than by cheque sent to
their registered address can complete a mandate form for this
purpose or complete an instruction electronically by visiting the
Computershare Investor Centre at: www-uk.computershare.
com/investor/.
Queries relating to dividends, shareholdings or requests for
mandate forms should be directed to Computershare by calling
0370 703 6325 (calls are charged at the standard geographic rate
and will vary by provider. Calls from outside the United Kingdom
will be charged at the applicable international rate. Lines are
open between 9.00am-5.30pm, Monday to Friday, excluding
public holidays in England and Wales), or by writing to them at:
The Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
70
Octopus AIM VCT plc Annual report 2023
The following unaudited table shows the net asset value per share and lists the dividends that have been paid since the launch of the
Company and the dierent share classes that have been issued:
Dividends
paid during
the period
ending
Ordinary
shares
2022/23
Ordinary
shares
2021/22
Ordinary
shares
2020/21
Ordinary
shares
2019/20
Ordinary
shares
2018/19
Ordinary
shares
2017/18
Ordinary
shares
2016/17
Ordinary
shares
2015/16
Ordinary
shares
2014/15
Ordinary
shares
2013/14
Ordinary
shares
2012/13
Ordinary
shares
2011/12
Ordinary
shares
2010/11
Ordinary
shares
2009/10
D shares
2003/04
C shares
2000/01
Ordinary
shares
1997/98
Phoenix
‘C’ shares
2005/06
Phoenix
Ordinary
shares
2002/03
February 1999 – – – – – – – – – – – – 3.13 – –
February 2000 – – – – – – – – – – – – 37. 25 – –
February 2001 – – – – – – – – – – – 2.55 6.50 – –
February 2002 – – – – – – – – – – – 1.50 3.50 – –
February 2003 – – – – – – – – – – – 0.50 0.50 – 0.15
February 2004 – – – – – – – – – – 0.50 0.50 0.50 – 6.50
February 2005 – – – – – – – – – – 2.25 2.31 2.15 – 1.00
February 2006 – – – – – – – – – – 3.30 7. 2 1 6.70 4.00 9. 35
February 2007 – – – – – – – – – – 5.00 5.38 5.00 5.00 11.00
February 2008 – – – – – – – – – – 5.00 2.93 2.72 4.35 6.00
February 2009 – – – – – – – – – – 5.00 2.93
1
2.72
1
4.05 3.00
February 2010 – – – – – – – – – 2.80 2.50 1.47
1
1.36
1
1.53
1
1.13
1
February 2011 – – – – – – – – 2.64
1
2.80
1
2.50 1.47
1
1.36
1
1.53
1
1.13
1
February 2012 – – – – – – – 5.18
1
5.29
1
5.59
1
5.00 2.93
1
2.72
1
3.05
1
2.26
1
February 2013 – – – – – –
1
5.51
1
5.18
1
5.29
1
5.59
1
5.00 2.93
1
2.72
1
3.05
1
2.26
1
February 2014 – – – – –
1
5.27
1
6.06
1
5.69
1
5.81
1
6.15
1
5.50 3.23
1
3.00
1
3.27
1
2.42
1
February 2015 – – – –
7.28
1
8.91
1
10.25
1
9.63
1
9.83
1
10.40
1
9.30 5.45
1
5.07
1
5.40
1
4.00
1
February 2016 – – – 4.34
1
3.91
1
4.79
1
5.51
1
5.18
1
5.29
1
5.59
1
5.00 2.93
1
2.72
1
2.90
1
2.15
1
February 2017 – – 4.97
1
4.77
1
4.30
1
5.27
1
6.06
1
5.69
1
5.81
1
6.15
1
5.50 3.23
1
3.00
1
3.19
1
2.36
1
February 2018 – 4.47
1
4.97
1
4.77
1
4.30
1
5.27
1
6.06
1
5.69
1
5.81
1
6.15
1
5.50 3.23
1
3.00
1
3.19
1
2.36
1
February 2019 4.48
1
4.47
1
4.97
1
4.77
1
4.30
1
5.27
1
6.06
1
5.69
1
5.81
1
6.15
1
5.50 3.23
1
3.00
1
3.19
1
2.36
1
February 2020 7.81
1
6.92
1
6.91
1
7.69
1
7.3 8
1
6.65
1
8.14
1
9.37
1
8.80
1
8.99
1
9.51
1
8.50 4.99
1
4.63
1
4.93
1
3.65
1
February 2021 5.93
1
5.06
1
4.48
1
4.47
1
4.97
1
4.77
1
4.30
1
5.27
1
6.06
1
5.69
1
5.81
1
6.15
1
5.50 3.23
1
3.00
1
3.19
1
2.36
1
February 2022 6.16
1
9.16
1
7.81
1
6.92
1
6.91
1
7.69
1
7.3 8
1
6.65
1
8.14
1
9.37
1
8.80
1
8.99
1
9.51
1
8.50 4.99
1
4.63
1
4.93
1
3.65
1
February 2023 4.96
1
3.99
1
5.93
1
5.06
1
4.48
1
4.47
1
4.97
1
4.77
1
4.30
1
5.27
1
6.06
1
5.69
1
5.81
1
6.15
1
5.50 3.23
1
3.00
1
3.19
1
2.36
1
Cumulative
dividends
paid
4.96 10.15 21.01 25.74 27.28 31.71 40.24 42.97 46.01 61.59 76.41 76.92 81.19 88.70 100.35 72.32 113.88 63.96 71.47
Adjusted
NAV as at
28 February
2023
2
(assuming
investment
at 100p)
70.8 56.9 84.6 72.2 63.9 63.8 71.0 68.1 61.4 75.2 86.5 81.3 83.0 87. 8 78.5 46.0 42.8 45.6 33.7
Adjusted
NAV plus
cumulative
dividends
paid
3
75.81 67.08 105.60 9 7. 8 9 91.21 95.53 111.21 111.11 1 07. 4 3 136.78 162.95 158.18 164.18 176.51 178.85 118.36 156.65 109.53 105.20
Following the merger with Octopus Phoenix VCT Plc and various share reorganisations, there is only one share class, Ordinary shares. For
Octopus Phoenix VCT Plc Ordinary shares and C shares, the figures above represent a notionally adjusted NAV per share in accordance
with the relevant conversion factors listed in the shareholder information sector on the preceding page.
1
Notional dividends adjusting for conversion and assuming an investment at 100p, of Phoenix ‘C’ shares into Phoenix Ordinary shares, and relevant AIM VCT shares into
AIM VCT Ordinary shares.
2
NAV adjusted for conversion of relevant shares into AIM VCT Ordinary shares at the date of each conversion. Phoenix Ordinary shares adjusted as at the date of the merger.
3
NAV plus cumulative dividends based on NAV adjusting for conversion where appropriate, assuming an investment at 100p, showing the notional return to shareholders
based on their original investment share class.
71
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
The proposed final dividend of 2.5p will, if approved by shareholders, be paid on 10 August 2023 to shareholders on the register on
28 July 2023.
The graph below depicts the Net Asset Value (NAV) per share and the dividends that have been paid since the launch of Octopus
AIM VCT Plc for each class of share issued since that date, assuming an investment at 100p including the up-front tax relief and
adjusted in accordance with the relevant conversion factors. Investment has been assumed at the first allotment of each tax year:
20p
40p
60p
80p
100p
120p
140p
160p
180p
200p
220p
240p
Octopus
Phoenix
VCT
Ordinary
shares
1
2002/03
Octopus
Phoenix
VCT ‘C’
shares
1
2005/06
Octopus
AIM VCT
Ordinary
shares
1
1997/98
Octopus
AIM VCT
‘C’
shares
1
2000/01
Octopus
AIM VCT
‘D’
shares
1
2003/04
Octopus
AIM VCT
Ordinary
shares
1
2009/10
Octopus
AIM VCT
Ordinary
shares
1
2010/11
Octopus
AIM VCT
Ordinary
shares
1
2011/12
Octopus
AIM VCT
Ordinary
shares
1
2012/13
Octopus
AIM VCT
Ordinary
shares
1
2013/14
Octopus
AIM VCT
Ordinary
shares
1
2014/15
Octopus
AIM VCT
Ordinary
shares
1
2015/16
Octopus
AIM VCT
Ordinary
shares
1
2016/17
Octopus
AIM VCT
Ordinary
shares
1
2017/18
Octopus
AIM VCT
Ordinary
shares
1
2018/19
Octopus
AIM VCT
Ordinary
shares
1
2019/20
Octopus
AIM VCT
Ordinary
shares
1
2020/21
Octopus
AIM VCT
Ordinary
shares
1
2021/22
Octopus
AIM VCT
Ordinary
shares
1
2022/23
63.8p
31.71p
30.0p
68.1p
42.97p
30.0p
61.4p
46.01p
30.0p
75.2p
61.6p
30.0p
86.5p
76.4p
30.0p
81.3p
76.9p
30.0p
83.0p
83.3p
30.0p
78.5p
100.4p
20.0p
46.0p
72.3p
20.0p
42.8p
115.8p
20.0p
Total return (p)
Adjusted NAV (p) assuming investment at 100p Cumulative dividends paid (p)
Income tax relief (p) Cost of investment
87.8p
94.3p
30.0p
71.0p
30.0p
40.24p
72.2p
25.74p
30.0p
84.6p
21.01p
30.0p
56.9p
10.15p
30.0p
70.8p
4.96p
30.0p
63.9p
30.0p
27.28p
45.6p
64.0p
40.0p
33.7p
71.5p
20.0p
1
Following the merger of Octopus AIM VCT and Octopus Phoenix VCT and various share re-organisations, there is now only one share class, Ordinary shares. For Ordinary
shares, ‘C’ shares and ‘D’ shares together with Octopus Phoenix VCT Ordinary shares and ‘C’ shares, the figures above represent a NAV, rebased to assume investment at
100p, and adjusted in accordance with the relevant conversion factors. Investment has been assumed at the first allotment of each tax year.
Dividend Reinvestment Scheme (DRIS)
The Company established a DRIS in 2014, under which shareholders are given the opportunity to automatically reinvest future dividend
payments by subscribing for new Ordinary shares. This allows participating shareholders to re-invest the growth in their shareholdings
and, subject to personal circumstances, benefit from additional income tax reliefs.
Any shareholder wishing to reinvest their dividends can request a DRIS instruction form by calling Computershare on
0370 703 6325. The application form and rules can also be found in the Document Library on the Octopus website:
www.octopusinvestments.com/investors/shareholder-information/aim-vct-plc/.
Share price
The Company’s share price can be found on various financial websites, such as www.londonstockexchange.com, by typing the
following TIDM/EPIC code in the ‘Quotes search’:
Ordinary shares
TIDM/EPIC code OOA
Latest share price 5 May 2023 70.5p per share
72
Octopus AIM VCT plc Annual report 2023
Buying and selling shares
The Company’s Ordinary shares can be bought and sold in the
same way as any other company quoted on the London Stock
Exchange via a stockbroker. There may be tax implications in
respect of selling all or part of your holdings, so shareholders
should contact their independent financial adviser if they have
any queries.
Buyback of shares
The Company operates a policy of buying its own shares for
cancellation as they become available, and envisages that
purchases will be made at up to a 5% discount to the prevailing
NAV. The Company is, however, unable to buy back shares directly
from shareholders. If you are considering selling your shares
or trading in the secondary market, please contact Panmure
Gordon (UK) Limited, the Company’s broker.
Panmure Gordon (UK) Limited is able to provide details of close
periods (when the Company is prohibited from buying in shares)
and details of the price at which the Company has bought
its shares. Panmure Gordon (UK) Limited can be contacted
as follows:
Chris Lloyd 020 7886 2716 chris.lloyd@panmure.com
Paul Nolan 020 7886 2717 paul.nolan@panmure.com
Secondary market
UK income tax payers, aged 18 or over, can purchase shares in the
secondary market and benefit from:
• Tax free dividends.
• Realised gains not being subject to capital gains tax
(although any realised losses are not allowable).
• No minimum holding period.
• No need to include VCT dividends in annual tax returns.
The UK tax treatment of VCTs is on a first-in and first-out basis
and therefore tax advice should be obtained before shareholders
dispose of their shares.
Notification of change of address
Communications with shareholders are mailed to the
registered address held on the share register. In the event
of a change of address or other amendment this should
be notified to Computershare, under the signature of the
registered holder, or via the Computershare online share portal
at: www-uk.computershare.com/investor/. Computershare’s
contact details are provided on page 74.
Other information for shareholders
Previously published Annual Reports and Half-yearly Reports are
available for viewing on the Investment Manager’s website at
www.octopusinvestments.com by navigating to Investor,
Shareholder Information, Octopus AIM VCT plc. Other statutory
information can also be found there. For any queries regarding
access to this, please call Octopus on 0800 316 2295.
Electronic communications
We also publish reports and accounts and all other correspondence
electronically. This cuts the cost of print and reduces the impact
on the environment. If, in future, you would prefer to receive a
letter or email telling you a report is available to view or to receive
documents by email, please contact Octopus on 0800 316 2295
or Computershare on 0370 703 6325. Alternatively you can sign
up to receive e-communications via the Computershare online
shareholder portal: www-uk.computershare.com/investor/.
Warning to shareholders
Many companies are aware that their shareholders have received
unsolicited phone calls or correspondence concerning investment
matters. These are typically from overseas based ‘brokers’ who
target UK shareholders oering to sell them what often turn out
to be worthless or high risk shares in US or UK investments. They
can be very persistent and extremely persuasive. Shareholders are
therefore advised to be wary of any unsolicited advice, oer to
buy shares at a discount or oer for free company reports.
Please note that it is very unlikely that either the Company,
Octopus or the Registrar would make unsolicited telephone
calls to shareholders and that any such calls would relate only
to ocial documentation already circulated to shareholders and
would never be in respect of investment advice.
If you are in any doubt about the authenticity of an unsolicited
phone call, please call Octopus on 0800 316 2295.
The Financial Conduct Authority have also issued guidelines
on how to avoid share fraud and further information can be
found on their website: www.fca.org.uk/consumers/scams/
investment-scams/share-fraud-and-boiler-room-scams.
You can report any share fraud to them by calling 0800 111 6768.
73
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Alternative performance measure (APM)
A financial measure of historical or future financial performance,
financial position, or cash flows, other than a financial measure
defined or specified in the applicable financial reporting
framework. These APMs will help shareholders to understand and
assess the Company’s progress. A number of terms within this
glossary have been identified as APMs.
Net asset value or NAV
The value of the Company’s total assets less liabilities. It is equal
to the total shareholders’ funds.
Net asset value per share or NAV per share
The sum of the underlying assets less the liabilities of the
Company divided by the total number of shares in issue.
Ongoing charges ratio (APM)
The ongoing charges ratio has been calculated using the AIC
recommended methodology and excludes irrecoverable VAT,
exceptional costs and trail commission. The figure shows the
annual percentage reduction in shareholder returns as a result
of recurring operational expenses. It informs shareholders
of the likely costs that will be incurred in managing the fund in
the future.
This is calculated by expressing expenses of £3,067,037 which
includes the expenses listed out in note 4 on page 56 excluding
irrecoverable VAT, exceptional costs and trail commission, as a
percentage of average net assets during the year of £144,905,501.
Total return (APM)
Total return is calculated as movement in NAV per share in the
period plus dividends paid in the period, dividend by the NAV per
share at the beginning of the period. Total return on the NAV
per share enables shareholders to evaluate more clearly the
performance of the Company, as it reflects the underlying value
of the portfolio at the reporting date.
Glossary of terms
74
Octopus AIM VCT plc Annual report 2023
Directors and advisers
Board of Directors
Neal Ransome (Chair)
Andrew Boteler
Stephen Hazell-Smith
Joanne Parfrey
Company Number
Registered in England No: 03477519
Legal Entity Identifier (LEI)
213800C5JHJUQLAFP619
Secretary and Registered Oce
Octopus Company Secretarial Services Limited
33 Holborn
London
EC1N 2HT
Investment and Administration Manager
Octopus Investments Limited
33 Holborn
London
EC1N 2HT
Tel: 0800 316 2295
www.octopusinvestments.com
Custodians
Octopus Investments Limited
33 Holborn
London
EC1N 2HT
Bankers
HSBC Bank Plc
31 Holborn
London
EC1N 2HR
LEI: 213800C5JHJUQLAFP619
Independent Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Tax Adviser
PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RH
VCT Status Adviser
Shoosmiths LLP
Apex Plaza
Forbury Road
Reading
RG1 1SH
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
Tel: 0370 703 6325
(Calls are charged at the standard geographic rate and will vary
by provider. Calls from outside the United Kingdom will
be charged at the applicable international rate.)
www.computershare.com/uk
www-uk.computershare.com/investor/
Corporate Broker
Panmure Gordon (UK) Limited
40 Gracechurch Street
London
EC3V 0BT
Tel: 020 7886 2500
75
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Notice is hereby given that the Annual General Meeting
of Octopus AIM VCT plc will be held at 33 Holborn, London,
EC1N 2HT on 20 July 2023 at 10.30am for the purposes of
considering and, if thought fit, passing the following resolutions,
of which Resolutions 1 to 11 and 16 will be proposed as Ordinary
Resolutions and Resolutions 12 to 15 will be proposed as Special
Resolutions:
Ordinary Business
1. To receive and adopt the annual report and accounts for the
year to 28 February 2023.
2. To approve a final dividend of 2.5p per Ordinary share.
3. To approve the Directors’ remuneration policy.
4. To approve the Directors’ remuneration report.
5. To re-elect Neal Ransome as a Director.
6. To re-elect Andrew Boteler as a Director.
7. To re-elect Stephen Hazell-Smith as a Director.
8. To re-elect Joanne Parfrey as a Director.
9. To re-appoint BDO LLP as auditor of the Company in
accordance with Section 489 of the Companies Act 2006
(the ‘Act’), until the conclusion of the next general meeting
of the Company at which audited accounts are laid before
members, and to authorise the Directors to determine their
remuneration.
Special Business
To consider and, if thought fit, pass Resolutions 10, 11 and 16
as Ordinary Resolutions and Resolutions 12 to 15 as Special
Resolutions:
10. Authority to allot relevant securities
THAT, in addition to existing authorities, the Directors
be and are generally and unconditionally authorised in
accordance with s551 of the Act to exercise all the powers
of the Company to allot shares in the Company up to a
maximum nominal amount of £356,985 (representing
approximately 20% of the Ordinary share capital in issue at
the date of this Notice) such authority to expire at the earlier
of the conclusion of the Company’s AGM next following the
passing of this Resolution and the expiry of 15 months from
the passing of this Resolution (unless previously renewed,
varied or revoked by the Company in a general meeting) but
so that such authority allows the Company to make oers or
agreements before the expiry thereof, which would or might
require relevant securities to be allotted after the expiry of
such authority.
11. Authority to allot relevant securities under the DRIS
THAT, in addition to existing authorities, the Directors of the
Company be and hereby are generally and unconditionally
authorised in accordance with Section 551 of the Act to
exercise all the powers of the Company to allot shares in the
Company up to a maximum nominal amount of £53,547
in connection with the Company’s dividend reinvestment
scheme (representing approximately 3% of the Ordinary
share capital in issue as at the date of this Notice) provided
that the authority conferred by this Resolution shall expire on
the date falling 15 months from the date of the passing of
this Resolution (unless previously renewed, varied or revoked
by the Company in general meeting) save that this authority
shall allow the Company to make, before the expiry of this
authority, any oers or agreements which would or might
require shares to be allotted or rights to be granted after
such expiry and the Directors may allot shares in pursuance
of any such oer or agreement notwithstanding the expiry
of such authority.
12. Empowerment to make allotments of equity securities
THAT, conditional upon the passing of Resolution 10 above,
and in addition to existing authorities, the Directors of the
Company be and are hereby empowered pursuant to s571 of
the Act to allot or make oers or agreements to allot equity
securities (as defined in s560(1) of the Act) for cash pursuant
to the authority granted by Resolution 10 as if s561 of the Act
did not apply to any such allotment and so that:
(a) reference to allotment of equity securities in this
Resolution shall be construed in accordance with s560(2)
of the Act; and
(b) the power conferred by this Resolution shall enable the
Company to make any oer or agreement before the
expiry of the said power which would or might require
equity securities to be allotted after the expiry of the said
power and the Directors may allot equity securities in
pursuance of such oer or agreement notwithstanding
the expiry of such power.
The power provided by this Resolution shall expire on the date
falling on the earlier of the conclusion of the Company’s AGM
next following the passing of this Resolution and 15 months
from the date of the passing of this Resolution (unless
previously renewed, varied or revoked by the Company in
general meeting).
Notice of Annual General
Meeting
76
Octopus AIM VCT plc Annual report 2023
13. Empowerment to make allotments of equity securities
under the DRIS
THAT, conditional upon the passing of Resolution 11 above
and in addition to existing authorities, the Directors of the
Company be and hereby are empowered pursuant to Section
571 of the Act to allot or make oers or agreements to allot
equity securities (which expression shall have the meaning
ascribed to it in Section 560(1) of the Act) for cash pursuant
to the authority granted by Resolution 10 above, as if Section
561 of the Act did not apply to any such allotment and
so that:
(a) reference to allotment of equity securities in this
Resolution shall be construed in accordance with Section
560(2) of the Act; and
(b) the power conferred by this Resolution shall enable
the Company to make any oer or agreement before
the expiry of the said power which would or might
require equity securities to be allotted after the expiry
of the said power and the Directors may allot equity
securities in pursuance of any such oer or agreement
notwithstanding the expiry of such power.
The power provided by this Resolution shall expire on the
date falling 15 months from the date of the passing of this
Resolution (unless previously renewed, varied or revoked by
the Company in general meeting).
14. Authority to make market purchases
THAT, in addition to existing authorities, the Company be
and is hereby generally and unconditionally authorised to
make market purchases (within the meaning of s693(4)
of the Act) of Ordinary shares of 1p each in the Company
(‘Ordinary shares’) provided that:
(a) the maximum number of Ordinary shares so authorised
to be purchased shall not exceed 26,756,048 Ordinary
shares, representing approximately 14.99% of the
Company’s issued share capital at the date of this
Notice;
(b) the minimum price which may be paid for an Ordinary
share shall be its nominal value;
(c) the maximum price, exclusive of expenses, which may
be paid for an Ordinary share is an amount equal to
the higher of (i) 105% of the average of the middle
market quotation for an Ordinary share taken from the
London Stock Exchange Daily Ocial List for the five
business days immediately preceding the day on which
the Ordinary share is contracted to be purchased; and
(ii) the amount stipulated by Article 5(6) of the Market
Abuse Regulation;
(d) the authority conferred comes to an end at the
conclusion of the next AGM of the Company or upon the
expiry of 15 months from the passing of this Resolution,
whichever is the earlier; and
(e) that the Company may enter into a contract to
purchase its Ordinary shares under this authority prior
to the expiry of this authority which would or might
be completed wholly or partly after the expiry of this
authority.
15. Cancellation of share premium
THAT, subject to the sanction of the High Court, the amount
standing to the credit of the share premium account of the
Company, at the date an order is made confirming such
cancellation by the Court, be and hereby is cancelled, and
the amount by which the share capital is so reduced be
credited to a reserve of the Company.
16. Continuation of the Company as a VCT
THAT the Company continue as a Venture Capital Trust.
By Order of the Board
Neal Ransome
Chair
6 June 2023
Notice of Annual General Meeting continued
77
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Notes:
(a) A member entitled to attend and vote at the AGM may
appoint one or more proxies to attend and vote on his or her
behalf. A proxy need not be a member.
(b) Pursuant to Regulation 41 of the Uncertificated Securities
Regulations 2001, entitlement to attend and vote at the
meeting and the number of votes which may be cast thereat
will be determined by reference to the Register of Members
of the Company at close of business on the day which is two
days before the day of the meeting. Changes to entries on
the Register of Members after that time shall be disregarded
in determining the rights of any person to attend and vote at
the meeting.
(c) A form of proxy is enclosed which, to be effective,
must be completed and delivered to the Company’s
registrars, Computershare Investor Services PLC,
The Pavilions, Bridgwater Road, Bristol, BS99 6ZZ or
alternatively, you may register your proxy electronically at
www.investorcentre.co.uk/eproxy, in each case, so as
to be received by no later than 48 hours before the time
the AGM is scheduled to begin. To vote electronically, you
will be asked to provide your Control Number, Shareholder
Reference Number and PIN which are detailed on your
proxy form.
Appointment of a proxy, or any CREST proxy instruction
(as described in paragraph (d) below) will not preclude a
member from subsequently attending and voting at the
meeting should he or she choose to do so. This is the only
acceptable means by which proxy instructions may be
submitted electronically.
(d) To appoint one or more proxies or to give an instruction to
a proxy (whether previously appointed or otherwise) via the
CREST system, CREST messages must be received by the
issuer’s agent (ID number 3RA50) not later than 48 hours
(excluding non-working days) before the time appointed for
holding the meeting. For this purpose, the time of receipt
will be taken to be the time (as determined by the time
stamp generated by the CREST system) from which the
issuer’s agent is able to retrieve the message. After this time
any change of instructions to a proxy appointed through
CREST should be communicated to the proxy by other
means. CREST personal members or other CREST sponsored
members, and those CREST members who have appointed
voting service provider(s) should contact their CREST sponsor
or voting service provider(s) for assistance with appointing
proxies via CREST. For further information on CREST
procedures, limitations and system timings please refer to
the CREST manual. The Company may treat as invalid a
proxy appointment sent by CREST in the circumstances set
out in Regulation 35(5)(a) of the Uncertificated Securities
Regulations 2001.
(e) Any person receiving a copy of the Notice as a person
nominated by a member to enjoy information rights under
Section 146 of the Companies Act 2006 (a ‘Nominated
Person’) should note that the provisions in notes (a) and (b)
above concerning the appointment of a proxy or proxies to
attend the meeting in place of a member, do not apply to
a Nominated Person as only shareholders have the right to
appoint a proxy. However, a Nominated Person may have a
right under an agreement between the Nominated Person
and the member by whom he or she was nominated to be
appointed, or to have someone else appointed, as a proxy
for the meeting. If a Nominated Person has no such proxy
appointment right or does not wish to exercise it, he/she
may have a right under such an agreement to give
instructions to the member as to the exercise of voting rights
at the meeting.
(f) Section 319A of the Companies Act 2006 requires the
Directors to answer any question raised at the AGM which
relates to the business of the meeting although no answer
need be given (a) if to do so would interfere unduly with
the preparation of the meeting or involve disclosure of
confidential information; (b) if the answer has already been
given on the Company’s website; or (c) if it is undesirable
in the best interests of the Company or the good order of
the meeting.
Questions from our shareholders in relation to the AGM can
be sent via email to AimAGM@octopusinvestments.com.
The Company may, however, elect to provide answers to
questions raised within a reasonable period of days after the
conclusion of the AGM.
(g) Members satisfying the thresholds in Section 527 of the
Companies Act 2006 can require the Company to publish
a statement on its website setting out any matter relating
to (a) the audit of the Company’s accounts (including the
auditor’s report and the conduct of the audit) that are to
be laid before the AGM; or (b) any circumstances connected
with an auditor of the Company ceasing to hold oce
since the last AGM, that the members propose to raise at
the meeting. The Company cannot require the members
requesting the publication to pay its expenses. Any statement
required to be placed on the website must also be sent to
the Company’s auditors no later than the time it makes its
statement available on the website. The business which may
be dealt with at the meeting includes any statement that
the Company has been required to publish on its website.
78
Octopus AIM VCT plc Annual report 2023
(h) Under Sections 338 and 338A Companies Act 2006, members
meeting the threshold requirements in those sections have
the right to require the Company:
(i) to give, to members of the Company entitled to receive
notice of the meeting, notice of a resolution which may
properly be moved and is intended to be moved at the
meeting; and/or
(ii) to include in the business to be dealt with at the meeting
any matters (other than a proposed resolution) which
may be properly included in the business.
A resolution may properly be moved or a matter may
properly be included in the business unless:
(i) (in the case of a resolution only) it would, if passed, be
ineective (whether by reason of inconsistency with any
enactment or the Company’s constitution or otherwise);
(ii) it is defamatory of any person; or
(iii) it is frivolous or vexatious.
Such a request may be in hard copy form or in electronic
form, and must identify the resolution of which notice is to
be given or the matter to be included in the business, must
be authorised by the person or persons making it, must be
received by the Company not later than six weeks before the
meeting, and (in the case of a matter to be included in the
business only) must be accompanied by a statement setting
out the grounds for the request.
(i) A copy of the Notice of AGM and the information required
by Section 311A Companies Act 2006 is included on the
Company’s website, www.octopusinvestments.com
under Venture Capital Trusts. Copies of the Directors’ letters
of appointment, the register of Directors’ interests in the
Ordinary shares of the Company kept in accordance with
the Listing Rules and a copy of the Memorandum and
Articles of Association of the Company will be available for
inspection at the registered oce of the Company during
usual business hours on any weekday from the date of this
notice until the AGM, and at the place of that meeting for at
least 15 minutes prior to the commencement of the meeting
until its conclusion.
(j) As at 5 June 2023 (being the last practicable date prior to
the publication of this Notice) the Company’s issued share
capital consists of 178,492,654 Ordinary shares, carrying one
vote each. Therefore, the total voting rights in the Company
as at 5 June 2023 are 178,492,654.
Notice of Annual General Meeting continued
79
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Intentionally blank
80
Octopus AIM VCT plc Annual report 2023
Intentionally blank
81
Octopus AIM VCT plc Annual report 2023
Call us on 0800 316 2295
Intentionally blank
Octopus AIM VCT plc