TIDMPMH
PUMA HIGH INCOME VCT PLC
INTERIM RESULTS FOR THE PERIOD FROM 1 JULY 2012 TO 15 MARCH 2013
HIGHLIGHTS
-- Further investments made during the period and post period end, including
two non-qualifying secured loans made, offering a higher yield than most
quoted secured bonds or deposits.
-- Qualifying investments now at 71% on an HMRC basis.
-- 21p per share of dividends paid since inception, 7p during the period,
equivalent to a 10% per annum tax-free running yield on net investment.
-- Gain in NAV (adding back dividends) of 0.42p per share during the period.
CHAIRMAN'S STATEMENT
Introduction
During the eight and a half months to 15 March 2013, the Company
maintained a cautious approach in its investments whilst remaining well
positioned to exploit the opportunities which are arising as a result of
tight credit markets.
During the period, the Company's accounting reference date was changed
to 31 March. The UK Listing Authority rules require the Company to
release this second interim report for the period as the accounting
period of the Company to 31 March 2013 is 15 months.
Qualifying Investments
In December 2012, the Company completed a GBP600,000 investment (as part
of a GBP1.5 million financing with other Puma VCTs) into Brewhouse and
Kitchen Limited, which is managed by two highly experienced pub sector
professionals, to facilitate the acquisition of freehold pubs and
install a micro brewery within the main area of each pub. The
investment is largely in the form of senior debt, secured with a first
charge over the business and each freehold site acquired. Funds can be
utilised to a maximum 65% loan-to-value ratio, and are expected to
produce a return to the Company of at least 7 per cent. per annum.
Subsequent to the period end, the Company invested a further GBP320,000
(as part of GBP1.6 million across the Puma VCTs) into Brewhouse and
Kitchen, taking total exposure to GBP920,000. This further investment,
again largely in the form of senior debt, is to be used to purchase
further pubs, subject to our approval of each purchase. The terms are
similar to the first loan to this company.
We are pleased to report that, in November 2012, Huntly Trading Limited
and Isaacs Trading Limited joined a limited liability partnership with
other contracting companies and have entered into their first
contracting contract with FreshStart Living. This will provide
GBP668,000 (as part of a GBP3.5 million project involving other
companies backed by Puma VCTs) of project management and contracting
services. These services will be provided in connection with the
development and construction by FreshStart Living of 116 apartments (all
of which were pre-sold when the contract was entered into) at a property
called Trafford Press, 2 miles south east of Manchester city centre.
The Company's investments in each of Frederica Trading Limited
("Frederica") and Glenmoor Trading Limited ("Glenmoor") are progressing
well. As members of a limited liability partnership with other
contracting companies, Frederica and Glenmoor are providing contracting
services in connection with five pre-let supported living developments
for psychiatric and learning disabled people who are housed and given
support by local authorities and other social care organisations. The
developments themselves are progressing well with three in various
stages of construction.
Our investment in Mirfield Contracting Limited ("MCL") is progressing
well as indicated in the Company's previous interim report. MCL is a
contracting services company providing project management services to a
GBP3.8 million development of town houses in Mirfield (near Wakefield)
West Yorkshire, as a member of a limited liability partnership with
other contracting companies. The development itself is progressing well
with the first of three phases complete and sold.
As reported in the Company's previous interim report, the Company
invested GBP700,000 (as part of a GBP1.4 million Puma VCT financing)
into SIP Communications Plc. SIPCOM provides hosted IP telephony and
unified communications products and services and is a leading hosting
provider for users of Microsoft Lync - a new business version of Skype
with many enhanced features allowing IP telephony, video calls, instant
messaging, and online meetings and integrating with Microsoft Outlook
and Office.
Most recently, after the period end, the Company concluded another
qualifying transaction, by investing GBP1.4 million into Saville
Services Limited, a contracting company, alongside other Puma VCTs.
Saville Services is deploying the funds to provide contracting services
in relation to the construction of a private detached housing
development in the countryside outside Aberdeen, under contract to
Churchill Homes Limited, a longstanding Aberdeenshire developer.
In accordance with the HMRC VCT rules the Company has three years to
invest 70 per cent of the portfolio (on an HMRC basis) into qualifying
investments. Having now achieved its 70% qualifying status, the Company
is considering some further deals which are in due diligence, on the
monitoring of our existing investments, and considering the options for
exits.
Non-Qualifying Investments
When the fund began investing in 2010, we chose a portfolio of bonds,
hedge funds and hedge funds of funds. We reviewed the portfolio and
liquidated several of these during 2012 for an overall small gain.
We retained a number of the best performing investments of this
portfolio throughout the period, most of which were bond funds and one
residual hedge fund. At the start of 2013, we became concerned that
bonds had become overvalued relative to equities. Anticipating a change
in market sentiment regarding bonds and a switch into equities, we
decided to take profits on all of these holdings at the start of 2013, a
decision which seems to have been vindicated by subsequent market
movements.
We have adopted a strategy for the non-qualifying portfolio of moving
away from quoted investments where possible and instead investing in
secured non-qualifying loans offering a good yield with hopefully
limited downside risk. These loans take longer to identify and execute,
but should work well for the Company into the medium term.
The first of these was made in August 2012, when the Company completed a
GBP1,250,000 non-qualifying loan. This was as part of a GBP4 million
financing with other Puma VCTs to Puma Brandenburg Finance Limited, a
subsidiary of Puma Brandenburg Holdings Limited. It is secured on a
portfolio of flats in the middle class area of central Berlin, Germany.
The facility attracts a fixed interest rate of 5% per annum. Since the
loan was made, the property market in this area of Berlin has been very
strong, further enhancing the excellent security we have for this loan.
In December 2012, the Company completed a second non-qualifying loan of
GBP860,000. This was to provide, together with other Puma VCTs, an
innovative GBP2.5 million revolving credit facility to Organic Waste
Management Trading Limited (effected via a loan to Buckhorn Lending
Limited, which on-lent the money). The facility provides working
capital for the purchase of used cooking oil for conversion into
bio-diesel. The ultimate borrower owns a large oil refining plant in
Birkenhead and is processing cooking oil to sell to obligated off-take
parties (petrol and diesel retailers). The facility is structured to
mitigate risks by being capable of being drawn only once approved
back-to-back purchase and sale contracts have been entered into with
approved counterparties. The facility bears interest at 1.5% per month
with a 5% per annum non-utilisation rate.
Dividends
On 31 January 2013, the Company declared an interim dividend of 7p per
ordinary share for that period which was paid on 25 February 2013,
taking the total of dividends paid to date to 21p per Ordinary Share,
equivalent to a 10% per annum tax-free running yield on the net
investment by shareholders. Reflecting this recent payout, your Board
is not proposing a further dividend at this interim stage but still
intends to pay out a dividend of 7p per ordinary share each year as
envisaged in the Company's prospectus.
Net Asset Value ("NAV")
The NAV per share was 72.59p at 15 March 2013. This was an increase of
0.42 per cent during the period (after adding back the 7p dividend paid
on 25 February 2013).
VCT Qualifying Status
PricewaterhouseCoopers LLP ("PwC") provides the board and the investment
manager with advice on the ongoing compliance with Her Majesty's Revenue
& Customs ("HMRC") rules and regulations concerning VCTs. PwC assists
the Investment Manager in establishing the status of investments as
qualifying holdings and has reported that the Company has met all HMRC's
criteria to date.
Principal risks and uncertainties
Continuing uncertainty whilst the economic environment in the UK is of
slow or negligible growth has meant that financial markets remain
turbulent. The consequences of this for the Company's investment
portfolio constitute the principal risk and uncertainty for the Company
in the second half of 2013.
Outlook
We are pleased now to have invested a substantial proportion of the
funds raised by the Company in secured loans, both qualifying and
non-qualifying. We remain focused on generating strong returns for the
Company in the both the qualifying and non-qualifying portfolios whilst
balancing these returns with maintaining an appropriate risk exposure
and ensuring there is significant liquidity in the portfolio to free up
cash for qualifying investments as they arise.
During the period, the Investment Management team have met and continue
to meet a substantial number of companies which are potentially suitable
for investment. In accordance with our mandate we have maintained a
cautious approach and are performing thorough due diligence work on
several potential investments. We have a strong deal-flow and are
meeting many potential investee companies with several interesting
opportunities firmly in the pipeline. We therefore believe the Company
is strongly positioned to deliver attractive returns to shareholders.
Ray Pierce
Chairman
14 May 2013
Income Statement (unaudited)
For the period from 1 July 2012 to 15 March 2013
Period from 1 July 2012 to Six months ended Year ended
15 March 2013 30 June 2012 31 December 2011
Note Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(Loss)/gain on investments - 135 135 - 124 124 - (376) (376)
Income 200 - 200 122 - 122 222 - 222
200 135 335 122 124 246 222 (376) (154)
Investment management fees 4 (31) (94) (125) (31) (92) (123) (54) (163) (217)
Performance fees - - - - - - - - -
Other expenses (153) - (153) (88) - (88) (173) - (173)
(184) (94) (278) (119) (92) (211) (227) (163) (390)
Return/(loss) on ordinary activities before taxation 16 41 57 3 32 35 (5) (539) (544)
Tax on return on ordinary activities - - - - - - - -
Return/(loss) on ordinary activities after tax attributable
to equity shareholders 16 41 57 3 32 35 (5) (539) (544)
Basic and diluted
Return/(loss) per Ordinary Share (pence) 2 0.12p 0.30p 0.42p 0.02p 0.24p 0.26p (0.04p) (3.94p) (3.98p)
The revenue column of this statement is the profit and loss of the
Company. All revenue and capital items in the above statement derive
from continuing operations. No operations were acquired or discontinued
in the period.
Balance Sheet (unaudited)
As at 15 March 2013
As at As at As at
Note 15 March 2013 30 June 2012 31 December 2011
GBP'000 GBP'000 GBP'000
Fixed Assets
Investments 7 7,430 7,646 7,608
Current Assets
Debtors 142 47 17
Cash 2,547 3,250 4,243
2,689 3,297 4,260
Creditors - amounts falling due within one year (193) (117) (120)
Net Current Assets 2,496 3,180 4,140
Total Assets less Current Liabilities 9,926 10,826 11,748
Creditors - amounts falling due after more than one
year (including convertible debt) (1) (1) (1)
Net Assets 9,925 10,825 11,747
Capital and Reserves
Called up share capital 137 137 137
Share premium account - - -
Capital reserve - realised (560) (741) (584)
Capital reserve - unrealised - 139 (50)
Other reserve - - -
Revenue reserve 10,348 11,290 12,244
Equity Shareholders' Funds 9,925 10,825 11,747
Net Asset Value per Ordinary Share 3 72.59p 79.18p 85.92p
Diluted Net Asset Value per Ordinary Share 3 72.59p 79.18p 85.92p
Cash Flow Statement (unaudited)
For the period 1 July 2012 to 15 March 2013
Period ended Six months ended Year ended
15 March 2013 30 June 2012 31 December 2011
GBP'000 GBP'000 GBP'000
Operating activities
Income received 191 66 246
Investment management fees paid (164) (103) (226)
Directors' fees paid (47) (29) (59)
Other cash payments (73) (54) (91)
Net cash inflow/(outflow) from operating activities (93) (120) (130)
Corporation tax paid - - -
Capital expenditure and financial investment
Purchase of investments (2,960) (4,720) (4,577)
Proceeds from sale of investments 3,311 4,807 7,546
Net realised loss on forward foreign exchange contracts - - (2)
Transaction costs (4) (3) (11)
Net cash outflow from capital expenditure and financial
investment 347 84 2,956
Equity dividend paid (957) (957) (957)
Financing
Redemption of redeemable preference shares - - -
Net cash outflow from financing - - -
Decrease in cash (703) (993) 1,869
Net cash at start of the period 3,250 4,243 2,374
Net funds at the period end 2,547 3,250 4,243
Reconciliation of Movements in Shareholders' Funds (unaudited)
For the period 1 July 2012 to 15 March 2013
Called Capital
up Share reserve Capital
share premium - reserve - Other Revenue
capital account realised unrealised reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1
January 2011 137 13,264 (110) 17 - (58) 13,250
Capital
reconstruction - (13,264) - - - 13,264 -
Total
recognised
(losses)/gains
for the
period - - (474) (67) - (5) (546)
Dividends paid - - - - - (957) (957)
Balance as at
31 December
2011 137 - (584) (50) - 12,244 11,747
Total
recognised
(losses)/gains
for the
period (157) 189 3 35
Dividends paid (957) (957)
Balance as at
30 June 2012 137 - (741) 139 - 11,290 10,825
Total
recognised
(losses)/gains
for the
period - - 181 (139) 15 57
Dividends paid - - (957) (957)
Balance as at
15 March 2013 137 - (560) - - 10,348 9,925
Notes to the Interim Report
For the period 1 July 2012 to 15 March 2013
1. Accounting Policies
The financial statements have been prepared under the historical cost
convention, modified to include the revaluation of fixed asset
investments, and in accordance with applicable Accounting Standards and
with the Statement of Recommended Practice, "Financial Statements of
Investment Trust Companies and Venture Capital Trusts" ("SORP").
2. Return per Ordinary Share
The total gain per share of 0.42p is based on the gain for the period of
GBP57,000 and the weighted average number of shares in issue as at 15
March 2013 of 13,671,870.
3. Net asset value per share
As at As at As at
15 March 2013 30 June 2012 31 December 2011
Net assets 9,925,000 10,825,000 11,747,000
Shares in issue 13,671,870 13,671,870 13,671,870
Net asset value per share
Basic 72.59p 79.18p 85.92p
Diluted 72.59p 79.18p 85.92p
Accrued performance fee - -
Net assets after performance 9,925,000 10,825,000 11,747,000
4. Management fees
The Company pays the Investment Manager an annual management fee of 2%
of the Company's net assets. The fee is payable quarterly in arrears.
The annual management fee is allocated 75% to capital and 25% to
revenue.
5. Related Party Transactions
Related party transactions are described in the 2011 Annual Report and
Accounts on page 34. There were no other related party transactions
during the period ended 15 March 2013.
6. The financial information for the periods ended 15 March
2013 and 30 June 2012 have not been audited and do not comprise full
financial statements within the meaning of Section 423 of the Companies
Act 2006. The financial information for the Year ended 31 December 2011
has been extracted from the company's full financial statements for the
period then ended that have been delivered to the Registrar of Companies,
and on which the report of the Auditors was unqualified. The interim
financial statements have been prepared on the same basis as the annual
financial statements.
Notes to the Interim Report (continued)
For the period 1 July 2012 to 15 March 2013
7. Investment portfolio summary
Valuation as a % of
Valuation Cost Gain/(loss) Net Assets
GBP'000 GBP'000 GBP'000
As at 15 March 2013
Qualifying Investment
- Unquoted
Frederica Trading
Limited 880 880 - 9%
Glenmoor Trading
Limited 880 880 - 9%
Huntly Trading Limited 700 700 - 7%
Isaacs Trading Limited 700 700 - 7%
Mirfield Contracting
Limited 860 860 - 9%
SIP Communications
Limited 700 700 - 7%
Brewhouse & Kitchen 600 600 - 6%
Total Qualifying
Investments 5,320 5,320 - 54%
Non-Qualifying
Investments
Buckhorn Lending
Limited 860 860 - 9%
Puma Brandenburg
Finance Limited 1,250 1,250 - 13%
Total Non-Qualifying
investments 2,110 2,110 - 22%
Total Investments 7,430 7,430 - 76%
Balance of Portfolio 2,495 2,495 24%
Net Assets 9,925 9,925 - 100%
Copies of this Interim Statement will be posted to shareholders in due
course and made available on the website:
http://shorecap.gg/investor-relations/announcements/2013
This announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other
applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the
information contained therein.
Source: Puma High Income VCT PLC via Thomson Reuters ONE
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