Final Results

For immediate release 30 June 2009 Puma VCT II plc Preliminary 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 the world, but I am able to report that the defensive qualities of Puma VCT II plc's investments have protected it from much of these difficulties. "We remain cautious about the state of the economy and the duration of the current recession. The values of most types of asset already reflect the prospects for a long recession and with the reluctance or inability of banks to advance new credit, the environment remains challenging. This may reduce the collateral value supporting some of our secured loans and slow the progress in achieving successful realisations in preparation for the end of the VCT's life. Notwithstanding this, there is good potential to deliver a satisfactory post-tax return to investors which should outperform most other investments made over a similar period." Enquiries Shore Capital 020 7408 4090 Graham Shore Citigate Dewe Rogerson 020 7638 9571 Angharad Couch Lindsay Noton Notes to Editors Puma VCT II plc is managed by Shore Capital's successful fund management team. The Company's investment objective is to achieve high distributions to shareholders. It is investing in a diversified portfolio of smaller companies, including both unquoted companies and AIM and Plus Markets traded, selecting companies which Shore Capital believes will have a relatively lower risk profile than is typical for their size whilst having the opportunity for value appreciation. Initially, whilst suitable VCT Qualifying Companies are being identified, the Investment Manager invested the Company's funds in a range of investments intended to generate a positive return, including funds of hedge funds and other products which aim to achieve an absolute return. The VCT will continue to hold a proportion of such products after building up the desired holdings of VCT Qualifying Companies. Chairman's Statement It has been an unprecedented year for financial markets around the world. The global financial system was close to breaking point and two major US banks, Lehman Brothers and Washington Mutual, did fail. Closer to home, the AiM market fell an astonishing 62 per cent. over the course of the financial period. Against this background, I am able to report that the defensive qualities of Puma VCT II plc's investments have protected it from much of these difficulties. NAV at the year end was 95.70p, after payment of a dividend of 1.5p. On a total return basis, the VCT lost 7.9 per cent. during the year; this was considerably better than most other VCTs or indeed other types of investment, reflecting the Investment Manager's conservative approach. Most of the drop in the value of our investments arose in our AiM equity holdings which, as already noted above, saw sharp falls in price as many investors were forced or panicked into selling into an illiquid market. Since the year end, there has been a noticeable increase in the value of some of these investments since these stocks had suffered unusually large falls. Venture capital investments In the last period, the VCT met its minimum qualifying investment percentage of 70 per cent., which it has since maintained, and as a consequence it was not necessary to complete any qualifying transactions. Given the current uncertainties with AiM and private equity investments in regards to a timely exit, the Investment Manager has taken a cautious approach when considering further qualifying investments, ensuring where possible that they offer liquidity in the medium term with a good element of downside protection. It has been an eventful year for our existing qualifying investments. The VCT has an investment of over £1.4m in Cadbury House Limited. Cadbury House, the hotel and health club, has outperformed expectations in the current climate and won national awards for its facilities. In 2006, the VCT made its first investment in Stocklight, a rare book dealer 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, although business in this sector has been tough, the VCT's investment is secured and bears an attractive coupon. As announced previously, Bond Contracting Limited (in which the VCT invested £1.05m) has a master development contract and is making significant progress in constructing a 141 bed Holiday Inn hotel on the outskirts of Winchester. It is expected that this will complete in the current year and be operational in early 2010. The VCT invested in Clifford Contracting Limited, another contracting company, over the two years 2006/7 and 2007/8. Subsequent to the year end, Telford Homes plc, a residential property developer in East London, purchased Clifford Contracting Limited for £6,328,500, of which £1,039,000 was for this VCT's investment in Clifford Contracting Limited. The sale to Telford is in exchange for new shares and secured loan notes in Telford Homes plc and the investment will remain qualifying for VCT purposes for several years. It is expected that the transaction will enable the VCT to exit its investment in line with the expected wind-up of the VCT, should shareholders vote to approve this. At 28 February 2009, the VCT's qualifying portfolio had a total cost of £6,294,000 and was valued at £5,250,000 resulting in an unrealised loss of £1,044,000. Non-qualifying investments The Investment Manager has invested the non-qualifying investments on an absolute return basis. The market value was £1,375,000 at year-end against an underlying book cost of £1,207,000 with significant realisations in the year from investments in hedge funds. The performance of the non-qualifying portfolio was down in 2008/9 as a result of the downward pressure on the equity and property markets. Subsequent to year end, the VCT has used its substantial cash reserves to invest in high yielding investment grade corporate bonds and bond funds, selecting investments which are liquid and short dated. VAT As discussed in the last interim report, the Government has announced that VCTs will be exempt from paying VAT on investment management fees with effect from 1 October 2008. This represents a prospective annual cost saving for the VCT of approximately £37,000. The Government has conceded that VCTs are able to obtain a repayment of VAT paid on management fees in earlier periods for which we have put a claim in of approximately £64,000 subsequent to the year-end. This recovery of VAT has not been included in the NAV at the year end. Results and dividend The VCT generated a profit before tax on revenue account of £326,000. However, principally as a result of write-downs on investments, it incurred a net total loss for the period of £693,000. Gross revenue for the period was £402,000 and net revenue return after taxation was £278,000. The Board proposes a final dividend of 2.75p per Ordinary Share. The ex-dividend date will be 15 July 2009 and the record date 17 July 2009. Payment will be made to shareholders by 16 September 2009. Annual General Meeting The Annual General Meeting of the VCT will be held at Bond Street House, 14 Clifford Street, London, W1S 4JU on 9 September at 10:05am. Notice of the Annual General Meeting and Form of Proxy are inserted within the annual accounts. Outlook (Incorporating first Interim Management Statement for 2009/10) The fall-out from tighter credit conditions is presenting more attractive opportunities to Puma VCT II plc as credit spreads of solid, profitable companies widen resulting in attractive yields. The existing private equity investments are generating a satisfactory return and are largely in the form of secured loans, which the Investment Manager has structured to facilitate exit in the medium term. Since the start of the current financial year beginning 1 March 2009 to the close on 25 June 2009, your portfolio of qualifying AiM stocks has gained 43 per cent., compared to 25 per cent. for the AiM index over the same period. We remain cautious about the state of the economy and the duration of the current recession. The values of most types of asset already reflect the prospects for a long recession and with the reluctance or inability of banks to advance new credit, the environment remains challenging. This may reduce the collateral value supporting some of our secured loans and slow the progress in achieving successful realisations in preparation for the end of the VCT's life. Notwithstanding this, there is good potential to deliver a satisfactory post-tax return to investors which should outperform most other investments made over a similar period. Sir Aubrey Brocklebank Bt Chairman Investment Manager's Report Overall Performance In its fourth year, the Company's investment strategy has been tested repeatedly against a banking crisis which has spread to all corners of the market. As is usual during economic upheavals, investors shun smaller companies in favour of larger and more liquid investments, and as a result the valuation of AiM companies took an unprecedented fall. Thus, we are pleased to report that the NAV per share performed relatively well, only dropping from 105.56p to 95.70p representing a 7.9 per cent fall after taking into account the dividend of 1.5p. Notwithstanding this, the results are disappointing as our investors were looking for an absolute return on their capital. The performance of the non-qualifying portfolio also suffered as the market sentiment on property stocks and the general equity markets worsened over the period. This was because one element of the portfolio was property-related stocks which performed badly in 2008/2009, having previously generated good returns for the VCT. We redeemed the majority of the VCT's hedge fund investments in the summer and autumn of 2008; this timely redemption meant that the contribution from this element of the non-qualifying portfolio was effectively flat for the year. Qualifying Investments - unquoted The Company achieved its 70% qualifying status in the last financial period, and as a result the Board have concentrated on the monitoring of the VCT's existing investments, rebalancing its non-qualifying investments to reflect changed market circumstances and considering the options for exits. Puma VCT II's largest investment is its £1.46 million debt and equity investment in Cadbury House Limited. Cadbury House's hotel and health club development project which started in June 2005 is fully operational and delivering good results. The overwhelming success of the leisure club in growing membership led to a proposal to build an extension to increase capacity and the VCT's investment in the facilities has enabled the club to achieve UK Health Club of Year in 2009. Puma VCT II has invested £1.05 million in Bond Contracting Limited up to year-end. Bond Contracting was set-up to operate as a contractor within the leisure sector and actively sought to enter into contracting arrangements during the period. It has entered into a contract as master contractor to build a 141 room Holiday Inn hotel on the outskirts of Winchester. Stocklight Limited in which the VCT has invested £419,000, is a rare book dealer and the parent company of Bloomsbury Auctions, which has made progress expanding its book auction business both in the UK and overseas. Whilst trading for this business is tough, we believe that it has a strong. Clifford Contracting Limited ("Clifford") is a contracting business supplying services to residential developers in which the VCT had invested £1.04 million. Subsequent to the year end, Telford Homes plc ("Telford"), the AiM listed residential property developer in East London noted for regeneration projects within public sector partnerships, purchased Clifford. The purchase price paid by Telford for 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 the issue of 1,130,089 new Telford ordinary shares. Puma VCT II will receive approximately £935,000 in loan notes earning 8.88% p.a. interest after 31 October 2009 (4.5% p.a. prior to this) and 104,000 Telford shares. The value of the new loan notes and Telford shares are in line with the valuation of Clifford as at the year end. Qualifying Investments - quoted The VCT made no additional qualifying investments into AiM quoted companies during the year. As mentioned above, the value of the AiM portfolio dropped significantly, but we are pleased to note that some of these stocks had begun to recover by the year end, a recovery which has continued subsequently. We believe this reflects a better recognition of their strengths. As at the year end, the listed qualifying holdings made up approximately 11% of total qualifying holdings and about 7% of the entire portfolio. Within this, the three largest components are Patsystems plc, Mount Engineering plc and Vertu Motors plc, accounting for 81% of total AiM listed qualifying holdings, and we therefore highlight these three larger investments below. Patsystems provides derivatives trading software products and solutions to financial institutions. The company continues to perform well and recently reported that 2009 has started strongly with sales successes across all products and regions. In addition to this growth, a high proportion of revenues are recurring giving a greater predictability. Cash generation is strong and the company has considerable 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 current conditions. Mount Engineering owns a portfolio of established engineering brands selling principally to the oil and gas sector, largely for operations rather than for major capital projects. The company is cash generative and has a strong balance sheet with 2008 profits slightly ahead of expectations. Group trading is forecast to be reasonably resilient and the company currently trades on less than six times forecast 2009 profits. The VCT has invested £153,000 in this company which 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, largely from freehold premises which it has acquired in the last few years on good terms. The business has remained profitable throughout the financial crisis and economic downturn and has consistently outperformed the market over the past 3 years. It has strong management which to date have delivered growth and cash generation and protected its strong balance sheet. The VCT has invested £407,000 in this company which is valued at £88,000, resulting in an unrealised loss of £319,000. However, the share price has appreciated over 170% since period end and currently trades at around tangible NAV. Vertu recently raised a further £30m to take advantage of opportunities in the sector. The steady stream of bad news about the state of the banks, corporate debt, and the poor state of the economy continues to dominate the press. However, for those companies without high levels of debt, it appears that investors are looking for value amongst share prices that have fallen too far. It is for this reason that smaller companies have outperformed their larger peers so far this year, as the scale of the rating discounts they were trading at has become apparent. We are sceptical that the economy is past its worst, but if it improves from here there should be scope for the asset values to recover further as the VCT's investments mature. Non-qualifying Investments During 2008, the VCT held significant sums in bank commercial paper on which it achieved satisfactory returns. Since the sharp fall in interest rates, we have invested some of the balance of the VCT's portfolio in reasonably liquid, better yielding corporate bonds with short maturity, of investment grade or close thereto. In the same vein, the VCT has purchased a diversified portfolio of corporate bond funds holding a broader range of similar credits. As stated above, we reduced holdings in hedge funds to a low level - the remaining hedge fund holdings are generating a positive return. Investment Strategy We are now focused on improving the liquidity of the portfolio wherever possible whilst maintaining an appropriate risk adjusted return. The objective remains to achieve an orderly winding up of the VCT's assets at the end of its life, subject to shareholder approval. Shore Capital Limited Investment Portfolio Summary As at 28 February 2009 Original Valuation Cost Gain/(Loss) Valuation as Investment £'000 £'000 £'000 % of NAV Qualifying Investments - Unquoted Albemarle Contracting Limited 700 700 - 9% Bond Contracting Limited 1,054 1,054 - 13% Cadbury House Limited 1,459 1,459 - 18% Clifford Contracting Limited 1,040 1,040 - 13% Stocklight Limited 419 419 - 5% Qualifying Investments - Quoted @UK plc 8 285 (277) 0% Alterian Plc 6 13 (7) 0% Clarity Commerce Solutions 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 Qualifying Investments 5,250 6,294 (1,044) 66% Non - Qualifying Investments - Unquoted Lakan Investments Limited 72 58 14 1% Non - Qualifying Investments - Quoted Puma Brandenburg Limited 175 397 (222) 2% The Hotel Corporation plc 276 283 (7) 3% Blackrock UK Emerging Cos Hedge Fund Limited 477 378 99 6% Treveria plc 6 58 (52) 0% Experian Finance bonds 201 201 - 3% Total Non - Qualifying Investments 1,207 1,375 (168) 15% Total investments 6,457 7,669 (1,212) 81% Other net assets including cash at bank and in hand 1,485 1,485 19% Net assets 7,942 9,154 (1,212) 100% Income Statement For 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 £'000 Losses on investments - (970) (970) - (400) (400) Income 5 402 - 402 364 - 364 402 (970) (568) 364 (400) (36) Investment management fees 43 130 173 64 191 255 Performance fees (53) (81) (134) 36 (116) (80) Other expenses 86 - 86 110 - 110 76 49 125 210 75 285 Return/(loss) on ordinary activities before taxation 326 (1,019) (693) 154 (475) (321) Tax on ordinary activities (48) 48 - (12) 12 - Return/(loss) after taxation attributable to equity shareholders 278 (971) (693) 142 (463) (321) Basic and diluted return/(loss) per Ordinary Share (pence) 2 3.33p (11.69)p (8.36)p 1.72p (5.58)p (3.86)p 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 2009 As at As at 28 February 2009 29 February 2008 Note £'000 £'000 Fixed Assets Investments 6,457 8,561 Current Assets Debtors 93 137 Cash at bank and in hand 1,446 293 1,539 430 Creditors - amounts falling due within one year (53) (96) Net Current Assets 1,486 334 Total Assets less Current Liabilities 7,943 8,895 Creditors - amounts falling due after more than one year (including convertible debt) (1) (1) Net Assets 7,942 8,894 Capital and Reserves Called up share capital 83 83 Capital reserve - realised 723 769 Capital reserve - (1,210) (285) unrealised Other reserve - 134 Revenue reserve 8,346 8,193 Equity Shareholders' Funds 7,942 8,894 Basic Net Asset Value per 3 95.70p 107.17p Ordinary Share Diluted Net Asset Value per Ordinary Share 3 95.70p 105.56p Cash Flow Statement For the year ended 28 February 2009 For the period to Year ended 29 February 28 February 2009 2008 Note £'000 £'000 Operating activities Investment income received 449 280 Investment management fees (182) (327) paid Directors fees paid (14) (17) Foreign exchange gain on cash - 19 Other expenses paid (71) (102) Net cash inflow/(outflow) from 4 operating activities 182 (147) Equity dividend paid (125) (75) Capital expenditure and financial investment Purchase of investments (384) (5,206) Proceeds from sale of 1,551 5,154 investments Acquisition costs - (1) Net realised gain on forward foreign exchange contracts (70) 63 Net cash inflow/(outflow) from capital expenditure and financial investment 1,097 10 Inflow/(outflow) in the year 1,154 (212) Reconciliation of net cash flow to movement in net funds Increase/(decrease) in cash 1,154 (212) for the year Net cash at start of the year 293 505 Net funds at the year end 1,447 293 Reconciliation of Movements in Shareholders' Funds For 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 £'000 At 1 March 2008 83 769 (285) 134 8,193 8,894 Return/(loss) after taxation attributable to equity shareholders - (46) (925) (134) 278 (827) Equity dividend paid - - - - (125) (125) At 28 February 2009 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 £'000 At 1 January 2007 83 115 832 214 8,126 9,370 Return/(loss) after taxation attributable to equity shareholders - 654 (1,117) (80) 142 (401) Equity dividend paid - - - - (75) (75) At 29 February 2008 83 769 (285) 134 8,193 8,894 Unaudited Notes to the Accounts For the period ended 29 February 2008 1. Basis of Accounting This announcement has been prepared under the historical cost convention, modified to include the revaluation of fixed asset investments, and in accordance with UK Generally Accepted Accounting Practice ("UK GAAP") and the Statement of Recommended Practice, 'Financial Statements of Investment Trust Companies' ("SORP") revised in 2005. Although this SORP principally applies to Investment Trusts, many of the characteristics of Investment Trusts are shared by VCTs and 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 Total Return 278,000 (971,000) (693,000) 142,000 (463,000) (321,000) for the year Weighted 8,299,300 8,299,300 8,299,300 8,299,300 8,299,300 8,299,300 average number of shares Return 3.33p (11.69)p (8.36)p 1.72p (5.58)p (3.86)p per Ordinary Share The total return per ordinary share is the sum of the revenue return and capital return. 3. Net Asset Value per Ordinary Share 2009 2008 Basic Diluted Basic Diluted Net assets (£) 7,942,000 7,942,000 8,894,000 8,894,000 Number of Ordinary Shares 8,299,300 8,299,300 8,299,300 8,425,540 Net Assets Value per 95.70p 95.70p 107.17p 105.56p Ordinary Share (p) Calculation of number of shares 2009 2008 Basic Diluted Basic Diluted Number of Ordinary Shares 8,299,300 8,299,300 8,299,300 8,299,300 Dilutive effect of - - - 126,240 performance fee At year/period-end 8,299,300 8,299,300 8,299,300 8,425,540 4. Reconciliation of total return before taxation to net cash inflow from operating activities 2009 2008 £'000 £'000 Total loss before taxation (693) (320) Losses on investments 970 400 Decrease/(increase) in debtors 47 (84) Decrease in creditors (8) (82) Foreign exchange gain on cash - 19 Performance fee to be effected through share-based (134) (80) payment Net cash inflow/(outflow) from operating activities 182 (147) 5. Income 2009 2008 £'000 £'000 Income from investments Loan stock interest 311 238 Dividend income 44 60 Investment fee rebate 10 21 Other income 21 - 386 319 Other income Bank deposit interest 16 45 402 364 6. Dividends The directors propose a final dividend payment of 2.75p per Ordinary Share (2008 final - 1.5p). 7. The financial information set out in the announcement does not constitute the Company's statutory accounts for the year ended 28 February 2009 or the period ended 29 February 2008. The financial information for the period ended 29 February 2008 is derived from the statutory accounts for that period which have been delivered to the Registrar of Companies. The auditor's report was unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. The auditors are reporting today on the statutory accounts for the year ended 28 February 2009. The statutory accounts for the year ended 28 February 2009 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. A copy of the full annual report and financial statements for the year ended 28 February 2009 will be published today on www.shorecap.co.uk, a website maintained by the investment manager, Shore Capital Limited, filed at the UKLA document exchange and posted to shareholders in due course. Copies will also be available to the public at the registered office of the Company at Bond Street House, 14 Clifford Street, London W1S 4JU. The financial information contained within this preliminary announcement 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.