1
Octopus AIM VCT 2 plc Annual report 2024
Call us on 0800 316 2295
Annual report and
accounts for the
year ended
30 November 2024
Company number: 05528235
For UK investors only
Octopus AIM VCT 2 plc
Contents
Financial summary and key dates 1
Strategic report
• Chair’s statement 2
• Investment Manager’s review 4
• The Investment Manager 16
• Section 172 statement 18
• Business review 20
• Risk and risk management 24
Details of Directors 28
Directors’ report 29
Corporate governance report 33
Audit Committee report 37
Directors’ remuneration report 39
Directors’ responsibilities 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
Information and contact details 68
Glossary of terms 71
Directors and advisers 72
Notice of Annual General Meeting 73
Octopus AIM VCT 2 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’).
1
Octopus AIM VCT 2 plc Annual report 2024
Call us on 0800 316 2295
Year to
30 November 2024
Year to
30 November 2023
Net assets (£’000)
79,062
84,690
Loss after tax (£’000)
(399)
(15,709)
Net asset value (NAV) per share (p)
1
40.5
47.9
Dividends per share paid in year (p)
7. 2
4.1
NAV Total return (%)
2
(0.4)
(15.6)
Final dividend proposed (p)
3
1.8
1.8
Special dividend (p)
–
3.6
Ongoing charges (%)
4
2.4
2.2
1
NAV per share is calculated on the underlying assets less liabilities of the Company divided by the number of shares, refer to page 22 for commentary on the movement.
2
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.
3
Subject to shareholder approval at the Annual General Meeting, the proposed final dividend will be paid on 29 May 2025 to shareholders on the register on 25 April 2025.
4
Ongoing charges is an alternative performance measure calculated using the AIC recommended methodology, refer to page 23 for commentary on the movement.
Definitions of key terms and alternative performance measures shown above and throughout this report are shown in the Glossary
of Terms on page 71.
Financial summary
Key dates
Annual General Meeting 23 May 2025
Final dividend payment date 29 May 2025
Half-yearly results to 31 May 2025 announced August 2025
Annual results to 30 November 2025 announced March 2026
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Octopus AIM VCT 2 plc Annual report 2024
Chair’s statement
Introduction
Firstly, I would like to welcome all new shareholders who have
joined us in the past year.
The year ending 30 November 2024 was marked by contrasting
halves. The first six months experienced a positive shift in market
sentiment after a prolonged period of depressed markets.
Inflation hit its 2% target, UK GDP growth exceeded expectations,
consumer confidence rose, and there was a surge in corporate,
secondary fundraising and IPO activity, boosting UK capital
markets.
However, the second half of the year saw market sentiment
dampened by widespread uncertainties surrounding the policies
of the new Labour Government. The recovery in share prices was
notably hindered by the announcement of tax changes reducing
Inheritance Tax (IHT) relief on AIM shares, which slowed the rate
of IPOs and further fundraisings in UK capital markets. This,
coupled with ongoing geo-political conflicts in the Middle East
and Europe, prolonged UK fund outflows despite the boost from
interest rate cuts in August and November.
Despite these challenges, opportunities to invest in innovative,
growth-oriented companies persisted. AIM raised a total of
£1.8 billion in new capital for both new and existing companies
during the year under review, marking a 12.5% increase from
the previous year. The majority of fundraisings in 2024 were for
existing AIM companies seeking additional capital, totalling
£1.5 billion during the review period. The Company made
£4.2 million in qualifying investments, representing a 7.1% increase
from the previous year.
Performance
Amidst this backdrop of economic, market, political, and geo-
political uncertainty, the year to 30 November 2024 proved
challenging for the fund. The net asset value (NAV) of the
Company decreased by 0.4%, even after accounting for the 7.2p
of dividends paid during the period. Over the review period, the
AIM Index grew by 4.6%, compared to a 23.1% increase for the
FTSE SmallCap index (excluding investment companies) and a
15.8% rise for the FTSE All-Share Index, all on a total return basis.
Despite mixed overall performance, AIM continued to attract
capital and support the development of innovative companies,
maintaining its role as a crucial platform for small, growing
businesses. However, AIM’s significant exposure to growth stocks
in the software, technology, and healthcare sectors proved
disadvantageous as market sentiment shifted away from smaller
growth stocks, in which the portfolio is predominantly invested.
However, despite the significant additional investment constraints
faced by VCTs, the AIM Index remains the most suitable broad
equity market index for comparative purposes, given the nature
of the underlying investments. The FTSE SmallCap and All-Share
indices provide a broader market context, with the weaker relative
performance of AIM underscoring investors’ preference for large
companies in more traditional sectors over the past three years.
Dividends
In November 2024 an interim dividend of 1.8p was paid to all
shareholders. The Board is recommending a final dividend
in respect of the year to 30 November 2024 of 1.8p per share
totalling 3.6p in respect of the year, which is an 8.6% yield on
the prior year closing share price of 42.1p, all paid from special
distributable reserves. This is in line with our policy of maintaining
a minimum annual dividend payment of 3.6p per share or a 5%
yield based on the prior year closing share price, whichever is the
greater. Subject to the approval of shareholders at the Annual
General Meeting (AGM), the final dividend will be paid on 29 May
2025 to shareholders on the register on 25 April 2025.
Shareholders are encouraged to ensure that the details held for
them by the registrar remain accurate and to check whether they
have received all dividends payable to them. This is particularly
important for those who move house or change their bank
account or email address. We are aware that some dividends
remain unclaimed by shareholders, so if you believe you are
impacted by this, please contact our registrar, Computershare,
at the details provided on page 72.
Cancellation of share premium account
At the last AGM, shareholders voted to cancel share premium
to increase the pool of distributable reserves by the amount of
£12.0 million. This is a regular occurrence to enable the continued
payment of dividends and buyback of shares. A special resolution
to this effect is being proposed at Resolution 12.
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. Over the course of the
year 5,689,493 new shares have been issued under this scheme,
returning £2.5 million to the Company. The final dividend referred
to above will be eligible for the DRIS.
Share buybacks
During the year to 30 November 2024 the Company continued
to buy back shares in the market from selling shareholders and
purchased 5,783,439 Ordinary shares for a total consideration of
£2.5 million. We have maintained a discount of approximately
4.5% to NAV (equating to up to a 5% 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.
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Octopus AIM VCT 2 plc Annual report 2024
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Share issues
On 23 September 2024, 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. We expect
to be fully subscribed by the end of the 2025 tax year. In the year
to 30 November 2024 the Company raised a total of £10.7 million
after costs and a total of 24,311,327 shares were issued.
Liquidity
Shareholders may be interested to know that at the year end,
28.2% of the Company’s net assets were held in cash or collective
investment funds including funds managed by the team at
Octopus and money market funds, providing short-term liquidity.
59.7% was invested in individual quoted shares and 11.6% was
held in unquoted single company investments. The proportion
of the portfolio represented by unquoted shares has increased
over the period, not because of additional investment in the
sector, but because of strong individual performances from
some of the holdings, notably Hasgrove Limited and Popsa
Holdings Ltd. Shareholders should be aware that a proportion
of the quoted securities may have limited liquidity owing to the
size of the portfolio company and the overall proportion held by
the Company.
VCT status
Shoosmiths LLP 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 according to HMRC
definitions. As at 30 November 2024, the level was 87.1%.
Annual General Meeting
The AGM will take place on 23 May 2025 at 10.30am. Further
information can be found in the Notice of Annual General
Meeting on pages 73 to 76. The Investment Manager will provide
an update on the Company’s activities and future plans at the
AGM.
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 these via email
to AIMVCT2AGM@octopusinvestments.com by 5.00pm on
20 May 2025 if you are unable to attend the AGM in person.
If your shares are held through a nominee account, formal notices
will be sent to your nominee.
Outlook
Despite facing various policy, market, and economic challenges
(which are referred to in more detail in the Investment Manager’s
Review), AIM has shown remarkable resilience over the past year.
However, recent amendments by the new Labour Government to
tax reliefs for AIM investors under business relief have dampened
market sentiment and reduced the appetite for investing in
small growth companies. While the timeline for a potential
recovery remains uncertain, the anticipated Mansion House
reforms aimed at directing pension funds into UK investments
could act as a significant catalyst for revitalising sentiment in
UK capital markets. Market commentators continue to express
cautious optimism regarding the outlook for UK capital markets
in 2025, although ongoing challenges related to fund outflows
and their impact on market performance persist. A more stable
economic environment, supported by expected interest rate cuts
in the coming months, should provide a favourable backdrop for
potential market recovery.
The portfolio contains 83 holdings across a range of sectors with
exposure to some exciting new technologies in the environmental
and healthcare sectors. Although the current market environment
remains challenging for those companies in need of further
funding, this can provide the Investment Manager with good
opportunities to invest newly raised cash at attractive valuations.
The balance of the portfolio towards profitable companies
remains, with the majority of these now trading at a significant
valuation discount to their long-term averages.
Keith Mullins
Chair
10 March 2025
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Octopus AIM VCT 2 plc Annual report 2024
Introduction
Building on a positive first half of the year, investor sentiment
remained optimistic (albeit cautiously) at the start of the second
half of the year, buoyed by improved UK macroeconomic data.
The threat of recession diminished, inflation concerns had eased,
and interest rates had finally peaked. The UK economy’s return
to growth, driven by the service and manufacturing sectors,
rising consumer confidence, and a robust employment market,
strengthened the market recovery outlook. In August 2024,
the Bank of England cut interest rates for the first time in four
years, further boosting market confidence. Additionally, the new
Labour Government’s commitment to a growth agenda was well
received by the market.
However, in the lead-up to the Autumn Budget sentiment
tempered due to uncertainty over Business Property Relief (BPR)
changes and its potential impact on AIM and UK capital markets.
The 2024 Autumn Budget introduced significant changes to BPR,
impacting inheritance tax planning and the UK capital markets.
AIM-listed shares, which previously qualified for 100% BPR, will
now only qualify for 50% relief, regardless of their value. The
reduction in BPR for AIM shares has led to increased uncertainty
among investors, particularly those focused on growth stocks.
Initially, there was a sense of relief among investors that the BPR
was not entirely removed. This relief led to a brief rally, with the
FTSE AIM All-Share Index rising by nearly 4% on the day of the
announcement. Despite the relief, there remain concerns about
the reduction of this relief and its long-term impact on AIM.
On a more positive note, the stable UK macroeconomic
environment has improved operational performance for many
portfolio companies. Furthermore, confidence in further interest
rate cuts has grown and inflation remains stable, close to the
Bank of England target level of 2%, providing a much-needed
foundation for the growth of small companies. UK equities remain
significantly undervalued compared to global peers, despite the
intermittent signs of market recovery during the year under
review, evidenced by increased opportunistic corporate activity,
particularly on AIM. The rise in IPOs and further fundraisings has
renewed interest in UK equity markets that had not been seen
for a while and has encouragingly continued since the year end.
The Alternative Investment Market
AIM has a high exposure to growth stocks in the software,
technology and healthcare sectors, which counted against
it as sentiment moved against highly rated growth stocks as
inflationary and recessionary pressures intensified. Although
VCTs have additional investment constraints, 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 continued movement away from
growth and momentum-driven shares and subsequent weak
performance of AIM versus its market peers, highlighted that
investors sought value in more traditional sectors which has been
the case for the last three years.
The rate of IPOs on AIM remained slow, while the number
of companies leaving the market throughout 2024 picked
up pace. There was a total of nine IPOs on AIM over the year,
compared to 14 the previous financial year. AIM ended the year
with 690 companies, which was down 9.5% on the previous
year. We still believe in the importance of functioning equity
markets as a driver of growth in the UK, particularly at the
smaller, growth company end, where the Company invests.
The pipeline for new issues remains active in the new financial
year and the significance of VCTs as a critical funding platform
for smaller companies remains, which is evident by the flow
of further fundraisings on AIM, albeit at a slower speed than
previous years. In the year to 30 November 2024 AIM raised
£1.8 billion of new capital for both new and existing companies,
which compares to a figure of £1.6 billion the previous year.
The following graph shows total fundraising by AIM companies
each month throughout the year to 30 November 2024.
Investment Manager’s
review
5
Octopus AIM VCT 2 plc Annual report 2024
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Funds raised on AIM (£m): December 2023-November 2024
0
50
100
150
200
250
300
350
400
NovemberOctoberSeptemberAugustJulyJuneMayAprilMarchFebruaryJanuaryDecember
Year Ended Nov 2024
Year Ended Nov 2023
Source: London Stock Exchange.
Performance
Adding back the 7.2p of dividends paid in the year, the NAV total return was -0.4%. This compares with a rise in the FTSE AIM All-Share
Index of 4.6%, a rise in the FTSE SmallCap (excluding investment companies) of 23.1% and a rise in the FTSE All-Share Index of 15.8%
all on a total return basis.
Poor market sentiment towards AIM growth stocks persisted in the period and the portfolio was not immune to this, though there
were also company specific factors that impacted valuations. UK equity markets proved to be a particularly unforgiving place for
those who failed to show financial discipline and control costs, highlighting the current lack of risk appetite, something we expect the
recent and anticipated interest rate cuts this year should start to reverse. Equipmake Holdings plc was the biggest detractor to the
portfolio’s performance over the year. While successful in growing revenue and getting many of its retrofit buses into operation the
business struggled against the headwind of component cost volatility, incurring significantly more cost than anticipated therefore,
widening losses and significantly shortening the cash runway, resulting in a need to raise further capital at dilutive levels. Scientific
Digital Imaging plc saw growth stall due to a challenging macroeconomic backdrop resulting in a significant drop in its rating. Lunglife
AI Inc continued to make meaningful clinical progress with successful validation of its LungLB test through a multi-site trial. Despite
meeting the major milestones set out at IPO, commercialisation of this technology has taken longer than hoped, resulting in the need
for cost saving measures and further fundraising. Haydale Graphene Industries plc were unable to meet revenue forecasts for the
period; in response to this the business has refocused its efforts on near-term commercial opportunities and raised further capital to
support them through this transition. Verici Dx plc achieved significant milestones in their agreement with Thermo Fischer generating
a significant uplift in revenue for the year. Their share price fell sharply on news of a delay in local coverage determination for its Tutivia
test, causing a delay to those revenues but this appears a minor setback and the long-term opportunity remains intact. Next 15 Group
plc saw the loss of its largest customer for portfolio business Mach49; this was both unexpected and material to the Group causing
a significant downgrade to forecasts. This setback is frustrating, but the business remains one with a global reach and strong brand
portfolio capable of delivering growth going forward.
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Octopus AIM VCT 2 plc Annual report 2024
On the positive side, many companies in the portfolio reported
solid trading performances, which was reflected in their share
prices and contributed positively to the portfolio’s performance.
This included Breedon Group plc who traded robustly in their
major regions despite difficult conditions; the business also took
the long-anticipated step of expansion into the United States
with the acquisition of BMC Enterprises Inc. This transaction
provides the opportunity to launch a scalable third platform,
in what is a growing but still fragmented market. Craneware
plc saw continued growth in revenue and profits, benefitting
from improved confidence in US hospitals and healthcare.
The growth opportunity remains significant having formed a
strategic alliance between Microsoft for a joint go to market
approach, further expanding their reach. Beeks Financial Cloud
Group plc delivered excellent growth in revenue and profitability,
announcing significant new contract wins and extensions for its
Exchange Cloud product with a number of global exchanges.
The business remains in the enviable position of having new
jurisdictions to target as well as being able to expand sales into
their existing customers. GB Group plc made good progress
against their cost and simplification initiatives, improving revenue
growth, profitability and reducing net debt. Animalcare Group
plc has continued to implement its growth strategy, delivering
good revenue growth while maintaining margins. The most
transformational element of this year for the business was the
sale of Identicare and a minority stake of STEM Animal Health
Inc, giving management sufficient balance sheet strength to
pursue M&A opportunities. A conditional acquisition of Randlab,
an Australian based equine veterinary business, was announced
shortly after the Company year end.
In our private company holdings, Hasgrove Limited’s valuation
increased over the year due to strong operational performance
and continued growth in ARR. Popsa Holdings Ltd also saw its
valuation rise, having traded ahead of expectations, leading to
an upgrade to the budget. The bases of valuation for unquoted
holdings are set out in note 10 to the financial statements.
Portfolio activity
Having made seven qualifying investments at a total cost of
£2.5 million in the first half of the year, we added one new
qualifying investment of £0.2 million as well as four follow-on
qualifying investments totalling £1.5 million in the second half
of the year. We added seven new non-qualifying investments
totalling £2.7 million in the second half of the year. This made
a total investment of £6.9 million, of which £4.2 million was
qualifying for the year, an increase on last year’s £3.9 million. Post
the year end, we have invested a further £2.8 million.
Of the seven first half investments, two were new investments in
Strip Tinning Holdings plc and Alusid Limited. Five were follow-on
investments in GenInCode plc, Verici Dx plc, Equipmake Holdings
plc, PCI Pal plc and Cambridge Cognition Holdings plc.
We invested in one new issue in the second half of the year, Getech
Group plc. We made an investment of £0.2 million, this business
provides data rich products and geographic information system
solutions to support the exploration of subsurface resources,
which are vital for the global energy transition.
The four follow-on investments into existing holdings were Ixico
plc, Rosslyn Data Technologies plc, Abingdon Health plc and
Haydale Graphene Industries plc. We invested £0.4 million into
Ixico plc, a leading neuroscience imaging business. We supported
Rosslyn Data Technologies plc, a United Kingdom based provider
of a cloud-based enterprise data analytics platform with an
investment of £0.2 million. We invested £0.7 million into Abingdon
Health plc, a leading international lateral flow contract research
and contract development and manufacturing organisation, and
a follow-on investment in Haydale Graphene Industries plc of
£0.2 million, who engage in the integration of graphene and other
nanomaterials into next generation industrial materials.
We also invested £2.7 million into non-qualifying, main list stocks
primarily to manage liquidity but also providing increased UK
equity market exposure. We invested £0.4 million into GSK plc,
a multinational pharmaceutical and biotechnology company;
£0.4 million into Cranswick plc, a leading UK food producer;
£0.4 million into WISE plc, a global payments solutions business;
£0.3 million into Bytes Technology Group plc, an IT solutions and
services business; £0.4 million into JTC plc, a global professional
services business; £0.4 million into Ricardo plc, a global strategic,
environmental and engineering consultancy group and £0.4
million into Bloomsbury Publishing plc, a leading independent
publisher.
During the year we sold partial holdings in three companies,
two of these where we took profits into rising share prices, Beeks
Financial Cloud Group plc and Judges Scientific plc. We also had
full disposals of ten holdings being LoopUp Group plc, Cordel
Group, Mattioli Woods plc, Renalytix plc, Cirata plc, Polarean
Imaging plc, Eluceda Limited, Spectral AI Inc, Velocys plc and
Clean Power Hydrogen plc. Total disposals made a £2.8 million
loss over original cost and generated £2.2 million of cash proceeds.
Non-qualifying investments are used to manage liquidity while
awaiting new qualifying investment opportunities. We continue
to hold some existing non-qualifying AIM holdings where we see
the opportunity for further share price progress. During the year
we increased our holdings in the FP Octopus Micro Cap Fund and
the FP Octopus Future Generations Fund, investing a total of
£0.9 million over the period and disposed of part of our holding in
FP Octopus UK Multi Cap Income Fund for £0.5 million.
Investment Manager’s review continued
7
Octopus AIM VCT 2 plc Annual report 2024
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VCT regulations
There have been no further changes to the VCT regulations since
publication of the previous set of audited accounts, however
the sunset clause was extended to 2035 in the recent Autumn
statement. As a reminder, the current requirements are that
30% of any funds raised should be invested in qualifying holdings
within twelve 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 HMRC value) 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. At present there has been only gradual 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;
• 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 its first
commercial sale (or ten years if a knowledge intensive
company) if raising state aided (i.e. VCT) funds for the first
time;
• not receive more than £5 million state aided funds in the
previous twelve months (£10 million for a knowledge intensive
company from 6 April 2018), or more than the lifetime limit of
£12 million (£20 million for a knowledge intensive company);
and
• produce a business plan to show that the funds are being
raised for growth and development.
Outlook and future prospects
Over the past year, the AIM IPO and fundraising market has
shown modest signs of recovery, a trend that has continued
into the post-year-end period. The current environment presents
unique opportunities to invest in innovative and growth-oriented
companies at attractive valuations. The deal pipeline remains
active, and we are confident that we will continue to identify
compelling investments that can deliver solid capital growth over
time. While the timeline for consistent market recovery remains
uncertain, the anticipated Mansion House reforms aimed at
directing pension funds into UK investments could serve as a
significant catalyst for boosting market sentiment. Additionally,
the ongoing news of takeovers involving AIM companies, along
with the transition of companies from AIM to the Main Market,
highlights the urgent need for participants in the UK capital
markets, including regulatory bodies and the Government,
to explore new and impactful initiatives that support AIM. As
Europe’s largest market for small growth companies, AIM plays
a crucial role in fostering innovation and economic growth in the
UK and beyond. We await news of more broader capital reform
initiatives in the coming months.
The Octopus Quoted Companies team
Octopus Investments Limited
10 March 2025
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Octopus AIM VCT 2 plc Annual report 2024
Investment portfolio
Portfolio company Sector
Book cost
as at
30 November
2024
£’000
Cumulative
change in
fair value
£’000
Fair value
as at
30 November
2024
£’000
Fair value
movement
in year
£’000
% equity
held by
Octopus
AIM VCT 2 plc
% equity
held by
all funds
managed
by Octopus
Fair value as
a % of
Octopus
AIM VCT 2 plc
NAV
Quoted investments
Breedon Group plc Construction & Building 573 3,828 4,401 1,098 0.28% 0.73% 5.57%
Craneware plc Health Care Providers 479 3,131 3,610 1,078 0.44% 7.52% 4.57%
Learning Technologies
Group plc
Support Services 701 2,101 2,802 564 0.39% 8.23% 3.54%
Judges Scientific plc Electronic and Electrical
Equipment
157 1,965 2,122 (152) 0.38% 0.95% 2.68%
Animalcare Group plc Pharmaceuticals & Biotech 824 1,293 2,117 613 1.27% 2.07% 2.68%
Netcall plc Telecommunication
Services
356 1,761 2,117 540 1.31% 3.43% 2.68%
IDOX plc Software & Computer
Services
314 1,786 2,100 12 0.72% 13.56% 2.66%
GB Group plc Software & Computer
Services
337 1,742 2,079 807 0.22% 6.74% 2.63%
Intelligent Ultrasound
Group plc
Engineering & Machinery 1,437 212 1,649 466 4.33% 10.83% 2.09%
PCI-Pal plc Software & Computer
Services
863 606 1,469 467 3.12% 8.90% 1.86%
Beeks Financial Cloud
Group plc
Software & Computer
Services
269 1,157 1,426 893 0.81% 2.02% 1.81%
Brooks Macdonald Group
plc
Specialty & Other Finance 610 537 1,147 (265) 0.44% 14.37% 1.45%
Vertu Motors plc General Retailers 777 340 1,117 (476) 0.57% 1.37% 1.41%
Diaceutics plc Pharmaceuticals & Biotech 620 334 954 212 0.96% 2.83% 1.21%
SDI Group plc Technology Hardware 119 774 893 (655) 0.00% 0.00% 1.13%
EKF Diagnostics Holdings
plc
Health 737 155 892 (102) 0.80% 1.76% 1.13%
Maxcyte Inc Pharmaceuticals & Biotech 690 199 889 (329) 0.31% 1.23% 1.12%
Ixico plc Health 1,101 (292) 809 44 7. 27% 18.18% 1.02%
Gamma Communications
plc
Telecommunication
Services
183 574 757 254 0.05% 6.51% 0.96%
Sosandar plc General Retailers 1,235 (535) 700 (427) 3.24% 10.74% 0.89%
Pulsar Group plc Software & Computer
Services
501 156 657 23 0.89% 2.13% 0.83%
Eden Research plc Industrial 1,080 (449) 631 (100) 3.12% 7.79% 0.80%
Next 15 Group plc Media & Entertainment 302 311 613 (465) 0.14% 11.29% 0.78%
Equipmake Holdings plc Electronic and Electrical
Equipment
1,414 (854) 560 (2,258) 2.98% 7.4 4% 0.71%
Abingdon Health plc Medical Equipment and
Services
1,077 (528) 549 (214) 4.05% 10.13% 0.69%
Itaconix plc Industrial 1,059 (540) 519 (42) 3.08% 10.73% 0.66%
Nexteq plc Technology Hardware 338 176 514 (220) 1.21% 3.03% 0.65%
WISE plc Industrial 404 101 505 99 0.01% 0.02% 0.64%
GENinCode plc Medical Equipment and
Services
1,334 (834) 500 (143) 7.06% 17.66% 0.63%
Cranswick plc Food Producers &
Processors
404 43 447 43 0.02% 0.07% 0.56%
JTC plc Investment Banking &
Brokerage Services
401 21 422 21 0.02% 0.46% 0.53%
Gear4music Holdings plc General Retailers 353 66 419 56 1.21% 3.02% 0.53%
Bloomsbury Publishing Plc Media & Entertainment 419 (22) 397 (22) 0.07% 0.92% 0.50%
Investment Manager’s review continued
9
Octopus AIM VCT 2 plc Annual report 2024
Call us on 0800 316 2295
Portfolio company Sector
Book cost
as at
30 November
2024
£’000
Cumulative
change in
fair value
£’000
Fair value
as at
30 November
2024
£’000
Fair value
movement
in year
£’000
% equity
held by
Octopus
AIM VCT 2 plc
% equity
held by
all funds
managed
by Octopus
Fair value as
a % of
Octopus
AIM VCT 2 plc
NAV
Oberon Investments Group
plc
Investment Banking &
Brokerage Services
576 (208) 368 – 1.79% 8.34% 0.47%
Cambridge Cognition
Holdings plc
Health 717 (349) 368 (251) 3.25% 8.67% 0.47%
Restore plc Support Services 171 168 339 54 0.09% 12.67% 0.43%
GSK plc Pharmaceuticals & Biotech 402 (66) 336 (66) 0.00% 0.00% 0.43%
Ricardo plc Construction & Building 402 (73) 329 (73) 0.13% 2.30% 0.42%
TPXimpact Holdings plc Support Services 653 (325) 328 (9) 0.96% 2.39% 0.41%
DP Poland plc Leisure & Hotels 678 (362) 316 (16) 0.34% 0.86% 0.40%
Gooch & Housego plc Electronic & Electrical 281 22 303 (44) 0.27% 11.06% 0.38%
Ilika plc Energy 706 (424) 282 (338) 0.84% 2.10% 0.36%
Tan Delta Systems plc Electronic and Electrical
Equipment
302 (35) 267 – 1.59% 3.97% 0.34%
Bytes Technology Group plc Software & Computer
Services
326 (59) 267 (59) 0.03% 0.09% 0.34%
RWS Holdings plc Support Services 99 160 259 (150) 0.05% 5.77% 0.33%
Verici Dx plc Pharmaceuticals & Biotech 1,044 (785) 259 (498) 3.56% 8.86% 0.33%
Advanced Medical
Solutions Group plc
Health 190 57 247 10 0.05% 13.01% 0.31%
Haydale Graphene
Industries plc
Chemicals 1,238 (1,036) 202 (521) 4.47% 11.18% 0.26%
GETECH Group plc Oil Services 200 – 200 – 6.56% 16.40% 0.25%
Rosslyn Data Technologies
plc
Software & Computer
Services
779 (581) 198 (137) 5.70% 14.26% 0.25%
MyCelx Technologies
Corporation
Oil Services 980 (785) 195 (87) 2.23% 23.55% 0.25%
Velocity Composites plc Engineering & Machinery 533 (401) 132 (100) 1.17% 2.93% 0.17%
Feedback plc Software & Computer
Services
1,000 (872) 128 (342) 1.53% 4.46% 0.16%
Northcoders Group plc Software and Computer
Services
253 (127) 126 25 1.05% 2.63% 0.16%
Creo Medical Group plc Pharmaceuticals & Biotech 981 (857) 124 (128) 0.19% 1.49% 0.16%
KRM22 plc Software & Computer
Services
454 (331) 123 (18) 1.27% 3.18% 0.15%
Crimson Tide plc Software and Computer
Services
378 (258) 120 (63) 1.92% 4.79% 0.15%
Gelion plc Electronic and Electrical
Equipment
760 (671) 89 (39) 0.35% 0.88% 0.11%
Mears Group plc Support Services 51 16 67 16 0.02% 0.16% 0.08%
LungLife AI Inc Pharmaceuticals & Biotech 1,386 (1,319) 67 (563) 2.57% 6.42% 0.08%
Strip Tinning Holdings plc Electronic and Electrical
Equipment
337 (275) 62 (11) 1.00% 2.50% 0.08%
ENGAGE XR Holdings plc Software & Computer
Services
1,253 (1,196) 57 (170) 1.96% 12.14% 0.07%
XP Factory plc Leisure & Hotels 659 (605) 54 (12) 0.28% 0.70% 0.07%
TheraCryf plc Pharmaceuticals,
Biotechnology and
Marijuana Producers
700 (656) 44 (96) 2.04% 5.09% 0.06%
1Spatial plc Support Services 200 (157) 43 13 0.06% 3.61% 0.05%
DXS International plc Software & Computer
Services
200 (173) 27 (35) 3.90% 9.76% 0.03%
Enteq Upstream plc Oil Services 687 (661) 26 (46) 0.66% 1.65% 0.03%
Investment portfolio continued
10
Octopus AIM VCT 2 plc Annual report 2024
Portfolio company Sector
Book cost
as at
30 November
2024
£’000
Cumulative
change in
fair value
£’000
Fair value
as at
30 November
2024
£’000
Fair value
movement
in year
£’000
% equity
held by
Octopus
AIM VCT 2 plc
% equity
held by
all funds
managed
by Octopus
Fair value as
a % of
Octopus
AIM VCT 2 plc
NAV
Fusion Antibodies plc Pharmaceuticals & Biotech 497 (472) 25 (14) 0.62% 1.56% 0.03%
Tasty plc Leisure & Hotels 336 (326) 10 (1) 0.56% 1.19% 0.01%
Genedrive plc Pharmaceuticals & Biotech 145 (141) 4 (7) 0.03% 0.08% 0.00%
Microsaic Systems plc Engineering & Machinery 922 (922) – (1) 0.02% 0.04% 0.00%
Sorted Group Holdings Plc Software & Computer
Services
509 (509) – – 0.00% 0.00% 0.00%
The British Honey Company
plc
General Retailers 880 (880) – – 4.74% 11.86% 0.00%
Cloudified Holdings Limited Software & Computer
Services
600 (600) – (13) 1.34% 3.36% 0.00%
ReNeuron Group plc Pharmaceuticals & Biotech 990 (990) – (46) 2.02% 5.06% 0.00%
Trackwise Designs plc Electronic & Electrical 1,289 (1,289) – – 0.28% 0.70% 0.00%
Libertine Holdings plc Industrial Engineering 2,000 (2,000) – (250) 7.18% 17.96% 0.00%
Total quoted investments 49,212 (2,038) 47,174 (2,666) 59.68%
Unquoted equity investments
Hasgrove plc 153 6,645 6,798 1,697 2.74% 17.08% 8.60%
Popsa Holdings Ltd 1,060 1,109 2,169 187 4.16% 10.39% 2.74%
Alusid Limited 200 – 200 – 2.09% 5.23% 0.25%
Airnow plc 838 (838) – – 0.00% 0.00% 0.00%
Rated People Ltd 236 (236) – – 0.07% 0.32% 0.00%
The Food Marketplace Ltd 200 (200) – (55) 4.40% 10.99% 0.00%
Total unquoted equity investments 2,687 6,480 9,167 1,829 11.59%
Loan notes
Strip Tinning Holdings plc
(Loan)
600 – 600 – N/A N/A 0.76%
Haydale Graphene
Industries plc (Loan)
200 – 200 – N/A N/A 0.25%
Total loan notes 800
–
800
–
1.01%
Current asset investments
FP Octopus UK Micro Cap
Growth Fund
5,412 486 5,898 348 7.46%
FP Octopus UK Multi Cap
Income Fund
2,389 502 2,891 420 3.66%
FP Octopus UK Future
Generations Fund
1,384 (27) 1,357 113 1.72%
Total current asset investments 9,185 961 10,146 881 12.84%
Total fixed and current asset investments
67,287
Money market funds 10,564
Cash at bank 1,595
Debtors less creditors (384)
Total net assets 79,062
Investment portfolio continued
Investment Manager’s review continued
11
Octopus AIM VCT 2 plc Annual report 2024
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Top ten holdings
Listed below are the ten largest investments by value, comprised of eight quoted level 1 investments which are valued at bid price
and two level 3 investments which are valued in accordance with International Private Equity and Venture Capital Valuation (IPEV)
guidelines and approach set out in note 10 on pages 59 to 61, as at 30 November 2024:
Hasgrove Limited (unquoted)
Hasgrove is a provider of digital communication services. The company is the owner of Interact, a software company that provides
a range of products and services to improve communication and collaboration within large organisations. The company operates
globally with a growing customer base across Europe, North America and Australia.
Initial investment date:
Cost:
Valuation – see note 10 to the financial statements:
Equity held by Octopus AIM VCT 2 plc:
Fair value as a % of NAV:
Last audited accounts:
Revenue:
Profit before tax:
Net assets:
Dividends received in year:
November 2008
£153,000
£6,798,000
2.74%
8.60%
31 December 2023
£37 million
£9.9 million
£13.3 million
£nil
Breedon Group plc
Breedon Group is a supplier of a wide range of materials to the construction industry. Breedon is a leading independent construction
materials group, operating in the UK, Ireland and the USA. The company produces cement, aggregates, asphalt, ready mixed
concrete, Welsh slate and specialist concrete clay products. The company benefited from a series of acquisitions and now employs
4,450 people with more than 320 operational sites. Breedon’s strategy is to continue growing through organic improvement and
consolidation of the UK’s building materials sector.
Initial investment date:
Cost:
Valuation at bid price:
Equity held by Octopus AIM VCT 2 plc:
Fair value as a % of NAV:
Last audited accounts:
Revenue:
Profit before tax:
Net assets:
Dividends received in year:
August 2010
£573,000
£4,401,000
0.28%
5.57%
31 December 2023
£1,487.5 million
£134.4 million
£1,043.8 million
£0.13 million
12
Octopus AIM VCT 2 plc Annual report 2024
Craneware plc
Craneware is the leading provider of optimal operational performance systems and services for the US Healthcare industry. The
company engages in the provision of software and support services for the healthcare industry, and aims to transform healthcare
businesses through its applications and industry-leading team of experts who examine operational, financial, and clinical data to
provide valuable insights. The company’s services and solutions include patient engagement, charge capture and pricing, claims
analysis, revenue recovery and retention, and cost analytics.
Initial investment date:
Cost:
Valuation at bid price:
Equity held by Octopus AIM VCT 2 plc:
Fair value as a % of NAV:
Last audited accounts:
Revenue:
Profit before tax:
Net assets:
Dividends received in year:
September 2007
£479,000
£3,610,000
0.44%
4.57%
30 June 2024
$189.3 million
$15.7 million
$363.9 million
£0.05 million
Learning Technologies Group plc
Learning Technologies is a group of businesses who provide innovative learning technology solutions. The company’s businesses are
at the forefront of innovation and best practice in the learning technology sector, and have received numerous awards for their
exceptional performance. Through its portfolio of brands, the company offers large organisations a new approach to digital learning
and talent management. The company benefited from a series of material acquisitions and now has several locations across the
UK, Europe, the United States, Asia-Pacific and South America.
Initial investment date:
Cost:
Valuation at bid price:
Equity held by Octopus AIM VCT 2 plc:
Fair value as a % of NAV:
Last audited accounts:
Revenue:
Profit before tax:
Net assets:
Dividends received in year:
June 2011
£701,000
£2,802,000
0.39%
3.54%
31 December 2023
£562.3 million
£45.6 million
£427.2 million
£0.05 million
Popsa Holdings Ltd (unquoted)
Popsa is a developer of consumer mobile applications for printing photos in photobooks and other gifting products. The app is now
available in 50 countries around the globe and has been translated into 10 different languages. Popsa is a pioneer in the use of
narrow AI technology for the personalised gift market.
Initial investment date:
Cost:
Valuation – see note 10 to the financial statements:
Equity held by Octopus AIM VCT 2 plc:
Fair value as a % of NAV:
Last audited accounts:
Revenue:
Loss before tax:
Net assets:
Dividends received in year:
February 2018
£1,060,000
£2,169,000
4.16%
2.74%
31 December 2023
£27.5 million
£0.9 million
£11.2 million
£nil
Top ten holdings continued
Investment Manager’s review continued
13
Octopus AIM VCT 2 plc Annual report 2024
Call us on 0800 316 2295
Judges Scientific plc
Judges Scientific specialises in the acquisition and development of a portfolio of scientific instrument businesses. The Group’s
companies are primarily UK based with products sold worldwide to a diverse range of markets including: higher education
institutions, manufacturers and regulatory authorities. The Group is made up of over 20 businesses offering the design, manufacture,
and sale of highly specialised scientific instruments. It has an excellent track record of delivering organic and acquisitive growth. Its
approach is to bring profitable companies with niche products and established reputations under the Group umbrella and provide
the environment in which to thrive and grow.
Initial investment date:
Cost:
Valuation at bid price:
Equity held by Octopus AIM VCT 2 plc:
Fair value as a % of NAV:
Last audited accounts:
Revenue:
Profit before tax:
Net assets:
Dividends received in year:
May 2012
£157,000
£2,122,000
0.38%
2.68%
31 December 2023
£136.1 million
£13.4 million
£82.6 million
£0.03 million
Animalcare Group plc
Animalcare Group is an international animal health business which operates primarily in the veterinary pharmaceutical and services
sectors. The company has a direct commercial presence in seven European countries and exports to around 40 countries in Europe
and worldwide.
Initial investment date:
Cost:
Valuation at bid price:
Equity held by Octopus AIM VCT 2 plc:
Fair value as a % of NAV:
Last published accounts:
Revenue:
Profit before tax:
Net assets:
Dividends received in year:
December 2007
£824,000
£2,117,000
1.27%
2.68%
31 December 2023
£74.4 million
£3.5 million
£77.9 million
£0.04 million
Netcall plc
Netcall is a UK-based enterprise software company is a leading provider of intelligent automation and customer engagement
software and helps organisations achieve digital transformation by automating workflows and managing customer interactions
to enable significant cost savings and better experiences.
Initial investment date:
Cost:
Valuation at bid price:
Equity held by Octopus AIM VCT 2 plc:
Fair value as a % of NAV:
Last audited accounts:
Revenue:
Profit before tax:
Net assets:
Dividends received in year:
July 2010
£356,000
£2,117,000
1.31%
2.68%
30 June 2024
£39.1 million
£6.3 million
£40.5 million
£0.02 million
Top ten holdings continued
14
Octopus AIM VCT 2 plc Annual report 2024
IDOX plc
IDOX engages in the development and supply of information and knowledge management products and services. It operates
through Public Sector Software and Engineering Information segments. The Public Sector Software segment focuses on delivering
specialist information management solutions and services to the public sector. The Engineering Information Management is
involved in engineering document management and control solutions to asset intensive industry sectors.
Initial investment date:
Cost:
Valuation at bid price:
Equity held by Octopus AIM VCT 2 plc:
Fair value as a % of NAV:
Last published accounts:
Revenue:
Profit before tax:
Net assets:
Dividends received in year:
May 2008
£314,000
£2,100,000
0.72%
2.66%
31 October 2024
£73.3 million
£7.8 million
£73.3 million
£0.02 million
GB Group plc
GB Group is a leading specialist in identity (ID) verification. Recognised as a global leader, GB Group is a technology specialist in
fraud, location and identity data intelligence. Its software helps companies and governments to fight fraud and cybercrime, lower
the cost of compliance and improve the experience for onboarding new customers in today’s digital economy.
Initial investment date:
Cost:
Valuation at bid price:
Equity held by Octopus AIM VCT 2 plc:
Fair value as a % of NAV:
Last audited accounts:
Revenue:
Loss before tax:
Net assets:
Dividends received in year:
November 2011
£337,000
£2,079,000
0.22%
2.63%
31 March 2024
£277.3 million
£50.4 million
£625.1 million
£0.02 million
Top ten holdings continued
Investment Manager’s review continued
15
Octopus AIM VCT 2 plc Annual report 2024
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 30 November 2024. It also shows the
sectors of the AIM market as a whole as at 30 November 2024:
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
AIM market
AIM VCT 2 plc
Other
1
Retailers
Health Care Providers
Food Producers
Pharmaceuticals,
and Biotechnology
Telecommunications
Service Providers
Electronic and
Electrical Equipment
Industrial Support
Services
Construction
and Materials
Software and
Computer Services
The graph below shows the top ten sectors the equity portfolio was invested in by value as at 30 November 2023. It also shows the
sectors of the AIM market as a whole as at 30 November 2023:
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
AIM market
AIM VCT 2 plc
Other
Industrial Support
Services
Media
Investment Banking and
Brokerage Services
Retailers
Construction
and Materials
Medical Equipment
and Services
Pharmaceuticals
and Biotechnology
Health Care Providers
Electronic and
Electrical Equipment
Software and
Computer Services
1
Other sectors include Technology Hardware and Equipment, Finance and Credit Services, Investment Banking and Brokerage Services, Oil, Gas and Coal, Travel and
Leisure, Alternative Energy, Chemicals.
16
Octopus AIM VCT 2 plc Annual report 2024
The Investment Manager
Personal service
Octopus was established in 2000 and has a strong commitment
to both smaller companies and to VCTs. Octopus also acts as
Investment Manager to four other listed investment companies
and has a total of over £10 billion of funds under management
across all products. 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 of Octopus comprises:
Freda Isingoma
Freda is the lead manager of the Octopus AIM VCTs. Freda
started her career as an investment analyst at Charterhouse
CCF before joining 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 ecosystem impact solutions
for the African art market. She joined Octopus in January 2022
and is focused primarily on the AIM VCT portfolios. Freda also
provides investment management support across all the Quoted
Companies team products.
Kate Tidbury
Kate is a senior fund manager on the Quoted Companies
team 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 (now Panmure Liberum). 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 products.
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 products.
Martin Jager
Martin is an Investment Analyst on the Octopus Quoted
Companies team, primarily providing analytical and investment
management support across the AIM VCTs as well as assisting on
all wider team mandates. He initially joined Octopus in 2021 as
a member of the Finance team and is a Chartered Accountant
and graduate from the University of Manchester with a degree in
International Management with American Business Studies.
Dominic Weller
Dominic is a senior 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 efforts. He is a CFA charterholder.
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, also oversees the investment process of
the team which includes the AIM IHT portfolios, and AIM VCTs.
Richard is also a 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
small companies fund. He subsequently joined Close Brothers to
manage a smaller companies investment trust before moving to
Octopus Investments Limited to head up the Quoted Companies
team in 2004. Richard was awarded Trustnet FE fundinfo Alpha
Manager status in 2022 acknowledging his proven track record.
Chris McVey
Chris is a Senior Fund Manager within the Octopus Quoted
Companies team. He works across all desk portfolios and 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. He has been a
specialist within the quoted UK Smaller Company market for over
20 years. In 2016 he joined Octopus from Citigroup where he
led the UK Small and Mid-Cap Equity research team 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 analyst and investment manager. Chris was
awarded Trustnet FE fundinfo Alpha Manager status in 2023.
Edward Griffiths
Edward is an experienced portfolio manager, with a City career
spanning over 21 years. Having previously worked at Schroders
Investment Management Pension Funds and State Street, he
joined Octopus Investments 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 products.
Jessica Bourdon-Pierre
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 2 plc Annual report 2024
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.
Ross MacSween
Ross is a Junior Investment Analyst on the Octopus Quoted
Companies team, primarily providing analytical and investment
management support across the OEIC offerings as well as
assisting on all wider team mandates. He is an Accounting and
Finance graduate from Edinburgh University and initially joined
Octopus in 2022 on a sales and operations rotation programme.
Ben Tyson
Ben is a Product Analyst on the Octopus Quoted Companies team
and is focused on strengthening the team’s trading capabilities,
performance analytics and operational efficiencies. Ben joined
Octopus Investments in 2017, as a member of the operations
team. He joined from PwC’s Investment Management Tax team
and previously worked within the Share Dealing and Share Plans
businesses at Capita. He joined the Quoted Companies team in
December 2023 having moved from the Investment Operations
team where he was a Settlements Subject Matter Expert (SME).
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 Manager believes 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 Investment Manager looks 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:
• Gelion – global energy storage innovator specialising in the
next generation of safe stationary storage technology to
maximise reliable energy storage solutions to stand alone
power systems.
• Mycelx – provider of clean water technology equipment and
related services to the oil and gas, power, marine, and heavy
manufacturing sectors.
• Learning Technologies – a market leader in the fast-growing
workplace digital learning and talent management market.
• Diaceutics – provider of end-to-end solutions for the launch
of precision medicine diagnostics.
Materiality of risks to investments
As part of the investment process, the Investment Manager
incorporates 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 and
• Leadership: ethics, competitive behaviour, regulatory, critical
incidents, and risk management.
The Investment Manager considers 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 pages 26 and 27.
Responsibility
As part of the investment management approach, the
Investment Manager’s team discuss the portfolio companies’
strategy, financial performance, data disclosures, capital
structure and corporate governance with their 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 portfolio companies’ 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 2 plc Annual report 2024
Introduction
The purpose of the report is to provide shareholders with sufficient
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. 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
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 2 plc has no
employees. However, the Directors also 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 AGM, the Investment Manager
shareholder presentation provided at the AGM, the annual and
half-year reports 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. 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 RNS 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 Octopus website at
www.octopusinvestments.com.
The Board always welcome questions from our shareholders at
the AGM. To ensure 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 AIMVCT2AGM@octopusinvestments.com by 5.00pm on
20 May 2025.
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, 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.
The Board formally reviews the performance of the Investment
Manager on an annual basis. All Board members complete
a questionnaire and discuss the findings 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 statement
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Octopus AIM VCT 2 plc Annual report 2024
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Engagement with other key stakeholders
and environment
The Investment Manager is a key business partner with
responsibility for the provision of investment management,
administration, custody and company secretarial services.
During the period the Board received sufficient 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 responsible investment
and the Octopus Group, of which the Investment Manager
forms a part, was 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 its approach to responsible
investment, as set out in the responsible investment policy.
This includes the development and implementation of
internal processes and checks in line with the UN Principles
of Responsible Investing. The Investment Manager continues
to monitor the ESG practices of existing portfolio companies
and over the coming year the Investment Manager shall
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.
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
factors include:
• In line with the Company’s objectives, on 23 September 2024,
the Board issued an offer 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 7.2p were paid to shareholders
(comprising a final dividend of 1.8p and special dividend of
3.6p, in respect of the previous financial year, and an interim
dividend of 1.8p).
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Octopus AIM VCT 2 plc Annual report 2024
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) 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 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 Tax Act 2007, as
amended. The shares of the Company were first admitted to the
Official List of the UK Listing Authority and trading on the London
Stock Exchange on 25 January 2006 and can be found under the
TIDM code ‘OSEC’. The Company is main market premium listed.
Investment policy
The Company’s investment policy has been designed to enable it
to comply with the VCT qualifying conditions. The Board intends
that the long-term disposition of the Company’s assets will be
not less than 85% in a portfolio of qualifying AIM, AQSE exchange
traded investments or unquoted companies where in the short
to medium term, the management is planning an initial public
offering (IPO) on AIM or AQSE.
The non-qualifying balance 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’, authorised funds, including
those managed by Octopus, or directly in equity investments and
bonds. 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 different 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 stewardship of assets 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. The Company has a strong cash position
which enables investment in new companies and support for
existing companies. The outlook statements in both the Chair’s
Statement and the Investment Manager’s Review, on pages 3
and 7 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 page 21 compares the total return of the Company
over the period from 1 March 2006 to 30 November 2024 with the
total return from notional investments in the FTSE AIM All-Share
Index, FTSE All-Share index, and the FTSE SmallCap (ex-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 in helping
shareholders benchmark returns from the Company but would
remind investors that approximately 15% of the FTSE AIM All-
Share Index is attributable to resources, mining, investment
companies and property stocks which VCTs cannot invest in.
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 NAV of the company.
Business review
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Octopus AIM VCT 2 plc Annual report 2024
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Comparative portfolio performance
310
290
270
250
230
210
190
170
150
130
110
90
70
50
30
Value of £100 investment (£)
FTSE All-Share total return, based on £100 notional investment on 1 March 2006 and the reinvestment
of all income
FTSE SmallCap ex investment trusts total return, based on £100 notional investment on 1 March 2006
and the reinvestment of all income
FTSE AIM All-Share total return, based on £100 notional investment on 1 March 2006 and the
reinvestment of all income
NAV return plus reinvestment of all dividends (excluding up-front tax relief), based on notional investment of
£100 on 1 March 2006
Nov 06
Nov 07
Nov 08
Nov 09
Nov 10
Nov 11
Nov 12
Nov 13
Nov 14
Nov 15
Nov 16
Nov 17
Nov 18
Nov 19
Nov 20
Nov 21
Nov 22
Nov 23
Nov 24
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Results and dividends
Year ended
30 November 2024
£’000
Year ended
30 November 2023
£’000
Loss attributable to shareholders
(399)
(15,709)
Distributions:
Interim dividend paid 1.8p (2023 – 1.8p)
3,502
2,927
Special dividend paid nil (2023 – 3.6p)
–
6,605
Final dividend proposed/paid 1.8p (2023 – 1.8p)
3,517
3,302
The proposed final dividend of 1.8p for the year ended 30 November 2024 will be paid on 29 May 2025 to shareholders on the register
on 25 April 2025 subject to approval at the AGM being held on 23 May 2025. The above proposed final dividend is based on the number
of shares in issue at the date of this report.
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Octopus AIM VCT 2 plc Annual report 2024
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 71 has further details:
1. NAV per share;
2. Total return per share
1
;
3. dividends per share paid in the year;
4. total ongoing charges
1
; 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
40.5 47.9 The NAV per share has decreased by 7.4p from last year’s value of 47.9p
to 40.5p. This decrease of 15.4% is largely the result of dividends paid out
in the period.
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 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. This is the most widely used
measure of performance in the VCT sector.
Current year % Prior year % Reason for movement
(0.4) (15.6) As previously considered, the NAV per share has decreased from last
year’s value of 47.9p to 40.5p. This gave a total return of -0.4% or a loss
of 0.2p per share, after adding back dividends of 7.2p paid in the year.
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 page 21. In the year under review the FTSE SmallCap Index increased by 23.1% and the FTSE All-Share Index
rose by 15.8%, 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.
3. Dividends per share paid in the year
The Company has a target of paying an annual dividend of 3.6p per share or a 5% yield based on the prior year-end share price,
whichever is greater at the time.
Current year
(pence per share)
Prior year
(pence per share) Reason for movement
7.2 4.1 This year the dividends paid were higher due to a special dividend of 3.6p
made following a large sale from the portfolio in the year.
The 3.6p of dividends paid in the year maintains the minimum of 5% dividend yield target. The proposed final dividend of 1.8p
gives a total dividend in respect of the year of 3.6p, which is a yield of 8.6% based on the share price of 42.1p at the prior year end,
1
These KPIs are defined as alternative performance measures (APMs) and are defined in more detail on the Glossary of terms on page 71.
Business review continued
23
Octopus AIM VCT 2 plc Annual report 2024
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in line with the Board’s policy of paying the higher of a 5% yield or 3.6p of dividends in the year. Dividends are 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.
4. Ongoing charges
1
The ongoing charges ratio has been calculated using the AIC recommended methodology and excludes exceptional costs and trail
commission.
Current year % Prior year % Reason for movement
2.4 2.2 The ongoing charges ratio has increased from the previous year due to
decreased net assets.
There are a number of costs involved in operating a VCT, these expenses are outlined in note 4 on page 56. The Company has an
expense cap of 3.5%. The ongoing charges have been lower than the expense cap for the current and prior year, which is in line
with the Board’s expectations.
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. This percentage is calculated using a formula based on HMRC rules.
Current year % Prior year % Reason for movement
87.1 85.4 87.1% (as measured by HMRC rules) by value of the Company’s
investments by shares or securities comprised in qualifying holdings of
the Company. The qualification level has increased by 1.7% due to higher
deployment and lower disposals made in the current year, so more
investments are contributing to the 80% qualifying investment level.
Further details on VCT regulations can be found within the Investment
Manager’s Review on page 7.
The Company has continued to meet the 80% qualification investment level. There continues to be sufficient investment
opportunities to enable the Investment Manager to comply with these ratios.
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.
Viability statement
As part of their continuing programme of monitoring risk the Directors have assessed the prospects of the Company over a longer period
than the minimum of twelve 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 offer for subscription 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 economic, market, political, and geo-political uncertainty and any other risks which may adversely impact its
business model such as future performance, solvency or liquidity. Particular consideration was given to the Company’s reliance on, and
close working relationship with, the Investment Manager and the ability to raise new capital. The principal risks faced by the Company
and the procedures in place to monitor and mitigate them are set out on pages 24 and 25.
The Board has also considered the liquidity of the underlying investments and the Company’s cash flow projections 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 30 November 2029.
1
These KPIs are defined as alternative performance measures (APMs) and are defined in more detail on the Glossary of terms on page 71.
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Octopus AIM VCT 2 plc Annual report 2024
Principal risks, risk management and regulatory environment
The Board carries out a regular review of the risk environment in which the Company operates. The Board seeks to mitigate risks by
setting policy, reviewing 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. Detailed below are what the Board deems to be the principal risks of the Company and the
mitigating actions in relation to those risks.
Risk Mitigation
Investment risk: The focus of the Company’s
investments is into VCT qualifying companies
quoted on AIM and the AQSE exchange, 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 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 its results to the Board and
Investment Manager.
Operational risk: The Board is reliant on the
Investment Manager to manage investments
effectively, 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 and that proper accounting records
are maintained, as well as any regulatory reporting. 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 by the Investment Manager 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: 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 poor performance in any
one sector. The Company also maintains adequate liquidity to ensure that 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
25
Octopus AIM VCT 2 plc Annual report 2024
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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: The risk that the Company’s available
cash will not be sufficient to meet its financial
obligations. The Company invests into smaller
companies, quoted on the AIM and AQSE
exchanges, and private companies which are
inherently less liquid than stocks on the main
market. Therefore, these may be difficult to realise
for their fair market value at short notice.
The Investment Manager prepares cash flow forecasts to ensure 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 sufficient cash
and readily realisable securities, including MMFs and OEICs, which can be accessed
at short notice. At 30 November 2024, 15.4% of net assets was held in cash and
MMFs, realisable within one business day, and 12.8% in open-ended investment
companies (OEICs), realisable in seven business days.
Valuation: For smaller companies or illiquid shares,
establishing a fair value can be difficult 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 exchange 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 the bid
price is not appropriate, alternative valuation techniques are used in accordance
with the IPEV guidelines.
Valuations of unquoted portfolio companies are performed by appropriately
experienced staff, 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 staff 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.
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.
The following are some of the potential emerging risks management and the Board are currently monitoring:
• adverse changes in global macroeconomic environment;
• geo-political tensions; and
• climate change.
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Octopus AIM VCT 2 plc Annual report 2024
Gender and diversity
The Board of Directors currently comprises one female and three male Non-Executive Directors with considerable experience of the VCT
industry and a broad range of skills and backgrounds. All appointments to the Board are made on the basis of ability and knowledge.
The composition of the Board, including gender and diversity, is reviewed on an annual basis. As at 30 November 2024 the Company
has not met the UK Listing Rule 6.6.6R (9)(a) target of the Board comprising 40% women. The target of at least one member of the
Board being from a minority ethnic background was not met during the year. The Board believes in the value and importance of
diversity in the boardroom but does not consider that it is in the best interests of the Company and its shareholders to set prescriptive
targets for gender or ethnicity on the Board. As the Company is externally managed the roles of CEO or CFO do not exist.
Please see the tables below which report on gender identity/sex and ethnic background for completeness as at 30 November 2024.
Gender identity or sex
Number of
Board members
Percentage of
the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Men 3 75% Not applicable
1
Women 1 25%
Not specified/prefer not to say – –
1
This column is not applicable as the Company is externally managed and does not have executive management functions, specifically it does not have a CEO or CFO. The
Company considers that the role of Chair and Chair of the Audit Committee are senior positions. Of these two senior positions, both are performed by men.
Ethnic background
Number of
Board members
Percentage of
the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
White British or other White
(including minority white groups)
4 100% Not applicable
2
Mixed/Multiple Ethnic Groups – –
Asian/Asian British – –
Black/African/Caribbean/Black British – –
Other ethnic group – –
Not specified/prefer not to say – –
2
This column is not applicable as the Company is externally managed and does not have executive management functions, specifically it does not have a CEO or CFO.
The Company considers that the role of Chair and Chair of the Audit Committee are senior positions. Of these two senior positions, both are performed by those from a
White British background.
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 30.
Climate-related matters
Octopus has chosen to continue evolving its responsible investment disclosures in alignment with industry-recognised regulatory and
reporting frameworks, such as the Task Force on Climate Related Financial Disclosures (TCFD). Importantly, due to its structure, the
Company is voluntarily disclosing this information, as opposed to it being a mandated ‘in-scope’ fund. In alignment with the spirit
of the TCFD framework, some initial disclosures have been outlined under the categorisations below, but do not cover the full set of
requirements as per the TCFD framework. Future changes are anticipated as regulatory and reporting frameworks continue to evolve.
• Governance: Day-to-day management of the portfolio, and oversight of investment decisions, sits within the Investment
Manager’s governance structures.
Risk and risk management continued
27
Octopus AIM VCT 2 plc Annual report 2024
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• Strategy: The Company makes investments into a range of sectors but the companies receiving funding are small companies
primarily listed on AIM. Exposure to climate-related risks is assessed on a deal-by-deal basis by the Investment Manager. 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 Investment Manager is 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 Manager assesses how
well the risk is managed by the portfolio company through further due diligence.
• Metrics: Where relevant for the industry and sector, the team review metrics reported by the portfolio 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 Investment
Manager has 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. Scope 3 emissions are all indirect emissions, not included in Scope 2.
While the ultimate goal is to reduce portfolio emissions to minimise these risks, the immediate goal is to increase data coverage.
The data coverage is currently 74% (2023: 74%), however, 76% of this data is modelled by ISS instead of reported by the companies
in their annual or sustainability reports. We will engage with the companies to report on their emissions, to allow for more accurate
data, and encourage them to set targets. Furthermore, Octopus Group are in the process of submitting Science-Based targets using
guidance from the Science-Based Targets initiative (SBTi). Therefore, engaging with the Company to reduce emissions forms part of
the Octopus Group targets. Given the intricate modelling, lack of data and calculations involved, we regard the analysis as indicative.
Current greenhouse gas (GHG) emissions:
Metrics for equity holdings
Octopus AIM
VCT 2 plc
30 November
2024
AIM All-Share
30 November
2024
Variance to index
30 November 2024
Scope 1 & 2 emissions (tCO₂e) 5,545 8,992 (38%)
Scope 3 emissions (tCO₂e) 4,177 25,334 (84%)
Scope 1 & 2 footprint (tCO₂e/mGBP invested) 70 114 (38%)
Scope 1 & 2 weighted average carbon intensity (tCO₂e/mGBP revenue) 112 122 (8%)
Percentage of issuer emission data coverage (including estimates) 87% 71% 22%
Consumer Duty
The Directors are aware of the Investment Manager’s obligations to comply with the FCA’s Consumer Duty rules and principles which
came 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 undertook a review of its
practices to identify and uplift areas of its operations in order to comply with the Consumer Duty principles which concluded ahead of
the Consumer Duty principles coming into force. 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:
Keith Mullins
Chair
10 March 2025
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Octopus AIM VCT 2 plc Annual report 2024
Details of Directors
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.
Keith Mullins (Chair)
Keith Mullins joined SG Warburg’s investment management
division in 1978. The division later developed into Mercury
Asset Management and subsequently became Merrill Lynch
Investment Managers upon its acquisition by Merrill Lynch in
1998. He therefore has many years’ experience as a specialist UK
equity fund manager. During this time he was responsible for
establishing and managing the team specialising in small and
medium-sized pension fund portfolios, and from 2000 he was
head of pension fund asset allocation. He left as a managing
director of Merrill Lynch Investment Managers in 2001. Keith
became a Director of the Company on 14 September 2005.
Andy Raynor FCA
Andy is the non-executive Chair of Potter Clarkson LLP, a leading
full-service intellectual property law firm based in the UK and
Europe. Andy retired from the position of Chief Executive of
Shakespeare Martineau LLP in January 2019, an expanding
Midlands and London law firm that he led from 2015 through a
period of significant growth in turnover and profits. In addition to
Potter Clarkson he also has a portfolio of senior advisory roles in
the professional and financial services sector and has held other
corporate non-executive roles over many years. Andy joined RSM
Tenon Group PLC (‘RSM Tenon’) in 2001 after its acquisition of the
independent partnership formerly known as BDO Stoy Hayward
– East Midlands. Andy led the company to win National Firm of
the Year 2011 in the British Accountancy Awards. Prior to joining
RSM Tenon, he spent almost 20 years with BDO Stoy Hayward –
East Midlands, where he was managing partner. Andy became a
Director of the Company on 14 September 2005.
Brad Ormsby CA
Brad Ormsby has been Chief Financial Officer at Judges Scientific
plc (‘Judges Scientific’), the AIM-listed buy and build scientific
instruments group since 2015. He is a Chartered Accountant with
significant senior financial and operational experience acquired
during his time at PwC and Eurovestech plc, a technology venture
capital fund. Prior to joining Judges Scientific he was CFO at
Kalibrate Technologies plc where he led the company’s IPO onto
AIM. Brad became a Director of the Company on 1 January 2022.
Virginia (Connelly) Bull
Virginia has almost 20 years of PLC Advisory and Corporate
Broking experience working with AIM and Main Market companies.
Virginia is a nominated adviser to AIM companies. Currently,
Virginia is a Director in the Investec Bank plc Corporate Broking
team, focused on partnering with Tech and Media companies
along their growth journey. Virginia became a Director of the
Company on 1 January 2024.
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Octopus AIM VCT 2 plc Annual report 2024
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Directors’ report
The Directors present their report and the audited financial
statements for the year ended 30 November 2024. The Corporate
Governance Report on pages 33 to 36 and the Audit Committee
Report on pages 37 and 38 form 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,
Keith Mullins and Brad Ormsby will retire as Directors at the AGM
and, being eligible, offer themselves for re-election. Following a
formal performance evaluation as part of the Board evaluation,
the Board believes that all the Directors continue to be effective
Non-Executive Directors, providing considerable experience and
continuity to the Company and demonstrating commitment
to their roles. In addition the Board has discussed succession
planning, and further details of both of these matters can be
found on page 34.
Directors’ and officers’ 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 detailed on
page 68.
The Company will continue to ensure its compliance with the
qualification requirements.
Going concern
The Company’s business activities and the factors likely to
affect its future development, performance and position are
set out in the Chair’s Statement and Investment Manager’s
Review on pages 2 and 3 and 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 17 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 at least 12 months from the
date of approval of the financial statements. As discussed in the
Viability Statement on page 23, 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 all scenarios the Board is
confident in the ability of the Company to maintain its VCT status
and meet its 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. 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, details on page 73,
to approve the Company continuing as a Venture Capital Trust.
A continuation vote has been approved by shareholders annually
since 2009.
Dividend
The proposed final dividend of 1.8p for the year ended
30 November 2024 will be paid on 29 May 2025 to shareholders on
the register on 25 April 2025 subject to approval at the AGM being
held on 23 May 2025, 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.
There are no other contracts which are deemed to be essential to
the business of the Company.
As required by the UK 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 decisions
such as the payment of standard 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 staff 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.
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Octopus AIM VCT 2 plc Annual report 2024
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 affairs 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 effectiveness 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 Board has no specific environmental policy; however, the
Company recognises the need to conduct its business, including
investment decisions, in a manner that is environmentally
responsible wherever possible. The Company does not produce
any reportable emissions as the fund management is outsourced
to the Investment Manager 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 Streamlined Energy and Carbon Reporting (SECR)
requirements.
Financial risk management
The most significant financial risks arising from the Company’s
financial instruments are market 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 17 to the financial statements.
Bribery Act
Octopus has an Anti-Bribery policy which includes 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 Octopus employees and those
working for, or on behalf of, the Investment Manager are aware
of their legal obligations when conducting Company business.
Share capital
The Company’s Ordinary share capital as at 30 November 2024
comprised 195,403,293 Ordinary shares of 0.01p each.
The voting rights of the Ordinary shares on a show of hands are
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.
Share issues
On 23 September 2024, 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.
In the year, 24,311,327 shares were issued, raising £10.7 million after
costs. This was allocated as follows:
During the year 9,191,581 shares were issued under the fundraise
that launched in 2023 raising £4.4 million after costs.
During the year 9,394,966 shares were issued under the fundraise
that launched on 23 September 2024, raising £3.9 million after
costs.
During the year 5,689,493 shares were issued to those
shareholders who elected to receive shares under the Dividend
Reinvestment Scheme as an alternative to dividends. This raised
£2.4 million.
An additional 35,287 shares were issued to shareholders as a result
of reduced adviser charges. These shares were issued to those
investors who, in accordance with the adviser charging terms
contained in each fundraising document offered 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 5,783,439 Ordinary
shares with a nominal value of 0.01p for cancellation at a
weighted average price of 43.8p per share (2023: 6,011,097
shares at a weighted average price of 51.2p per share) for a total
consideration of £2.5 million (2023: £3.1 million). This represents
3% 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 30 November 2024
can be found in note 18 to the financial statements on page 67.
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
Directors’ report continued
31
Octopus AIM VCT 2 plc Annual report 2024
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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 their 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 their 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 Official List maintained by the UK Listing
Authority, any such discretion may not be exercised so as to
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 offer
themselves for re-appointment. A resolution to re-appoint
BDO LLP as auditor and 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 Directors
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 2025
Directors’ authority to allot shares, to disapply
pre-emption rights
The authority proposed under Resolution 7 is required so that
the Directors may issue shares in connection with offers, if the
Directors believe this to be in the best interests of the Company
and the shareholders as a whole. Any issue proceeds will be
available for investment in line with the Company’s investment
policy and may be used, in whole or part, to purchase Ordinary
shares in the market. Resolution 7 renews the Directors’ authority
to allot Ordinary shares (representing approximately 20% of the
Company’s issued share capital at the date of the Notice of AGM).
The authority conferred by this Resolution will expire on the date
falling 15 months after the date of the passing of the Resolution
or, if earlier, at the conclusion of the next AGM of the Company.
Any shares allotted under this authority would be issued at prices
at or above NAV.
Resolution 8 authorises the Directors to allot Ordinary shares in
connection with the Dividend Re-investment Scheme (‘DRIS’), up
to 5% 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.
Resolutions 9 and 10 renew and extend the Directors’ authority
to allot equity securities for cash without pre-emption rights
applying in certain circumstances. The Resolutions will authorise
the Directors, until the date falling 15 months after the date of
the passing of the Resolutions 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 offer to existing
32
Octopus AIM VCT 2 plc Annual report 2024
shareholders. These powers will be exercised only if, in the opinion
of the Directors, it would be in the 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 purchases
of its own shares
The authority proposed under Resolution 11 is required so that
the Directors may make purchases of up to 30,239,764 Ordinary
shares (representing approximately 14.99% of the Company’s
issued share capital 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 0.01p (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.
Cancellation of share premium account
The Board considers it appropriate to obtain shareholders’
approval for the cancellation of the remaining amount standing
to the share premium account of the Company to create (subject
to Court approval) a pool of distributable reserves. A Special
Resolution to this effect is being proposed at Resolution 12.
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).
On behalf of the Board
Keith Mullins
Chair
10 March 2025
Directors’ report continued
33
Octopus AIM VCT 2 plc Annual report 2024
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Corporate governance
report
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 differs from that of other companies. In
addition, VCTs differ 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 2 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 by the Board 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.
Virginia (Connelly) Bull joined the Board on 1 January 2024. Trust
Associates Limited, who are independent of the Company, were
engaged for the recruitment.
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 effectiveness
and setting its agenda, and has no involvement in the day-to-day
business of the Company. He facilitates the effective contribution
of the Directors and makes sure that they receive accurate, timely
and clear information and that they communicate effectively
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.
1
Please see the AIC Code at www.theaic.co.uk.
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Octopus AIM VCT 2 plc Annual report 2024
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
Keith Mullins 6 6 3 3
Elizabeth Kennedy1 6 3 3 1
Andy Raynor 6 6 3 3
Brad Ormsby 6 5 3 3
Virginia (Connelly) Bull2 6 4 3 2
1Elizabeth Kennedy resigned as a Non-Executive Director on 16 May 2024.
2Virginia (Connelly) Bull was appointed as a Non-Executive Director on 1 January 2024.
Additional meetings were held as required to address specific issues, including approval of the Company’s annual reports and accounts,
half-yearly results and fundraising.
Performance evaluation and independence of Directors
Each year a formal performance evaluation is undertaken of the Board, its Committees 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.
Brad Ormsby is the Chief Financial Officer and a shareholder of Judges Scientific plc, in which the Company has an investment, and
so absents himself from any Board decisions relating to that investment. Judges Scientific plc are a client of Investec Bank plc and
consequently Virginia (Connelly) Bull as a Director of the Investec Bank plc Corporate Broking team was known to Brad Ormsby before
her appointment to the Board. As part of the recruitment process the Board were satisfied this does not present a conflict. We believe
that, in line with the AIC Code, all members of the Board are independent in character and judgement with respect to their duties
to the shareholders. Keith Mullins, Chair of the Company, has served on the Board for 19 years since his initial appointment. He is still
considered to be independent in the absence of a connection with the Investment Manager or any of the Company’s advisers. Andy
Raynor, who was appointed in 2005, is also considered independent. The Board are in the process of finalising plans that will ensure
the maintenance of requisite skills and experience and an appropriate balance between continuity and succession of the Directors.
Details will be shared during the course of the financial year ending 30 November 2025.
Length of service
Date of original appointment Date of last election/re-election
Keith Mullins 14 September 2005 AGM 2022
Andy Raynor 14 September 2005 AGM 2024
Brad Ormsby 1 January 2022 AGM 2022
Virginia (Connelly) Bull 1 January 2024 AGM 2024
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, and when considering succession
planning. 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 sufficient corporate memory and consistent adherence to strategy.
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 2024 AGM to make market purchases of up to 14.99% of the issued Ordinary share
capital at any time up to the 2025 AGM and otherwise on the terms set out in the relevant resolution and renewed authority is being
sought at the 2025 AGM as set out in the notice of meeting.
Corporate governance report continued
35
Octopus AIM VCT 2 plc Annual report 2024
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Board committees
It should be noted that 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 considers its composition to be appropriate with due
regard for the benefits of diversity and gender.
Audit Committee
Andy Raynor is Chair of the Audit Committee and all Directors
are members of this Committee, including the Chair, which is
considered appropriate based on the limited number of Directors.
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. Both Andy Raynor,
as Chair, and Brad Ormsby are Chartered Accountants and have
recent and relevant financial experience. 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 ensure 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 effectiveness of the internal control systems.
As part of this process, an annual review of the Investment
Manager’s 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 17
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 2024 AGM were for the resolutions relating to the
re-election of Andy Raynor as a Director (9.04% of votes cast)
and the approval of the Directors’ Remuneration Report (7.8% 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.
Relations with shareholders
The Investment Manager will provide an update on the
Company’s activities and future plans at the AGM to be held on
23 May 2025. 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 23 May 2025 at 10.30am. To ensure we
are able to respond to any questions you may have for either
the Investment Manager or AIM VCT 2 Board, please send
these via email to AIMVCT2AGM@octopusinvestments.com
by 5.00pm on 20 May 2025. Alternatively, please contact the
team at Octopus to answer any queries. They can be contacted
on 0800 316 2295.
Corporate Governance Code
The Board are aware of the revised UK Corporate Governance
Code as published by the FRC on 22 January 2024, which will
apply to accounting periods beginning on or after 1 January
2025, with the exception of a new provision (29) relating to risk
management and internal controls, which will be applicable for
accounting periods beginning on or after 1 January 2026. The
Board are further aware of the updated Association of Investment
Companies Code of Corporate Governance as published in
August 2024, which applies to accounting periods beginning on
or after 1 January 2025, with the exception of provision 34 which
will be applicable for accounting periods beginning on or after 1
January 2026.
36
Octopus AIM VCT 2 plc Annual report 2024
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 30 November 2024, 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 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;
3. 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;
4. 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, but are welcome to contact the Board or Octopus at
any time; and
5. the Directors are not subject to annual re-election.
This is to ensure experience is retained on the Board. As
highlighted earlier, the Board considers all the Directors to
be independent.
By Order of the Board
Keith Mullins
Chair
10 March 2025
Corporate governance report continued
37
Octopus AIM VCT 2 plc Annual report 2024
Call us on 0800 316 2295
Audit Committee report
This report is submitted in accordance with The AIC Code in
respect of the year ended 30 November 2024 and describes the
work of the Audit Committee in discharging its responsibilities.
The Committee’s key objective is the provision of effective
governance of the appropriateness of the Company’s financial
reporting, the performance of the auditor and the management
of the internal control and business risk systems. The Directors
forming the Audit Committee can be found on page 28.
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 financial statements
and other formal announcements relating to the Company’s
financial performance;
• reviewing and making recommendations to the Board in
relation to the Octopus 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 effectiveness 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 staff in relation to propriety of
financial reporting or other matters.
The Committee reviews its terms of reference and its effectiveness
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 at least 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 2018 as required for all Public Interest Entities who have
had the same auditor for ten years, following which BDO LLP
were re-appointed. When considering whether to recommend
the re-appointment of the external auditor, the Committee
take into account the tenure of the current auditor in addition
to comparing the fees charged to similar sized VCTs. The current
auditor was appointed in 2008 under the name of PKF (UK) LLP,
which subsequently merged with BDO LLP, and has held the
position for seventeen years. Under FRC ethical standards an
audit tender will be mandatory for the year ended 30 November
2027. The year ended 30 November 2024 represents Elizabeth
Hooper’s second year as audit partner.
Independence and objectivity of the auditor
Non-audit services were not provided by the external auditor
during the period. The external auditor confirmed that they
have not identified any other relationships or threats that
may reasonably be thought to bear on their objectivity and
independence which was agreed by the Audit Committee.
When considering the effectiveness 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 effectiveness 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 engages with the auditor when present at
a Committee meeting, if appropriate. The Audit Committee is
satisfied that BDO LLP provided effective 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 team, which is supported as required by
external consultants. The Octopus Compliance Department
reports to the Board on the outcome of the internal audits that
have taken place insofar as these relate to the Company and
confirms the absence of any issues relating to internal audit
of which the Board should be aware. Octopus undertakes to
immediately raise to the Committee any significant issues arising
from the Octopus internal audit that affect the Company.
The Committee will monitor the significant risks at each meeting
and Octopus will work closely with the internal auditor to mitigate
the risks and the resultant impact.
38
Octopus AIM VCT 2 plc Annual report 2024
Financial reporting matters
The Audit Committee is responsible for considering issues in
relation to the financial statements, which are either significant
financial reporting matters or other financial reporting matters.
The Committee has identified the most significant financial
reporting matter for the Company as:
• Valuation and existence of investments: The Committee
gives special audit consideration to the valuation of
investments and supporting data provided by Octopus.
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, third party evidence and (where relevant for
unquoted investments) valuations confirmed to be in
accordance with IPEV guidelines. These, together with
reconciliations and independent confirmations performed
by the auditor give comfort to the Audit Committee.
The Committee has identified the following as other financial
reporting matters:
• Management override of financial controls: The
Committee specifically review all significant accounting
estimates that form part of the financial statements and
consider 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. Octopus 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 higher interest rates. As at the date
of issuing this Report, whilst the Committee anticipates further
market volatility affecting 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 23. These issues were discussed with Octopus
and the auditor at the conclusion of the audit of the financial
statements.
The Committee has considered the annual report and accounts
for the year ended 30 November 2024 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 position, 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 30 November 2024.
Andy Raynor
Audit Committee Chair
10 March 2025
Audit Committee report continued
39
Octopus AIM VCT 2 plc Annual report 2024
Call us on 0800 316 2295
Directors’ remuneration
report
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 30 November 2024.
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 the Directors’ interest in
shares below as set out on pages 40 and 41.
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 boards of directors of
other VCTs. The Company does not have a chief executive officer,
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 affairs.
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.
Re-election will be recommended by the Board but is dependent
upon shareholder votes.
Each Director receives a letter of appointment. A Director
may resign by notice in writing to the Board at any time giving
three months’ notice. 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
affairs and the responsibilities borne by the Directors. They should
be sufficient 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 office 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
2023 AGM and 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.
Annual remuneration report
This section of the report is subject to approval by a simple
majority of shareholders at the AGM on 23 May 2025, as in
previous years.
Statement of voting at the Annual General
Meeting on remuneration matters
The 2023 Remuneration Report was presented to the AGM held
on 16 May 2024 and received shareholder approval following
voting by way of a poll. 92.13% of the votes cast were in favour of
the Remuneration Report or at the Chair’s discretion, 7.8% were
against the resolution and 99,573 votes were withheld. The proxy
forms returned to the Registrars contained no explanation for the
votes against the resolution.
The Remuneration Policy was approved at the AGM held on
26 April 2023.
Shareholders’ views are always considered by the Board, and the
methods of contacting the Board are set out on page 35.
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.
40
Octopus AIM VCT 2 plc Annual report 2024
Directors’ fees (audited)
The amount of each Director’s fees for the year were:
Year ended
30 November 2024
£
Year ended
30 November 2023
£
Keith Mullins
30,250
29,104
Andy Raynor
27,250
26,208
Elizabeth Kennedy1
12,375
24,229
Brad Ormsby
24,750
23,813
Virginia (Connelly) Bull2
22,688
n/a
Total
117,313
103,354
1
Retired from the Board on 16 May 2024.
2
Appointed to the Board on 1 January 2024 and received fees for 11 months of the year ended 30 November 2024.
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.
Directors’ fees are considered annually. These were last increased with effect from 1 May 2023. There has been no increase in Directors’
fees in the reporting period.
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.
Directors’ fees annual percentage change
2024
% Increase/
(Decrease)
2023
% Increase/
(Decrease)
2022
% Increase/
(Decrease)
2021
% Increase/
(Decrease)
2020
% Increase/
(Decrease)
Keith Mullins 3.9 3.6 7.7 4.0 0.0
Andy Raynor 4.0 4.0 4.2 4.3 0.0
Elizabeth Kennedy (48.9) 9.1 4.8 5.0 0.0
Brad Ormsby 3.9 14.3 n/a n/a n/a
Virginia (Connelly) Bull n/a n/a n/a n/a n/a
Relative importance of spend on pay
The actual expenditure in the current year is as follows:
Year ended
30 November 2024
£’000
Year ended
30 November 2023
£’000
Total dividends paid
13,409
6,673
Total buybacks
2,533
3,076
Total Directors’ fees
117
103
The Directors do not consider there to be any other significant distributions during the year relevant to understanding the relative
importance of spend on pay.
Directors’ remuneration report continued
41
Octopus AIM VCT 2 plc Annual report 2024
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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 0.01p are shown in the table below:
Ordinary shares of 0.01p each
30 November 2024
Ordinary shares of 0.01p each
30 November 2023
Keith Mullins
416,929
416,929
Andy Raynor
21,080
21,080
Elizabeth Kennedy1
n/a
37,380
Brad Ormsby – –
Virginia (Connelly) Bull2 – –
1 Elizabeth Kennedy resigned as a Director on 16 May 2024.
2 Virginia (Connelly) Bull was appointed as a Director on 1 January 2024.
All of the shares held by the Directors, or their connected persons, were held beneficially, either in their own name or through a nominee
company. There have been no changes in the Directors’ share interests between 30 November 2024 and the date of this report.
Shareholders’ proxy voting information
As required by Schedule 8:23 of the Regulations, the votes received for the Directors’ Remuneration Policy (approved at the AGM in
2023) and the Directors’ Remuneration Report (approved at the AGM in 2024) were as follows:
For (including discretionary) Against
No. of Shares % No. of Shares %
Approval of Directors’
Remuneration Policy (approved at
the AGM held in 2023)
2,635,271 93.02 197,73 4 6.98
Approval of Directors’
Remuneration Report (approved at
the AGM held in 2024)
3,598,840 92.13 307,296 7.87
By Order of the Board
Keith Mullins
Chair
10 March 2025
42
Octopus AIM VCT 2 plc Annual report 2024
The Directors are responsible for preparing the Strategic Report,
the Directors’ Report, the Directors’ Remuneration Report and
the financial statements in accordance with applicable laws and
regulations. They are also responsible for ensuring that the annual
report and accounts include information required by the Listing
Rules of the Financial Conduct Authority.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the financial statements in accordance
with United Kingdom Generally Accepted Accounting Practice
(GAAP), including Financial Reporting Standard 102 – ‘The
Financial Reporting Standard Applicable in the United Kingdom
and Republic of Ireland’ (FRS 102), (United Kingdom accounting
standards and applicable law). Under company law the Directors
must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs
and profit or loss of the Company for that period. In preparing
these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make 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 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.
In so far as each of the Directors is aware:
• there is no relevant audit information of which the Company’s
auditor is unaware; and
• the Directors have taken all steps that they ought to have
taken to make themselves aware of any relevant audit
information and to establish that the auditor is aware of
that information.
The Directors are responsible for preparing the annual report and
accounts in accordance with applicable laws and regulations.
Having taken advice from the Audit Committee, the Directors are
of the opinion that this report as a whole provides the necessary
information to assess the Company’s performance, business
model and strategy and is fair, balanced and understandable.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company’s website. Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
The Directors confirm that, to the best of their knowledge:
• the financial statements, prepared in accordance with United
Kingdom Generally Accepted Accounting Practice, including
FRS 102, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company; and
• the annual report and accounts (including the Strategic
Report), give a fair review of the development and
performance of the business and the position of the
Company, together with a description of the principal risks
and uncertainties that it faces.
On behalf of the Board
Keith Mullins
Chair
10 March 2025
Directors’ responsibilities
statement
43
Octopus AIM VCT 2 plc Annual report 2024
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Opinion on the financial statements
In our opinion the financial statements:
• give a true and fair view of the state of the Company’s affairs
as at 30 November 2024 and of its loss for the year then
ended;
• have been properly prepared in accordance with having
been prepared in accordance with United Kingdom Generally
Accepted Practice; and
• have been prepared in accordance with the requirements of
the Companies Act 2006.
We have audited the financial statements of Octopus AIM VCT
2 Plc (the ‘Company’) for the year ended 30 November 2024
which comprise the Income statement, the Balance sheet, the
Statement of changes in equity, the Statement of cash flows
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
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor’s responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion. Our audit opinion is consistent with the additional report
to the audit committee.
Independence
Following the recommendation of the audit committee, we
were appointed by the Board of Directors to audit the financial
statements for the year ended 30 November 2008 and
subsequent financial periods. The period of total uninterrupted
engagement including retenders and reappointments is 17 years,
covering the years ended 30 November 2008 to 30 November
2024. 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 the calculations therein to
check that the Company was meeting its requirements to
retain VCT status;
• Consideration of the Company’s expected future compliance
with VCT legislation, the absence of bank debt, contingencies
and commitments and any market or reputational risks;
• Reviewing the forecasted cash flows that support the
Directors’ assessment of going concern, challenging
assumptions and judgements made in the forecasts,
and assessing them for reasonableness. In particular, we
considered the available cash resources relative to the
forecast expenditure which was assessed against the prior
year for reasonableness; and
• Evaluating the Directors’ method of assessing the going
concern in light of market conditions.
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 2 plc
44
Octopus AIM VCT 2 plc Annual report 2024
Overview
2024 2023
Key audit matters Valuation and existence of investments 3 3
Materiality
£790,000 (2023: £846,000) based on 1% (2023: 1%) of 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 effect on: the overall audit strategy, the allocation of resources in the
audit, and directing the efforts of the engagement team. These matters 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 these matters.
Key audit matter How the scope of our audit addressed the key audit matter
Valuation and Existence of investments
(Notes 1 and 10 of the financial
statements)
The investment portfolio comprises of
level 1 quoted equity and level 3 unquoted
investments.
The Investment Manager’s fee is based on 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 the holdings %
may have changed or that the bid price used
to value the level 1 quoted equity investments
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 assessed the design and implementation of controls in relation to the valuation
of investments.
In respect of 100% of level 1 quoted equity investments, we responded to this
matter by testing the valuation and existence 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;
• Assessed if there were contra indicators, such as liquidity considerations, to
suggest bid price is not the most appropriate indication of fair value;
• Recalculating the valuation by multiplying the number of shares held per the
statement obtained from the custodian by the valuation per share; and
• Obtained direct confirmation from the custodian and agreed all investments
held at the balance sheet date to CREST records.
On a sample basis covering 98% (by value) of the unquoted investments, we have:
• 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;
• Obtained share capital tables directly from the investee company to confirm
ownership at year end and recalculated the value attributable to the
Company;
• 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 2 plc continued
45
Octopus AIM VCT 2 plc Annual report 2024
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Quoted Investments: £47 million (83%) of
the fixed asset investments held at fair
value through profit and loss are quoted
investments.
Unquoted investments: £10 million (17%) of
the fixed asset investments held at fair value
through profit and loss are unquoted and
are valued using more subjective techniques
(level 3).
For these reasons we considered the valuation
and existence of unquoted and quoted
investments to be a key audit matter.
• 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 did not identify any matters to suggest
the valuation or existence of the investments was not appropriate and we are
satisfied that the estimates and judgements made in the unquoted investment
valuations are 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 effect 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 effect 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
2024 2023
Materiality
£790,000 £846,000
Basis for determining materiality
1% of net assets.
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 net assets value.
Performance materiality
£592,000 £634,000
Basis for determining performance
materiality
75% of materiality (2023: 75% of materiality).
Rationale for the percentage applied for
performance 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.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £39,000 (2023: £42,000).
We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
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Octopus AIM VCT 2 plc Annual report 2024
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 UK 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
Code 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 to the appropriateness of adopting the going concern
basis of accounting and any material uncertainties identified as set out on page 29; and
• The Directors’ explanation as to their assessment of the Company’s prospects, the period
this assessment covers and why the period is appropriate as set out on page 23.
Other Code provisions
• Directors’ statement on fair, balanced and understandable as set out on page 42;
• Board’s confirmation that it has carried out a robust assessment of the emerging and
principal risks as set out on page 24;
• The section of the annual report that describes the review of effectiveness of risk
management and internal control systems as set out on page 35; and
• The section describing the work of the audit committee as set out on page 37.
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.
Independent auditor’s report to the members of
Octopus AIM VCT 2 plc continued
47
Octopus AIM VCT 2 plc Annual report 2024
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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’ responsibilities 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:
Non-compliance with laws and regulations
Based on:
• our understanding of the Company and the industry in which it operates;
• discussion with management and those charged with governance; and
• obtaining an understanding of the Company’s policies and procedures regarding compliance with laws and regulations;
we considered the significant laws and regulations to be Companies Act 2006, the UK Listing Rules and Disclosure Guidance and
Transparency Rules, the principles of the UK Corporate Governance Code, industry practice represented by the SORP and the applicable
financial reporting framework. We also considered the Company’s qualification as a VCT under UK tax legislation.
Our procedures in respect of the above included:
• obtaining an understanding of the control environment in monitoring compliance with laws and regulations;
• reviewing minutes of meeting of those charged with governance for instances of non-compliance with laws and regulations;
• enquiries of management and those charged with governance relating to the existence of any non-compliance with laws and
regulations;
• agreement of the financial statement disclosures to underlying supporting documentation; and
• 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.
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Octopus AIM VCT 2 plc Annual report 2024
Fraud
We assessed the susceptibility of the financial statement to
material misstatement including fraud.
Our risk assessment procedures included:
• Enquiry with management and those charged with
governance regarding any known or suspected instances of
fraud;
• Obtaining an understanding of the Company’s policies and
procedures relating to:
• Detecting and responding to the risks of fraud; and
• Internal controls established to mitigate risks related to
fraud.
• Review of minutes of meeting of those charged with
governance for any known or suspected instances of fraud;
and
• Discussion amongst the engagement team as to how and
where fraud might occur in the financial statements.
Based on our risk assessment, we considered the areas most
susceptible to be management override of controls and the
valuation of unquoted investments.
Our procedures in respect of the above included but were not
limited to:
• The procedures set out in the Key Audit Matters section
above relating to valuation of the unquoted investments;
• Review of estimates and judgements applied by
management in the financial statements to assess their
appropriateness and the existence of any systematic bias;
• Review and consideration of the appropriateness of
adjustments made in the preparation of the financial
statements; and
• Review of unadjusted audit differences, if any, for indication
of bias or deliberate misstatement.
We also communicated relevant identified laws and regulations
and potential fraud risks to all engagement team members
who were all deemed to have appropriate competence and
capabilities 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.
Elizabeth Hooper (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
10 March 2025
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 2 plc continued
49
Octopus AIM VCT 2 plc Annual report 2024
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Income statement
Year to 30 November 2024
Year to 30 November 2023
Notes
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
(Loss)/Gain on disposal of fixed
asset investments
10
– (30) (30)
– 668 668
Gain/(loss) on disposal of current
asset investments
– 57 57
– (91) (91)
Loss on valuation of fixed asset
investments
10
– (837) (837)
– (14,333) (14,333)
Gain/(loss) on valuation of current
asset investments
– 881 881
– (1,047) (1,047)
Investment income 2
1,588 – 1,588
1,194 – 1,194
Investment management fees 3
(353) (1,058) (1,411)
(393) (1,179) (1,572)
Other expenses 4
(647) – (647)
(528) – (528)
Profit/(loss) before tax 588 (987) (399)
273 (15,982) (15,709)
Tax 6
– – –
– – –
Total comprehensive income/
(loss) after tax
588 (987) (399)
273 (15,982) (15,709)
Earnings per share – basic and
diluted
8
0.3p (0.5p) (0.2p)
0.2p (9.8p) (9.6p)
• The ‘Total’ column of this statement represents the statutory income statement of the Company prepared in accordance with
the accounting policies detailed in the Notes to the financial statements; 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 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 accompanying notes on pages 53 to 67 form an integral part of the financial statements.
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Octopus AIM VCT 2 plc Annual report 2024
As at 30 November 2024
As at 30 November 2023
Notes £’000 £’000 £’000 £’000
Fixed asset investments 10
57,141
53,288
Current assets:
Investments 11
10,146
8,796
Money market funds 11
10,564
21,893
Debtors 12
152
152
Cash at bank 11
1,595
1,045
22,457
31,886
Creditors: amounts falling due within
one year
13
(536)
(484)
Net current assets
21,921
31,402
Total assets less current liabilities 79,062
84,690
Called up equity share capital 14
20
18
Share premium
6,314
7,619
Capital redemption reserve
4
3
Special distributable reserve
76,116
80,043
Capital reserve realised
(13,501)
(5,400)
Capital reserve unrealised
11,879
4,765
Revenue reserve
(1,770)
(2,358)
Total equity shareholders’ funds 79,062
84,690
NAV per share – basic and diluted
9
40.5p
47.9p
The statements were approved by the Directors and authorised for issue on 10 March 2025 and are signed on their behalf by:
Keith Mullins
Chair
Company No: 05528235
The accompanying notes on pages 53 to 67 form an integral part of the financial statements.
Balance sheet
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Octopus AIM VCT 2 plc Annual report 2024
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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
Balance as at 1 December 2023 18 7,619 3 80,043 (5,400) 4,765 (2,358) 84,690
Comprehensive income/(loss) for the year:
Management fee allocated as capital
expenditure
– – – – (1,058) – – (1,058)
Current year net gain on disposal – – – – 27 – – 27
Current year gain on fair value of
investments
– – – – – 44 – 44
Profit after tax – – – – – – 588 588
Total comprehensive loss for the year – – – – (1,031) 44 588 (399)
Contributions by and distributions to owners:
Repurchase and cancellation of own shares (1) – 1 (2,533) – – – (2,533)
Issue of shares 3 11,264 – – – – – 11,267
Share issue costs – (554) – – – – – (554)
Dividends paid – – – (13,409) – – – (13,409)
Total contributions by and distributions to
owners
2 10,710 1 (15,942) – – – (5,229)
Other movements:
Cancellation of share premium – (12,015) – 12,015 – – – –
Prior years’ holding loss now realised – – – – (7,070) 7,070 – –
Total other movements – (12,015) – 12,015 (7,070) 7,070 – –
Balance as at 30 November 2024 20 6,314 4 76,116 (13,501) 11,879 (1,770) 79,062
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 December 2022 17 12,904 3 76,154 (5,843) 21,190 (2,631) 101,794
Comprehensive income/(loss) for the year:
Management fee allocated as capital
expenditure
– – – – (1,179) – – (1,179)
Current year net gain on disposal – – – – 577 – – 577
Current year loss on fair value of
investments
– – – – – (15,380) – (15,380)
Profit after tax – – – – – – 273 273
Total comprehensive loss for the year – – – – (602) (15,380) 273 (15,709)
Contributions by and distributions to owners:
Repurchase and cancellation of own shares – – – (3,076) – – – (3,076)
Issue of shares 1 8,821 – – – – – 8,822
Share issue costs – (468) – – – – – (468)
Dividends paid – – – (6,673) – – – (6,673)
Total contributions by and distributions to
owners
1 8,353 – (9,749) – – – (1,395)
Other movements:
Cancellation of share premium – (13,638) – 13,638 – – – –
Prior years’ holding gains now realised – – – – 3,215 (3,215) – –
Transfer between reserves – – – – (2,170) 2,170 – –
Total other movements – (13,638) – 13,638 1,045 (1,045) – –
Balance as at 30 November 2023 18 7,619 3 80,043 (5,400) 4,765 (2,358) 84,690
1
Included within these reserves is an amount of £60,845,000 (2023: £72,285,000) which is considered distributable to shareholders under Companies Act rules. The Income
Taxes Act 2007 restricts distribution of capital from reserves created by the conversion of the share premium account into a special distributable reserve until the third
anniversary of the share allotment that led to the creation of that part of the share premium account. As at 30 November 2024, £20,921,000 of the special reserve is
distributable under this restriction.
The accompanying notes on pages 53 to 67 form an integral part of the financial statements.
Statement of changes
in equity
52
Octopus AIM VCT 2 plc Annual report 2024
Notes
Year to 30 November 2024
£’000
Year to 30 November 2023
£’000
Cash flows from operating activities
Loss on ordinary activities before tax
(399)
(15,709)
Adjustments for:
Decrease in debtors 12
–
53
Increase/(decrease) in creditors 13
52
(82)
Loss/(gain) on disposal of fixed assets 10
30
(668)
(Gain)/loss on disposal of current asset investments
(57)
91
Loss on valuation of fixed asset investments 10
837
14,333
(Gain)/loss on valuation of current asset investments
(881)
1,047
Net cash utilised in operating activities (418)
(935)
Cash flows from investing activities
Purchase of fixed asset investments 10
(6,934)
(4,086)
Proceeds from sale of fixed asset investments 10
2,214
9,157
Purchase of current asset investments
(924)
(2,040)
Proceeds from sale of current asset investments
512
1,505
Net cash flows (utilised in)/generated from
investing activities
(5,132)
4,536
Cash flows from financing activities
Purchase of own shares 14
(2,533)
(3,076)
Share issues net of DRIS 14
8,815
7,519
Share issue costs net of DRIS 14
(554)
(468)
Dividends paid net of DRIS
(10,957)
(5,370)
Net cash flows utilised in financing activities (5,229)
(1,395)
(Decrease)/increase in cash and cash equivalents (10,779)
2,206
Opening cash and cash equivalents
22,938
20,732
Closing cash and cash equivalents 12,159
22,938
Closing cash and cash equivalents is represented by:
Cash at bank 11
1,595
1,045
Money market funds 11
10,564
21,893
Total cash and cash equivalents 12,159
22,938
The accompanying notes on pages 53 to 67 form an integral part of the financial statements.
Cash flow statement
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Octopus AIM VCT 2 plc Annual report 2024
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1. Significant accounting policies
The Company is a Public Limited Company (plc) incorporated
in England and Wales and its registered office is 6th Floor,
33 Holborn, London, EC1N 2HT.
The Company’s principal activity is to invest in a diverse
portfolio of predominantly AIM-traded companies with the
objective 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 July
2022).’
The significant accounting policies have remained unchanged
since those set out in the Company’s 2023 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 held 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 annual expenses of
the Company are around £2.1 million and the Company had
£22.3 million in cash at bank and readily realisable securities,
including MMFs and OEICs at the year end. The annual
expenses do not include outflows related to share buybacks
or dividends but the ability to retain cash is largely in the
Company’s control as it can shift investment strategy to
ensure it has a sufficient cash buffer. 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 Directors’ 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 of investments,
and gains and losses on the revaluation of investments.
Upon disposal of investments, gains or losses relating to the
assets are transferred from the unrealised capital reserve to
the realised capital reserve.
Investment management fees are split between revenue
(25%) and capital (75%), 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.
Key judgements and estimates
The preparation of the financial statements requires the
Board to make judgements and estimates that affect the
application of policies and reported amounts of assets and
liabilities. 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 effects 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).
Notes to the financial
statements
54
Octopus AIM VCT 2 plc Annual report 2024
1. Significant 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.
Cash and liquid resources
For the purpose of the Cash Flow Statement, cash and cash
equivalents comprises, cash at bank and money market
funds. 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. Investments in OEICs and MMFs are subject
to insignificant changes in fair value.
Financing strategy and capital structure
We define capital as shareholders’ funds and our financial
strategy in the medium term is to manage a level of cash
that balances the risks of the business with optimising the
return on equity. The Company currently has no borrowings
nor does it anticipate that it will have any borrowing facilities
in the future to fund the acquisition of investments.
The Company does not have any externally imposed capital
requirements.
The Board considers the distributable reserves and the total
return for the year when recommending a dividend. In
addition, the Board is authorised to make market purchases
up to a maximum of 14.99% of the issued Ordinary share
capital in accordance with Special Resolution 11 in order to
maintain sufficient liquidity in the Company’s shares.
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.
Capital redemption reserve – includes nominal share
capital which has been bought back by the Company for
cancellation and cannot be distributed to shareholders.
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. This
reserve is available for distribution.
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.
Revenue reserve – includes all net revenue profits and losses
of the Company. When in surplus this reserve is available for
distribution.
Functional and presentational currency
The financial statements are presented in sterling (£). The
functional currency is also sterling (£).
2. Income
Accounting policy
Investment income includes interest earned on money
market securities and 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 recognised 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 effective yield, provided there
is no reasonable doubt that payment will be received in
due course.
Notes to the financial statements continued
55
Octopus AIM VCT 2 plc Annual report 2024
Call us on 0800 316 2295
2. Income continued
Disclosure
30 November 2024
£’000
30 November 2023
£’000
Dividends receivable from fixed asset investments
590
563
Loan note interest receivable
67
20
Income receivable on money market securities
931
611
1,588
1,194
3. Investment management fees
30 November 2024
30 November 2023
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Investment management fees
353 1,058 1,411
393 1,179 1,572
Octopus provides investment management and accounting and administration services to the Company under a management
agreement which 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 insufficient notice be given, will be equal to the fee that would have been paid should continuous service be
provided, or the required notice period was given. The management fee is an annual charge and is set at 2% of the Company’s
net assets. The Investment Manager is not entitled to any annual performance incentive scheme.
During the year Octopus charged gross management fees of £1,708,000 (2023: £1,860,000). When the various allowances detailed
below are included, the net management fee for the year is £1,411,000 (2023: £1,572,000). At the year end £379,000 was payable
to Octopus (2023: £356,000). Octopus received £189,000 as a result of upfront fees charged on allotments of Ordinary shares
(2023: £154,000). The increase in upfront fees this year has proportionately increased in line with the value of allotments in
the year.
The Company pays ongoing adviser charges to independent financial advisers (IFAs). Ongoing adviser charges are an ongoing
fee of up to 0.5% per annum of the amount invested 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 30 November 2024 the rebate received was £108,000 (2023: £105,000).
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 ensure that the Company is not financially
disadvantaged by such payment, a notional ongoing adviser charge equivalent to 0.5% per annum of the amount invested 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 30 November 2024 the rebate received was £134,000 (2023: £127,000).
The Company also receives a reduction in the management fee for the investments in other Octopus managed funds, being the
Multi Cap, Micro Cap Growth and Future Generations products, to ensure the Company is not double charged on these products.
This amounted to £55,000 for the year to 30 November 2024 (2023: £56,000).
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.
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Octopus AIM VCT 2 plc Annual report 2024
4. Other expenses
Accounting policy
All expenses are accounted for on an accruals basis and are charged wholly to revenue, apart from management fees which are
charged 25% to revenue and 75% to capital.
The transaction costs incurred when purchasing or selling assets are written off to the Income Statement in the period that
they occur.
Disclosure
30 November 2024
£’000
30 November 2023
£’000
IFA charges
108
105
Directors’ remuneration
117
103
Audit fees
51
51
Registrar fees
55
49
Printing and postage
15
22
VCT monitoring fees
18
20
Legal and professional fees
15
14
Directors’ and officers’ liability insurance
43
13
Brokers’ fees
6
6
Other administration expenses
219
145
647
528
The fees payable to the Company’s auditor above are stated net of VAT and the VAT is included within other administration
expenses. No non-audit services were provided by the Company’s auditor.
The ongoing charges of the Company were 2.4% of average net assets during the year to 30 November 2024 (2023: 2.2%).
5. Directors’ remuneration
Total Directors’ fees during the year were £117,000 (2023: £103,000). This excludes Employer’s National Insurance contributions
of £10,300 (2023: £9,500) which have been included within other administration expenses. The highest paid Director received
£30,250 (2023: £29,000). None of the Directors received any other remuneration or benefit from the Company during the year.
The Company has no employees other than Non-Executive Directors. The average number of Non-Executive Directors in the year
was five (2023: four).
6. Tax
Accounting policy
Current tax is recognised for the amount of income tax payable in respect of the taxable profit/(loss) for the current or past
reporting periods using the current UK corporation tax rate. The tax effect of different items of income/gain and expenditure/loss
is allocated between capital and revenue return on the ‘marginal’ basis as recommended in the SORP.
Deferred tax is recognised on an undiscounted basis in respect of all timing differences that have originated but not reversed at
the balance sheet date, 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.
Notes to the financial statements continued
57
Octopus AIM VCT 2 plc Annual report 2024
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6. Tax continued
Disclosure
The corporation tax charge for the year was £nil (2023: £nil).
30 November 2024
£’000
30 November 2023
£’000
Loss before tax
(399)
(15,709)
Current tax at 25% (2023: 23.0%)
(100)
(3,615)
Effects of
Non-taxable income
(380)
(270)
Non-taxable capital gains
(18)
3,406
Non-deductible expenses
10
3
Excess management expenses on which deferred tax not
recognised
488
476
Total tax charge
– –
Approved VCTs are exempt from tax on capital gains within the Company. Since the Board intends that the Company will continue
to conduct its affairs 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 30 November 2024, there is an unrecognised deferred tax asset of £5,450,000 (2023: £5,118,000) in respect of surplus
management expenses of £21,800,000 (2023: £20,500,000), based on a prospective tax rate of 25% (2023: 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 surplus management expenses
will be utilised and that the Company will obtain any benefit from this asset.
7. Dividends
Accounting policy
Dividends payable are recognised as distributions in the financial statements when the Company’s liability to make a 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
30 November 2024
£’000
30 November 2023
£’000
Dividends paid on Ordinary shares during the year
2023 Final dividend – 1.8p per share paid 27 June 2024
(2022: 2.3p per share)
3,302
3,746
2023 Special dividend – 3.6p per share paid 27 June 2024
(2022: Nil)
6,605
2024 Interim dividend – 1.8p per share paid 28 November
2024 (2023: 1.8p per share)
3,502
2,927
Total 13,409
6,673
During the year £2,452,000 (2023: £1,303,000) of dividends were reinvested under the DRIS, see note 14.
58
Octopus AIM VCT 2 plc Annual report 2024
7. Dividends continued
Under Section 32 of FRS 102 ‘Events After the end of the Reporting Period’, dividends payable at year end are not recognised as a
liability. Details of these dividends and all other dividends declared in the year are set out below.
30 November 2024
£’000
30 November 2023
£’000
Dividends paid and proposed
2023 Special dividend – 3.6p per share paid 27 June 2024
(2022: Nil)
6,605
6,639
2024 Interim dividend – 1.8p per share paid 28 November
2024 (2023: 1.8p per share)
3,502
2,927
2024 Final dividend proposed – 1.8p per share payable
29 May 2025 (2023: 1.8p per share)
3,517
3,328
13,624
12,894
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 differ 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
30 November 2024
30 November 2023
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Profit/(loss) attributable to Ordinary
shareholders
588 (987) (399)
273 (15,982) (15,709)
Earnings per Ordinary share
0.3p (0.5p) (0.2p)
0.2p (9.8p) (9.6p)
The profit/(loss) per share is based on 184,864,715 (2023: 164,257,336) Ordinary shares, being the weighted average number
of Ordinary shares in issue during the year, and the loss on ordinary activities after tax for the year of £399,000 (2023: loss of
£15,709,000).
There are no potentially dilutive capital instruments in issue and, as such, the basic and diluted earnings per share are identical.
9. Net asset value per share
30 November 2024
30 November 2023
Net assets (£’000)
79,062
84,690
Shares in issue
195,403,293
176,875,405
NAV per share (p)
40.5
47.9
There are no potentially dilutive capital instruments in issue and, as such, the basic and diluted NAV per share are identical.
Notes to the financial statements continued
59
Octopus AIM VCT 2 plc Annual report 2024
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10. Fixed asset investments
Accounting policy
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 being 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
and loan notes, fair value is established by assessing different
methods of valuation, such as price of recent transaction,
earnings or revenue-based 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 recommends following
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 2 plc Annual report 2024
10. Fixed asset investments continued
Level 1:
Quoted equity
investments
£’000
Level 2:
Quoted equity
investments
£’000
Level 3:
Unquoted
investments
£’000
Total
£’000
Opening cost at 1 December 2023 47,922 – 2,807 50,729
Opening unrealised (loss)/gain as at 1
December 2023
(1,903) – 4,462 2,559
Valuation as at 1 December 2023 46,019 – 7,269 53,288
Purchases at cost 5,934 – 1,000 6,934
Disposal proceeds (2,089) – (125) (2,214)
Loss on realisation of investments (24)
–
(6) (30)
Change in fair value in year (2,666) – 1,829 (837)
Closing valuation as at 30 November 2024 47,174 – 9,967 57,141
Closing cost as at 30 November 2024 49,212
–
3,487 52,699
Closing unrealised (loss)/gain as at 30
November 2024
(2,038) – 6,480 4,442
Valuation as at 30 November 2024 47,174 – 9,967 57,141
The Company received £2,214,000 (2023: £9,157,000) from investments sold in the year. The book cost of these investments when
they were purchased was £4,965,000 (2023: £5,332,000). 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 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 2 investments are valued using other observable inputs not included in Level 1. The Company holds no level 2 investments.
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 different assumptions were to be used, different valuations could have been attributed to some of the
Company’s investments.
The Company holds six unquoted investments and two loan note stocks, 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 sufficiently 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.
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 Limited and Popsa Holdings Ltd make up 98%
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. See below for the results of our analysis:
Notes to the financial statements continued
61
Octopus AIM VCT 2 plc Annual report 2024
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10. Fixed asset investments continued
Valuation
technique
Portfolio
company Input Input selected
Change in
input
Change in
fair value of
investments
(£m)
Change in
NAV (pence
per share)
Revenue multiple Hasgrove Ltd ARR multiple 6.67
+0.5x +0.5 +0.26
-0.5x -0.5 -0.26
Revenue multiple Popsa Holdings Ltd EV/Sales multiple 1.80
+0.2x +0.2 +0.10
-0.2x -0.2 -0.10
The Board and the Investment Manager believe that the valuations as at 30 November 2024 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. 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.
There have been no transfers between these classifications in the year (2023: none).
11. Current asset investments, cash and cash equivalents
Accounting policy
For the purpose of the Cash Flow Statement, cash and cash equivalents comprise of cash at bank and money market funds. 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. They are also subject to
insignificant risk of valuation changes.
Current asset investments on the Balance Sheet comprise OEICs, which are valued on a FVTPL basis. 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.
Money market funds are carried at fair value at the latest published price.
The current asset investments are readily convertible into cash at the option of the Company, within seven days. The current asset
investments are held for trading, are actively managed and the performance is evaluated in accordance with a documented
investment strategy.
Disclosure
As at 30 November 2024 and 30 November 2023, current asset investments, money market funds and cash at bank fall into
Level 1 of the fair value hierarchy as defined in the fixed asset investment accounting policy in note 10 above.
30 November 2024
£’000
30 November 2023
£’000
OEICs:
FP Octopus UK Micro Cap Growth Fund
5,898
5,150
FP Octopus UK Multi Cap Income Fund
2,891
2,925
FP Octopus UK Future Generations Fund
1,357
721
Total current asset investments 10,146
8,796
Money market funds
10,564
21,893
Total current asset investments and money
market funds
20,710
30,689
Cash at bank
1,595
1,045
Total current asset investments and cash and
cash equivalents
22,305
31,734
62
Octopus AIM VCT 2 plc Annual report 2024
12. Debtors
30 November 2024
£’000
30 November 2023
£’000
Prepayments
17
21
Accrued income
135
131
152
152
13. Creditors: Amounts falling due within one year
30 November 2024
£’000
30 November 2023
£’000
Trade creditors
30
4
Accruals
504
479
Other
2
1
536
484
14. Share capital
30 November 2024
£’000
30 November 2023
£’000
Allotted and fully paid up:
195,403,293 Ordinary shares of 0.01p (2023: 176,875,405)
20
18
The capital of the Company is managed in accordance with its investment policy with a view to the achievement of its investment
objective as set on page 20. As the Company is registered as an Alternative Investment Fund Manager (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.
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 (£)
14 December 2023 791,619 45.9 363,000
18 January 2024 408,110 46.6 190,000
22 February 2024 448,271 46.8 210,000
21 March 2024 280,039 48.0 134,000
25 April 2024 504,889 47. 3 239,000
23 May 2024 201,620 48.9 98,000
20 June 2024 430,789 42.4 183,000
18 July 2024 253,990 42.8 109,000
15 August 2024 712,121 42.3 301,000
12 September 2024 430,621 42.1 181,000
10 October 2024 514,128 40.8 210,000
14 November 2024 8 07, 242 39.0 315,000
Totals 5,783,439 2,533,000
Notes to the financial statements continued
63
Octopus AIM VCT 2 plc Annual report 2024
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14. Share capital continued
The total nominal value of the shares repurchased for cancellation was £578 representing 3% of the issued share capital (2023:
6,011,097 shares with a nominal value of £601 representing 3.4% of the issued share capital).
The Company issued the following shares during the year:
Date Number of shares Price per share (p)
Net proceeds of
shares issued (£)
14 December 2023 5,635,893 47. 2 2,662,000
11 January 2024 3,555,688 48.3 1,716,000
16 May 2024
1
35,287 50.2 18,000
27 June 2024
2
4,047,663 44.2 1,790,000
29 October 2024 9,394,966 41.1 3,865,000
28 November 2024
2
1,641,830 40.3 662,000
Totals 24,311,327 10,713,000
1
Shares issued as a result of reduced adviser charges.
2
Shares issued under the Dividend Reinvestment Scheme (DRIS).
Excluding the value of shares issued under the DRIS, the total value of shares issued net of share issue costs was £8,261,000 (2023:
£7,519,000). This is shown in the Cash Flow Statement.
15. Reconciliation of movements in equity
Notes
30 November 2024
£’000
30 November 2023
£’000
Shareholders’ funds at start of year
84,690
101,794
Total comprehensive loss
(399)
(15,709)
Share capital bought back 14
(2,533)
(3,076)
Issue of shares (net of issue costs) 14
10,713
8,354
Dividends paid 7
(13,409)
(6,673)
Shareholders’ funds at end of year 79,062
84,690
Included within these reserves is an amount of £60,845,000 (2023: £72,285,000) which is considered distributable to shareholders
under Companies Act rules. The Income Taxes Act 2007 restricts distribution of capital from reserves created by the conversion of
the share premium account into a special distributable reserve until the third anniversary of the share allotment that led to the
creation of that part of the share premium account. As at 30 November 2024, £20,921,000 of the special reserve is distributable
under this restriction.
During the year there was a share premium cancellation amounting to £12,015,000 (2023: £13,638,000). This was carried out with
the approval of shareholders for the purpose of creating additional distributable reserves.
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Octopus AIM VCT 2 plc Annual report 2024
16. Financial instruments
The Company’s financial instruments comprise 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.
30 November 2024
£’000
30 November 2023
£’000
Financial assets at fair value through profit or loss
Fixed asset investments
57,141
53,288
Money market securities
10,564
21,893
OEICs
10,146
8,796
Total financial assets at fair value through profit
or loss
77,851
83,977
Financial assets measured at amortised cost
Cash at bank
1,595
1,045
Accrued dividends and interest receivable
135
131
Total financial assets measured at amortised cost 1,730
1,176
Financial liabilities measured at amortised cost
Creditors
536
484
Total financial liabilities measured at
amortised cost
536
484
The Company holds six qualifying, unquoted investments; Airnow plc, Hasgrove Limited, Popsa Holdings Limited, Rated People
Limited, The Food Marketplace Limited and Alusid Limited. The Company also holds two unquoted loan note investments, held
at price of recent investment, in Strip Tinning Holdings plc valued at £600,000 and Haydale Graphene Industries plc valued at
£200,000. 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. For quoted investments this is the 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 effective 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.
Notes to the financial statements continued
65
Octopus AIM VCT 2 plc Annual report 2024
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17. 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 market 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 Report on pages 33 to 36, having regard to the possible effects of adverse price movements, and other
macroeconomic effects on the market such as economic recession, movement in interest rates, inflation, political instability and
rising living costs with the objective of maximising overall returns to shareholders. Investments in smaller companies, by their
nature, usually involve a higher degree of risk than investments in larger companies quoted on a recognised stock exchange,
though the risk can be mitigated to a certain extent by diversifying the portfolio across business sectors and asset classes. The
overall disposition of the Company’s assets is regularly monitored by the Board.
Details of the Company’s investment portfolio at the balance sheet date are set out on pages 8 to 10.
By value, 59.7% (2023: 54.3%) of the Company’s net assets comprised equity securities listed on the London Stock Exchange,
Aquis, NASDAQ or quoted on AIM. In the context of the continued short-term market volatility caused by the unstable economic
environment, we have maintained the sensitivity analysis at 20%, consistent with 2023. Therefore, a decrease in the bid price of
these securities as at 30 November 2024 would have decreased net assets and the total return for the year by £9,435,000 (2023:
£9,204,000 decrease); and an equivalent change in the opposite direction would have increased net assets for the year by the
same amount.
OEIC investments comprised 12.8% of the Company’s net assets by value (2023: 10.4%). A 20% decrease (2023: 20%) in the price of
these securities at 30 November 2024 would have decreased net assets by £2,029,000 (30 November 2023: £1,759,000 decrease);
and an equivalent change in the opposite direction would have increased net assets for the year by the same amount.
Unquoted investments comprised 12.6% of the Company’s net assets by value (2023: 8.6%). A 20% decrease (2023: 20%) in the
multiple or price of recent investment used in the valuation of these securities as at 30 November 2024 would have decreased net
assets by £1,993,000 (2023: £1,454,000 decrease); and an equivalent change in the opposite direction would have increased net
assets for the year by the same amount.
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.
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Octopus AIM VCT 2 plc Annual report 2024
17. Financial risk management continued
Floating rate
The Company’s floating rate investments comprise cash held on 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 4.75% at 30 November 2024
(2023: 5.25%). The amounts held in floating rate investments at the balance sheet date were as follows:
30 November 2024
£’000
30 November 2023
£’000
Money market funds
10,564
21,893
10,564
21,893
A 1% increase in the base rate would increase income receivable from these investments and the total return for the year by
£106,000 (2023: £219,000).
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. The Investment Manager and the Board carry out a regular review of counterparty risk. Where
financial assets expose the Company to credit risk, the maximum exposure is represented by their carrying value.
30 November 2024
£’000
30 November 2023
£’000
Investments in interest bearing instruments
800
120
Cash on deposit
1,595
1,045
Debtors
152
152
Money market funds
10,564
21,893
13,111
23,210
By value, no individual bank holding or fixed rate note investment exceeded 13% of the Company’s net assets at 30 November
2024 (2023: 9%).
The Company’s interest-bearing deposit and current accounts are maintained with HSBC and Money Market Funds held with
BlackRock, HSBC and JP Morgan. The risk of loss to this balance is deemed to be low due to the historical credit ratings and a
current Moody’s rating of Aaa (2023: Aaa) for HSBC, JP Morgan and BlackRock Money Market 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 these counterparties deteriorate significantly, the Investment Manager will move the cash holdings to
another bank.
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. Credit risk relating to loans
to and shares in unquoted companies is considered to be part of market risk.
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 by bankruptcy proceedings.
Credit risk arising on the sale of investments, accrued dividends and interest receivable is considered to be small due to the short
settlement and the contracted agreements in place with the settlement lawyers.
Notes to the financial statements continued
67
Octopus AIM VCT 2 plc Annual report 2024
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17. Financial risk management continued
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 sufficient investments in cash and
readily realisable securities to pay accounts payable and
accrued expenses. At 30 November 2024 these investments
were valued at £22,305,000 (2023: £31,734,000). The
Company has no debt, therefore no maturity analysis
is required as all financial liabilities fall due within twelve
months.
18. Events after the end of the reporting period
The following events occurred between the balance sheet
date and the signing of these financial statements:
The following shares have been allotted since the year end:
• 12 December 2024: 5,310,639 Ordinary shares at a price
of 43.1p per share.
• 23 January 2025: 2,927,288 Ordinary shares at a price of
42.6p per share.
The following shares have been bought back since the
year end:
• 18 December 2024: 560,613 shares at a price of 39.1p
per share.
• 30 January 2025: 802,694 shares at a price of 38.4p
per share.
• 20 February 2025: 544,996 shares at a price of 38.5p
per share.
19. Contingencies, guarantees and financial
commitments
There were no contingencies, guarantees or financial
commitments as at 30 November 2024 (2023: nil).
20. Transactions with the Investment Manager
The Company has employed Octopus Investments Limited
(‘Octopus’ or ‘the Investment Manager’) throughout the
period as Investment Manager. Octopus has also been
appointed as Custodian of the Company’s investments under
a Custodian Agreement. The Company has been charged
£1,411,000 by Octopus as a management fee in the year to
30 November 2024 (2023: £1,572,000). The management
fee is payable quarterly and is based on 2% of net assets at
quarterly intervals.
The Company receives a reduction in the management
fee for the investments in other Octopus managed funds,
being the 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
£55,000 in the year to 30 November 2024 (2023: £56,000).
For further details please refer to note 3. Details of amounts
invested in Octopus managed funds can be found on
page 10.
21. Related party transactions
As at 30 November 2024, Octopus Investments Nominees
Limited (OINL) held nil shares (2023: nil) in the Company
as beneficial owner, having purchased these at a cost of
£nil (2023: £nil) from shareholders to protect their interests
after delays or errors with shareholder instructions and
other similar administrative tasks. Throughout the period to
30 November 2024 OINL purchased nil shares (2023: nil) at
a cost of £nil (2023: £nil) and sold nil shares (2023: 4,284)
for proceeds of £nil (2023: £2,000). In accordance with the
listing rules, 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.
Details of the Directors, their remuneration and shareholdings
can be found in the Directors’ Remuneration Report on
pages 39 to 41.
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Octopus AIM VCT 2 plc Annual report 2024
Octopus AIM VCT 2 plc was launched as Close IHT AIM VCT
plc in March 2006 and raised £25 million through an offer for
subscription. On 12 August 2010 the Company acquired the assets
and liabilities of Octopus Third AIM VCT plc (formerly Octopus
Second AIM VCT plc) (‘the merger’) and changed its name
from Octopus IHT AIM VCT plc to Octopus Second AIM VCT plc.
Shareholders of Octopus Third AIM VCT plc received 0.48356191
Ordinary shares in the Company for each Ordinary share they
had prior to the merger. On 30 January 2015, the Company name
changed to Octopus AIM VCT 2 plc.
An offer, launched on 6 February 2012 and which closed on
5 April 2012, raised £1.3 million for the Company. An offer launched
on 25 April 2012, closed on 31 July 2012 and raised a further
£0.5 million for the Company. An Enhanced Buyback Facility
opened on 23 October 2012 and closed on 28 December 2012.
10,470,985 existing shares were tendered and 9,974,094 new
shares were issued.
An offer for subscription of up to £10 million, which opened
on 1 February 2013 and closed on 17 January 2014, raised
£5.9 million. Since the company has raised additional investment
through further fundraise as follows:
• Combined total up to £12.1 million with a £4 million over-
allotment facility was launched alongside Octopus AIM VCT
during the year to 30 November 2014;
• Combined total up to £8 million with a £4 million over-
allotment facility was launched alongside Octopus AIM VCT
during the year to 30 November 2016;
• Combined total up to £14.3 million with a £4 million over-
allotment facility was launched alongside Octopus AIM VCT
during the year to 30 November 2017;
• Combined total up to £20 million with a £10 million over-
allotment facility was launched alongside Octopus AIM VCT
during the year to 30 November 2018;
• Combined total up to £20 million with a £10 million over-
allotment facility was launched alongside Octopus AIM VCT
during the year to 30 November 2019;
• Combined total up to £20 million with a £10 million over-
allotment facility was launched alongside Octopus AIM VCT
during the year to 30 November 2020;
• Combined total up to £20 million with a £10 million over-
allotment facility was launched alongside Octopus AIM VCT
during the year to 30 November 2021;
• Combined total up to £20 million with a £10 million over-
allotment facility was launched alongside Octopus AIM VCT
during the year to 30 November 2022;
• Combined total up to £20 million with a £10 million over-
allotment facility was launched alongside Octopus AIM VCT
during the year to 30 November 2023; and
• Combined total up to £20 million with a £10 million over-
allotment facility was launched alongside Octopus AIM VCT
during the year to 30 November 2024.
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% up-front 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 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 6326 (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 Monday-Friday 9.00am-5.30pm), or by writing to them at:
The Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
Information and contact
details
69
Octopus AIM VCT 2 plc Annual report 2024
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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 reinvest 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 6326 or complete an instruction electronically
by visiting the Computershare Investor Centre at:
www-uk.computershare.com/investor/. The application
form and rules can also be found in the Document Library on the
Octopus website: www.octopusinvestments.com/investor/
our-products/venture-capital-trusts/octopus-aim-vcts/.
Share price
The Company’s share price can be found on various financial
websites including www.londonstockexchange.com, with the
following TIDM/EPIC code:
Ordinary shares
TIDM/EPIC code OSEC
Latest share price 7 March 2025 37.2 pence per share
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
Liberum Limited, the Company’s broker.
Panmure Liberum 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 Liberum Limited can be contacted as follows:
Chris Lloyd 020 7886 2716 chris.lloyd@panmureliberum.com
Paul Nolan 020 7886 2717 paul.nolan@panmureliberum.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; and
• 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 the
Company’s registrar, Computershare, under the signature of the
registered holder or via the Computershare Investor Centre at:
www-uk.computershare.com/investor/. Computershare’s
contact details are provided on page 72.
Other information for shareholders
Previously published annual reports and half-yearly reports are
available for viewing on the Investment Manager’s website at
https://octopusinvestments.com/our-products/venture-
capital-trusts/octopus-aim-vcts/shareholder-information/
by navigating to Products, Venture Capital Trusts, Octopus
AIM VCTs, Shareholder Information. If your shares are held via a
nominee company, you won’t receive communications regarding
annual reports and half-yearly reports directly from us or the
Registrars. You’ll need to speak to your nominee company about
this or you can find latest published reports on the Investment
Manager’s website. Other statutory information about the
Company can also be found on this page.
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
an 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 6326. Alternatively you can sign
up to receive e-communications via the Computershare Investor
Centre at: www-uk.computershare.com/investor/.
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Octopus AIM VCT 2 plc Annual report 2024
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 offering 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, offer to
buy shares at a discount or offer 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 official 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.
Information and contact details continued
71
Octopus AIM VCT 2 plc Annual report 2024
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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 VCT’s total assets less liabilities. It is equal to the
total shareholders’ funds.
Net asset value per share or 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.
Ongoing Charges Ratio (APM)
The Ongoing Charges ratio has been calculated using the
AIC recommended methodology and excludes 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 Company
in the future.
This is calculated by dividing the expenses of £2,058,000 which
includes the management fee in note 3 on page 55 and the
expenses listed out in note 4 on page 56 excluding irrecoverable
VAT, exceptional costs and trail commission, by average net
assets of £85,005,000.
Total return (APM)
Total return is calculated as movement in NAV per share in the
period plus dividends paid in 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.
Total return % (APM)
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 % 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.
Money Market Fund (MMF)
A mutual fund that invests in highly liquid, short term instruments.
These instruments include cash, cash equivalent securities,
and high credit rating debt based securities with a short term
maturity. They are intended to offer investors high liquidity with
a low level of risk.
Open Ended Investment Company (OEIC)
A type of investment fund that invests in equities, bonds and
other securities. The price of the shares is based on the underlying
assets of the fund. These are highly liquid as new shares can be
created to meet investor demand and the fund will cancel shares
of investors who exit the fund.
Glossary of terms
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Octopus AIM VCT 2 plc Annual report 2024
The Board of Directors
Keith Mullins (Chair)
Andy Raynor FCA
Brad Ormsby CA
Virginia (Connelly) Bull
Company Number
Registered in England No: 05528235
Legal Entity Identifier (LEI)
213800BW27BKJCI35L17
Secretary and Registered office
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
Independent Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Tax Adviser
James Cowper Kreston
The White Building
1-4 Cumberland Place
Southampton
SO15 2NP
VCT Status Adviser
Shoosmiths LLP
Apex Plaza
Forbury Road
Reading
RG1 1AX
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
Tel: 0370 703 6326
(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 Liberum Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London
EC2Y 9LY
Tel: +44 (0)20 3100 2000
Directors and advisers
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Notice is hereby given that the Annual General Meeting of
Octopus AIM VCT 2 plc will be held at 33 Holborn, London,
EC1N 2HT on 23 May 2025 at 10.30am for the purposes of
considering, and if thought fit, passing the following resolutions
of which Resolutions 1 to 8 and 13 will be proposed as Ordinary
Resolutions and Resolutions 9 to 12 will be proposed as Special
Resolutions:
Ordinary Business
1. To receive and adopt the annual report and audited financial
statements for the year to 30 November 2024.
2. To approve a final dividend of 1.8p per Ordinary share.
3. To approve the Directors’ Remuneration Report.
4. To re-elect Keith Mullins as a Director.
5. To re-elect Brad Ormsby as a Director.
6. 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 7 to 8 and 13
as Ordinary Resolutions and Resolutions 9 to 12, as Special
Resolutions:
7. 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 £4,035 (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 next AGM
following the passing of this Resolution and the expiry of 15
months from the passing of the relevant Resolution (unless
previously renewed, varied or revoked by the Company
in a general meeting) but so that such authority allows
the Company to make offers or agreements before the expiry
thereof, which would or might require relevant securities to
be allotted after the expiry of such authority.
8. 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 £1,009
in connection with the Company’s dividend reinvestment
scheme (representing approximately 5% 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 offers 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 offer or agreement notwithstanding the expiry
of such authority.
9. Empowerment to make allotments of equity securities
THAT, conditional upon the passing of Resolution 7 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 offers or agreements to allot equity
securities (as defined in s560(1) of the Act) for cash pursuant
to the authority granted by Resolution 7 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 offer 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 offer or agreement notwithstanding
the expiry of such power.
The power provided by this Resolution shall expire on the
earlier of the conclusion of the Company’s next AGM
following the passing of this Resolution and the date falling
15 months from the date of the passing of this Resolution
(unless previously renewed, varied or revoked by the
Company in a general meeting).
Notice of Annual General
Meeting
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Octopus AIM VCT 2 plc Annual report 2024
10. Empowerment to make allotments of equity securities
under the DRIS
THAT, conditional upon the passing of Resolution 8 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 offers 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 8 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 offer 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 offer 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).
11. 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 0.01p each in the Company
(‘Ordinary shares’) provided that:
(a) the maximum number of Ordinary shares so authorised
to be purchased shall not exceed 30,239,764 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 Official 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.
12. Cancellation of Share Premium Account
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.
13. Continuation of the Company as a VCT
THAT the Company continue in being as a Venture Capital
Trust.
By Order of the Board
Keith Mullins
Chair
10 March 2025
Notice of Annual General Meeting continued
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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 6ZY 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 AIMVCT2AGM@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 office
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.
(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
76
Octopus AIM VCT 2 plc Annual report 2024
properly be moved and is intended to be moved at the
meeting, and/or
(ii) To include 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
ineffective (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 VCTs. Copies of the Directors’ Letters of Appointment,
the Register of Directors’ Interests in the Ordinary shares of
the Company kept in accordance with the UK Listing Rules
and a copy of the Memorandum and Articles of Association
of the Company will be available for inspection at the
registered office 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 7 March 2025 (being the last practicable date prior to
the publication of this Notice) the Company’s issued share
capital consists of 201,732,917 Ordinary shares, carrying one
vote each. Therefore, the total voting rights in the Company
as at 7 March 2025 are 201,732,917.
Notice of Annual General Meeting continued
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Octopus AIM VCT 2 plc