TIDMPUM9
RNS Number : 8375F
Puma VCT 9 PLC
30 April 2014
Puma VCT 9 plc
Final results for the period ended 31 December 2013
HIGHLIGHTS
-- Good progress in the first seven months of investment to 31 December 2013 and subsequently.
-- GBP12.3 million deployed in eight investments during the period.
-- Strong pipeline of potential deals at the Company's first anniversary.
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present to you as Chairman the first annual
report for the Puma VCT 9 plc for the period to 31 December 2013,
which comprised seven months of investment following the completion
of the fund raising in May 2013.
The Company was incorporated and launched its Prospectus in
October 2012. It raised GBP28.1 million, making it the largest
single-company VCT fundraise in the 2012/2013 tax year. The
Investment Manager, Puma Investments, is a member of the Shore
Capital Group which has approximately GBP90 million of VCT money
under management in this and other Puma VCTs and a
well-established, experienced VCT team to manage the Company's deal
flow.
Investments
During the period, the Company completed eight investments for a
total of GBP12.3 million, including its first three VCT qualifying
investments for a total of GBP4.8 million. Details of these can be
found in the Investment Manager's report below.
The Investment Manager has continued to review a number of
suitable investment opportunities, generated by a strong pipeline,
and expects, in particular, to make further qualifying investments
during the coming year to ensure the Company is on course to meet
its HMRC qualifying target. In anticipation of the strong pipeline
of opportunities, the Investment Manager has taken the view to
continue to hold a significant portion of the portfolio on cash
deposit.
VCT qualifying status
PricewaterhouseCoopers LLP ('PwC') provides the board and the
Investment Manager with advice on the ongoing compliance with HMRC
rules and regulations concerning VCTs. PwC will continue to assist
the Investment Manager in establishing the status of potential
investments as qualifying holdings in the future.
Results
The Company reported a loss of GBP450,000 for the period, a loss
of 2.48p per ordinary share (calculated on the weighted average
number of shares). This is a result of the running costs of the
Company exceeding the income during this initial period whilst the
Company has continued to review suitable investment opportunities.
The Net Asset Value per ordinary share ("NAV") at the period end
was 93.71p. In line with the Company's dividend policy as stated in
the Prospectus, no dividend was declared in respect of this first
accounting period. The Board's stated objective is to pay an annual
dividend of 6p from the end of the Company's second year of
investment, with the first such payment expected in Q1 2015.
Outlook
We are pleased that the Investment Manager has invested almost
50% of the fund at the Company's first anniversary and there is a
good flow of opportunities which should lead to further suitable
investments. We will update you in due course as investments are
completed.
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 when we offer finance. There are many suitable
companies which are well-managed, in good market positions, and
which can offer security and need our finance. We therefore believe
the Company is strongly positioned to select a portfolio to deliver
attractive returns to shareholders in the medium to long term.
Egmont Kock
Chairman
29 April 2014
INVESTMENT MANAGER'S REPORT
Introduction
As set out in the Chairman's Statement, the on-going effects of
the credit crisis mean that small and medium sized businesses
(SMEs) are continuing to find it difficult to access the funding
they need from the traditional banks. As a consequence, we have a
strong pipeline of potential investments. In particular, we are
seeing many established companies which have predictable revenue
streams or substantial assets over which a security can be
taken.
Qualifying investments
As referred to in the Chairman's statement, the Company
completed three VCT qualifying investments during the period.
As indicated in the Company's interim report, in July 2013, the
Company invested GBP400,000 (alongside other Puma VCTs) into
Saville Services Limited, a company providing contracting services
over a series of projects including the construction of up to 20
apartments for supported living for psychiatric and learning
disabled service users in Grimsby, North East Lincolnshire. The
project is progressing well.
In December 2013, the Company invested GBP3.5 million into
Kinloss Trading Limited and GBP880,000 into Jephcote Trading
Limited. We are pleased to report that Kinloss Trading Limited and
Jephcote Trading Limited have joined a limited liability
partnership with other contracting companies which entered into a
contracting contract with Ansgate (Barnes) Limited. This will
provide GBP4.38 million (as part of an GBP8 million project
involving other companies backed by Puma VCTs) of project
management and contracting services. These services will be
provided in connection with the construction of nine new houses and
12 new flats at a construction known as The Albany, in Barnes,
south west London.
In accordance with the HMRC VCT rules the Company has three
years to invest 70 per cent of the portfolio into qualifying
investments.
Non-qualifying investments
We have adopted a strategy for the non-qualifying portfolio of
investing in secured non-qualifying loans offering a good yield
with hopefully limited downside risk. These loans take time to
identify and execute, but should work well for the VCT into the
medium term. Since the Company's launch, we have completed four
such non-qualifying loans for a total of GBP7.34 million.
As indicated in the Company's interim report, in April 2013, the
Company advanced a GBP700,000 non-qualifying loan (through an
affiliate of itself and other VCTs) to Churchill Homes (Aberdeen)
Limited, a longstanding Aberdeenshire developer, towards the
funding of the construction of a private detached housing
construction in the countryside outside Aberdeen. Subsequent to the
year end, the Company invested a further GBP350,000 to facilitate
further construction opportunities for Churchill Homes which itself
has a strong pipeline of potential sites for which the Company may
be able to provide financing in due course.
The Company made a further non-qualifying loan of GBP190,610 in
July 2013 to provide a loan facility to HB Community Solutions 2
Limited, a nationwide provider of supported living accommodation,
for its general working capital. This loan was made through the
same affiliate, Latimer Lending Limited.
In August 2013, the Company completed a GBP1.54 million
non-qualifying loan, and together with various other Puma VCTs
extended an innovative GBP4 million revolving credit facility to
Organic Waste Management Trading Limited. This loan was made
through another affiliate Buckhorn Lending Limited. The facility
provides working capital for the purchase of used cooking oil for
conversion into bio-diesel for sale to obligated off-take parties.
The facility is structured to mitigate risks by being capable of
draw only once approved back-to-back purchase and sale contracts
have been entered into with approved counterparties.
In November 2013, the Company invested GBP1.41 million (as part
of a total investment by Puma VCTs of GBP2.16 million) in Gold Line
Property Limited, a care and dementia treatment business which is
currently developing new premises in Surrey. The management team
have a long track record in operating similar treatment centres
across the UK. The project is progressing well and the team expect
the new facility to open in early 2015.
In December 2013, the Company completed a GBP3.5 million
non-qualifying loan and together with other vehicles managed and
advised by your Investment Manager, extended a GBP5 million
revolving credit facility to Citrus PX Two Limited, part of the
Citrus Group. This loan was also made through an affiliate,
Valencia Lending Limited. Citrus PX operates a property part
exchange service facilitating the rapid purchase of properties for
developers and homeowners. The Company's facility will provide a
series of loans to Citrus PX, with the benefit of a first charge
over a geographically diversified portfolio of residential
properties on conservative terms.
The Company invested GBP210,000 in a Tesco Bank 8 year bond
traded on the London Stock Exchange, bearing a 5% per annum coupon,
but otherwise, and in anticipation of the strong pipeline of
opportunities (both qualifying and non-qualifying), the larger part
of the net proceeds raised have been placed on cash deposit.
Subsequent to the year end, the Tesco Bank bond has been sold.
Investment Strategy
We are pleased to have already invested almost half of the funds
raised by the Company in qualifying and non-qualifying investments.
We remain focused on generating strong returns for the Company in
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 a
number of companies which are potentially suitable for investment.
In accordance with our mandate we have maintained a cautious
approach and are performing due diligence work on several potential
investments. Over the course of the next two years, the Company
will build the qualifying portfolio up to the required 70 per cent
by the end of year three. We have a strong deal-flow and are
meeting a many potential investee companies with several
interesting opportunities firmly in the pipeline.
Puma Investment Management Limited
29 April 2014
Investment Portfolio Summary
As at 31 December 2013
Valuation
as a %
of Net
Valuation Cost Gain/(loss) Assets
GBP'000 GBP'000 GBP'000
As at 31 December
2013
Qualifying Investment
- Unquoted
Jephcote Trading
Limited 880 880 - 3%
Saville Services
Limited 400 400 - 2%
Kinloss Trading
Limited 3,500 3,500 - 13%
Total Qualifying
Investments 4,780 4,780 - 18%
---------- -------- ------------ ----------
Non-Qualifying
Investments
Valencia Lending
Limited 3,500 3,500 - 13%
Gold Line Property
Limited 1,410 1,410 - 5%
Buckhorn Lending
Limited 1,541 1,541 - 6%
Latimer Lending
Limited 891 891 - 3%
Tesco Personal
Finance Bond* 210 214 (4) 1%
Total Non-Qualifying
investments 7,552 7,556 (4) 28%
---------- -------- ------------ ----------
Total Investments 12,332 12,336 (4) 46%
Balance of Portfolio 14,234 14,234 - 54%
Net Assets 26,566 26,570 (4) 100%
---------- -------- ------------ ----------
Of the investments held at 31 December 2013, all are
incorporated in England and Wales.
* Quoted investment listed on the LSE.
Income Statement
For the period ended 31 December 2013
Period from 3 October
2012 to 31 December
2013
Note Revenue Capital Total
GBP'000 GBP'000 GBP'000
8
Loss on investments (c) - (4) (4)
Income 2 256 - 256
256 (4) 252
-------- -------- --------
Investment management
fees 3 (108) (324) (432)
Other expenses 4 (270) - (270)
(378) (324) (702)
-------- -------- --------
Loss on ordinary
activities before
taxation (122) (328) (450)
Tax on return on
ordinary activities 5 - - -
Loss on ordinary
activities after
tax attributable
to equity shareholders (122) (328) (450)
======== ======== ========
Basic and diluted
Loss per Ordinary
Share (pence) 6 (0.68p) (1.80p) (2.48p)
======== ======== ========
The total column represents the profit and loss account and the
revenue and capital columns are supplementary information.
All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
in the period.
No separate Statement of Total Recognised Gains and Losses is
presented as all gains and losses are included in the Income
Statement.
Balance Sheet
As at 31 December 2013
As at
31 December
Note 2013
GBP'000
Fixed Assets
Investments 7 12,332
-------------
Current Assets
Debtors 9 85
Cash 14,370
-------------
14,455
Creditors - amounts
falling due within one
year 10 (220)
Net Current Assets 14,235
-------------
Total Assets less Current
Liabilities 26,567
Creditors - amounts
falling due after more
than one year (including
convertible debt) 11 (1)
Net Assets 26,566
=============
Capital and Reserves
Called up share capital 12 283
Share premium account -
Capital reserve - realised (324)
Capital reserve - unrealised (4)
Revenue reserve 26,611
Equity Shareholders'
Funds 26,566
=============
Net Asset Value per
Ordinary Share 13 93.71p
=============
Diluted Net Asset Value
per Ordinary Share 13 93.71p
=============
The financial statements were approved and authorised for issue
by the Board of Directors on 29 April 2014 and were signed on their
behalf by:
Egmont Kock
Chairman
29 April 2014
Cash Flow Statement
For the period ended 31 December 2013
Period
from 3
October
2012 to
31 December
2013
GBP'000
Loss on ordinary activities
before taxation (450)
Loss on investments 4
Increase in debtors (85)
Increase in creditors 220
Net cash outflow from operating
activities (311)
-------------
Capital expenditure and financial
investment
Purchase of investments (12,336)
Net cash outflow from capital
expenditure and financial investment (12,336)
-------------
Net cash outflow before financing (12,647)
-------------
Financing
Proceeds received from issue
of ordinary share capital 28,349
Expenses paid for issue of
share capital (1,333)
Proceeds received from issue
of redeemable preference shares 13
Redemption of redeemable preference
shares (13)
Proceeds received from issue
of convertible loan notes 1
Net cash inflow from financing 27,017
-------------
Increase in cash in the period 14,370
=============
Reconciliation of net cash
flow to movement in net funds
Increase in cash in the period 14,370
Net funds at start of period -
Net funds at end of period 14,370
=============
Reconciliation of Movements in Shareholders' Funds
For the period ended 31 December 2013
Called Share Capital Capital
up share premium reserve reserve Revenue
capital account - realised - unrealised reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Shares issues
in the period 283 28,066 - - - 28,349
Expenses of share
issues - (1,333) - - - (1,333)
Return after taxation
attributable to
equity shareholders - - (324) (4) (122) (450)
Capital reconstruction - (26,733) - - 26,733 -
Balance as at
31 December 2013 283 - (324) (4) 26,611 26,566
========== ========= ============ ============== ========= ========
Distributable reserves comprise: Capital reserve-realised,
Capital reserve-unrealised (excluding gains on unquoted
investments) and the Revenue reserve. At the period end
distributable reserves were GBP26,283,000.
The Capital reserve-realised shows gains/losses that have been
realised in the period due to the sale of investments, net of
related costs. The Capital reserve-unrealised represents the
investment holding gains/losses and shows the gains/losses on
investments still held by the company not yet realised by an asset
sale.
There was a capital reorganisation on 6 November 2013 which
transferred GBP26,733,000 from the share premium reserve to the
revenue reserve.
Notes to the Accounts
For the period ended 31 December 2013
1. Accounting Policies
Basis of Accounting
Puma VCT 9 plc ("the Company") was incorporated and is domiciled
in England and Wales. The financial statements have been prepared
under the historical cost convention, modified to include the
revaluation of investments held at fair value, and in accordance
with UK Generally Accepted Accounting Practice ("UK GAAP") and the
Statement of Recommended Practice, 'Financial Statements of
Investment Trust Companies and Venture Capital Trusts' ("SORP")
revised in 2009.
Income Statement
In order to better reflect the activities of a Venture Capital
Trust and in accordance with guidance issued by the Association of
Investment Companies ("AIC"), supplementary information which
analyses the Income Statement between items of a revenue and
capital nature has been presented alongside the Income Statement.
The net loss of GBP450,000 as per the Income Statement on page 25
is the measure that the Directors believe is appropriate in
assessing the Company's compliance with certain requirements set
out in s274 of the Income Tax Act 2007.
Investments
All investments have been designated as fair value through
profit or loss, and are initially measured at cost which is the
best estimate of fair value. A financial asset is designated in
this category if acquired to be both managed and its performance
evaluated on a fair value basis with a view to selling after a
period of time in accordance with a documented risk management or
investment strategy. All investments held by the Company have been
managed in accordance with the investment policy set out on page
12. The investments are measured at subsequent reporting dates at
fair value. Listed investments and investments traded on AIM are
stated at bid price at the reporting date. Hedge funds are valued
at their respective quoted Net Asset Values per share at the
reporting date. Unlisted investments are stated at Directors'
valuation with reference to the International Private Equity and
Venture Capital Valuation Guidelines ("IPEVC") and in accordance
with FRS26 "Financial Instruments: Measurement":
-- Investments which have been made within the last twelve
months or where the investee company is in the early stage of
development will usually be valued at the price of recent
investment except where the company's performance against plan is
significantly different from expectations on which the investment
was made in which case a different valuation methodology will be
adopted.
-- Investments in debt instruments will usually be valued by
applying a discounted cashflow methodology based on expected future
returns of the investment.
-- Alternative methods of valuation such as net asset value may
be applied in specific circumstances if considered more
appropriate.
Realised surpluses or deficits on the disposal of investments
are taken to realised capital reserves, and unrealised surpluses
and deficits on the revaluation of investment are taken to
unrealised capital reserves.
It is not the Company's policy to exercise a controlling
influence over investee companies. Therefore the results of the
companies are not incorporated into the revenue account except to
the extent of any income accrued.
Cash at bank and in hand
Cash at bank and in hand comprises cash on hand and demand
deposits.
Equity instruments
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. Equity
instruments issued by the Company are recorded at proceeds received
net of issue costs.
Notes to the Accounts
For the period ended 31 December 2013
1. Accounting Policies (continued)
Income
Dividends receivable on listed equity shares are brought into
account on the ex-dividend date. Dividends receivable on unlisted
equity shares are brought into account when the Company's right to
receive payment is established and there is no reasonable doubt
that payment will be received. Interest receivable is recognised
wholly as a revenue item on an accruals basis.
Performance fees
Upon its inception, the Company agreed performance fees payable
to the Investment Manager, Puma Investment Management Limited, and
members of the investment management team at 20 per cent of the
aggregate excess of the amounts realised over GBP1 per Ordinary
Share returned to Ordinary Shareholders. This incentive will only
be exercisable once the holders of Ordinary Shares have received
distributions of GBP1 per share. The performance fee is accounted
for as an equity-settled share-based payment.
FRS 20 Share-Based Payment requires the recognition of an
expense in respect of share-based payments in exchange for goods or
services. Entities are required to measure the goods or services
received at their fair value, unless that fair value cannot be
estimated reliably in which case that fair value should be
estimated by reference to the fair value of the equity instruments
granted.
At each balance sheet date, the Company estimates that fair
value by reference to any excess of the net asset value, adjusted
for dividends paid, over GBP1 per share in issue at the balance
sheet date. Any change in fair value is recognised in the Income
Statement with a corresponding adjustment to equity.
Expenses
All expenses (inclusive of VAT) are accounted for on an accruals
basis. Expenses are charged wholly to revenue, with the exception
of:
-- expenses incidental to the acquisition or disposal of an investment charged to capital; and
-- the investment management fee, 75 per cent of which has been
charged to capital to reflect an element which is, in the
directors' opinion, attributable to the maintenance or enhancement
of the value of the Company's investments in accordance with the
Board's expected long-term split of return; and
-- the performance fee which is allocated proportionally to
revenue and capital based on the respective contributions to the
Net Asset Value.
Taxation
Corporation tax is applied to profits chargeable to corporation
tax, if any, at the applicable rate for the year. The tax effect of
different items of income/gain and expenditure/loss is allocated
between capital and revenue return on the marginal basis as
recommended by the SORP.
Deferred tax is recognised in respect of all timing differences
that have originated but not reversed at the balance sheet date,
where transactions or events that result in an obligation to pay
more, or right to pay less, tax in the future have occurred at the
balance sheet date. This is subject to deferred tax assets only
being recognised if it is considered more likely than not that
there will be suitable taxable profits from which the future
reversal of the underlying timing differences can be deducted.
Timing differences are differences arising between the Company's
taxable profits and its results as stated in the financial
statements which are capable of reversal in one or more subsequent
years. Deferred tax is measured on a non-discounted basis at the
tax rates that are expected to apply in the years in which timing
differences are expected to reverse, based on tax rates and laws
enacted or substantively enacted at the balance sheet date.
Notes to the Accounts
For the period ended 31 December 2013
1. Accounting Policies (continued)
Reserves
Realised losses and gains on investments, transaction costs, the
capital element of the investment management fee and taxation are
taken through the Income Statement and recognised in the Capital
Reserve - Realised on the Balance sheet. Unrealised losses and
gains on investments and the capital element of the performance fee
are also taken through the Income Statement and are recognised in
the Capital Reserve - Unrealised.
Foreign exchange
The base currency of the Company is Sterling. Transactions
denominated in foreign currencies are translated into Sterling at
the rates ruling at the dates that they occurred. Assets and
liabilities denominated in a foreign currency are translated at the
appropriate foreign exchange rate ruling at the balance sheet date.
Translation differences are recorded as unrealised foreign exchange
losses or gains and taken to the Income Statement.
Debtors
Debtors include accrued income which is recognised at amortised
cost, equivalent to the fair value of the expected balance
receivable.
Dividends
Final dividends payable are recognised as distributions in the
financial statements when the Company's liability to make payment
has been established. The liability is established when the
dividends proposed by the Board are approved by the Shareholders.
Interim dividends are recognised when paid.
2. Income
Period from
3 October
2012 to
31 December
2013
GBP'000
Income from investments
Loan stock interest 157
157
Other income
Bank deposit income 99
256
=============
Notes to the Accounts
For the period ended 31 December 2013
3. Investment Management Fees
Period from
3 October
2012 to
31 December
2013
GBP'000
Puma Investment Management
Limited 432
Puma Investment Management Limited ("Puma Investments") has been
appointed as the Investment Manager of the Company for an initial
period of five years, which can be terminated by not less than
twelve months' notice, given at any time by either party, on or
after the fifth anniversary. The Board is satisfied with the
performance of the Investment Manager. Under the terms of this
agreement Puma Investments will be paid an annual fee of 2 per cent
of the Net Asset Value payable quarterly in arrears calculated on
the relevant quarter end NAV of the Company. These fees are capped,
the Investment Manager having agreed to reduce its fee (if
necessary to nothing) to contain total annual costs (excluding
performance fee and trail commission) to within 3.5 per cent of
funds raised. Total costs this period were 2.5 per cent of the
funds raised.
In addition to the investment manager fees disclosed above, in
May 2013 a payment of GBP988,000 was made to Puma Investment
Management Limited in relation to share issue costs. This fee was
to cover the cost of launching the fund.
4. Other expenses
Period from
3 October
2012 to
31 December
2013
GBP'000
Administration - Shore Capital
Fund Administration Services
Limited 76
Directors' remuneration 56
Social security costs 1
Auditor's remuneration for
statutory audit 21
Insurance 4
Legal and professional fees 51
Trail commission 42
Other expenses 19
270
=============
Shore Capital Fund Administration Services Limited provides
administrative services to the Company for an aggregate annual fee
of 0.35 per cent of the Net Asset Value of the Fund, payable
quarterly in arrears.
The total fees paid or payable (excluding VAT and employers NIC)
in respect of individual Directors for the period are detailed in
the Directors' Remuneration Report on page 17. The Company had no
employees (other than Directors) during the period. The average
number of non-executive Directors during the period was 3.
The Auditor's remuneration of GBP17,500 has been grossed up in
the table above to be inclusive of VAT.
Notes to the Accounts
For the period ended 31 December 2013
5. Tax on Ordinary Activities
Period from
3 October
2012 to
31 December
2013
GBP'000
UK corporation tax charged
to revenue reserve -
UK corporation tax charged
to capital reserve -
UK corporation tax charge
for the period -
=============
Factors affecting tax charge
for the period
Loss on ordinary activities
before taxation (450)
=============
Tax charge calculated on
loss on ordinary activities
before taxation at the applicable
rate of 20% (90)
Tax losses carried forward 90
-
=============
The income statement shows the tax charge allocated to revenue
and capital. Capital returns are not taxable as VCTs are exempt
from tax on realised capital gains subject that they comply and
continue to comply with the VCT regulations.
No provision for deferred tax has been made in the current
accounting period. No deferred tax assets have been recognised as
the timing of their recovery cannot be foreseen with any certainty.
Due to the Company's status as a Venture Capital Trust and the
intention to continue meeting the conditions required to obtain
approval in the foreseeable future, the Company has not provided
deferred tax on any capital gains and losses arising on the
revaluation or disposal of investments.
6. Basic and diluted loss per Ordinary Share
Period from 3 October 2012
to 31 December 2013
Revenue Capital Total
Loss for the period
(GBP'000) (122) (328) (450)
Weighted average
number of shares 18,176,358 18,176,358 18,176,358
Loss per share (0.68)p (1.80)p (2.48)p
The total loss per ordinary share is the sum of the revenue loss
and capital loss.
Notes to the Accounts
For the period ended 31 December 2013
7. Dividends
The Directors do not propose a final dividend in relation to the
period ended 31 December 2013.
8. Investments
Historic Market
cost as value as
at 31 December at 31 December
(a) Summary 2013 2013
GBP'000 GBP'000
Qualifying venture
capital investments 4,780 4,780
Non qualifying investments 7,556 7,552
12,336 12,332
================ ================
Qualifying
venture
(b) Movements in capital Non qualifying
investments investments investments Total
GBP'000 GBP'000 GBP'000
Opening value - - -
Purchases at cost 4,780 7,556 12,336
Net unrealised
losses - (4) (4)
Valuation at 31
December 2013 4,780 7,522 12,332
============= =============== ========
Book cost at 31
December 2013 4,780 7,556 12,336
Net unrealised
losses at 31 December
2013 - (4) (4)
Valuation at 31
December 2013 4,780 7,552 12,332
============= =============== ========
(c) (Losses) on investments
The (losses) on investments for the period shown in the Income
Statement on page 25 is analysed as follows:
Period from
3 October
2012 to
31 December
2013
GBP'000
Net unrealised losses on investments
held at the period end (4)
(4)
==================
Notes to the Accounts
For the period ended 31 December 2013
8. Investments - continued
(d) Quoted and unquoted investments
Market Value
as at 31
December
2013
GBP'000
Quoted investments 210
Unquoted investments 12,122
12,332
=============
(e) Significant interests
As at 31 December 2013, the Company held more than 20% of the
equity of the following undertakings. These holdings are included
within the unquoted investments disclosed above and are held as
part of the Company's investment portfolio.
Percentage of equity directly Fair value
held in Investee Company of Company's
investment
as at
31/12/2013
Investee Company Company Puma Puma Puma GBP'000
VCT High VCT VCT
Income VII 8 plc
plc plc
Buckhorn Lending
Limited 25% 25% 25% 25% 1,541
Latimer Lending
Limited 33% - 33% 33% 891
Gold Line Property
Limited 29% - - 16% 1,410
Valencia Lending
Limited 50% - - 50% 3,500
Jephcote Trading
Limited 24% - 45% 28% 880
Kinloss Trading
Limited 50% - - 50% 3,500
11,722
==============
Shore Capital Limited, a fellow member of the Shore Capital
Group, is the investment manager of Puma VCT VII plc, Puma High
Income VCT plc and Puma VCT 8 plc.
The Company is able to exercise significant influence over all
of the above-named investee companies.
These investments have not been accounted for as associates or
joint ventures since FRS 9: Associates and Joint Ventures and the
SORP require that Investment Companies treat all investments held
as part of their investment portfolio in the same way, even those
over which the Company has significant influence.
Further details of these investments are disclosed in the
Investment Portfolio Summary on pages 6 to 10 of the Annual
Report.
Notes to the Accounts
For the period ended 31 December 2013
9. Debtors
As at 31 December
2013
GBP'000
Prepayments and accrued
income 85
==========================
10. Creditors - amounts falling due within one year
As at 31 December
2013
GBP'000
Accrued management
fees and administration
costs 220
==================
11. Creditors - amounts falling due after more than one year (including convertible debt)
As at 31 December
2013
GBP'000
Loan notes 1
==================
On 30 October 2012, the Company issued Loan Notes in the amount
of GBP1,000 to a nominee on behalf of Puma Investment Management
Limited and members of the investment management team. The Loan
Notes accrue interest of 5 per cent per annum.
The Loan Notes entitle Puma Investments and members of the
investment management team to receive a performance related
incentive of 20 per cent of the aggregate amounts realised by the
Company in excess of GBP1 per Ordinary Share. The Shareholders will
be entitled to the balance. This incentive, to be effected through
the issue of shares in the Company, will only be exercised once the
holders of Ordinary Shares have received dividends of GBP1 per
share (whether capital or income). The performance incentive
structure provides a strong incentive for the Investment Manager to
ensure that the Company performs well, enabling the Board to
approve distributions as high and as soon as possible.
In the event that distributions to the holders of Ordinary
Shares totalling GBP1 per share have been made the Loan Notes will
convert into sufficient Ordinary Shares to represent 20 per cent of
the enlarged number of Ordinary Shares. The amount of the
performance fee will be calculated as 20 per cent of the excess of
the net asset value (adjusted for dividends paid) over GBP1 per
issued share.
Notes to the Accounts
For the period ended 31 December 2013
12. Called Up Share Capital
As at 31 December
2013
GBP'000
28,348,823 ordinary
shares of 1p each 283
==================
On incorporation on the 3 October 2012 the company issued two
Ordinary shares of 1p each. On 25 October 2012 a special resolution
was passed which conferred the allotment of equity securities in
connection with the issue of 50,000 Redeemable Preference Shares of
GBP1 each and the allotment in connection with a proposed offer for
subscription of up to 30,000,000 Ordinary Shares of 1p each at the
issue price of GBP1 per share payable on subscription.
The 50,000 Redeemable Preference shares were issued to Shore
Capital Group Investments Limited, one quarter paid up, so as to
enable the Company to obtain a certificate under Section 761 of the
Companies Act 2006.
Between 31 October 2012 and 3 May 2013, 28,348,823 Ordinary
shares of 1p each were issued at GBP1 per share pursuant to the
offers for subscription to the public dated 31 October 2012.
On 9 October 2013 the 50,000 Redeemable Preference shares issued
to Shore Capital Group Investments Limited were paid up in full and
then subsequently redeemed out of the proceeds of the offers. Upon
redemption the shares were cancelled.
13. Net Asset Value per Ordinary Share
As at
31 December 2013
Net assets (GBP'000) 26,566
Shares in issue 28,348,823
Net asset value per
share
Basic and diluted 93.71p
Notes to the Accounts
For the period ended 31 December 2013
14. Financial Instruments
The Company's financial instruments comprise its investments,
cash balances, debtors and certain creditors. Fixed Asset
investments held are valued at Bid market prices or price of recent
investment. The fair value of all of the Company's financial assets
and liabilities is represented by the carrying value in the Balance
Sheet. The Company held the following categories of financial
instruments at 31 December 2013:
As at 31 December
2013
GBP'000
Assets at fair value
through profit or
loss
Investments managed
through Puma Investment
Management Limited 12,332
Loans and receivables
Cash at bank and
in hand 14,370
Interest, dividends
and other receivables 85
Other financial liabilities
Financial liabilities
measured at amortised
cost (221)
26,566
==================
Management of risk
The main risks the Company faces from its financial instruments
are market price risk, being the risk that the value of investment
holdings will fluctuate as a result of changes in market prices
caused by factors other than interest rate or currency movements,
liquidity risk, credit risk and interest rate risk. The Board
regularly reviews and agrees policies for managing each of these
risks. The Board's policies for managing these risks are summarised
below and have been applied throughout the period.
Notes to the Accounts
For the period ended 31 December 2013
14. Financial Instruments (continued)
Credit risk
Credit risk is the risk that the counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Company. The Investment Manager
monitors counterparty risk on an ongoing basis. The carrying amount
of financial assets best represents the maximum credit risk
exposure at the balance sheet date. The Company's financial assets
maximum exposure to credit risk is as follows:
As at 31 December
2013
GBP'000
Investments in loans,
loan notes and bonds 7,999
Cash at bank and
in hand 14,370
Interest, dividends
and other receivables 85
22,454
==================
The cash held by the Company at the period end is split between
two U.K. banks. Bankruptcy or insolvency of either bank may cause
the Company's rights with respect to the receipt of cash held to be
delayed or limited. The Board monitors the Company's risk by
reviewing regularly the financial position of the banks and should
it deteriorate significantly the Investment Manager will, on
instruction of the Board, move the cash holdings to another
bank.
Credit risk associated with interest, dividends and other
receivables are predominantly covered by the investment management
procedures.
Investments in loans, loan notes and bonds comprises a
fundamental part of the Company's venture capital investments,
therefore credit risk in respect of these assets is managed within
the Company's main investment procedures.
Market price risk
Market price risk arises mainly from uncertainty about future
prices of financial instruments held by the Company. It represents
the potential loss the Company might suffer through holding
investments in the face of price movements. The Investment Manager
actively monitors market prices and reports to the Board, which
meets regularly in order to consider investment strategy.
The Company's strategy on the management of market price risk is
driven by the Company's investment policy as outlined in the Report
of the Directors on page 12. The management of market price risk is
part of the investment management process. The portfolio is managed
with an awareness of the effects of adverse price movements through
detailed and continuing analysis, with an objective of maximising
overall returns to shareholders.
Holdings in unquoted investments may pose higher price risk than
quoted investments. Some of that risk can be mitigated by close
involvement with the management of the investee companies along
with review of their trading results.
2% of the Company's investments are listed on the London Stock
Exchange and 98% are unquoted investments
Notes to the Accounts
For the period ended 31 December 2013
14. Financial Instruments (continued)
Liquidity risk
Details of the Company's unquoted investments are provided in
the Investment Portfolio summary on page 6. By their nature,
unquoted investments may not be readily realisable, the Board
considers exit strategies for these investments throughout the
period for which they are held. As at the period end, the Company
had no borrowings other than loan notes amounting to GBP1,000 (see
note 11).
The Company's liquidity risk associated with investments is
managed on an ongoing basis by the Investment Manager in
conjunction with the Directors and in accordance with policies and
procedures in place as described in the Report of the Directors.
The Company's overall liquidity risks are monitored on a quarterly
basis by the Board.
The Company maintains sufficient investments in cash and readily
realisable securities to pay accounts payable and accrued
expenses.
Fair value interest rate risk
The benchmark that determines the interest paid or received on
the current account is the Bank of England base rate, which was 0.5
per cent at 31 December 2013. All of the loan and loan note
investments are unquoted and hence not directly subject to market
movements as a result of interest rate movements.
At the period end and throughout the period, the Company's only
liability subject to fair value interest rate risk were the Loan
Notes of GBP1,000 at 5.0 per cent (see note 11).
Cash flow interest rate risk
The Company has exposure to interest rate movements primarily
through its cash deposits and loan notes which track either the
Bank of England base rate or LIBOR.
Interest rate risk profile of financial assets
The following analysis sets out the interest rate risk of the
Company's financial assets as at 31 December 2013.
Weighted
Weighted average
average period
Rate interest until
status rate maturity Total
GBP'000
Cash at bank
- RBS Floating 0.65% - 21
Cash at bank
- Lloyds Floating 0.90% - 14,349
Loans and loan
notes Floating 12.73% 58 months 6,898
Loans, loan
notes and bonds Fixed 8.55% 58 months 1,101
Balance of Non-interest
assets bearing - 4,197
26,566
========
Notes to the Accounts
For the period ended 31 December 2013
14. Financial Instruments (continued)
Foreign currency risk
The reporting currency of the Company is Sterling. The Company
has not held any non-Sterling investments during the period.
Fair value hierarchy
Fair values have been measured at the end of the reporting
period as follows:-
Level Level Level
1 2 3
'Quoted 'Observable 'Unobservable
prices' inputs' inputs' Total
At fair value
through profit
and loss 210 - 12,122 12,332
Financial assets and liabilities measured at fair value are
disclosed using a fair value hierarchy that reflects the
significance of the inputs used in making the fair value
measurements, as follows:-
-- Level 1 - Unadjusted quoted prices in active markets for
identical asset or liabilities ('quoted prices');
-- Level 2 - Inputs (other than quoted prices in active markets
for identical assets or liabilities) that are directly or
indirectly observable for the asset or liability ('observable
inputs'); or
-- Level 3 - Inputs that are not based on observable market data
('unobservable inputs').
The Level 3 investments have been valued at the price of recent
investment, in line with the Company's accounting policies and
IPEVC guidelines. Further details of these investments are provided
in the significant interests section of the Annual Report.
Reconciliation of fair value for level 3 financial instruments
held at the period end:
Unquoted
shares Loan notes Total
GBP'000 GBP'000 GBP'000
Purchases at cost 4,333 7,789 12,122
Sales proceeds - - -
--------- ----------- --------
Balance as at 31
December 2013 4,333 7,789 12,122
========= =========== ========
Notes to the Accounts
For the period ended 31 December 2013
15. Capital management
The Company's objectives when managing capital are to safeguard
the Company's ability to continue as a going concern, so that it
can provide an adequate return to shareholders by allocating its
capital to assets commensurate with the level of risk.
By its nature, the Company has an amount of capital, at least
70% (as measured under the tax legislation) of which must be, and
remain, invested in the relatively high risk asset class of small
UK companies within three years of that capital being
subscribed.
The Company accordingly has limited scope to manage its capital
structure in the light of changes in economic conditions and the
risk characteristics of the underlying assets. Subject to this
overall constraint upon changing the capital structure, the Company
may adjust the amount of dividends paid to shareholders, issue new
shares, or sell assets to maintain a level of liquidity to remain a
going concern.
The Board has the opportunity to consider levels of gearing,
however there are no current plans to do so. It regards the net
assets of the Company as the Company's capital, as the level of
liabilities is small and the management of it is not directly
related to managing the return to shareholders.
16. Contingencies, Guarantees and Financial Commitments
There were no commitments, contingencies or guarantees of the
Company at the period-end.
17. Controlling Party
In the opinion of the Directors there is no immediate or
ultimate controlling party.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR ZMGZDNLDGDZM
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