FINAL RESULT
Phoenix VCT plc
Year ended 31 October 2007
About Phoenix VCT plc
Phoenix VCT plc ("Phoenix" or "Company") is a venture capital trust
("VCT") which aims to provide shareholders with attractive tax-free
dividends and long-term capital growth.
The Investment Manager is Octopus Investments Limited ("Octopus" or
"Manager"). The Company was launched in November 2002 and raised
over �11.3 million (�10.8 million net of expenses) through an offer
for subscription.
Phoenix raised more money 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 �5.1 million (�5.0 million
net of expenses) by the closing date of the offer on 30 June 2005.
Financial Highlights
Year to 31 October Year to 31
Ordinary shares 2007 October 2006
Net assets (�'000s) 11,945 11,211
Net profit after tax (�'000s) 1,202 712
Net asset value per share 106.0p 103.8p
Dividend per share - paid and
proposed in year 12.0p 4.35p
Cumulative dividends since launch -
paid and proposed 23.0p 11.0p
Year to 31 October Year to 31
'C' shares 2007 October 2006
Net assets (�'000s) 6,183 5,495
Net profit after tax (�'000s) 489 567
Net asset value per share 110.8p 105.1p
Dividend per share - paid and
proposed in year 6.0p 1.0p
Cumulative dividends since launch
- - paid and proposed 7.0p 1.0p
Chairman's Statement
I am delighted to be reporting an uplift in the Net Asset Value
("NAV") of both the Ordinary share portfolio and the 'C' share
portfolio over the year to 31 October 2007.
Results Review
In the year to 31 October 2007, the NAV per Ordinary share increased
2.1% from 103.8p to 106.0p net of dividends. The Investment Manager
realised a gain of over �2.1 million during the year from the
disposal, either wholly or partially, of a number of investments
which are discussed below. Of this, �674,000 related to gains
generated in prior years carried forward in the revaluation reserve.
Further details are included within the Investment Manager's Review
including a review of the performance of the investments, the key
performance indicator by which the Board measures the performance of
the Company. Consequently, the Board has proposed a dividend of 6.0p
per Ordinary share to be paid on 28 March 2008 to shareholders on the
register on 2 March 2008. This is in addition to the 6.0p interim
dividend paid earlier in the year and will take total dividends paid
and proposed for the year ended 31 October 2007 to 12.0p per Ordinary
share. Cumulative dividends will total 23.0p per Ordinary share
since the Fund's launch. The total return to shareholders, before
payment of this dividend, is 23.0%. This is before taking into
account the 20% upfront tax relief received by initial subscribers.
The table below shows the movement in NAV per share and lists the
dividends that have been paid since the launch of Phoenix:
Dividends NAV + cumulative
Period Ended NAV paid dividends
31 October 100.7p - 100.7p
2003
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
In respect of the 'C' share portfolio, the NAV per share increased
5.4% from 105.1p to 110.8p net of dividends. The Investment Manager
realised a gain of nearly �723,000 million during the year from the
disposal, either wholly or partially, of a number of investments
which are discussed below. Of this, �314,000 related to gains
generated in prior years carried forward in the revaluation reserve.
Further details are included within the Investment Manager's Review
including a review of the performance of the investments, the key
performance indicator by which the Board measures the performance of
the Company. Consequently, the Board has proposed a dividend of 3.0p
per share to be paid on 28 March 2008 to shareholders on the register
on 2 March 2008. This is in addition to the 3.0p interim dividend
paid earlier in the year and will take total dividends paid and
proposed for the year ended 31 October 2007 to 6.0p per Ordinary
share. Cumulative dividends will total 7.0p per Ordinary share since
the Fund's launch. The total return to shareholders, before payment
of this dividend, is 14.8%. This is before taking into account the
40% upfront tax relief received by initial subscribers.
The table below shows the movement in NAV per share and lists the
dividends that have been paid since the launch of Phoenix:
Dividends NAV + cumulative
Period Ended NAV paid dividends
30 April 2005 94.2p - 94.2p
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
Ordinary Share Portfolio
At 31 October 2007, the Ordinary share portfolio comprised
investments in 39 AiM-quoted companies with a total value of �9.9
million and was 93.4% (by net assets) invested in qualifying
holdings.
During the year, we sold, either partially or wholly, ten holdings,
crystallising a net realised profit of �2,134,000; of this realised
profit, �674,000 related to gains generated in prior years carried
forward in the revaluation reserve. Our most successful realisation
came from a reduction in our holding in Tanfield Group plc,
generating �1,476,000 of net profit. At the year end, our remaining
holding was valued at �898,000 compared with an initial cost of
�52,600. Worthington Nicholls Group plc was another successful
realisation returning �753,000 of net profit.
Eleven new investments were made in the year totalling �3.4 million.
Details of these investments are set-out at the end of the Investment
Manager's Review.
'C' Share Portfolio
At 31 October 2007, the 'C' share portfolio contained investments in
28 AiM-quoted companies, with a total value of �4.5 million and was
80.4% (by net assets) invested in qualifying holdings.
During the year, we sold, either partially or wholly, six holdings,
crystallising a net realised profit of �723,000; of this realised
profit, �314,000 related to gains generated in prior years carried
forward in the revaluation reserve. Details of these realisations
are set-out in the Investment Manager's Review. Our most successful
realisation came from the sale of the holding in Worthington Nicholls
Group plc, generating �454,000 of net profit. Tanfield Group plc was
another successful partial realisation returning �401,000 of net
profit.
A total of fifteen new investments were made during the year
totalling �2.7 million. Details of these are set-out in the
Investment Manager's Review.
Share Price
Phoenix's mid market Ordinary share price currently stands at 93.0p
and the 'C' shares at 105.0p.
VCT Qualifying Status
PricewaterhouseCoopers LLP provides the Board and Investment Manager
with advice on the ongoing compliance with HM Revenue & Customs rules
and regulations concerning VCTs. The Board has been advised that
Phoenix VCT plc is in compliance with the conditions laid down by HM
Revenue & Customs for maintaining approval as a VCT.
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 2007, on an individual basis, over 93% of the Ordinary share
investment portfolio was invested in VCT qualifying investments, and
over 80% of the 'C' share investment portfolio. The Board does not
anticipate any issues in achieving and maintaining the required
investment level.
Outlook
In what has been a difficult period for stock markets, particularly
smaller companies, it is useful to reiterate that Phoenix's
investment strategy is designed to focus on the delivery of absolute
returns and a regular tax-free dividend stream for investors. To
this end Phoenix has accumulated realised gains for distribution in
future years in excess of the 6.0p final dividend just declared for
the Ordinary Share portfolio and the 3.0p final dividend declared for
the 'C' Share portfolio. Phoenix continues to focus on investments
into companies that, relative to the VCT qualifying investment
universe, are more established and therefore should prove more
robust. Less than 5% of the value of the Ordinary and 'C' Share
portfolios are invested in companies that are not profitable.
Since October, the continued weakness in global stock markets has
impacted the NAV of both the Ordinary Share portfolio and the C Share
portfolio which stood at 93.9p and 100.5p respectively at 31 December
2007. However, while we expect the high levels of uncertainty to
persist over the coming months, the investment manager's strategy to
focus the portfolio on companies with a niche or proprietary product
or service and avoid exposure to the UK consumer should allow us to
view the future with confidence.
Stephen Hazell-Smith
Chairman
11 February 2008
Investment Manager's Review
Personal Service
At Octopus, we pride ourselves not only on our team's track record
but also on our personalised customer service. We believe in open
communication and our regular updates are designed to keep you
involved and informed.
If you have any questions about this review, or if it would help to
speak to one of the fund managers, please do not hesitate to contact
us on 020 7710 2800.
The AiM Market
The success of AiM in attracting a diverse range of growing companies
and investors from around the globe has meant that the number of
companies listed on AiM has increased from 753 companies in December
2003, when Phoenix was making its initial investments, to over 1,600
companies today. This has resulted in a range of investment
opportunities available to us over recent years.
We have set out below a review of the Ordinary share and 'C' share
portfolios, including details of the investments completed during the
year, realisations made, and a list of all of the holdings in both
portfolios.
Investment Portfolio
Cost of Valuation as at
investment 31 October 2007
%
equity
held by
other
% funds
AiM-listed Ord 'C' Ord 'C' equity managed
Qualifying shares Shares shares Shares held by by
Investments Sector (�'000) (�'000) (�'000) (�'000) Phoenix Octopus
Tanfield Engineering &
Group plc Machinery 53 77 898 659 0.3% 2.3%
Cello Group Media &
plc Entertainment 500 - 665 - 1.3% 8.5%
BBI Holdings
plc Healthcare 189 112 628 195 1.2% 1.0%
Staffline
Recruitment Support
plc Services 300 - 600 - 1.8% 10.1%
Speciality &
CBG Group plc Other Finance 381 216 500 283 3.1% 11.1%
Media &
Hasgrove plc Entertainment 400 200 473 237 2.4% 5.7%
Food
Zetar plc Producers 158 - 436 - 0.7% 1.4%
Vertu Motors General
plc Retailers 400 200 420 210 1.1% 2.1%
Hexagon Human Support
Capital plc Services 315 157 324 162 1.6% 9.9%
Brooks Speciality &
Macdonald plc Other Finance 156 - 322 - 1.1% 0.8%
Support
Augean plc Services 500 - 306 - 0.4% 4.1%
Support
Autoclenz plc Services 425 169 292 116 4.6% 8.2%
Bond Software &
International Computer
Software plc Services 60 - 282 - 0.5% 0.0%
Software &
Computer
Cantono plc Services 420 220 277 145 2.2% 7.7%
Support
Melorio plc Services - 275 - 294 0.9% 0.0%
Construction
Northern Bear & Building
plc Materials 299 149 254 127 1.8% 6.6%
Support
Fountains plc Services 240 - 244 - 1.3% 2.6%
Debts.co.uk Speciality &
plc Other Finance 400 200 240 120 2.7% 0.4%
Pressure
Technologies Engineering &
plc Machinery 165 105 239 152 1.6% 3.7%
Inditherm plc Chemicals 400 100 210 88 6.7% 0.0%
Support
AssetCo plc Services 95 - 197 - 0.1% 0.0%
Jelf Group Speciality &
plc Other Finance 77 51 189 125 0.5% 0.8%
Aerospace &
Cohort plc Defence 135 340 185 401 0.9% 1.1%
Software &
Clarity Computer
Commerce plc Services 367 183 169 85 3.4% 0.0%
Access
Intelligence Support
plc Services 500 150 163 81 6.8% 5.8%
Media Square Media &
plc Entertainment 251 - 150 - 0.6% 1.1%
Media &
Optimisa plc Entertainment 143 247 139 239 2.0% 3.2%
Support
Concateno plc Services - 85 - 135 0.1% 0.4%
Brulines
(Holdings) Support
plc Services 123 111 133 120 0.8% 1.8%
SectorGuard Support
plc Services 200 100 129 64 2.7% 0.0%
InterQuest Support
plc Services - 75 - 129 0.5% 3.7%
Support
Synarbor plc Services 500 - 125 - 0.8% 0.0%
Real Good Food
Food Co plc Producers 500 - 119 - 0.6% 0.0%
Software &
Computer
Invu plc Services 100 100 95 95 0.6% 0.3%
Top Ten
Holdings plc Leisure 200 - 84 - 0.8% 0.8%
Software &
Strategic Computer
Thought plc Services 194 68 81 28 0.8% 0.2%
Myhome
International Support
plc Services 85 85 75 75 0.3% 1.7%
Speciality &
Invocas plc Other Finance 80 50 61 38 0.4% 0.9%
Tissue
Science
Laboratories
plc Healthcare 161 - 54 - 0.3% 0.3%
Software &
Mediasurface Computer
plc Services - 125 - 39 0.5% 0.2%
Screen FX Media &
plc* Entertainment 419 125 35 27 2.1% 0.0%
Bright General
Futures plc Retailers 125 - 24 - 0.0% 0.0%
Baydonhill Speciality &
plc Other Finance 199 - 20 - 1.4% 0.0%
Total AiM-listed qualifying
investments 10,215 4,075 9,837 4,469
Non-qualifying AiM
investments 26 15 54 30
Total non-qualifying
investments 26 15 54 30
Fixed income
securities 1,590 1,126 1,596 1,083
Total investments 11,831 5,216 11,487 5,582
Net current assets 458 601
Total net assets 11,945 6,183
* Screen FX plc changed its name to Vision Media Group plc on 31st
January 2008
Review of Ordinary Share Portfolio
At 31 October 2007, the Phoenix portfolio comprised investments in 39
AiM-quoted companies. During the year, seven investments were
disposed of in their entirety including Ovum plc which received a
cash bid from a third party and Worthington Nicholls plc and
Concateno plc which crystallised profits of 162% and 59%
respectively. The investments in Tanfield Group plc, Bond
International Software plc and Tissue Science Laboratories plc were
reduced during the year, the details of which are shown below.
Sovereign Oilfield Services plc, Plethora Solutions plc, Dawmed plc
and Disperse Group plc were disposed off at a loss as the investment
manager believes they carry risk of further disappointment.
A summary of the realisations is shown below:
Cost of
Initial investment Proceeds of Total
investment realised investment gain/(loss)
Realisations date (�'000) (�'000) (�'000)
Tanfield Group 20 December
plc 2004 147 1,623 1,476
Worthington
Nicholls plc 12 June 2006 465 1,218 753
Concateno plc 7 April 2005 500 794 294
Bond
International 15 March
Software plc 2004 44 218 174
10 March
Ovum plc 2006 150 237 87
Sovereign
Oilfield 28 September
Services plc 2005 140 128 (12)
Plethora 13 January
Solutions plc 2006 122 87 (35)
Tissue Science 22 March
Laboratories plc 2005 86 33 (53)
15 November
Dawmed plc 2003 79 22 (57)
Disperse Group
plc 26 July 2004 500 7 (493)
TOTAL 2,233 4,367 2,134
Ten Largest Ordinary Share Portfolio Holdings
Listed below are the ten largest investments by value as at 31
October 2007:
Tanfield Group plc
Tanfield Group plc is a manufacturing company with two principal
operating divisions; Smith Electric Vehicles, the world's largest
manufacturer of road-going commercial zero emission vehicles, and
UpRight Powered Access, the UK's largest manufacturer of
self-propelled aerial work platforms. UpRight has recently increased
its exposure in the US market with the acquisition of Snorkel
Holdings last year.
Initial investment date: December 2004
Cost: �52,600
Valuation: �898,545
Valuation basis: Bid price
Equity held: 0.15%
Last audited accounts: December 2006
Profit before interest & tax: �3.6 million
Net assets: �43.4 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, is able to operate 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: �500,000
Valuation: �665,000
Valuation basis: Bid price
Equity held: 1.29%
Last audited accounts: December 2006
Profit before interest & tax: �4.4 million
Net assets: �39.6 million
BBI Holdings plc
BBI Holdings plc is a leading supplier of products and services to
the global diagnostic and healthcare industries. The company's range
of products and services cover all aspects of lateral flow test
development; however its core business is the manufacture and supply
of gold reagents which are used in rapid diagnostic testing.
Initial investment date: April 2004
Cost: �188,760
Valuation: �628,000
Valuation basis: Bid price
Equity held: 0.93%
Last audited accounts: March 2007
Profit before interest & tax: �1.9 million
Net assets: �12.4 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: �300,000
Valuation: �600,000
Valuation basis: Bid price
Equity held: 1.77%
Last audited accounts: December 2006
Profit before interest & tax: �3.8 million
Net assets: �20.0 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: �380,700
Valuation: �499,500
Valuation basis: Bid price
Equity held: 1.97%
Last audited accounts: December 2006
Profit before interest & tax: �1.0 million
Net assets: �4.9 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: �400,000
Valuation: �473,333
Valuation basis: Bid price
Equity held: 1.61%
Last audited accounts: December 2006
Profit before interest & tax: �1.9 million
Net assets: �13.0 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: �158,090
Valuation: �436,328
Valuation basis: Bid price
Equity held: 0.69%
Last audited accounts: April 2007
Profit before interest & tax: �6.0 million
Net assets: �41.3 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: �400,000
Valuation: �420,000
Valuation basis: id price
Equity held: 0.73%
Last audited accounts: N/A (First audited accounts to be prepared
for period ending February 2008)
Hexagon Human Capital plc
Hexagon Human Capital plc is the UK's leading provider of interim
executive management and one of the UK's leading executive search
businesses. Its group companies currently provide services to over
thirty FTSE 100 companies and a number of the largest professional
services firms in the world.
Initial investment date: February 2007
Cost: �314,667
Valuation: �324,202
Valuation basis: Bid price
Equity held: 1.04%
Last audited accounts: March 2007
Profit before interest & tax: �0.8 million
Net assets: �14.2 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 �1 billion fund under management.
Initial investment date: March 2005
Cost: �156,296
Valuation: �321,523
Valuation basis: Bid price
Equity held: 1.14%
Last audited accounts: December 2006
Profit before interest & tax: �1.2 million
Net assets: �4.3 million
Review of 'C' Share Portfolio
At 31 October 2007, the Phoenix portfolio comprised investments in 28
AiM-quoted companies. During the year, five investments were
disposed of in their entirety including Ovum plc which received a
cash bid from a third party and Worthington Nicholls plc which
crystallised a profit of 169%. The investment in Tanfield Group plc
was reduced, realising a profit of �401,000 from a book cost of just
�83,000. Sovereign Oilfield Services plc, Plethora Solutions plc and
Disperse Group plc were disposed off at a loss as the investment
manager believes they all carry risk of further disappointment.
A summary of these realisations is shown below:
Initial Cost of Proceeds of Total
investment investment investment gain/(loss)
Realisations date realised (�'000) (�'000) (�'000)
Worthington
Nicholls plc 12 June 2006 269 723 454
Tanfield Group
plc 26 May 2005 83 484 401
Ovum plc 10 March 2006 94 148 54
Sovereign
Oilfield 28 September
Services plc 2005 62 56 (6)
Plethora 13 January
Solutions plc 2006 81 58 (23)
Disperse Group
plc 26 July 2004 160 3 (157)
TOTAL 749 1,472 723
Ten Largest 'C' Share Portfolio Holdings
Listed below are the ten largest investments by value as at 31
October 2007:
Tanfield Group plc
Tanfield plc is a manufacturing company with two principal operating
divisions; Smith Electric Vehicles, the world's largest manufacturer
of road-going commercial zero emission vehicles, and UpRight Powered
Access, the UK's largest manufacturer of self-propelled aerial work
platforms. UpRight has recently increased its exposure in the US
market with the acquisition of Snorkel Holdings last year.
Initial investment date: May 2005
Cost: �77,200
Valuation: �659,095
Valuation basis: Bid price
Equity held: 0.11%
Last audited accounts: December 2006
Profit before interest & tax: �3.6 million
Net assets: �43.4 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: �339,502
Valuation: �401,100
Valuation basis: Bid price
Equity held: 0.59%
Last audited accounts: April 2007
Profit before interest & tax: �2.2 million
Net assets: �20.3 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: �275,000
Valuation: �294,250
Valuation basis: Bid price
Equity held: 0.87%
Last audited accounts: N/A (First audited accounts to be prepared
for period ending March 2008)
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: �215,500
Valuation: �282,748
Valuation basis: Bid price
Equity held: 1.12%
Last audited accounts: December 2006
Profit before interest & tax: �1.0 million
Net assets: �4.9 million
Optimisa plc
Optimisa plc provides market research and consultancy services.
Recently Optimisa completed the acquisition of EQ Group, a business
operating in a similar sector. Historically Optimisa and EQ have
competed for contracts and we expect the larger and more diversified
group to exploit a number of synergies and cross selling
opportunities
Initial investment date: October 2007
Cost: �247,000
Valuation: �239,400
Valuation basis: Bid price
Equity held: 1.28%
Last audited accounts: December 2006
Profit before interest & tax: �0.8 million
Net assets: �4.7 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: �200,000
Valuation: �236,667
Valuation basis: Bid price
Equity held: 1.81%
Last audited accounts: December 2006
Profit before interest & tax: �1.9 million
Net assets: �13.0 million
Vertu Motors plc
Vertu Motors plc was formed in 2006 to acquire and consolidate the UK
motor retail sector. The management team have 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: �200,000
Valuation: �210,000
Valuation basis: Bid price
Equity held: 0.36%
Last audited accounts: N/A (First audited accounts to be prepared
for period ending February 2008)
BBI Holdings plc
BBI Holdings plc is a leading supplier of products and services to
the global diagnostic and healthcare industries. The company's range
of products and services cover all aspects of lateral flow test
development; however its core business is the manufacture and supply
of gold reagents which are used in rapid diagnostic testing.
Initial investment date: April 2004
Cost: �112,135
Valuation: �194,534
Valuation basis: Bid price
Equity held: 0.29%
Last audited accounts: March 2007
Profit before interest & tax: �1.9 million
Net assets: �12.4 million
Hexagon Human Capital plc
Hexagon Human Capital plc is the UK's leading provider of interim
executive management and one of the UK's leading executive search
businesses. Its group companies currently provide services to over
thirty FTSE100 companies and a number of the largest professional
services firms in the world.
Initial investment date: February 2007
Cost: �157,332
Valuation: �162,100
Valuation basis: Bid price
Equity held: 0.52%
Last audited accounts: March 2007
Profit before interest & tax: �0.8 million
Net assets: �14.2 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: �105,000
Valuation: �151,900
Valuation basis: Bid price
Equity held: 0.62%
Last audited accounts: N/A (First audited accounts to be prepared
for period ending September 2007)
New Investments
During the year, the Ordinary and C Share Portfolios made fifteen new
investments. Details of these investments and the amount invested
are set-out below:
Concateno plc
Investment date: November 2006
Cost: �85,000 ('C')
Valuation: �135,000 ('C')
Concateno plc has been consolidating businesses in the drug and
alcohol testing sector. Through a number of acquisitions the group
has gained exposure to companies providing services to aid drug
testing and subsequent analysis at the work place.
Hasgrove plc
Investment date: November 2006
Cost: �400,000 (Ord), �200,000 ('C')
Valuation: �473,333 (Ord), �236,667 ('C')
Hasgrove plc is a pan European marketing and communications services
group. The company offers its clients consultancy and implementation
solutions across a range of disciplines including brand designs,
creative advertising, public relations and public affairs.
Vertu Motors plc
Investment date: December 2006
Cost: �400,000 (Ord), �200,000 ('C')
Valuation: �420,000 (Ord), �210,000 ('C')
Vertu Motors plc was formed in 2006 to acquire and consolidate the UK
motor retail sector. The management team have 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.
Hexagon Human Capital plc
Investment date: February 2007
Cost: �314,667 (Ord), �157,332 ('C')
Valuation: �324,202 (Ord), �162,100 ('C')
Hexagon Human Capital plc is the UK's leading provider of interim
executive management and one of the UK's leading executive search
businesses. Its group companies currently provide services to over
thirty FTSE100 companies and a number of the largest professional
services firms in the world.
Debts.co.uk plc
Investment date: May 2007
Cost: �400,000 (Ord), �200,000 ('C')
Valuation: �240,000 (Ord), �120,000 ('C')
Debts.co.uk plc is a debt solutions company with a product offering
that includes Individual Voluntary Agreements (IVAs), debt management
programmes and secured loans or second mortgages to over-indebted
individuals.
Pressure Technologies plc
Investment date: June 2007
Cost: �165,000 (Ord), �105,000 ('C')
Valuation: �238,700 (Ord), �151,900 ('C')
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.
Invu plc
Investment date: June 2007
Cost: �100,000 (Ord), �100,000 ('C')
Valuation: �95,000 (Ord), �95,000 ('C')
Invu plc is a global software and computer services company which
produces and distributes document and information management software
that addresses the needs of small and medium-sized companies.
CBG Group plc
Investment date: June & July 2007
Cost: �380,700 (Ord), �215,500 ('C')
Valuation: �499,500 (Ord), �282,748 ('C')
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 complete further acquisitions
over the next twelve months.
Myhome International plc
Investment date: June 2007
Cost: �85,000 (Ord), �85,000 ('C')
Valuation: �75,000 (Ord), �75,000 ('C')
MyHome International plc is an acquisitive national franchise group,
headquartered in London. The group has become a market leader in the
provision of cleaning services and has recently extended its offering
into electrical, plumbing and garden services.
Mediasurface plc
Investment date: August 2007
Cost: �125,000 ('C')
Valuation: �39,402 ('C')
Mediasurface plc develops, markets and implements Web Content
Management (WCM) software programmes that help businesses best
utilise the capabilities that the web can offer their sites.
Northern Bear plc
Investment date: August 2007
Cost: �299,425 (Ord), �149,350 ('C')
Valuation: �253,995 (Ord), �126,690 ('C')
Northern Bear plc is a building services group based in North East
England. It provides central strategic and financial functions for a
group of otherwise autonomous companies, each of which provides
products and services to the construction industry and house
builders. We expect the company to complete further acquisitions
over the next twelve months.
Cantono plc
Investment date: August 2007
Cost: �420,000 (Ord), �220,000 ('C')
Valuation: �277,200 (Ord), �145,220 ('C')
Cantono plc is a provider of Managed IT Services and hosting
solutions for small to medium sized organisations. The company
provides a range of services from individual applications to fully
managed IT environments.
Melorio plc
Investment date: October 2007
Cost: �275,000 ('C')
Valuation: �294,250 ('C')
Melorio plc is a vehicle formed with the aim of consolidating the UK
vocational training market. It has acquired CLW, the UK's largest
provider of on site construction assessment and training. As well as
construction Melorio will focus on the utilities, logistics and care
sectors.
Cohort plc
Investment date: October 2007
Cost: �339,563 ('C')
Valuation: �401,100 ('C')
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.
Optimisa plc
Investment date: October 2007
Cost: �143,000 (Ord), �247,000 ('C')
Valuation: �138,600 (Ord), �239,400 ('C')
Optimisa plc provides market research and consultancy services.
Recently Optimisa completed the earnings enhancing acquisition of EQ
Group, a business operating in a similar sector. Historically
Optimisa and EQ have competed for contracts and we expect the larger
and more diversified group to exploit a number of synergies and cross
selling opportunities.
Recent Transactions
Since the end of the year under review, we have completed two new
qualifying investments and one disposal:
Myhome International plc
During November 2007, Phoenix invested a further �500,000 into Myhome
International plc. Myhome is an acquisitive national franchise
group, headquartered in London. The group has become a market leader
in the rapidly growing sector of residential cleaning. In June 2006
the company acquired Ovenclean, the UK's leading domestic oven
cleaning franchise with a ten year growth history and over 165
franchisees. The fund raising in November was in order to complete
the acquisition of ChipsAway, a mobile service delivered to
customers' homes and offices to repair scratches, chips and other
minor damage to car paintwork. The enlarged group now has 748
franchisees across its brands.
Vitesse Media plc
Phoenix C Share portfolio invested �100,000 in Vitesse Media plc in
November 2007. Vitesse is an online, print publishing & events
company specialising in growing businesses offering award-winning
publications, fast-growing web sites, acclaimed research and events.
Its flagship titles include Growth Company Investor,
SmallBusiness.co.uk, Information Age, GrowthBusiness.co.uk, What
Investment and M & A magazine.
BBI Holdings plc
Since the year end, Phoenix has disposed of its investment in BBI
Holdings plc, crystallising a profit of �554,576 for the Ordinary
Shares and �118,568 for the 'C' shares. This followed a 185p per
share cash bid for the company by Inverness Medical Inc.
If you have any questions on any aspect of your investment, please
call one of the team on 020 7710 2800.
Simon Rogerson
Chief Executive
Profit & Loss Account
For the year ended 31
October 2007 Ordinary shares 'C' shares Total
Total �'000 Total �'000 Total �'000
Gain on disposal of fixed
asset investments 1,459 409 1,868
Gain/(loss) on disposal of
current asset investments (2) (21) (23)
Unrealised gain on fair
value of fixed asset
investments 48 179 227
Unrealised gain/(loss) on
fair value of current asset
investments 6 (18) (12)
Other income 165 182 347
Investment management fees (266) (131) (397)
Other expenses (208) (111) (319)
Profit on ordinary
activities before tax 1,202 489 1,691
Taxation on profit on
ordinary activities - - -
Profit on ordinary
activities after tax 1,202 489 1,691
Earnings per share - basic
and diluted 11.1p 9.2p
The Company has no recognised gains or losses other than the results
for the year as set out above.
Profit & Loss Account
For the year ended 31
October 2006 Ordinary shares 'C' shares Total
Total �'000 Total �'000 Total �'000
Gain on disposal of fixed
asset investments 844 43 887
Unrealised gain on fair
value of fixed asset
investments 183 562 745
Unrealised gain/(loss) on
fair value of current asset
investments 20 (82) (62)
Other income 126 238 364
Investment management fees (262) (116) (378)
Other expenses (179) (78) (257)
Profit on ordinary
activities before tax 712 567 1,279
Taxation on profit on
ordinary activities - - -
Profit on ordinary
activities after tax 712 567 1,279
Earnings per share - basic
and diluted 6.4p 12.0p
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
For the year ended 31 October 2007 Ordinary shares 'C' shares Total
�'000 �'000 �'000
Profit on ordinary activities before
taxation 1,202 489 1,691
Unrealised gain on fair value of
investments (54) (161) (215)
Realisation of prior years' net
unrealised gains 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
Note of Historical Cost Profits and Losses
For the year ended 31 October 2006 Ordinary shares 'C' shares Total
�'000 �'000 �'000
Profit on ordinary activities before
taxation 712 567 1,279
Unrealised gain on fair value of
investments (183) (480) (663)
Realisation of prior years' net
unrealised gains on investments 321 11 332
Historical cost profit on ordinary
activities before taxation 850 98 948
Historical cost profit on ordinary
activities after taxation 850 98 948
Balance Sheet
For the year ended 31 October 2007 Ordinary shares 'C' shares Total
�'000 �'000 �'000
Fixed asset investments 9,891 4,499 14,390
Current assets:
Investments 1,596 1,083 2,679
Debtors 65 91 156
Cash at bank 482 533 1,015
2,143 1,707 3,850
Creditors: amounts falling due
within one year (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 1,127 558 1,685
Special distributable reserve 9,646 4,813 14,459
Capital redemption reserve 108 12 120
Revaluation reserve (343) 367 24
Revenue reserve 1,407 433 1,840
Total equity shareholders' funds 11,945 6,183 18,128
Net asset value per share 106.0p 110.8p
Balance Sheet
For the year ended 31 October 2006 Ordinary shares 'C' shares Total
�'000 �'000 �'000
Fixed asset investments 9,356 2,666 12,022
Current assets:
Investments 417 2,189 2,606
Debtors 155 159 314
Cash at bank 1,299 586 1,885
1,871 2,934 4,805
Creditors: amounts falling due
within one year (16) (105) (121)
Net current assets 1,855 2,829 4,684
Net assets 11,211 5,495 16,706
Called up equity share capital 1,080 523 1,603
Share premium 323 4,436 4,759
Special distributable reserve 8,846 - 8,846
Capital redemption reserve 76 12 88
Revaluation reserve 277 463 740
Profit and loss account 609 61 670
Total equity shareholders' funds 11,211 5,495 16,706
Net asset value per share 103.8p 105.1p
The accompanying notes are an integral part of the financial
statements.
Cash Flow Statement
Ordinary
For the year ended 31 October 2007 shares 'C' shares Total
�'000 �'000 �'000
Net cash (outflow)/inflow from
operating activities (141) (113) (254)
Financial investment :
Purchase of investments (3,395) (2,718) (6,112)
Sale of investments 4,367 1,472 5,839
Management of liquid resources :
(Increase)/decrease in cash equivalent
investments (1,179) 1,106 (73)
Dividends paid (1,024) (213) (1,237)
Financing :
Issue of own shares 918 428 1,346
Share issue expenses (28) (16) (44)
Repurchase of own shares (335) - (335)
Decrease in cash resources (817) (53) (870)
Cash Flow Statement
Ordinary
For the year ended 31 October 2006 shares 'C' shares Total
�'000 �'000 �'000
Net cash (outflow)/inflow from
operating activities (544) (182) (726)
Financial investment :
Purchase of investments (2,101) (1,531) (3,632)
Sale of investments 2,194 160 2,354
Management of liquid resources :
Decrease/(increase) in cash equivalent
investments 1,448 1,841 3,289
Dividends paid (110) - (110)
Financing :
Issue of own shares 308 125 433
Share issue expenses (9) - (9)
Repurchase of own shares (632) (114) (746)
Increase in cash resources 554 299 853
Reconciliation of Net Cash Flow to Movement in Cash Resources
For the year ended 31 October 2007 Ordinary shares 'C' shares Total
�'000 �'000 �'000
Increase 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
Net cash at 31 October 2007 comprised:
Ordinary shares 'C' shares Total
�'000 �'000 �'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
For the year ended 31 October
2006 Ordinary shares 'C' shares Total
�'000 �'000 �'000
Increase in cash resources 554 299 853
Movement in liquid resources (1,448) (1,841) (3,289)
Opening net cash resources 2,610 4,317 6,927
Net cash at 31 October 2006 1,716 2,775 4,491
Net cash at 31 October 2006 comprised:
Ordinary shares 'C' shares Total
�'000 �'000 �'000
Cash at Bank 1,299 586 1,885
Bonds - 2,189 2,189
Money Market Funds 417 - 417
Net cash at 31 October 2006 1,716 2,775 4,491
Reconciliation of Operating Profit before Taxation to Cash Flow from
Operating Activities
For the year ended 31 October Ordinary
2007 shares 'C' shares Total
�'000 �'000 �'000
Profit on ordinary activities
before tax 1,202 489 1,691
Unrealised gains on fixed asset
investments (48) (179) (227)
Realised gains on fixed asset
investments (1,458) (409) (1,867)
Decrease in debtors 90 68 158
(Decrease)/Increase in creditors 73 (82) (9)
Outflow from operating
activities (141) (113) (254)
For the year ended 31 October 2006 Ordinary shares 'C' shares Total
�'000 �'000 �'000
Profit on ordinary activities
before tax 712 567 1,279
Unrealised gains on fixed asset
investments (183) (562) (745)
Realised gains on fixed asset
investments (844) (43) (887)
Increase in debtors (136) (154) (290)
(Decrease)/Increase in creditors (93) 10 (83)
(Outflow)/Inflow from operating
activities (544) (182) (726)
Notes: Fixed Asset Investments
Ordinary shares 'C' shares Total
31 October 31 October
31 October 2007 2007 2007
�'000 �'000 �'000
Valuation and net book amount:
Book cost as at 1 November 2006 9,079 2,121 11,200
Revaluation in the year 277 545 822
Valuation at 1 November 2006 9,356 2,666 12,022
Movement in the year:
Purchases at cost 3,395 2,717 6,112
Disposal proceeds (4,367) (1,472) (5,839)
Profit on realisation of
investments - current year 1,459 409 1,868
Unrealised gain in year 48 179 227
Valuation at 31 October 2007 9,891 4,499 14,390
Book cost at 31 October 2007 10,240 4,089 14,329
Revaluation to 31 October 2007 (349) 410 61
Valuation at 31 October 2007 9,891 4,499 14,390
Further details of the fixed asset investments held by the Company
are shown within the Investment Manager's Review.
The above summary of results for the year ended 31 October 2007 does
not constitute statutory financial statements within the meaning of
section 240 of the Companies Act 1985 and has not been delivered to
the Registrar of Companies.
Statutory financial statements will be filed with the Registrar of
Companies in due course; the auditor's report on those financial
statements under S235 of the Companies Act 1985 is unqualified and
does not contain a statement under S237 (2) or (3) of the Companies
Act 1985.
A copy of the full annual report and financial statements for the
year ended 31 October 2007 is expected to be posted to shareholders
shortly and will be available to the public at the registered office
of the company at 8 Angel Court, London, EC2R 7HP.
- ---END OF MESSAGE---
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