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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Puma High | LSE:PMH | London | Ordinary Share | GB00B53Y1331 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 37.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMPMH Puma High Income VCT plc Final results for the period ended 31 March 2013 HIGHLIGHTS -- Eleven investments made during the period, totalling GBP9.4 million, including two non-qualifying secured loans made, offering a higher yield than most quoted secured bonds or deposits. -- Qualifying investments now exceed 70% on an HMRC basis. -- 21p per share of dividends paid since inception, 14p during the period, equivalent to a 10% per annum tax-free running yield on net investment. -- Gain in NAV (adding back dividends) of 0.34p per share during the period. CHAIRMAN'S STATEMENT Introduction I am pleased to present the Company's third Annual Report which, reflecting the change of accounting year end to 31 March, represents a 15 month period ended 31 March 2013. As envisaged in the Company's prospectus, the Company has for the third calendar year in succession paid a dividend of 7p per ordinary share, equivalent to a 10% tax-free running yield on shareholder's net investment. The fully diluted net asset value per share ("NAV") at 31 March 2013 was 72.26p (equivalent to 93.26p after adding back the 21p of dividends paid to date) resulting in a gain in NAV (after adding back dividends) of 0.34p per share during the period. VCT qualifying investments During the period of fifteen months the Company pursued an active investment policy. It completed eight VCT-qualifying investments, deploying a total of just over GBP7 million. Details of these investments can be found in the Investment Manager's report below. During the period, the Company met its minimum qualifying investment percentage of 70 per cent. Non-qualifying investments As indicated in the interim report for the first six months of the period, the Investment Manager made several changes to the non-qualifying portfolio to re-position it in light of current conditions in securities markets. During the period ended 31 March 2013, the Investment Manager disposed of all the Company's holdings in absolute return funds and bond funds, resulting in an overall total return to the Company (including income and capital) of 5% from the funds. During the period, the Company also completed two non-qualifying secured loans for a total of GBP2.1 million. Details of these 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. Results and dividends The Company reported a profit of GBP46,000 for the period. Two interim dividends, each of 7p per Ordinary Share, were paid during the period (which represents a 15 month period to 31 March 2013), taking the total of dividends paid to date to 21p per Ordinary Share, equivalent to a 10% per annum tax-free running yield on the net investment by shareholders Outlook 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 in the current financial period. As a result the Board expect to concentrate in the future on the monitoring of our existing investments and considering the options for exits. Ray Pierce Chairman 29 July 2013 INVESTMENT MANAGER'S REPORT Introduction As set out in the Chairman's Statement, the ongoing 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 established companies on a secured basis. VCT qualifying investments Our investment of GBP860,000 in Mirfield Contracting Limited ("MCL") is progressing well as indicated in the Company's previous interim report. MCL is a contracting services company providing project management services to a GBP3.8 million development of town houses in Mirfield (near Wakefield) West Yorkshire. The development itself is progressing well with the first of three phases complete and sold, and the second phase almost complete. The developer has recently been approved for the Government-backed Help to Buy Scheme. In March 2012, the Company invested GBP700,000 (as part of a GBP1.4 million Puma VCT financing) into SIP Communications Plc ("SIPCOM"). SIPCOM provides hosted IP telephony and unified communications products and services and is a leading hosting provider for users of Microsoft Lync - a new business version of Skype with many enhanced features allowing IP telephony, video calls, instant messaging, and online meetings and integrating with Microsoft Outlook and Office. SIPCOM had a major customer default on its contract last year and to be prudent we have made a fair value provision against an element of our investment. As indicated in the Company's previous interim report, the Company invested GBP880,000 into each of two contracting companies, Frederica Trading Limited ("Frederica") and Glenmoor Trading Limited ("Glenmoor"), committing GBP1.76 million in total. As members of a limited liability partnership with other contracting companies, Frederica and Glenmoor are providing contracting services in connection with five pre-let supported living developments for psychiatric and learning disabled people who are housed and given support by local authorities and other social care organisations. The developments themselves are progressing well with four in various stages of construction and we expect the projects to deliver attractive returns. In the Company's previous interim report, we reported that the Company had invested a total of GBP1.4 million into Huntly Trading Limited ("Huntly") and Isaacs Trading Limited ("Isaacs"), two qualifying services companies which were actively pursuing opportunities to develop their businesses. We are pleased to report that, in November 2012, Huntly and Isaacs joined a limited liability partnership with other contracting companies and have entered into their first contracting contract with FreshStart Living. These companies will provide GBP668,000 (as part of a GBP3.5 million project involving other companies backed by Puma VCTs) of project management and contracting services. These services will be provided in connection with the development and construction by FreshStart Living of 116 apartments (all of which were pre-sold when the contract was entered into) at a property called Trafford Press, 2 miles south east of Manchester city centre. In December 2012, the Company completed a GBP600,000 investment (as part of a GBP1.5 million financing with other Puma VCTs) into Brewhouse and Kitchen Limited, which is managed by two highly experienced pub sector professionals, to facilitate the acquisition of freehold pubs and install a micro brewery within the main area of each pub. The investment is largely in the form of senior debt, secured with a first charge over the business and each freehold site acquired. Funds can be utilised to a maximum 65% loan-to-value ratio, and are expected to produce a return to the Company of at least 7 per cent. per annum. In March 2013, the Company invested a further GBP320,000 (as part of GBP1.6 million across the Puma VCTs) into Brewhouse and Kitchen, taking total exposure to GBP920,000. This further investment, again largely in the form of senior debt, is to be used to purchase further pubs, subject to our approval of each purchase. The terms are similar to the first loan to this company. Most recently, the Company concluded another qualifying transaction, by investing GBP1.4 million into Saville Services Limited, a contracting company, alongside other Puma VCTs. Saville Services is deploying the funds to provide contracting services in relation to the construction of a private detached housing development in the countryside outside Aberdeen, under contract to Churchill Homes Limited, a longstanding Aberdeenshire developer. Non-Qualifying Investments When the fund began investing in 2010, we chose a portfolio of bonds, hedge funds and hedge funds of funds. We reviewed the portfolio and liquidated several of these during 2012 for an overall small gain. We retained a number of the best performing investments of this portfolio throughout the period, most of which were bond funds and one residual hedge fund. At the start of 2013, we became concerned that bonds had become overvalued relative to equities. Anticipating a change in market sentiment regarding bonds and a switch into equities, we decided to take profits on all of these holdings at the start of 2013, a decision which seems to have been vindicated by subsequent market movements. We have adopted a strategy for the non-qualifying portfolio of moving away from quoted investments where possible 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 Company into the medium term. The first of these was made in August 2012, when the Company completed a GBP1,250,000 non-qualifying loan. This was as part of a GBP4 million financing with other Puma VCTs to Puma Brandenburg Finance Limited, a subsidiary of Puma Brandenburg Holdings Limited. It is secured on a portfolio of flats in the middle class area of central Berlin, Germany. The facility attracts a fixed interest rate of 5% per annum. 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. In December 2012, the Company completed a second non-qualifying loan of GBP860,000. This was to provide, together with other Puma VCTs, an innovative GBP2.5 million revolving credit facility to Organic Waste Management Trading Limited (effected via a loan to Buckhorn Lending Limited, which on-lent the money). The facility provides working capital for the purchase of used cooking oil for conversion into bio-diesel. The ultimate borrower owns a large oil refining plant in Birkenhead and is processing cooking oil to sell to obligated off-take parties (petrol and diesel retailers). The facility is structured to mitigate risks by being capable of being drawn only once approved back-to-back purchase and sale contracts have been entered into with approved counterparties. The facility bears interest at 1.5% per month with a 5% per annum non-utilisation rate. Outlook We are pleased now to have invested a substantial proportion of the funds raised by the Company in secured loans, both qualifying and non-qualifying. 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. In accordance with the HMRC VCT rules the Company had three years to invest 70 per cent of the portfolio (on an HMRC basis) into qualifying investments. Having now achieved this 70% qualifying status, we are now primarily focusing on the monitoring of our existing investments and considering the options for exits. Shore Capital Limited 29 July 2013 Investment Portfolio Summary As at 31 March 2013 Valuation as a % of Valuation Cost Gain/(loss) Net Assets GBP'000 GBP'000 GBP'000 As at 31 March 2013 Qualifying Investment - Unquoted Brewhouse & Kitchen Limited 920 920 - 9% Saville Services Limited 1,400 1,400 - 14% SIP Communications plc 490 700 (210) 5% Mirfield Contracting Limited 860 860 - 9% Huntly Trading Limited 700 700 - 7% Isaacs Trading Limited 700 700 - 7% Frederica Trading Limited 880 880 - 9% Glenmoor Trading Limited 880 880 - 9% Total Qualifying Investments 6,830 7,040 (210) 69% Non-Qualifying Investments Buckhorn Lending Limited 860 860 - 9% Puma Brandenburg Finance Limited 1,250 1,250 - 13% Total Non-Qualifying investments 2,110 2,110 - 22% Total Investments 8,940 9,150 - 91% Balance of Portfolio 939 939 - 9% Net Assets 9,879 10,089 - 100% Of the investments held at 31 March 2013, 86 per cent are incorporated in England and Wales and 14 per cent incorporated in Guernsey. Percentages have been calculated on the valuation of the assets at the reporting date. Income Statement For the period ended 31 March 2013 Period from 1 January Year ended 31 December 2012 to 31 March 2013 2011 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) - 49 49 - (376) (376) Income 2 481 - 481 222 - 222 481 49 530 222 (376) (154) Investment management fees 3 (58) (174) (232) (54) (163) (217) Other expenses 4 (252) - (252) (173) - (173) (310) (174) (484) (227) (163) (390) Return/(loss) on ordinary activities before taxation 171 (125) 46 (5) (539) (544) Tax on return on ordinary activities 5 - - - - - - Return/(loss) on ordinary activities after tax attributable to equity shareholders 171 (125) 46 (5) (539) (544) Basic and diluted Return/(loss) per Ordinary Share (pence) 6 1.25p (0.91p) 0.34p (0.04p) (3.94p) (3.98p) The total column represents the profit and loss account and the revenue and capital columns are supplementary information. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period. No separate Statement of Total Recognised Gains and Losses is presented as all gains and losses are included in the Income Statement. Balance Sheet As at 31 March 2013 Registered No: 07036487 As at As at Note 31 March 2013 31 December 2011 GBP'000 GBP'000 Fixed Assets Investments 8 8,940 7,608 Current Assets Debtors 9 236 17 Cash at bank and in hand 813 4,243 1,049 4,260 Creditors - amounts falling due within one year 10 (109) (120) Net Current Assets 940 4,140 Total Assets less Current Liabilities 9,880 11,748 Creditors - amounts falling due after more than one year (including convertible debt) 11 (1) (1) Net Assets 9,879 11,747 Capital and Reserves Called up share capital 12 137 137 Capital reserve - realised (549) (584) Capital reserve - unrealised (210) (50) Revenue reserve 10,501 12,244 Shareholders' Funds 9,879 11,747 Net Asset Value per Ordinary Share 13 72.26p 85.92p Diluted Net Asset Value per Ordinary Share 13 72.26p 85.92p The financial statements were approved and authorised for issue by the Board of Directors on 29 July 2013 and were signed on their behalf by: Raymond Pierce Chairman 29 July 2013 Cash Flow Statement For the period ended 31 March 2013 Period from 1 January Year ended 2012 to 31 31 December March 2013 2011 GBP'000 GBP'000 Profit/(loss) on ordinary activities before taxation 46 (544) (Loss)/gain on investments (49) 376 (Increase)/decrease in debtors (219) 51 Decrease in creditors (11 ) (14) Foreign exchange gain on cash - 1 Net cash outflow from operating activities (233) (130) Capital expenditure and financial investment Purchase of investments (9,400) (4,577) Proceeds from sale of investments 8,117 7,546 Acquisition costs - (13) Net cash (outflow)/inflow from capital expenditure and financial investment (1,283) 2,956 Equity dividend paid (1,914) (957) Net cash (outflow)/inflow before financing (3,430) 1,869 (Decrease)/increase in cash in the period (3,430) 1,869 Reconciliation of net cashflow to movement in net funds (Decrease)/increase in cash in the period (3,430) 1,869 Net funds at start of period 4,243 2,374 Net funds at end of period 813 4,243 Reconciliation of Movements in Shareholders' Funds For the period ended 31 March 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 Balance as at 1 January 2011 137 13,264 (110) 17 (58) 13,250 Capital reconstruction - (13,264) - - 13,264 - Loss after taxation attributable to equity shareholders - - (474) (67) (5) (546) Dividends paid - - - - (957) (957) Balance as at 31 December 2011 137 - (584) (50) 12,244 11,747 Return after taxation attributable to equity shareholders - - (85) (210) 171 46 Transfer - - (50) 50 - - Dividends paid - - (1,914) (1,914) Balance as at 31 March 2013 137 - (549) (210) 10,501 9,879 Distributable reserves comprise: Capital reserve-realised, Capital reserve-unrealised and the Revenue reserve. At the period end distributable reserves totalled GBP9,742,000 (2011: GBP11,610,000). The Capital reserve-realised shows gains/losses that have been realised in the period due to the sale of investments, and related costs. The Capital reserve-unrealised shows the gains/losses on investments still held by the company not yet realised by an asset sale. Notes to the Accounts For the period ended 31 March 2013 1. Accounting Policies Basis of Accounting Puma High Income VCT plc ("the Company") was incorporated and is domiciled in England & 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 return of GBP46,000 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 is 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 12. Thereafter the investments are measured at subsequent reporting dates at fair value. Listed investments and investments traded on AIM are stated at bid price at the reporting date. Hedge funds are valued at their respective quoted Net Asset Values per share at the reporting date. Unlisted investments are stated at Directors' valuation with reference to the International Private Equity and Venture Capital Valuation Guidelines ("IPEVC") and in accordance with FRS26 "Financial Instruments: Measurement": -- Investments which have been made within the last twelve months or where the investee company is in the early stage of development will usually be valued at the price of recent investment except where the company's performance against plan is significantly different from expectations on which the investment was made in which case a different valuation methodology will be adopted. -- Investments may be valued by applying a suitable price-earnings ratio to that company's historical post tax earnings. The ratio used is based on a comparable listed company or sector but discounted to reflect lack of marketability. Alternative methods of valuation include net asset value where such factors apply that make this or alternative methods more appropriate. Realised surpluses or deficits on the disposal of investments are taken to realised capital reserves, and unrealised surpluses and deficits on the revaluation of investments are taken to unrealised capital reserves. It is not the Company's policy to exercise control 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 of 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. Notes to the Accounts For the period ended 31 March 2013 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 negotiated performance fees payable to the Investment Manager, Shore Capital Limited at 20 per cent of the aggregate excess over GBP1 per Ordinary Share returned to Ordinary shareholders. This incentive will only be exercisable once the holders of Ordinary Shares have received distributions of GBP1 per share. The performance fee is accounted for as an equity-settled share-based payment. FRS 20 Share-Based Payment requires the recognition of an expense in respect of share-based payments in exchange for goods or services. Entities are required to measure the goods or services received at their fair value, unless that fair value cannot be estimated reliably in which case that fair value should be estimated by reference to the fair value of the equity instruments granted. At each balance sheet date, the Company estimates that fair value by reference to any excess of the net asset value, adjusted for dividends paid, over GBP1 per share. Any change in fair value in the period is recognised in the Income Statement with a corresponding adjustment to equity. Expenses All expenses (inclusive of VAT) are accounted for on an accruals basis. Expenses are charged wholly to revenue, with the exception of: -- expenses incidental to the acquisition or disposal of an investment which are 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 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 period ended 31 March 2013 1. Accounting Policies (continued) Reserves Realised losses and gains on investments and foreign exchange transactions, transaction costs, the capital element of the management fee and taxation are taken through the Income Statement and recognised in the Capital Reserve - Realised on the Balance sheet. Unrealised losses and gains on investments and foreign exchange transactions and the capital element of the performance fee are also taken through the Income Statement and recognised in the Capital Reserve - Unrealised. The performance fee to be effected through share-based payment is taken to the Other Reserve and the total revenue gain or loss on the Income Statement is taken to the Revenue Reserve. Foreign exchange The functional and presentational 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. Change in reporting date The Company has changed its reporting date to 31 March 2013 during the year and so the accounts are for the 15 month period ended 31 March 2013. 2. Income Period from 1 January Year ended 31 December 2012 to 31 March 2013 2011 GBP'000 GBP'000 Income from investments Income from investments 439 148 Arrangement fees 16 - 455 148 Other income Bank deposit income 26 74 481 222 Notes to the Accounts For the period ended 31 March 2013 3. Investment Management Fees Period from 1 January 2012 Year ended 31 December to 31 March 2013 2011 GBP'000 GBP'000 Shore Capital Limited 232 242 Fee rebate - (25) 232 217 Shore Capital Limited (Shore Capital) was appointed as the Investment Manager of the Company for an initial period of five years, which can be terminated by not less than twelve months' notice, given at any time by either party, on or after the fifth anniversary. The board is satisfied with the performance of the Investment Manager. Under the terms of this agreement Shore Capital will be paid an annual fee of 2 per cent of the Net Asset Value payable quarterly in arrears calculated on the relevant quarter end NAV of the Company. These fees are capped, the Investment Manager having agreed to reduce its fee (if necessary to nothing) to contain total annual costs (excluding performance fee and trail commission) to within 3.5 per cent of Net Asset Value. The breach of the fee cap is adjusted for in the current period resulting in a credit of GBP28,000 to reduce total annual running costs for this year to 3.5% of Net Asset Value. Total annual costs this year were 3.5% of the year end Net Asset Value (2011: 3.3%). 4. Other expenses Period from 1 January Year ended 2012 to 31 31 December March 2013 2011 GBP'000 GBP'000 Administration - Shore Capital Fund Administration Services Limited 46 42 Directors' Remuneration 80 56 Social security costs 7 4 Auditor's remuneration for statutory audit 17 17 Insurance 2 4 Legal and professional fees (13) 14 FSA, LSE and registrar fees 28 17 Trail commission 52 - Other expenses 33 19 252 173 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 commencing on page 17. The Company had no employees (other than Directors) during the period. The average number of non-executive Directors during the year was four (2011: four). The Auditor's remuneration of GBP14,000 (2011: GBP14,000) has been grossed up in the table above to be inclusive of VAT. Notes to the Accounts For the period ended 31 March 2013 5. Tax on Ordinary Activities Period from 1 January Year ended 2012 to 31 31 December March 2013 2011 GBP'000 GBP'000 UK corporation tax charged to revenue - - UK corporation tax charged to capital - - UK corporation tax charge for the period - - Factors affecting tax charge for the period Return/(loss) on ordinary activities before taxation 46 (544) Tax charge calculated on return/(loss) on ordinary activities before taxation at the applicable rate of 20% 9 (109) Non taxable capital income 25 108 Tax losses carried forward - 1 Utilisation of tax losses brought forward (44) - Non deductible expenses 10 - - - 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 to continuing compliance with the VCT regulations. No provision for deferred tax has been made in the accounts. 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. Notes to the Accounts For the period ended 31 March 2013 6. Basic and diluted return per Ordinary Share Period from 1 January 2012 to 31 March 2013 Revenue Capital Total GBP'000 GBP'000 GBP'000 Return for the period 171 (125) 46 Weighted average number of shares 13,671,870 13,671,870 13,671,870 Return per share 1.25p (0.91p) 0.34p Year ended 31 December 2011 Revenue Capital Total GBP'000 GBP'000 GBP'000 Loss for the period (5) (539) (544) Weighted average number of shares 13,671,870 13,671,870 13,671,870 Loss per share (0.04)p (3.94)p (3.98)p The total return/(loss) per ordinary share is the sum of the revenue return and capital return. 7. Dividends The directors do not propose a final dividend in relation to the period ended 31 March 2013 (year ended 31 December 2011: nil). Interim dividends of 7p per Ordinary Share each were paid on 27 February 2012 and 19 February 2013. Each dividend payment totalled GBP957,000. Notes to the Accounts For the period ended 31 March 2013 8. Investments Historic cost Market value Historic cost Market value as at 31 March as at 31 March as at 31 as at 31 (a) Summary 2013 2013 December 2011 December 2011 GBP'000 GBP'000 GBP'000 GBP'000 Qualifying venture capital investments 7,040 6,830 - - Non qualifying investments 2,110 2,110 7,659 7,608 9,150 8,940 7,659 7,608 (b) Movements in Qualifying venture Non qualifying investments capital investments investments Total GBP'000 GBP'000 GBP'000 Opening value at 1 January 2012 - 7,608 7,608 Purchases at cost 7,040 2,360 9,400 Disposals: Proceeds - (8,117) (8,117) Realised net gains/(losses) on disposals - 259 259 Net unrealised loss (210) - (210) Valuation at 31 March 2013 6,830 2,110 8,940 Book cost at 31 March 2013 7,040 2,110 9,150 Net unrealised gains/(losses) at 31 March 2013 (210) - (210) Valuation at 31 March 2013 6,830 2,110 8,940 (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 Year ended 2012 to 31 31 December March 2013 2011 GBP'000 GBP'000 Realised gains/(losses) on disposal 259 (297) Net unrealised losses on revaluation in respect of investments held at the period end - (67) Transaction costs - (12) Net unrealised losses on revaluation in respect of investments held at the period end (210) - 49 (376) Notes to the Accounts For the period ended 31 March 2013 8. Investments - continued (d) Quoted and unquoted Historic cost as at 31 Market value as at 31 investments March 2013 March 2013 GBP'000 GBP'000 Quoted investments - - Unquoted investments 9,150 8,940 9,150 8,940 (e) Significant interests As at 31 March 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. Percentage of equity directly held in Fair value of Company's investment as at 31 March Investee Investee 2013 Company Company GBP'000 Saville Services Limited 23% 1,400 Mirfield Contracting Limited 50% 860 Huntly Trading Limited 47% 700 Isaacs Trading Limitedd 48% 700 Frederica Trading Limited 47% 880 Glenmoor Trading Limited 47% 880 Buckhorn Trading Limited 33% 860 6,280 Graham Shore, a director of the Company, is also a director of Mirfield Contracting Limited, Huntly Trading Limited, Isaacs Trading Limited, Frederica Trading Limited, Glenmoor Trading Limited, Buckhorn Trading Limited and Saville Services Limited. The Company is able to exercise significant influence over all of the above-named investee companies. These investments have not been accounted for as associates or joint ventures since FRS 9: Associates and Joint Ventures and the SORP require that Investment Companies treat all investments held as part of their investment portfolio in the same way, even those over which the Company has significant influence. Further details of these investments are disclosed in the Investment Portfolio Summary on pages 8 to 12 of the Annual Report. Notes to the Accounts For the period ended 31 March 2013 9. Debtors As at 31 March 2013 As at 31 December 2011 GBP'000 GBP'000 Accrued income 236 17 10. Creditors - amounts falling due within one year As at 31 March 2013 As at 31 December 2011 GBP'000 GBP'000 Accruals and deferred income 109 120 11. Creditors - amounts falling due after more than one year (including convertible debt) As at 31 March 2013 As at 31 December 2011 GBP'000 GBP'000 Loan notes 1 1 On 11 November, 2009, the Company issued Loan Notes in the amount of GBP1,000 to a nominee on behalf of the Investment Manager. The Loan Notes accrue interest of 5 per cent per annum. As holders of the Loan Notes Shore Capital will be entitled to a performance related incentive of 20 per cent of the aggregate excess on any amounts realised by the Company in excess of GBP1 per Ordinary Share, and Shareholders will be entitled to the balance. This incentive to be effected through the issue of shares in the Company will only be payable 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. No performance fee is currently payable as the Ordinary Shares have not received enough distributions to date. However, when the total return is greater than GBP1, a performance fee will be expensed in accordance with FRS 20 Share-based Payment. The amount of the performance fee will be calculated as 20 per cent of the excess of the net asset value over GBP1 per issued share. This amount will be debited to the Income Statement and credited to other reserve within Equity Shareholder's Funds. Notes to the Accounts For the period ended 31 March 2013 12. Called Up Share Capital As at 31 March 2013 As at 31 December 2011 GBP'000 GBP'000 13,671,870 ordinary shares of 1p each 137 137 13. Net Asset Value per Ordinary Share As at As at 31 March 2013 31 December 2011 Net assets 9,879,000 11,747,000 Shares in issue 13,671,870 13,671,870 Dilutive effect of performance fee - - 13,671,870 13,671,870 Net asset value per ordinary share Basic 72.26p 85.92p Diluted 72.26p 85.92p 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. As at 31 March 2013 As at 31 December 2011 GBP'000 GBP'000 Assets at fair value through profit or loss Investments managed through Shore Capital Limited 8,940 7,608 Loans and receivables Cash at bank and in hand 813 4,243 Interest, dividends and other receivables 236 17 Other financial liabilities Financial liabilities measured at amortised cost (110) (121) 9,879 11,747 Notes to the Accounts For the period ended 31 March 2013 14. Financial Instruments (continued) Management of risk The main risk the Company faces from its financial instruments is 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. Credit risk Credit risk is the risk that the counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The Investment Manager monitors counterparty risk on an ongoing basis. The carrying amounts of financial assets best represents the maximum credit risk exposure at the balance sheet date. The Company's financial assets maximum exposure to credit risk is as follows: As at 31 March 2013 As at 31 December 2011 GBP'000 GBP'000 Investments in loans and loan notes 5,830 - Cash at bank and in hand 813 4,243 Interest, dividends and other receivables 236 17 6,879 4,260 The majority of the cash held by the Company at the period end is split between an A rated 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 loan and loan notes and bonds comprise 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 management procedures. Market price risk Market price risk arises mainly from uncertainty about future prices of financial instruments held by the Company. It represents the potential loss the Company might suffer through holding investments in the face of price movements. The Investment Manager actively monitors market prices throughout the period and reports to the Board, which meets regularly in order to consider investment strategy. The Company's strategy on the management of market price risk is driven by the Company's investment policy as outlined in the Report of the Directors on page 14. 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. Notes to the Accounts For the period ended 31 March 2013 14. Financial Instruments (continued) 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. 100 per cent of the Company's investments at 31 March 2013 are unquoted investments. Liquidity risk Details of the Company's unquoted investments are provided in the Investment Portfolio summary on page 7. By their nature, unquoted investments may not be readily realisable, the Board regularly considers exit strategies for these investments. As at the period end, the Company had no borrowings other than loan notes amounting to GBP1,000 (2011: GBP1,000) (see note 11). The Company's liquidity risk associated with investments is managed on an ongoing basis by the Investment Manager in conjunction with the Directors and in accordance with policies and procedures in place as described in the Report of the Directors. The Company's overall liquidity risks are monitored on a quarterly basis by the Board. The Company maintains sufficient investments in cash and readily realisable securities to pay accounts payable and accrued expenses. Notes to the Accounts For the period ended 31 March 2013 14. Financial Instruments (continued) 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. At the period end and throughout the period, the Company's only liability subject to interest rate risk were the Loan Notes of GBP1,000 at 5.0 per cent (see note 11). Interest rate risk profile of financial assets The following analysis sets out the interest rate risk of the Company's financial assets. Average Period 31 interest until 31 March December Rate status rate maturity 2013 2011 GBP'000 GBP'000 Brewhouse & Kitchen Limited Floating 11.3% Five years 276 - Saville Services Limited Floating 5.5% Six years 420 - SIP Communications plc Fixed 11.1% Four years 490 - Mirfield Contracting Limited Floating 2.5% Nine years 602 - Huntly Trading Limited Floating 2.5% Nine years 490 - Isaacs Trading Limited Floating 5.5% Nine years 210 - Frederica Trading Limited Floating 2.5% Nine years 616 - Glenmoor Trading Limited Floating 2.5% Nine years 616 - Buckhorn Lending Limited Floating 8.6% Five years 860 - Puma Brandenburg Finance Limited Fixed 5.0% Two years 1,250 Cash at bank Floating 0.9% 670 3,133 32 days Cash at bank Floating 0.9% notice 128 1,087 Cash at bank Floating 0.9% 15 15 Balance of financial assets Non-interest bearing 3,346 7,512 9,989 11,747 The non-interest bearing assets include investments in equity instruments that have no fixed dividend rate. An increase in 1% in Bank of England base rate would have increased the net assets attributable to the Company's shareholders and the total profit for the year by GBP49,000 (2011: GBP42,000). A decrease of 1% would have had an equal but opposite effect. None of the loan stocks held by the Company are convertible. Notes to the Accounts For the period ended 31 March 2013 14. Financial Instruments (continued) Fair value hierarchy Fair values have been measured at the end of the reporting period as follows:- As at 31 March Level 1 Level 2 Level 3 2013 'Quoted prices' 'Observable inputs' 'Unobservable inputs' Total At fair value through profit and loss - - 8,940 8,940 As at 31 December Level 1 Level 2 Level 3 2011 'Quoted prices' 'Observable inputs' 'Unobservable inputs' Total At fair value through profit and loss 6,355 1,253 - 7,608 Financial assets 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 assets ('quoted prices'); -- Level 2 - Inputs (other than quoted prices in active markets for identical assets) that are directly or indirectly observable for the asset ('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 are provided in the significant investments section on pages 7 to 9 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 Movements in the income statement: Balance as at 1 January 2012 - - - Unrealised losses in the income statement (210) - (210) Realised gains in the income statement - - - (210) - (210) Purchases at cost 3,320 5,830 9,150 Sales proceeds - - - Balance as at 31 March 2013 3,110 5,830 8,940 Notes to the Accounts For the period ended 31 March 2013 15. Capital management The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern and to provide an adequate return to shareholders by allocating its capital to assets commensurate with the level of risk. By its nature, the Company has an amount of capital, at least 70% (as measured under the tax legislation) of which is and must be, and remain, invested in the relatively high risk asset class of small UK companies within three years of that capital being subscribed. The Company accordingly has limited scope to manage its capital structure in the light of changes in economic conditions and the risk characteristics of the underlying assets. Subject to this overall constraint upon changing the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets if so required 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 the 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. 17. Controlling Party and Related Party Transactions In the opinion of the Directors there is no immediate or ultimate controlling party. The Company has appointed Shore Capital Limited, a company of which Graham Shore is a director, to provide investment management services. During the period GBP232,000 (2011: GBP217,000) was due in respect of investment management fees. The balance owing to Shore Capital Limited at the period-end was GBP21,000 (2011: GBP60,000). The Company has appointed Shore Capital Fund Administration Services Limited, a related company to Shore Capital Limited, to provide accounting, secretarial and administrative services. During the period GBP46,000 (2011: GBP42,000) was due in respect of these services. The balance owing to Shore Capital Fund Administration Services Limited at the period-end was GBP9,000 (2011: GBP10,000). This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Puma High Income VCT PLC via Thomson Reuters ONE HUG#1719767
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