TIDMOEC3
Octopus Eclipse VCT 3 plc
Half-Yearly Results
31 March 2012
Octopus Eclipse VCT 3 plc, managed by Octopus Investments Limited, today
announces the Half-Yearly results for the six months ended 31 January 2012.
These results were approved by the Board of Directors on 27 March 2012.
You may shortly view the Half-Yearly Report in full at
www.octopusinvestments.com by navigating to Services, Investor Services, Venture
Capital Trusts, Octopus Eclipse VCT 3. All other statutory information will also
be found there.
About Octopus Eclipse VCT 3 plc
Octopus Eclipse VCT 3 plc ('Eclipse 3', 'VCT' or 'Company') is a venture capital
trust ('VCT') which aims to provide shareholders with attractive tax-free
dividends and long-term capital growth.
Eclipse 3 invests primarily in unquoted and AIM-quoted companies and aims to
deliver absolute returns on its investments. Eclipse 3 was launched in August
2005 and raised approximately GBP29.1 million ( GBP28.7 million net of expenses)
through an offer for subscription.The Investment Manager is Octopus Investments
Limited ('Octopus' or 'Investment Manager').
Eclipse 3 co-invests with the three other Eclipse funds which are all managed by
the same investment team at Octopus. This is viewed as a benefit as it means
Eclipse 3 will not only be able to invest in a wider range of opportunities but
also in larger and more developed companies than are typically available to a
single VCT.
Venture Capital Trusts (VCTs)
VCTs were introduced in the Finance Act 1995 to provide a means for private
individuals to invest in unquoted 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% up-front income tax relief;
· exemption from income tax on dividends paid; and
· exemption from capital gains tax on disposals of shares in
VCTs.
Eclipse 3 has been approved as a VCT by HM Revenue & Customs (HMRC). In order
to maintain its approval the Company must comply with certain requirements on a
continuing basis. By the end of the Company's third accounting period at least
70% of the Company's investments must comprise 'qualifying holdings' of which at
least 30% must be in eligible ordinary shares. A 'qualifying holding' consists
of up to GBP1 million invested in any one year in new shares or securities in an
unquoted company (or companies quoted on AIM) which is carrying on a qualifying
trade and whose gross assets do not exceed GBP7 million 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. The
Company will continue to ensure its compliance with these qualification
requirements.
Financial Summary
Six months to Six months to Year to
31 January 2012 31 January 2011 31 July 2011
=------------------------------------------------------------------------------
Net assets ( GBP'000s) 13,287 18,085 15,702
Net return after tax ( GBP'000s) (1,650) (506) (1,993)
Net asset value per share (NAV) 51.1p 66.1p 59.3p
Cumulative dividends since launch
- paid and declared/proposed 17.7p 11.7p 13.7p
=------------------------------------------------------------------------------
Chairman's Statement
I present the half-yearly results for the six month period ended 31 January
2012.
As at 31 January 2012 the net asset value stood at 51.1p, compared to 59.3p at
31 July 2011 which, when adding back the cumulative dividend paid, represents a
reduction in total return of 8.7%. The main driver of this fall in net asset
value has been the reduction in value of the unquoted portfolio of investments
during the period to 31 January 2012 in addition to the normal running costs of
the VCT.
At the period end the VCT had investments in 12 unquoted and 9 AIM-quoted
companies. The Investment Manager continues to focus on the existing portfolio
which is being financially supported where appropriate. Limited new additions to
the portfolio are envisaged in the near future. By value, 63.1% of the VCT's net
assets are in unquoted investments, 5.9% in AIM-quoted investments and 31.8% of
the VCT's net assets are currently in cash or cash equivalents, with the balance
in debtors and creditors.
The Board's strategy is to maintain an appropriate level of liquidity on the
balance sheet to achieve four aims:
* to support further investment in existing portfolio companies, if required;
· to take advantage of new investment opportunities as they arise;
· to assist liquidity in the shares through the buyback facility; and
· to support a consistent dividend flow.
Dividend and Dividend Policy
It is your Board's policy to strive to maintain a regular dividend flow where
possible and this primarily relies on the level of profitable realisations and
available cash reserves. In the current credit and economic environment we have
to be conscious that the funding options for portfolio companies are more
restricted than usual. We thus continue to place priority on maintaining a
suitable quantum of cash reserves. Taking these factors into account, for the
period ended 31 January 2012 the Board has declared an interim dividend of 2.0p
per share. On 10 May 2012, this dividend will be paid to shareholders who are on
the register as at 10 April 2012.
In addition, in light of the successful realisation obtained from CSL Dualcom,
the Board has decided to pay a special dividend of 2.0p per share. Therefore,
the total dividend for the period will be 4.0p per share. Further details
regarding the disposal are discussed below.
Investment Portfolio Review
Unquoted
I am pleased to announce that during the period the investment held in CSL
Dualcom was realised in total, generating a profit of GBP1,944,000. Overall this
investment realised an IRR of 38%. There was also a small profit realised in
Blanc Brasseries of GBP18,000.
There has been one new addition to the portfolio in the year. An investment of
GBP150,000 was made into Artesian, a business software company.
Since 31 July 2011, it is encouraging to have seen increases in fair value in
both Hydrobolt Limited and Audio Visual Machines of GBP243,000 and GBP189,000
respectively. These were, however, outweighed by significant decreases in other
investments, most notably The History Press, Bruce Dunlop & Associates and
Brandspace, due to the difficult trading conditions in publishing and media.
Overall the unquoted investments have suffered a decrease in value of
GBP1,342,000.
AIM-quoted
Despite the Company experiencing a difficult time for investments in quoted
small capitalisation companies, there has been encouraging operational progress
in a number of the holdings during the period, particularly Cohort, Vertu
Motors, and Tanfield Group. We are yet, however, to see this progress fully
reflected in share prices as stock markets remained volatile in the 6 month
period to 31 January 2012.
Since 31 July 2011, the AIM element of the portfolio has seen an overall
decrease in valuation of GBP178,000. This is primarily due to the holding in
Plastics Capital decreasing by GBP100,000 in value in the period, despite a
further increase in profits and a reduction in the company's debt position.
Two AIM holdings were realised during the period under review; CBG received a
32p cash bid from a competitor and Northern Bear was sold as the balance sheet
position of the company continued to deteriorate. The two disposals realised a
disappointing loss of GBP682,000.
VCT Qualifying Status
PricewaterhouseCoopers LLP provides the Board and Investment Manager with advice
on the ongoing compliance with HMRC's rules and regulations concerning VCTs.
The Board has been advised that Eclipse 3 is in compliance with the conditions
laid down by HMRC for maintaining approval as a VCT. As at 31 January 2012,
over 82% of the portfolio (as measured by HMRC rules) was invested in VCT
qualifying investments, in line with our expectations at this stage of the
Fund's life. There is an ongoing requirement to maintain the level of
qualifying investments above the 70% threshold which will be supported by the
continuing deal flow from the Investment Manager.
Principal Risks and Uncertainties
The Company's assets consist of equity and fixed-rate interest investments, cash
and liquid resources. Its principal risks are therefore market risk, credit risk
and liquidity risk. Other risks faced by the Company include economic, loss of
approval as a VCT, investment and strategic, regulatory, reputational,
operational and financial risks. These risks, and the ways in which they are
managed, are described in more detail in the Company's Annual Report and
Accounts for the year ended 31 July 2011. The Company's principal risks and
uncertainties have not changed materially since the date of that report.
Outlook
There remains continued uncertainty about the sustainability of the economic
recovery, inflationary pressures and the fragile condition of public finances.
These factors provide testing and challenging times for many businesses.
It cannot be ignored that your Company and its investments have suffered as a
result of the current economic climate. The Board will continue to support its
established portfolio to help them through this difficult time, with the aim of
seeing them through to recovery, as is beginning to be seen in investments such
as Hydrobolt and Audio Visual Machines. I very much hope to be able to give you
more positive news at the year end.
Greg Melgaard
Chairman
27 March 2012
Investment Portfolio Review
+--------------------------------------------------------------------------------+
| %|
| equity|
| Carrying held by|
| Investment value at % all|
| at cost 31 equity funds|
| 31 January Unrealised January held by managed|
|Unquoted 2012 profit/(loss) 2012 Eclipse by|
|investments Sector ( GBP'000) ( GBP'000) ( GBP'000) 3 Octopus|
+--------------------------------------------------------------------------------+
|Hydrobolt Engineering & 1,396 933 2,329 16.3% 43.5%|
|Limited Machinery |
| |
|The History |
|Press Publishing 2,315 (632) 1,683 15.2% 60.0%|
|Limited |
| |
|Tristar Transport Services 1,000 523 1,523 10.0% 30.0%|
|Limited |
| |
|Audio |
|Visual Technology & 711 624 1,335 10.1% 40.4%|
|Machines Telecommunications |
|Limited |
| |
|Brandspace Media & Marketing 2,112 (1,690) 422 13.1% 40.5%|
|Limited Services |
| |
|Dualcom Technology & |
|Holdings Telecommunications - 313 313 0.0% 0.0%|
|Limited |
| |
|Bruce |
|Dunlop Media & Marketing 1,524 (1,221) 303 12.5% 31.9%|
|Associates Services |
|Limited |
| |
|Convivial |
|London Pubs Leisure and Hotels 214 (37) 177 1.4% 9.4%|
|plc |
| |
|Artesian Technology & 150 - 150 1.8% 7.2%|
| Telecommunications |
| |
|T4 Holdings Media & Marketing 1,141 (1,039) 102 14.2% 53.3%|
|Limited Services |
| |
|Lilestone |
|Holdings General Retail 448 (412) 36 1.1% 10.8%|
|Limited |
| |
|Perfect |
|Pizza Leisure and Hotels 553 (553) - n/a n/a|
|Limited |
| |
|Sweet Cred |
|Holdings Consumer Products 2,315 (2,315) - n/a n/a|
|Limited |
+--------------------------------------------------------------------------------+
|Total unquoted investments 13,879 (5,506) 8,373 |
+--------------------------------------------------------------------------------+
|AIM-quoted |
|investments |
| |
|Plastics Engineering & 500 (165) 335 1.8% 16.5%|
|Capital plc Machinery |
| |
|Hasgrove Media & Marketing 400 (273) 127 1.4% 12.0%|
|plc Services |
| |
|Vertu General Retail 250 (129) 121 0.2% 3.6%|
|Motors plc |
| |
|Tanfield Engineering & 144 (82) 62 0.1% 2.0%|
|Group plc Machinery |
| |
|Brulines Support Services 94 (33) 61 0.3% 4.6%|
|Group plc |
| |
|Cohort plc Engineering & 69 (9) 60 0.1% 4.2%|
| Machinery |
| |
|Autoclenz |
|Holdings Support Services 125 (102) 23 1.0% 11.6%|
|plc |
| |
|Cantono Technology & 420 (420) - n/a n/a|
|plc* Telecommunications |
| |
|Hexagon |
|Human Support Services 677 (677) - n/a n/a|
|Capital |
|plc* |
+--------------------------------------------------------------------------------+
|Total AIM- |
|quoted 2,679 (1,890) 789 |
|investments |
+--------------------------------------------------------------------------------+
|Total 16,558 (7,396) 9,162 |
|investments |
| |
|Money |
|market 4,102 - 4,102 |
|securities |
| |
|Cash at 121 - 121 |
|bank |
+--------------------------------------------------------------------------------+
|Total |
|investments 20,781 (7,396) 13,385 |
|and cash at |
|bank |
| |
|Net current (98) |
|assets |
+--------------------------------------------------------------------------------+
|Total net 13,287 |
|assets |
+--------------------------------------------------------------------------------+
*in administration
Directors' Responsibility Statement in respect of the half-yearly report
We confirm that to the best of our knowledge:
* the half-yearly financial statements have been prepared in accordance with
the statement 'Half-Yearly Financial Reports' issued by the UK Accounting
Standards Board;
* the half-yearly report includes a fair review of the information required by
the Financial Services Authority Disclosure and Transparency Rules, being:
* an indication of the important events that have occurred during the first
six months of the financial year and their impact on the condensed set of
financial statements;
* a description of the principal risks and uncertainties for the remaining six
months of the year; and
* a description of related party transactions that have taken place in the
first six months of the current financial year, that may have materially
affected the financial position or performance of the Company during that
period and any changes in the related party transactions described in the
last annual report that could do so.
On behalf of the Board
Greg Melgaard
Chairman
27 March 2012
Income Statement
+-----------------------+
| Six months to 31 | Six months to 31
| January 2012 | January 2011 Year to 31 July 2011
| |
|Revenue Capital Total|Revenue Capital Total Revenue Capital Total
| |
| GBP'000 GBP'000 GBP'000| GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=--------------+-----------------------+----------------------------------------------
| |
| |
Realised | |
(loss)/gain on| |
disposal of | |
fixed asset | |
investments | - 38 38| - (38) (38) - 84 84
| |
Realised gain | |
on disposal of| |
current asset | |
investments | - - -| - 2 2 2 2
| |
| |
| |
Fixed asset | |
investment | |
holding | |
(losses)/gains| - (1,520) (1,520)| - (577) (577) (1,938) (1,938)
| |
| |
| |
Other income | 129 - 129| 451 - 451 549 - 549
| |
| |
| |
Investment | |
management | |
fees | (41) (122) (163)| (48) (145) (193) (96) (289) (385)
| |
| |
| |
Other expenses| (134) - (134)| (151) - (151) (305) - (305)
| |
| |
=--------------+-----------------------+----------------------------------------------
Return on | |
ordinary | |
activities | |
before tax | (46) (1,604) (1,650)| 252 (758) (506) 148 (2,141) (1,993)
| |
| |
| |
Taxation on | |
return on | |
ordinary | |
activities | - - -| - - - - - -
| |
| |
=--------------+-----------------------+----------------------------------------------
Return on | |
ordinary | |
activities | |
after tax | (46) (1,604) (1,650)| 252 (758) (506) 148 (2,141) (1,993)
=--------------+-----------------------+----------------------------------------------
Earnings per | |
share - basic | |
and diluted | (0.2) (6.1)p (6.3)p| 0.9p (2.7)p (1.8)p 0.5p (7.8)p (7.3)p
+-----------------------+
* The 'Total' column of this statement is the profit and loss account of the
Company; the supplementary revenue return and capital return columns have
been prepared under guidance published by the Association of Investment
Companies.
* All revenue and capital items in the above statement derive from continuing
operations.
* The Company has only one class of business and derives its income from
investments made in shares and securities and from bank and money market
funds.
* The Company has no recognised gains or losses other than the results for the
period as set out above.
* The accompanying notes are an integral part of the half-yearly report.
Reconciliation of Movements in Shareholders' Funds
+---------------+
| Six months to| Six months to Year to
|31 January 2012|31 January 2011 31 July 2011
| |
| GBP'000| GBP'000 GBP'000
=---------------------------------+---------------+----------------------------
Shareholders' funds at start of | |
period | 15,702| 19,265 19,625
| |
Return on ordinary activities | |
after tax | (1,650)| (506) (1,993)
| |
Cancellation of equity | (235)| (260) (751)
| |
Dividends paid | (530)| (414) (819)
=---------------------------------+---------------+----------------------------
Shareholders' funds at end of | |
period | 13,287| 18,085 15,702
+---------------+
Balance Sheet
+-------------------+
| As at 31 January| As at 31 January As at 31 July
| 2012| 2011 2011
| |
| GBP'000 GBP'000| GBP'000 GBP'000 GBP'000 GBP'000
=---------------------+-------------------+------------------------------------
| |
| |
Fixed asset | |
investments* | 9,162| 15,027 13,260
| |
Current assets: | |
| |
Money market | |
securities and other | |
deposits* | 4,102 | 2,947 2,475
| |
Debtors | 109 | 112 27
| |
Cash at bank | 121 | 175 136
=---------------------+-------------------+------------------------------------
| 4,332 | 3,234 2,638
| |
Creditors: amounts | |
falling due within | |
one year | (207) | (176) (196)
=---------------------+-------------------+------------------------------------
Net current assets | 4,125| 3,058 2,442
=---------------------+-------------------+------------------------------------
| |
=---------------------+-------------------+------------------------------------
Net assets | 13,287| 18,085 15,702
=---------------------+-------------------+------------------------------------
| |
| |
Called up equity | |
share capital | 2,619 | 2,733 2,648
| |
Special distributable| |
reserve | 22,502 | 23,228 22,737
| |
Capital redemption | |
reserve | 354 | 220 304
| |
Own shares held in | |
Treasury | (20) |
| |
Capital reserve - | |
losses on disposal |(4,866) |(5,537) (5,599)
| |
| |
- | |
holding losses |(7,396) |(2,902) (4,527)
| |
Revenue reserve | 94 | 343 139
=---------------------+-------------------+------------------------------------
Total equity | |
shareholders' funds | 13,287| 18,085 15,702
=---------------------+-------------------+------------------------------------
Net asset value per | |
share | 51.1p| 66.1p 59.3p
+-------------------+
*Held at fair value through profit or loss
The statements were approved by the Directors and authorised for issue on 27
March 2012 and are signed on their behalf by:
Greg Melgaard
Chairman
Company Number: 05487724
Cash Flow Statement
+---------------+
| Six months to| Six months to Year to
|31 January 2012|31 January 2011 31 July 2011
| |
| GBP'000| GBP'000 GBP'000
=---------------------------------+---------------+----------------------------
| |
| |
Net cash (outflow)/inflow from | |
operating activities | (239)| 48 (95)
| |
| |
| |
Financial investment : | |
| |
Purchase of fixed asset | |
investments | (165)| (209) (392)
| |
Sale of fixed asset investments | 2,781| 1,047 1,756
| |
| |
| |
Management of liquid resources: | |
| |
Purchase of current asset | |
investments | (2,677)| (3,034) (5,520)
| |
Sale of current asset investments| 1,050| 2,754 5,714
| |
| |
| |
Taxation | -| - -
| |
| |
| |
Dividends paid | (530)| (414) (819)
| |
| |
| |
Financing: | |
| |
Repurchase of own shares | (235)| (260) (751)
=---------------------------------+---------------+----------------------------
Decrease in cash resources at | |
bank | (15)| (68) (107)
+---------------+
Reconciliation of net cash flow to movement in net funds
+---------------+
| Six months to| Six months to Year to
|31 January 2012|31 January 2011 31 July 2010
| |
| GBP'000| GBP'000 GBP'000
=---------------------------------+---------------+----------------------------
Decrease in cash resources at | |
bank | (15)| (68) (107)
| |
Movement in cash equivalents | 1,627| 280 (192)
| |
Opening net cash resources | 2,611| 2,910 2,910
=---------------------------------+---------------+----------------------------
Net funds at period end | 4,223| 3,122 2,611
+---------------+
Reconciliation of return before taxation to cash flow from operating
activities
+---------------+
| Six months to| Six months to Year to
|31 January 2012|31 January 2011 31 July 2011
| |
| GBP'000| GBP'000 GBP'000
=---------------------------------+---------------+----------------------------
Return on ordinary activities | |
before tax | (1,650)| (506) (1,993)
| |
Loss/(gain) on disposal of fixed| |
asset investments | (38)| 38 (84)
| |
Gain on disposal of current asset| |
investments | -| (2) (2)
| |
Loss/(gain) on valuation of | |
fixed asset investments | 1,520| 577 1,938
| |
(Increase)/decrease in debtors | (82)| (101) (16)
| |
Increase/(decrease) in creditors | 11| 42 62
=---------------------------------+---------------+----------------------------
Inflow/(outflow) from operating | |
activities | (239)| 48 (95)
+---------------+
Notes to the Half-Yearly Report
1. Basis of preparation
The unaudited half-yearly results which cover the six months to 31 January 2012
have been prepared in accordance with the Accounting Standard Board's (ASB)
statement on half-yearly financial reports (July 2007) and adopting the
accounting policies set out in the statutory accounts of the Company for the
year ended 31 July 2011, which were prepared under UK GAAP and in accordance
with the Statement of Recommended Practice for Investment Companies issued by
the Association of Investment Companies in January 2009.
2. Publication of non-statutory accounts
The unaudited half-yearly results for the six months ended 31 January 2012 do
not constitute statutory accounts within the meaning of Section 415 of the
Companies Act 2006 and have not been delivered to the Registrar of Companies.
The comparative figures for the year ended 31 July 2011 have been extracted from
the audited financial statements for that year, which have been delivered to the
Registrar of Companies. The independent auditor's report on those financial
statements, in accordance with chapter 3, part 16 of the Companies Act 2006, was
unqualified. This half-yearly report has not been reviewed by the Company's
auditor.
3. Earnings per share
The total earnings per share is based on 26,170,256 (31 January
2011: 27,655,498 and 31 July 2011: 27,328,296) ordinary shares, being the
weighted average number of ordinary shares in issue during the period.
There are no potentially dilutive capital instruments in issue and, therefore no
diluted returns per share figures are relevant. The basic and diluted earnings
per share are therefore identical.
4. Net asset value per share
The calculation of NAV per share as at 31 January 2012 is based on 26,000,137
(31 January 2011: 27,344,177 and 31 July 2011: 26,479,092) ordinary shares in
issue at that date.
5. Dividends
The interim dividend declared of 4.0p per share for the six months to 31 January
2012 will be paid on 10 May 2012, to those shareholders on the register on 10
April 2012.
A final dividend of 2.0p per share was paid on 16 December 2011 to those
shareholders on the register on 18 November 2011.
6. Buy Backs
During the six months ended 31 January 2012 the Company bought back 478,955
shares at a weighted average price of 49.2p per share (six months ended 31
January 2011: 429,927 shares at a weighted average price of 60.3p per share and
year ended 31 July 2011: 1,295,012 shares at a weighted average price of 57.9p
per share). No shares were issued during the period.
7. Related Party Transactions
Octopus acts as the Investment Manager of the Company. Under the management
agreement, Octopus receives a fee of 2.0 per cent per annum of the net assets of
the Company for the investment management services. During the period, the
Company incurred management fees of GBP163,000 payable to Octopus (31 January
2011: GBP193,000 and 31 July 2011: GBP385,000). At the period end there was GBPnil
outstanding to Octopus (31 January 2011: GBPnil and 31 July 2011: GBPnil).
Furthermore, Octopus provides administration and company secretarial services to
the Company. Octopus receives a fee of 0.3 per cent per annum of net assets of
the Company for administration services and GBP10,000 per annum for company
secretarial services.
8. Copies of this report are available from the registered office of
the Company at 20 Old Bailey, London, EC4M 7AN.
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Octopus Eclipse VCT 3 plc via Thomson Reuters ONE
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