I very rarely recommend enterprise investment schemes because the majority of them are only for speculative investors. However, I have discovered one, Johnson Cod 1, which looks to me far less risky than most.
The investment is in farmed cod managed by Johnson Sea Farms and based in Shetland. Johnson Sea Farms is the acknowledged leader in salmon and mussel farming, having over 20 years experience and ranking first in both UK markets.
Farmed cod have until now been difficult to rear but Johnson Sea Farms has produced its first cod harvest which was successfully test-marketed in the gourmet restaurant trade in the US.
Unlike salmon, cod are not migratory but wild cod are fast disappearing and are subject to disease so farmed cod are likely to be even more popular than wild cod.
The UK imports 85 per cent of its cod from Iceland, Russia and elsewhere so the price of cod will increase in value. At present, Johnson Sea Farms is selling farmed cod at £4.19 a kilo – a much higher price than farmed salmon.
On the manager's projections, the company should make at least 50 per cent profit at the end of three years, which will be tax-free under EIS rules. Taking into account income tax relief, this gives a tax-free return of 62.5 per cent over three years – not a bad return by any standards.
The fish are all insured against disease, natural disaster or other eventuality. Natural wastage of 21 per cent of the codlings initially bought is taken into account in the projections. The sum of £1m is being raised to buy and rear 200,000 codlings. The cod will be sold when they reach the weight of three kilos after two to three years.
This scheme is marketed to IFAs by Kreis Consulting of Glasgow. The minimum investment is £30,000.