Interim Report
28 Octubre 2008 - 1:02AM
UK Regulatory
Interim Report
Puma VCT plc
Interim Report
For the six months ended 31 August 2008
Chairman's Statement
Highlights
* Net asset value per share of 100.49p. This represents a
3.2% decrease from year-end (adding back the 1.5p 2008 final
dividend paid on 2 July 2008) compared to a decrease of 21.4% on
the FTSE AIM Index for the same period.
Introduction
During the six months to 31 August 2008, the investment manager's
conservative approach has held Puma VCT plc's performance stable
though the continuing turmoil inflicting the wider financial markets,
resulting in a small drop in NAV.
The fund has a remit to invest in both unquoted and AIM/Plus listed
equities, but the investment manager has concentrated upon
investments in unquoted companies. The focus in unquoted investments
is on providing secured mezzanine finance whilst taking minimum
equity risk. The fund also holds some AIM stocks where the
Investment Manager considered that the fund-raising offered good
medium term value.
This strategy has proven to be prudent as the AIM market fell 21.4%
during the six months to 31 August 2008, suffering from the
continuing economic downturn affecting global financial markets. It
is likely that the value of typical unquoted equities of a kind in
which VCTs can invest will have fallen by the same amount or more. In
the same period the Company is reporting a fall of only 3.2% (adding
back the 1.5p 2008 final dividend paid on 2 July 2008) in the NAV per
share which now stands at 100.49p.
The fall in value is primarily attributable to the Company's AIM
quoted stocks, many of which are trading at a discount to their
respective net asset values. This is less to do with the quality of
these companies than the continuing result of the volatility and
sentiment in the stock market for smaller companies that we reported
on for the period ended 29 February 2008.
Existing Qualifying investments
Of the existing unquoted stocks, the �2.1m investment in Cadbury
House Hotel & Country Club plc (Cadbury House), the leisure centre
and hotel complex near Bristol, continues to trade very well and
ahead of budget. Also, Cadbury House had applied for planning
permission to build an extension to the hotel containing a further 58
bedrooms and the application is expected to be considered by the
relevant committees over the next few months. This should generate
further value to the Company's existing investment.
The Company invested �610k in Stocklight, the parent company of
Bloomsbury Auctions. This investment is in mezzanine finance and is
very well secured both by freehold commercial property and a
well-spread inventory of rare books. Stocklight is trading
profitably as a group, but the company has invested significantly in
establishing a global footprint of its auction business. The auction
sites in Rome and New York are taking time to generate a return, but
overall our investment is secure.
The value of the quoted qualifying stocks at the period end was
�1,305,000, compared to �1,746,000 at the period ended 29 February
2008 and is responsible for the bulk of the fall in NAV in the
period. This reflects the difficult market conditions facing all AIM
stocks. However these stocks make up only 10.6% of the overall
portfolio and we expect that at least some of the recent falls will
reverse in due course.
Non-qualifying investments
The market value of the non-qualifying investment portfolio was
�3,564,000 at the period end against an underlying book cost of
�3,244,000. This portfolio consists of three elements, listed
stocks, hedge funds and a non-qualifying private equity investment.
Performance for this portfolio for the six months is slightly
negative.
The non-qualifying private equity investment is in a hotel
development project on the outskirts of Winchester in the green
belt. Having secured planning permission in this location we expect,
in due course, to record a gain on this holding. At present we are
carrying it at cost. Construction of a 120 bedroom hotel, to be a
Holiday Inn Express, is expected to begin in September and to take
about a year.
Results and dividends
As set-out in the accounts for the period ended 29 February 2008, a
dividend of 1.5p per ordinary share was declared during the period
and paid on 2 July 2008. Your Board is not proposing a dividend in
relation to this interim period but reiterates the intention to
distribute a large element of the available income and, if
appropriate, realised capital gains in due course.
VAT on management fees
The Government has announced that VCTs will be exempt from paying VAT
on investment management fees with effect from 1 October 2008,
following a European Court of Justice judgement against the
Government in a case relating to VAT payable by investment trusts.
This represents a prospective annual cost saving for the Company of
around �50,000. More recently, the Government has conceded that VCTs
will be able to obtain a repayment of VAT paid on management fees in
earlier periods (the benefit of this has not been included in the
current NAV). We will report on our progress in respect of this
beneficial development in due course.
Principal risks and uncertainties
It is clear that the UK economy is in turmoil. The consequences of
this for our investment portfolio constitute the principal risk and
uncertainty for the Company in the second half of the year.
The Board
Chris Ring has resigned as a director of the Company and the Board
has appointed Graham Shore, a director of Shore Capital Limited, as
his replacement. Chris has been a director of Puma VCT plc since its
inception and has played a full and active role in the development of
the Company. I would like thank him for his contribution.
Outlook
The Investment Manager continues to review opportunities as potential
investee companies look for alternate sources of debt finance brought
about by tighter credit conditions. The VCTs offering of mezzanine
and equity finance for asset-backed growing companies continues to be
attractive benefiting from the ability to increase the sum offered by
spreading the investment across the five Puma VCTs.
The current portfolio of private equity holdings are sustaining their
strong position and limit the Company's risk exposure in qualifying
investments. The AIM qualifying stocks, a small element of the
portfolio, have not performed well during the period but the
Investment Manager is monitoring them closely and expects at least
some of current losses to reverse in due course.
The investment manager is seeking new qualifying opportunities which
match the risk averse mandate of the Company. The Company has
sufficient cash resources to capitalise on any opportunities which
arise and the timing for making investments into mezzanine in solid
private companies is now much more favourable.
I look forward to reporting the progress of the Company with the next
Annual Report for the year ended 28 February 2009.
Sir Aubrey Brocklebank Bt
Chairman
28th October 2008
Income Statement (unaudited)
For the six months ended 31 August 2008
Six months ended Six months ended Period ended
31 August 2008 30 June 2007 29 February 2008
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Note �'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000
(Loss)/gains
on
investments - (578) (578) - 624 624 - (584) (584)
Income 282 - 282 134 - 134 480 - 480
282 (578) (296) 134 624 758 480 (584) (104)
Investment
management
fees 4 36 108 144 41 124 165 92 277 369
Performance
fees 31 (131) (100) 6 100 106 46 (170) (124)
Other
expenses 61 - 61 65 - 65 148 - 148
128 (23) 105 112 224 336 286 107 393
(Loss)/return
on ordinary
activities
before
taxation 154 (555) (401) 22 400 422 194 (691) (497)
Tax on return
on ordinary
activities (29) 29 - 4 (4) - (12) 12 -
(Loss)/return
on ordinary
activities
after tax
attributable
to
equity
shareholders 125 (526) (401) 26 396 422 182 (679) (497)
(Loss)/return
per Ordinary
Share (pence) 2 1.03p (4.35)p (3.32)p 0.22p 3.28p 3.50p 1.50p (5.61)p (4.11)p
The revenue column of this statement is the profit and loss of the
Company. All revenue and capital items in the above statement derive
from continuing operations. No operations were acquired or
discontinued in the period.
Balance Sheet (unaudited)
As at 31 August 2008
As at As at As at
31 August 30 June 29 February
Note 2008 2007 2008
�'000 �'000 �'000
Fixed Assets
Investments 7 11,638 13,096 12,406
Current Assets
Debtors 233 138 171
Cash at bank and in hand 465 945 477
698 1,083 648
Creditors - amounts falling
due within one year (99) (112) (135)
Net Current Assets 599 971 513
Total Assets less Current
Liabilities 12,237 14,067 12,919
Creditors - amounts falling
due after more than one year
(including convertible debt) (1) (1) (1)
Net Assets 12,236 14,066 12,918
Capital and Reserves
Called up share capital 121 121 121
Capital reserve - realised 891 464 1,092
Capital reserve - unrealised (744) 1,283 (419)
Other reserve 87 417 187
Revenue reserve 11,881 11,781 11,937
Equity Shareholders' Funds 12,236 14,066 12,918
Net Asset Value per Ordinary
Share 3 101.21p 116.37p 106.86p
Diluted Net Asset Value per
Ordinary Share 3 100.49p 112.92p 105.31p
Cash Flow Statement (unaudited)
For the six months ended 31 August 2008
Six months
ended Six months Period ended
31 August ended 29 February
2008 30 June 2007 2008
�'000 �'000 �'000
Operating activities
Investment income received 221 102 385
Investment management fees paid (145) (239) (476)
Cash paid to directors (11) (11) (26)
Foreign exchange gain/(loss) on 27 24
cash (2)
Other cash payments (63) (72) (135)
Net cash outflow from operating
activities - (193) (228)
Equity dividend paid (181) (109) (109)
Capital expenditure and
financial investment
Purchase of investments (269) (3,411) (7,434)
Proceeds from sale of 3,758
investments 500 7,276
Acquisition costs - - (1)
Net realised (loss)/gain on
forward foreign exchange
contracts (62) 19 92
Net cash outflow from capital
expenditure and financial
investment 169 366 (67)
(Decrease)/increase in cash (12) 64 (404)
Reconciliation of net cash flow
to movement in net funds
Decrease in cash for the period (12) 64 (404)
Net cash at start of the period 477 881 881
Net funds at the period end 465 945 477
Reconciliation of Movements in Shareholders' Funds (unaudited)
For the six months ended 31 August 2008
Called
up Capital Capital
share reserve- reserve- Other Revenue
capital realised unrealised reserve reserve Total
�'000 �'000 �'000 �'000 �'000 �'000
Six months ended 31 August 2008
Balance at 1
March 2008 121 1,092 (419) 187 11,937 12,918
Total recognised
(losses)/gains
for the period - (201) (325) (100) 125 (501)
Equity dividend
paid - - - - (181) (181)
Balance at 31
August 2008 121 891 (744) 87 11,881 12,236
Six months ended 30 June 2007
Balance at 1
January 2007 121 108 1,243 311 11,864 13,647
Total recognised
(losses)/gains
for the period - 356 40 106 26 528
Equity dividend
paid - - - - (109) (109)
Balance at 30
June 2007 121 464 1,283 417 11,781 14,066
For the period ended 29 February 2008
At 1 January 2007 121 108 1,243 311 11,864 13,647
Total recognised
(losses)/gains
for the period - 984 (1,662) (124) 182 (620)
Equity dividend
paid - - - - (109) (109)
Balance at 29
February 2008 121 1,092 (419) 187 11,937 12,918
Notes to the Interim Report
For the six months ended 31 August 2008
1. Accounting Policies
The financial statements have been prepared under the historical cost
convention, modified to include the revaluation of fixed asset
investments, and in accordance with applicable Accounting Standards
and with the Statement of Recommended Practice, "Financial Statements
of Investment Trust Companies" ("SORP") December 2005. Although this
SORP principally applies to Investment Trusts, many of the
characteristics of Investment Trusts are shared by VCTs therefore the
Company will continue to follow the SORP until investment company
status is revoked.
2. Return per Ordinary Share
The total loss per share of 3.32p (30 June 2007 - return of 3.50p) is
based on the loss for the period of �401,000 (30 June 2007 - profit
of �422,000) and the weighted average number of shares in issue as at
31 August 2008 of 12,087,500 (30 June 2007 - 12,087,500).
3. Net asset value per share
Period Net Asset Value per share
Net assets Shares in issue Basic Diluted
31 August 2008 �12,236,000 12,087,500 101.21p 100.49p
29 February �12,918,000 12,087,500 106.86p 105.31p
2008
30 June 2007 �14,066,000 12,087,500 116.37p 112.92p
4. Management fees
The Company pays the Investment Manager an annual management fee of
2% (plus VAT) of the Company's net assets. The fee is payable
quarterly in arrears. The annual management fee is allocated 75% to
capital and 25% to revenue.
5. Related Party Transactions
Related party transactions are described the 2008 Annual Report and
Accounts on page 36. There were no other related party transactions
during the six months ended 31 August 2008.
6. The financial information for the six months ended 31
August 2008 and 30 June 2007 has not been audited and does not
comprise full financial statements within the meaning of Section 240
of the Companies Act 1985. The financial information for the period
ended 29 February 2008 has been extracted from the company's full
financial statements for the period then ended that have been
delivered to the Registrar of Companies, and on which the report of
the Auditors was unqualified. The interim financial statements have
been prepared on the same basis as the annual financial statements.
Notes to the Interim Report continued
For the six months ended 31 August 2008
7. Investment portfolio summary
Cost Valuation Gain/ Valuation as a %
As at 31 August 2008 �'000 �'000 (loss) of Net Assets
Qualifying investment -
unquoted
Albemarle Contracting Ltd 1,000 1,000 - 8%
Bond Contracting Ltd 1,532 1,532 - 13%
Clifford Contracting Ltd 1,515 1,515 - 12%
Cadbury House Hotel & 2,110 2,110 - 17%
Country Club plc
Stocklight Limited 610 610 - 5%
Qualifying investment -
quoted
@UK plc 415 25 (390) 0%
Alterian plc 19 20 1 0%
Clarity Commerce Solutions 142 44 (98) 0%
plc
I-Design Group plc 59 30 (29) 0%
INVU plc 119 89 (30) 1%
Mount Engineering plc 223 206 (17) 2%
Patsystems plc 311 468 157 4%
Sport Media plc 305 74 (231) 1%
Universe Group plc 174 93 (81) 1%
Vertu Motors plc 593 257 (336) 2%
Total qualifying 9,127 8,073 (1,054) 66%
investments
Non-qualifying investments
Hedge fund portfolio 1,875 2,293 418 18%
Loan stock - interest 297 334 37 3%
bearing
Other quoted investments 1,072 938 (134) 8%
Total non-qualifying 3,244 3,565 321 29%
investments
Total investments 12,371 11,638 (733) 95%
Balance of portfolio 598 598 5%
Net Assets 12,969 12,236 (733) 100%
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