TIDMPUM8
30 June 2015
Puma VCT 8 plc
Annual report and accounts 2015
HIGHLIGHTS
-- Fund substantially invested in a diverse range of high quality businesses
and projects.
-- Requirement that qualifying investments are 70% of the fund on an HMRC
basis now met.
-- Profit of GBP232,000 before tax for the period, a gain of 1.81p per share
-- 15p per share of dividends paid since inception, 10p during the period,
equivalent to a 7.1% per annum tax-free running yield on net investment.
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the Company's third Annual Report which,
reflecting the change of accounting year end to 28 February, represents
a 14 month period ended 28 February 2015.
Results
The Company reported a profit for the period of GBP232,000 (2013: loss
of GBP39,000), equivalent to 1.81p per ordinary share (calculated on the
weighted average number of shares). The Net Asset Value per ordinary
share ("NAV") at the period end adding back the 15p of dividends paid to
date was 95.04p.
Dividends
As envisaged in the Company's prospectus, the Company has for the third
calendar year in succession paid a dividend of 5p per ordinary share,
equivalent to a 7.1% tax-free running yield on shareholder's net
investment.
Investments
At the end of the period, the Company had invested just under GBP10
million, representing 93% of its net asset value, in a mixture of
qualifying and non-qualifying investments whilst maintaining our VCT
qualifying status. These investments are primarily in asset-backed
businesses and projects generating a gross annual return of 8.2% on the
basis of current deployments and investment performance. Details of the
Company's portfolio of investments can be found in the Investment
Manager's report below.
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 also assists the Investment Manager in
establishing the status of investments as qualifying holdings.
Outlook
We are pleased to report that the Company's net assets are now
substantially deployed in a diverse range of high quality businesses and
projects. The lack of availability of bank credit has enabled the
Company to assemble a portfolio of investments on attractive terms. In
addition to deploying funds in non-qualifying loans, the Company
achieved its 70% qualifying status during the period. Whilst there will
probably be some further changes in the composition of the portfolio,
the Board expects to concentrate in the future on the monitoring of our
existing investments and considering the options for exits in due
course.
Sir Aubrey Brocklebank Bt.
Chairman
30 June 2015
INVESTMENT MANAGER'S REPORT
Introduction
The Company's funds are now substantially deployed in both qualifying
and non-qualifying investments, having met its minimum qualifying
investment percentage of 70 per cent during the period. We believe our
portfolio is well positioned to deliver attractive returns to
shareholders within its expected remaining time horizon.
Qualifying Investments
The Company deployed a total of GBP3.785 million across four
VCT-qualifying investments during the period, ensuring that the
requirement that qualifying investments represent are 70% of the fund on
an HMRC basis was met.
Energy from Waste
Before the passing of the Finance Act 2014, the Company completed a
GBP1.25 million qualifying investment (as part of a GBP5 million
investment alongside other Puma VCTs) in Urban Mining Limited, a member
of the Chinook Urban Mining group of companies. Chinook Urban Mining is
a well-funded energy-from waste business which is developing a flagship
plant in East London to generate electricity through the gasification of
municipal solid waste. The project will benefit from Renewable
Obligations Certificates (ROCs). The investment is qualifying because it
was made prior to the royal ascent of the finance act 2014.
The management team has a track record of delivering similar projects in
other jurisdictions and is a preferred partner of Chinook Sciences, the
Nottingham based leading technology company which has developed the
award-winning "non-incineration ultra clean synthetic gas
technology" which will be used in the East London plant. Chinook
Sciences also holds a minority stake in the business. The investment is
secured with a first charge over the Chinook Urban Mining business and
the eight acre freehold site of the East London plant and is expected to
produce an attractive return to the Company over three years.
Supported Living
During the period, the Company subscribed a further GBP735,000 in
Saville Services Limited to provide further working capital to enable
Saville Services to continue to deliver on its pipeline of providing
contracting services in relation to a series of supported living
projects. Following the Company's investment, Saville Services entered
into a contract with HB Villages Tranche 2 Limited to provide project
management and contracting services in connection with the construction
of 16 units as accommodation and supported housing for psychiatric and
learning disabled service users, and their care-workers, in
Wolverhampton.
Recycling
The Company made a GBP1 million qualifying investment (as part of a GBP8
million investment alongside other entities managed and advised by your
Investment Manager) in Opes Industries Limited. Opes is developing a
materials recycling facility at an established landfill
and aggregates business on a 76 hectare site in Oxfordshire. The
investment is secured with a first charge over the site and the Opes
business and is expected to produce an attractive return to the Company
over four years. The installation of the materials recycling facility
is nearing completion and is expected to be operational in Q3 2015.
Contracting Services
The Company invested GBP800,000 (as part of a GBP2.4 million investment
alongside other Puma VCTs) into Alyth Trading Limited, a nationwide
provider of contracting services to provide working capital for its
ongoing business. Alyth Trading entered into a contract with Saggart
Silverstream Limited to provide project management and contracting
services in connection with the construction of a new 65 bed high-end
nursing home in Saggart Village, County Dublin. The team behind the
project have successfully developed, operated and sold previous nursing
homes in the Republic of Ireland, and it is expected that this home will
open in Q3 2015.
Micro Brewery
The Company's GBP930,000 investment in Brewhouse and Kitchen Limited
continues to perform well. Brewhouse and Kitchen is managed by two
highly experienced pub sector professionals and our funding is
facilitating 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. Brewhouse and Kitchen
opened a further four units during the period and now operates five
units across locations in London, Bristol and the South East. The
portfolio is trading well.
Construction
As previously reported, Isaacs Trading Limited, Kinloss Trading Limited
and Jephcote Trading Limited (in which the Company had invested
GBP1,000,000, GBP254,000 and GBP1,000,000 respectively) were, as members
of SKPB Services LLP, engaged in a contract with Ansgate (Barnes)
Limited to provide up to GBP8 million of project management and
contracting services in connection with the construction of nine new
houses and 12 new flats at a development known as Hampton Row (formerly,
The Albany), in Barnes, south west London. The total cost of the project
is c.GBP15 million and the developers have already pre-sold four of the
flats at prices in line with a gross development value for the project
of c.GBP30 million. The project is expected to complete in Q4 2015.
Non-Qualifying Investments
As previously reported, we have adopted 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.
The Company's GBP750,000 non-qualifying investment in Gold Line Property
Limited, a care and dementia treatment business which is currently
developing new premises in Surrey, continues to perform well. We are
pleased to report that the build project completed on time and on budget,
the premises has recently passed its Care Quality Commission final
inspection and the first patients have been accepted.
The Company's 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 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. The loan attracts a fixed
interest rate at a good coupon given the security profile.
The Company had extended a GBP650,000 non-qualifying loan (as part of a
GBP1.3 million financing with other Puma VCTs) to Countywide Property
Holdings Limited, secured on a 5.6 acre site, including a large house,
in Brackley near Silverstone. As indicated in the Company's interim
report, having successfully obtained planning permission for 50 new
homes on the site, Countywide Property Holdings completed the sale of
the site to one of the UK's largest house builders and repaid the
Company's loan in full during the period.
During the period, the Company also realised its GBP785,000 holding in a
Tesco Bank 5% 8 year bond at a premium to the issue price.
The Company had extended a GBP500,000 loan to various entities within
the Citrus Group (through an affiliate, Valencia Lending Limited) which,
together with loans from other vehicles managed and advised by your
Investment Manager, formed part of a GBP10 million revolving credit
facility to provide working capital to the Citrus PX business. Citrus PX
operates a property part exchange service facilitating the rapid
purchase of properties for developers and homeowners. The facility
provided a series of loans to Citrus PX, with the benefit of a first
charge over a geographically diversified portfolio of residential
properties on conservative terms. During the period the Company
realised this position in order to facilitate the completion of a
qualifying investment.
As previously reported, the Company had extended a GBP881,000 loan
(through Buckhorn Lending Limited) which, together with loans from other
Puma VCTs, provided a GBP4 million revolving credit facility to Ennovor
Trading 1 Limited. The facility provided working capital for the
purchase of used cooking oil for conversion into bio-diesel and
attracted a substantial interest rate for utilised funds and a lower
rate for non-utilised funds. The ultimate borrower owned a large oil
refining plant near Birkenhead and was processing cooking oil to sell to
petrol and diesel retailers who are obligated to include bio-fuels in
their offerings.
The facility was structured to mitigate risks by being capable of being
drawn only once back-to-back purchase and sale contracts had been
entered into with approved counterparties. In November 2014, following a
major default by one of those counterparties, Ennovor Trading 1 Limited
was placed into administration. The Company has recovered its principal
in full (plus some interest) from the proceeds of the administration to
date and we are hopeful that that the Company can recover its
outstanding interest.
Investment Strategy
We are pleased now to have substantially invested the Company's funds in
both qualifying and non-qualifying secured 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 compliance
with the HMRC VCT rules. We are now primarily focusing on the monitoring
of our existing investments and considering the options for exits.
Shore Capital Limited
30 June 2015
Investment Portfolio Summary
As at 28 February 2015
Valuation Cost Gain/(loss) Valuation as a
GBP'000 GBP'000 GBP'000 % of Net Assets
As at 28 February 2015
Qualifying Investments
Kinloss Trading Limited 254 254 - 2%
Brewhouse & Kitchen
Limited 930 930 - 9%
Saville Services Limited 1,185 1,185 - 12%
Isaacs Trading Limited 1,000 1,000 - 10%
Jephcote Trading Limited 1,000 1,000 - 10%
Urban Mining Limited 1,250 1,250 - 12%
Opes Industries Limited 1,000 1,000 - 10%
Alyth Trading Limited 800 800 - 8%
Total Qualifying
Investments 7,419 7,419 - 73%
Non-Qualifying Investments
Puma Brandenburg Finance
Limited 1,420 1,420 - 14%
Gold Line Property Limited 750 750 - 7%
Total Non-Qualifying
investments 2,170 2,170 - 21%
Total Investments 9,589 9,589 - 93%
Balance of Portfolio 673 673 7%
Net Assets 10,262 10,262 - 100%
Of the investments held at 28 February 2015, 86 per cent are
incorporated in England and Wales and 14 per cent in Guernsey.
Percentages have been calculated on the valuation of the assets at the
reporting date.
Income Statement
For the period ended 28 February 2015
Period from 1 January 2014 Year ended 31 December
to 28 February 2015 2013
Note Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain/(loss) on investments 8 (c) - 11 11 - (10) (10)
Income 2 697 - 697 402 - 402
697 11 708 402 (10) 392
Investment management fees 3 (62) (186) (248) (57) (171) (228)
Other expenses 4 (228) - (228) (203) - (203)
(290) (186) (476) (260) (171) (431)
Profit/(loss) on ordinary activities before taxation 407 (175) 232 142 (181) (39)
Tax on profit on ordinary activities 5 - - - - - -
Profit/(loss) on ordinary activities after tax attributable
to equity shareholders 407 (175) 232 142 (181) (39)
Basic and diluted
Return/(loss) per Ordinary Share (pence) 6 3.17p (1.36p) 1.81p 1.11p (1.41p) (0.30p)
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 28 February 2015
As at As at
Note 28 February 2015 31 December 2013
GBP'000 GBP'000
Fixed Assets
Investments 8 9,589 8,620
Current Assets
Debtors 9 339 92
Cash 466 2,743
805 2,835
Creditors - amounts falling due within one year 10 (131) (142)
Net Current Assets 674 2,693
Total Assets less Current Liabilities 10,263 11,313
Creditors - amounts falling due after more than one
year (including convertible debt) 11 (1) (1)
Net Assets 10,262 11,312
Capital and Reserves
Called up share capital 12 128 128
Capital reserve - realised (439) (299)
Capital reserve - unrealised - 35
Revenue reserve 10,573 11,448
Equity Shareholders' Funds 10,262 11,312
Net Asset Value per Ordinary Share 13 80.04p 88.23p
Diluted Net Asset Value per Ordinary Share 13 80.04p 88.23p
The financial statements were approved and authorised for issue by the
Board of Directors on 30 June 2015 and were signed on their behalf by:
Sir Aubrey Brocklebank
Chairman
30 June 2015
Cash Flow Statement
For the period ended 28 February 2015
Period
from 1
January
2014 to Year
28 ended 31
February December
2015 2013
GBP'000 GBP'000
Profit/(loss) on ordinary activities before taxation 232 (39)
(Gains)/loss on investments (11) 10
Increase in debtors (247) (25)
(Decrease)/increase in creditors (11) 37
Net cash outflow from operating activities (37) (17)
Capital expenditure and financial investment
Purchase of investments (3,785) (3,084)
Proceeds from sale of investments and repayment of
loans and loan notes 2,827 -
Net cash outflow from capital expenditure and financial
investment (958) (3,084)
Dividends paid (1,282) (641)
Net cash outflow before financing (2,277) (3,742)
Financing
Redemption of redeemable preference shares - (13)
Net cash outflow from financing - (13)
Decrease in cash in the period (2,277) (3,755)
Reconciliation of net cash flow to movement in net
funds
Decrease in cash in the period (2,277) (3,755)
Net funds at start of period 2,743 6,498
Net funds at end of period 466 2,743
Reconciliation of Movements in Shareholders' Funds
For the period ended 28 February 2015
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
Balance as at 1
January 2013 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
- - - -
Return after
taxation
attributable
to equity
shareholders - - (175) - 407 232
Realisation of
revaluation
from prior
period - - 35 (35) - -
Dividends paid - - - - (1,282) (1,282)
Balance as at
28 February
2015 128 - (439) - 10,573 10,262
Distributable reserves comprise: Capital reserve - realised, Capital
reserve -unrealised (excluding gains on unquoted investments) and the
Revenue reserve. At the period end distributable reserves were
GBP10,134,000 (2013: GBP11,184,000).
The Capital reserve-realised includes gains/losses that have been
realised less related costs. The Capital reserve-unrealised represents
the gains/losses on investments still held by the company.
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 profit for the period of
GBP232,000 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. Unquoted
investments are stated at Directors' valuation with reference to the
International Private Equity and Venture Capital Valuation Guidelines
("IPEVC") and in accordance with FRS26 "Financial Instruments:
Measurement":
-- Investments which have been made within the last twelve months or where
the investee company is in the early stage of development will usually be
valued at the price of recent investment except where the company's
performance against plan is significantly different from expectations on
which the investment was made in which case a different valuation
methodology will be adopted.
-- Investments in debt instruments will usually be valued by applying a
discounted cash flow methodology based on expected future returns of the
investment.
-- Alternative methods of valuation such as net asset value may be applied
in specific circumstances if considered more appropriate.
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 period. The tax effect of different
items of income/gain and expenditure/loss is allocated between capital
and revenue return on the marginal basis as recommended by the SORP.
Deferred tax is recognised in respect of all timing differences that
have originated but not reversed at the balance sheet date, where
transactions or events that result in an obligation to pay more, or
right to pay less, tax in the future have occurred at the balance sheet
date. This is subject to deferred tax assets only being recognised if it
is considered more likely than not that there will be suitable taxable
profits from which the future reversal of the underlying timing
differences can be deducted. Timing differences are differences arising
between the Company's taxable profits and its results as stated in the
financial statements which are capable of reversal in one or more
subsequent years. Deferred tax is measured on a non-discounted basis at
the tax rates that are expected to apply in the years in which timing
differences are expected to reverse, based on tax rates and laws enacted
or substantively enacted at the balance sheet date.
1. Accounting Policies (continued)
Reserves
Realised losses and gains on investments, transaction costs, the capital
element of the investment management fee and taxation are taken through
the Income Statement and recognised in the Capital Reserve - Realised on
the Balance sheet. Unrealised losses and gains on investments and the
capital element of the performance fee are also taken through the Income
Statement and are recognised in the Capital Reserve - Unrealised.
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 1 January 2014 to 28 Year ended
February 2015 31 December 2013
GBP'000 GBP'000
Income from investments
Loan stock interest 665 336
Bond yields 9 38
674 374
Other income
Bank deposit income 23 28
697 402
3. Investment Management Fees
Period from 1 January Year ended 31 December
2014 to 28 February 2015 2013
GBP'000 GBP'000
Shore Capital Limited 248 228
248 228
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 period were 3.5 per cent of the average Net Asset
Value for the period (2013: 3.5%).
4. Other expenses
Period from
1 January
2014 to 28 Year ended
February 31 December
2015 2013
GBP'000 GBP'000
Administration - Shore Capital Fund Administration
Services Limited 47 40
Directors' remuneration 65 56
Social security costs 2 1
Auditor's remuneration for statutory audit 22 21
Insurance 11 5
Legal and professional fees 20 28
Trail commission 42 35
Other expenses 19 17
228 203
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 period are detailed in the
Directors' Remuneration Report on page 18. The Company had no employees
(other than Directors) during the period. The average number of
non-executive Directors during the period was 3 (2013: 3).
The Auditor's remuneration of GBP18,000 (2013: GBP17,500) has been
grossed up in the table above to be inclusive of VAT.
5. Tax on Ordinary Activities
Period
from 1
January
2014 to 28 Year ended
February 31 December
2015 2013
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
Profit/(loss) on ordinary activities before
taxation 232 (39)
Tax charge calculated on profit/(loss) on ordinary
activities before taxation at the applicable rate
of 20% 46 (8)
Capital income not taxable (2) 2
Tax losses carried forward - 6
Utilisation of tax losses brought forward (44) -
- -
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 return/(loss) per Ordinary Share
Period from 1 January 2014 to 28 February 2015
Revenue Capital Total
Result for the period
(GBP'000) 407 (175) 232
Weighted average number of
shares 12,820,841 12,820,841 12,820,841
Return/(loss) per share 3.17p (1.36)p 1.81p
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
The total return/(loss) per ordinary share is the sum of the revenue and
capital returns.
7. Dividends
The Directors do not propose a final dividend in relation to the period
ended 28 February 2015 (2013: GBPnil). Interim dividends of 5p per
Ordinary Share were paid on both 21 February 2014 and 19 February 2015
(2013: 5p paid). Dividend payments totalled GBP1,282,000 (2013:
GBP641,000)
8. Investments
Historic cost Market value Historic cost Market value
as at 28 as at 28 as at 31 as at 31
(a) Summary February 2015 February 2015 December 2013 December 2013
GBP'000 GBP'000 GBP'000 GBP'000
Qualifying
venture
capital
investments 7,419 7,419 3,634 3,634
Non qualifying
investments 2,170 2,170 4,951 4,986
9,589 9,589 8,585 8,620
Qualifying Non-qualifying
(b) Movements in investments investments investments Total
GBP'000 GBP'000 GBP'000
Opening value 3,634 4,986 8,620
Purchases at cost 3,785 - 3,785
Disposal proceeds and repayment of loans and loan
notes - (2,827) (2,827)
Realised net gains on disposals - 11 11
Valuation at 28 February 2015 7,419 2,170 9,589
Book cost at 28 February 2015 7,419 2,170 9,589
Net unrealised gains at 28 February 2015 - - -
Valuation at 28 February 2015 7,419 2,170 9,589
(c) Gains/(Losses) on investments
The gains/(losses) on investments for the period shown in the Income
Statement on page 26 is analysed as follows:
Period from 1 January
2014 to 28 February Year ended 31 December
2015 2013
GBP'000 GBP'000
Realised gain on disposal 11 -
Net unrealised loss - (10)
11 (10)
8. Investments - continued
(d) Quoted and
unquoted Market value as at Market value as at 31 December
investments 28 February 2015 2013
GBP'000 GBP'000
Quoted investments - 785
Unquoted investments 9,589 7,835
9,589 8,620
(e) Significant interests
Further details of investments are disclosed in the Investment Portfolio
Summary on pages 6 to 11 of the Annual Report. The Company is able to
exercise significant influence over investee companies.
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 and Puma VCT 10 plc.
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 28 February 2015 As at 31 December 2013
GBP'000 GBP'000
Prepayments and accrued income 339 92
10. Creditors - amounts falling due within one year
As at 28 February 2015 As at 31 December 2013
GBP'000 GBP'000
Accruals and deferred income 131 142
11. Creditors - amounts falling due after more than
one year (including convertible debt)
As at 28 February 2015 As at 31 December 2013
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 distributions 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 28 February 2015 As at 31 December 2013
GBP'000 GBP'000
12,820,841 ordinary shares of
1p each 128 128
13. Net Asset Value per Ordinary Share
As at As at
28 February 2015 31 December 2013
Net assets 10,262,000 11,312,000
Shares in issue 12,820,841 12,820,841
Net asset value per share
Basic 80.04p 88.23p
Diluted 80.04p 88.23p
14. Financial Instruments
The Company's financial instruments comprise its investments, cash
balances, debtors and certain creditors. The fair value of all of the
Company's financial assets and liabilities is represented by the
carrying value in the Balance Sheet. The Company held the following
categories of financial instruments at 28 February 2015:
As at 28 February 2015 As at 31 December 2013
GBP'000 GBP'000
Assets at fair value through
profit or loss
Investments managed through
Shore Capital Limited 9,589 8,620
Loans and receivables
Cash at bank and in hand 466 2,743
Interest, dividends and other
receivables 339 92
Other financial liabilities
Financial liabilities measured
at amortised cost (132) (143)
10,262 11,312
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 period.
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
credit 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 28 February 2015 As at 31 December 2013
GBP'000 GBP'000
Investments in loans, loan
notes and bonds 3,871 5,551
Cash at bank and in hand 466 2,743
Interest, dividends and other
receivables 339 92
4,676 8,386
The cash held by the Company at the period 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
The Company's strategy on the management of market price risk is driven
by the Company's investment policy as outlined in the Strategic Report
on page 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.
None of the Company's investments are listed on the London Stock
Exchange (2013: 9%) and 100% are unquoted investments (2013: 91%).
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 period end, the Company had no borrowings other than
loan notes amounting to GBP1,000 (2013: 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 Strategic Report. The Company's overall liquidity risks
are monitored on a quarterly basis by the Board.
The Company maintains sufficient investments in cash 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 28 February 2015.
Weighted average
As at 28 February Weighted average period until
2015 Rate status interest rate maturity Total
GBP'000
Cash at bank - RBS Floating 0.15% - 462
Cash at bank -
Investec Fixed 0.40% 32 day notice 4
Loans and loan
notes Floating 28.03% 42 months 2,451
Loans Fixed 5.00% 16 months 1,420
Balance of assets Non-interest bearing - 6,057
10,394
Weighted average
As at 31 December Weighted average period until
2013 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
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 28 February 2015 and 31 December 2013. 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).
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
GBP'000 GBP'000 GBP'000 GBP'000
As at 28 February 2015
At fair value through
profit and loss - - 9,589 9,589
As at 31 December 2013
At fair value through
profit and loss 785 - 7,835 8,620
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 in line with the Company's
accounting policies and IPEVC guidelines. Further details of these
investments are provided in the significant investments section of the
Annual Report.
Reconciliation of fair value for level 3 financial instruments held at
the period end:
Unquoted shares Loans and loan notes Total
GBP'000 GBP'000 GBP'000
Balance as at 1 January 2013 1,715 3,036 4,751
Purchases at cost 1,354 1,730 3,084
Repayments - - -
Balance as at 31 December 2013 3,069 4,766 7,835
Purchases at cost 2,649 1,136 3,785
Repayments - (2,031) (2,031)
Balance as at 28 February 2015 5,718 3,871 9,589
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 remain, invested in
the relatively high risk asset class of small UK companies within three
years of that capital being subscribed.
The Company accordingly has limited scope to manage its capital
structure in the light of changes in economic conditions and the risk
characteristics of the underlying assets. Subject to this overall
constraint upon changing the capital structure, the Company may adjust
the amount of dividends paid to shareholders, issue new shares, or sell
assets to maintain a level of liquidity to remain a going concern.
The Board has the opportunity to consider levels of gearing, however
there are no current plans to do so. It regards the net assets of the
Company as the Company's capital, as the level of liabilities is small
and the management of those liabilities is not directly related to
managing the return to shareholders. 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 period-end (2013: 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#1933067
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