TIDMPUM9
RNS Number : 2943Q
Puma VCT 9 PLC
29 August 2014
Puma VCT 9 plc
Interim Report
For the period ended 30 June 2014
Chairman's Statement
Highlights
-- NAV per share up 0.69p in the half year at 94.40p
-- Currently over 80% of the assets invested in portfolio of
investments generating an attractive return
Introduction
During the six months to 30 June 2014 and following the period
end, the Company has been actively deploying its cash resources in
both qualifying and non-qualifying investments. In doing so, it has
focused on its mandate to exploit the opportunities which are
arising as a result of continuing tight credit markets.
Net Asset Value ('NAV')
The NAV per share was 94.40p at 30 June 2014, an increase of
0.69p following a GBP194,000 profit for the period.
Investments
I am pleased to report that the Company completed five
investments during the period and a further four since the period
end, deploying just over GBP11 million. Over 80% of the Company's
assets are now invested in a diverse portfolio of qualifying and
non-qualifying investments, generating an attractive return.
Qualifying Investments
The Company is required to have at least 70% of its assets in
VCT qualifying investments by the end of its third accounting
period. With approximately 38% of the Company's assets in VCT
qualifying investments at the date of this interim report, the
Company is well on course to meet its HMRC qualifying targets.
In June, the Company invested GBP1.6 million (as part of a
GBP2.4 million investment alongside other Puma VCTs) into Alyth
Trading Limited, a nationwide provider of contracting services, to
provide working capital for its ongoing business. We are pleased to
report that Alyth Trading has entered into a contract with Saggart
Silverstream Limited to provide project management and contracting
services in connection with the construction of a new 65 bed
high-end nursing home in Saggart Village, County Dublin. The team
behind the project have successfully developed, operated and sold
previous nursing homes in the Republic of Ireland, and it is
expected that this home will open in early 2015.
As reported in the Company's previous annual report, Kinloss
Trading Limited and Jephcote Trading Limited (in which the Company
had invested GBP3.5 million and GBP880,000 respectively) were, as
members of SKPB Services LLP, engaged in a contract with Ansgate
(Barnes) Limited to provide project management and contracting
services 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. We understand that the project is progressing
well with a view to completion by the third quarter of next
year.
As previously reported, 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. I am pleased to report
that Saville Services recently completed this project and its
directors are actively pursuing opportunities to continue to deploy
the capital and profits arising from the Grimsby project in similar
projects in the near future.
Since the period end, the Company has made two further VCT
qualifying investments.
Before the passing of the Finance Act 2014, the Company
completed a GBP1.875 million qualifying investment (as part of a
GBP5 million investment alongside other Puma VCTs) in Urban Mining
Limited, a member of the Chinook Urban Mining group of companies.
Chinook Urban Mining is a well-funded energy-from-waste business
which is developing a flagship plant in East London to generate
electricity through the gasification of municipal solid waste and
will benefit from Renewable Obligations Certificates. The
management team have a track record of delivering similar projects
in other jurisdictions and are a preferred partner of Chinook
Sciences, the Nottingham based leading technology company which has
developed the award-winning "non-incineration ultra clean synthetic
gas technology" which will be used in the East London plant.
Chinook Sciences also holds a minority stake in the business. The
investment is secured with a first charge over the Chinook Urban
Mining business and the eight acre site of the East London plant
and is expected to produce an attractive return to the Company over
three years.
Earlier this month, the Company made a GBP2 million qualifying
investment (as part of a GBP8 million investment alongside other
entities managed and advised by your Investment Manager) in Opes
Industries Limited. Opes is developing a materials recycling
facility at an established landfill and aggregates business on a 76
hectare site in Oxfordshire. The investment is secured with a first
charge over the site and the Opes business and is expected to
produce an attractive return to the Company over four years.
Non-Qualifying Investments
In April, the Company subscribed GBP500,000 in the initial
public offering of Nextenergy Solar Fund, an investment company
focusing on operational solar photovoltaic assets located in the
United Kingdom. The Company's investment expects to yield a
sustainable and attractive dividend that increases in line with RPI
over the long term.
As previously reported, 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.
During the period, 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.
Shortly after the period end, various entities managed and
advised by your Investment Manager provided several tranches of a
GBP7.1 million bridging facility to companies within the Connolly
and Callaghan group. The Company participated in this through an
initial GBP1.95 million non-qualifying loan (advanced through a
subsidiary, Buckhorn Lending Limited) and, subsequently, through a
GBP600,000 non-qualifying loan (advanced through another
subsidiary, Latimer Lending Limited). The Connolly and Callaghan
group is a provider of emergency overnight accommodation in Bristol
with over 20 years' experience in the sector. The overall facility
is secured on a portfolio of over 20 properties, was extended on a
sub-50% loan-to-value basis and is earning an attractive rate of
interest.
The Company's GBP1.54 million non-qualifying loan to Ennovor
Trading 1 Limited (formerly known as Organic Waste Management
Trading Limited) continues to perform well. The loan (through an
affiliate of the Company and other Puma VCTs) extended an
innovative GBP4 million revolving credit facility to Ennovor
Trading which 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.
As previously reported, 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.
Together with other vehicles managed and advised by your
Investment Manager the Company made a GBP3.5 million non-qualifying
loan, as part of GBP5 million revolving credit facility to Citrus
PX Two Limited, part of the Citrus Group, through an affiliate,
Valencia Lending Limited. Citrus PX Two operates a property part
exchange service facilitating the rapid purchase of properties for
developers and homeowners. The Company's facility is providing a
series of loans to Citrus PX Two, with the benefit of a first
charge over a geographically diversified portfolio of residential
properties on conservative terms.
During the period, the Company realised its non-qualifying loan
of GBP190,610, made through Latimer Lending Limited 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. It also realised its GBP210,000 investment
in a Tesco Bank 5% 8 year bond at a premium to the issue price.
Shortly after the period end, the Company extended a GBP1.3
million non-qualifying loan which (through a subsidiary, Lothian
Lending Limited) provides a facility, together with another Puma
VCT, of GBP2.6 million to RPE FL1 Limited, a member of the
Renewable Power Exchange group. The facility provides funding
towards the construction of a 1.5MW wind farm in East Lothian,
Scotland, with the electricity once generated, used to supply those
on low incomes in the local community. The project has planning
consent, a grid connection offer and an EPC contract with Enercon
GmbH, one of the largest manufacturers of wind turbines in the
world. The loan was made on a 65% loan-to-cost basis, is secured on
the site in East Lothian, and is earning an attractive rate of
interest.
The Company has made available GBP1 million of a GBP5 million
revolving credit facility, together with other vehicles managed and
advised by your Investment Manager, to Citrus PX LLP, another
member of the Citrus Group. The facility operates on similar terms
to that advanced by Valencia Lending Limited to Citrus PX Two
Limited referred to above.
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
Although the economy in the UK continues to improve, 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 2014.
Outlook
We are pleased that a significant proportion of the Company's
available cash is now invested in a diverse portfolio of qualifying
and non-qualifying investments, generating an attractive return.
The Investment Manager is in legal process with a number of further
qualifying investment opportunities and expects to make such
investments in the second half of the year. 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.
Egmont Kock
Chairman
29 August 2014
Income Statement (unaudited)
For the period ended 30 June 2014
Six months ended Period ended Period ended
30 June 2014 30 June 2013 31 December 2013
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 - 18 18 - - - - (4) (4)
Income 591 - 591 31 - 31 256 - 256
591 18 609 31 - 31 256 (4) 252
-------- -------- -------- -------- -------- -------- --------
Investment
management
fees 4 (67) (201) (268) (40) (120) (160) (108) (324) (432)
Performance
fees - - - - - - - - -
Other expenses (147) - (147) (116) - (116) (270) - (270)
(214) (201) (415) (156) (120) (276) (378) (324) (702)
-------- -------- -------- -------- -------- -------- --------
Return/(loss)
on ordinary
activities
before taxation 377 (183) 194 (125) (120) (245) (122) (328) (450)
Tax on return
on ordinary
activities - - - - - - - - -
Return/(loss)
on ordinary
activities
after tax
attributable
to equity
shareholders 377 (183) 194 (125) (120) (245) (122) (328) (450)
======== ======== ======== ======== ======== ======== ======== ======== ========
Basic and
diluted
Return/(loss)
per Ordinary
Share (pence)
* 2 1.33p (0.64p) 0.69p (0.44p) (0.43p) (0.87p) (0.43p) (1.16p) (1.59p)
======== ======== ======== ======== ======== ======== ======== ======== ========
*comparative figures restated based on weighted average number
of shares in issue as at 30 June 2014
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 2014
As at As at As at
30 June 30 June 31 December
Note 2014 2013 2013
GBP'000 GBP'000 GBP'000
Fixed Assets
Investments 7 17,136 700 12,332
--------- --------- -------------
Current Assets
Debtors 551 30 85
Cash 9,430 26,104 14,370
--------- --------- -------------
9,981 26,134 14,455
Creditors - amounts falling
due within one year (450) (62) (220)
Net Current Assets 9,531 26,072 14,235
--------- --------- -------------
Total Assets less Current Liabilities 26,667 26,772 26,567
Creditors - amounts falling
due after more than one year
(including convertible debt) (1) (1) (1)
Net Assets 26,666 26,771 26,566
========= ========= =============
Capital and Reserves
Called up share capital 282 283 283
Share premium account - 26,733 -
Capital reserve - realised (525) (120) (324)
Capital reserve - unrealised 14 (4)
Other reserve -
Revenue reserve 26,895 (125) 26,611
Equity Shareholders' Funds 26,666 26,771 26,566
========= ========= =============
Net Asset Value per Ordinary
Share 3 94.40p 94.43p 93.71p
========= ========= =============
Diluted Net Asset Value per
Ordinary Share 3 94.40p 94.43p 93.71p
========= ========= =============
Cash Flow Statement (unaudited)
For the period ended 30 June 2014
Six months
ended Period ended Period ended
30 June 30 June 31 December
2014 2013 2013
GBP'000 GBP'000 GBP'000
Operating activities
Return/(loss) on ordinary activities
before tax 194 (245) (450)
(Gains)/losses on investments (20) - 4
Decrease/(increase) in debtors (466) (30) (85)
Increase/(decrease) in creditors 230 62 220
Net cash inflow/(outflow) from
operating activities (62) (213) (311)
----------- ------------- -------------
Corporation tax paid - - -
----------- ------------- -------------
Capital expenditure and financial
investment
Purchase of investments (5,000) (700) (12,336)
Proceeds from sale of investments 216 - -
Net cash outflow from capital
expenditure and financial investment (4,784) (700) (12,336)
----------- ------------- -------------
Equity dividend paid - - -
----------- ------------- -------------
Financing
Proceeds received from issue
of ordinary share capital - 28,349 28,349
Expenses paid for issue of share
capital - (1,333) (1,333)
Proceeds received from issue
of redeemable preference shares - 13 13
Redemption of redeemable preference
shares (13) (13)
Redemption of redeemable ordinary
shares (94) - -
Proceeds received from convertible
loan notes - 1 1
Net cash outflow from financing (94) 27,017 27,017
----------- ------------- -------------
Decrease in cash (4,940) 26,104 14,370
Net cash at start of the period 14,370 - -
Net funds at the period end 9,430 26,104 14,370
=========== ============= =============
Reconciliation of Movements in Shareholders' Funds
(unaudited)
For the period ended 30 June 2014
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
Balance as at 3
October 2012 -
Shares issued in
the period 283 28,066 - - - 28,349
Expense of share
issue - (1,333) - - - (1,333)
Total recognised
(losses)/gains for
the period - - (120) - (125) (245)
Balance as at 30
June 2013 283 26,733 (120) - (125) 26,771
Total recognised
(losses)/gains for
the period - - (204) (4) 3 (205)
Capital reconstruction - (26,733) - - 26,733 -
Balance as at 31
December 2013 283 - (324) (4) 26,611 26,566
Total recognised
(losses)/gains for
the period (201) 18 377 194
Shares repurchased (1) - - - (93) (94)
Balance as at 30
June 2014 282 - (525) 14 26,895 26,666
========== ========= ============ ============== ========= ========
Notes to the Interim Report
For the period ended 30 June 2014
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 return per share of 0.69p is based on the profit for
the period of GBP194,000 and the weighted average number of shares
in issue as at 30 June 2014 of 28,248,821.
3. Net asset value per share
As at As at As at
30 June 30 June 31 December
2014 2013 2013
Net assets 26,666,000 26,771,000 26,566,000
Shares in issue 28,248,821 28,348,821 28,348,821
Net asset value
per share
Basic 94.40p 94.43p 93.71p
Diluted 94.40p 94.43p 93.71p
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 2013 Annual
Report and Accounts on page 34. There were no other related party
transactions during the six months ended 30 June 2014.
6. The financial information for the period ended 30 June 2014
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.
Notes to the Interim Report continued
For the period ended 30 June 2014
7. Investment portfolio summary
Valuation
as a % of
Valuation Cost Gain/(loss) Net Assets
GBP'000 GBP'000 GBP'000
As at 30 June 2014
Qualifying Investment
- Unquoted
Jephcote Trading Limited 880 880 - 3%
Saville Services Limited 400 400 - 2%
Kinloss Trading Limited 3,500 3,500 - 13%
Alyth Trading Limited 1,600 1,600 - 6%
Total Qualifying Investments 6,380 6,380 - 24%
---------- -------- ------------ ------------
Non-Qualifying Investments
Valencia Lending Limited 3,500 3,500 - 13%
Gold Line Property Limited 1,410 1,410 - 5%
Buckhorn Lending Limited 3,491 3,491 - 13%
Latimer Lending Limited 1,841 1,841 - 7%
Nextenergy Solar 514 500 14 2%
Total Non-Qualifying
investments 10,756 10,742 14 40%
---------- -------- ------------ ------------
Total Investments 17,136 17,122 64%
Balance of Portfolio 9,530 9,530 36%
Net Assets 26,666 26,652 - 100%
---------- -------- ------------ ------------
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 information is provided by RNS
The company news service from the London Stock Exchange
END
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