Half-yearly report
October 30 2009 - 11:46AM
UK Regulatory
TIDMPMV
Puma VCT II plc
Interim Report
For the six months ended 31 August 2009
Chairman's Statement
Highlights
* Undiluted net asset value per share of 102.88p. This
represents a 7.5% increase from year-end.
* Fully diluted net asset value per share of 101.81p. This
represents a 6.4% increase from year-end.
* Significant gains made on the AiM listed portfolio
reflecting a recovering market.
Introduction
During the six months to 31 August 2009 the Company has seen a
significant recovery of its holdings both in the qualifying and
non-qualifying portfolios as the AiM quoted stocks recovered. In
addition to the increase in value of the existing listed holdings the
Investment Manager has been able to take advantage of new
opportunities presented as the markets have shown signs of recovery.
The Company's net asset value grew by 7.5% during the period, before
accrued performance fees.
The gain in value is primarily attributable to the Company's AiM
quoted stocks, however some of these continue to trade at a discount
to their respective net asset values and the Investment Manager hopes
that the Company will continue to see a recovery in the values of
these holdings in the second half.
Qualifying investments
The six months to 31 August 2009 have seen progress for the Company's
qualifying investments.
In May 2009 Cadbury House Limited, the leisure centre and hotel
complex near Bristol, was granted planning permission to build an
extension to the hotel containing a further 48 bedrooms. The
construction is expected to commence in the next few months.
As announced at the year end, the Company's holding in Clifford
Contracting Limited of GBP1,039,000 has been sold in the period to
Telford Homes plc in exchange for new shares and secured loan notes.
This investment continues to be qualifying for VCT purposes and the
exit has been targeted to coincide with the expected wind-up
timetable of the VCT.
Bond Contracting Limited (in which the Company has invested GBP1.05m)
is in the final stages of constructing a 141 bed Hotel on the
outskirts of Winchester. It is on target to complete the construction
in the current year and be operational in early 2010.
At 31 August 2009 the listed holdings within the Company's qualifying
portfolio were valued at GBP904,000. This represents an unrealised gain
of GBP326,000 over the value of GBP578,000 as at the year end.
Non-qualifying investments
The Investment Manager has taken advantage of new opportunities
presented as the markets have shown signs of recovery, focusing on
corporate bonds and other bond funds. This strategy has generated
GBP41,000 in bond interest during the period, together with profits of
GBP25,000 from disposal of bonds.
Just subsequent to the period end the Company fully realised its
fixed rate loan stock holding in Lakan investments. The loan was put
in place in November 2007 and has generated an IRR of over 21% during
its life.
The VCT also exited from Puma Brandenburg (in which it had originally
invested into at GBP1) as a result of its takeover at 60p per share by
Shore Capital Group plc. The 60p exit price represented a premium of
approximately 40 per cent. to the closing price on 10 June 2009,
being the last practicable business day before the takeover was
announced.
During the period VCT and VCT II invested in GBP500,000 secured loan
notes of INVU plc of which GBP204,000 was for this VCT. These loan
notes bear an attractive coupon and the term coincides with the
expected VCT wind-up strategy.
Results and dividends
As set-out in the accounts for the period ended 28 February 2009, a
dividend of 2.75p per ordinary share was declared during the period
and paid on 16 September 2009. Your Board is not proposing a
dividend in relation to this interim period but reiterates the
intention to distribute a large element of the available income and,
if appropriate, realised capital gains in due course.
Principal risks and uncertainties
Although the UK economy has shown some limited signs of a recovery so
far this year, economic risks remain. The consequences of this for
our investment portfolio represent one of the principal risks and
uncertainties for the Company in the second half of the year.
Outlook
Despite the strong performance in the period we also remain cautious
of the risk of a further downturn in stock markets. Our existing
private equity investments are largely in the form on secured loans
and limit the Company's risk exposure. The quoted holdings have
performed well during the period but the values of these still
reflect the prospects for a long period of economic uncertainty and
reduced liquidity in small cap stocks. However, liquidity has
improved in the larger more successful holdings.
Realisations and end of VCT life
We are now focused on improving the liquidity of the portfolio
wherever possible whilst maintaining an appropriate risk/return. The
full realisations of Lakan Investments and Puma Brandenburg Ltd in
the period go someway towards this. The new investments in INVU plc
and Telford Homes plc have been structured consistent with the
objective of achieving an orderly winding up of the VCT assets at the
end of its life.
As we draw near to the end of its life we are reviewing how we wind
up the Fund and manage its assets in line with this requirement. To
meet VCT rules, the process of formal winding up cannot begin until
until 1 June 2010, 5 years on from the closing of the two VCTs'
flotations. However if significant capital is realised before this
point, it is the intention of the Board to distribute it.
Recent Net Asset Value
The fully diluted net asset value per share as at 30 September 2009
was 99.60p after the payment of the 2.75p dividend mentioned above.
I look forward to reporting the progress of the Company with the next
Annual Report for the year ended 28 February 2010.
Sir Aubrey Brocklebank Bt
Chairman
30 October 2009
Income Statement (unaudited)
For the six months ended 31 August 2009
Six months ended Six months ended Year ended
31 August 2009 31 August 2008 28 February 2009
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gains/(losses)
on investments - 502 502 - (396) (396) - (970) (970)
Income 158 - 158 195 - 195 402 - 402
158 502 660 195 (396) (201) 402 (970) (568)
Investment
management
fees 4 9 27 36 25 75 100 43 130 173
Performance
fees 15 73 88 21 (90) (69) (53) (81) (134)
Other expenses 28 - 28 46 - 46 86 - 86
52 100 152 92 (15) 77 76 49 125
Return /(loss)
on ordinary
activities
before
taxation 106 402 508 103 (381) (278) 326 (1,019) (693)
Tax on return
on ordinary
activities (19) 19 - (19) 19 - (48) 48 -
Return /(loss)
on ordinary
activities
after tax
attributable
to
equity
shareholders 87 421 508 84 (362) (278) 278 (971) (693)
Return /(loss)
per Ordinary
Share (pence) 2 1.05p 5.07 p 6.12p 1.01p (4.35)p (3.34)p 3.33p (11.69)p (8.36)p
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 31 August 2009
As at As at As at
31 August 31 August 28 February
Note 2009 2008 2009
GBP'000 GBP'000 GBP'000
Fixed Assets
Investments 7 8,024 8,028 6,457
Current Assets
Debtors 159 183 93
Cash 400 282 1,446
559 465 1,539
Creditors - amounts
falling due within one
year (44) (70) (53)
Net Current Assets 515 395 1,486
Total Assets less Current
Liabilities 8,539 8,423 7,943
Creditors - amounts
falling due after more
than one year
(including convertible
debt) (1) (1) (1)
Net Assets 8,538 8,422 7,942
Capital and Reserves
Called up share capital 83 83 83
Capital reserve - realised 710 630 723
Capital reserve - (1,210)
unrealised (776) (508)
Other reserve 88 65 -
Revenue reserve 8,433 8,152 8,346
Equity Shareholders' Funds 8,538 8,422 7,942
Net Asset Value per
Ordinary Share 3 102.88p 101.50p 95.70p
Diluted Net Asset Value
per Ordinary Share 3 101.81p 100.72p 95.70p
Cash Flow Statement (unaudited)
For the six months ended 31 August 2009
Six months
Six months ended Year ended
ended 31 August 28 February
31 August 2009 2008 2009
GBP'000 GBP'000 GBP'000
Operating activities
Investment income received 153 148 449
Investment management fees paid (87) (100) (182)
Cash paid to directors (7) (7) (14)
Foreign exchange loss on cash - (2) -
Other cash payments (42) (45) (71)
Net cash inflow/(outflow) from
operating activities 17 (6) 182
Equity dividend paid - (125) (125)
Capital expenditure and
financial investment
Purchase of investments (2,721) (183) (384)
Proceeds from sale of 1,551
investments 1,655 347
Net realised gain/(loss) on
forward foreign exchange
contracts 2 (44) (70)
Net cash (outflow)/inflow from
capital expenditure and
financial investment (1,064) 120 1,097
(Decrease)/increase in cash (1,047) (11) 1,154
Reconciliation of net cash flow
to movement in net funds
(Decrease)/increase in cash for 1,154
the period (1,047) (11)
Net cash at start of the period 1,447 293 293
Net funds at the period end 400 282 1,447
Reconciliation of Movements in Shareholders' Funds (unaudited)
For the six months ended 31 August 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
Six months ended 31 August 2009
Balance at 1 March
2009 83 723 (1,210) - 8,346 7,942
Total recognised
(losses)/gains for
the period - (13) 434 88 87 596
Balance at 31
August 2009 83 710 (776) 88 8,433 8,538
Six months ended 31 August 2008
Balance at 1 March
2008 83 769 (285) 134 8,193 8,894
Total recognised
(losses)/gains for
the period - (139) (223) (69) 84 (347)
Equity dividend
paid - - - - (125) (125)
Balance at 31
August 2008 83 630 (508) 65 8,152 8,422
For the year ended 28 February 2009
Balance at 1 March
2008 83 769 (285) 134 8,193 8,894
Total recognised
(losses)/gains for
the period - (46) (925) (134) 278 (827)
Equity dividend
paid - - - - (125) (125)
Balance at 28
February 2009 83 723 (1,210) - 8,346 7,942
Notes to the Interim Report
For the six months ended 31 August 2009
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" ("SORP") December 2005. Although this
SORP principally applies to Investment Trusts, many of the
characteristics of Investment Trusts are shared by VCTs therefore the
Company will continue to follow the SORP until investment company
status is revoked.
2. Return per Ordinary Share
The total return per share of 6.12p (31 August 2008 - loss of 3.34p)
is based on the profit for the period of GBP508,000 (31 August 2008 -
loss of GBP278,000) and the weighted average number of shares in issue
as at 31 August 2009 of 8,299,300 (31 August 2008 - 8,299,300).
3. Net asset value per share
+-------------------------------------------------------------------+
| | | | Net Asset Value per |
| | | | share |
| |------------+---------------+-----------------------|
| | Net assets | Shares in | Basic | Diluted |
| Period | | issue | | |
|--------------+------------+---------------+-----------+-----------|
| 31 August | GBP8,538,000 | 8,299,300 | 102.88p | 101.81p |
| 2009 | | | | |
|--------------+------------+---------------+-----------+-----------|
| 28 February | GBP7,942,000 | 8,299,300 | 95.70p | 95.70p |
| 2009 | | | | |
|--------------+------------+---------------+-----------+-----------|
| 31 August | GBP8,422,000 | 8,299,300 | 101.50p | 100.72p |
| 2008 | | | | |
+-------------------------------------------------------------------+
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 the 2009 Annual Report and
Accounts on page 38. There were no other related party transactions
during the 6 months ended 31 August 2009.
6. The financial information for the six months ended 31
August 2009 and 31 August 2008 has not been audited and does not
comprise full financial statements within the meaning of Section 240
of the Companies Act 1985. The financial information for the year
ended 28 February 2009 has been extracted from the company's full
financial statements for the period then ended that have been
delivered to the Registrar of Companies, and on which the report of
the Auditors was unqualified. The interim financial statements have
been prepared on the same basis as the annual financial statements.
Notes to the Interim Report continued
For the six months ended 31 August 2009
7. Investment portfolio summary
Cost Valuation Gain/ Valuation as a %
As at 31 August 2009 GBP'000 GBP'000 (loss) of Net Assets
Qualifying investment -
unquoted
Albemarle Contracting Ltd 700 700 - 8%
Bond Contracting Ltd 1,054 1,054 - 12%
Cadbury House Hotel &
Country Club plc 1,459 1,459 - 17%
Stocklight Limited 419 419 - 5%
Telford Homes Ltd 1,039 1,039 - 12%
Qualifying investment -
quoted
@UK plc 285 1 (284) 0%
Alterian plc 13 17 4 0%
Clarity Commerce Solutions
plc 98 72 (26) 1%
I-Design Group plc 41 7 (34) 0%
INVU plc 81 6 (75) 0%
Mount Engineering plc 153 113 (40) 1%
Patsystems plc 214 356 142 4%
Sport Media plc 210 13 (197) 0%
Universe Group plc 120 47 (73) 1%
Vertu Motors plc 407 272 (135) 3%
Total qualifying investments 6,293 5,575 (718) 65%
Non-qualifying investments -
unquoted
INVU plc 204 204 - 2%
Lakan Investments Limited 58 72 14 1%
Non-qualifying investments -
quoted
Anglo American Bonds 159 161 2 2%
Artemis Strategic Bonds 102 124 22 1%
Blackrock UK Emerging Cos
Hedge Fund Limited 378 493 115 6%
Brevan Howard Macro 169 182 13 2%
Cazenove Strategic Bond Fund 204 232 28 3%
Cazenove UK Dynamic Absolute
UK 170 180 10 2%
Jupiter Strategic Bonds 204 255 51 3%
Puma Brandenburg Limited 397 226 (171) 3%
Rio Tinto Finance Plc Bonds 107 107 - 1%
The Hotel Corporation plc 283 213 (70) 2%
Total non-qualifying
investments 2,435 2,449 14 29%
Total investments 8,728 8,024 (704) 94%
Balance of portfolio 514 514 6%
Net Assets 9,242 8,538 (704) 100%
=--END OF MESSAGE---
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