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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Apollo Vct 2 | LSE:APO2 | London | Ordinary Share | GB00B13YVK26 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 89.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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Apollo VCT 2 plc
Annual Report & Accounts for the year ended 31 January 2008
About Apollo VCT 2 plc
Apollo VCT 2 plc ("Company" or "Fund") is a venture capital trust
("VCT") and is managed by Octopus Investments Limited ("Octopus").
The Fund was launched in May 2006 together with Apollo VCT 1 plc.
Both companies have identical constitutions, boards of directors and
investment policies, and together launched an offer for subscription
comprising 25,000,000 ordinary shares each, or 50,000,000 in
aggregate (the "Offer"). The Offer closed on 5 April 2007 having
raised £17.6 million in aggregate (£16.8 million net of expenses).
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
2008 2007
Net assets (£'000s) 8,355 2,889
Net revenue return after tax
(£'000s) 102 (24)
Net total return after tax
(£'000s) 52 (33)
Net asset value per share 94.7p 93.4p
Proposed dividend per share 0.75p -
Chairman's Statement
I am pleased to present the second annual report for Apollo VCT 2 plc
for the year to 31 January 2008.
Net Asset Value ("NAV")
The NAV per share at 31 January 2008 was 94.7p, slightly up from the
initial NAV of 94.5p and an increase from the prior year of 93.4p.
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 0.75p 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 three new investments, totalling £1.875
million, into Funeral Services Partnership Limited, Bruce Dunlop &
Associates Limited and Tristar Worldwide Limited. In accordance with
International Private Equity valuation 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. 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 three 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 35,175 shares at a
weighted average price of 93.2p 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
Apollo VCT 2 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 22.3% 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 firms look for finance
that is not affected by the short-term decisions that large banks are
apt to make in times of economic uncertainty.
Andrew Boyle
Chairman
24 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, three new investments,
totalling £1.875 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 three new investments. Details of
these are set-out below.
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: £875,000
(ordinary shares and loan notes)
Valuation: £875,000
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: £500,000
(ordinary shares and loan notes)
Valuation: £500,000
Valuation basis: Cost
Equity held: 0.8% '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: £500,000
(ordinary shares and loan notes)
Valuation: £500,000
Valuation basis: Cost
Equity held: 1.3% '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
Apollo VCT 2 invested £196,868 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 Apollo VCT 2 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 - 22 22
Unrealised gain on fair value of current
asset investments - 60 60
Other income 305 - 305
Investment management fees (44) (132) (176)
Other expenses (159) - (159)
Profit/(loss) on ordinary activities before
tax 102 (50) 52
Taxation on profit/(loss) on ordinary
activities - - -
Profit/(loss) on ordinary activities after
tax 102 (50) 52
Earnings/(loss) per share - basic and diluted 1.3p (0.6)p 0.7p
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 23 - 23
Investment management fees (3) (9) (12)
Other expenses (44) - (44)
Loss on ordinary activities before tax (24) (9) (33)
Taxation on loss on ordinary activities - - -
Loss on ordinary activities after tax (24) (9) (33)
Loss per share - basic and diluted (4.2)p (1.7)p (5.9)p
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 Period to
31 January 2008 31 January 2007
£'000 £'000
Profit/(loss) on ordinary 52
activities before taxation (33)
Unrealised gain on fair value of (60)
investments -
Historical cost loss on ordinary (12)
activities before taxation (33)
Historical cost loss on ordinary (12)
activities after taxation (33)
Reconciliation of Movements in Shareholders' Funds
Year to Period to
31 January 2008 31 January 2007
£'000 £'000
Shareholders' funds at 1 February 2,889 -
Profit/(loss) on ordinary activities
after tax 52 (33)
Issue of redeemable non-voting
preference shares - 50
Redemption of redeemable non-voting
preference shares - (50)
Net proceeds of share issue 5,447 2,922
Cancellation of own shares (33) -
Balance at 31 January 8,355 2,889
Balance Sheet
31 January 2008 31 January 2007
£'000 £'000
Fixed asset investments 1,875 -
Current assets:
Investments 6,437 2,814
Debtors 96 106
Cash at bank 9 15
6,542 2,935
Creditors: amounts falling due
within one year (62) (46)
Net current assets 6,480 2,889
Net assets 8,355 2,889
Called up equity share capital 882 309
Capital redemption reserve 3 -
Share Premium - 2,613
Special distributable reserve 7,451 -
Capital reserve - realised (119) (9)
- - un-realised 60 -
Revenue reserve 78 (24)
Total equity shareholders' funds 8,355 2,889
Net asset value per share 94.7p 93.4p
Cash Flow Statement
Year ended 10 months to 31
31 January 2008 January 2007
£'000 £'000
Net cash inflow/(outflow) from
operating activities 78 (93)
Financial investment :
Purchase of investments (1,875) -
Management of liquid resources :
Increase in bonds and money market
funds:
Purchases (19,618) (2,814)
Disposal proceeds 16,077 -
Gains (82) -
(3,623) (2,814)
Financing :
Issue of own shares 5,734 3,076
Share issue expenses (287) (154)
Repurchase of own shares (33) -
(Decrease)/increase in cash
resources (6) 15
Reconciliation of Net Cash Flow to Movement in Cash
Resources
31 January 2008 31January 2007
£'000 £'000
(Decrease)/Increase in cash
resources (6) 15
Movement in liquid resources 3,623 2,819
Opening net cash resources 2,829 -
Net cash at 31 January 6,446 2,829
Net cash at 31 January comprised:
31
January 31January
2008 2007
£'000 £'000
Cash at Bank 9 15
Bonds 4,326 -
Money Market Funds 2,111 2,814
Net cash at 31
January 6,446 2,829
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 52 (33)
Decrease/(increase) in debtors 10 (106)
Increase in creditors 16 46
Net cash inflow/(outflow) from
operating activities 78 (93)
Note: Fixed asset investments
31 January 2008 31 January 2007
£'000 £'000
Movement in the year:
Purchases at cost 1,875 -
Valuation at 31 January 1,875 -
Book cost at 31 January:
- - Ordinary shares 562 -
- - Loan notes/other securities 1,313 -
Valuation at 31 January 1,875 -
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.
- ---END OF MESSAGE---
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