TIDMPUMA
For the six months ended 30 June 2013
Chairman's Statement
Introduction
During the six months to 30 June 2013, the Company was active in
deploying its cash resources in both qualifying and non-qualifying
investments. In doing so, it focussed on its mandate to exploit the
opportunities which continue as a result of tight credit markets. The
Company invested just over GBP2.5 million during the period and has now
deployed a substantial proportion of its funds in both qualifying and
non-qualifying investments.
Qualifying Investments
During the period, the Company concluded the investment of GBP1.1
million into Saville Services Limited, a contracting company, alongside
other Puma VCTs. Saville Services is currently deploying the funds
providing contracting services on two projects: the construction of a
private detached housing development in the countryside outside Aberdeen,
under contract to Churchill Homes Limited, a longstanding Aberdeenshire
developer, and the development of up to 20 apartments for supported
living for psychiatric and learning disabled service users in Grimsby,
North East Lincolnshire.
As reported in the Company's previous annual report, in December 2012
the Company completed a GBP450,000 investment (as part of a GBP1.5
million financing with other Puma VCTs) into Brewhouse and Kitchen
Limited ("B&K"). I am pleased to report that during the period, the
Company invested a further GBP800,000 (as part of GBP1.6 million across
the Puma VCTs) into B&K, taking total exposure to GBP1.25 million. B&K
is managed by two highly experienced pub sector professionals and our
funding will 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.
The Company's investments of GBP880,000 into each of two contracting
companies, Frederica Trading Limited ("Frederica") and Glenmoor Trading
Limited ("Glenmoor") are progressing well. As previously reported,
Frederica and Glenmoor (as members of a limited liability partnership
with other contracting companies) 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 four in various stages
of construction and we expect the investments to deliver attractive
returns.
The Company previously invested GBP2 million into two other contracting
companies, Huntly Trading Limited ("Huntly") and Jephcote Trading
Limited ("Jephcote"). As reported in the Company's previous annual
report, Huntly joined a limited liability partnership with other
contracting companies and entered into its first contracting contract
with FreshStart Living. This would provide GBP476,000 (as part of a
GBP3.5 million project involving other companies backed by Puma VCTs) of
project management and contracting services in connection with the
development and construction by FreshStart Living of 116 apartments at a
property called Trafford Press, 2 miles south east of Manchester city
centre. We understand that the directors of Huntly and Jephcote are
considering several other opportunities to deploy their financial
resources in the short to medium term.
In March 2012, the Company invested GBP700,000 (as part of a GBP1.4
million Puma VCT financing) into SIP Communications Plc ("SIPCOM").
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. SIPCOM had
a major customer default on its contract last year and although we are
secured to be prudent we have made a fair value provision against an
element of our investment.
There are currently several other suitable qualifying investments in
legal process. The Investment Manager therefore expects to make further
qualifying investments in the second half of the year to ensure the
Company is on course to meet its HMRC qualifying target.
Non-Qualifying Investments
As reported in the Company's previous annual report, when the Company
began investing in 2011, we chose a portfolio of bonds, hedge funds and
hedge fund of funds. We reviewed the portfolio and liquidated a number
of these during 2012 for an overall small gain. We retained a number of
best performing of this portfolio throughout the year, 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 and all the positions were liquidated during the
period, 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 VCT into the medium term.
During the period, the Company completed a GBP650,000 non-qualifying
loan as part of a GBP1.3 million financing with other Puma VCTs to
Countywide Property Holdings Limited ("CPHL"), a business with a strong
track record of acquiring greenfield and brownfield sites for
residential and commercial development. The loan is secured on a 5.6
acre site, including a large house, in Brackley near Silverstone. The
loan was extended on a sub-50% loan to value basis and is earning an
attractive rate of interest which is being paid monthly. CPHL has
exchanged contracts with one of the UK's largest house builders to sell
the property, subject to planning permission being granted to develop up
to 50 new homes on the site.
As reported in the Company's previous annual report, the Company
extended a GBP881,000 loan to provide, together with other Puma VCTs, an
innovative GBP2.5 million revolving credit facility to Organic Waste
Management Trading Limited. 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 petrol and diesel retailers who are
obligated to include bio-fuels in their offerings. The facility is
structured to mitigate risks by being capable of being drawn only once
back-to-back purchase and sale contracts have been entered into with
approved counterparties. The facility bears interest at a substantial
rate for utilised funds and a lower rate for non-utilised funds. The
facility has been performing well over the period.
The Company's GBP1,330,000 non-qualifying loan (as part of a GBP4
million financing with other Puma VCTs) to Puma Brandenburg Finance
Limited, a subsidiary of Puma Brandenburg Limited, continues to perform.
The loan is secured on a portfolio of flats in the middle class area of
central Berlin, Germany. 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. The loan attracts a fixed
interest rate at a good coupon given the security profile.
Dividends
As set out in the accounts for the period ended 31 December 2012, the
Company declared a dividend of 5p per ordinary share for that period
which was paid on 25 February 2013. 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 5p per ordinary share each year
as envisaged in the Company's prospectus.
Net Asset Value ('NAV')
The NAV per share at the period end was 91.37p after adding back
dividends paid to date.
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. The Company has 62 per cent of its portfolio in
qualifying investments, putting it well on track for the requirement to
of over 70 per cent by the end of the third financial year which is on
28 February 2014.
Principal risks and uncertainties
Although the economy in the UK is showing signs of improvement, it
remains fragile. 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
The Investment Manager has a pipeline in legal process and many
companies which are suitable for investment. There is therefore a strong
flow of further opportunities likely to lead to suitable investments.
The restrictions on availability of bank credit continue to affect the
terms on which target companies can raise finance. This should both
increase the demand for our offering and improve the terms we can
secure. There are many suitable companies which are well-managed, in
good market positions, which need our finance and can offer good
security. We therefore believe the Company is strongly positioned to
assemble a portfolio to deliver attractive returns to shareholders in
the medium to long term.
David Buchler
Chairman
30 August 2013
Income Statement (unaudited)
For the period ended 30 June 2013
Six months ended Six months ended Year ended
30 June 2013 30 June 2012 31 December 2012
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 - (218) (218) - 119 119 - 312 312
Income 373 - 373 90 - 90 274 - 274
373 (218) 155 90 119 209 274 312 586
Investment management fees 4 (27) (81) (108) (27) (80) (107) (56) (168) (224)
Performance fees - - - - - - - - -
Other expenses (61) - (61) (83) - (83) (239) - (239)
(88) (81) (169) (110) (80) (190) (295) (168) (463)
Return/(loss) on ordinary activities before taxation 285 (299) (14) (20) 39 19 (21) 144 123
Tax on return on ordinary activities - - - 4 (4) - - - -
Return/(loss) on ordinary activities after tax attributable
to equity shareholders 285 (299) (14) (16) 35 19 (21) 144 123
Basic and diluted
Return/(loss) per Ordinary Share (pence) 2 2.11p (2.21p) (0.10p) (0.12p) 0.26p 0.14p (0.16p) 1.07p 0.91p
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 30 June 2013
As at As at As at
Note 30 June 2013 30 June 2012 31 December 2012
GBP'000 GBP'000 GBP'000
Fixed Assets
Investments 7 9,461 8,941 10,817
Current Assets
Debtors 245 26 75
Cash 1,323 2,715 926
1,568 2,741 1,001
Creditors - amounts falling due within one year (36) (103) (135)
Net Current Assets 1,532 2,638 866
Total Assets less Current Liabilities 10,993 11,579 11,683
Creditors - amounts falling due after more than one
year (including convertible debt) (1) (1) (1)
Net Assets 10,992 11,578 11,682
Capital and Reserves
Called up share capital 135 135 135
Share premium account - - -
Capital reserve - realised (528) (403) (718)
Capital reserve - unrealised (210) (145) 279
Other reserve - - -
Revenue reserve 11,595 11,991 11,986
Equity Shareholders' Funds 10,992 11,578 11,682
Net Asset Value per Ordinary Share 3 81.37p 85.71p 86.48p
Diluted Net Asset Value per Ordinary Share 3 81.37p 85.71p 86.48p
Cash Flow Statement (unaudited)
For the period ended 30 June 2013
Six months ended Six months ended Year ended
30 June 2013 30 June 2012 31 December 2012
GBP'000 GBP'000 GBP'000
Operating activities
(Loss)/return on ordinary activities before tax (14) 19 123
Losses/(gains) on investments 229 (116) (312)
Increase in debtors (170) (13) (61)
(Decrease)/increase in creditors (99) (12) 20
Net cash outflow from operating activities (54) (122) (230)
Corporation tax paid - - -
Capital expenditure and financial investment
Purchase of investments (2,550) (4,523) (7,434)
Proceeds from sale of investments 3,681 2,430 3,660
Transaction costs (4) (2) (2)
Net cash inflow/(outflow) from capital expenditure
and financial investment 1,127 (2,095) (3,776)
Equity dividend paid (676) (676) (676)
Financing
Redemption of redeemable preference shares - - -
Net cash outflow from financing - - -
Increase/(decrease) in cash 397 (2,893) (4,682)
Net cash at start of the period 926 5,608 5,608
Net funds at the period end 1,323 2,715 926
Reconciliation of Movements in Shareholders' Funds (unaudited)
For the period ended 30 June 2013
Capital
Called Share reserve Capital
up share premium - reserve - Revenue
capital account realised unrealised reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1
January 2012 135 - (405) (178) 12,683 12,235
Total
recognised
(losses)/gains
for the
period - - 2 33 (16) 19
Dividends paid - - - - (676) (676)
Balance as at
30 June 2012 135 - (403) (145) 11,991 11,578
Total
recognised
(losses)/gains
for the
period - - (151) 260 (5) 104
Realisation of
valuations
from prior
period - - (164) 164 - -
Dividends paid - - - - - -
Balance as at
31 December
2012 135 - (718) 279 11,986 11,682
Total
recognised
(losses)/gains
for the
period - - 190 (489) 285 (14)
Dividends paid - - - - (676) (676)
Balance as at
30 June 2013 135 - (528) (210) 11,595 10,992
Notes to the Interim Report
For the period ended 30 June 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 loss per share of 0.10p is based on the loss for the period of
GBP14,000 and the weighted average number of shares in issue as at 30
June 2013 of 13,508,925 calculated from the date of the first receipt of
proceeds from the issue of ordinary share capital.
3. Net asset value per share
As at As at As at
30 June 2013 30 June 2012 31 December 2012
Net assets 10,992,000 11,578,000 11,682,000
Shares in issue 13,508,925 13,508,925 13,508,925
Net asset value per share
Basic 81.37p 85.71p 86.48p
Diluted 81.37p 85.71p 86.48p
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 2012 Annual Report and
Accounts on page 36. There were no other related party transactions
during the six months ended 30 June 2013.
6. The financial information for the period ended 30 June 2013
has not been audited and does not comprise full financial statements
within the meaning of Section 423 of the Companies Act 2006. The interim
financial statements have been prepared on the same basis as will be
used to prepare the annual financial statements.
7. Investment portfolio summary
Valuation as a % of
Valuation Cost Gain/(loss) Net Assets
GBP'000 GBP'000 GBP'000
As at 30 June 2013
Qualifying Investment
- Unquoted
Brewhouse & Kitchen 1,250 1,250 - 11%
Frederica Trading
Limited 880 880 - 8%
Glenmoor Trading
Limited 880 880 - 8%
Huntly Trading Limited 1,000 1,000 - 9%
Jephcote Trading
Limited 1,000 1,000 - 9%
SIPCOM Limited 490 700 (210) 4%
Saville Services
Limited 1,100 1,100 - 10%
Total Qualifying
Investments 6,600 6,810 (210) 59%
Non-Qualifying
Investments
Organic Waste
Management
Limited(1) 881 881 - 8%
Countrywide Property
Holdings Limited(2) 650 650 - 6%
Puma Brandenburg
finance Limited 1,330 1,330 - 12%
Total Non-Qualifying
investments 2,861 2,861 - 26%
Total Investments 9,461 9,671 85%
Balance of Portfolio 1,531 1,531 15%
Net Assets 10,992 11,202 - 100%
1. Via a loan to Buckhorn Lending Limited
2. Via a loan to Latimer Lending Limited
Copies of this Interim Statement will be posted to shareholders in due
course and made available on the website:
http://www.shorecap.gg/alternative-asset-management/puma-vcts/information
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 VCT VII PLC via Thomson Reuters ONE
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