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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Phoenix Vct | LSE:PHX | London | Ordinary Share | GB0032362997 | 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% | 35.00 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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Phoenix VCT plc
Final Results
5 February 2009
Phoenix VCT plc (the "Company"), managed by Octopus Investments
Limited, today announces the final results for the year ended 31
October 2008.
These results were approved by the Board of Directors on 5 February
2009.
You may view the Annual Report in full at www.octopusinvestments.com
and navigating to the VCT Annual and Interim Reports under the 'Learn
More' section.
About Phoenix VCT plc
Phoenix VCT plc ("Phoenix", "Company" or "Fund") 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 AIM-quoted companies.
The Investment Manager is Octopus Investments Limited ("Octopus" or
"Manager"). The Company was launched in November 2002 and raised
over GBP11.3 million (GBP10.8 million net of expenses) through an offer
for subscription.
Phoenix raised more funds in 2005 in the form of a 'C' Share issue
(i.e. the issue for subscription of a new class of share referred to
as 'C' shares). In total, Phoenix raised GBP5.1 million (GBP5.0 million
net of expenses) by the closing date of the offer on 30 June 2005.
Financial Highlights
Year to 31 October Year to 31 October
Ordinary shares 2008 2007
Net assets (GBP'000s) 4,824 11,945
Net (loss) / profit after tax
(GBP'000s) (5,763) 1,202
Net asset value per share 43.4p 106.0p
Dividend per share - in respect
of the year 10.0p 12.0p
Cumulative dividends since
launch - paid and proposed 33.0p 23.0p
Year to 31 October Year to 31 October
'C' shares 2008 2007
Net assets (GBP'000s) 3,141 6,183
Net (loss) / profit after tax
(GBP'000s) (2,622) 489
Net asset value per share 58.6p 110.8p
Dividend per share - in respect
of the year in year 5.0p 6.0p
Cumulative dividends since
launch - paid and proposed 12.0p 7.0p
Chairman's Statement
At the time of writing there is universal gloom, which is reflected
in the share prices of the Fund's underlying investments. As 2009
progresses, we can expect much of the uncertainty that persists to
begin to lift, and the stock market will attribute more measured
valuations to small growing companies.
In the year to 31 October 2008, the total return (being the change in
NAV added to dividends paid out to shareholders) per Ordinary share
was -42.0%, falling from 123.0p to 71.4p, and for 'C' shares was
-40.6%, falling from 114.8p to 68.2p. In comparison, the FTSE
All-Share index fell 36.1% and the FTSE AIM All-Share index fell
61.3%; very disappointing for everyone. As the portfolios are
invested in the Alternative Investment Market ("AIM"), the return is
a reflection of the falls across equity markets. However, the Board
believes that the overall investment portfolios are well placed to
benefit from the recovery in the financial markets once investor
appetite for risk returns.
Despite the volatility, the investment manager was successful in
crystallising a profit of GBP348,000 for the Ordinary share portfolio
from the disposal of a number of holdings. A small profit of GBP33,000
was also crystallised for the 'C' share portfolio. The Ordinary
share portfolio made new investments totalling GBP364,000 into Myhome
International plc (subsequently placed in administration) and Maxima
plc, with a follow-on investment into Clarity Commerce plc.
Meanwhile, the 'C' shares completed an investment into Vitesse Media
plc. Further details of these realisations and new investments can
be found in the Investment Manager's Review on pages 7 to 15.
The Board's strategy is to maintain an appropriate level of liquidity
in the balance sheet to achieve four aims:
* to take advantage of new investment opportunities as they arise;
* to support further investment in existing portfolio companies if
required;
* to assist liquidity in the shares through the buy back facility;
* to support a consistent dividend flow.
Given a realised capital reserve remains, and it is the Board's
intention to continue to pay a consistent dividend stream, the Board
has proposed a dividend of 5.0p per Ordinary share and a dividend of
3.0p per 'C' share to be paid on 3 April 2009 to shareholders on the
register on 13 February 2009. This is in addition to the 5.0p
Ordinary share interim dividend and the 2.0p 'C' share interim
dividend paid earlier in the year and will take total dividends paid
and proposed for the year ended 31 October 2008 to 10.0p per Ordinary
share and 5.0p per 'C' share. Cumulative dividends will total 33.0p
per Ordinary share since the Fund's launch and 12.0p per 'C' share
since the launch of the 'C' share class.
The table below shows the movement in NAV of the Ordinary shares and
lists the dividends that have been paid since the launch of the
Company:
Dividend paid
Period Ended NAV in period NAV + cumulative dividends
31 October 2003 100.7p - 100.7p
30 April 2004 111.7p 0.15p 111.9p
31 October 2004 110.9p - 111.1p
30 April 2005 118.2p 2.50p 120.9p
31 October 2005 97.9p 4.00p 104.6p
30 April 2006 104.6p - 111.3p
31 October 2006 103.8p 1.00p 111.5p
30 April 2007 122.4p 3.35p 133.4p
31 October 2007 106.0p 6.00p 123.0p
30 April 2008 75.9p 6.00p 98.9p
31 October 2008 43.4p 5.00p 71.4p
The table below shows the movement in NAV of the 'C' shares and lists
the dividends that have been paid since the launch of the Company:
Dividend paid
Period Ended NAV in period NAV + cumulative dividends
30 April 2005 94.9p - 94.9p
31 October 2005 94.2p - 94.2p
30 April 2006 100.1p - 100.1p
31 October 2006 105.1p - 105.1p
30 April 2007 122.6p 1.0p 123.6p
31 October 2007 110.8p 3.0p 114.8p
30 April 2008 89.0p 3.0p 96.0p
31 October 2008 58.6p 2.0p 67.6p
Change of Name
With a wide range of Octopus funds now under management, it is
considered appropriate that the name of the Company should reflect
the name of Octopus so as to avoid confusion in the marketplace.
Therefore it is proposed that the name of the Company be changed to
Octopus Phoenix VCT plc. This will be a Special Resolution to be
presented at the Company's Annual General Meeting.
It should be made clear to shareholders, however, that current
directors will remain in office and their independence from Octopus
is in no way affected.
VAT on Management Fees
The Government has announced that VCTs will be exempt from paying VAT
on investment management fees with effect from 1 October 2008. This
follows a European Court of Justice Judgement against the Government
in a case relating to VAT payable by investment trusts. It is now
almost certain that a VAT repayment will be obtained for VAT paid on
management fees for the last three years. However, the extent and
timing of repayments is not yet known. We will follow developments
with the help of our advisers. For the purposes of these accounts,
and with guidance from our advisers, we have accrued income of
GBP106,000 for the Ordinary shares and GBP36,000 for the 'C' shares,
being approximately 90% of the anticipated VAT rebate.
The VAT saving on management fees for the 2008/2009 year ahead on
Ordinary shares is GBP14,000 and GBP9,000 for 'C' shares.
Share Buy-backs
The Company's mid-market share price at the date of this report
stands at 45p for Ordinary shares and 51p for the 'C' shares. In
order to improve the liquidity of the shares of Phoenix, Octopus is
developing strategies that it will use to increase the awareness of
the attractions of buying shares in VCTs in the secondary market with
the aim of creating a market for those Shareholders who want to
dispose of their holdings. However, in order to underpin the ability
of shareholders to dispose of their holdings, it is intended that
Phoenix will operate a buy-back policy where (subject to having the
requisite authorisations in place and having distributable reserves
and sufficient financial resources) it is envisaged that purchases of
shares would happen at no more than a 10% discount to the prevailing
NAV per share.
Shareholders should note that if they sell their shares within the
minimum holding period of the original investment they forfeit any
income tax relief obtained.
'C' Shares conversion into New Ordinary Shares
As you may recall from the 'C' share prospectus, the 'C' shares are
to be converted into New Ordinary Shares based on the audited net
asset values as at 31 October 2008. Further details of this
conversion will be mailed out to shareholders by Octopus in the near
future.
VCT Qualifying Status
PricewaterhouseCoopers LLP provides the Board and investment manager
with advice concerning ongoing compliance with HM Revenue & Customs
rules ("HMRC") and regulations concerning VCTs. The Board has been
advised that Phoenix VCT plc is in compliance with the conditions
laid down by HMRC for maintaining approval as a VCT. This is
discussed further in Shareholder Information on page 16.
A key requirement is for 70% of the entire 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
October 2008, over 92% of the Ordinary share investment portfolio was
invested in VCT qualifying investments, and over 81% of the 'C' share
investment portfolio. The Board does not anticipate any issues in
maintaining the required investment level.
Outlook
In what has been a particularly grim twelve months for stock markets
generally and smaller companies in particular, your Board continues
to seek a balanced portfolio of investments in smaller, developing
companies. The economic outlook for 2009 remains uncertain and
equity markets are still reeling from the impact of the banking
crisis and recent economic scandals. As a result, very little value
is being attributed to small growing companies at this point in time.
However the Manager remains confident that the portfolio will provide
attractive returns to investors with a medium to long-term horizon.
The investment strategy for Phoenix remains focused on the delivery
of absolute returns and a regular tax-free dividend stream for
investors. Whilst the portfolios will not be immune to the wider
impact of the credit crunch, the Board does consider that the
portfolio as a whole is well positioned to benefit from any
improvement in the overall financial outlook.
Stephen Hazell-Smith
Chairman
5 February 2009
Investment Manager's Review
Personal Service
At Octopus, we have a dual focus on managing your investments and
keeping you informed throughout the investment process. We are
committed to providing our investors with regular and open
communication. Our updates are designed to keep you involved with the
progress of your investment.
During this time of economic upheaval, we consider it particularly
important to be in contact with our investors. We are working hard to
manage your money in the current climate. We share your goal to make
money from your investment, as our money is invested alongside yours.
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 0800 316 2347.
The AIM Market
Over the last twelve months, the well publicised banking crisis and
the ensuing deteriorating economic outlook has had a severe impact on
AIM. As is usual during periods of uncertainty, investors shun small
companies in favour of larger and more liquid investments. However,
as you will be aware, these have fared little better as the banking
crisis has unfolded.
It is extremely disappointing to be reporting a significant decline
in NAV for the year ending October 2008. However, the valuations
below simply represent the current value attributed by the stock
market to your investee companies. Their individual share prices
reflect disinterest by investors and the absence of buyers. While
stock markets are frequently accused of over hyping small growing
companies during the good times, they are equally guilty of
attributing miserly valuations to small companies during periods of
uncertainty.
Within the portfolios, over 95% of the value of the investments held
by the Ordinary share and 'C' share portfolios are into profitable
companies. Balance sheet strength will also be important to the
success of the portfolios' holdings during 2009 as traditional
lenders to small businesses continue to face balance sheet pressure
themselves. We continue to work closely with the management of the
companies in which we invest to ensure there is headroom to cope with
all eventualities over the next twelve months.
Investment Portfolio
Cost of
investment as
at 31 October Valuation as at
2008 31 October 2008
%
equity
held by
all
% funds
AIM-listed Ord 'C' Ord 'C' equity managed
Qualifying shares Shares shares Shares held by by
Investments Sector (GBP'000) (GBP'000) (GBP'000) (GBP'000) Phoenix Octopus
Speciality &
CBG Group plc Other Finance 381 216 356 202 2.7 12.7
Media &
Hasgrove plc Entertainment 400 200 333 167 2.2 7.3
Pressure
Technologies Engineering &
plc Machinery 165 105 264 168 1.6 11.0
Brooks Speciality &
Macdonald plc Other Finance 156 - 251 - 1.1 4.4
Cello Group Media &
plc Entertainment 500 - 200 - 1.1 10.5
Support
Augean plc Services 500 - 196 - 0.4 5.3
Support
Melorio plc Services - 275 - 157 0.7 5.8
Aerospace and
Cohort plc Defence 135 340 176 382 0.9 2.4
Staffline
Recruitment Support
Group plc Services 300 - 150 - 1.8 13.7
Food
Zetar plc Producers 158 - 136 - 0.7 4.2
Brulines Support
(Holdings) plc Services 123 111 130 117 0.8 5.5
Hexagon Human Support
Capital plc Services 315 157 128 64 1.5 15.7
Vertu Motors General
plc Retailers 400 200 127 63 1.1 7.7
Construction
Northern Bear & Building
plc Materials 299 149 112 56 1.7 7.6
Software &
Clarity Computer
Commerce plc Services 407 203 94 47 3.4 5.0
Support
Concateno plc Services - 85 - 90 0.1 0.9
Vitesse Media Media &
plc Entertainment - 100 - 72 1.6 3.6
Access Software
Intelligence Communication
plc Devices 500 150 88 44 4.7 8.4
Inditherm plc Chemicals 400 100 84 35 6.7 6.7
Support
Interquest plc Services - 75 - 53 0.5 5.9
Software &
Strategic Computer
Thought plc Services 194 68 78 27 0.8 4.0
Support
Fountains plc Services 240 - 77 - 1.3 10.6
Bond Software &
International Computer
Software plc Services 60 - 75 - 0.5 4.0
Relax Group Speciality &
plc Other Finance 400 200 69 34 1.9 2.1
Speciality &
Jelf Group plc Other Finance 77 51 65 43 0.2 1.5
Support
AutoClenz plc Services 425 169 37 15 4.6 12.7
Tanfield Group Engineering &
plc Machinery 53 77 29 23 0.3 3.0
Software &
Computer
Invu plc Services 100 100 27 27 0.6 2.1
Software &
Computer
Cantono plc Services 420 220 20 11 0.2 1.0
Speciality &
Invocas plc Other Finance 80 50 18 11 0.4 1.3
Synabor Group Support
plc Services 500 - 16 - 0.8 0.8
Media &
Optimisa plc Entertainment 143 247 13 23 2.0 14.1
Speciality &
Baydonhill plc Other Finance 200 - 10 - 1.4 1.4
Real Good Food Food
Company plc Producers 500 - 7 - 0.6 0.6
Vision Media Media &
Group plc Entertainment 419 125 6 5 0.7 0.7
Top Ten
Holdings plc Leisure 200 - 5 - 0.8 0.8
Bright Futures General
plc Retailers 125 - - - 0.9 0.9
Myhome
International Support
plc Services 385 285 - - - -
Total
AIM-listed
qualifying
investments 9,660 4,058 3,377 1,936
Non-qualifying
AIM-listed
investments 43 35 34 27
Total
investments 9,703 4,093 3,411 1,962
Money Market
Funds 1,280 971
Net current
assets 133 208
Total net
assets 4,824 3,141
* Screen FX plc changed its name to Vision Media Group plc on 31st
January 2008
Review of Ordinary Share Portfolio
At 31 October 2008, the Ordinary portfolio comprised investments in
34 AIM-quoted companies. During the year, five investments were
disposed of in their entirety. BBI Holdings plc and Tissue Science
Laboratories plc both received cash bids from US companies during the
period. Profits were taken in AssetCo plc. We disposed of the
holdings in Media Square plc and SectorGuard plc at a loss because we
felt the companies were not making the progress anticipated. The
major disappointment over the period was MyHome International plc.
The company was placed into administration by its bank during August
2008, after breaking its covenants.
A summary of the realisations is shown below:
Cost of
Initial investment Proceeds of Total
investment realised investment gain/(loss)
Realisations date (GBP'000) (GBP'000) (GBP'000)
BBI Holdings
plc March 2004 191 749 558
AssetCo plc December 2003 95 188 93
Tissue Science
Laboratories
plc March 2005 161 97 (64)
SectorGuard plc August 2005 200 121 (79)
Media Square
plc April 2004 254 94 (160)
Total 901 1,249 348
Ten Largest Ordinary Share Portfolio Holdings
Listed below are the ten largest qualifying investments by value as
at 31 October 2008:
CBG Group plc
Based in Manchester, CBG Group plc is a corporate insurance, risk
management and financial services intermediary. The company offers a
range of services principally in the area of commercial insurance,
business risk management, healthcare and employee benefits. We
expect the company to continue to acquire further businesses in the
North-West of England.
Initial investment date: June 2007
Cost: GBP380,700
Valuation: GBP356,400
Valuation basis: Bid price
Equity held: 1.8%
Last audited accounts: December 2007
Profit before interest & tax: GBP1.6 million
Net assets: GBP9.5 million
Hasgrove plc
Hasgrove plc is a pan European marketing and communications services
group. The group offers its clients consultancy and implementation
solutions across a range of disciplines including brand design,
creative advertising, public relations and public affairs.
Initial investment date: November 2006
Cost: GBP400,000
Valuation: GBP333,333
Valuation basis: Bid price
Equity held: 1.5%
Last audited accounts: December 2007
Profit before interest & tax: GBP2.4 million
Net assets: GBP18.4 million
Pressure Technologies plc
Pressure Technologies plc is the holding company of Chesterfield
Special Cylinders ("CSC"). CSC designs, manufactures and offers
testing and refurbishment services for a range of speciality high
pressure, seamless steel gas cylinders for global energy and defence
markets.
Initial investment date: June 2007
Cost: GBP165,000
Valuation: GBP264,000
Valuation basis: Bid price
Equity held: 1.0%
Last audited accounts: September 2008
Profit before interest & tax: GBP5.0 million
Net assets: GBP11.2 million
Brooks Macdonald plc
Brooks Macdonald plc is an integrated wealth management group with
two operating companies: Brooks Macdonald Asset Management is a
specialist private client fund manager and Brooks Macdonald Financial
Consulting provides bespoke financial planning. The Group now has
over GBP1 billion funds under management.
Initial investment date: March 2005
Cost: GBP156,300
Valuation: GBP251,200
Valuation basis: Bid price
Equity held: 1.1%
Last audited accounts: June 2008
Profit before interest & tax: GBP2.0 million
Net assets: GBP5.8 million
Cello Group plc
Cello Group plc is a specialist marketing solutions business that has
completed a number of acquisitions since its flotation on AIM in
November 2004. Cello, which has specific expertise in market
research, operates under a number of brands, each with specific
expertise across a number of markets including the pharmaceutical,
public and not-for-profit sectors.
Initial investment date: November 2004
Cost: GBP500,000
Valuation: GBP200,000
Valuation basis: Bid price
Equity held: 1.1%
Last audited accounts: December 2007
Profit before interest & tax: GBP4.6 million
Net assets: GBP48.5 million
Augean plc
Augean is a UK based specialist waste and resource management group
delivering a range of services to the hazardous waste sector,
including waste treatment, transfer and recycling, landfill disposal,
laboratory testing and contaminated land treatment and recycling.
Initial investment date: September
Cost: GBP500,000
Valuation: GBP196,000
Valuation basis: Bid price
Equity held: 0.4%
Last audited accounts: December 2007
Profit before interest & tax: GBP3.7 million
Net assets: GBP83.4 million
Cohort plc
Cohort plc is a provider of independent defence technical services.
The company is focused on command, control, computing, communications
and intelligence systems and more recently has moved into crisis
management for non-military customers.
Initial investment date: February 2006
Cost: GBP135,300
Valuation: GBP176,000
Valuation basis: Bid price
Equity held: 0.3%
Last audited accounts: April 2008
Profit before interest & tax: GBP5.6 million
Net assets: GBP40.8 million
Staffline Recruitment Group plc
Staffline Recruitment Group plc is a leading provider of recruitment
and outsourced human resource services to industry. It specialises in
supplying temporary and permanent blue-collar industrial workers both
via its high street network branches and through on-site operations
located at the customers' premises.
Initial investment date: December 2004
Cost: GBP300,000
Valuation: GBP150,000
Valuation basis: Bid price
Equity held: 1.8%
Last audited accounts: December 2007
Profit before interest & tax: GBP4.4 million
Net assets: GBP22.3 million
Zetar plc
Zetar plc diversified into two divisions; confectionery and natural &
premium snacks. The company has been highly acquisitive and now holds
Kinnerton, Readifoods and Humdinger under its umbrella. Kinnerton
manufactures niche and novelty chocolate and both Readifoods and
Humdinger manufacture organic dried fruit products. The company has
more recently acquired Lir Chocolates, an Irish based
manufacturer.
Initial investment date: April 2005
Cost: GBP158,090
Valuation: GBP135,900
Valuation basis: Bid price
Equity held: 0.7%
Last audited accounts: April 2008
Profit before interest & tax: GBP4.8 million
Net assets: GBP40.3 million
Brulines (Holdings) plc
Brulines designs and sells fluid monitoring systems to pubs and
bars. The company is the market leader in its field and manages
information from over 22,000 licences premises, over one in three
pubs in the UK. The system allows the landlord to reconcile the
amount of beer being dispensed against what is being delivered.
Initial investment date: October 2006
Cost: GBP123,000
Valuation: GBP130,000
Valuation basis: Bid price
Equity held: 0.4%
Last audited accounts: March 2008
Profit before interest & tax: GBP4.2 million
Net assets: GBP13.3 million
Review of 'C' Share Portfolio
At 31 October 2008, the 'C' portfolio comprised of investments in 26
AIM-quoted companies. During the year, three investments were
disposed of in their entirety, including BBI Holdings plc, which
received a successful cash bid from a US company. We sold both Media
Square plc and SectorGuard plc as we felt the companies were not
making the progress anticipated. The major disappointment over the
period was Myhome International plc. The company was placed into
administration by its bank during August 2008, after breaking its
covenants.
A summary of these realisations is shown below:
Initial Proceeds of Total
investment Cost of investment investment gain/(loss)
Realisations date realised (GBP'000) (GBP'000) (GBP'000)
BBI Holdings
plc March 2004 115 240 125
MediaSurface
plc June 2007 125 72 (53)
SectorGuard
plc August 2005 100 61 (39)
Total 340 373 33
Ten Largest 'C' Share Portfolio Holdings
Listed below are the ten largest qualifying investments by value as
at 31 October 2008:
Cohort plc
Cohort plc is a provider of independent defence technical services.
The company is focused on command, control, computing, communications
and intelligence systems and more recently has moved into crisis
management for non-military customers.
Initial investment date: February 2006
Cost: GBP339,502
Valuation: GBP382,000
Valuation basis: Bid price
Equity held: 0.6%
Last audited accounts: April 2008
Profit before interest & tax: GBP5.6 million
Net assets: GBP40.8 million
CBG Group plc
Based in Manchester, CBG Group plc is a corporate general insurance,
risk management and financial services intermediary. The company
offers a range of services principally in the area of commercial
insurance, business risk management, healthcare and employee
benefits. We expect the company to continue to acquire further
businesses in the North-West of England.
Initial investment date: June 2007
Cost: GBP215,500
Valuation: GBP202,000
Valuation basis: Bid price
Equity held: 1.0%
Last audited accounts: December 2007
Profit before interest & tax: GBP1.6 million
Net assets: GBP9.5 million
Pressure Technologies plc
Pressure Technologies plc is the holding company of Chesterfield
Special Cylinders ("CSC"). CSC designs, manufactures and offers
testing and refurbishment services for a range of speciality high
pressure, seamless steel gas cylinders for global energy and defence
markets.
Initial investment date: June 2007
Cost: GBP105,000
Valuation: GBP168,000
Valuation basis: Bid price
Equity held: 0.6%
Last audited accounts: September 2008
Profit before interest & tax: GBP5.0 million
Net assets: GBP11.2 million
Hasgrove plc
Hasgrove plc is a pan European marketing and communications services
group. The Group offers its clients consultancy and implementation
solutions across a range of disciplines including brand design,
creative advertising, public relations and public affairs.
Initial investment date: November 2006
Cost: GBP200,000
Valuation: GBP167,000
Valuation basis: Bid price
Equity held: 0.7%
Last audited accounts: December 2007
Profit before interest & tax: GBP2.4 million
Net assets: GBP18.4 million
Melorio plc
Melorio plc was formed to consolidate the UK vocational training
market. In September 2007 it acquired CLW, the UK's largest provider
of on site construction assessment and training. As well as the
construction industry, Melorio will focus on acquisitions within the
utility, logistics and care sectors.
Initial investment date: October 2007
Cost: GBP275,000
Valuation: GBP156,750
Valuation basis: Bid price
Equity held: 0.7%
Last audited accounts: March 2008
Profit before interest & tax: GBP1.7 million
Net assets: GBP30.6 million
Brulines (Holdings) plc
Brulines designs and sells fluid monitoring systems to pubs and
bars. The company is the market leader in its field and manages
information from over 22,000 licences premises, over one in three
pubs in the UK. The system allows the landlord to reconcile the
amount of beer being dispensed against what is being delivered.
Initial investment date: October 2006
Cost: GBP110,700
Valuation: GBP117,000
Valuation basis: Bid price
Equity held: 0.4%
Last audited accounts: March 2008
Profit before interest & tax: GBP4.2 million
Net assets: GBP13.3 million
Concateno plc
Concateno is Europe's leading drug and alcohol testing company. The
company undertakes over 8 million drug tests per annum on behalf of
over 8,000 customers worldwide via a network of over 500 sample
collectors. The company's products include leading edge point of
care technology and laboratory testing via three UKAS accredited
sites in the UK.
Initial investment date: October 2006
Cost: GBP85,000
Valuation: GBP90,000
Valuation basis: Bid price
Equity held: 0.1%
Last audited accounts: December 2007
Profit before interest & tax: GBP0.3 million
Net assets: GBP103.2 million
Vitesse Media plc
Vittesse Media is a B2B publisher and events company to the business
and investment community. The company's titles include Growth
Company Investor, Information Age, What Investment and M&A Magazine.
Initial investment date: November 2007
Cost: GBP100,000
Valuation: GBP72,000
Valuation basis: Bid price
Equity held: 1.6%
Last audited accounts: January 2008
Loss before interest & tax: GBP0.1 million
Net assets: GBP4.2 million
Hexagon Human Capital
Hexagon Human Capital is the UK's leading provider of senior interim
management to industry. The company has also built a leading
executive search business operating across a variety of sectors.
Initial investment date: February 2007
Cost: GBP157,000
Valuation: GBP63,900
Valuation basis: Bid price
Equity held: 1.5%
Last audited accounts: March 2008
Profit before interest & tax: GBP4.1 million
Net assets: GBP16.9 million
Vertu Motors plc
Vertu Motors plc was formed in 2006 to acquire and consolidate the UK
motor retail sector. The management team has experience in the sector
having previously held senior positions at Reg Vardy plc. To date
the company has acquired Bristol Street Group Limited, Blake Holdings
Limited, Grantham Motors Company Limited and the Jennings Group
Limited.
Initial investment date: December 2006
Cost: GBP200,000
Valuation: GBP63,333
Valuation basis: Bid price
Equity held: 0.4%
Last audited accounts: February 2008
Profit before interest & tax: GBP0.1 million
Net assets: GBP60.2 million
New Investments
During the year, the Ordinary share portfolio made two new
investments and the 'C' share portfolio made three new investments.
Firstly, both the Ordinary share portfolio and 'C' share portfolio
made an investment into Myhome International plc, a franchise
cleaning business. In November 2007, Myhome raised GBP5 million of new
VCT qualifying funds in order to complete the acquisition of Chips
Away, an established franchise auto repair business. Despite Myhome
being profitable, its bank called in the company's loan during the
summer of 2008 following a breach of a banking covenant. The
business was subsequently purchased out of administration for an
undisclosed sum and the bank loan was repaid. This was extremely
frustrating for shareholders and served as a stark warning of the
pressure that certain lenders were under during the second half of
2008.
Both portfolios also completed a follow on investment into Clarity
Commerce Solutions plc, a provider of software to the retail,
ticketing and leisure sectors, during February 2008. We first
invested into Clarity Commerce Solutions in April 2006. However,
results had been disappointing, prompting shareholders to call for a
management change and fund raising. I am delighted to report that
the trading results have improved significantly following a number of
new contract wins. The company is now on course to deliver a profit
of GBP1.0 million on turnover GBP16.2 million for the year ending March
2009.
The 'C' share portfolio completed an investment into Vitesse Media
plc, a publishing and events company focused on the business and
investment community. The company raised further funds during
November 2007 in order to complete the acquisition of Infoconomy
Limited, the publisher of Information Age, a B2B publication for the
IT sector. In a recent trading update, the company confirmed that
revenues continue to make progress despite the recent decline in
advertising revenues.
If you have any questions on any aspect of your investment, please
call one of the team on 0800 316 2347.
Simon Rogerson
Chief Executive
Directors' Responsibility Statement
The Directors are responsible for preparing the annual report and the
financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law the Directors have elected
to prepare financial statements in accordance with United Kingdom
Accounting Standards (United Kingdom Generally Accepted Accounting
Practice).
The financial statements are required by law to give a true and fair
view of the state of affairs of the Company and of the profit or loss
of the Company for that period. In preparing these financial
statements, the Directors are required to:
* select suitable accounting policies and then
apply them consistently;
* make judgements and 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; and
* prepare financial statements on the going
concern basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors confirm that to the best of their knowledge the
financial statements for the year ended 31 October 2008 comply with
the requirements set out above and that suitable accounting policies,
consistently applied and supported by reasonable and prudent
judgement, have been used in their preparation. They also confirm
that the annual report includes a fair review of the development and
performance of the business together with a description of the
principal risks and uncertainties faced by the Company.
The Directors are responsible for keeping proper accounting records
that disclose with reasonable accuracy at any time the financial
position of the Company and enable them to ensure that the financial
statements comply with the Companies Act 1985. 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.
Under applicable law and regulations, the Directors are responsible
for preparing a Directors' Report (including Business Review),
Directors' Remuneration Report and Corporate Governance Statement
which comply with that law and those regulations.
In so far as the Directors are 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 Company's financial statements are published on the Octopus
Investments website. The investment manager is responsible for the
maintenance and integrity of the corporate and financial information
set out on their website, and this is not the responsibility of the
Company. The work carried out by Grant Thornton UK LLP as
independent auditor of the Company does not involve consideration of
the maintenance and integrity of the website and accordingly they
accept no responsibility for any changes that have occurred to the
financial statements since they were initially presented on the
website.
Legislation in the United Kingdom governing the preparation and
dissemination of the financial statements may differ from legislation
in other jurisdictions.
To the best of my knowledge:
* the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company; and
* the management report includes 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
Stephen Hazell-Smith
Chairman
5 February 2009
+---------------------------------------------------------------------------------------------------------------+
|Profit and Loss Account |
|---------------------------------------------------------------------------------------------------------------|
| | | Year to 31 October 2008 |
|---------------------------------+-----+-----------------------------------------------------------------------|
| | | Ordinary Shares | 'C' shares | Total |
|---------------------------------+-----+-----------------------+-----------------------+-----------------------|
| | |Revenue|Capital| Total|Revenue|Capital| Total|Revenue|Capital| Total|
|---------------------------------+-----+-------+-------+-------+-------+-------+-------+-------+-------+-------|
| |Notes| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000|
|---------------------------------+-----+-------+-------+-------+-------+-------+-------+-------+-------+-------|
|Gain on disposal of fixed asset | | | | | | | | | | |
|investments | 10| -| 82| 82| -| 65| 65| -| 147| 147|
|---------------------------------+-----+-------+-------+-------+-------+-------+-------+-------+-------+-------|
|Gain on disposal of current asset| | | | | | | | | | |
|investments | 11| -| 1| 1| -| -| -| -| 1| 1|
|---------------------------------+-----+-------+-------+-------+-------+-------+-------+-------+-------+-------|
| | | | | | | | | | | |
|---------------------------------+-----+-------+-------+-------+-------+-------+-------+-------+-------+-------|
|Loss on valuation of fixed asset | | | | | | | | | | |
|investments | 10| -|(5,680)|(5,680)| -|(2,578)|(2,578)| -|(8,258)|(8,258)|
|---------------------------------+-----+-------+-------+-------+-------+-------+-------+-------+-------+-------|
| | | | | | | | | | | |
|---------------------------------+-----+-------+-------+-------+-------+-------+-------+-------+-------+-------|
|Other Income | 2| 174| -| 174| 101| -| 101| 275| -| 275|
|---------------------------------+-----+-------+-------+-------+-------+-------+-------+-------+-------+-------|
| | | | | | | | | | | |
|---------------------------------+-----+-------+-------+-------+-------+-------+-------+-------+-------+-------|
|Investment management fees | 3| (69)| (206)| (275)| (36)| (108)| (144)| (105)| (314)| (419)|
|---------------------------------+-----+-------+-------+-------+-------+-------+-------+-------+-------+-------|
|VAT Management Fee Rebate | | 27| 79| 106| 9| 27| 36| 36| 106| 142|
|---------------------------------+-----+-------+-------+-------+-------+-------+-------+-------+-------+-------|
| | | | | | | | | | | |
|---------------------------------+-----+-------+-------+-------+-------+-------+-------+-------+-------+-------|
|Other expenses | 4| (171)| -| (171)| (102)| -| (102)| (273)| -| (273)|
|---------------------------------+-----+-------+-------+-------+-------+-------+-------+-------+-------+-------|
| | | | | | | | | | | |
|---------------------------------+-----+-------+-------+-------+-------+-------+-------+-------+-------+-------|
|Loss on ordinary activities | | | | | | | | | | |
|before tax | | (39)|(5,724)|(5,763)| (28)|(2,594)|(2,622)| (67)|(8,318)|(8,385)|
|---------------------------------+-----+-------+-------+-------+-------+-------+-------+-------+-------+-------|
| | | | | | | | | | | |
|---------------------------------+-----+-------+-------+-------+-------+-------+-------+-------+-------+-------|
|Taxation on loss on ordinary | | | | | | | | | | |
|activities | 6| -| -| -| -| -| -| -| -| -|
|---------------------------------+-----+-------+-------+-------+-------+-------+-------+-------+-------+-------|
| | | | | | | | | | | |
|---------------------------------+-----+-------+-------+-------+-------+-------+-------+-------+-------+-------|
|Loss on ordinary activities after| | | | | | | | | | |
|tax | | (39)|(5,724)|(5,763)| (28)|(2,594)|(2,622)| (67)|(8,318)|(8,385)|
|---------------------------------+-----+-------+-------+-------+-------+-------+-------+-------+-------+-------|
|Loss per share - basic and | | | | | | | | | | |
|diluted | 8| (0.4)p|(51.3)p|(51.7)p| (0.5)p|(46.8)p|(47.3)p| | | |
+---------------------------------------------------------------------------------------------------------------+
* the 'Total' column of this statement is the profit and loss
account of the Company; the supplementary revenue return and
capital return columns have been prepared under guidance
published by the Association of Investment Companies.
* all revenue and capital items in the above statement derive from
continuing operations
* the accompanying notes are an integral part of the financial
statements
* 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.
+-------------------------------------------------------------------------------------------------------------+
|Profit and Loss Account |
|-------------------------------------------------------------------------------------------------------------|
| | | Year to 31 October 2007 |
|-------------------------------------+-----+-----------------------------------------------------------------|
| | | Ordinary Shares | 'C' shares | Total |
|-------------------------------------+-----+---------------------+---------------------+---------------------|
| | |Revenue|Capital|Total|Revenue|Capital|Total|Revenue|Capital|Total|
|-------------------------------------+-----+-------+-------+-----+-------+-------+-----+-------+-------+-----|
| |Notes| GBP'000| GBP'000|GBP'000| GBP'000| GBP'000|GBP'000| GBP'000| GBP'000|GBP'000|
|-------------------------------------+-----+-------+-------+-----+-------+-------+-----+-------+-------+-----|
|Gain on disposal of fixed asset | | | | | | | | | | |
|investments | | -| 1,459|1,459| -| 409| 409| -| 1,868|1,868|
|-------------------------------------+-----+-------+-------+-----+-------+-------+-----+-------+-------+-----|
|Loss on disposal of current asset | | | | | | | | | | |
|investments | | -| (2)| (2)| -| (21)| (21)| -| (23)| (23)|
|-------------------------------------+-----+-------+-------+-----+-------+-------+-----+-------+-------+-----|
| | | | | | | | | | | |
|-------------------------------------+-----+-------+-------+-----+-------+-------+-----+-------+-------+-----|
|Gain on valuation of fixed asset | | | | | | | | | | |
|investments | | -| 48| 48| -| 179| 179| -| 227| 227|
|-------------------------------------+-----+-------+-------+-----+-------+-------+-----+-------+-------+-----|
|Gain/(loss) on valuation of current | | | | | | | | | | |
|asset investments | | -| 6| 6| -| (18)| (18)| -| (12)| (12)|
|-------------------------------------+-----+-------+-------+-----+-------+-------+-----+-------+-------+-----|
| | | | | | | | | | | |
|-------------------------------------+-----+-------+-------+-----+-------+-------+-----+-------+-------+-----|
|Other Income | 2| 165| -| 165| 182| -| 182| 347| -| 347|
|-------------------------------------+-----+-------+-------+-----+-------+-------+-----+-------+-------+-----|
| | | | | | | | | | | |
|-------------------------------------+-----+-------+-------+-----+-------+-------+-----+-------+-------+-----|
|Investment management fees | 3| (66)| (200)|(266)| (33)| (98)|(131)| (99)| (298)|(397)|
|-------------------------------------+-----+-------+-------+-----+-------+-------+-----+-------+-------+-----|
|Other expenses | 4| (208)| -|(208)| (111)| -|(111)| (319)| -|(319)|
|-------------------------------------+-----+-------+-------+-----+-------+-------+-----+-------+-------+-----|
| | | | | | | | | | | |
|-------------------------------------+-----+-------+-------+-----+-------+-------+-----+-------+-------+-----|
|(Loss)/profit on ordinary activities | | | | | | | | | | |
|before tax | | (109)| 1,311|1,202| 38| 451| 489| (71)| 1,762|1,691|
|-------------------------------------+-----+-------+-------+-----+-------+-------+-----+-------+-------+-----|
| | | | | | | | | | | |
|-------------------------------------+-----+-------+-------+-----+-------+-------+-----+-------+-------+-----|
|Taxation on (loss)/profit on ordinary| | | | | | | | | | |
|activities | 6| -| -| -| -| -| -| -| -| -|
|-------------------------------------+-----+-------+-------+-----+-------+-------+-----+-------+-------+-----|
| | | | | | | | | | | |
|-------------------------------------+-----+-------+-------+-----+-------+-------+-----+-------+-------+-----|
|(Loss)/profit on ordinary activities | | | | | | | | | | |
|after tax | | (109)| 1,311|1,202| 38| 451| 489| (71)| 1,762|1,691|
|-------------------------------------+-----+-------+-------+-----+-------+-------+-----+-------+-------+-----|
|(Loss)/earnings per share - basic and| | | | | | | | | | |
|diluted | 8| (1.0)p| 12.1p|11.1p| 0.7p| 8.5 p| 9.2p| | | |
+-------------------------------------------------------------------------------------------------------------+
* the 'Total' column of this statement is the profit and loss
account of the Company; the supplementary revenue return and
capital return columns have been prepared under guidance
published by the Association of Investment Companies
* all revenue and capital items in the above statement derive from
continuing operations
* the accompanying notes are an integral part of the financial
statements
* 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.
Note of Historical Cost Profits and Losses
Year to 31 October 2008
Ordinary shares 'C' shares Total
GBP'000 GBP'000 GBP'000
Loss on ordinary activities before
taxation (5,763) (2,622) (8,385)
Loss on valuation of investments 5,680 2,578 8,258
Realisation of prior years' net
unrealised gain/(loss) on
investments 269 (81) 188
Historical cost profit/(loss) on
ordinary activities before
taxation 186 (125) 61
Historical cost profit/(loss) on
ordinary activities after taxation 186 (125) 61
Year to 31 October 2007
Ordinary shares 'C' shares Total
GBP'000 GBP'000 GBP'000
Profit on ordinary activities before
taxation 1,202 489 1,691
Gain on valuation of investment (54) (161) (215)
Realisation of prior years' net
unrealised gain on investments 674 314 988
Historical cost profit on ordinary
activities before taxation 1,822 642 2,464
Historical cost profit on ordinary
activities after taxation 1,822 642 2,464
Reconciliation of Movements in Shareholders' Funds
Year to 31 October 2008
Ordinary shares 'C' shares Total
GBP'000 GBP'000 GBP'000
Shareholders' funds at 1 November
2007 11,945 6,183 18,128
Loss on ordinary activities after
tax (5,763) (2,622) (8,385)
Net proceeds of share issue 20 - 20
Cancellation of own shares (146) (141) (287)
Dividends paid (1,232) (279) (1,511)
Shareholders' funds at 31 October
2008 4,824 3,141 7,965
Year to 31 October 2007
Ordinary shares 'C' shares Total
GBP'000 GBP'000 GBP'000
Shareholders' funds at 1 November
2006 11,211 5,495 16,706
Profit on ordinary activities
after tax 1,202 489 1,691
Net proceeds of share issue 891 412 1,303
Cancellation of own shares (335) - (335)
Dividends paid (1,024) (213) (1,237)
Shareholders' funds at 31 October
2007 11,945 6,183 18,128
Balance Sheet
As at 31 October 2008
Notes Ordinary Shares 'C' shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed asset
investments 10 3,411 1,962 5,373
Current assets:
Money market
securities 11 1,280 971 2,251
Debtors 12 138 42 180
Cash at bank 36 207 243
1,454 1,220 2,674
Creditors: amounts
falling due within
one year 13 (41) (41) (82)
Net current assets 1,413 1,179 2,592
Net assets 4,824 3,141 7,965
Called up equity
share capital 14 1,111 536 1,647
Share premium
account 15 18 - 18
Special
distributable
reserve 15 9,500 4,672 14,172
Capital redemption
reserve 15 127 34 161
Capital reserve -
realised 15 710 124 834
Capital reserve -
unrealised 15 (6,292) (2,134) (8,426)
Revenue reserve 15 (350) (91) (441)
Total equity
shareholders' funds 4,824 3,141 7,965
Net asset value per
share 9 43.4p 58.6p
The accompanying notes are an integral part of this statement.
The financial statements were approved by the directors and
authorised for issue on 5 February 2009 and are signed on their
behalf by:
Stephen Hazell-Smith
Chairman
Balance Sheet
As at 31 October 2007
Notes Ordinary Shares 'C' shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed asset
investments 10 9,891 4,499 14,390
Current assets:
Money market
securities 11 1,596 1,083 2,679
Debtors 12 65 91 156
Cash at bank 482 533 1,015
2,143 1,707 3,850
Creditors: amounts
falling due within
one year 13 (89) (23) (112)
Net current assets 2,054 1,684 3,738
Net assets 11,945 6,183 18,128
Called up equity
share capital 14 1,128 558 1,685
Share premium
account 15 - - -
Special
distributable
reserve 15 9,646 4,813 14,459
Capital redemption
reserve 15 108 12 120
Capital reserve -
realised 15 1,717 496 2,210
Capital reserve -
unrealised 15 (343) 367 24
Revenue reserve 15 (311) (63) (370)
Total equity
shareholders' funds 11,945 6,183 18,128
Net asset value per
share 9 106.0p 110.8p
Cash Flow Statement
As at 31 October 2008
Ordinary shares 'C' shares Total
Notes GBP'000 GBP'000 GBP'000
Net cash outflow from
operating activities (290) (42) (332)
Capital expenditure and
financial investment :
Purchase of investments 10 (364) (343) (707)
Sale of investments 10 1,246 367 1,613
Dividends paid (1,232) (279) (1,511)
Management of liquid
resources :
Purchase of cash equivalent
investments 11 (2,774) (1,780) (4,554)
Sale of cash equivalent
investments 11 3,091 1,892 4,983
Financing :
Issue of equity (net of
expenses) 23 - 23
Repurchase of own shares (146) (141) (287)
Decrease in cash resources (446) (326) (772)
Reconciliation of Net Cash Flow to Movement in Cash Resources
Year to 31 October 2008
Ordinary Shares 'C' shares Total
GBP'000 GBP'000 GBP'000
Decrease in cash resources (446) (326) (772)
Movement in liquid resources (316) (113) (429)
Opening net cash resources 2,078 1,616 3,694
Net cash at 31 October 2008 1,316 1,177 2,493
Liquid resources at 31 October comprised:
Ordinary shares 'C' shares Total
GBP'000 GBP'000 GBP'000
Cash at Bank 36 207 243
Money Market Funds 1,280 970 2,250
Net cash at 31 October 2008 1,316 1,177 2,493
Reconciliation of (Loss) / Profit before Taxation to Cash Flow from
Operating Activities
Year ended 31 October 2008
Ordinary
shares 'C' shares Total
GBP'000 GBP'000 GBP'000
Loss on ordinary activities before
tax (5,763) (2,622) (8,385)
Gain on disposal of fixed asset
investments (82) (65) (147)
Gain on disposal of current asset
investments (1) - (1)
Loss on valuation fixed asset
investments 5,680 2,578 8,258
(Increase)/decrease in debtors (51) 68 17
Decrease in creditors (73) (1) (74)
Outflow from operating activities (290) (42) (332)
Cash Flow Statement
As at 31 October 2007
Ordinary shares 'C' shares Total
Notes GBP'000 GBP'000 GBP'000
Net cash outflow from
operating activities (145) (74) (219)
Capital expenditure and
financial investment :
Purchase of investments 10 (3,395) (2,717) (6,112)
Sale of investments 10 4,367 1,472 5,839
Dividends paid 7 (1,024) (213) (1,237)
Management of liquid
resources :
Purchase of cash equivalent
investments (5,028) (3,479) (8,507)
Sale of cash equivalent
investments 3,853 4,546 8,399
Financing :
Issue of own shares (net of
expenses) 890 412 1,302
Repurchase of own shares 14 (335) - (335)
Decrease in cash resources (817) (53) (870)
Reconciliation of Net Cash Flow to Movement in Cash Resources
Year to 31 October 2007
Ordinary Shares 'C' shares Total
GBP'000 GBP'000 GBP'000
Decrease in cash resources (817) (53) (870)
Movement in liquid resources 1,179 (1,106) 73
Opening net cash resources 1,716 2,775 4,491
Net cash at 31 October 2007 2,078 1,616 3,694
Liquid resources at 31 October comprised:
Ordinary shares 'C' shares Total
GBP'000 GBP'000 GBP'000
Cash at Bank 482 533 1,015
Bonds 404 739 1,143
Money Market Funds 1,192 344 1,536
Net cash at 31 October 2007 2,078 1,616 3,694
Reconciliation of Profit before Taxation to Cash Flow from Operating
Activities
For the year ended 31 October
2007 Ordinary shares 'C' shares Total
GBP'000 GBP'000 GBP'000
Profit on ordinary activities
before tax 1,202 489 1,691
Gain on valuation of fixed asset
investments (48) (179) (227)
(Gain)/loss on valuation of
current asset investments (6) 18 12
Gain on disposal of fixed asset
investments (1,458) (409) (1,867)
Loss on disposal current asset
investments 2 21 23
Decrease in debtors 90 68 158
Increase/(decrease) in creditors 73 (82) (9)
Outflow from operating
activities (145) (74) (219)
Notes to the Financial Statements
1. Principal Accounting Policies
The financial statements have been prepared under the historical cost
convention, except for the revaluation of certain financial
instruments, and in accordance with UK Generally Accepted Accounting
Practice (UK GAAP). Where presentational guidance set out in the
Statement of Recommended Practice (SORP) "Financial Statements of
Investment Trust Companies", revised December 2005, is consistent
with the requirements of UK GAAP, the directors have sought to
prepare the financial statements on a consistent basis compliant with
the recommendations of the SORP.
The principal accounting policies have remained unchanged from those
set out in the Company's 2007 annual report and financial
statements. A summary of the principal accounting policies is set
out below.
The accounts have been drawn up to include a statutory profit and
loss account and a note of historical cost profits and losses in
accordance with Schedule 4 of the Companies Act 1985 and Financial
Reporting Standard 3 (Reporting Financial Performance). Investment
company status was revoked on 23 March 2007.
Investments
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 26, the
investments will be designated as fair value through profit and loss
("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.
Investments in AIM-quoted companies will be stated at bid price at
the balance sheet date.
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. For the avoidance
of doubt, Phoenix VCT plc does not hold any unquoted investments.
Gains and losses arising from changes in fair value of investments
are recognised as part of the capital return within the profit and
loss account and allocated to the capital reserve - realised.
In preparation of the valuations of assets the directors are required
to make judgements and estimates that are reasonable and prudent.
Current asset investments
Current asset investments comprise money market funds and are
designated as FVTPL. Gains and losses arising from changes in fair
value of investments are recognised as part of the capital return
within the profit and loss account and allocated to the revaluation
reserve as appropriate.
The current asset investments are all invested with the Company's
cash manager and are readily convertible into cash at the choice of
the Company. The current asset investments are held for trading, are
actively managed and the performance is evaluated on a fair value
basis in accordance with a documented investment strategy.
Information about them has to be provided internally on that basis to
the Board.
Income
Investment income includes interest earned on bank balances and
income from money market securities. Dividend income is shown net of
any related tax credit.
Dividends receivable are brought into account when the Company's
right to receive payment is established and there is no reasonable
doubt 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.
Expenses
All expenses are accounted for on an accruals basis. Expenses are
charged wholly to revenue with the exception of the investment
management fee, which has been charged 25% to the revenue account and
75% to the realised capital reserve to reflect, in the Directors'
opinion, the expected long term split of returns in the form of
income and capital gains respectively from the investment portfolio.
Revenue and capital
The revenue column of the profit and loss account includes all income
and revenue expenses of the Company. The capital column includes
realised and unrealised gains and losses on investments. Gains and
losses arising from changes in fair value are considered to be
realised only to the extent that they are readily convertible to cash
in full at the balance sheet date.
Taxation
Corporation tax payable is applied to profits chargeable to
corporation tax, if any, at the current 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 where transactions or events have occurred at that
date that will result in an obligation to pay more, or a right to pay
less tax, with the exception that deferred tax assets are recognised
only to the extent that the directors consider that it is more likely
than not that there will be suitable taxable profits from which the
future reversal of the underlying timing difference can be deducted.
Cash and liquid resources
Cash, for the purposes of the cash flow statement, comprises cash in
hand and deposits repayable on demand, less overdrafts payable on
demand. Liquid resources 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. Liquid
resources comprise term deposits of less than one year (other than
cash), government securities, investment grade bonds and investments
in money market managed funds.
Loans and receivables
The Company's loans and receivables are initially recognised at cost
and subsequently measured at fair value.
Financial instruments
The Company's principal financial assets are its investments and the
policies in relation to those assets are set out above. 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.
Dividends
Dividends payable are recognised as distributions in the financial
statements when the Company's liability to make payment has been
established. This liability is established when the dividends
proposed by the Board are approved by the shareholders.
2. Income
Ordinary shares 'C' shares Total
31 October 31 October
31 October 2008 2008 2008
GBP'000 GBP'000 GBP'000
Interest receivable on money
market securities and bank
balances 9 28 37
Dividends received 165 73 238
174 101 275
Ordinary shares 'C' shares Total
31 October 31 October
31 October 2007 2007 2007
GBP'000 GBP'000 GBP'000
Interest receivable on money
market securities and bank
balances 50 131 181
Dividends received 115 51 166
165 182 347
3. Management fees
Ordinary Shares
31 October 2008 31 October 2007
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment management fee 59 175 234 56 170 226
Irrecoverable VAT thereon 10 31 41 10 30 40
69 206 275 66 200 266
'C' shares
31 October 2008 31 October 2007
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment management fee 31 92 123 28 84 112
Irrecoverable VAT thereon 5 16 21 5 14 19
36 108 144 33 98 131
For the purposes of the revenue and capital columns in the income
statement, the management fee (including VAT) has been allocated 25
per cent to revenue and 75 per cent 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.
Octopus provides investment management, accounting, administration
and secretarial services to the Company under a management agreement
which runs for a period of five years with effect from 24 March 2005
and may be terminated at any time thereafter by not less than twelve
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 basis upon which the management fee is
calculated is disclosed within note 19 to the financial statements.
The Chancellor of the Exchequer announced in his budget statement on
12 March 2008 that the Finance Act 2008 would contain draft
legislation exempting VCTs from VAT on management fees with effect
from 1 October 2008.
4. Other expenses
Ordinary
shares 'C' shares Total
31 October 31 October 31 October
2008 2008 2008
GBP'000 GBP'000 GBP'000
Accounting and administration
services 34 32 66
Directors' remuneration 33 17 50
Fees payable to the Company's
auditor for the audit of the
financial statements 10 6 16
Fees payable to the Company's
auditor for other services - tax
compliance 2 1 3
Other expenses 92 46 138
171 102 273
Ordinary
shares 'C' shares Total
31 October 31 October 31 October
2007 2007 2007
GBP'000 GBP'000 GBP'000
Accounting and administration
services 33 32 65
Directors' remuneration 31 16 47
Fees payable to the Company's
auditor for the audit of the
financial statements 9 5 14
Fees payable to the Company's
auditor for other services - tax
compliance 2 1 3
Other expenses 133 57 190
208 111 319
Total annual running costs are capped at 3.5% of net assets. For the
year to 31 October 2008 the running costs were 2.8% of net assets for
the Ordinary shares and 3.4% for the 'C' shares.
5. Directors' remuneration
Ordinary shares 'C' shares Total
31 October 31 October
31 October 2008 2008 2008
GBP'000 GBP'000 GBP'000
Directors' emoluments
Mr S Hazell-Smith
(Chairman) 13 7 20
Mr M Cooper 10 5 15
Mr T Morgan 10 5 15
33 17 50
Ordinary shares 'C' shares Total
31 October 31 October
31 October 2007 2007 2007
GBP'000 GBP'000 GBP'000
Directors' emoluments
Mr S Hazell-Smith
(Chairman) 13 6 19
Mr M Cooper 9 5 14
Mr T Morgan 9 5 14
31 16 47
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 three (2007: three).
6. Tax on ordinary activities
The corporation tax charge for the year was GBPnil (2007: GBPnil).
Factors affecting the tax charge for the current year:
The current tax charge for the year differs from the standard rate of
corporation tax in the UK of 29% (2007: 19%). The differences are
explained below.
Ordinary
shares 'C' shares Total
31 October 31 October 31 October
2008 2008 2008
Current tax reconciliation: GBP'000 GBP'000 GBP'000
Loss on ordinary activities before
tax (5,763) (2,622) (8,385)
Current tax at 29% (1,671) (760) (2,431)
Expenses not deductible for tax
purposes 1,595 726 2,321
Unrelieved tax losses 76 34 110
Total current tax charge - - -
Ordinary
shares 'C' shares Total
31 October 31 October 31 October
2007 2007 2007
Current tax reconciliation: GBP'000 GBP'000 GBP'000
Profit on ordinary activities before
tax 1,202 489 1,691
Current tax at 19% 229 93 322
Income not liable to tax (300) (107) (407)
Excess management charges 71 14 85
Total current tax charge - - -
Excess management charges of GBP1,675,000 (2007: GBP1,298,000) have been
carried forward at 31 October 2008 and are available for offset
against future taxable income subject to agreement with HMRC.
Approved venture capital trusts are exempt from tax on capital gains
within the Company. Since the directors intend that the Company will
continue to conduct its affairs so as to maintain its approval as a
venture capital trust, no current deferred tax has been provided in
respect of any capital gains or losses arising on the revaluation or
disposal of investments.
7. Dividends
Ordinary shares 'C' shares Total
31 October 31 October
31 October 2008 2008 2008
GBP'000 GBP'000 GBP'000
Interim dividend per share - 556 112 668
(Ord share: 5.0p, 'C' share:
2.0p)
Final proposed dividend - (Ord 556 161 717
share: 5.0p, 'C' share: 3.0p)
Ordinary shares 'C' shares Total
31 October 31 October
31 October 2007 2007 2007
GBP'000 GBP'000 GBP'000
Interim dividend per share -
(Ord share: 6.0p, 'C' share:
3.0p) 663 160 823
Final proposed dividend - (Ord
share: 6.0p, 'C' share: 3.0p) 676 167 843
The final dividends for the year ended 31 October 2008, subject to
shareholder approval at the Annual General Meeting, will be paid on 3
April 2009 to those shareholders on the register on 13 February 2009.
8. (Loss)/earnings per share
Ordinary Shares
The (loss)/earnings per share is based on loss after tax of
GBP(5,763,000) (2007: GBP1,202,000) and on 11,151,594 (2007: 10,806,191)
shares, being the weighted average number of shares in issue during
the year.
'C' shares
The (loss)/earnings per share is based on loss after tax of
GBP(2,622,000) (2007: GBP489,000) and on 5,547,722 (2007: 5,322,479)
shares, being the weighted average number of shares in issue during
the year.
There are no potentially dilutive capital instruments in issue and,
therefore, no diluted returns per share figures are relevant. The
basic and diluted earnings per share are therefore identical.
9. Net asset value per share
Ordinary shares
The calculation of net asset value per share as at 31 October 2008 is
based on net assets of GBP4,824,000 (2007: GBP11,945,000) divided by the
11,111,439 (2007: 11,266,960) ordinary shares in issue at that date.
'C' shares
The calculation of net asset value per share as at 31 October 2008 is
based on net assets of GBP3,141,000 (2007: GBP6,183,000) divided by the
5,356,248 (2007: 5,579,429) ordinary shares in issue at that date.
10. Fixed asset investments
Ordinary shares 'C' shares Total
31 October 31 October
31 October 2008 2008 2008
GBP'000 GBP'000 GBP'000
Valuation and net book amount:
Book cost as at 1 November 2007 10,240 4,089 14,329
Revaluation as at 1 November
2007 (349) 410 61
Valuation at 1 November 2007 9,891 4,499 14,390
Movement in the year:
Purchases at cost 364 343 707
Disposal proceeds (1,246) (367) (1,613)
Profit on realisation of
investments - current year 82 65 147
Loss on valuation in year (5,680) (2,578) (8,258)
Valuation at 31 October 2008 3,411 1,962 5,373
Book cost at 31 October 2008 9,703 4,092 13,795
Revaluation to 31 October 2008 (6,292) (2,130) (8,422)
Valuation at 31 October 2008 3,411 1,962 5,373
Further details of the fixed asset investments held by the Company
are shown within the Investment Manager's Review on pages 7 to 15.
All investments are designated as fair value through profit or loss
at the time of acquisition, and all capital gains or losses on
investments so designated. 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 unrealised.
At 31 October 2008 and 31 October 2007 there were no commitments in
respect of investments approved by the Manager but not yet completed.
11. Current asset investments
Current asset investments at 31 October 2008 money market funds and
at 31 October 2007 comprised bonds and money market funds.
Ordinary 'C'
shares shares Total
31 31
31 October October October
2008 2008 2008
GBP'000 GBP'000 GBP'000
Money market securities at cost at 1
November 2007:
Bonds 402 782 1,184
Money Market Funds 1,188 344 1,532
Revaluation as at 1 November 2007:
Bonds 2 (43) (41)
Money Market Funds 4 - 4
Valuation as at 1 November 2008 1,596 1,083 2,679
Movement in the year:
Purchases at Cost:
Money 1,780 4,554
Market Funds 2,774
Disposal proceeds:
Bonds (405) (739) (1,144)
Money (1,153) (3,839)
Market Funds (2,686)
Gain in year on realisation of
investments:
Bonds 1 - 1
Valuation as at 31 October 2008 1,280 971 2,251
Cost at 31 October 2008:
Money 971 2,251
Market Funds 1,280
Revaluation to 31 October 2008:
Money - -
Market Funds -
Valuation as at 31 October 2008 1,280 971 2,251
12. Debtors
Ordinary shares 'C' shares Total
31 October 2008 31 October 2008 31 October 2008
GBP'000 GBP'000 GBP'000
Prepayments 6 4 10
Accrued income 113 38 151
Other debtors 19 - 19
138 42 180
Ordinary shares 'C' shares Total
31 October 2007 31 October 2007 31 October 2007
GBP'000 GBP'000 GBP'000
Prepayments 6 3 9
Accrued income 59 49 108
Other debtors - 39 39
65 91 156
13. Creditors: amounts falling due within one year
Ordinary shares 'C' shares Total
31 October 2008 31 October 2008 31 October 2008
GBP'000 GBP'000 GBP'000
Accruals 41 22 63
Other creditors - 19 19
41 41 82
Ordinary shares 'C' shares Total
31 October 2007 31 October 2007 31 October 2007
GBP'000 GBP'000 GBP'000
Accruals 52 23 75
Other creditors 37 - 37
89 23 112
14. Share capital
31 October 2008 31 October 2007
GBP'000 GBP'000
Authorised:
Equity - 30,000,000 Ordinary shares 3,000 3,000
of 10p
Equity - 10,000,000 'C' shares of 10p 1,000 1,000
4,000 4,000
Allotted and fully paid up:
Equity - 11,111,439 (2007: 1,111 1,128
11,266,960) Ordinary shares of 10p
Equity - 5,356,248 (2007: 5,579,429) 536 558
'C' shares of 10p
1,647 1,686
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. The Company is not subject to any
externally imposed capital requirements.
During the year, the Company repurchased the following Ordinary
shares for cancellation:
* 22 February 2008: 127,050 Ordinary shares at a price of 79.0p per
share
* 10 April 2008: 30,522 Ordinary Shares at a price of 69.0p per
share
* 30 April 2008: 28,965 Ordinary Shares at a price of 69.0p per
share
* 19 September 2008: 9,620 Ordinary Shares at a price of 50.0p per
share
The total nominal value of the Ordinary shares repurchased was
GBP19,616 representing 1.8% of the issued share capital.
During the year the Company allotted the following Ordinary shares
* 10 December 2007: 2,442 Ordinary shares at a price of 102.4p per
share
* 7 September 2008: 38,194 Ordinary shares at a price of 53.0p per
share
During the year, the Company repurchased the following 'C' shares for
cancellation:
* 21 February 2008: 5,828 'C' shares at a price of 85.0p per share
* 10 April 2008: 9,765 'C' shares at a price of 78.0p per share
* 18 July 2008: 40,000 'C' shares at a price of 73.4p per share
* 18 September 2008: 10,000 'C' shares at a price of 65.0p per
share
* 19 September 2008: 53,338 'C' shares at a price of 65.0p per
share
* 17 October 2008: 104,250 'C' shares at a price of 56.5p per share
The total nominal value of the shares repurchased was GBP22,318
representing 4.2% of the issued share capital.
The Company did not issue any 'C' shares during the year.
15. Reserves
Capital
Special Capital reserve Capital
Ordinary Share distributable redemption - reserve - Revenue
shares premium reserve reserve realised unrealised reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 31
October 2007 - 9,646 108 1,717 (343) (311)
Cancellation
of own shares - (146) 19 - - -
Issue of
shares (net of
costs) 18 - - - - -
Loss on
ordinary
activities
after tax - - - - - (5,763)
Capitalisation
of management
fees (127) - 127
Prior period
gains/losses
on disposal - - - 269 (269) -
Current period
gains/losses
on disposal - - - 83 - (83)
Gains/losses
on revaluation - - - - (5,680) 5,680
Dividends paid - - - (1,232) - -
Balance at 31
October 2008 18 9,500 127 710 (6,292) (350)
Capital
Special Capital reserve Capital
Share distributable redemption - reserve - Revenue
'C' shares premium reserve reserve realised unrealised reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 31
October 2007 - 4,813 12 496 367 (63)
Cancellation
of own shares - (141) 22 - - -
Issue of
shares (net of
costs) - - - - - -
Loss on
ordinary
activities
after tax - - - - - (2,622)
Capitalisation
of management
fees - - - (81) - 81
Prior period
gains/losses
on disposal - - - (77) 77 -
Current period
gains/losses
on disposal - - - 65 - (65)
Gains/losses
on revaluation - - - - (2,578) 2,578
Dividends paid - - - (279) - -
Balance at 31
October 2008 - 4,672 34 124 (2,134) (91)
When the Company revalues its investments during the period, any
gains or losses arising are credited/charged to the profit and loss
account. Unrealised gains/losses are then transferred to the capital
reserve - unrealised. When an investment is sold any balance held on
the revaluation reserve is transferred to the capital reserve -
realised as a movement in reserves. The purpose of the special
distributable reserve was to create a reserve which will be capable
of being used by the Company to pay dividends and for the purpose of
making repurchases of its own shares in the market with a view to
narrowing the discount at which the Company's shares trade to net
asset value.
16. Financial instruments and risk management
The Company's financial instruments comprise equity, cash balances
and liquid resources including debtors and creditors. The Company
holds financial assets in accordance with its investment policy of
investing mainly in a portfolio of VCT qualifying unquoted and
AIM-quoted securities whilst holding a proportion of its assets in
cash or near-cash investments in order to provide a reserve of
liquidity.
Fixed asset investments (see note 10) are valued at fair value. For
quoted investments this is either bid price or the latest traded
price, depending on the convention of the exchange on which the
investment is quoted.. 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 are
held at the year end is equal to their book value.
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 price 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
statement on pages 29 to 31, having regard to the possible effects of
adverse price movements, with the objective of maximising overall
returns to shareholders. Investments in unquoted companies, by their
nature, usually involve a higher degree of risk than investments in
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 page 10 to 15. An analysis of investments
between debt and equity instruments is given in note 10.
71% of Ordinary Shares (31 October 2007: 83%) by value of the
Company's net assets comprises equity securities quoted on AIM. A 5%
increase in the bid price of these securities as at 31 October 2008
would have increased net assets and the total return for the year by
GBP171,000 (31 October 2007: GBP495,000); a corresponding fall would have
reduced net assets and the total return for the year by the same
amount.
63% of 'C' Shares (31 October 2007: 73%) by value of the Company's
net assets comprises equity securities quoted on AIM. A 5% increase
in the bid price of these securities as at 31 October 2008 would have
increased net assets and the total return for the year by GBP100,000
(31 October 2007: GBP225,000); a corresponding fall would have reduced
net assets and the total return 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.
Fixed rate
The table below summarises weighted average effective interest rates
for the fixed interest-bearing financial instruments:
Ordinary
Shares As at 31 October 2008 As at 31 October 2007
Total Weighted Total Weighted
fixed average fixed average
rate time for rate time for
portfolio Weighted which portfolio Weighted which
by average rate is by average rate is
value interest fixed in value interest fixed in
GBP'000 rate % years GBP'000 rate % years
Listed
fixed-interest
investments - - - 422 5.2 0.17
- 422
'C' Shares As at 31 October 2008 As at 31 October 2007
Total Weighted Total Weighted
fixed average fixed average
rate time for rate time for
portfolio Weighted which portfolio Weighted which
by average rate is by average rate is
value interest fixed in value interest fixed in
GBP'000 rate % years GBP'000 rate % years
Listed
fixed-interest
investments - - - 573 7.8 0.92
- - - 573
Due to the relatively short period to maturity of the fixed rate
investments held within the portfolio, it is considered than an
increase or decrease of 1% in interest rates as at the reporting date
would not have had a significant effect on the Company's net assets
or total return for the year.
Floating rate
The Company's floating rate investments comprise cash held on
interest-bearing deposit accounts and, where appropriate, within
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 4.5% at 31 October 2008 (31 October 2007:
5.75%). The amounts held in floating rate investments at the balance
sheet date were as follows:
31 October 2008 31 October 2007
Ordinary Shares GBP000 GBP000
Cash on deposit & money market funds 1,316 1,674
1,316 1,674
31 October 2008 31 October 2007
'C' shares GBP000 GBP000
Floating rate notes - 190
Cash on deposit & money market funds 1,178 877
1,178 1,067
A 1% increase in the base rate would increase income receivable on
Ordinary Shares from these investments and the total return for the
year by GBP13,000 (31 October 2007: GBP17,000)
A 1% increase in the base rate would increase income receivable on
'C' Shares from these investments and the total return for the year
by GBP12,000 (31 October 2007: GBP11,000)
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. The carrying values
of financial assets represent the maximum credit risk exposure at the
balance sheet date.
At 31 October 2008 the Company's financial assets exposed to credit
risk comprised the following:
31 October 2008 31 October 2007
Ordinary Shares GBP000 GBP000
Investments in fixed interest
instruments - 422
Cash on deposit & money market funds 1,316 1,674
Accrued dividends and interest
receivable - 59
1,316 2,155
31 October 2008 31 October 2007
'C' Shares GBP000 GBP000
Investments in fixed interest
instruments - 573
Investments in floating rate
instruments - 190
Cash on deposit & money market funds 1,178 1,067
Accrued dividends and interest
receivable - 49
1,178 1,879
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..
Those assets of the Company which are traded on recognised stock
exchanges are held on the Company's behalf by third party custodians
(Goldman Sachs International in the case of listed money market
securities and Charles Stanley Limited in the case of AIM 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.
Credit risk arising on the sale of investments is considered to be
small due to the short settlement and the contracted agreements in
place with the settlement lawyers.
The Company's interest-bearing deposit and current accounts are
maintained with Goldman Sachs International and HSBC PLC.
Other than cash or liquid money market funds, there were no
significant concentrations of credit risk to counterparties at 31
October 2008 or 31 October 2007.
Liquidity risk
The Company's financial assets include investments in AIM-quoted
companies, which by their nature; involve a higher degree of risk
than investments on the main market. 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 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 funds raised since incorporation are currently used to fund the
Company's primary objective of investing in venture capital
opportunities which accord with its investment strategy. As at 31
October 2008, some 92% (2006: 93.5%) of the Ordinary Share funds
raised and 81% (2006: 80.4%) of the 'C' Share funds raised have been
utilised in this investment process. The remaining funds were
primarily represented by cash, money market securities and bonds
shown as current asset investments in the balance sheet.
The Company maintains sufficient investments in cash and readily
realisable securities to pay accounts payable and accrued expenses.
At 31 October 2008 these investments were valued at GBP1,316,000 for
ordinary shares (31 October 2007: 2,517) and GBP1,177,000 for 'C'
Shares. (31 October 2007: GBP1,867).
17. Post balance sheet events
There are no post balance sheet events to report
18. Contingencies, guarantees and financial commitments
As mentioned in the Chairman's Statement on pages 4 to 6, there may
be an opportunity to obtain a repayment of VAT paid on management
fees to Octopus. It is not yet clear to what degree this may be
possible. For the purposes of these accounts, and with guidance from
our advisers, we have accrued income of GBP106,000 for the Ordinary
shares and GBP36,000 for the 'C' shares, being approximately 90% of the
anticipated VAT rebate.
There were no further contingencies, guarantees or financial
commitments as at 31 October 2008 (2007: GBPnil).
19. Related party transactions
Matt Cooper, a non-executive Director of Phoenix VCT plc, is a
Director of Octopus. Phoenix VCT plc has employed Octopus throughout
the year as investment manager. Phoenix VCT plc has paid Octopus
GBP275,000 (2007: GBP226,000) (including irrecoverable VAT at the
applicable rate) in the year as a management fee and there is GBPnil
outstanding at the balance sheet date. The management fee is payable
quarterly in advance and is based on 2.0% of the net asset value
calculated at annual intervals as at 31 October. Octopus also
provides accounting, administrative and secretarial services to the
Company, payable quarterly in advance for a fee of GBP25,000 for the
Ordinary Share portfolio and GBP25,000 for the 'C' Share portfolio per
annum, which increases annually in line with the movement in RPI.
There was GBPnil outstanding at the balance sheet date for the
accounting and administrative services.
In addition, Octopus is entitled to an annual performance related
incentive fee which is equal to 20%. of the amount by which the
increase in the net asset value attributable of the Fund in any
accounting period and all prior accounting periods, after adding back
distributions made by the Fund, exceeds an amount equal to simple
interest on the gross proceeds raised by the Fund at a rate of HSBC
base rate plus 3%, less the amount of any performance fee paid in
respect of prior accounting periods. No performance fee was payable
as at 31 October 2008 since the performance criteria has not been
met. Furthermore, the directors do not consider it likely that the
criteria will be met in the short to medium term and therefore no
accrual has been made in respect of these performance fees.
=--END OF MESSAGE---
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
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