TIDMPUM8
Puma VCT 8 plc
Final Results for the Period Ended 31 December 2012
HIGHLIGHTS
-- Good progress in the first nine months of investment to 31 December 2012
and subsequently.
-- Three qualifying investments made, three non-qualifying investments made
and terms agreed for two further investments.
-- Strong pipeline of investments at the Company's first anniversary.
-- Dividend per Ordinary Share paid on 25 February 2013 of 5 pence,
equivalent to a 7.1% per annum tax-free running yield on investment.
Enquiries
Shore Capital 020 7408 4090
Graham Shore
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present to you as Chairman the first annual report for
the Puma VCT 8 plc for the period to 31 December 2012, which comprised
nine months of investment following the completion of the fund raising
on 5 April 2012.
The Company was incorporated and launched its Prospectus in July 2011.
The offer raised GBP12.4 million, the larger part being in the Spring of
2012. The fund-raising closed in April 2012. The Investment Manager,
Shore Capital Limited, now has approximately GBP69 million of VCT money
under management and a well established, experienced VCT team to manage
the Company's deal flow.
VCT qualifying investments
During the period, the Company completed three VCT qualifying
investments for a total of GBP2.5 million and agreed terms for a further
investment of GBP500,000. Details of these 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 expects to make further qualifying investments
during the coming year to ensure the Company is on course to meet its
HMRC qualifying target.
Non-qualifying investments
The Company's strategy is to seek a good return from its non-qualifying
investments as well as its qualifying investments. Once the proceeds of
the fund-raising were received, the Company began investing into a
portfolio of securities, including single name bonds. Anticipating a
change in market sentiment regarding bonds, the Investment Manager
decided to take profits on these holdings at the very end of 2012. Only
one bond has been retained, described in the Investment Manager's
report.
During the period, the Company also completed two non-qualifying loans
for a total of GBP2.3 million and agreed terms for a further loan of
GBP650,000. Details of these can be found in the Investment Manager's
report below. In anticipation of the strong pipeline of loan
opportunities, the Investment Manager has taken the view to continue to
hold a significant portion of the portfolio on cash deposit.
VCT qualifying status
PricewaterhouseCoopers LLP ('PwC') provides the board and the investment
manager with advice on the ongoing compliance with HMRC rules and
regulations concerning VCTs. PwC will assist the investment manager in
establishing the status of investments as qualifying holdings in the
future.
Results and dividends
The Company reported a small loss of GBP145,000 for the period, a loss
of 2.14p per ordinary share (calculated on the weighted average number
of shares). The Net Asset Value per ordinary share ("NAV") at the period
end was 93.54p. This is a result of the running costs of the Company
exceeding the income during this initial period whilst the Company has
continued to review suitable investment opportunities. In line with the
Company's dividend policy, as stated in the Prospectus, which is to pay
out up to 5p per annum an interim dividend of 5p per Ordinary Share was
paid on 25 February 2013 in respect of the period ended 31 December
2012.
Outlook
The Investment Manager has met a number of companies which are
potentially suitable for investment. There is a good flow of
opportunities which may lead to suitable investments. We will update you
in due course as investments are completed. The restrictions on
availability of bank credit continue to affect the terms on which target
companies can raise finance. This should both increase the demand for
our offering and improve the terms we can secure when we offer finance.
There are many suitable companies which are well-managed, in good market
positions, and which can offer security and need our finance. We
therefore believe the Company is strongly positioned to select a
portfolio to deliver attractive returns to shareholders in the medium to
long term.
Sir Aubrey Brocklebank
Chairman
30 April 2013
INVESTMENT MANAGER'S REPORT
Introduction
As set out in the Chairman's Statement, the on-going effects of the
credit crisis mean that small and medium sized businesses (SMEs) are
continuing to find it difficult to access the funding they need from the
traditional banks. As a consequence, we have seen a significant
increase in our pipeline of potential investments. In particular, we
are seeing many established companies which have substantial assets or
predictable revenue streams, over which a security can be taken.
Qualifying investments
As indicated in the Company's interim report, prior to 5 April 2012, the
Company invested GBP2 million into two qualifying contracting companies.
These two companies, Isaacs Trading Limited and Jephcote Trading Limited,
have been actively pursuing opportunities to deploy their financial
resources. We are pleased to report that, in November 2012, Isaacs
Trading Limited joined a limited liability partnership with other
contracting companies and has entered into its first contracting
contract with FreshStart living. This will provide GBP476,000 (as part
of a GBP3.5 million project involving other companies backed by Puma
VCTs) of project management and contracting services. These services
will be provided in connection with the development and construction of
116 apartments, all of which have been pre-sold, by FreshStart Living at
a property called Trafford Press, 2 miles south east of Manchester city
centre.
In December 2012, the Company completed a GBP450,000 investment (as part
of a GBP1.5 million financing with other Puma VCTs) into Brewhouse and
Kitchen Limited, which is managed by two highly experienced pub sector
professionals, to facilitate the acquisition of freehold pubs and
install a micro brewery within the main area of each pub. The
investment is largely in the form of senior debt, secured with a first
charge over the business and each freehold site acquired. Funds can be
utilised to a maximum 65% loan-to-value ratio, and are expected to
produce a return of at least 7 per cent per annum.
In accordance with the HMRC VCT rules the Company has three years to
invest 70 per cent of the portfolio into qualifying investments.
Non-qualifying investments
As set out in the Chairman's statement, the Company bought three bonds,
two of which were disposed of in the period generating a small profit.
As indicated in the Company's interim report, the Company invested
GBP750,000 in a Tesco Bank 8 year bond traded on the London Stock
Exchange, bearing a 5% per annum coupon. This bond is currently trading
at a premium to the issue price. Given the recent volatility in the
financial markets, we have taken a cautious approach to investment;
accordingly, since the close of the Offer, and in anticipation of the
strong pipeline of loan opportunities (see below) a considerable part of
the net proceeds raised have been held on cash deposit.
In August 2012, the Company completed a GBP1,420,000 non-qualifying loan
(as part of a GBP4 million financing with other Puma VCTs) to Puma
Brandenburg Finance Limited, a subsidiary of Puma Brandenburg Holdings
Limited, secured on a portfolio of flats in the Wilmersdorf area of
central Berlin, Germany. The facility attracts a fixed interest rate of
5% per annum.
In December 2012, the Company completed a GBP881,000 non-qualifying loan
to Buckhorn Lending Limited which itself (having received loans from
various other Puma VCTs) extended an innovative GBP2.5 million revolving
credit facility to Organic Waste Management Trading Limited ("OWM").
The facility provides working capital for the purchase of used cooking
oil for conversion into bio-diesel for sale to obligated off-take
parties. The facility is structured to mitigate risks by being capable
of draw only once approved back-to-back purchase and sale contracts have
been entered into with approved counterparties. The facility bears
interest at 1.5% per month with a 5% per annum non-utilisation rate.
Investment Strategy
We are pleased to have already invested almost half of funds raised by
the Company in qualifying and non-qualifying investments. We remain
focused on generating strong returns for the Company in the both the
qualifying and non-qualifying portfolios whilst balancing these returns
with maintaining an appropriate risk exposure and ensuring there is
significant liquidity in the portfolio to free up cash for qualifying
investments as they arise.
During the period, the Investment Management team have met a number of
companies which are potentially suitable for investment. In accordance
with our mandate we have maintained a cautious approach and are
performing thorough due diligence work on several potential investments.
Over the course of the next two years, the Company will build the
qualifying portfolio up to the required 70 per cent by the end of year
three. We have a strong deal-flow and are meeting a lot of potential
investee companies with several interesting opportunities firmly in the
pipeline.
Shore Capital Limited
30 April 2013
Investment Portfolio Summary
As at 31 December 2012
Valuation as a % of
Valuation Cost Gain/(loss) Net Assets
GBP'000 GBP'000 GBP'000
As at 31 December 2012
Qualifying Investment
- Unquoted
Brewhouse & Kitchen
Limited equity 315 315 - 3%
Brewhouse & Kitchen
Limited loan notes 135 135 - 1%
Isaacs Trading Limited
B equity 700 700 - 6%
Isaacs Trading Limited
Loan Notes 300 300 - 3%
Jephcote Trading
Limited equity 700 700 - 6%
Jephcote Trading
Limited Loan Notes 300 300 - 3%
Total Qualifying
Investments 2,450 2,450 - 22%
Non-Qualifying
Investments
Buckhorn Lending
Limited loan notes 881 881 - 7%
Tesco Personal Finance
Bond* 795 750 45 7%
Puma Brandenburg
Finance Limited loan 1,420 1,420 - 12%
Total Non-Qualifying
investments 3,096 3,051 45 26%
Total Investments 5,546 5,501 45 46%
Balance of assets
(net) 6,446 6,446 54%
Net Assets 11,992 11,947 45 100%
Of the investments held at 31 December 2012, 74 per cent are
incorporated in England and Wales, 26 per cent in Europe. Percentages
have been calculated on the valuation of the assets at the reporting
date.
* Quoted investment listed on the LSE.
Income Statement
For the period ended 31 December 2012
Period from 7 July 2011 to
31 December 2012
Note Revenue Capital Total
GBP'000 GBP'000 GBP'000
Gain on investments 8 (c) - 61 61
Income 2 158 - 158
158 61 219
Investment management fees 3 (48) (144) (192)
Other expenses 4 (172) - (172)
(220) (144) (364)
Loss on ordinary activities before taxation (62) (83) (145)
Tax on loss on ordinary activities 5 - - -
Loss on ordinary activities after tax attributable
to equity shareholders (62) (83) (145)
Basic and diluted
Loss per Ordinary Share (pence) 6 (0.91p) (1.23p) (2.14p)
The total column represents the profit and loss account and the revenue
and capital columns are supplementary information.
All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued in
the period.
No separate Statement of Total Recognised Gains and Losses is presented
as all gains and losses are included in the Income Statement.
Balance Sheet
As at 31 December 2012
As at
Note 31 December 2012
GBP'000
Fixed Assets
Investments 8 5,546
Current Assets
Debtors 9 67
Cash at bank and in hand 6,498
6,565
Creditors - amounts falling due within one year 10 (118)
Net Current Assets 6,447
Total Assets less Current Liabilities 11,993
Creditors - amounts falling due after more than one
year (including convertible debt) 11 (1)
Net Assets 11,992
Capital and Reserves
Called up share capital 12 128
Share premium account 12,009
Capital reserve - realised (128)
Capital reserve - unrealised 45
Revenue reserve (62)
Equity Shareholders' Funds 11,992
Basic and diluted Net Asset Value per Ordinary Share 13 93.54p
Cash Flow Statement
For the period ended 31 December 2012
Period from 7 July
2011 to 31 December
2012
GBP'000
Loss on ordinary activities before taxation (145)
Gains on investments (61)
Increase in debtors (67)
Increase in creditors 105
Net cash outflow from operating activities (168)
Capital expenditure and financial investment
Purchase of investments (6,501)
Proceeds from sale of investments 1,016
Net cash outflow from capital expenditure and financial
investment (5,485)
Net cash outflow before financing (5,653)
Financing
Proceeds received from issue of ordinary share capital 12,441
Expenses paid for issue of share capital (304)
Proceeds received from issue of redeemable preference
shares 13
Proceeds received from convertible loan notes 1
Net cash inflow from financing 12,151
Increase in cash in the period 6,498
Reconciliation of net cashflow to movement in net
funds
Increase in cash in the period 6,498
Net funds at start of period -
Net funds at end of period 6,498
Reconciliation of Movements in Shareholders' Funds
For the period ended 31 December 2012
Called up Share Capital Capital
share premium reserve - reserve - Revenue
capital account realised unrealised reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Shares issued
in the
period 128 12,693 - - - 12,821
Expenses of
share
issues - (684) - - - (684)
Return after
taxation
attributable
to equity
shareholders - - (128) 45 (62) (145)
Balance as at
31 December
2012 128 12,009 (128) 45 (62) 11,992
Distributable reserves comprise: Capital reserve-realised, Capital
reserve-unrealised and the Revenue reserve. At the period end
distributable reserves were nil.
The Capital reserve-realised shows gains/losses that have been realised
in the period due to the sale of investments, and related costs. The
Capital reserve-unrealised shows the gains/losses on investments still
held by the company not yet realised by an asset sale.
There was a capital reorganisation on 13 February 2013 which transferred
GBP12,009,000 from the share premium reserve to the revenue reserve.
Notes to the Accounts
For the period ended 31 December 2012
1. Accounting Policies
Basis of Accounting
The financial statements have been prepared under the historical cost
convention, modified to include the revaluation of investments held at
fair value, and in accordance with UK Generally Accepted Accounting
Practice ("UK GAAP") and the Statement of Recommended Practice,
'Financial Statements of Investment Trust Companies and Venture Capital
Trusts' ("SORP") revised in 2009.
Income Statement
In order to better reflect the activities of a Venture Capital Trust and
in accordance with guidance issued by the Association of Investment
Companies ("AIC"), supplementary information which analyses the Income
Statement between items of a revenue and capital nature has been
presented alongside the Income Statement. The net loss of GBP145,000 as
per the Income Statement 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. The investments are measured at subsequent reporting dates at
fair value. Listed investments and investments traded on AIM are stated
at bid price at the reporting date. Hedge funds are valued at their
respective quoted Net Asset Values per share at the reporting date.
Unlisted investments are stated at Directors' valuation with reference
to the International Private Equity and Venture Capital Valuation
Guidelines ("IPEVC") and in accordance with FRS26 "Financial
Instruments: Measurement":
-- Investments which have been made within the last twelve months
or where the investee company is in the early stage of development will
usually be valued at the price of recent investment except where the
company's performance against plan is significantly different from
expectations on which the investment was made in which case a different
valuation methodology will be adopted.
-- Investments may be valued by applying a suitable price-earnings
ratio to that company's historical post tax earnings. The ratio used is
based on a comparable listed company or sector but discounted to reflect
lack of marketability. Alternative methods of valuation include net asset
value where such factors apply that make this or alternative methods more
appropriate.
Realised surpluses or deficits on the disposal of investments are taken
to realised capital reserves, and unrealised surpluses and deficits on
the revaluation of investment are taken to unrealised capital reserves.
It is not the Company's policy to exercise a controlling influence over
investee companies. Therefore the results of the companies are not
incorporated into the revenue account except to the extent of any income
accrued.
Cash at bank and in hand
Cash at bank and in hand comprises cash on hand and demand deposits.
Equity instruments
Equity instruments are classified according to the substance of the
contractual arrangements entered into. An equity instrument is any
contract that evidences a residual interest in the assets of the company
after deducting all of its liabilities. Equity instruments issued by the
company are recorded at proceeds received net of issue costs.
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 negotiated performance fees payable to
the Investment Manager, Shore Capital Limited, at 20 per cent of the
aggregate excess 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 in the period 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
Boards 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 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.
Reserves
Realised losses and gains on investments and foreign exchange
transactions, transaction costs, the capital element of the 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 foreign exchange transactions and
the capital element of the performance fee are also taken through the
Income Statement and are recognised in the Capital Reserve - Unrealised.
The revenue element of the performance fee to be effected through
share-based payment is taken to the Other Reserve and the total revenue
gain or loss on the Income Statement is taken to the Revenue Reserve.
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 7 July 2011 to 31 December 2012
GBP'000
Income from investments
Loan stock interest 53
Arrangement fees 15
Bond yields 23
91
Other income
Bank deposit income 67
158
3. Investment Management Fees
Period from 7 July 2011 to 31 December 2012
GBP'000
Shore Capital Limited 192
Shore Capital Limited ("Shore Capital") 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 Shore Capital 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) to
within 3.5 per cent of Net Asset Value. Total annual costs this period
were 3.0 per cent of the period end Net Asset Value.
4. Other expenses
Period from 7 July 2011
to 31 December 2012
GBP'000
Administration - Shore Capital Fund Administration
Services Limited 33
Directors' remuneration 50
Social security costs 1
Auditor's remuneration for statutory audit 17
Insurance 4
Legal and professional fees 4
FSA, LSE and registrar fees 33
Trail commission 21
Other expenses 9
172
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 Company had no employees (other than Directors) during the period.
The average number of non-executive Directors during the period was 3.
The Auditor's remuneration of GBP14,000 has been grossed up in the table
above to be inclusive of VAT.
5. Tax on Ordinary Activities
Period from 7 July 2011
to 31 December 2012
GBP'000
UK corporation tax charged to revenue reserve -
UK corporation tax charged to capital reserve -
UK corporation tax charge for the period -
Loss on ordinary activities before taxation (145)
Factors affecting tax charge for the period
Tax charge calculated on loss on ordinary activities
before taxation at the applicable rate of 20% (29)
Capital income not taxable (12)
Tax losses carried forward 41
-
The income statement shows the tax charge allocated to revenue and
capital. Capital returns are not taxable as VCTs are exempt from tax on
realised capital gains subject that they comply and continue to comply
with the VCT regulations.
No provision for deferred tax has been made in the current accounting
period. No deferred tax assets have been recognised as the timing of
their recovery cannot be foreseen with any certainty. Due to the
Company's status as a Venture Capital Trust and the intention to
continue meeting the conditions required to obtain approval in the
foreseeable future, the Company has not provided deferred tax on any
capital gains and losses arising on the revaluation or disposal of
investments.
6. Basic and diluted loss per Ordinary Share
Period from 7 July 2011 to 31 December 2012
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Loss for the period (62) (83) (145)
Weighted average number of
shares 6,774,461 6,774,461 6,774,461
Loss per share (0.91)p (1.23)p (2.14)p
The total loss per ordinary share is the sum of the revenue return and
capital return.
7. Dividends
The directors do not propose a final dividend in relation to the period
ended 31 December 2012. An interim dividend of 5p per Ordinary Share was
paid on 26 February 2013, this equates to GBP641,000.
8. Investments
Historic cost as at 31 Market value as at 31
(a) Summary December 2012 December 2012
GBP'000 GBP'000
Qualifying venture
capital investments 2,450 2,450
Non qualifying
investments 3,051 3,096
5,501 5,546
(b) Movements in Qualifying venture Non qualifying
investments capital investments investments Total
GBP'000 GBP'000 GBP'000
Opening value - - -
Purchases at cost 2,450 4,051 6,501
Disposals:
Proceeds - (1,016) (1,016)
Realised net gains
on disposals - 16 16
Net unrealised gains
in the period - 45 45
Valuation at 31
December 2012 2,450 3,096 5,546
Book cost at 31
December 2012 2,450 3,051 5,501
Net unrealised gains
at 31 December 2012 - 45 45
Valuation at 31
December 2012 2,450 3,096 5,546
(c) Gains/(losses) on investments
The gains/(losses) on investments for the period shown in the Income
Statement is analysed as follows:
Period from 7 July 2011 to 31 December
2012
GBP'000
Realised gain on disposal 16
Net unrealised gains in the period 45
61
(d) Quoted and unquoted Historic cost as at 31 Market value as at 31
investments December 2012 December 2012
GBP'000 GBP'000
Quoted investments 750 795
Unquoted investments 4,751 4,751
5,501 5,546
(e) Significant interests
As at 31 December 2012, the Company held more than 20% of the equity of
the following undertakings. These holdings are included within the
unquoted investments disclosed above and are held as part of the
Company's investment portfolio.
Percentage of equity directly Fair value of Company's investment as at 31 December
held in Investee Company 2012
Puma
Puma VCT Funds
VCT High managed by
Investee VII Income Shore
Company Company plc plc Capital GBP'000
Isaacs
Trading
Limited 50% - 50% 100% 1,000
Jephcote
Trading
Limited 50% 50% - 100% 1,000
Buckhorn
Lending
Limited 33% 33% 33% 100% 881
2,881
Graham Shore, a director of the Company, is also a director of Puma VCT
VII plc, Puma High Income VCT plc, Isaacs Trading Limited and Jephcote
Trading Limited. The Company is able to exercise significant influence
over all of the above-named investee companies.
These investments have not been accounted for as associates or joint
ventures since FRS 9: Associates and Joint Ventures and the SORP require
that Investment Companies treat all investments held as part of their
investment portfolio in the same way, even those over which the Company
has significant influence.
9. Debtors
As at 31 December 2012
GBP'000
Prepayments and accrued income 67
10. Creditors - amounts falling due within one year
As at 31 December 2012
GBP'000
Preference share capital 13
Other creditors 32
Accruals 73
118
11. Creditors - amounts falling due after more than
one year (including convertible debt)
As at 31 December 2012
GBP'000
Loan notes 1
On 26 July 2011, the Company issued Loan Notes in the amount of GBP1,000
to a nominee on behalf of Shore Capital Limited. The Loan Notes accrue
interest of 5 per cent per annum.
As holders of the loan note Shore Capital Limited will be entitled to a
performance related incentive of 20 per cent of the aggregate excess on
any amounts realised by the Company in excess of GBP1 per Ordinary Share,
and 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 2012
GBP'000
12,820,841 ordinary shares of 1p each 128
50,000 preference shares of GBP1 each, one quarter
paid up 13
Shown within equity 128
Shown as a liability 13
The Company issued 12,820,841 Ordinary shares at GBP1 per share during
the period ended 31 December 2012.
The ordinary share capital upon incorporation was divided into 50,000
Redeemable Preference Shares of GBP1 each and two Ordinary shares of 1p
each issued.
The 50,000 Redeemable Preference shares were issued to Shore Capital
Group Investments Limited, one quarter paid up, so as to enable the
Company to obtain a certificate under Section 761 of the Companies Act
2006.
Between 27 February 2012 and 5 April 2012, 12,820,839 Ordinary shares of
1p each were issued at GBP1 per share pursuant to the offers for
subscription to the public dated 29 July 2011.
On 24 January 2013 the 50,000 Redeemable Preference shares issued to
Shore Capital Group Investments were paid up in full and then
subsequently redeemed out of the proceeds of the offers. Upon redemption
the shares were cancelled.
The Ordinary Shares and the Preference Shares shall have the same rights
and privileges and shall rank pari passu in all respects save that:
As Regards Voting:
(i) The holders of the Preference Shares shall not be entitled to
receive notice of, or attend, or vote at any General Meeting of the
Company.
As Regards Income:
(ii) The holders of the Preference Shares shall be entitled in priority
to any payment of dividend on any other class of share to a cumulative
preferential dividend of 0.1% (per annum). Subject to this the profits
of the Company available for dividend and resolved to be distributed
shall be distributed by way of dividend among the holders of the
Ordinary Shares.
As Regards Capital:
(iii) The Preference Shares shall confer the rights to be paid out of
the assets of the Company available for distribution a nominal amount
paid on such shares pari passu with, and in proportion to, the amount of
capital paid to the holders of the ordinary shares, but do not confer
any right to participate in any surplus assets of the Company.
13. Net Asset Value per Ordinary Share
As at
31 December 2012
Net assets 11,992,000
Shares in issue 12,820,841
Net asset value per share
Basic 93.54p
Diluted 93.54p
14. Financial Instruments
The Company's financial instruments comprise its investments, cash
balances, debtors and certain creditors. Fixed Asset investments held
are valued at Bid market prices or price of recent investment. The fair
value of all of the Company's financial assets and liabilities is
represented by the carrying value in the Balance Sheet. The Company held
the following categories of financial instruments at 31 December 2012:
As at 31 December 2012
GBP'000
Assets at fair value through profit or loss
Investments managed through Shore Capital Limited 5,546
Loans and receivables
Cash at bank and in hand 6,498
Interest, dividends and other receivables 67
Other financial liabilities
Financial liabilities measured at amortised cost (119)
11,992
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, foreign currency risk and interest rate risk. The Board regularly
reviews and agrees policies for managing each of these risks. The
Board's policies for managing these risks are summarised below and have
been applied throughout the period.
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 amounts of financial assets best
represents the maximum credit risk exposure at the balance sheet date.
The Company's financial assets maximum exposure to credit risk is as
follows:
As at 31 December 2012
GBP'000
Investments in loans, loan notes and bonds 3,831
Cash at bank and in hand 6,498
Interest, dividends and other receivables 67
10,396
The cash held by the Company at the period end is split between an A
rated U.K. bank, a BBB rated South African bank and Pershing Securities
Limited. Bankruptcy or insolvency of either bank may cause the Company's
rights with respect to the receipt of cash held to be delayed or
limited. The Board monitors the Company's risk by reviewing regularly
the financial position of the banks and should it deteriorate
significantly the Investment Manager will, on instruction of the Board,
move the cash holdings to another bank.
Credit risk associated with interest, dividends and other receivables
are predominantly covered by the investment management procedures.
Investments in loans, loan notes and bonds comprises a fundamental part
of the Company's venture capital investments, therefore credit risk in
respect of these assets is managed within the Company's main investment
procedures.
Market price risk
Market price risk arises mainly from uncertainty about future prices of
financial instruments held by the Company. It represents the potential
loss the Company might suffer through holding investments in the face of
price movements. The Investment Manager actively monitors market prices
throughout the period 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. 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.
Investments 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 to produce a conservative and accurate
valuation.
7 per cent of the Company's investments are listed on the London Stock
Exchange and 93% are unquoted investments.
Liquidity risk
Details of the Company's unquoted investments are provided in the
Investment Portfolio. By their nature, unquoted investments may not be
readily realisable, the Board considers exit strategies for these
investments throughout the period for which they are held. As at the
period end, the Company had no borrowings other than loan notes
amounting to GBP1,000 (see note 11).
The Company's liquidity risk associated with investments is managed on
an ongoing basis by the Investment Manager in conjunction with the
Directors and in accordance with policies and procedures in place as
described in the Report of the Directors. The Company's overall
liquidity risks are monitored on a quarterly basis by the Board.
The Company maintains sufficient investments in cash and readily
realisable securities to pay accounts payable and accrued expenses.
Fair value interest rate risk
The benchmark that determines the interest paid or received on the
current account is the Bank of England base rate, which was 0.5 per cent
at 31 December 2012. All of the loan and loan note investments are
unquoted and hence not directly subject to market movements as a result
of interest rate movements.
At the period end and throughout the period, the Company's only
liability subject to fair value interest rate risk were the Loan Notes
of GBP1,000 at 5.0 per cent (see note 11).
Cash flow interest rate risk
The Company has exposure to interest rate movements primarily through
its cash deposits and loan notes which track either the Bank of England
base rate or LIBOR.
Interest rate risk profile of financial assets
The following analysis sets out the interest rate risk of the Company's
financial assets.
Average Period until
Rate status interest rate maturity Total
GBP'000
Cash at bank -
RBS Floating 0.9% - 1,747
Cash at bank -
Investec Fixed 1.7% 32 day notice 4,242
Cash at
custodian - Non-interest
Pershing bearing - - 509
Brewhouse and
Kitchen loan
notes Floating 10.8% 5 years 135
Isaacs Trading
Limited loan
notes Floating 5.5% 10 years 300
Jephcote Trading
Limited loan
notes Floating 5.5% 10 years 300
Buckhorn Lending
Limited loan
notes Fixed 5.0% 5 years 881
Tesco Personal
Finance Bond Fixed 5.0% 7 years 795
Balance of
financial
assets Non-interest bearing - 3,135
12,044
Foreign currency risk
The reporting currency of the Company is Sterling. The company has not
held any non-Sterling investments during the period.
Fair value hierarchy
Fair values have been measured at the end of the reporting period as
follows:-
Level 1 Level 2 Level 3
'Quoted prices' 'Observable inputs' 'Unobservable inputs' Total
At fair
value
through
profit
and
loss 795 - 4,751 5,546
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.
Reconciliation of fair value for level 3 financial instruments held at
the period end:
Unquoted shares Loan notes Total
GBP'000 GBP'000 GBP'000
Movements in the income statement:
Unrealised losses in the income
statement - - -
Realised gains in the income statement - - -
- - -
Purchases at cost 1,715 3,036 4.751
Sales proceeds - - -
Balance as at 31 December 2012 1,715 3,036 4,751
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 is and must be, and remain,
invested in the relatively high risk asset class of small UK companies
within three years of that capital being subscribed.
The Company accordingly has limited scope to manage its capital
structure in the light of changes in economic conditions and the risk
characteristics of the underlying assets. Subject to this overall
constraint upon changing the capital structure, the Company may adjust
the amount of dividends paid to shareholders, issue new shares, or sell
assets to maintain a level of liquidity to remain a going concern.
The Board has the opportunity to consider levels of gearing, however
there are no current plans to do so. It regards the net assets of the
Company as the Company's capital, as the level of liabilities is small
and the management of it is not directly related to managing the return
to shareholders.
16. Contingencies, Guarantees and Financial Commitments
There were no commitments, contingencies or guarantees of the Company at
the period-end.
17. Controlling Party and Related Party Transactions
In the opinion of the Directors there is no immediate or ultimate
controlling party.
The Company has appointed Shore Capital Limited, a company of which
Graham Shore is a director, to provide investment management services.
During the period GBP192,000 was due in respect of investment management
fees. The balance owing to Shore Capital at 31 December 2012 was GBPnil.
The Company has appointed Shore Capital Fund Administration Services
Limited, a related company to Shore Capital Limited, to provide
accounting, secretarial and administrative services. During the period
GBP33,000 was due in respect of these services. The balance owing to
Shore Capital at 31 December 2012 was GBPnil.
As detailed in the prospectus of the fund, issue costs of 2% were
charged to cover the cost of launching the fund. In June 2012 a payment
of GBP244,000 was made to Shore Capital Ltd in relation to these issue
costs.
This announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other
applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the
information contained therein.
Source: PUMA VCT 8 PLC via Thomson Reuters ONE
HUG#1697942
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