The directors present the strategic report for the period ended 31 August 2024.
The Company was incorporated as a public limited company on 18 August 2023. The Company was established as a special purpose vehicle to issue notes (“Notes”) under a £2,000,000,000 secured medium term note programme (the “Secured Note Programme”). The Company uses the proceeds of the Note issuances to make loans to body corporates that meet the necessary borrower loan eligibility criteria as specified in the Listing Particulars (the “Listing Particulars”).
The Company has made a profit before exceptional expenses of £2,758 for the period. The exceptional expenses that were incurred during the year relate to the setup and incorporation costs of the Secured Note Programme; such as listing fees, onboarding costs and initial legal and consultancy charges.
During the year, the Company has issued 11,983,354 of Series 1 fixed term 6 year Notes on the Frankfurt Stock Exchange (“Series 1”).
Following the above issuances, the total number of fixed term Notes issued to date is 11,983,354.
In accordance with the terms of Series 1 the Company has made 2 secured loans to corporates during the year. Each of the loans are performing in accordance with the respective loan terms.
The Board continues to operate the Company and Note Programme in accordance with the Listing Particulars.
The Directors have assessed the Company as a going concern. In arriving at this view, the Directors have reviewed the forecasts for the Company and have reviewed this in light of the Notes issued to date and their relevant coupon and principal repayment dates. The directors are of the view that as the loans are each performing the Company remains a going-concern for at least the next 12 months from the date of this report.
The main financial risks faced by the Company are credit risk, interest rate risk and liquidity risk. A summary of these risks is included below:
Credit risk is the risks that counterparties will not be able to meet their obligations to the Company as they become due. Credit risk arises on cash and cash equivalent and loans. The ability of the Company’s counterparties to repay their loans is impacted by the performance of the underlying companies of each borrower that form part of the security for each loan.
Interest rate risk arises from movement in interest rates on the underlying loans granted by the Company. The Company seeks to minimise this risk by utilising fixed interest rates that provide a buffer or interest spread above the interest rate due on the notes.
Liquidity Risk is the risk that the Company is not able to meet its financial obligations as they fall due as a result of interest or principal repayments being made late. Liquidity risk arises on the Company’s Notes in issue. The risk is addressed by having a diversified portfolio of loans with differing interest rates and interest payment periods that are designed to create the liquidity to meet annual interest payments on the notes.
The key performance indicators of the company are operating profits, cash and investments/loans made. Salient points are:
Actual | 2024 |
Operating profit before exceptional items | £2,758 |
Cash and cash equivalents | £549,176 |
Investments | £11,808,627 |
Director’s statement of compliance with duty to promote the success of the Group:
The Director’s of the Company are aware of the requirement to act in the way they consider, in good faith, would be the most likely to promote the success of the Company for the benefit of its members as a whole. In consider this duty, the Directors considers the following stakeholders.
Shareholders:
The Directors have regular contact with the shareholders in order to maximise the Company’s long-term growth prospects.
Noteholders:
The Directors work to ensure that each loan that is made from the Secured Note Programme is made with the best interest in mind of each holder of Notes.
Suppliers:
The Company has various key supplier relationship which work in unison to ensure the smooth running of the business.
Environmental:
The Company complies as a minimum with all environmental legislation as well as other environmental requirements.
On behalf of the board
The directors present their annual report and financial statements for the period ended 31 August 2024.
The results for the year are set out on page 10.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
Vision Consulting Accountants Limited were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the directors must not approve the financial statements unless they are satisfied that they 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 accounting 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 the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and 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 2006. 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.
We have audited the financial statements of Odysseus MTN PLC (the 'company') for the period ended 31 August 2024 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and noncompliance with laws and regulations, we considered the following:
The nature of the industry and sector, control environment, business performance including the design of the policies and performance targets.
The results of our enquiries of management.
Any matters we identified having obtained and reviewed the entity’s documentation of their policies and procedures relating to compliance with regulations;
Identifying, evaluating and complying with laws and regulations such as companies act 2006 and whether management were aware of any instances of non-compliance.
Detecting and responding to the risks of fraud and whether management have knowledge of any actual, suspected or alleged fraud.
The entity's procedures to identify related party transactions.
The internal controls established to mitigate risks of fraud or non-compliance with laws and regulations and
The matters discussed among the audit engagement team where fraud might occur in the financial statements and any potential indicators of fraud.
It is common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the entity operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the entity’s ability to operate.
As a result of performing the above, our procedures to respond to risks identified included the following:
Reviewing the financial statement disclosures and testing to supporting documentation to assess
compliance with provisions of relevant laws and regulations having a direct effect on the financial
statements.
Enquiring the management regarding related party disclosures and transactions outside the normal course of the business.
Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud.
In addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments.
Assessing whether the judgments made in making accounting estimates are indicative of a potential bias;
and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Odysseus MTN PLC is a private company limited by shares incorporated in England and Wales. The registered office is C/O Truva Corp, 30 Bedford Street, London, United Kingdom, WC2E 9ED.
The company was incorporated on 18 August 2023. The accounting period is from the date of incorporation until the reporting date of 31 August 2024.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
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 company after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
The following judgements and key estimates have had the most significant effect on amounts recognised in the financial statements.
The Company holds financial assets at amortised cost, including fixed asset investments and debtors. The carrying amount of these assets is subject to impairment testing.
Fixed asset investments and debtors are tested for impairment when there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of these asset. These events include, but are not limited to, significant financial difficulty of the issuer or obligor, default or delinquency in payments, or other observable data indicating a reduction in the expected future cash flows.
The key judgments and estimates involved in the impairment process are as follows:
Assessment of Credit Risk:
The Company assesses the credit risk associated with each financial asset, including fixed asset investments and debtors. This includes determining the likelihood of default and the ability of the borrower to meet repayment obligations. Judgment is required in evaluating whether there has been a significant increase in credit risk since the initial recognition.
Impairment of Financials Assets:
Impairment is recognized when there is objective evidence of impairment, such as a significant deterioration in creditworthiness. The estimation of impairment involves assumptions about future cash flows, which are based on the borrower’s financial performance, repayment capacity, and other relevant information.
The carrying amount of these financial assets at amortised cost is reviewed regularly, and adjustments are made if new information becomes available or if judgments and estimates change.
The Company incurred setup costs during the year related to the listing of its debentures on the stock exchange and the issuance of its debentures. These costs primarily include listing fees, incorporation costs and initial legal and professional consultancy charges. These costs are not expected to recur in the future.
These setup costs do not meet the recognition criteria of an asset and have been expensed in the period in which they were incurred.
The average monthly number of persons (including directors) employed by the company during the period was:
Their aggregate remuneration comprised:
The actual charge for the period can be reconciled to the expected credit for the period based on the profit or loss and the standard rate of tax as follows:
The loan has been provided on the following terms:
Principal amount: £5,500,000
Interest rate: 7.3%, payable quarterly.
Repayment terms: Principal amount repayable at the end of the loan term with the repayment due on 24 May 2029.
At the reporting date:
The carrying amount of the loan is £5,608,900 with £5,500,000 classified as non-current and £108,900 as current. Interest income recognised during the year amounted to £108,900. £11,349 represents the unamortised portion of the transaction costs incurred in the arrangement of this loan.
The other debtors amount includes the loan given on the following terms:
The company provided a loan facility of £5m on 27 December 2023, which was later extended to £7.5m on 14 June 2024, followed by another extension granted on 3 December 2024, increasing it to £15m.
The drawdown amount at the year-end, along with the terms, is listed below:
Drawdown amount: £6,024,800
Interest rate: 10%, payable on repayment
Repayment terms: The principal amount is repayable at the end of the loan term, with repayment due on 27 December 2024. However, the repayment date has been extended by 12 months to 27 December 2025.
At the reporting date:
The carrying amount of the loan is £6,308,627, classified as current. Interest income recognized during the year amounted to £222,079.
The company has provided a loan facility of £10 million to another party of which £2.7 million has been drawn down as of 31 August 2024 under a sub-participation agreement with the risks and rewards associated with the loan being fully transferred to the participants.
The company issued debentures during the year following its listing on the Frankfurt Stock Exchange on 27 September 2023. The debentures have been issued under the following terms:
Principal Amount: £11,983,354.
Interest Rate: 6.5% per annum, payable annually.
These debentures are secured for the benefit of the debenture holders by a fixed, first-priority charge over the company’s secured assets. The secured assets include the borrower’s loans, financial collateral assets, and each Borrower Deed of Charge.
Maturity Date: 27 September 2029
Called-up Share Capital Not Paid :
As at 31 August 2024 the company's issued share capital included the following amounts that remain unpaid:
Class of Shares Number of Shares Par Value per Share Total Amount Unpaid
Ordinary Shares 37,500 £1.00 £37,500.
During the year the company issued 50,000 shares at par on incorporation.
Debentures amounting to £4,833,480 were issued after the year end.