Final Results>

Final Results

(Thomson Reuters ONE) - For immediaterelease 30 June 2009 Puma VCT II plcPreliminary Final Results for the Year Ended 28 February 2009(Incorporating first Interim Management Statement for 2009/10)Highlights* Fully diluted NAV per share of 95.70p at year end (down 7.9% for the year).* Final dividend of 2.75p per ordinary share.* Cumulative dividends to date (including Final) of 5.15p per ordinary share.* Portfolio of qualifying AiM stocks has recovered significantly since the year end.Sir Aubrey Brocklebank Bt of Puma VCT II plc said:"It has been an unprecedented year for financial markets around theworld, but I am able to report that the defensive qualities of PumaVCT II plc's investments have protected it from much of thesedifficulties."We remain cautious about the state of the economy and the durationof the current recession. The values of most types of asset alreadyreflect the prospects for a long recession and with the reluctance orinability of banks to advance new credit, the environment remainschallenging. This may reduce the collateral value supporting some ofour secured loans and slow the progress in achieving successfulrealisations in preparation for the end of the VCT's life.Notwithstanding this, there is good potential to deliver asatisfactory post-tax return to investors which should outperformmost other investments made over a similar period."EnquiriesShoreCapital020 7408 4090GrahamShoreCitigate DeweRogerson020 7638 9571AngharadCouchLindsay NotonNotes to EditorsPuma VCT II plc is managed by Shore Capital's successful fundmanagement team. The Company's investment objective is to achievehigh distributions to shareholders. It is investing in a diversifiedportfolio of smaller companies, including both unquoted companies andAIM and Plus Markets traded, selecting companies which Shore Capitalbelieves will have a relatively lower risk profile than is typicalfor their size whilst having the opportunity for value appreciation.Initially, whilst suitable VCT Qualifying Companies are beingidentified, the Investment Manager invested the Company's funds in arange of investments intended to generate a positive return,including funds of hedge funds and other products which aim toachieve an absolute return. The VCT will continue to hold aproportion of such products after building up the desired holdings ofVCT Qualifying Companies.Chairman's StatementIt has been an unprecedented year for financial markets around theworld. The global financial system was close to breaking point andtwo major US banks, Lehman Brothers and Washington Mutual, did fail.Closer to home, the AiM market fell an astonishing 62 per cent. overthe course of the financial period. Against this background, I amable to report that the defensive qualities of Puma VCT II plc'sinvestments have protected it from much of these difficulties. NAVat the year end was 95.70p, after payment of a dividend of 1.5p. Ona total return basis, the VCT lost 7.9 per cent. during the year;this was considerably better than most other VCTs or indeed othertypes of investment, reflecting the Investment Manager's conservativeapproach.Most of the drop in the value of our investments arose in our AiMequity holdings which, as already noted above, saw sharp falls inprice as many investors were forced or panicked into selling into anilliquid market. Since the year end, there has been a noticeableincrease in the value of some of these investments since these stockshad suffered unusually large falls.Venture capital investmentsIn the last period, the VCT met its minimum qualifying investmentpercentage of 70 per cent., which it has since maintained, and as aconsequence it was not necessary to complete any qualifyingtransactions. Given the current uncertainties with AiM and privateequity investments in regards to a timely exit, the InvestmentManager has taken a cautious approach when considering furtherqualifying investments, ensuring where possible that they offerliquidity in the medium term with a good element of downsideprotection.It has been an eventful year for our existing qualifyinginvestments. The VCT has an investment of over £1.4m in CadburyHouse Limited. Cadbury House, the hotel and health club, hasoutperformed expectations in the current climate and won nationalawards for its facilities.In 2006, the VCT made its first investment in Stocklight, a rare bookdealer and the parent company of Bloomsbury Auctions Limited.Bloomsbury Auctions is Europe's largest specialist book auctioneer.The VCT has invested a total of £419,000 to date and, althoughbusiness in this sector has been tough, the VCT's investment issecured and bears an attractive coupon.As announced previously, Bond Contracting Limited (in which the VCTinvested £1.05m) has a master development contract and is makingsignificant progress in constructing a 141 bed Holiday Inn hotel onthe outskirts of Winchester. It is expected that this will completein the current year and be operational in early 2010.The VCT invested in Clifford Contracting Limited, another contractingcompany, over the two years 2006/7 and 2007/8. Subsequent to theyear end, Telford Homes plc, a residential property developer in EastLondon, purchased Clifford Contracting Limited for £6,328,500, ofwhich £1,039,000 was for this VCT's investment in CliffordContracting Limited. The sale to Telford is in exchange for newshares and secured loan notes in Telford Homes plc and the investmentwill remain qualifying for VCT purposes for several years. It isexpected that the transaction will enable the VCT to exit itsinvestment in line with the expected wind-up of the VCT, shouldshareholders vote to approve this.At 28 February 2009, the VCT's qualifying portfolio had a total costof £6,294,000 and was valued at £5,250,000 resulting in an unrealisedloss of £1,044,000.Non-qualifying investmentsThe Investment Manager has invested the non-qualifying investments onan absolute return basis. The market value was £1,375,000 atyear-end against an underlying book cost of £1,207,000 withsignificant realisations in the year from investments in hedgefunds. The performance of the non-qualifying portfolio was down in2008/9 as a result of the downward pressure on the equity andproperty markets. Subsequent to year end, the VCT has used itssubstantial cash reserves to invest in high yielding investment gradecorporate bonds and bond funds, selecting investments which areliquid and short dated.VATAs discussed in the last interim report, the Government has announcedthat VCTs will be exempt from paying VAT on investment managementfees with effect from 1 October 2008. This represents a prospectiveannual cost saving for the VCT of approximately £37,000. TheGovernment has conceded that VCTs are able to obtain a repayment ofVAT paid on management fees in earlier periods for which we have puta claim in of approximately £64,000 subsequent to the year-end. Thisrecovery of VAT has not been included in the NAV at the year end.Results and dividendThe VCT generated a profit before tax on revenue account of£326,000. However, principally as a result of write-downs oninvestments, it incurred a net total loss for the period of£693,000. Gross revenue for the period was £402,000 and net revenuereturn after taxation was £278,000. The Board proposes a finaldividend of 2.75p per Ordinary Share. The ex-dividend date will be15 July 2009 and the record date 17 July 2009. Payment will be madeto shareholders by 16 September 2009.Annual General MeetingThe Annual General Meeting of the VCT will be held at Bond StreetHouse, 14 Clifford Street, London, W1S 4JU on 9 September at10:05am. Notice of the Annual General Meeting and Form of Proxy areinserted within the annual accounts.Outlook (Incorporating first Interim Management Statement for2009/10)The fall-out from tighter credit conditions is presenting moreattractive opportunities to Puma VCT II plc as credit spreads ofsolid, profitable companies widen resulting in attractive yields.The existing private equity investments are generating a satisfactoryreturn and are largely in the form of secured loans, which theInvestment Manager has structured to facilitate exit in the mediumterm. Since the start of the current financial year beginning 1 March2009 to the close on 25 June 2009, your portfolio of qualifying AiMstocks has gained 43 per cent., compared to 25 per cent. for the AiMindex over the same period.We remain cautious about the state of the economy and the duration ofthe current recession. The values of most types of asset alreadyreflect the prospects for a long recession and with the reluctance orinability of banks to advance new credit, the environment remainschallenging. This may reduce the collateral value supporting some ofour secured loans and slow the progress in achieving successfulrealisations in preparation for the end of the VCT's life.Notwithstanding this, there is good potential to deliver asatisfactory post-tax return to investors which should outperformmost other investments made over a similar period.Sir Aubrey Brocklebank BtChairmanInvestment Manager's ReportOverall PerformanceIn its fourth year, the Company's investment strategy has been testedrepeatedly against a banking crisis which has spread to all cornersof the market. As is usual during economic upheavals, investors shunsmaller companies in favour of larger and more liquid investments,and as a result the valuation of AiM companies took an unprecedentedfall. Thus, we are pleased to report that the NAV per share performedrelatively well, only dropping from 105.56p to 95.70p representing a7.9 per cent fall after taking into account the dividend of 1.5p.Notwithstanding this, the results are disappointing as our investorswere looking for an absolute return on their capital.The performance of the non-qualifying portfolio also suffered as themarket sentiment on property stocks and the general equity marketsworsened over the period. This was because one element of theportfolio was property-related stocks which performed badly in2008/2009, having previously generated good returns for the VCT. Weredeemed the majority of the VCT's hedge fund investments in thesummer and autumn of 2008; this timely redemption meant that thecontribution from this element of the non-qualifying portfolio waseffectively flat for the year.Qualifying Investments - unquotedThe Company achieved its 70% qualifying status in the last financialperiod, and as a result the Board have concentrated on the monitoringof the VCT's existing investments, rebalancing its non-qualifyinginvestments to reflect changed market circumstances and consideringthe options for exits.Puma VCT II's largest investment is its £1.46 million debt and equityinvestment in Cadbury House Limited. Cadbury House's hotel and healthclub development project which started in June 2005 is fullyoperational and delivering good results. The overwhelming success ofthe leisure club in growing membership led to a proposal to build anextension to increase capacity and the VCT's investment in thefacilities has enabled the club to achieve UK Health Club of Year in2009.Puma VCT II has invested £1.05 million in Bond Contracting Limited upto year-end. Bond Contracting was set-up to operate as a contractorwithin the leisure sector and actively sought to enter intocontracting arrangements during the period. It has entered into acontract as master contractor to build a 141 room Holiday Inn hotelon the outskirts of Winchester.Stocklight Limited in which the VCT has invested £419,000, is a rarebook dealer and the parent company of Bloomsbury Auctions, which hasmade progress expanding its book auction business both in the UK andoverseas. Whilst trading for this business is tough, we believe thatit has a strong.Clifford Contracting Limited ("Clifford") is a contracting businesssupplying services to residential developers in which the VCT hadinvested £1.04 million. Subsequent to the year end, Telford Homesplc ("Telford"), the AiM listed residential property developer inEast London noted for regeneration projects within public sectorpartnerships, purchased Clifford. The purchase price paid by Telfordfor the ordinary shares of, and loan notes issued by, Clifford is£6,328,500 in total, comprising £5,695,650 in new loan notes and theissue of 1,130,089 new Telford ordinary shares. Puma VCT II willreceive approximately £935,000 in loan notes earning 8.88% p.a.interest after 31 October 2009 (4.5% p.a. prior to this) and 104,000Telford shares. The value of the new loan notes and Telford sharesare in line with the valuation of Clifford as at the year end.Qualifying Investments - quotedThe VCT made no additional qualifying investments into AiM quotedcompanies during the year. As mentioned above, the value of the AiMportfolio dropped significantly, but we are pleased to note that someof these stocks had begun to recover by the year end, a recoverywhich has continued subsequently. We believe this reflects a betterrecognition of their strengths.As at the year end, the listed qualifying holdings made upapproximately 11% of total qualifying holdings and about 7% of theentire portfolio. Within this, the three largest components arePatsystems plc, Mount Engineering plc and Vertu Motors plc,accounting for 81% of total AiM listed qualifying holdings, and wetherefore highlight these three larger investments below.Patsystems provides derivatives trading software products andsolutions to financial institutions. The company continues to performwell and recently reported that 2009 has started strongly with salessuccesses across all products and regions. In addition to thisgrowth, a high proportion of revenues are recurring giving a greaterpredictability. Cash generation is strong and the company hasconsiderable cash reserves on its balance sheet. It is valued at£264,000 and at a cost of £214,000, and the unrealised profit of£50,000 is indicative of the strength of this company in the currentconditions.Mount Engineering owns a portfolio of established engineering brandsselling principally to the oil and gas sector, largely for operationsrather than for major capital projects. The company is cashgenerative and has a strong balance sheet with 2008 profits slightlyahead of expectations. Group trading is forecast to be reasonablyresilient and the company currently trades on less than six timesforecast 2009 profits. The VCT has invested £153,000 in this companywhich is valued at £118,000, resulting in an unrealised loss of£35,000.Vertu Motors is a volume retailer of both new and used cars, largelyfrom freehold premises which it has acquired in the last few years ongood terms. The business has remained profitable throughout thefinancial crisis and economic downturn and has consistentlyoutperformed the market over the past 3 years. It has strongmanagement which to date have delivered growth and cash generationand protected its strong balance sheet. The VCT has invested £407,000in this company which is valued at £88,000, resulting in anunrealised loss of £319,000. However, the share price has appreciatedover 170% since period end and currently trades at around tangibleNAV. Vertu recently raised a further £30m to take advantage ofopportunities in the sector.The steady stream of bad news about the state of the banks, corporatedebt, and the poor state of the economy continues to dominate thepress. However, for those companies without high levels of debt, itappears that investors are looking for value amongst share pricesthat have fallen too far. It is for this reason that smallercompanies have outperformed their larger peers so far this year, asthe scale of the rating discounts they were trading at has becomeapparent. We are sceptical that the economy is past its worst, butif it improves from here there should be scope for the asset valuesto recover further as the VCT's investments mature.Non-qualifying InvestmentsDuring 2008, the VCT held significant sums in bank commercial paperon which it achieved satisfactory returns. Since the sharp fall ininterest rates, we have invested some of the balance of the VCT'sportfolio in reasonably liquid, better yielding corporate bonds withshort maturity, of investment grade or close thereto. In the samevein, the VCT has purchased a diversified portfolio of corporate bondfunds holding a broader range of similar credits. As stated above,we reduced holdings in hedge funds to a low level - the remaininghedge fund holdings are generating a positive return.Investment StrategyWe are now focused on improving the liquidity of the portfoliowherever possible whilst maintaining an appropriate risk adjustedreturn. The objective remains to achieve an orderly winding up ofthe VCT's assets at the end of its life, subject to shareholderapproval.Shore Capital LimitedInvestment Portfolio SummaryAs at 28 February 2009 Original Valuation Cost Gain/(Loss) Valuation asInvestment £'000 £'000 £'000 % of NAVQualifyingInvestments -UnquotedAlbemarle ContractingLimited 700 700 - 9%Bond ContractingLimited 1,054 1,054 - 13%Cadbury House Limited 1,459 1,459 - 18%Clifford ContractingLimited 1,040 1,040 - 13%Stocklight Limited 419 419 - 5%QualifyingInvestments - Quoted(at)UK plc 8 285 (277) 0%Alterian Plc 6 13 (7) 0%Clarity CommerceSolutions plc 33 98 (65) 0%I-Design Group plc 13 41 (28) 0%INVU plc 4 81 (77) 0%Mount Engineering plc 118 153 (35) 1%Patsystems plc 264 214 50 3%Sport Media Group plc 10 210 (200) 0%Universe Group plc 34 120 (86) 0%Vertu Motors plc 88 407 (319) 1%Total QualifyingInvestments 5,250 6,294 (1,044) 66%Non - QualifyingInvestments -UnquotedLakan InvestmentsLimited 72 58 14 1%Non - QualifyingInvestments - QuotedPuma BrandenburgLimited 175 397 (222) 2%The Hotel Corporationplc 276 283 (7) 3%Blackrock UK EmergingCos Hedge FundLimited 477 378 99 6%Treveria plc 6 58 (52) 0%Experian Financebonds 201 201 - 3%Total Non -QualifyingInvestments 1,207 1,375 (168) 15%Total investments 6,457 7,669 (1,212) 81%Other net assetsincluding cash atbank and in hand 1,485 1,485 19%Net assets 7,942 9,154 (1,212) 100%Income StatementFor the year ended 28 February 2009 Year ended For the period to 28 February 2009 29 February 2008 Revenue Capital Total Revenue Capital Total Note £'000 £'000 £'000 £'000 £'000 £'000Losses oninvestments - (970) (970) - (400) (400)Income 5 402 - 402 364 - 364 402 (970) (568) 364 (400) (36)Investmentmanagement fees 43 130 173 64 191 255Performancefees (53) (81) (134) 36 (116) (80)Other expenses 86 - 86 110 - 110 76 49 125 210 75 285Return/(loss)on ordinaryactivitiesbefore taxation 326 (1,019) (693) 154 (475) (321)Tax onordinaryactivities (48) 48 - (12) 12 -Return/(loss)after taxationattributable toequityshareholders 278 (971) (693) 142 (463) (321)Basic anddilutedreturn/(loss)per OrdinaryShare (pence) 2 3.33p (11.69)p (8.36)p 1.72p (5.58)p (3.86)pThe total column represents the profit and loss account and therevenue and capital columns are supplementary information.All revenue and capital items in the above statement derive fromcontinuing operations. No operations were acquired or discontinuedin the year.No separate Statement of Total Recognised Gains and Losses ispresented as all gains and losses are included in the IncomeStatementBalance SheetAs at 28 February 2009 As at As at 28 February 2009 29 February 2008 Note £'000 £'000Fixed AssetsInvestments 6,457 8,561Current AssetsDebtors 93 137Cash at bank and in hand 1,446 293 1,539 430Creditors - amountsfalling due within oneyear (53) (96)Net Current Assets 1,486 334Total Assets less CurrentLiabilities 7,943 8,895Creditors - amountsfalling due after morethan one year(including convertibledebt) (1) (1)Net Assets 7,942 8,894Capital and ReservesCalled up share capital 83 83Capital reserve - realised 723 769Capital reserve - (1,210) (285)unrealisedOther reserve - 134Revenue reserve 8,346 8,193Equity Shareholders' Funds 7,942 8,894Basic Net Asset Value per 3 95.70p 107.17pOrdinary ShareDiluted Net Asset Valueper Ordinary Share 3 95.70p 105.56pCash Flow StatementFor the year ended 28 February 2009 For the period to Year ended 29 February 28 February 2009 2008 Note £'000 £'000Operating activitiesInvestment income received 449 280Investment management fees (182) (327)paidDirectors fees paid (14) (17)Foreign exchange gain on cash - 19Other expenses paid (71) (102)Net cash inflow/(outflow) from 4operating activities 182 (147)Equity dividend paid (125) (75)Capital expenditure andfinancial investmentPurchase of investments (384) (5,206)Proceeds from sale of 1,551 5,154investmentsAcquisition costs - (1)Net realised gain on forwardforeign exchange contracts (70) 63Net cash inflow/(outflow) fromcapital expenditure andfinancial investment 1,097 10Inflow/(outflow) in the year 1,154 (212)Reconciliation of net cashflow to movement in net fundsIncrease/(decrease) in cash 1,154 (212)for the yearNet cash at start of the year 293 505Net funds at the year end 1,447 293Reconciliation of Movements in Shareholders' FundsFor the year ended 28 February 2009 For the year ended 28 February 2009 Called up Capital Capital share reserve- reserve- Other Revenue capital realised unrealised reserve reserve Total £'000 £'000 £'000 £'000 £'000 £'000At 1 March 2008 83 769 (285) 134 8,193 8,894Return/(loss)after taxationattributable toequityshareholders - (46) (925) (134) 278 (827)Equity dividendpaid - - - - (125) (125)At 28 February2009 83 723 (1,210) - 8,346 7,942 For the period to 29 February 2008 Called up Capital Capital share reserve- reserve- Other Revenue capital realised unrealised reserve reserve Total £'000 £'000 £'000 £'000 £'000 £'000At 1 January 2007 83 115 832 214 8,126 9,370Return/(loss)after taxationattributable toequityshareholders - 654 (1,117) (80) 142 (401)Equity dividendpaid - - - - (75) (75)At 29 February2008 83 769 (285) 134 8,193 8,894Unaudited Notes to the AccountsFor the period ended 29 February 20081. Basis of AccountingThis announcement has been prepared under the historical costconvention, modified to include the revaluation of fixed assetinvestments, and in accordance with UK Generally Accepted AccountingPractice ("UK GAAP") and the Statement of Recommended Practice,'Financial Statements of Investment Trust Companies' ("SORP") revisedin 2005. Although this SORP principally applies to Investment Trusts,many of the characteristics of Investment Trusts are shared by VCTsand therefore the Company has followed the SORP.The comparative period runs from 1 January 2007 to 29 February 2008.2. Basic and diluted return per Ordinary Share 2009 2008 Revenue Capital Total Revenue Capital TotalReturn 278,000 (971,000) (693,000) 142,000 (463,000) (321,000)for theyearWeighted 8,299,300 8,299,300 8,299,300 8,299,300 8,299,300 8,299,300averagenumberofsharesReturn 3.33p (11.69)p (8.36)p 1.72p (5.58)p (3.86)pperOrdinaryShareThe total return per ordinary share is the sum of the revenue returnand capital return.3. Net Asset Value per Ordinary Share 2009 2008 Basic Diluted Basic DilutedNet assets (£) 7,942,000 7,942,000 8,894,000 8,894,000Number of Ordinary Shares 8,299,300 8,299,300 8,299,300 8,425,540Net Assets Value per 95.70p 95.70p 107.17p 105.56pOrdinary Share (p)Calculation of number ofshares 2009 2008 Basic Diluted Basic DilutedNumber of Ordinary Shares 8,299,300 8,299,300 8,299,300 8,299,300Dilutive effect of - - - 126,240performance feeAt year/period-end 8,299,300 8,299,300 8,299,300 8,425,5404. Reconciliation of total return before taxation to netcash inflow from operating activities 2009 2008 £'000 £'000Total loss before taxation (693) (320)Losses on investments 970 400Decrease/(increase) in debtors 47 (84)Decrease in creditors (8) (82)Foreign exchange gain on cash - 19Performance fee to be effected through share-based (134) (80)paymentNet cash inflow/(outflow) from operating activities 182 (147)5. Income 2009 2008 £'000 £'000Income from investmentsLoan stock interest 311 238Dividend income 44 60Investment fee rebate 10 21Other income 21 - 386 319Other incomeBank deposit interest 16 45 402 3646. DividendsThe directors propose a final dividend payment of 2.75p per OrdinaryShare (2008 final - 1.5p).7. The financial information set out in the announcement doesnot constitute the Company's statutory accounts for the year ended 28February 2009 or the period ended 29 February 2008. The financialinformation for the period ended 29 February 2008 is derived from thestatutory accounts for that period which have been delivered to theRegistrar of Companies. The auditor's report was unqualified and didnot contain a statement under section 237 (2) or (3) of the CompaniesAct 1985. The auditors are reporting today on the statutory accountsfor the year ended 28 February 2009. The statutory accounts for theyear ended 28 February 2009 will be delivered to the Registrar ofCompanies following the Company's Annual General Meeting.A copy of the full annual report and financial statements for theyear ended 28 February 2009 will be published today onwww.shorecap.co.uk, a website maintained by the investment manager,Shore Capital Limited, filed at the UKLA document exchange and postedto shareholders in due course. Copies will also be available to thepublic at the registered office of the Company at Bond Street House,14 Clifford Street, London W1S 4JU.The financial information contained within this preliminaryannouncement was approved by the board on 29 June 2009.---END OF MESSAGE---This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.

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