TIDMPUM8
Puma VCT 8 plc
Final results for the year ended 31 December 2013
HIGHLIGHTS
-- 70% of funds raised invested in a diverse range of high quality
businesses and projects.
-- One third of net assets in VCT qualifying investments at the year-end (on
an HMRC basis), on track to meet its 3-year target.
-- Three non-qualifying secured loans made during the year, offering a
significantly higher yield than other deposits or quoted bonds of similar
risk to these secured loans.
-- 10p per share of dividends paid since inception, 5p in respect of 2013,
equivalent to a 7.1% per annum tax-free running yield on net 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 8 plc for
the year to 31 December 2013, its first full year of investment.
The Company began investing in May 2012 having completed its
fund-raising and 2012 was therefore not a full year. The Company has
made good progress in 2013: it has now deployed a large proportion of
its funds in medium-term investments, both qualifying and
non-qualifying.
Investments
At the end of the year, the Company had invested a total of GBP8.6
million, representing just under 70% of funds raised, primarily in
asset-backed businesses and projects generating weighted average annual
return of c7%.
VCT qualifying investments
During the year, the Company deployed a total of GBP1.2 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 expects to make further
qualifying investments during the coming year to ensure the Company
meets 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. During the year, the
Company completed three non-qualifying loans for a total of GBP1.9
million. Its existing non-qualifying loans continue to perform well.
At the year end, the Company was holding GBP2.7 million on cash deposit
in anticipation of the continued strong pipeline of opportunities.
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 board and
investment manager in establishing the status of potential investments
as qualifying holdings in the future.
Results and dividends
The Company reported a loss of GBP39,000 for the year (2012: GBP145,000
loss), a loss of 0.30p per ordinary share (calculated on the weighted
average number of shares). The Net Asset Value per ordinary share
("NAV") at the year end (adding back the dividend paid last year of 5p
per Ordinary Share) was 93.23p. Following the year end, an interim
dividend of 5p per Ordinary Share was paid on 21 February 2014 in
respect of the year ended 31 December 2013.
Outlook
The Company has made good progress. At the time of writing we are
pleased that we have invested over 75% of the Company's net assets in
advance of the Company's second anniversary of operations, of these
close to half are qualifying. 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 has increased and should continue to increase the
demand for our offering and also 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
deliver attractive returns to shareholders.
Sir Aubrey Brocklebank Bt
Chairman
29 April 2014
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 been able to make a number
of attractive investments, both qualifying and non-qualifying, to
smaller companies on a secured basis. We have also seen a significant
increase in our pipeline of potential investments. In particular, we
are seeing many established companies which have predictable revenue
streams or substantial assets over which a security can be taken.
Qualifying investments
As indicated in the Company's interim report, the Company invested a
further GBP480,000 (as part of GBP1.6 million across the Puma VCTs) into
Brewhouse and Kitchen Limited in March 2013, taking its total exposure
to GBP930,000. Brewhouse and Kitchen is managed by two highly
experienced pub sector professionals and our funding will facilitate the
acquisition of freehold pubs and the roll-out of the brand. The
investment is largely in the form of senior debt, secured with a first
charge over the business and each site acquired. Funds can be utilised
to a maximum 65% loan-to-value ratio, and are expected to produce an
attractive return to the Company. During the year, Brewhouse and Kitchen
opened its first pub, the White Swan in Portsmouth, which has been
trading well, and exchanged contracts to acquire a pub in Dorchester
which will open at the end of April 2014 after a substantial renovation.
In August 2013, the Company invested GBP450,000 (alongside other Puma
VCTs) into Saville Services Limited, a contracting company, which is
providing contracting services over a series of projects, including a
contract to provide contracting services to HB Community Solutions 2
Limited in connection with the construction of up to 20 apartments for
supported living for psychiatric and learning disabled service users in
Grimsby, North East Lincolnshire. We are pleased to confirm that the
project is progressing well.
As previously reported, the Company invested GBP2 million into two
qualifying contracting companies, Isaacs Trading Limited and Jephcote
Trading Limited. These companies have been actively pursuing
opportunities to deploy their financial resources. In December 2013, the
Company invested GBP254,000 into Kinloss Trading Limited, another
qualifying contracting company. We are pleased to report that all three
of these companies have joined a limited liability partnership with
other contracting companies which entered into a contracting contract
with Ansgate (Barnes) Limited. The limited liability partnership has
agreed to provide GBP8 million of project management and contracting
services, of which the Company's share via the three contracting
companies is an investment of GBP1.68 million. These services will be
provided 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 project has now commenced and is currently progressing to
time and to budget.
We previously reported that Isaacs Trading Limited had joined a limited
liability partnership which entered into a contracting contract with
FreshStart Living to provide project management and contracting services
in connection with a project known as Trafford Press in Manchester. We
understand that this project is no longer proceeding. Isaacs Trading
Limited's funds have since been re-allocated to the Barnes project
referred to above.
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 32% and a strong pipeline.
Non-qualifying investments
We are following a strategy for the non-qualifying portfolio of moving
away from quoted investments and instead investing in secured
non-qualifying loans offering a good yield with hopefully limited
downside risk. These loans take longer to identify and execute, but
should work well for the VCT into the medium term. We have now
completed five such non-qualifying loans for a total of GBP4.2 million.
As indicated in the Company's interim report, in March 2013 the Company
advanced a GBP650,000 loan which (through a subsidiary, Latimer Lending
Limited) together with another Puma VCT investing on the same basis
provides a loan to Countywide Property Holdings Limited, a business with
a strong track record of acquiring greenfield and brownfield sites for
residential and commercial development. The loan is secured on a 5.6
acre site, including a large house, in Brackley near Silverstone. The
loan was extended on a sub-50% loan to value basis and is earning an
attractive rate of interest which is being paid monthly. Countywide
Property Holdings has exchanged contracts with one of the UK's largest
house builders to sell the property, subject to planning permission
being granted, to develop up to 50 new homes on the site. There has
recently been a favourable planning meeting and we expect planning to be
granted.
In November 2013, the Company invested GBP750,000 (as part of a total
investment by Puma VCTs of GBP2.16 million) in Gold Line Property
Limited, a care and dementia treatment business which is currently
developing new premises in Surrey. The management team have a long track
record in operating similar treatment centres across the UK. The
project is progressing well and the team expect the new facility to open
in early 2015.
In December 2013, the Company completed a GBP500,000 non-qualifying loan
which together with funding from other vehicles managed and advised by
your Investment Manager extended a GBP5 million revolving credit
facility to Citrus PX Two Limited, part of the Citrus Group (through a
jointly held affiliate of the VCTs, Valencia Lending Limited). Citrus
PX operates a property part exchange service facilitating the rapid
purchase of properties for developers and homeowners. The Company's
facility will provide a series of loans to Citrus PX on conservative
terms, with the benefit of a first charge over each of the
geographically diversified portfolio of residential properties.
The Company's GBP1,420,000 loan (as part of a GBP4 million financing
with other Puma VCTs) to Puma Brandenburg Finance Limited, a subsidiary
of Puma Brandenburg Holdings Limited, continues to perform. The loan is
secured on a portfolio of flats in the middle class area of central
Berlin, Germany. Since the loan was made, the property market in this
area of Berlin has been very strong, further enhancing the excellent
security we have for this loan.
As reported in the previous annual report, the Company provided a loan
of GBP881,000 to provide, together with other Puma VCTs, an innovative
GBP4 million revolving credit facility to Organic Waste Management
Trading Limited through another jointly held affiliate of the VCTs
Buckhorn Lending Limited. 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 drawn only once approved back-to-back purchase and
sale contracts have been entered into with approved counterparties. The
facility bears interest at a substantial rate for utilised funds and a
lower rate for non-utilised fund, and has been performing very well over
the year.
During the year, the Company held its original investment of GBP750,000
in a Tesco Bank 8 year bond, traded on the London Stock Exchange,
bearing a 5% per annum coupon, but otherwise, and in anticipation of the
strong pipeline of opportunities (both qualifying and non-qualifying),
the rest of the Company's funds have been placed on cash deposit.
Subsequent to the year end, the Tesco Bank bond has been sold,
generating a capital gain of GBP46,000 in addition to the interest
received.
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.
During the year, the Investment Management team have met and continue to
meet a substantial number of 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 a strong
deal-flow and are meeting many potential investee companies with several
interesting opportunities in the pipeline close to the investment being
concluded.
Shore Capital Limited
29 April 2014
Investment Portfolio Summary
As at 31 December 2013
Valuation as a % of
Valuation Cost Gain/(loss) Net Assets
GBP'000 GBP'000 GBP'000
As at 31 December 2013
Qualifying Investment
- Unquoted
Kinloss Trading
Limited 254 254 - 2%
Brewhouse & Kitchen
Limited 930 930 - 8%
Saville Services
Limited 450 450 - 4%
Isaacs Trading Limited 1,000 1,000 - 9%
Jephcote Trading
Limited 1,000 1,000 - 9%
Total Qualifying
Investments 3,634 3,634 - 32%
Non-Qualifying
Investments
Buckhorn Lending
Limited 881 881 - 8%
Puma Brandenburg
Finance Limited 1,420 1,420 - 13%
Gold Line Property
Limited 750 750 - 7%
Latimer Lending
Limited 650 650 - 6%
Valencia Lending
Limited 500 500 - 4%
Tesco Personal Finance
Bond* 785 750 35 7%
Total Non-Qualifying
investments 4,986 4,951 35 45%
Total Investments 8,620 8,585 35 76%
Balance of Portfolio 2,692 2,692 24%
Net Assets 11,312 11,277 35 100%
Of the investments held at 31 December 2013, 84 per cent are
incorporated in England and Wales and 16 per cent in Guernsey.
Percentages have been calculated on the valuation of the assets at the
reporting date.
* Quoted investment listed on the LSE.
Income Statement
For the year ended 31 December 2013
Year ended 31 December Period from 6 July 2011 to
2013 31 December 2012
Note Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(Loss)/gain on investments 8 (c) - (10) (10) - 61 61
Income 2 402 - 402 158 - 158
402 (10) 392 158 61 219
Investment management fees 3 (57) (171) (228) (48) (144) (192)
Other expenses 4 (203) - (203) (172) - (172)
(260) (171) (431) (220) (144) (364)
Return/(loss) on ordinary activities before taxation 142 (181) (39) (62) (83) (145)
Tax on return on ordinary activities 5 - - - - - -
Return/(loss) on ordinary activities after tax attributable
to equity shareholders 142 (181) (39) (62) (83) (145)
Basic and diluted
Return/(loss) per Ordinary Share (pence) 6 1.11p (1.41p) (0.30p) (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 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 2013
As at As at
Note 31 December 2013 31 December 2012
GBP'000 GBP'000
Fixed Assets
Investments 7 8,620 5,546
Current Assets
Debtors 9 92 67
Cash 2,743 6,498
2,835 6,565
Creditors - amounts falling due within one year 10 (142) (118)
Net Current Assets 2,693 6,447
Total Assets less Current Liabilities 11,313 11,993
Creditors - amounts falling due after more than one
year (including convertible debt) 11 (1) (1)
Net Assets 11,312 11,992
Capital and Reserves
Called up share capital 12 128 128
Share premium account - 12,009
Capital reserve - realised (299) (128)
Capital reserve - unrealised 35 45
Revenue reserve 11,448 (62)
Equity Shareholders' Funds 11,312 11,992
Net Asset Value per Ordinary Share 13 88.23p 93.54p
Diluted Net Asset Value per Ordinary Share 13 88.23p 93.54p
The financial statements were approved and authorised for issue by the
Board of Directors on 29 April 2014 and were signed on their behalf by:
Sir Aubrey Brocklebank
Chairman
29 April 2014
Cash Flow Statement
For the year ended 31 December 2013
Period
from 6
Year July 2011
ended 31 to 31
December December
2013 2012
GBP'000 GBP'000
Loss on ordinary activities before taxation (39) (145)
Loss/(gains) on investments 10 (61)
Increase in debtors (25) (67)
Increase in creditors 37 105
Net cash outflow from operating activities (17) (168)
Capital expenditure and financial investment
Purchase of investments (3,084) (6,501)
Proceeds from sale of investments - 1,016
Net cash outflow from capital expenditure and financial
investment (3,084) (5,485)
Dividends paid (641) -
Net cash outflow before financing (3,742) (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
Redemption of redeemable preference shares (13) -
Proceeds received from issue of convertible loan notes - 1
Net cash (outflow)/inflow from financing (13) 12,151
(Decrease)/increase in cash in the year/period (3,755) 6,498
Reconciliation of net cash flow to movement in net
funds
(Decrease)/increase in cash in the year/period (3,755) 6,498
Net funds at start of year/period 6,498 -
Net funds at end of year/period 2,743 6,498
Reconciliation of Movements in Shareholders' Funds
For the year ended 31 December 2013
Capital
Called Share reserve Capital
up share premium - reserve - Revenue
capital account realised unrealised reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Shares issues
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
Capital
reconstruction - (12,009) - - 12,009 -
Return after
taxation
attributable
to equity
shareholders - - (171) (10) 142 (39)
Dividends paid - - - - (641) (641)
Balance as at
31 December
2013 128 - (299) 35 11,448 11,312
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
GBP11,184,000 (2012: GBPnil).
The Capital reserve-realised shows 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 13 February 2013 which transferred
GBP12,009,000 from the share premium reserve to the revenue reserve.
1. Accounting Policies
Basis of Accounting
Puma VCT 8 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 net loss of GBP39,000 as
per the Income Statement on page 26 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 13. 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 in debt instruments will usually be valued by applying a
discounted cashflow 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.
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.
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, Shore Capital Limited, and members of the investment
management team at 20 per cent of the aggregate excess of 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.
Notes to the Accounts
For the year ended 31 December 2013
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
Year ended Period from 6 July 2011 to
31 December 2013 31 December 2012
GBP'000 GBP'000
Income from investments
Loan stock interest 336 53
Arrangement fees - 15
Bond yields 38 23
374 91
Other income
Bank deposit income 28 67
402 158
3. Investment Management Fees
Year ended Period from 6 July 2011 to 31
31 December 2013 December 2012
GBP'000 GBP'000
Shore Capital Limited 228 192
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 is 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 Net Asset Value. Total
annual costs this year were 3.5 per cent of the year end Net Asset Value
(2012: 3.5%).
In addition to the investment manager fees disclosed above, in June 2012
a payment of GBP244,000 was made to Shore Capital Limited in relation to
share issue costs. This fee of 2% of funds raised was detailed in the
prospectus of the fund.
4. Other expenses
Period
from 6
July
2011 to
31
Year ended December
31 December 2013 2012
GBP'000 GBP'000
Administration - Shore Capital Fund Administration
Services Limited 40 33
Directors' remuneration* 60 50
Social security costs 1 1
Auditor's remuneration for statutory audit 21 17
Insurance 5 4
Legal and professional fees 28 37
Trail commission 35 21
Other expenses 13 9
203 172
* Directors' remuneration includes VAT of GBP4,000
(2012: GBP3,000).
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 18. The Company had no employees
(other than Directors) during the year. The average number of
non-executive Directors during the year was 3 (2012: 3).
The Auditor's remuneration of GBP17,500 has been grossed up in the table
above to be inclusive of VAT.
5. Tax on Ordinary Activities
Period
from 6
July
2011 to
31
Year ended December
31 December 2013 2012
GBP'000 GBP'000
UK corporation tax charged to revenue reserve - -
UK corporation tax charged to capital reserve - -
UK corporation tax charge for the period - -
Factors affecting tax charge for the period
Loss on ordinary activities before taxation (39) (145)
Tax charge calculated on loss on ordinary activities
before taxation at the applicable rate of 20% (8) (29)
Capital income not taxable 2 (12)
Tax losses carried forward 6 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
Year ended 31 December 2013
Revenue Capital Total
Result for the year (GBP'000) 142 (181) (39)
Weighted average number of
shares 12,820,841 12,820,841 12,820,841
Return/(loss) per share 1.11p (1.41)p (0.30)p
Period from 6 July 2011 to 31 December 2012
Revenue Capital Total
Result for the period
(GBP'000) (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/(loss) and capital loss.
7. Dividends
The Directors do not propose a final dividend in relation to the year
ended 31 December 2013 (2012: GBPnil). Interim dividends of 5p per
Ordinary Share were paid on both 26 February 2013 and 21 February 2014.
Each interim dividend payment totalled GBP641,000.
8. Investments
Historic cost Market value Historic cost Market value
as at 31 as at 31 as at 31 as at 31
(a) Summary December 2013 December 2013 December 2012 December 2012
GBP'000 GBP'000 GBP'000 GBP'000
Qualifying
venture
capital
investments 3,634 3,634 2,450 2,450
Non qualifying
investments 4,951 4,986 3,051 3,096
8,585 8,620 5,501 5,546
(b) Movements in Qualifying venture Non qualifying
investments capital investments investments Total
GBP'000 GBP'000 GBP'000
Opening value 2,450 3,096 5,546
Purchases at cost 1,184 1,900 3,084
Net unrealised losses - (10) (10)
Valuation at 31
December 2013 3,634 4,986 8,620
Book cost at 31
December 2013 3,634 4,951 8,585
Net unrealised gains
at 31 December 2013 - 35 35
Valuation at 31
December 2013 3,634 4,986 8,620
(c) Gains/(Losses) on investments
The gains/(losses) on investments for the year shown in the Income
Statement on page 26 is analysed as follows:
Period from
6 July 2011
Year ended to 31
31 December December
2013 2012
GBP'000 GBP'000
Realised gain on disposal - 16
Net unrealised (loss)/gain on investments held at
the year end (10) 45
(10) 61
8. Investments - continued
(d) Quoted and unquoted Market value as at 31 Market value as at 31
investments December 2013 December 2012
GBP'000 GBP'000
Quoted investments 785 795
Unquoted investments 7,835 4,751
8,620 5,546
(e) Significant interests
As at 31 December 2013, 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.
Fair value
of
Company's
Fair value of investment
Percentage of equity directly Company's investment as at
held in Investee Company as at 31/12/2013 31/12/2012
Puma VCT
High
Investee Income Puma VCT Puma VCT
Company Company plc VII plc 9 plc GBP'000 GBP'000
Buckhorn
Lending
Limited 25% 25% 25% 25% 881 881
Latimer
Lending
Limited 33% - 33% 33% 650 -
Valencia
Lending
Limited 50% - - 50% 500 -
Jephcote
Trading
Limited 28% - 45% 24% 1,000 1,000
Isaacs
Trading
Limited 47.5% 47.5% - - 1,000 1,000
Kinloss
Trading
Limited 50% - - 50% 254 -
4,285 2,881
Shore Capital Limited is the investment manager of the Company, Puma VCT
VII plc and Puma High Income VCT plc and a subsidiary of Shore Capital
Limited is the investment manager of Puma VCT 9 plc.
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.
Further details of these investments are disclosed in the Investment
Portfolio Summary on pages 6 to 11 of the Annual Report.
9. Debtors
As at 31 December 2013 As at 31 December 2012
GBP'000 GBP'000
Prepayments and accrued income 92 67
10. Creditors - amounts falling due within one year
As at 31 December 2013 As at 31 December 2012
GBP'000 GBP'000
Accrued management fees and
administration costs 142 118
11. Creditors - amounts falling due after more than
one year (including convertible debt)
As at 31 December 2013 As at 31 December 2012
GBP'000 GBP'000
Loan notes 1 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 and members of the
investment management team. The Loan Notes accrue interest of 5 per cent
per annum.
The Loan Notes entitle Shore Capital 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 2013 As at 31 December 2012
GBP'000 GBP'000
12,820,841 ordinary shares of
1p each 128 128
13. Net Asset Value per Ordinary Share
As at 31 December As at 31 December
2013 2012
Net assets (GBP'000) 11,312 11,992
Shares in issue 12,820,841 12,820,841
Net asset value per share
Basic 88.23p 93.54p
Diluted 88.23p 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 2013:
As at 31 December 2013 As at 31 December 2012
GBP'000 GBP'000
Assets at fair value through
profit or loss
Investments managed through
Shore Capital Limited 8,620 5,546
Loans and receivables
Cash at bank and in hand 2,743 6,498
Interest, dividends and other
receivables 92 67
Other financial liabilities
Financial liabilities measured
at amortised cost (143) (119)
11,312 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 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.
14. Financial Instruments (continued)
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 maximum exposure to credit risk is as
follows:
As at 31 December 2013 As at 31 December 2012
GBP'000 GBP'000
Investments in loans, loan
notes and bonds 5,551 3,831
Cash at bank and in hand 2,743 6,498
Interest, dividends and
other receivables 92 67
8,386 10,396
The cash held by the Company at the year end is split between a U.K.
bank and a BBB rated South African bank. 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
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 Report of the
Directors on page 13. 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.
9% of the Company's investments are listed on the London Stock Exchange
(2012: 14%) and 91% are unquoted investments (2012: 86%).
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 period for which they
are held. As at the year end, the Company had no borrowings other than
loan notes amounting to GBP1,000 (2012: GBP1,000) (see note 11).
14. Financial Instruments (continued)
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.
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 2013.
Weighted average
Weighted average period until
Rate status interest rate maturity Total
GBP'000
Cash at bank - RBS Floating 0.90% - 126
Cash at bank -
Investec Fixed 1.65% 32 day notice 2,617
Loans and loan
notes Floating 17.38% 49 months 2,696
Loans, loan notes
and bonds Fixed 6.07% 49 months 2,855
Balance of assets Non-interest bearing - 3,018
11,312
The following analysis sets out the interest rate risk of the Company's
financial assets as at 31 December 2012.
Weighted Weighted
average average period
Rate status interest rate until maturity Total
GBP'000
Cash at bank -
RBS Floating 0.90% - 1,747
Cash at bank -
Investec Fixed 1.65% 32 day notice 4,242
Cash held by
custodian - Non interest
Pershing bearing - - 509
Loans and loan
notes Floating 16.19% 57 months 1,616
Loans, loan
notes and
bonds Fixed 5.00% 61 months 2,215
Balance of
assets Non-interest bearing - 1,782
12,111
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.
14. Financial Instruments (continued)
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 2013 and 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 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).
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 period as
follows:-
Level 1 Level 2 Level 3
'Quoted prices' 'Observable inputs' 'Unobservable inputs' Total
GBP'000 GBP'000 GBP'000 GBP'000
As at 31
December
2013
At fair
value
through
profit
and
loss 785 - 7,835 8,620
As at 31
December
2012
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. 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 shares Loan notes Total
GBP'000 GBP'000 GBP'000
Purchases at cost 1,715 3,036 4,751
Sales proceeds - - -
Balance as at 31 December 2012 1,715 3,036 4,751
Purchases at cost 1,354 1,730 3,084
Sales proceeds - - -
Balance as at 31 December 2013 3,069 4,766 7,835
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 it is not directly related to managing the return
to shareholders. There has been no change in this approach from the
previous period.
16. Contingencies, Guarantees and Financial Commitments
There were no commitments, contingencies or guarantees of the Company at
the year-end (2012: nil).
17. Controlling Party
In the opinion of the Directors there is no immediate or ultimate
controlling party.
This announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: PUMA VCT 8 PLC via Globenewswire
HUG#1781073
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