Final Results
Octopus Protected VCT plc
30 April 2008
Annual Report & Accounts for the year ended 31 January 2008
About Octopus Protected VCT plc
Octopus Protected VCT plc ("Company" or "Fund") is a venture capital
trust ("VCT") and is managed by Octopus Investments Limited
("Octopus").
The Fund was launched in July 2006 and raised over £27.1 million
(£25.9 million net of expenses) through an offer for subscription by
the time it closed on 5 April 2007. The objective of the Fund is to
invest in a diversified portfolio of UK smaller companies in order to
generate income and capital growth over the long-term.
Financial Highlights
Year to 31 January Period to 31 January
Ordinary shares 2008 2007
Net assets (£'000s) 26,114 6,417
Net revenue return after tax
(£'000s) 498 (14)
Net total return after tax
(£'000s) 337 (54)
Net asset value per share 95.5p 93.7p
Proposed dividend per share 1.5p -
Chairman's Statement
I am pleased to present the second annual report for Octopus
Protected VCT plc for the year to 31 January 2008.
Net Asset Value ("NAV")
The NAV per share at 31 January 2008 was 95.5p, up from the initial
NAV of 94.5p, and from the prior year NAV of 93.7p. The increase in
NAV is due to income from proceeds invested with the cash managers
exceeding the expenses and running costs of the Fund. As such, the
Board has proposed a dividend of 1.5p per share to be paid to
shareholders on 25 June 2008 who are on the register on 30 May 2008.
Investment Portfolio
During the year the Fund made four new investments, totalling £3.1
million, into British Country Inns 3 plc, Funeral Services
Partnership Limited, Bruce Dunlop & Associates Limited and Tristar
Worldwide Limited. In accordance with International Private Equity
guidelines, these will be held at cost for the first year of
investment as this is considered to be the best approximation to fair
value as there have been no significant changes in circumstances
since the time of investment. No disposals took place during the
year. In addition Octopus has taken an active yet cautious approach
to managing the cash raised prior to its investment in qualifying
companies. The remaining funds raised have been invested by Goldman
Sachs International in a range of money market securities.
Investment Strategy
The Fund is being invested on the basis of taking lower risk than a
typical VCT and a higher risk than a typical bank. In the finance
sector this is often called intermediate capital or mezzanine
finance. The investment strategy is to derive sufficient return from
the secured loan notes to achieve the fund aims and use any equity
portion to boost returns.
The manner of the reduced risk will vary across the investments. In
the four main investments to date risk has been reduced by investing
in well managed, successful, profitable, strong recurring cashflow
businesses with the majority of the investment being in the form of a
secured loan which, in the unlikely event of the business failing,
ranks ahead of the investment of other equity investors. Typically
the fund will receive its return from interest paid on its secured
loan notes, as well as the return on the equity it holds when the
company is sold.
Share Price
The Fund has a share buy-back facility, proposing to buy-back shares
at no more than a 10% discount to the prevailing NAV at the
discretion of the Company. This should assist the marketability of
the shares and help prevent the shares from trading at a wide
discount to NAV. The Fund's mid market share price currently stands
at 90p. During the year the Fund bought back 50,582 shares at a
price of 94.5p per share.
Shareholders should note that if they sell their shares within five
years of the original purchase they forfeit any income tax relief
obtained. If you need to sell your shares, please contact Octopus on
020 7710 2800.
VCT Qualifying Status
PricewaterhouseCoopers LLP provides the Board and Investment Manager
with advice on the ongoing compliance with HM Revenue & Customs rules
and regulations concerning VCTs. The Board has been advised that
Octopus Protected VCT plc is in compliance with the conditions laid
down by HM Revenue & Customs for maintaining approval as a VCT at
this stage in the Fund's life.
A key requirement is for 70% of the portfolio to be invested in
qualifying investments by the end of the third accounting period
following that in which new share capital was subscribed. As at 31
January 2008, over 10.3% of the portfolio (according to HM Revenue &
Customs rules and regulations) was invested in VCT qualifying
investments, in line with our expectations at this early stage of the
Fund's life. In light of the current deal flow, the Board is
confident of achieving the required investment level.
Outlook
Whilst national and international economies have suffered
considerable recent setbacks we remain confident that our policy of
investing predominantly in secured loan stock in profitable UK
businesses with strong recurring cashflows is sound. We expect to see
increased demand from such companies for our funds as our presence in
the market continues to grow and the best firms look for finance that
is not tainted with the irrational decisions that the large banks are
apt to make in times of economic uncertainty.
Tony Morgan
Chairman
29 April 2008
Investment Manager's Review
Personal Service
At Octopus, we pride ourselves not only on our team's track record
but also on our personalised customer service. We believe in open
communication and our regular updates are designed to keep you
involved and informed.
If you have any questions about this review, or if it would help to
speak to one of the fund managers, please do not hesitate to contact
us on 020 7710 2800.
Review of Investments
As mentioned in the Chairman's Statement, four new investments,
totalling £3.1 million, were made during the year, the details of
which are set-out below. Whilst Octopus seeks suitable qualifying
investments, the remaining proceeds raised have been managed by our
cash managers, Goldman Sachs International, and invested in a range
of low risk money market securities. Over what has been a difficult
period across world debt and equity markets, resulting from the
'credit crunch' in the US, the proceeds managed by Goldman Sachs have
yielded over 5.1%.
Investment Portfolio
During the year, the Fund made four new investments. Details of
these are set-out below.
British Country Inns 3 plc
British Country Inns was launched as an EIS, qualifying company in
April 2006 in order to buy traditional, food-led freehold and long
leasehold pubs in the South of England. Rather than initiate a
second round of fundraising, which would have entailed a very early
valuation of the estate at the time and a tight cap on the size of
the issue, management opted to raise additional funds through a
separate company, British Country Inns 2. This company maintained a
geographical focus in the South and South West of England. A third
company, British Country Inns 3 in which Octopus Protected is an
investor, was formed to invest in pubs in the West Midlands.
Investment date: April 2007
Cost: £100,000
(ordinary shares)
Valuation: £100,000
Valuation basis: Cost
Equity held: 1.3% (1.3%
held by all funds managed by Octopus)
Last audited accounts: N/A
Funeral Services Partnership Limited
Funeral Services Partnership is an independent funeral services group
made up of funeral parlours and their associated services. It
currently owns 14 funeral parlours and a stonemasons and is
continuing to grow via acquisition.
Investment date: October 2007
Cost: £1,000,000
(ordinary shares and loan notes)
Valuation: £1,000,000
Valuation basis: Cost
Equity held: 2.5% 'B
shares' (6.8% 'B shares' held by all funds managed by Octopus)
Last audited accounts: N/A
Bruce Dunlop & Associates Limited
BDA provides promotion and design services to broadcasters and
advertisers worldwide and also creates brand films and internal
communications for leading UK corporations, including Hallmark,
Barclays, Discovery and Sony. The company operates from offices in
London, Munich, Dubai, Singapore and Sydney.
Investment date: December 2007
Cost: £1,000,000
(ordinary shares and loan notes)
Valuation: £1,000,000
Valuation basis: Cost
Equity held: 1.7% 'A
shares' (33.3% 'A shares' held by all funds managed by Octopus)
Last audited accounts: June 2006
Profit before interest & tax: £0.7 million
Net assets: £1.8 million
Tristar Worldwide Limited
Tristar is one of the world's leading chauffeur companies, carrying
over 400,000 passengers for 400 clients in 2007 alone. The business
operates in 44 countries with its own vehicles in the UK and a
rapidly expanding service in the US. It has a blue chip customer base
which includes Virgin, Emirates, BP, Goldman Sachs and Merrill Lynch.
Investment date: January 2008
Cost: £1,000,000
(ordinary shares and loan notes)
Valuation: £1,000,000
Valuation basis: Cost
Equity held: 2.5% 'A
shares' (35.0% 'A shares' held by all funds managed by Octopus)
Last audited accounts: May 2007
Profit before interest & tax: £1.7 million
Net assets: £3.4 million
Recent Transactions
Since the end of the year under review, we have completed one new
qualifying investment:
Hydrobolt Limited
Octopus Protected invested £606,000 in the management buy-out of
Hydrobolt Limited in April 2008. Hydrobolt is a specialist
manufacturer of high integrity fasteners for the oil & gas and energy
sectors. Further details of this investment will be detailed in the
interim report of Octopus Protected later in the year.
Simon Rogerson
Chief Executive
Income Statement
For the year ended 31 January
2008 Revenue Capital Total
£'000 £'000 £'000
Gain on disposal of current
asset investments - 99 99
Unrealised gain on fair value
of current asset investments - 124 124
Other income 988 - 988
Investment management fees (128) (384) (512)
Other expenses (362) - (362)
Profit/(loss) on ordinary
activities before tax 498 (161) 337
Taxation on profit on ordinary
activities - - -
Profit/(loss) on ordinary
activities after tax 498 (161) 337
Earnings/(loss) per share -
basic and diluted 2.1p (0.7)p 1.4p
* the 'Total' column of this statement is the profit and loss
account of the Company
* all revenue and capital items in the above statement derive from
continuing operations
* the company has only one class of business and derives its income
from investments made in shares and securities and from bank and
money market funds
The Company has no recognised gains or losses other than the results
for the year as set out above.
Income Statement
For the period ended 31
January 2007 Revenue Capital Total
£'000 £'000 £'000
Other income 63 - 63
Investment management fees (13) (40) (53)
Other expenses (64) - (64)
Loss on ordinary activities
before tax (14) (40) (54)
Taxation on loss on ordinary
activities - - -
Loss on ordinary activities
after tax (14) (40) (54)
Loss per share - basic and
diluted (1.0p) (3.1p) (4.1p)
* the 'Total' column of this statement is the profit and loss
account of the Company
* all revenue and capital items in the above statement derive from
continuing operations
* the company has only one class of business and derives its income
from investments made in shares and securities and from bank and
money market funds
The Company has no recognised gains or losses other than the results
for the period as set out above.
Note of Historical Cost Profits and Losses
Year to 31 Period to 31
January 2008 January 2007
£'000 £'000
Profit/(loss) on ordinary activities 337 (54)
before taxation
Unrealised gain on fair value of (124) -
investments
Historical cost profit/(loss) on ordinary 213 (54)
activities before taxation
Historical cost profit/loss on ordinary 213 (54)
activities after taxation
Reconciliation of Movements in Shareholders' Funds
Period to
31 January 2008 31 January 2007
£'000 £'000
Shareholders' funds at 1 February 6,417 -
Profit/(loss) on ordinary activities
after tax 337 (54)
Issue of redeemable non-voting
preference shares - 50
Redemption of redeemable non-voting
preference shares - (50)
Net proceeds of share issue 19,407 6,471
Cancellation of own shares (47) -
Balance at 31 January 26,114 6,417
Balance Sheet
31 January 2008 31 January 2007
£'000 £'000
Fixed asset investments 3,100 -
Current assets:
Investments 22,904 6,337
Debtors 252 3
Cash at bank 16 703
23,172 7,043
Creditors: amounts falling due
within one year (158) (626)
Net current assets 23,014 6,417
Net assets 26,114 6,417
Called up equity share capital 2,734 685
Capital Redemption Reserve 5 -
Share Premium - 5,786
Special distributable reserve 23,092 -
Capital reserve - realised (325) (40)
- un-realised 124 -
Revenue reserve 484 (14)
Total equity shareholders' funds 26,114 6,417
Net asset value per share 95.5p 93.7p
Cash Flow Statement
10 months to 31
For the year ended 31 January 2008 31 January 2008 January 2007
£'000 £'000
Net cash (outflow)/inflow from
operating activities (379) 569
Financial investment :
Purchase of investments (3,100) -
Management of liquid resources :
Increase in cash equivalent
investments
Purchases (67,426) (6,337)
Disposal proceeds 51,082
Gains (223) -
(16,567) (6,337)
Financing :
Issue of own shares 20,374 6,775
Share issue expenses (967) (254)
Repurchase of own shares (48) (50)
(Decrease)/Increase in cash
resources (687) 703
Reconciliation of Net Cash Flow to Movement in Net
Funds
For the year ended 31 January 2008 31 January 2008 31January 2007
£'000 £'000
(Decrease)/Increase in cash
resources (687) 703
Movement in liquid resources 16,567 6,337
Opening net cash resources 7,040 -
Net cash at 31 January 22,920 7,040
Net cash at 31 January 2008 comprised:
31 January 2008 31January 2007
£'000 £'000
Cash at Bank 16 703
Bonds 14,140 -
Money Market Funds 8,764 6,337
Net cash at 31 January 22,920 7,040
Reconciliation of Operating Profit before Taxation to Cash Flow from
Operating Activities
31 January 2008 31January 2007
£'000 £'000
Profit/(Loss) on ordinary activities
before tax 337 (54)
Increase in debtors (249) (3)
(Decrease)/Increase in creditors (467) 626
Net cash (outflow)/inflow from
operating activities (379) 569
Note: Fixed asset investments
31 January 2008 31 January 2007
£'000 £'000
Movement in the year:
Purchases at cost 3,100 -
Valuation at 31 January 3,100 -
Book cost at 31 January:
- Ordinary shares 1,000 -
- Loan notes/other securities 2,100 -
Valuation at 31 January 3,100 -
Further details of the fixed asset investments held by the Company
are shown within the Investment Manager's Review.
The above summary of results for the year ended 31 January 2008 does
not constitute statutory financial statements within the meaning of
section 240 of the Companies Act 1985 and has not been delivered to
the Registrar of Companies.
Statutory financial statements will be filed with the Registrar of
Companies in due course; the auditor's report on those financial
statements under S235 of the Companies Act 1985 is unqualified and
does not contain a statement under S237 (2) or (3) of the Companies
Act 1985.
A copy of the full annual report and financial statements for the
year ended 31 January 2008 is expected to be posted to shareholders
shortly and will be available to the public at the registered office
of the company at 8 Angel Court, London, EC2R 7HP.
ENDS
---END OF MESSAGE---
Friday, 17th May 2024
COMPANIES COVERED:
Latest directors dealings
- 1 hour ago Altitude Group
- 1 hour ago Victoria
- 1 hour ago Supermarket Income Reit
- 1 hour ago Cordiant Digital Infrastructure Limited NPV
- 2 days ago Gran Tierra Energy Inc. (CDI)