TIDMPUME
Puma VCT V plc
Final results for the year ended 28 February 2013
HIGHLIGHTS
-- Top performing VCT of its peer group for the fifth year running.
-- Fully diluted NAV per share (adding back dividends paid to date) of
103.15p.
-- As envisaged in the original Prospectus, resolutions will be put forward
for a winding up of the VCT at the end of its planned life.
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report upon another successful year for the Company in
which it achieved major progress in fulfilling its objectives. The VCT
was launched and began investing in Spring 2008, with a planned life of
five years. In this, its fifth year, the process of realising the
Company's qualifying investments and returning capital to investors
advanced significantly.
Once again, at the year end, the Company had the highest total return of
all limited life VCTs launched in the 2007/2008 tax year.
Qualifying VCT investments
During the year, the Company began the process of realising its
qualifying holdings in anticipation of the expected wind-up timetable of
the VCT whilst maintaining its minimum qualifying investment percentage
of 70 per cent. The Company successfully realised its GBP1 million
investment in Forward Internet Group Limited (formerly Traffic Broker
Limited) ("Forward"), the London based internet search engine specialist,
generating an IRR of 7.2%.
As indicated in the Company's latest interim report, the Company's
investments in its other qualifying holdings are progressing well.
Further details are in the Investment Manager's report below.
Non-qualifying investments
As indicated in the interim report, the Investment Manager was reducing
the non-qualifying portfolio in line with the life of the Company and to
reflect current conditions in securities markets. During the year, the
Company realised all its remaining non-qualifying holdings generating a
small gain.
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.
Dividends
As indicated in the interim report, dividends of 16p per ordinary share
were declared during the year, bringing cumulative dividends paid to
date of 19p per ordinary share. Your Board does not propose a final
dividend, but anticipates further dividends as the Company's assets are
realised.
Annual General Meeting and Proposal to Wind-Up the VCT
The Annual General Meeting of the VCT will be held at Bond Street House,
14 Clifford Street, London W1S 4JU on 19 August 2013 at 11 o'clock.
Notice of the Annual General Meeting and Form of Proxy will be inserted
within the annual accounts.
The Company has now just passed its fifth anniversary. In accordance
with the plans set out in the Company's 2008 Prospectus, the Board
expects to convene a general meeting of the Company in the autumn of
this year, at which resolutions will be proposed to place the Company
into members' solvent liquidation. If these are passed, liquidators
will be appointed and the Company will seek to de-list from the London
Stock Exchange.
Once such resolutions have been passed by shareholders, for a maximum
period of three years the VCT is permitted to depart from the 70 per
cent qualifying rule whilst retaining its status of tax free
distribution to UK taxpayers. The intention is to return the balance of
the capital in an orderly way, with disposals timed appropriately to
enable further substantial distributions by the end of 2013.
David Vaughan
Chairman
27 June 2013
INVESTMENT MANAGER'S REPORT
Overall Performance
In its fifth year, the Company took good strides towards achieving its
objectives, by maintaining its qualifying status and returning capital
to shareholders through the realisation of investments. The Company
returned 16 pence per share to shareholders in the year, bringing total
cash returned to shareholders to 19 pence per share and leaving a
residual NAV of 84.93 pence per share at the year end. This has been
achieved despite the dramatic turbulence of the five year period in
which the Company has operated.
Qualifying Investments
During the year, the Investment Manager focused on the objective of
realising the Company's qualifying investments in anticipation of its
expected wind-up timetable whilst maintaining its VCT qualifying status.
As referred to in the Chairman's Statement, we were pleased that the
Company successfully realised its investment in Forward Internet Group
Limited. Forward has enjoyed very impressive growth during the period of
the Company's investment and we are pleased that the Company was able to
assist in the development of this exciting business.
The Company's GBP940,000 investment in Alyth Trading Limited ("Alyth")
is progressing well as indicated in the Company's latest interim report.
Alyth is a contracting services company providing project management
services to a GBP3.8 million development of town houses in Mirfield
(near Wakefield) West Yorkshire, as a member of a limited liability
partnership with other contracting companies. The development itself is
progressing well with the first of three phases complete and sold.
During the year, Dunkeld Trading Limited and Elgin Trading Limited
(companies in which the VCT had previously invested GBP1.88 million in
aggregate) joined a limited liability partnership with other contracting
companies and has entered into their first contracting contract with HB
Community Solutions. These companies will provide project management
and contracting services as part of a GBP5.4 million project involving
other companies backed by Puma VCTs. These services will be provided
to a series of developments constructing pre-let accommodation for large
healthcare groups providing supported living services for psychiatric
and learning disabled service users. The project is expected to
conclude by the end of 2013.
We are pleased to report that, in November 2012, Cawdor Trading Limited
and Benellen Trading Limited (companies in which the VCT had previously
invested GBP1.88 million in aggregate) joined a limited liability
partnership with other contracting companies and have entered into their
first contracting contract with FreshStart Living. These companies will
provide project management and contracting services (as part of a GBP3.5
million project involving other companies backed by Puma VCTs) in
connection with the development and construction 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.
The project is expected to conclude during the first quarter of 2014.
Having achieved its 70% qualifying status, the Company is concentrating
on the monitoring of our existing investments and considering the
options for exits.
Non-Qualifying Investments
As referred to in the Chairman's Statement, the Company realised all its
remaining non-qualifying holdings during the year in anticipation of its
expected wind-up timetable.
The Company's holdings in the Blackrock UK Emerging Companies Fund, the
Bluebay Macro Fund and the Puma Absolute Return Fund were all disposed
of during the period producing an aggregate total return of 7% since the
Company's investment.
Outlook
We continue to focus on improving the liquidity of the portfolio
wherever possible whilst maintaining an appropriate risk adjusted
return. The successful realisation and subsequent distributions to
shareholders this year, combined with the returns achieved, have proved
this strategy so far. The objective remains to achieve an orderly
winding up of the Company's assets at the end of its life, subject to
shareholder approval.
Shore Capital Limited
27 June 2013
Investment Portfolio Summary
As at 28 February 2013
Valuation as a % of
Valuation Cost Gain/(loss) Net Assets
GBP'000 GBP'000 GBP'000
As at 28 February 2013
Qualifying Investment
- Unquoted
Alyth Trading Limited 940 940 - 15%
Benellen Trading
Limited 940 940 - 15%
Cawdor Trading Limited 940 940 - 15%
Dunkeld Trading
Limited 940 940 - 15%
Elgin Trading Limited 940 940 - 15%
Total Qualifying
Investments 4,700 4,700 - 75%
Non-Qualifying
Investments
Total Non-Qualifying
investments - - - 0%
Total Investments 4,700 4,700 - 75%
Balance of Portfolio 1,647 1,647 25%
Net Assets 6,347 6,347 - 100%
Of the investments held at 28 February 2013, 100 per cent are
incorporated in England and Wales. Percentages have been calculated on
the valuation of the assets at the reporting date.
Income Statement
For the year ended 28 February 2013
Year ended 28 February Year ended 29 February
2013 2012
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) - 1 1 - (30) (30)
Income 2 116 - 116 177 - 177
116 1 117 177 (30) 147
Investment management fees 3 (19) (56) (75) (39) (117) (156)
Other expenses 4 (133) - (133) (125) - (125)
Performance fees 11 14 5 19 72 25 97
(138) (51) (189) (92) (92) (184)
(Loss)/profit on ordinary activities before taxation (22) (50) (72) 85 (122) (37)
Tax on (loss)/profit on ordinary activities 5 - - - (2) 2 -
(Loss)/profit on ordinary activities after tax attributable
to equity shareholders (22) (50) (72) 83 (120) (37)
Basic and diluted
(Loss)/return per Ordinary Share (pence) 6 (0.29p) (0.67p) (0.96p) 1.11p (1.61p) (0.50p)
The total column represents the profit and loss account and the revenue
and capital columns are supplementary information.
All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued in
the year.
No separate Statement of Total Recognised Gains and Losses is presented
as all gains and losses are included in the Income Statement.
Balance Sheet
As at 28 February 2013
Registered No: 06443253
As at As at
Note 28 February 2013 29 February 2012
GBP'000 GBP'000
Fixed Assets
Investments 8 4,700 6,714
Current Assets
Debtors 9 33 29
Cash at bank and in hand 1,678 962
1,711 991
Creditors - amounts falling due within one year 10 (63) (70)
Net Current Assets 1,648 921
Total Assets less Current Liabilities 6,348 7,635
Creditors - amounts falling due after more than one
year (including convertible debt) 11 (1) (1)
Net Assets 6,347 7,634
Capital and Reserves
Called up share capital 12 75 75
Capital reserve - realised 97 124
Capital reserve - unrealised - 23
Other reserve 56 75
Revenue reserve 6,119 7,337
Shareholders' Funds 6,347 7,634
Net Asset Value per Ordinary Share 13 84.93p 102.16p
Diluted Net Asset Value per Ordinary Share 13 84.15p 101.13p
The financial statements were approved and authorised for issue by the
Board of Directors on 27 June 2013 and were signed on their behalf by:
David Vaughan
Chairman
27 June 2013
Cash Flow Statement
For the year ended 28 February 2013
Year Year ended
ended 28 29
February February
2013 2012
GBP'000 GBP'000
Operating activities
Loss on ordinary activities before taxation (72) (37)
(Gains)/losses on investments (1) 30
Increase in debtors (4) (9)
(Decrease)/increase in creditors (7) 3
Performance fee to be effected through share based
payment (19) (97)
Net cash outflow from operating activities (103) (110)
Capital expenditure and financial investment
Proceeds from sale of investments 2,015 529
Disposal costs - (1)
Net cash inflow from capital expenditure and financial
investment 2,015 528
Equity dividends paid (1,196) (75)
Net cash inflow before financing 716 343
Financing
Redemption of redeemable preference shares - (50)
Net cash outflow from financing - (50)
Net cash inflow after financing 716 293
Increase in cash in the year 716 293
Reconciliation of net cashflow to movement in net
funds
Increase in cash in the year 716 293
Net funds at start of year 962 669
Net funds at end of year 1,678 962
Reconciliation of Movements in Shareholders' Funds
For the year ended 28 February 2013
Called Capital
up reserve Capital
share - reserve - Other Revenue
capital realised unrealised reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1 March 2011 75 161 106 172 7,329 7,843
(Loss)/return after taxation attributable to equity
shareholders - (37) (83) - 83 (37)
Performance fees - - - (97) - (97)
Dividend paid - - - - (75) (75)
Balance as at 29 February 2012 75 124 23 75 7,337 7,634
Loss after taxation attributable to equity
shareholders - (27) (23) - (22) (72)
Performance fees - - - (19) - (19)
Dividend paid - - - - (1,196) (1,196)
Balance as at 28 February 2013 75 97 - 56 6,119 6,347
Distributable reserves comprise: Capital reserve-realised, Capital
reserve-unrealised and the Revenue reserve. At the year end
distributable reserves totalled GBP6,216,000 (2012: GBP7,484,000).
The Capital reserve-realised shows gains/losses that have been realised
from the sale of investments, less related costs. The Capital
reserve-unrealised shows the gains/losses on investments still held by
the company not yet realised by an asset sale. The Other reserve
reflects the cumulative share based payment charge associated with the
performance fee.
Notes to the Accounts
For the year ended 28 February 2013
1. Accounting Policies
Basis of Accounting
Puma VCT V plc ("the company") is incorporated and domiciled in England
and Wales.
The financial statements have been prepared under the historical cost
convention, modified to include the revaluation of investments held at
fair value, and in accordance with UK Generally Accepted Accounting
Practice ("UK GAAP") and the Statement of Recommended Practice,
'Financial Statements of Investment Trust Companies and Venture Capital
Trusts' ("SORP") revised in 2009.
Income Statement
In order to better reflect the activities of a Venture Capital Trust and
in accordance with guidance issued by the Association of Investment
Companies ("AIC"), supplementary information which analyses the Income
Statement between items of a revenue and capital nature has been
presented alongside the Income Statement. The net loss of GBP72,000 as
per the Income Statement on page 23 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 11. 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 year ended 28 February 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 year 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 year. The tax effect of different
items of income/gain and expenditure/loss is allocated between capital
and revenue return on the marginal basis as recommended by the SORP.
Deferred tax is recognised in respect of all timing differences that
have originated but not reversed at the balance sheet date, where
transactions or events that result in an obligation to pay more, or
right to pay less, tax in future have occurred at the balance sheet
date. This is subject to deferred tax assets only being recognised if it
is considered more likely than not that there will be suitable taxable
profits from which the future reversal of the underlying timing
differences can be deducted. Timing differences are differences arising
between the Company's taxable profits and its results as stated in the
financial statements which are capable of reversal in one or more
subsequent years. Deferred tax is measured on a non-discounted basis at
the tax rates that are expected to apply in the years in which timing
differences are expected to reverse, based on tax rates and laws enacted
or substantively enacted at the balance sheet date.
Notes to the Accounts
For the year ended 28 February 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.
2. Income
Year ended 28 February Year ended 29 February
2013 2012
GBP'000 GBP'000
Income from investments
Loan stock interest 99 159
Dividend income - 3
Mezzanine fees - 8
99 170
Other income
Bank deposit income 17 7
116 177
Notes to the Accounts
For the year ended 28 February 2013
3. Investment Management Fees
Year ended 28 February Year ended 29 February
2013 2012
GBP'000 GBP'000
Shore Capital Limited 75 158
Fee rebates - (2)
75 156
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. Total annual
costs this year were 3.3% of the year end Net Asset Value (2012: 3.7%).
The breach of the fee cap in 2012 was adjusted for in the current year,
resulting in a credit of GBP14,000 to reduce total annual costs for that
year to 3.5% of Net Asset Value. The total annual costs for the year
ended 28 February 2013 (excluding this credit) have been capped at 3.5%
of the year end Net Asset Value.
4. Other expenses
Year ended Year ended
28 February 29 February
2013 2012
GBP'000 GBP'000
Administration - Shore Capital Fund Administration
Services Limited 24 27
Directors' Remuneration 48 43
Social security costs 3 3
Auditor's remuneration for statutory audit 17 17
Insurance 6 4
Legal and professional fees 15 12
FSA, LSE and registrar fees 18 14
Other expenses 2 5
133 125
Shore Capital Fund Administration Services Limited provides
administrative services to the Company for an aggregate annual fee of
0.35 per cent of the Net Asset Value of the Fund, payable quarterly in
arrears.
The total fees paid or payable (excluding VAT and employers NIC) in
respect of individual Directors for the year are detailed in the
Directors' Remuneration Report commencing on page 16. The Company had
no employees (other than Directors) during the year. The average number
of non-executive Directors during the year was 3 (2012: 3).
The Auditor's remuneration of GBP14,000 (2012: GBP14,000) has been
grossed up in the table above to be inclusive of VAT.
Notes to the Accounts
For the year ended 28 February 2013
5. Tax on loss on Ordinary Activities
Year ended
28 Year ended
February 29 February
2013 2012
GBP'000 GBP'000
UK corporation tax charged to revenue - (2)
UK corporation tax charged to capital - 2
UK corporation tax charge for the year - -
Factors affecting tax charge for the year
Loss on ordinary activities before taxation (72) (37)
Tax charge calculated on loss on ordinary activities
before taxation at the applicable rate of 20% (14) (7)
Non taxable UK dividend income - (1)
Non taxable capital income 1 6
Performance fee credit (3) (20)
Tax losses carried forward 16 -
Tax losses utilised - 22
- -
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 year ended 28 February 2013
6. Basic and diluted (loss)/return per Ordinary Share
Year ended 28 February 2013
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Loss for the year (22) (50) (72)
Weighted average number of shares 7,472,812 7,472,812 7,472,812
Loss per share (0.29)p (0.67)p (0.96)p
Year ended 29 February 2012
Revenue Capital Total
GBP'000 GBP'000 GBP'000
(Loss)/profit for the year 83 (120) (37)
Weighted average number of shares 7,472,812 7,472,812 7,472,812
(Loss)/return per share 1.11p (1.61)p (0.50)p
The total loss per ordinary share is the sum of the revenue return and
capital return.
7. Dividends
The directors do not propose a final dividend in relation to the year
ended 28 February 2013 (2012: 1p). During the year a final dividend of
1p per Ordinary Share totalling GBP75,000 was paid on 24 August 2012
(2012: 1p final dividend paid) and an interim dividend of 15p per
Ordinary Share totalling GBP1,121,000 was paid on 7 September 2012
(2012: nil interim dividend paid).
Notes to the Accounts
For the year ended 28 February 2013
8. Investments
Historic cost Market value Historic cost Market value
as at 28 as at 28 as at 29 as at 29
(a) Summary February 2013 February 2013 February 2012 February 2012
GBP'000 GBP'000 GBP'000 GBP'000
Qualifying
venture
capital
investments 4,700 4,700 5,700 5,700
Non qualifying
investments - - 889 1,014
4,700 4,700 6,589 6,714
(b) Movements in Qualifying venture Non qualifying
investments capital investments investments Total
GBP'000 GBP'000 GBP'000
Opening book cost at 1
March 2012 5,700 889 6,589
Unrealised gains at 1
March 2012 - 125 125
Valuation at 1 March
2012 5,700 1,014 6,714
Purchases at cost - - -
Disposals:
Proceeds (1,000) (1,015) (2,015)
Realised net gains on
disposals - 1 1
Valuation at 28
February 2013 4,700 - 4,700
Book cost at 28
February 2013 4,700 - 4,700
Net unrealised gains
at 28 February 2013 - - -
Valuation at 28
February 2013 4,700 - 4,700
(c) Gains/(losses) on investments
The gains/(losses) on investments for the period shown in the Income
Statement on page 23 are analysed as follows:
Year ended Year ended
28 February 29 February
2013 2012
GBP'000 GBP'000
Realised gain on disposal 1 79
Transaction costs - (1)
Net unrealised losses on revaluation in respect of
investments held at the year end - (108)
1 (30)
Notes to the Accounts
For the year ended 28 February 2013
8. Investments - continued
Historic cost
(d) Quoted and as at 28 Market value Historic cost Market value
unquoted February as at 28 as at 29 as at 29
investments 2013 February 2013 February 2012 February 2012
GBP'000 GBP'000 GBP'000 GBP'000
Quoted
investments - - 739 814
Unquoted
investments 4,700 4,700 5,850 5,900
4,700 4,700 6,589 6,714
(e) Significant interests
As at 28 February 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
Investee Investee Fair value of Company's investment as at 28 February
Company Company 2013
Alyth
Trading
Limited 50% 940
Benellen
Trading
Limited 50% 940
Cawdor
Trading
Limited 50% 940
Dunkeld
Trading
Limited 50% 940
Elgin
Trading
Limited 50% 940
4,700
Graham Shore, a director of the Company, is also a director of Alyth
Trading Limited, Benellen Trading Limited, Cawdor Trading Limited,
Dunkeld Trading Limited and Elgin Trading Limited. The Company is able
to exercise significant influence over all of the above-named investee
companies.
These investments have not been accounted for as associates or joint
ventures since FRS 9: Associates and Joint Ventures and the SORP require
that Investment Companies treat all investments held as part of their
investment portfolio in the same way, even those over which the Company
has significant influence.
Further details of these investments are disclosed in the Investment
Portfolio Summary on pages 6 to 9 of the Annual Report.
Notes to the Accounts
For the year ended 28 February 2013
9. Debtors
As at 28 February 2013 As at 29 February 2012
GBP'000 GBP'000
Accrued income 33 29
10. Creditors - amounts falling due within one year
As at 28 February 2013 As at 29 February 2012
GBP'000 GBP'000
Accrued management fees and
other expenses 63 70
11. Creditors - amounts falling due after more than
one year (including convertible debt)
As at 28 February 2013 As at 29 February 2012
GBP'000 GBP'000
Loan Notes 1 1
On 21 January 2008, 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, as the NAV is greater
than GBP1, a performance fee has been expensed in accordance with FRS 20
Share-based Payment. Also a diluted NAV per share has been calculated
which reflects the impact of this conversion (see note 13).
The performance fee credit for the year was GBP19,000 (2012: GBP97,000)
which reduces the cumulative charge to GBP56,000 (2012: GBP75,000)
Notes to the Accounts
For the year ended 28 February 2013
12. Called Up Share Capital
As at 28 February 2013 As at 29 February 2012
GBP'000 GBP'000
7,472,812 ordinary shares of
1p each 75 75
13. Net Asset Value per Ordinary Share
As at As at
28 February 2013 29 February 2012
Net assets 6,347,000 7,634,000
Shares in issue 7,472,812 7,472,812
Dilutive effect of performance fee 69,882 75,888
7,542,694 7,548,700
Net asset value per ordinary share
Basic 84.93p 102.16p
Diluted 84.15p 101.13p
There is a dilution impact due to the additional shares that may be
issued to effect the performance fee payable to the Investment Manager,
the terms of the performance fee are detailed in note 11.
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 28 February 2013 As at 29 February 2012
GBP'000 GBP'000
Assets at fair value through
profit or loss
Investments managed through
Shore Capital Limited 4,700 6,714
Loans and receivables
Cash at bank and in hand 1,678 962
Interest, dividends and other
receivables 33 29
Other financial liabilities
Financial liabilities measured
at amortised cost (64) (71)
6,347 7,634
Notes to the Accounts
For the year ended 28 February 2013
14. Financial Instruments (continued)
Management of risk
The main risks the Company faces from its financial instruments are (i)
credit risk, (ii) 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,
(iii) liquidity risk, credit risk, foreign currency risk and (iv)
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 28 February 2013 As at 29 February 2012
GBP'000 GBP'000
Investments in loan notes 3,102 3,902
Cash at bank and in hand 1,678 962
Interest, dividends and other
receivables 33 29
4,813 4,893
The majority of the cash held by the Company at the year end is held
with an A rated U.K. 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 bank 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 notes 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
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 12. 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 year ended 28 February 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 are unquoted investments
(2012: 75 per cent).
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 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 (2012:
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 its expenses.
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 year end and throughout the year, the Company's only liability
subject to interest rate risk were the Loan Notes of GBP1,000 (2012:
GBP1,000) at 5.0 per cent (see note 11).
Notes to the Accounts
For the year ended 28 February 2013
14. Financial Instruments (continued)
Interest rate risk profile of financial assets
The following analysis sets out the interest rate risk of the Company's
financial assets.
Average Period
interest until
Rate status rate maturity 2013 2012
GBP'000 GBP'000
Cash at bank - RBS *Floating 0.9% 1,297 962
Non-interest
Cash held by custodian- Pershing bearing - 381 -
Alyth Trading Limited *Floating 2.5% 3 years 658 658
Benellen Trading Limited *Floating 2.5% 3 years 658 658
Cawdor Trading Limited *Floating 2.5% 3 years 658 658
Dunkeld Trading Limited *Floating 2.5% 3 years 658 658
Elgin Trading Limited *Floating 2.5% 4 years 470 470
Forward Internet Group Limited (formerly TrafficBroker)
loan note Fixed rate 8.1% matured - 800
Balance of financial assets Non-interest bearing - 1,631 2,841
6,411 7,705
*Benchmark rate is Bank of England base rate
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 GBP13,000 (2012 GBP49,000). A decrease of 1%
would have had an equal but opposite effect.
None of the loan stocks held by the Company are convertible.
Fair value hierarchy
Fair values have been measured at the end of the reporting period as
follows:-
As at 28
February Level 1 Level 2 Level 3
2013 'Quoted prices' 'Observable inputs' 'Unobservable inputs' Total
At fair
value
through
profit
and
loss - - 4,700 4,700
As at 29
February Level 1 Level 2 Level 3
2012 'Quoted prices' 'Observable inputs' 'Unobservable inputs' Total
At fair
value
through
profit
and
loss 814 200 5,700 6,714
Notes to the Accounts
For the year ended 28 February 2013
14. Financial Instruments (continued)
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 asset
('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 March 2012 1,798 3,902 5,700
Unrealised losses in the income
statement - - -
Realised gains in the income statement - - -
Purchases at cost - - -
Sales proceeds (200) (800) (1,000)
Balance as at 28 February 2013 1,598 3,102 4,700
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 year.
16. Contingencies, Guarantees and Financial Commitments
There were no commitments, contingencies or guarantees of the Company at
the year-end.
Notes to the Accounts
For the year ended 28 February 2013
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 year GBP75,000 (2012: GBP156,000) was due in respect of
investment management fees. The balance owing to Shore Capital Limited
at the period-end was GBP12,000 (2012: GBP25,000).
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 year
GBP24,000 (2012: GBP27,000) was due in respect of these services. The
balance owing to Shore Capital Fund Administration Services Limited at
the period-end was GBP4,000 (2012: GBP4,000).
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 VCT V PLC via Thomson Reuters ONE
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