Annual Financial Report

Octopus AIM VCT 2 plc


Final Results


22 February 2021

Octopus AIM VCT 2 plc, managed by Octopus Investments Limited, today announces the final results for the year ended 30 November 2020.

These results were approved by the Board of Directors on 22 February 2021.

You may view the Annual Report in full at in due course. All other statutory information will also be found there.

Financial Summary

 30 November 202030 November 2019
Net assets (£’000)104,14680,040
Profit/(loss) after tax (£’000)17,762(476)
Net asset value (“NAV”) per share (p)82.972.4
Dividends per share paid in year (p)4.28.1
Total return (%)*20.3(0.4)
Final dividend proposed (p)**2.12.1
Total ongoing charges (%)***1.92.0

*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.
**Subject to shareholder approval at the Annual General Meeting, the proposed final dividend will be paid on 21 May 2021 to shareholders on the register on 30 April 2021.
***Total ongoing charges is an alternative performance measure calculated using the AIC recommended methodology.

Chairman’s Statement


I am pleased to present the Annual Report of AIM VCT 2 for the  year ended 30 November 2020. I would like to welcome all new shareholders who have joined in the year.

It has been an extraordinary year and events have had an impact on stock market sentiment and movements as well as on peoples’ lives, jobs and the wider economy both here and around the world.

A strong start fuelled by initial stock market euphoria at the decisive general election result in December 2019 gave way to  concern as news of a new strain of coronavirus emerged from China in early 2020. By March, the seriousness of the situation had become apparent and businesses and schools were forced  to close and our economy was effectively shut down in order to  protect the National Health Service and to save lives. Since then, attempts to relax restrictions and open up the economy have been constrained by further outbreaks of the virus which caused  restrictions to be increased again in November 2020. Rules have been further tightened with schools and shops once again closed  and hospital cases still high. While all this was happening the  Brexit clock continued to advance with fears that the United Kingdom would leave without a deal.

In the year under review AIM raised £5.5 billion of new capital, a  sharp increase on the £3.6 billion raised in the previous year. It was  really encouraging to see existing AIM companies successfully raising funds to see them through the crisis, emphasising the  advantages of a public market listing. Unsurprisingly the number  of new issues remained low although our investment manager reports an uptick in companies looking to float in the next six months.


The Board’s initial concern was that your Company could function in this new virtual world with the next being for the health of the underlying portfolio companies. I am pleased to say  that all Octopus and all our other service providers successfully  adapted to the ‘new normal’ and that Board meetings and other VCT business continued seamlessly on the usual schedule using remote communications. Board meetings were supplemented by regular portfolio updates from the Investment Management  team at Octopus in what turned out to be a rapidly changing situation. There is more in the Investment Manager’s Review about how the team kept up to date with portfolio companies during the pandemic.

Against this background I am pleased to report a very strong year  of investment performance as well as an increase in the amount invested into VCT qualifying investments to £5.3 million, up from £4.3 million in the previous year.

I am sorry that it was not possible to hold an open Annual General Meeting last year because of the restrictions on public meetings. The Board takes its shareholder communications very seriously and I hope that any shareholder who had a question was able to submit it by email as advised. A summary of the answers to questions we received was posted on the Octopus website. Octopus also gave an opportunity for shareholders to hear a presentation from the Investment Manager later on in the year which I hope those who attended found informative. I  look forward to welcoming you to an AGM in person again once regulations permit.


The NAV on 30 November 2020 was 82.9p per share, an increase  on the NAV of 72.4p per share reported at 30 November 2019. Adding back the 4.2p of dividends paid in the year, to adjust the year end NAV to 87.1p, gives a total return of 20.3%. In the same year, the FTSE AIM All Share Index rose by 14.9%, the FTSE SmallCap (excluding investment companies) Index rose by 2.8%  and the FTSE All Share Index fell by 10.3%, all on a total return basis.

Once again stock specific factors had a significant impact on  performance, both positive and negative, and these are covered  in more detail in the Investment Manager’s Review. The need for companies to adhere to lockdown rules has meant that company performances have been even more polarised than usual, although the portfolio’s relatively high exposure to the software, environmental and healthcare sectors has provided a significant  boost to returns. The purpose of a VCT is to provide capital for small growth companies and 2020 has seen strong performance from those companies exposed to the new economy which make up a significant proportion of our investment portfolio.


In November 2020 an interim dividend of 2.1p was paid to all shareholders. The Board is recommending a final dividend in respect of the year to 30 November 2020 of 2.1p per share, making  4.2p in total paid in respect of the year. Subject to the approval of  shareholders at the AGM the dividend will be paid on 21 May 2021 to shareholders on the register on 30 April 2021. There is no special dividend to be declared in respect of the year to 30 November 2020 as there have been no large sales of holdings from the portfolio in the year. It remains the Board’s intention to maintain a minimum annual dividend payment of 3.6p per share or a 5% yield based on the prior year end share price, whichever is greater. This will usually be paid in two instalments during each year.

Cancellation of Share Premium Account 

At the last Annual General Meeting, shareholders voted to cancel share premium to create a pool of distributable reserves to the amount of £23.4 million. This is a regular occurrence for share premium created more than three years ago 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 a number of other VCTs, the Company has established a Dividend Reinvestment Scheme (DRIS) following approval at the AGM in 2014. Some shareholders have already taken advantage of this opportunity. For investors who do not need income, but value the additional tax relief on their reinvested dividends, this is an attractive scheme and I hope that more shareholders will find it useful. In the course of the  year 1,281,159 new shares have been issued under this scheme, returning £925,000 to the Company. The final dividend referred to above will be eligible for the DRIS.

Share Buybacks

During the year to 30 November 2020 the Company continued to buy back shares in the market from selling shareholders and purchased 3,788,659 ordinary shares for a total consideration of £2,710,000. We have maintained a discount of approximately 4.5% to NAV (equating to a 5.0% discount to the selling shareholder after costs), which the Board monitors and intends to retain as a policy which fairly balances the interests of both remaining and selling shareholders. Buybacks remain an essential practice for VCTs, as providing a means of selling is an important part of the initial investment decision and has enabled  the Company to grow. As such I hope you will all support the appropriate resolution at the AGM.

Share Issues

During the year 12,140,295 shares were issued under the fundraise that launched on 29 November 2019 and closed on 27 February 2020 raising £8.8m after costs.

On 20 August 2020, 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 30 November 2020. 5,502,829 shares were issued in the current period, raising £4.4 million after costs. The remaining balance of the fundraise for the 2020/2021 tax year was completed in December 2020 post the period end when a further 10,527,955 shares were issued, raising £8.8 million after costs.


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 27% of the Company’s portfolio was held in cash or collective investment funds providing short-term liquidity, 68% in individual quoted shares and 5% of the Company’s assets  were held in unquoted single company investments. Shareholders  should be aware that a proportion of the quoted securities may have limited liquidity owing to the size of the investee company and the overall proportion held by the Company.

VCT Status

PricewaterhouseCoopers LLP provides 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. From 1st December 2019 a key requirement is to maintain at least an 80% qualifying  investment level, up from the previous level of 70%. As at 30 November 2020, 93.5% (as measured by HMRC rules) of the Company’s portfolio were in qualifying investments.

Annual General Meeting (“AGM”)

The AGM will take place on 29 April 2021 at 11:00 a.m. In light of   the UK government’s public health guidelines on the Coronavirus  pandemic and the interests of the safety and wellbeing of our  shareholders, this year’s AGM will be run as a closed meeting and shareholders will not be able to attend in person. However, we  intend to host a virtual shareholder event on the same day as the  AGM so that shareholders receive an update from the Investment Manager and can ask the Board and the Investment Manager  questions. We would encourage all shareholders to submit their votes for the closed AGM via proxy as there will be no opportunity to vote in person. There will not be a facility to lodge votes at the  virtual shareholder event following the AGM. If you have a question you wish to submit to the virtual shareholder event then please send these via email  to  by 5.00pm on 26  April 2021.

Further information can be found in the Directors’ Report and Notice of Annual General Meeting. Formal notices will be sent to shareholders by their preferred method (e-mail or post).

At the AGM a resolution will be proposed to extend the life of the Company until 2026 in order to preserve its VCT status for the benefit of both existing shareholders and new investors who are participating in the latest offer.


The recovery in share prices from their lows in March 2020 has continued with remarkably few wobbles given the seriousness of the pandemic and the added worries about Brexit. With a deal on Brexit now achieved some of the uncertainty which overshadowed the UK market has gone leaving shares looking relatively undervalued compared with their international competitors. Investors are now looking  through the current coronavirus pandemic, encouraged by the approval of three vaccines for use which should provide hope that the economy can open up again and start the process of recovery.

The net asset value has continued to rise since year end. The latest announced NAV as at 15 February 2021 is 94.7p.

The portfolio now contains 82 holdings across a range of sectors with exposure to some exciting new technologies in the software, environmental and healthcare sectors. Many of these have been able to raise funds for growth in the past year leaving them well positioned to achieve their ambitions. The balance of the portfolio towards profitable companies remains, and the Investment Manager expects to find good opportunities to invest the cash as a recovery in confidence feeds through to an increased demand from companies for more growth capital.

Keith Mullins
22 February 2021

Investment Manager’s Review


It has been a roller coaster year. In our interim review we highlighted a strong start on hopes of a Brexit settlement post the December General Election result swiftly followed by a sharp fall in UK stockmarket as the severity of the Coronavirus pandemic became apparent in February and March. This forced our government in common with others around the world to shut down economic activity to protect healthcare systems and save lives. More encouragingly, policies were put in place to alleviate the worst of the short term social and economic damage wreaked by the virus. Even though there were individual volatile months in the second half of the year, the market recovered from its March lows once the economy demonstrated its potential to bounce back as restrictions were eased over the summer. Although we were back in lockdown by November, the market had started to look through the disastrous economic performance in the second quarter of 2020 and hope for better conditions with fewer restrictions to follow. Added to this there was the constant hope of a Brexit resolution, potentially removing the uncertainty which had held back the valuation of UK assets. Against this turbulent background we were pleased with the total positive return for the Net Asset Value of 20.3% for the year. Since the period end we have had a resolution to the Brexit negotiations and the successful approval of three vaccines, providing hope for better times to come in 2021.

In the year to 30 November 2020 AIM excelled itself in successfully raising capital for its constituents across the market capitalisation range. For portfolio companies this has left many well financed for future growth plans and has particularly helped many in the healthcare and technology sectors to raise money to develop new treatments and products. New issues were understandably still subdued but there are now signs that these are returning in 2021.

The Alternative Investment Market

AIM was the best performing UK index in 2020, reflecting a higher exposure to growth stocks in the software, technology and healthcare sectors than the wider market. In the 12 months to November 2020 the AIM Index returned 14.9% exceeding a more muted 2.8% for the FTSE SmallCap (excluding investment companies) Index. This compared with significant negative returns for both the FTSE 100 and the Mid 250 indices which are exposed to some of the more traditional sectors of the economy including banks, traditional retailers and manufacturing companies.

In the interim report we highlighted the success of AIM in raising new capital for its existing members. In the four months from April 2020 onwards we saw a steady procession of companies of all sizes successfully raising money to help with pandemic costs and for growth. There was a brief lull in fundraisings in August and September and then another strong month in November. This was reflected in the figures for the year to 30 November 2020, when AIM raised a further £5.1 billion of new capital for existing companies which compares to a figure of £3.2 billion the previous year.

Given the background it was not really surprising that AIM raised only £0.4 billion for new listings, the same as the previous year. Anecdotally we are now hearing about a healthy pipeline of new issues from brokers and we hope that the current buoyant state of the market helps to restore the flow of new entrants. VCTs play a significant part in the funding process and we identify below the companies we have invested in during the year.


Adding back the 4.2p of dividends paid in the year, the NAV total return was 20.3%. This compares with a rise in the FTSE AIM All Share Index of 14.9%, the FTSE SmallCap (excluding investment companies) Index of 2.8% and a fall in the FTSE All Share Index of 10.3%. It was a year characterised by individual months of significant market volatility as investors reacted to unfolding events. At the end of February and March 2020 all share prices fell across the board as the seriousness of the pandemic became apparent and people and companies focused on the immediate priorities of keeping themselves and their employees safe. Once the dust had settled, investors quickly focused on those companies showing resilience and balance sheet strength as well as those with an opportunity to capitalise on new opportunities thrown up by the pandemic. This has meant that performance was more than ever dominated by stock specific factors.

Among the holdings in the pharmaceutical and healthcare sectors Ergomed had another outstanding year. Profit expectations were upgraded several times as it managed to replace some delayed cancer trials with some trials for Covid-19 drugs fairly early in the pandemic. It has a range of services it can offer large pharmaceutical companies including the monitoring of drugs for regulatory purposes and the conducting of drugs trials for very rare diseases. We expect the strong organic growth to continue in the current year.

Another healthcare stock, EKF Diagnostics also performed extremely well, achieving a series of upgrades to forecasts. Like Ergomed, some of its business was negatively impacted by Coronavirus related delays to orders as doctors saw fewer patients and needed fewer point of care diagnostic consumables. However, this was more than made up for by orders for Primestore MTM, a Coronavirus sample collection device which has been in strong demand and has generated profits and cash for the Group. In the same sector Ixico continued its strong share price run as it added new brain imaging contracts for clinical trials into neurological diseases resulting in further forecast increases. Maxcyte, which has developed an instrument which can produce cells safely in large volumes for cell therapy, again saw increased demand for its instruments which have now moved decisively out of the research lab and are being used to develop treatments in the clinic. Forecasts have been upgraded several times and the shares have performed exceptionally well for the VCT.

Some of the smaller stocks in the healthcare sector also did very well, helped by a much warmer attitude of investors to companies needing funding which has left many of them far better equipped for potential success than previous years. Two of the newer holdings C4X Discovery that helps to design better drug molecules and Synairgen which is conducting clinical trials for an inhaled treatment for Coronavirus are both performing very well post successful fundraises. Intelligent Ultrasound successfully raised further cash and although its sales of training simulators were affected by the pandemic its software is now being designed in to a GE ultrasound machine. It also developed a lung module for use in the Coronavirus pandemic. Verici Dx followed Renalytix AI as a spin-out from EKF Diagnostics, raising finance on AIM. Both shares have done well in the year.

Other portfolio companies benefitted from their exposure to the new economy. The best performing of these was Trackwise Designs which signed a substantial contract with an electric vehicle manufacturer to use its improved harness technology which can also be designed into medical equipment and aircraft to save weight and space. Ilika, which is developing and starting to supply solid state batteries also performed well and both successfully raised funds in 2020.

Events forced many companies and individuals to change the way that they operate. In different ways Gear4Music whose high street competition was unable to open their shops for much of a year of strong demand for instruments, The Panoply Holdings which specialises in helping the public sector to embrace efficient ways of working in a digital world and Hasgrove who saw strong demand for its intranet solution for internal communications were all beneficiaries. GB Group was another strong performer and remains one of the largest holdings in the portfolio even after taking significant profits in the year. Where a company is established and has grown in size we will continue to hold the shares if we still believe it has the capacity to grow further on a medium term time horizon. This helps to balance the portfolio as newly raised cash is invested in earlier stage companies which could take some time to achieve profitability.

Individual companies suffered from pandemic related headwinds which resulted in poor share price performance. Quixant is still being held back by the loss of market share of its largest customer and the closure of its customer base in lockdown. It has some exciting new products aimed at the broadcasting sector which have yet to establish themselves but it has a strong balance sheet and trading has found a base. Equals Group suffered from a loss of currency trades from tourists going through its platform. We sold the shares at a loss. Velocity Composites and Myclex have customers in sectors badly impacted by the pandemic and its economic consequences and so have faced a challenging year. Breedon Group had to cease trade completely in March although it has been allowed to operate in the subsequent lockdowns and we expect demand to be strong in 2021 as the government looks to increase capital spending on building projects. Its shares have therefore already recovered well.

Those consumer facing companies forced to shut faced significant challenges. Vertu Motors was able to adapt quite swiftly to an on-line world and was helped in recent lockdowns by being able to keep its workshops open to all customers. However, this was not possible for Escape Hunt or Tasty which can only trade once conditions permit again. The VCT does not have a high exposure to direct consumer facing businesses.

Craneware shares are still being held back by the slower than hoped uptake of its new Trisus platform at a time when its US hospital customer base has been focusing its attention on managing the Coronavirus crisis. It retains its strong positioning in the US hospital market and stands out as a cash generative software company with growing annual recurring revenues. Likewise, Clinigen has seen demand for Proleukin, its cancer treatment drug disrupted by the pandemic in the short term and Creo Medical has been unable to roll out the training programme on its portfolio of approved devices.

A wide range of portfolio companies found it harder to sell to customers in the pandemic. Adept Telecom’s share price suffered from lacklustre figures held back by lack of demand for on premise telephony solutions and the continued decline of its voice and lines business. We expect growth to accelerate now that this side of the business is less significant. Restore was also affected by lockdown as offices were left empty and recycling services not needed. Among the smaller software holdings Osirium, Falanx and DXS all reported similar problems accessing customers and closing deals.

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. Our fear in April 2020 was that the pandemic would make raising enough finance to achieve this much harder. To the credit of AIM investors this has not turned out to be the case in 2020 and even those companies which have faced more difficult trading conditions should emerge with stronger balance sheets.

This quite often takes longer than expected and they remain potentially vulnerable until they achieve profitability.

Although the earlier stage companies in the portfolio represent a relatively small proportion by value we expect them to contribute to future performance when they start to demonstrate growth in their businesses. In the year under review there were some examples of companies that demonstrated that they had started to achieve that in the period and whose shares outperformed including Ixico, SDI Group, Sosandar, Diaceutics, and Renalytix AI. The latter was spun out of the holding in EKF Diagnostics since when it has made better than expected progress with its commercialisation strategy for its kidneyintelx test in the US.

Portfolio Activity

Having made eleven qualifying investments at a total cost of £3.9 million in the first half of the year, we added two new qualifying investments of £0.2 million and £0.28 million into Feedback plc and Verici Dx plc as well as two further investments of £0.8 million and £0.14 million into ReNeuron Group plc and Popsa in the second half. This made a total investment of £5.3 million in qualifying investments for the year, an increase on last year’s £4.3 million, reflecting a busy AIM market for fundraisings.

Feedback plc is a specialist medical imaging company providing software and messaging systems to NHS hospitals. Its Bleepa app is approved as a class 1 medical device. It is able to message medical images and records securely between healthcare professionals and is the only medical imaging product on the NHSX National Communications Framework. It raised money for growth, targeting NHS hospital trusts as new customers. Verici Dx was another spin-out from EKF Diagnostics following the success of Renalytix AI which is now dual listed on the Nasdaq exchange. It has two tests for use on kidney transplant patients. The money has been raised to conduct clinical trials which are expected to show that these tests improve the outcome for patients as well as enabling a more precise prescription of anti-rejection drugs following each transplant.

The small follow-on investment into Popsa was to fund the ongoing strong growth of its photo book business. Sales have exceeded forecasts and the valuation has been written up with this round although we still hold it at a 20% discount to the fundraise price to reflect the fact that it is a private company. We made a larger follow-on investment into Reneuron which has now stopped spending money on its costly stroke programme to concentrate on getting approval for its treatment for Retanosis Pigmentosa, for which most sufferers cannot be treated leaving them to eventually go blind. Some significant clinical trial results are expected over the next twelve months, and the company is now financed well into 2022.

During the year we took profits into rising share prices and sold part of the holdings in Gamma, Learning Technologies, GB Group, LoopUp, Ixico, Synairgen, C4X Discovery, VR Education and Trackwise Designs. We also sold the entire holdings in Staffline and Equals Group at a loss after a series of profit warnings and Omega Diagnostics at a profit after its shares bounced strongly on the news that it was developing a Coronavirus test. Brady, Nasstar and Cello Health were all sold following successful cash takeover bids. In all disposals made a £1.5 million profit over original cost and generated £5.2 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. More recently we have reduced the size of our holdings in the Octopus Managed Portfolios as we have made qualifying investments and increased our holdings in the FP Octopus Micro-Cap and the FP Octopus Multi-Cap Income Fund. This strategy is designed to obtain a better return on funds awaiting investment than the very low rates available on cash. In the period under review £1.6 million was invested into the FP Octopus Multi-Cap Income Fund and £0.8 million was invested into FP Octopus Micro-Cap. A net divestment of £4.8 million was made in each of the Octopus Portfolio Manager (“OPM”) funds; OPM 3 and OPM 4.

VCT Regulations

There have been no further changes to the VCT regulations since publication of the previous set of audited accounts. As a reminder, the current requirements are that any new funds raised should be 30% invested in qualifying holdings within 12 months of the end of the accounting period in which the shares were issued, and for financial years ending after 6 April 2019 the portfolio will also have to maintain a minimum of 80% invested at cost in qualifying holdings. We are determined to maintain a threshold of quality and to invest where we see the potential for returns from growth. However, the emphasis of the new regulations is definitely to encourage investment into earlier stage companies and to that extent, it seems likely over a number of years, that the portfolio will see a rise in the number of smaller companies receiving our initial investment. We would expect to invest further in those companies as they demonstrate their ability to grow.

At present there has been little change to the profile of the portfolio, as we continue to hold the larger market capitalisation companies, in which we invested several years ago as qualifying companies, or which we bought in the market prior to the rule changes where we see the potential for them to continue to grow.

In order to qualify, companies must:

  • have fewer than 250 full time equivalent employees; and
  • have less than £15 million of gross assets at the time of investment and no more than £16 million immediately post investment; and
  • be less than seven years old from the date of its first commercial sale (or 10 years if a knowledge intensive company) if raising State Aided (i.e. VCT) funds for the first time; and
  • 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 since 6th April 2018 £10 million in 12 months
£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.

The most recent changes were to encourage VCTs to keep their investment rate up after raising money. However, allowing knowledge intensive companies to raise up to £10 million of the £20 million lifetime limit in a twelve month period rather than the existing £5 million has given the VCT more flexibility. In addition, the rules around the amount of time allowed for re-investment of cash from sales of qualifying holdings have increased from six to twelve months which has further created some head room.

Long-term responsible investing

The investment team has always invested as long-term responsible shareholders and supported businesses in the process of improving the corporate governance structure. As part of the investment process, the team is incorporating a material risk review depending on the exposure of the underlying business where appropriate. These risks span from 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) to leadership (ethics, competitive behaviour, regulatory, critical incidents and risk management). The team assess the exposure and how well management is managing these material risks. The team believes that assessing these factors allows for informed investment analysis and it forms part of the investment strategy. The investment manager is taking its duty as a shareholder seriously and acting as a steward of capital. This includes regular engagement with the independent non-executive members of boards. The team’s stewardship and engagement policy can be found here


For the past ten months the team has been mainly working from home, absorbing the continuous flow of information from companies and communicating with each other. The team continue to operate business as usual, holding meetings with companies and reporting back to your Board on developments.

We were initially concerned about balance sheet strength for more mature companies as well as funding for those that had not yet reached the point of profitability and were likely to be unable to get there on existing resources as a result of delays to business caused by the pandemic.

In the first category, the majority of the more established companies in the portfolio were quick to publish fairly detailed trading statements including banking relationships and balance sheet headroom. We were very impressed by how efficiently many companies handled the situation, sometimes having to react twice in the space of a week to changing conditions and regulations. It is also interesting to note that the AIM market fulfilled its function to fund companies and there have been many examples of this in action over the past months both within and outside the portfolio. The priority for many of them was to come out of the crisis on the front foot and in a position to take advantage of any opportunities that presented themselves.

In the second category there were examples like Trackwise Designs, PCI-Pal and Sosandar that had already raised money before the pandemic took hold. This has helped them to move their businesses towards being self-supporting and able to grow. Although there are some companies such as Tasty or Escape Hunt in the portfolio which have gone through a particularly difficult period given their direct consumer businesses, the portfolio is balanced with exposure to many different sectors some of which have benefitted from events. Gear4 Music is one direct example and Ergomed, EKF Diagnostics, Diaceutics, Maxcyte and Fusion Antibodies are all operating in areas which will receive increased attention and funding in the future and others such as GB Group will benefit from the general move by companies to operate remotely.

Reflecting on the underlying portfolio, we have been struck by the resilience shown by the companies during what has been a particularly challenging year. The shock of the Coronavirus pandemic led many companies to concentrate in increasing the efficiency of their operations and to embrace technology. Additionally the majority of investee companies are business rather than directly consumer facing, and many have recurring revenues. When the pandemic struck, forecasts were withdrawn in many cases and then only cautiously reinstated. The result has been that expectations have been upgraded as visibility has improved, supporting share prices.

Outlook and Future Prospects

This time last year we wrote about the continuing need for a Brexit resolution, the uncertainty to come in a US Election year and the emerging Coronavirus pandemic. Today we have left the EU with a deal, the US Election has produced a result which ought to provide a more stable environment for global trade and there is finally hope with vaccines being rolled out that the Coronavirus pandemic can be brought under control. The short-term social and economic damage caused by the virus is obvious to all, however, economists have reasons to remain upbeat about the future. A combination of the policy support from Governments around the world, easing global trade tensions, the growing strength of corporate balance sheets over the last year and the spike in the consumer savings ratio could all contribute to a significant pick up in spending and growth later in the year.

We believe that a return of confidence following the conclusion of Brexit talks will have a positive impact on equity markets as asset allocators deploy money back into the UK. There are signs that new issues will be stronger in 2021 to supplement the secondary fundraising market which remained suprisingly healthy throughout the volatile months of 2020. Encouragingly, as a result of successful fundraises in 2020 most of the unprofitable companies in the portfolio are now much better financed to execute on their growth ambitions. The portfolio now contains 82 holdings with investments across a range of sectors including both domestic and international exposure. The balance of the portfolio towards profitable companies remains.

The AIM Team
Octopus Investments Limited
22 February 2021

Directors' Responsibility Statement

The Directors are responsible for preparing the Annual Report and the 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 have elected to prepare the financial statements in accordance with the Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland (“FRS 102”). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these financial statements the Directors are required to:

  • select suitable accounting policies and then apply them consistently;
  • make judgments and accounting estimates that are reasonable and prudent;
  • state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;
  • 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 Directors’ Report and Directors’ Remuneration Report which comply with the requirements of the Companies Act 2006.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions, to disclose with reasonable accuracy at any time the financial position of the Company and to 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, and understandable and provides the information necessary for shareholders to assess the Company’s performance, business model and strategy.

Website Publication

The Directors are responsible for ensuring the Annual Report and Accounts are made available on a website. Financial statements are published on the Company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein.

Directors’ responsibilities pursuant to Disclosure Guidance and Transparency Rules 4 (DTR4)

Keith Mullins (Chairman), Andy Raynor, Elizabeth Kennedy and Alastair Ritchie, the Directors confirm to the best of their knowledge:

  • the financial statements, prepared in accordance with the Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland (“FRS 102”), 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 or the principal risks and uncertainties that it faces.

On Behalf of the Board

Keith Mullins
22 February 2021


The financial information set out below does not constitute the Company's statutory accounts for the years ended 30 November 2020 or 30 November 2019 but is derived from those accounts. Statutory accounts for the year ended 30 November 2019 have been delivered to the Registrar of Companies and statutory accounts for the year ended 30 November 2020 will be delivered to the Registrar of Companies in due course. The Auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

Income Statement

 Year to 30 November 2020Year to 30 November 2019 
Gain on disposal of fixed asset investments-433433-315315 
(Loss)/gain on disposal of current asset investments-(158)(158)-6161 
Gain/(loss) on valuation of fixed asset investments-17,87117,871-(900)(900) 
Gain on valuation of current asset investments-1,1261,126-1,3901,390 
Investment Income29041331539-539 
Investment management fees(334)(1,001)(1,335)(353)(1,058)(1,411) 
Other expenses(506)-(506)(470)-(470) 
Profit/(loss) before tax(550)18,31217,762(284)(192)(476) 
Total comprehensive income/(loss) after tax(550)18,31217,762(284)(192)(476) 
Earnings per share – basic and diluted(0.5)p15.5p15.0p(0.3)p(0.1)p(0.4)p 
  • The ‘Total’ column of this statement represents the statutory income statement of the Company; the supplementary revenue return and capital return columns have been prepared in accordance with the AIC Statement of Recommended Practice.
  • All revenue and capital items in the above statement derive from continuing operations.
  • The Company has only one class of business and derives its income from investments made in shares and securities and from bank and money market funds, as well as OEIC funds.

The Company has no recognised gains or losses other than the results for the period as set out above. Accordingly a Statement of Comprehensive income is not required.

Balance Sheet

 As at 30 November 2020As at 30 November 2019
Fixed asset investments 76,695 58,246
Current assets:    
Investments10,396 16,458 
Money Market Funds3,486 3,474 
Debtors120 134 
Cash at bank14,838 1,881 
 28,840 21,947 
Creditors: amounts falling due within one year(1,389) (153) 
Net current assets 27,451 21,794
Total assets less current liabilities 104,146 80,040
Called up equity share capital  

Share premium 37,758 47,044
Capital redemption reserve 1 1
Special distributable reserve 35,051 19,423
Capital reserve realised (7,492) (8,641)
Capital reserve unrealised                      40,309 23,146
Revenue reserve (1,494)  (944)
Total equity shareholders’ funds 104,146 80,040
NAV per share – basic and diluted 82.9p 72.4p

The statements were approved by the Directors and authorised for issue on 22 February 2021 and are signed on their behalf by:

Keith Mullins

Company No: 05528235
Statement of changes in Equity

 Share capital
Share premium
Special distributable reserves*
Capital reserve – realised*
Capital reserve – unrealised
Capital redemption reserve
Revenue reserve*
As at 1 December 20191147,04419,423(8,641)23,1461(944)80,040
Comprehensive income for the year:        
Management fee allocated as capital expenditure(1,001)(1,001)
Current year gains on disposal275275
Current period gains on fair value of investments18,99718,997
Capital Investment Income4141
Loss after tax(550)(550)
Total comprehensive income for the year(685)18,997(550)17,762
Contributions by and distributions
to owners:
Repurchase and cancellation of own shares(2,710)(2,710)
Issue of shares215,02715,029
Share issue costs(908)(908)
Total contributions by and distributions to owners214,119(7,777)6,344
Other movements:        
Cancellation of share premium(23,405)23,405
Prior years’ holding gains now realised1,834(1,834)
Total other movements(23,405)23,4051,834(1,834)
Balance as at 30 November 20201337,75835,051(7,492)40,3091(1,494)104,146

*Included within these reserves is an amount of £26,065,000 (2019: £9,838,000) which is considered distributable to shareholders.

 Share capital
Share premium
Special distributable reserves*
Capital reserve – realised*
Capital reserve – unrealised
Capital redemption reserve
Revenue reserve*
As at 1 December 20181157,04519,536(9,898)24,5951(660)90,630
Comprehensive income for the year:        
Management fee allocated as capital expenditure(1,058)(1,058)
Current year gains on disposal376376
Current period gains on fair value of investments490490
Loss after tax(284)(284)
Total comprehensive income for the year(682)490(284)(476)
Contributions by and distributions
to owners:
Repurchase and cancellation of own shares(2,782)(2,782)
Issue of shares1,5761,576
Share issue costs(2)(2)
Total contributions by and distributions to owners1,574(11,688)(10,114)
Other movements:        
Cancellation of share premium(11,575)11,575
Prior years’ holding gains now realised1,939(1,939)
Total other movements(11,575)11,5751,939(1,939)
Balance as at 30 November 20191147,04419,423(8,641)23,1461(944)80,040

*Included within these reserves is an amount of £26,065,000 (2019: £9,838,000) which is considered distributable to shareholders.

Cash Flow Statement

 Year to 30 November 2020Year to 30 November 2019
Cash flows from operating activities  
Profit/(loss) on ordinary activitites before tax                          17,762                          (476)
Adjustments for:  
Decrease/(increase) in debtors14(69)
Increase/(decrease) in creditors437(386)
Gain on disposal of fixed assets(433)(315)
Loss/(gain) on disposal of current asset investments158(61)
(Gain)/loss on valuation of fixed asset investments(17,871) 900
Gain on valuation of current asset investments(1,126)(1,390)
Non-cash distributions(41)-
Cash from operations(1,100)                           (1,797)
Income taxes paid                                    -
Net cash from operating activities(1,100)(1,797)
Cash flows from investing activities  
Purchase of fixed asset investments(4,518)(4,959)
Proceeds from sale of fixed asset investments5,214 5,346
Purchase of current asset investments(2,471)(3,116)
Proceeds from sale of current asset investments9,500 5,000
Total cash flows from investing activities7,725 2,271
Cash flows from financing activities  
Purchase of own shares(2,710)(2,782)
Share issues14,10492
Share issue costs(908)(2)
Dividends paid(4,142)(7,422)
Total cash flows from financing activities6,344(10,114)
Increase/(decrease) in cash and cash equivalents12,969(9,640)
Opening cash and cash equivalents                            5,355                            14,995
Closing cash and cash equivalents18,324                            5,355
Cash and cash equivalents comprise  
Cash at bank14,838                            1,881
Money market funds3,486                             3,474
Total cash and cash equivalents18,3245,355