Half-yearly report
September 28 2009 - 11:46AM
UK Regulatory
TIDMOPV
Octopus Protected VCT 2 plc
Half-Yearly Results
28 September 2009
Octopus Protected VCT 2 plc, managed by Octopus Investments Limited,
today announces the Half-Yearly results for the six months ended 31
July 2009.
These results were approved by the Board of Directors on 28 September
2009.
You may view the Half-Yearly Report in full at
www.octopusinvestments.com by navigating to the VCT Meetings &
Reports under the 'Services' section.
About Octopus Protected VCT 2
plc
Octopus Protected VCT 2 plc ("Protected 2," "Company" or "Fund") is a
venture capital trust ("VCT") and is managed by Octopus Investments
Limited ("Octopus" or "Manager").
Protected 2 was incorporated on 9 June 2008 with the first allotment
of equity occurring on 6 October 2008. Protected 2 opened for
subscription (the "Offer") on 17 July 2008 and, pursuant to the
supplementary prospectus dated 3 April 2009, the offer was extended
and subsequently closed, once fully subscribed, on 30 June 2009. The
Company will invest primarily in unquoted UK smaller companies and
aims to deliver absolute returns on its investments.
Financial Summary
Six months to Period to
31 July 2009 31 January 2009
Net assets (GBP'000s) 10,771 2,087
Net loss after tax (GBP'000s) (153) (84)
Net asset value per share ("NAV") 92.5p 90.8p
Chairman's Statement
Introduction
I am pleased to present the half-yearly report of Octopus Protected
VCT 2 plc for the period ended 31 July 2009.
As at 31 July 2009, the Company had raised gross proceeds of GBP11.5
million through the Offer for new subscriptions.
Performance
At 31 July 2009 the Company's net asset value per share ("NAV") was
92.5p which compares to 90.8p at 31 January 2009. This uplift has
been partially due to the spreading of fixed costs over a larger
number of shares as full subscription has now been attained. The
performance of the Fund has also been relatively stable as a large
proportion of its assets are held in cash and cash equivalent
securities. Over the longer term, as the underlying portfolio of
investments is created, the Company's NAV will be linked increasingly
to the value of the investments in the portfolio companies.
During the period investments have been made, as discussed below.
These are unchanged in value at the period end.
Investment Portfolio
As mentioned in the Annual Report, since 31 January 2009 six
investments have been made. The Fund invested GBP250,000 into CSL
Dualcom Limited and GBP350,000 in to Diagnos Limited. Furthermore, a
total of GBP2.4 million was invested into four companies that have been
established to seek suitable qualifying investments across a range of
sectors.
CSL DualCom Limited
CSL DualCom (www.csldual.com) is the UK's leading supplier of dual
path signalling devices, which link burglar alarms to the police or a
private security firm. The devices communicate using a telephone line
or broadband connection and a wireless link from Vodafone, which has
been a partner since 2000.
Diagnos Limited
Diagnos (www.autologic-diagnos.co.uk) develops and sells
sophisticated automotive diagnostic software and hardware that
enables independent mechanics, dealerships and garages to service and
repair vehicles. Mechanics require a diagnostic tool to communicate
with the in-car computer in order to measure, monitor and, where
necessary, fix the electronic process or system.
Both companies remain profitable and have been relatively unaffected
by the current economic environment. In terms of new investments, we
are seeing good deal flow and are at offer stage with a number of new
deals.
Investment Strategy
The Fund is being invested on the basis of taking less risk than a
typical VCT. Typically the Fund will receive its return from
interest paid on secured loan notes as well as an exposure to the
value of the shares of a company. The investment strategy is to
derive sufficient return from the secured loan notes to achieve the
Fund's investment aims and to use the equity exposure to boost
returns. As portfolio companies are unquoted the Fund will receive a
return from an equity holding when a company is sold.
The Manager of the Fund aims to reduce risk by investing in well
managed and profitable businesses with strong recurring cash-flows.
Furthermore with the majority of the investment being made in the
form of a secured loan, in the event of the business failing, the
Fund will rank ahead of unsecured creditors and equity investors.
VCT Qualifying Status
PricewaterhouseCoopers LLP provides the Board and Investment Manager
with advice on the ongoing compliance with HM Revenue and Customs
(HMRC) rules and regulations concerning VCTs. As at 31 July 2009,
over 26.4% of the portfolio (as measured by HMRC rules) was invested
in VCT qualifying investments. The Manager does not foresee any
issues with reaching the required investment hurdle of 70% before the
third anniversary of the end of the financial year in which investors
subscribed to the Fund.
Principal Risks and Uncertainties
The principal risks and uncertainties are set out in note 5 of the
Notes to the Half-Yearly Report on page 10.
Outlook
While the Fund is insulated from the stock market, all companies face
challenging trading conditions. In this environment, it is the good
companies with strong management teams and sound business models,
such as those in your portfolio, that have the best chance of
succeeding.
The Investment Manager is in a strong position to provide the support
that companies need, which is especially crucial while banks refuse
to lend or impose high lending terms. Our strategy is focused on
strengthening businesses for the future through guidance and funding.
In these ways, we are working to ensure ongoing value from your VCT
investment.
Protected 2 invests alongside three other VCTs with the same
investment strategy under the management of Octopus.
It is expected that co-investment will allow Protected 2 to invest in
larger, safer companies and to invest on more
favourable terms. Your Board monitors the development of Octopus
closely. The growing resources of Octopus as well as its day-to-day
management of the Fund continue to give us confidence that the
company will perform well under Octopus management.
If you have any questions on any aspect of your investment, please
call one of the team on 0800 316 2347.
Murray Steele
Chairman
28 September 2009
Investment Portfolio
%
equity
Carrying held by
value at all
31 % equity funds
Unquoted Investment Unrealised January held by managed
qualifying at cost profit/(loss) 2009 Protected by
investments Sector (GBP'000) (GBP'000) (GBP'000) 2 Octopus
CSL Dualcom Security
Limited devices 250 - 250 N/A N/A
Diagnos
Limited Automotive 350 - 350 N/A N/A
PubCo
Services Restaurants &
Limited pubs 600 - 600 14.5% 49.0%
GreenCo
Services
Limited Environmental 600 - 600 14.5% 49.0%
Salus
Services I
Limited Healthcare 600 600 14.5% 49.0%
BusinessCo
Services Business
Limited services 600 - 600 14.5% 49.0%
Total unquoted qualifying
investments 3,000 - 3,000
Money
market
funds 7,461 - 7,461
Cash at
bank 412 - 412
Total money market funds
and cash at bank 7,873 - 7,873
Total
investments 10,873 - 10,873
Net current
assets 102
Total net
assets 10,771
Responsibility Statement of the Directors in respect of the
Half-Yearly Report
We confirm that to the best of our knowledge:
* the half-yearly financial statements have been prepared in
accordance with the statement "Half-Yearly Financial Reports"
issued by the UK Accounting Standards Board;
* the half-yearly report includes a fair review of the information
required by the Financial Services Authority Disclosure and
Transparency Rules, being:
* an indication of the important events that have occurred
during the first six months of the financial year and their
impact on the condensed set of financial statements.
* a description of the principal risks and uncertainties for
the remaining six months of the year; and
* a description of related party transactions that have taken
place in the first six months of the current financial year,
that may have materially affected the financial position or
performance of the Company during that period and any
changes in the related party transactions described in the
last annual report that could do so.
On behalf of the Board
Murray Steele
Chairman
28 September 2009
Income Statement
Period to 31 January
Six months to 31 July 2009 2009
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 25 - 25 - - -
Investment
management fees (18) (55) (73) (2) (7) (9)
Other expenses (105) - (105) (75) - (75)
Loss on ordinary
activities before
tax (98) (55) (153) (77) (7) (84)
Taxation on
profit/(loss) on
ordinary
activities - - - - - -
Loss on ordinary
activities after
tax (98) (55) (153) (77) (7) (84)
Earnings per
share - basic and
diluted (1.2)p (0.7)p (1.9)p (4.8)p (0.4)p (5.2)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 half-yearly
report
* The Company has no recognised gains or losses other than those
disclosed in the income statement.
Reconciliation of Movements in Shareholders' Funds
Six months ended Period to
31 July 2009 31 January 2009
GBP'000 GBP'000
Shareholders' funds at start of
period 2,087 -
Loss on ordinary activities after
tax (153) (84)
Issue of equity (net of expenses) 8,837 2,171
Shareholders' funds at end of
period 10,771 2,087
Balance Sheet
As at 31 July 2009 As at 31 January 2009
GBP'000 GBP'000 GBP'000 GBP'000
Fixed asset investments 3,000 - -
Current assets:
Money market securities 7,461 2,000
Debtors 12 1
Cash at bank 412 240
7,885 2,241
Creditors: amounts falling
due within one year (114) (154)
Net current assets 7,771 2,087
Net assets 10,771 2,087
Called up equity share
capital 1,165 230
Share premium account 9,843 1,941
Capital reserve - Realised (62) (7)
Revenue Reserve (175) (77)
Total equity shareholders'
funds 10,771 2,087
Net asset value per share 92.5p 90.8p
Cash Flow Statement
Six months to Period to
31 July 2009 31 January 2009
GBP'000 GBP'000
Net cash (outflow)/inflow from
operating activities (204) 69
Financial investment :
Purchase of fixed asset investments (3,000) -
Management of liquid resources :
Purchase of current asset investments (5,711) (2,000)
Disposal of current asset investments 250 -
Financing
Issue of own shares 9,307 2,249
Share issue expenses (470) (78)
Increase in cash at bank 172 240
Reconciliation of Net Cash Flow to Movement in Net Funds
Six months to Period to
31 July 2009 31 January 2009
GBP'000 GBP'000
Increase in cash at bank 172 240
Increase in cash equivalent securities 5,461 2,000
Opening net cash resources 2,240 -
Net cash resources at end of period 7,873 2,240
Reconciliation of Loss before Taxation to Cash Flow from Operating
Activities
Six months to Period to
31 July 2009 31 January 2009
GBP'000 GBP'000
Loss on ordinary activities before tax (153) (84)
Increase in debtors (11) (1)
(Decrease)/increase in creditors (40) 154
Net cash (outflow)/inflow from
operating activities (204) 69
Notes to the Half-Yearly Report
1. Basis of preparation
The unaudited half-yearly results which cover the six months to 31
July 2009 have been prepared in accordance with the Accounting
Standard Board's (ASB) statement on half-yearly financial reports
(July 2007) and adopting the accounting policies set out in the
statutory accounts of the Company for the year ended 31 January 2009,
which were prepared under UK GAAP and in accordance with the
Statement of Recommended Practice for Investment Companies issued by
the Association of Investment Companies in January 2009.
2. Publication of non-statutory accounts
The unaudited half-yearly results for the six months ended 31 July
2009 do not constitute statutory accounts within the meaning of
Section 240 of the Companies Act 1985 and have not been delivered to
the Registrar of Companies. The comparative figures for the period
ended 31 January 2009 have been extracted from the audited financial
statements for that year, which have been delivered to the Registrar
of Companies. The independent auditor's report on those financial
statements under Section 235 of the Companies Act 1985 was
unqualified. This half-yearly report has not been reviewed by the
Company's auditor.
3. Earnings per share
The earnings per share at 31 July 2009 is calculated on the basis of
8,148,112 (31 January 2009: 1,609,161) 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 return per share figures are relevant. The
basic and diluted earnings per share are therefore identical.
4. Net asset value per share
The net asset value per share is based on net assets as at 31 July
2009 divided by 11,650,327 (31 January 2009: 2,297,666) Shares in
issue at that date.
5. Principal Risks and Uncertainties
The Company's assets consist of equity and fixed-rate interest
investments, cash and liquid resources. Its principal risks are
therefore market risk, credit risk and liquidity risk. Other risks
faced by the Company include economic, loss of approval as a VCT,
investment and strategic, regulatory, reputational, operational and
financial risks. These risks, and the way in which they are managed,
are described in more detail in the Company's Annual Report and
Accounts for the year ended 31 January 2009. The Company's principal
risks and uncertainties have not changed materially since the date of
that report.
6. Related Party Transactions
Octopus acts as the investment manager of the Company. Under the
management agreement, Octopus receives a fee of 2.0 per cent per
annum of the net assets of the Company for the investment management
services. During the period, the Company incurred management fees of
GBP73,000 (31 January 2009: GBP9,000) payable to Octopus. At the period
end there was GBPNil (31 January 2008: Nil) outstanding to Octopus.
Furthermore, Octopus Investments Limited provides administration and
company secretarial services to the Company. Octopus Investments
Limited receives a fee of 0.3 per cent per annum of net assets of the
Company for administration services and GBP10,000 per annum for company
secretarial services.
7. Copies of this statement are being sent to all
shareholders. Copies are also available from the registered office of
the Company at 8 Angel Court, London, EC2R 7HP, and will also be
available to view on the Investment Manager's website at
www.octopusinvestments.com.
=--END OF MESSAGE---
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solely responsible for the content of this announcement.
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