TIDMPMV
For immediate
release
30 June 2009
Puma VCT II plc
Preliminary Final Results for the Year Ended 28 February 2009
(Incorporating first Interim Management Statement for 2009/10)
Highlights
* Fully diluted NAV per share of 95.70p at year end (down
7.9% for the year).
* Final dividend of 2.75p per ordinary share.
* Cumulative dividends to date (including Final) of 5.15p per
ordinary share.
* Portfolio of qualifying AiM stocks has recovered
significantly since the year end.
Sir Aubrey Brocklebank Bt of Puma VCT II plc said:
"It has been an unprecedented year for financial markets around the
world, but I am able to report that the defensive qualities of Puma
VCT II plc's investments have protected it from much of these
difficulties.
"We remain cautious about the state of the economy and the duration
of the current recession. The values of most types of asset already
reflect the prospects for a long recession and with the reluctance or
inability of banks to advance new credit, the environment remains
challenging. This may reduce the collateral value supporting some of
our secured loans and slow the progress in achieving successful
realisations in preparation for the end of the VCT's life.
Notwithstanding this, there is good potential to deliver a
satisfactory post-tax return to investors which should outperform
most other investments made over a similar period."
Enquiries
Shore
Capital
020 7408 4090
Graham
Shore
Citigate Dewe
Rogerson
020 7638 9571
Angharad
Couch
Lindsay Noton
Notes to Editors
Puma VCT II plc is managed by Shore Capital's successful fund
management team. The Company's investment objective is to achieve
high distributions to shareholders. It is investing in a diversified
portfolio of smaller companies, including both unquoted companies and
AIM and Plus Markets traded, selecting companies which Shore Capital
believes will have a relatively lower risk profile than is typical
for their size whilst having the opportunity for value appreciation.
Initially, whilst suitable VCT Qualifying Companies are being
identified, the Investment Manager invested the Company's funds in a
range of investments intended to generate a positive return,
including funds of hedge funds and other products which aim to
achieve an absolute return. The VCT will continue to hold a
proportion of such products after building up the desired holdings of
VCT Qualifying Companies.
Chairman's Statement
It has been an unprecedented year for financial markets around the
world. The global financial system was close to breaking point and
two major US banks, Lehman Brothers and Washington Mutual, did fail.
Closer to home, the AiM market fell an astonishing 62 per cent. over
the course of the financial period. Against this background, I am
able to report that the defensive qualities of Puma VCT II plc's
investments have protected it from much of these difficulties. NAV
at the year end was 95.70p, after payment of a dividend of 1.5p. On
a total return basis, the VCT lost 7.9 per cent. during the year;
this was considerably better than most other VCTs or indeed other
types of investment, reflecting the Investment Manager's conservative
approach.
Most of the drop in the value of our investments arose in our AiM
equity holdings which, as already noted above, saw sharp falls in
price as many investors were forced or panicked into selling into an
illiquid market. Since the year end, there has been a noticeable
increase in the value of some of these investments since these stocks
had suffered unusually large falls.
Venture capital investments
In the last period, the VCT met its minimum qualifying investment
percentage of 70 per cent., which it has since maintained, and as a
consequence it was not necessary to complete any qualifying
transactions. Given the current uncertainties with AiM and private
equity investments in regards to a timely exit, the Investment
Manager has taken a cautious approach when considering further
qualifying investments, ensuring where possible that they offer
liquidity in the medium term with a good element of downside
protection.
It has been an eventful year for our existing qualifying
investments. The VCT has an investment of over GBP1.4m in Cadbury
House Limited. Cadbury House, the hotel and health club, has
outperformed expectations in the current climate and won national
awards for its facilities.
In 2006, the VCT made its first investment in Stocklight, a rare book
dealer and the parent company of Bloomsbury Auctions Limited.
Bloomsbury Auctions is Europe's largest specialist book auctioneer.
The VCT has invested a total of GBP419,000 to date and, although
business in this sector has been tough, the VCT's investment is
secured and bears an attractive coupon.
As announced previously, Bond Contracting Limited (in which the VCT
invested GBP1.05m) has a master development contract and is making
significant progress in constructing a 141 bed Holiday Inn hotel on
the outskirts of Winchester. It is expected that this will complete
in the current year and be operational in early 2010.
The VCT invested in Clifford Contracting Limited, another contracting
company, over the two years 2006/7 and 2007/8. Subsequent to the
year end, Telford Homes plc, a residential property developer in East
London, purchased Clifford Contracting Limited for GBP6,328,500, of
which GBP1,039,000 was for this VCT's investment in Clifford
Contracting Limited. The sale to Telford is in exchange for new
shares and secured loan notes in Telford Homes plc and the investment
will remain qualifying for VCT purposes for several years. It is
expected that the transaction will enable the VCT to exit its
investment in line with the expected wind-up of the VCT, should
shareholders vote to approve this.
At 28 February 2009, the VCT's qualifying portfolio had a total cost
of GBP6,294,000 and was valued at GBP5,250,000 resulting in an unrealised
loss of GBP1,044,000.
Non-qualifying investments
The Investment Manager has invested the non-qualifying investments on
an absolute return basis. The market value was GBP1,375,000 at
year-end against an underlying book cost of GBP1,207,000 with
significant realisations in the year from investments in hedge
funds. The performance of the non-qualifying portfolio was down in
2008/9 as a result of the downward pressure on the equity and
property markets. Subsequent to year end, the VCT has used its
substantial cash reserves to invest in high yielding investment grade
corporate bonds and bond funds, selecting investments which are
liquid and short dated.
VAT
As discussed in the last interim report, the Government has announced
that VCTs will be exempt from paying VAT on investment management
fees with effect from 1 October 2008. This represents a prospective
annual cost saving for the VCT of approximately GBP37,000. The
Government has conceded that VCTs are able to obtain a repayment of
VAT paid on management fees in earlier periods for which we have put
a claim in of approximately GBP64,000 subsequent to the year-end. This
recovery of VAT has not been included in the NAV at the year end.
Results and dividend
The VCT generated a profit before tax on revenue account of
GBP326,000. However, principally as a result of write-downs on
investments, it incurred a net total loss for the period of
GBP693,000. Gross revenue for the period was GBP402,000 and net revenue
return after taxation was GBP278,000. The Board proposes a final
dividend of 2.75p per Ordinary Share. The ex-dividend date will be
15 July 2009 and the record date 17 July 2009. Payment will be made
to shareholders by 16 September 2009.
Annual General Meeting
The Annual General Meeting of the VCT will be held at Bond Street
House, 14 Clifford Street, London, W1S 4JU on 9 September at
10:05am. Notice of the Annual General Meeting and Form of Proxy are
inserted within the annual accounts.
Outlook (Incorporating first Interim Management Statement for
2009/10)
The fall-out from tighter credit conditions is presenting more
attractive opportunities to Puma VCT II plc as credit spreads of
solid, profitable companies widen resulting in attractive yields.
The existing private equity investments are generating a satisfactory
return and are largely in the form of secured loans, which the
Investment Manager has structured to facilitate exit in the medium
term. Since the start of the current financial year beginning 1 March
2009 to the close on 25 June 2009, your portfolio of qualifying AiM
stocks has gained 43 per cent., compared to 25 per cent. for the AiM
index over the same period.
We remain cautious about the state of the economy and the duration of
the current recession. The values of most types of asset already
reflect the prospects for a long recession and with the reluctance or
inability of banks to advance new credit, the environment remains
challenging. This may reduce the collateral value supporting some of
our secured loans and slow the progress in achieving successful
realisations in preparation for the end of the VCT's life.
Notwithstanding this, there is good potential to deliver a
satisfactory post-tax return to investors which should outperform
most other investments made over a similar period.
Sir Aubrey Brocklebank Bt
Chairman
Investment Manager's Report
Overall Performance
In its fourth year, the Company's investment strategy has been tested
repeatedly against a banking crisis which has spread to all corners
of the market. As is usual during economic upheavals, investors shun
smaller companies in favour of larger and more liquid investments,
and as a result the valuation of AiM companies took an unprecedented
fall. Thus, we are pleased to report that the NAV per share performed
relatively well, only dropping from 105.56p to 95.70p representing a
7.9 per cent fall after taking into account the dividend of 1.5p.
Notwithstanding this, the results are disappointing as our investors
were looking for an absolute return on their capital.
The performance of the non-qualifying portfolio also suffered as the
market sentiment on property stocks and the general equity markets
worsened over the period. This was because one element of the
portfolio was property-related stocks which performed badly in
2008/2009, having previously generated good returns for the VCT. We
redeemed the majority of the VCT's hedge fund investments in the
summer and autumn of 2008; this timely redemption meant that the
contribution from this element of the non-qualifying portfolio was
effectively flat for the year.
Qualifying Investments - unquoted
The Company achieved its 70% qualifying status in the last financial
period, and as a result the Board have concentrated on the monitoring
of the VCT's existing investments, rebalancing its non-qualifying
investments to reflect changed market circumstances and considering
the options for exits.
Puma VCT II's largest investment is its GBP1.46 million debt and equity
investment in Cadbury House Limited. Cadbury House's hotel and health
club development project which started in June 2005 is fully
operational and delivering good results. The overwhelming success of
the leisure club in growing membership led to a proposal to build an
extension to increase capacity and the VCT's investment in the
facilities has enabled the club to achieve UK Health Club of Year in
2009.
Puma VCT II has invested GBP1.05 million in Bond Contracting Limited up
to year-end. Bond Contracting was set-up to operate as a contractor
within the leisure sector and actively sought to enter into
contracting arrangements during the period. It has entered into a
contract as master contractor to build a 141 room Holiday Inn hotel
on the outskirts of Winchester.
Stocklight Limited in which the VCT has invested GBP419,000, is a rare
book dealer and the parent company of Bloomsbury Auctions, which has
made progress expanding its book auction business both in the UK and
overseas. Whilst trading for this business is tough, we believe that
it has a strong.
Clifford Contracting Limited ("Clifford") is a contracting business
supplying services to residential developers in which the VCT had
invested GBP1.04 million. Subsequent to the year end, Telford Homes
plc ("Telford"), the AiM listed residential property developer in
East London noted for regeneration projects within public sector
partnerships, purchased Clifford. The purchase price paid by Telford
for the ordinary shares of, and loan notes issued by, Clifford is
GBP6,328,500 in total, comprising GBP5,695,650 in new loan notes and the
issue of 1,130,089 new Telford ordinary shares. Puma VCT II will
receive approximately GBP935,000 in loan notes earning 8.88% p.a.
interest after 31 October 2009 (4.5% p.a. prior to this) and 104,000
Telford shares. The value of the new loan notes and Telford shares
are in line with the valuation of Clifford as at the year end.
Qualifying Investments - quoted
The VCT made no additional qualifying investments into AiM quoted
companies during the year. As mentioned above, the value of the AiM
portfolio dropped significantly, but we are pleased to note that some
of these stocks had begun to recover by the year end, a recovery
which has continued subsequently. We believe this reflects a better
recognition of their strengths.
As at the year end, the listed qualifying holdings made up
approximately 11% of total qualifying holdings and about 7% of the
entire portfolio. Within this, the three largest components are
Patsystems plc, Mount Engineering plc and Vertu Motors plc,
accounting for 81% of total AiM listed qualifying holdings, and we
therefore highlight these three larger investments below.
Patsystems provides derivatives trading software products and
solutions to financial institutions. The company continues to perform
well and recently reported that 2009 has started strongly with sales
successes across all products and regions. In addition to this
growth, a high proportion of revenues are recurring giving a greater
predictability. Cash generation is strong and the company has
considerable cash reserves on its balance sheet. It is valued at
GBP264,000 and at a cost of GBP214,000, and the unrealised profit of
GBP50,000 is indicative of the strength of this company in the current
conditions.
Mount Engineering owns a portfolio of established engineering brands
selling principally to the oil and gas sector, largely for operations
rather than for major capital projects. The company is cash
generative and has a strong balance sheet with 2008 profits slightly
ahead of expectations. Group trading is forecast to be reasonably
resilient and the company currently trades on less than six times
forecast 2009 profits. The VCT has invested GBP153,000 in this company
which is valued at GBP118,000, resulting in an unrealised loss of
GBP35,000.
Vertu Motors is a volume retailer of both new and used cars, largely
from freehold premises which it has acquired in the last few years on
good terms. The business has remained profitable throughout the
financial crisis and economic downturn and has consistently
outperformed the market over the past 3 years. It has strong
management which to date have delivered growth and cash generation
and protected its strong balance sheet. The VCT has invested GBP407,000
in this company which is valued at GBP88,000, resulting in an
unrealised loss of GBP319,000. However, the share price has appreciated
over 170% since period end and currently trades at around tangible
NAV. Vertu recently raised a further GBP30m to take advantage of
opportunities in the sector.
The steady stream of bad news about the state of the banks, corporate
debt, and the poor state of the economy continues to dominate the
press. However, for those companies without high levels of debt, it
appears that investors are looking for value amongst share prices
that have fallen too far. It is for this reason that smaller
companies have outperformed their larger peers so far this year, as
the scale of the rating discounts they were trading at has become
apparent. We are sceptical that the economy is past its worst, but
if it improves from here there should be scope for the asset values
to recover further as the VCT's investments mature.
Non-qualifying Investments
During 2008, the VCT held significant sums in bank commercial paper
on which it achieved satisfactory returns. Since the sharp fall in
interest rates, we have invested some of the balance of the VCT's
portfolio in reasonably liquid, better yielding corporate bonds with
short maturity, of investment grade or close thereto. In the same
vein, the VCT has purchased a diversified portfolio of corporate bond
funds holding a broader range of similar credits. As stated above,
we reduced holdings in hedge funds to a low level - the remaining
hedge fund holdings are generating a positive return.
Investment Strategy
We are now focused on improving the liquidity of the portfolio
wherever possible whilst maintaining an appropriate risk adjusted
return. The objective remains to achieve an orderly winding up of
the VCT's assets at the end of its life, subject to shareholder
approval.
Shore Capital Limited
Investment Portfolio Summary
As at 28 February 2009
Original
Valuation Cost Gain/(Loss) Valuation as
Investment GBP'000 GBP'000 GBP'000 % of NAV
Qualifying
Investments -
Unquoted
Albemarle Contracting
Limited 700 700 - 9%
Bond Contracting
Limited 1,054 1,054 - 13%
Cadbury House Limited 1,459 1,459 - 18%
Clifford Contracting
Limited 1,040 1,040 - 13%
Stocklight Limited 419 419 - 5%
Qualifying
Investments - Quoted
@UK plc 8 285 (277) 0%
Alterian Plc 6 13 (7) 0%
Clarity Commerce
Solutions plc 33 98 (65) 0%
I-Design Group plc 13 41 (28) 0%
INVU plc 4 81 (77) 0%
Mount Engineering plc 118 153 (35) 1%
Patsystems plc 264 214 50 3%
Sport Media Group plc 10 210 (200) 0%
Universe Group plc 34 120 (86) 0%
Vertu Motors plc 88 407 (319) 1%
Total Qualifying
Investments 5,250 6,294 (1,044) 66%
Non - Qualifying
Investments -
Unquoted
Lakan Investments
Limited 72 58 14 1%
Non - Qualifying
Investments - Quoted
Puma Brandenburg
Limited 175 397 (222) 2%
The Hotel Corporation
plc 276 283 (7) 3%
Blackrock UK Emerging
Cos Hedge Fund
Limited 477 378 99 6%
Treveria plc 6 58 (52) 0%
Experian Finance
bonds 201 201 - 3%
Total Non -
Qualifying
Investments 1,207 1,375 (168) 15%
Total investments 6,457 7,669 (1,212) 81%
Other net assets
including cash at
bank and in hand 1,485 1,485 19%
Net assets 7,942 9,154 (1,212) 100%
Income Statement
For the year ended 28 February 2009
Year ended For the period to
28 February 2009 29 February 2008
Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Losses on
investments - (970) (970) - (400) (400)
Income 5 402 - 402 364 - 364
402 (970) (568) 364 (400) (36)
Investment
management fees 43 130 173 64 191 255
Performance
fees (53) (81) (134) 36 (116) (80)
Other expenses 86 - 86 110 - 110
76 49 125 210 75 285
Return/(loss)
on ordinary
activities
before taxation 326 (1,019) (693) 154 (475) (321)
Tax on
ordinary
activities (48) 48 - (12) 12 -
Return/(loss)
after taxation
attributable to
equity
shareholders 278 (971) (693) 142 (463) (321)
Basic and
diluted
return/(loss)
per Ordinary
Share (pence) 2 3.33p (11.69)p (8.36)p 1.72p (5.58)p (3.86)p
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 28 February 2009
As at As at
28 February 2009 29 February 2008
Note GBP'000 GBP'000
Fixed Assets
Investments 6,457 8,561
Current Assets
Debtors 93 137
Cash at bank and in hand 1,446 293
1,539 430
Creditors - amounts
falling due within one
year (53) (96)
Net Current Assets 1,486 334
Total Assets less Current
Liabilities 7,943 8,895
Creditors - amounts
falling due after more
than one year
(including convertible
debt) (1) (1)
Net Assets 7,942 8,894
Capital and Reserves
Called up share capital 83 83
Capital reserve - realised 723 769
Capital reserve - (1,210) (285)
unrealised
Other reserve - 134
Revenue reserve 8,346 8,193
Equity Shareholders' Funds 7,942 8,894
Basic Net Asset Value per 3 95.70p 107.17p
Ordinary Share
Diluted Net Asset Value
per Ordinary Share 3 95.70p 105.56p
Cash Flow Statement
For the year ended 28 February 2009
For the period
to
Year ended 29 February
28 February 2009 2008
Note GBP'000 GBP'000
Operating activities
Investment income received 449 280
Investment management fees (182) (327)
paid
Directors fees paid (14) (17)
Foreign exchange gain on cash - 19
Other expenses paid (71) (102)
Net cash inflow/(outflow) from 4
operating activities 182 (147)
Equity dividend paid (125) (75)
Capital expenditure and
financial investment
Purchase of investments (384) (5,206)
Proceeds from sale of 1,551 5,154
investments
Acquisition costs - (1)
Net realised gain on forward
foreign exchange contracts (70) 63
Net cash inflow/(outflow) from
capital expenditure and
financial investment 1,097 10
Inflow/(outflow) in the year 1,154 (212)
Reconciliation of net cash
flow to movement in net funds
Increase/(decrease) in cash 1,154 (212)
for the year
Net cash at start of the year 293 505
Net funds at the year end 1,447 293
Reconciliation of Movements in Shareholders' Funds
For the year ended 28 February 2009
For the year ended 28 February 2009
Called
up Capital Capital
share reserve- reserve- Other Revenue
capital realised unrealised reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 March 2008 83 769 (285) 134 8,193 8,894
Return/(loss)
after taxation
attributable to
equity
shareholders - (46) (925) (134) 278 (827)
Equity dividend
paid - - - - (125) (125)
At 28 February
2009 83 723 (1,210) - 8,346 7,942
For the period to 29 February 2008
Called
up Capital Capital
share reserve- reserve- Other Revenue
capital realised unrealised reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2007 83 115 832 214 8,126 9,370
Return/(loss)
after taxation
attributable to
equity
shareholders - 654 (1,117) (80) 142 (401)
Equity dividend
paid - - - - (75) (75)
At 29 February
2008 83 769 (285) 134 8,193 8,894
Unaudited Notes to the Accounts
For the period ended 29 February 2008
1. Basis of Accounting
This announcement has been prepared under the historical cost
convention, modified to include the revaluation of fixed asset
investments, and in accordance with UK Generally Accepted Accounting
Practice ("UK GAAP") and the Statement of Recommended Practice,
'Financial Statements of Investment Trust Companies' ("SORP") revised
in 2005. Although this SORP principally applies to Investment Trusts,
many of the characteristics of Investment Trusts are shared by VCTs
and therefore the Company has followed the SORP.
The comparative period runs from 1 January 2007 to 29 February 2008.
2. Basic and diluted return per Ordinary Share
2009 2008
Revenue Capital Total Revenue Capital Total
Return 278,000 (971,000) (693,000) 142,000 (463,000) (321,000)
for the
year
Weighted 8,299,300 8,299,300 8,299,300 8,299,300 8,299,300 8,299,300
average
number
of
shares
Return 3.33p (11.69)p (8.36)p 1.72p (5.58)p (3.86)p
per
Ordinary
Share
The total return per ordinary share is the sum of the revenue return
and capital return.
3. Net Asset Value per Ordinary Share
2009 2008
Basic Diluted Basic Diluted
Net assets (GBP) 7,942,000 7,942,000 8,894,000 8,894,000
Number of Ordinary Shares 8,299,300 8,299,300 8,299,300 8,425,540
Net Assets Value per 95.70p 95.70p 107.17p 105.56p
Ordinary Share (p)
Calculation of number of
shares 2009 2008
Basic Diluted Basic Diluted
Number of Ordinary Shares 8,299,300 8,299,300 8,299,300 8,299,300
Dilutive effect of - - - 126,240
performance fee
At year/period-end 8,299,300 8,299,300 8,299,300 8,425,540
4. Reconciliation of total return before taxation to net
cash inflow from operating activities
2009 2008
GBP'000 GBP'000
Total loss before taxation (693) (320)
Losses on investments 970 400
Decrease/(increase) in debtors 47 (84)
Decrease in creditors (8) (82)
Foreign exchange gain on cash - 19
Performance fee to be effected through share-based (134) (80)
payment
Net cash inflow/(outflow) from operating activities 182 (147)
5. Income
2009 2008
GBP'000 GBP'000
Income from investments
Loan stock interest 311 238
Dividend income 44 60
Investment fee rebate 10 21
Other income 21 -
386 319
Other income
Bank deposit interest 16 45
402 364
6. Dividends
The directors propose a final dividend payment of 2.75p per Ordinary
Share (2008 final - 1.5p).
7. The financial information set out in the announcement does
not constitute the Company's statutory accounts for the year ended 28
February 2009 or the period ended 29 February 2008. The financial
information for the period ended 29 February 2008 is derived from the
statutory accounts for that period which have been delivered to the
Registrar of Companies. The auditor's report was unqualified and did
not contain a statement under section 237 (2) or (3) of the Companies
Act 1985. The auditors are reporting today on the statutory accounts
for the year ended 28 February 2009. The statutory accounts for the
year ended 28 February 2009 will be delivered to the Registrar of
Companies following the Company's Annual General Meeting.
A copy of the full annual report and financial statements for the
year ended 28 February 2009 will be published today on
www.shorecap.co.uk, a website maintained by the investment manager,
Shore Capital Limited, filed at the UKLA document exchange and posted
to shareholders in due course. Copies will also be available to the
public at the registered office of the Company at Bond Street House,
14 Clifford Street, London W1S 4JU.
The financial information contained within this preliminary
announcement was approved by the board on 29 June 2009.
=--END OF MESSAGE---
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
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