TIDMPUM9
RNS Number : 7577L
Puma VCT 9 PLC
30 April 2015
Puma VCT 9 plc
HIGHLIGHTS
-- Over 80% of funds raised invested in a diverse range of high quality businesses and projects.
-- c40% of net assets in VCT qualifying investments at the
year-end (on an HMRC basis), on track to meet its 3-year
target.
-- Profit of GBP517,000 before tax for the year, a gain of 1.8p per share
-- First 6p per share dividend paid in February 2015, equivalent
to a 9% per annum tax-free running yield on investment.
-- Strong pipeline of investments as the Company completes its second year of operations.
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present to you the annual report for Puma VCT 9
plc for the year to 31 December 2014, its first full year of
investment.
The Company began investing in May 2013 having completed its
fund-raising and 2013 was therefore not a full year. The Company
has made good progress in 2014: it has now deployed a large
proportion of its funds in medium-term investments, both qualifying
and non-qualifying.
The Investment Manager, Puma Investments, now has over GBP100
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
At the end of the year, the Company had invested a total of
GBP21.9 million, representing just over 80% of funds raised,
primarily in asset-backed businesses and projects generating a
weighted average annual return of c7.4%.
VCT qualifying investments
During the year, the Company deployed a total of GBP5.5 million
across three new VCT-qualifying investments. Details of these
investments can be found in the Investment Manager's report below.
The Investment Manager has continued to review a number of other
suitable qualifying investments, generated by a strong pipeline,
and the Company expects to make further qualifying investments
during the coming year to ensure that it meets the HMRC qualifying
target.
Non-qualifying investments
The Company's strategy is to seek a good return from its
non-qualifying portfolio as well as its qualifying investments.
During the year, the Company completed six new non-qualifying loans
and investments for a total of GBP6.3 million and had a
non-qualifying portfolio of GBP11.7 million at the year end.
Details of the non-qualifying portfolio can also be found in the
Investment Manager's report.
At the year end, the Company was holding GBP4.4 million on cash
deposit in anticipation of the Company's first dividend (see below)
and the continued strong pipeline of opportunities. As at today's
date, the Company is holding GBP3.5m in cash.
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 and Dividend
The Company reported a profit before tax of GBP517,000 for the
year (2013: GBP450,000 loss) and a gain of 1.80p per ordinary share
(calculated on the weighted average number of shares). The Net
Asset Value per ordinary share ("NAV") at the year end was 95.51p
(2013: 93.71p).
I am pleased to report that, following the year end and in line
with our stated objective as set out in our prospectus, your board
declared the Company's first dividend of 6p per Ordinary Share.
This was paid on 19 February 2015 in respect of the year on which
we are reporting.
Outlook
The Company has made good progress. At the time of writing we
are pleased that we have invested over 80% of the Company's net
assets in advance of the Company's second anniversary of
operations. Approximately half of these investments are qualifying
and there is a good flow of qualifying opportunities which should
lead to further suitable investments. We will update you in due
course as investments are completed.
Although there is an increased demand from smaller companies
seeking finance as they perceive that the economy has returned to
growth, the availability of bank finance continues to be
restricted. Moreover the terms on which target companies can raise
finance from banks remain problematic. This continues to drive the
demand for our offering and should also allow us to secure
favourable terms 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 deliver attractive returns to
shareholders.
Egmont Kock
Chairman
29 April 2015
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, the Company
has been able to make a number of attractive investments, both
qualifying and non-qualifying, to smaller companies on a secured
basis. We have also continued to see a strong pipeline of potential
investments, particularly opportunities to make further qualifying
investments to ensure the Company meets its HMRC qualifying
target.
Qualifying investments
As referred to in the Chairman's statement, the Company deployed
a total of GBP5.5 million across three new VCT-qualifying
investments during the year.
As indicated in the Company's interim report, in June 2014, 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 Q3 2015.
In July 2014, 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 Dagenham, 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.
In August 2014, 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.
As previously reported, 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 up
to GBP8 million of 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. The total cost of the project is cGBP15 million and the
developers have already pre-sold three of the flats at prices in
line with a gross development value for the project of c.GBP30
million. The project is expected to complete in Q4 2015.
The Company retains a GBP400,000 investment in Saville Services
Limited, a company providing contracting services over a series of
projects, which successfully completed the construction of 20
apartments for supported living for psychiatric and learning
disabled service users in Grimsby, North East Lincolnshire, during
the year. We understand that Saville Services' 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.
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. We are on track to achieve this, with
a current percentage of 42% and a strong pipeline.
Non-qualifying investments
We have adopted a strategy for the non-qualifying portfolio of
investing in secured loans (and other similar instruments) offering
a good yield with hopefully limited downside risk. These loans take
time to identify and execute, but should work well for the VCT in
the medium term. As referred to in the Chairman's statement, the
Company completed six new non-qualifying loans and investments for
a total of GBP6.3 million during the year.
On 1 July 2014, 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 a GBP2.55 million
non-qualifying loan (advanced through two affiliates, Buckhorn
Lending Limited and 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 which 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.
Later in July 2014, the Company extended a GBP1.3 million
non-qualifying loan which (through another affiliate, 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 provided funding
towards the construction of a 1.5MW wind farm in East Lothian,
Scotland. The loan is secured on the site in East Lothian, and is
earning an attractive rate of interest. The wind farm is now fully
built and is generating electricity which is supplying those on low
incomes in the local community. The project was duly accredited for
the 2014 rate of Feed in Tariffs which give a UK government backed,
inflation linked, 20 year income stream to RPE FL1 Limited.
As previously reported, the Company advanced a GBP700,000
non-qualifying loan (through Latimer Lending Limited) to Churchill
Homes (Aberdeen) Limited, a longstanding Aberdeenshire developer,
towards the funding of the construction of a private detached
housing development in the countryside outside Aberdeen. During the
year, 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's GBP1.41 million non-qualifying investment in Gold
Line Property Limited, a care and dementia treatment business which
is currently developing new premises in Surrey, continues to
perform well. We are pleased to report that the build project
completed on time and on budget, and the premises has recently
passed its Care Quality Commission final inspection. We understand
that the first patients are expected to be accepted in Q2 2015.
As indicated in the Company's interim report, the Company has
extended two non-qualifying loans, totally GBP4.1 million, to
various entities within the Citrus Group (through another
affiliate, Valencia Lending Limited). These loans, together with
loans from other vehicles managed and advised by your Investment
Manager, form part of a GBP10 million revolving credit facility to
provide working capital to the Citrus PX business. Citrus PX
operates a property part exchange service facilitating the rapid
purchase of properties for developers and homeowners. The facility
provides 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. Following the year
end, GBP142,000 of principal (together with all accrued interest)
was repaid to the Company. The Company's exposure to Citrus at the
year end was GBP3.642 million.
As previously reported, the Company had extended a GBP1.541
million loan (through Buckhorn Lending Limited) which, together
with loans from other Puma VCTs, provided a GBP4 million revolving
credit facility to Ennovor Trading 1 Limited. The facility provided
working capital for the purchase of used cooking oil for conversion
into bio-diesel and attracted a substantial interest rate for
utilised funds and a lower rate for non-utilised funds. The
ultimate borrower owned a large oil refining plant near Birkenhead
and was processing cooking oil to sell to petrol and diesel
retailers who are obligated to include bio-fuels in their
offerings. The facility was structured to mitigate risks by being
capable of being drawn only once back-to-back purchase and sale
contracts had been entered into with approved counterparties. In
November 2014, following a major default by one of those
counterparties, Ennovor Trading 1 Limited was placed into
administration. The Company has recovered its principal in full
(plus some interest) from the proceeds of the administration to
date and the administrator is hopeful that further amounts will be
recovered such that the Company should fully recover its
position.
During the year, the Company subscribed GBP500,000 in the
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 which increases in line with RPI over the
long term.
Investment Strategy
We are pleased to have invested a substantial proportion of the
funds raised by the Company in asset-backed 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.
The Investment Management team continues to meet with companies
which are potentially suitable for investment. In accordance with
our mandate we have maintained a cautious approach and are
performing due diligence on several potential investments. Over the
course of the next year, the Company will build the qualifying
portfolio to the required 70 per cent. We have strong deal-flow and
are meeting many potential investee companies with several
interesting opportunities to make further qualifying
investments.
Puma Investment Management Limited
29 April 2015
Investment Portfolio Summary
As at 31 December 2014
Valuation
as a % of
Valuation Cost Gain/(loss) Net Assets
GBP'000 GBP'000 GBP'000
Qualifying Investments
Jephcote Trading Limited 880 880 - 3%
Kinloss Trading Limited 3,500 3,500 - 13%
Saville Services Limited 400 400 - 1%
Urban Mining Limited 1,875 1,875 - 7%
Opes Industries Limited 2,000 2,000 - 7%
Alyth Trading Limited 1,600 1,600 - 6%
Total Qualifying Investments 10,255 10,255 - 37%
---------- -------- ------------ ------------
Non-Qualifying Investments
Latimer Lending Limited 1,841 1,841 - 7%
Valencia Lending Limited 3,500 3,500 - 13%
Gold Line Property Limited 1,410 1,410 - 5%
Buckhorn Lending Limited 2,950 2,950 - 11%
NextEnergy Solar Fund
Ltd - Bonds* 520 500 20 2%
Citrus PX Two Limited 142 142 - 1%
Lothian Lending Limited 1,300 1,300 - 5%
Total Non-Qualifying
investments 11,663 11,643 20 44%
---------- -------- ------------ ------------
Total Investments 21,918 21,898 20 81%
Balance of Portfolio 5,063 5,063 19%
Net Assets 26,981 26,961 20 100%
---------- -------- ------------ ------------
Of the investments held at 31 December 2014, all are
incorporated in England and Wales.
* Quoted investment listed on the LSE.
Income Statement
For the year ended 31 December 2014
Period from 3 October
Year ended 31 December 2012 to 31 December
2014 2013
Note Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain/(loss) on investments 8 (c) - 23 23 - (4) (4)
Income 2 1,293 - 1,293 256 - 256
1,293 23 1,316 256 (4) 252
-------- -------- -------- -------- -------- --------
Investment management
fees 3 (135) (405) (540) (108) (324) (432)
Other expenses 4 (259) - (259) (270) - (270)
(394) (405) (799) (378) (324) (702)
-------- -------- -------- -------- -------- --------
Profit/(loss) on ordinary
activities before taxation 899 (382) 517 (122) (328) (450)
Tax on return on ordinary
activities 5 (8) - (8) - - -
Profit/(loss) on ordinary
activities after tax
attributable to equity
shareholders 891 (382) 509 (122) (328) (450)
======== ======== ======== ======== ======== ========
Basic and diluted
Return/(loss) per Ordinary
Share (pence) 6 3.15p (1.35p) 1.80p (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 year.
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 2014
As at As at
31 December 31 December
Note 2014 2013
GBP'000 GBP'000
Fixed Assets
Investments 8 21,918 12,332
------------- -------------
Current Assets
Debtors 9 1,019 85
Cash 4,405 14,370
------------- -------------
5,424 14,455
Creditors - amounts falling
due within one year 10 (360) (220)
Net Current Assets 5,064 14,235
------------- -------------
Total Assets less Current Liabilities 26,982 26,567
Creditors - amounts falling
due after more than one year
(including convertible debt) 11 (1) (1)
Net Assets 26,981 26,566
============= =============
Capital and Reserves
Called up share capital 12 282 283
Capital redemption reserve 12 1 -
Capital reserve - realised (730) (324)
Capital reserve - unrealised 20 (4)
Revenue reserve 27,408 26,611
Equity Shareholders' Funds 26,981 26,566
============= =============
Net Asset Value per Ordinary
Share 13 95.51p 93.71p
============= =============
Diluted Net Asset Value per
Ordinary Share 13 95.51p 93.71p
============= =============
The financial statements were approved and authorised for issue
by the Board of Directors on 29 April 2015 and were signed on their
behalf by:
Egmont Kock
Chairman
29 April 2015
Cash Flow Statement
For the year ended 31 December 2014
Period from
3 October
Year ended 2012 to 31
31 December December
2014 2013
GBP'000 GBP'000
Profit/(loss) on ordinary activities
before taxation 517 (450)
(Gains)/loss on investments (23) 4
Increase in debtors (934) (85)
Increase in creditors 132 220
Net cash outflow from operating activities (308) (311)
------------- ------------
Capital expenditure and financial
investment
Purchase of investments (11,575) (12,336)
Proceeds from sale of investments
and loan note repayments 2,012 -
Net cash outflow from capital expenditure
and financial investment (9,563) (12,336)
------------- ------------
Net cash outflow before financing (9,871) (12,647)
------------- ------------
Proceeds received from issue of ordinary
share capital - 28,349
Expense paid for issue of share capital - (1,333)
Proceeds received from issue of redeemable
preference shares - 13
Redemption of redeemable preference
shares - (13)
Shares repurchased in year (94) -
Proceeds received from convertible
loan notes - 1
Net cash (outflow)/inflow from financing (94) 27,017
------------- ------------
(Decrease)/increase in cash in the
year (9,965) 14,370
============= ============
Reconciliation of net cash flow to
movement in net funds
(Decrease)/increase in cash in the
year (9,965) 14,370
Net funds at start of year 14,370 -
Net funds at end of year 4,405 14,370
============= ============
Reconciliation of Movements in Shareholders' Funds
For the year ended 31 December 2014
Called Capital Share Capital Capital
up share redemption premium reserve reserve Revenue
capital reserve account - realised - unrealised reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Shares issued 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
Return after taxation
attributable to equity
shareholders - - - (406) 24 891 509
Shares cancelled in
the year (1) 1 - - - (94) (94)
Balance as at 31 December
2014 282 1 - (730) 20 27,408 26,981
========== ============ ========= ============ ============== ========= ========
Distributable reserves comprise: Capital reserve-realised,
Capital reserve-unrealised (excluding gains on unquoted
investments) and the Revenue reserve. At the year end distributable
reserves were GBP26,698,000 (2013: GBP26,283,000).
The Capital reserve-realised includes gains/losses that have
been realised in the year 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 year ended 31 December 2014
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 profit before tax of GBP517,000 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. Unquoted 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 cash flow 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.
Realisedsurpluses 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.
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.
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
Year ended 31 December 2012 to 31 December
2014 2013
GBP'000 GBP'000
Income from investments
Loan stock interest 1,199 151
Bond yields 13 6
1,212 157
Other income
Bank deposit income 81 99
1,293 256
======================= ======================
3. Investment Management Fees
Period from 3 October
Year ended 31 December 2012 to 31 December
2014 2013
GBP'000 GBP'000
Puma Investment Management
Limited 540 432
540 432
======================= ======================
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 year were 2.7 per cent of the funds
raised (2013: 2.5%).
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
Year ended to
31 December 31 December
2014 2013
GBP'000 GBP'000
Administration - Shore Capital Fund
Administration Services Limited 95 76
Directors' remuneration 56 56
Social security costs 1 1
Auditor's remuneration for statutory
audit 22 21
Insurance 3 4
Legal and professional fees 41 51
Trail commission 39 42
Other expenses 2 19
259 270
============= ================
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 year are detailed in the
Directors' Remuneration Report on page 20. The Company had no
employees (other than Directors) during the year. The average
number of non-executive Directors during the year was 3 (2013:
3).
The Auditor's remuneration of GBP18,250 (2013: GBP17,500) has
been grossed up in the table above to be inclusive of VAT.
5. Tax on Ordinary Activities
Period from
Year ended 3 October 2012
31 December to 31 December
2014 2013
GBP'000 GBP'000
UK corporation tax charged
to revenue reserve (8) -
UK corporation tax charged
to capital reserve - -
UK corporation tax charge
for the year (8) -
============= ================
Factors affecting tax charge for the year
Profit/(loss) on ordinary
activities before taxation 517 (450)
============= ================
Tax charge calculated on profit/(loss)
on ordinary activities before
taxation at the applicable
rate of 20% 103 (90)
Capital items not taxable (5) 1
Tax losses utilised (89) -
Tax losses carried forward - 89
Other (1) -
8 -
============= ================
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 year. 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 return/(loss) per Ordinary Share
Year ended 31 December 2014
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Result for the year 891 (382) 509
Weighted average number
of shares 28,265,480 28,265,480 28,265,480
Return/(loss) per share 3.15p (1.35)p 1.80p
Period from 3 October 2012 to 31
December 2013
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Result for the period (122) (328) (450)
Weighted average number
of shares 18,176,358 18,176,358 18,176,358
Return/(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.
7. Dividends
The Directors do not propose a final dividend in relation to the
year ended 31 December 2014 (2013: nil). An interim dividend of 6p
per Ordinary Share was paid on 19 February 2015 totalling
GBP1,696,000.
8. Investments
Historic Market value Historic Market value
cost as at as at 31 cost as at as at 31
31 December December 31 December December
(a) Summary 2014 2014 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000
Qualifying venture capital
investments 10,255 10,255 4,780 4,780
Non qualifying investments 11,643 11,663 7,556 7,552
21,898 21,918 12,336 12,332
============= ============= ============= =============
Qualifying
venture capital Non qualifying
(b) Movements in investments investments investments Total
GBP'000 GBP'000 GBP'000
Opening value 4,780 7,552 12,332
Purchases at cost 5,475 6,100 11,575
Repayment of loans and
loan notes - (2,012) (2,012)
Realised gains on disposals - 3 3
Unrealised gains on
investments held - 20 20
Valuation at 31 December
2014 10,255 11,663 21,918
================= =============== ========
Book cost at 31 December
2014 10,255 11,643 21,898
Net unrealised gains
at 31 December 2014 - 20 20
Valuation at 31 December
2014 10,255 11,663 21,918
================= =============== ========
8. Investments - continued
(c) Gains/(losses) on investments
The gains/(losses) on investments for the year shown in the
Income Statement on page 25 is analysed as follows:
Period from
Year ended 3 October
31 December 2012 to 31
2014 December 2013
GBP'000 GBP'000
Realised gain on disposal 3 -
Net unrealised gains/(losses) in respect
of investments held at the year end 20 (4)
23 (4)
============= ===============
Market value Market value
(d) Quoted and unquoted as at 31 December as at 31 December
investments 2014 2013
GBP'000 GBP'000
Quoted investments 520 210
Unquoted investments 21,398 12,122
21,918 12,332
================== =====================
8. Investments - continued
(e) Significant interests
The Company is able to exercise significant influence over all
of the investee companies named below. 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
held in Investee Company
Investee Company Company Puma Puma VCT Puma Puma Fair value
VCT High Income VCT VCT of Company's Fair value
VII plc 8 plc 10 investment of Company's
plc plc as at investment
31/12/2014 as at 31/12/2013
GBP'000 GBP'000
Buckhorn Lending
Limited - 33% 33% 33% - 2,950 1,541
Latimer Lending
Limited 33% 33% - 33% - 1,841 891
Gold Line Property
Limited 29% - - 16% - 1,410 1,410
Valencia Lending
Limited 25% 25% 25% 25% - 3,500 3,500
Jephcote Trading
Limited 24% 45% - 28% - 880 880
Kinloss Trading
Limited 50% - - 50% - 3,500 3,500
Alyth Trading
Limited 50% - - 25% - 1,600 -
Lothian Trading
Limited 50% - - - 50% 1,300 -
Saville Services
Limited 6% 20% 20% 7% - 400 400
17,381 12,122
============== ==================
Shore Capital Limited is the investment manager of Puma VCT VII
plc, Puma High Income VCT plc and Puma VCT 8 plc and Puma
Investments Limited is the investment manager of Puma VCT 10 plc.
Both Shore Capital Limited and Puma Investments Limited are members
of the Shore Capital Group.
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.
9. Debtors
As at 31 December As at 31 December
2014 2013
GBP'000 GBP'000
Prepayments and accrued
income 1,019 85
================== ==================
10. Creditors - amounts falling due within one year
As at 31 December As at 31 December
2014 2013
GBP'000 GBP'000
Accrued management fees
and administration costs 352 220
Corporation tax 8 -
360 220
================== ==================
11. Creditors - amounts falling due after more than one year (including convertible debt)
As at 31 December As at 31 December
2014 2013
GBP'000 GBP'000
Loan notes 1 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.
12. Called Up Share Capital
As at 31 December As at 31 December
2014 2013
GBP'000 GBP'000
28,248,823 (2013: 28,348,823)
ordinary shares of 1p
each 282 283
================== ==================
During the year, the Company purchased 100,000 1p ordinary
shares for cash consideration of GBP94,000. These shares were
subsequently cancelled with the nominal value of GBP1,000 being
recognised in a capital redemption reserve.
13. Net Asset Value per Ordinary Share
As at As at
31 December 2014 31 December 2013
Net assets 26,981,000 26,566,000
Shares in issue 28,248,823 28,348,823
Net asset value per
share
Basic 95.51p 93.71p
Diluted 95.51p 93.71p
14. Financial Instruments
The Company's financial instruments comprise its investments,
cash balances, debtors and certain creditors. 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
2014:
As at 31
December As at 31 December
2014 2013
GBP'000 GBP'000
Assets at fair value through
profit or loss
Investments managed through
Puma Investment Management
Limited 21,918 12,332
Loans and receivables
Cash at bank and in hand 4,405 14,370
Interest, dividends and other
receivables 1,019 85
Other financial liabilities
Financial liabilities measured
at amortised cost (361) (221)
26,981 26,566
========== ==================
14. Financial Instruments (continued)
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 year.
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
and maximum exposure to credit risk is as follows:
As at 31 December As at 31 December
2014 2013
GBP'000 GBP'000
Investments in loans, loan
notes and bonds 13,233 7,999
Cash at bank and in hand 4,405 14,370
Interest, dividends and
other receivables 1,019 85
18,657 22,454
================== ==================
The cash held by the Company at the year 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.
14. Financial Instruments (continued)
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
Strategic Report 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 (2013: 2%) and 98% are unquoted investments (2013:
98%).
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 year
for which they are held. As at the year end, the Company had no
borrowings other than loan notes amounting to GBP1,000 (2013:
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 2014. 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 year end and throughout the year, 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).
14. Financial Instruments (continued)
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 2014.
Weighted Weighted
average interest average period
Rate status rate until maturity Total
GBP'000
Cash at bank -
RBS Floating 0.15% - 2,304
Cash at bank -
Lloyds Floating 0.50% - 2,101
Loans and loan
notes Floating 13.82% 48 months 6,799
Loans, loan notes
and bonds Fixed 14.65% 51 months 6,434
Balance of assets Non-interest bearing - 9,704
27,342
========
The following analysis sets out the interest rate risk of the
Company's financial assets as at 31 December 2013.
Weighted Weighted
average interest average period
Rate status rate until 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 assets Non-interest bearing - 4,418
26,787
========
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 year.
Fair value hierarchy
Fair values have been measured at the end of the reporting year
as follows:-
Level
Level 1 2 Level 3
'Quoted 'Observable 'Unobservable
prices' inputs' inputs' Total
GBP'000 GBP'000 GBP'000 GBP'000
As at 31 December 2014
At fair value through
profit and loss 520 - 21,398 21,918
As at 31 December 2013
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 year end:
Unquoted Loans and
shares loan notes Total
GBP'000 GBP'000 GBP'000
Purchases at cost 4,333 7,789 12,122
--------- ------------ --------
Balance as at 31 December
2013 4,333 7,789 12,122
Purchases at cost 3,832 7,243 11,075
Repayments of loans and
loan notes - (1,799) (1,799)
--------- ------------ --------
Balance as at 31 December
2014 8,165 13,233 21,398
========= ============ ========
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 those liabilities 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 year-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 MMGZDVLZGKZM
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