11 Dec 2013 15:29
Pembroke VCT plc
HALF-YEARLY REPORT
for the period ended 30 September 2013
OVERVIEW
Investment Objective
Pembroke VCT plc (the "Company") is a generalist VCT focused on private equity style investments in the leisure and luxury brands sectors. The Company will seek to invest in a diversified portfolio of small, principally unquoted companies, and select those which Oakley Capital Management Limited (the "Manager") believes provide the opportunity for value appreciation.
Key data
for the period ended 30 September 2013
| 30/09/13 |
| (unaudited) |
Net Asset Value ("NAV") | £13,702,875 |
Shares in issue | 14,072,002 |
NAV per share | 97.38p |
Loss on ordinary activities before tax | £87,687 |
Loss per share | (0.74)p |
CHAIRMAN'S STATEMENT
On behalf of the Board of Directors, I would like to welcome you as a shareholder of Pembroke VCT plc (the "Company") and thank you for your investment in the Company.
Offer for subscription
The Company's offer for subscription has raised £14.8m to date. The closing date for the offer is 31 January 2014.
PERFORMANCE
I am pleased to present this inaugural half-yearly report for the Company.
At the end of the period, we had committed a total of £5.5 million to 7 companies across 3 sectors - health and fitness, consumer brands and restaurant/cafe. Given that all of these investments have been made within the reporting period, we are carrying them at cost of £3.9 million. I am pleased to report that all the investee companies are trading in line with expectation and that the Manager's team is actively involved with the founders and managers in the development of the companies. All of the investments are more fully described in the Fund Manager's Review.
Total net assets at 30 September 2013 were £13.7 million, comprising cash of £9.9 million and the value of investments of £3.9 million. Net asset value per share at the period end was 97.38p, reflecting share issue expenses of 2p per share and operating losses in the period of 0.62p per share.
SHARE ISSUES AND FUND RAISING
During the period there were no issues or buybacks of Ordinary Shares.
Valuation Policy
Investments held by the Company have been valued in accordance with the International Private Equity and Venture Capital (IPEVC) valuation guidelines (August 2010) developed by the British Venture Capital Association and other organisations. Through these guidelines, investments are valued as defined at 'fair value'. Ordinarily, unquoted investments will be valued at cost for a limited period following the date of acquisition, being the most suitable approximation of fair value unless there is an impairment or significant accretion in value during the period. The portfolio valuations are prepared by the Manager, reviewed and approved by the Board quarterly and subject to audit annually.
Outlook
We continue to enjoy good quality deal flow and, as a consequence, it is likely that the Company will be fully invested by the time of our first year anniversary.
I am pleased by our portfolio of investments which we believe provide exciting opportunities for the future.
Jonathan Djanogly
Chairman
29 November 2013
If you have any questions relating to your investment please contact the company secretary on 0131 2437215 or email info@pembrokevct.com, for further information refer to the Company's website www.pembrokevct.com.
FUND MANAGER'S REVIEW
Performance
Performance across the portfolio companies has been encouraging and given the relative nascent nature of the investments, we believe it is appropriate to continue to value the investments at cost.
Portfolio Activity
In the first half of the year we have made 7 investments, committing in total £5.5m and investing £3.9m to date.
The company has made no realisations during the period.
Portfolio Overview
http://www.rns-pdf.londonstockexchange.com/rns/3119V_1-2013-12-11.pdf
Andrew Wolfson
Oakley Capital Management Limited
29 November 2013
INVESTMENT PORTFOLIO
as at 30 September 2013
|
Book cost |
Valuation |
Fund |
Company | £'000 | £'000 | % |
LBID (UK) Trading Limited* | 1,000 | 1,000 | 7.30 |
KX Group Holding Limited | 700 | 700 | 5.11 |
LBID Holdings Limited* | 690 | 690 | 5.03 |
FRV LLP | 471 | 471 | 3.44 |
Kat Maconie Limited | 320 | 320 | 2.34 |
Troubadour Goods Limited | 290 | 290 | 2.12 |
Plenish Cleanse Limited | 225 | 225 | 1.64 |
Boom Spin Limited | 172 | 172 | 1.25 |
Total investments | 3,868 | 3,868 | 28.23 |
Net current assets | 9,835 | 9,835 | 71.77 |
Net assets | 13,703 | 13,703 | 100.00 |
Note:
*LBID (UK) Trading and LBID Holdings Limited are the registered entities through which the Company invested in La Bottega.
PRINCIPAL RISKS AND UNCERTAINTIES
The Company's assets consist of equities, cash and liquid resources. Its principal risks are therefore market risk, interest rate risk, credit risk and liquidity risk.
Other risks faced by the Company include:
In addition to the risks mentioned above the other key risks that the Company faces are:
1. VCT status risk
The Company is required to fulfil certain criteria in order to maintain its VCT status. Where full approval as a VCT is not maintained, this could potentially result in the loss of tax relief (i.e. Capital Gains and Income Tax relief) which have been provided to both the Company and Investors alike. The Manager continually monitors compliance with the relevant VCT regulations, and has engaged PricewaterhouseCoopers LLP to provide periodic reports to ensure our compliance.
2. Investment risk
The Company invests in small to medium sized businesses, as such there is an inherent degree of risk and lower liquidity than investing in larger quoted companies. The Manager performs extensive in-house due diligence on all investments, and also engages independent third party providers when the investments are of a certain size. In addition to due diligence, the Company aims to diversify its portfolio by investing in a range of industries and companies at varying stages of development.
3. Share value risk
The value of shares may fall below the original amount invested or may not fully reflect the underlying net asset value. Dividends may not be paid. Investment in the Company should be seen as a long-term investment. There is likely to be an illiquid market in the shares with investors finding it difficult to realise their investment.
GOING CONCERN
The Directors have assessed the future funding requirements of the Company and are of the opinion that the Company has adequate resources to fund its operations for the foreseeable future. Therefore they believe that it is appropriate to prepare the accounts on a going concern basis.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
in respect of the half-yearly financial report
We confirm that to the best of our knowledge:
· the condensed set of financial statements has been prepared in accordance with the Statement "Half-yearly financial reports" issued by the UK Accounting Standards Board;
· the Chairman's Statement and Fund Manager's Review (constituting the interim management report) includes a true and fair review of the information required by DTR4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the period ended 30 September 2013 and their impact on the condensed set of financial statements;
· the Statement of Principal Risks and Uncertainties on page • is a fair review of the information required by DTR4.2.7R, being a description of the principal risks and uncertainties for the remaining six months of the year; and
· the financial statements include a fair review of the information required by DTR4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the period ended 30 September 2013 and that have materially affected the financial position or performance of the entity during that period.
For and on behalf of the Board
Jonathan Djanogly
Chairman
29 November 2013
INCOME STATEMENT
for the period ended 30 September 2013
|
| Period ended | ||
|
| 30 September 2013 | ||
|
| (unaudited) | ||
|
| Revenue | Capital | Total |
| Note | £'000 | £'000 | £'000 |
Realised/unrealised movements on investments |
| - | - | - |
Income |
| 40 | - | 40 |
Investment management fee |
| (13) | (38) | (51) |
Other expenses |
| (77) | - | (77) |
(Loss) on ordinary activities before taxation |
| (50) | (38) | (88) |
Taxation on ordinary activities |
| - | - | - |
(Loss) on ordinary activities after taxation |
| (50) | (38) | (88) |
(Loss) per Ordinary share | 2 | (0.42)p | (0.32)p | (0.74)p |
The total column is the profit and loss account of the Company, with the revenue and capital columns representing supplementary information under the Statement of Recommended Practice, "Financial Statements of Investment Trust Companies and Venture Capital Trusts" ("SORP") revised in January 2009.
All the items above derive from continuing operations of the Company. There were no other recognised gains or losses in the period.
The accompanying notes are an integral part of the statement.
CONDENSED BALANCE SHEET
as at 30 September 2013
|
| 30 September 2013 |
|
| (unaudited) |
| Note | £'000 |
Fixed assets |
|
|
Investments held at fair value |
| 3,868 |
|
|
|
Current assets |
|
|
Debtors |
| 53 |
Cash at bank |
| 9,898 |
Total current assets |
| 9,951 |
|
|
|
Current liabilities |
|
|
Creditors: amounts falling due within one year |
| (116) |
Net current assets |
| 9,835 |
Total assets less current liabilities |
| 13,703 |
|
|
|
Capital and reserves |
|
|
Called up share capital |
| 141 |
Share premium account |
| 13,650 |
Revenue reserves |
| (88) |
Equity shareholders' funds |
| 13,703 |
Net asset value per share | 3 | 97.38p |
The accompanying notes are an integral part of the balance sheet.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the period ended 30 September 2013
|
|
| Period ended | ||
|
| 30 September 2013 | |||
|
|
| (unaudited) | ||
| Share capital | Share premium | Revenue reserves |
Total | |
| £'000 | £'000 | £'000 | £'000 | |
Opening shareholders' funds | - | - | - | - | |
(Loss) for the period | - | - | (88) | (88) | |
Issue of shares | 141 | 13,650 | - | 13,791 | |
Closing shareholders' funds | 141 | 13,650 | (88) | 13,703 | |
The accompanying notes are an integral part of the statement.
CASH FLOW STATEMENT
for the period ended 30 September 2013
Period | ||
ended | ||
30 September 2013 | ||
(unaudited) | ||
Note | £'000 | |
Operating activities | ||
(Loss) on ordinary activities before taxation |
| (88) |
(Increase) in debtors |
| (53) |
Increase in trade creditors and accruals |
| 66 |
Net cash outflow from operating activities |
| (75) |
Taxation |
|
|
Taxation paid |
| - |
Financial investment |
|
|
Purchase of investments |
| (3,868) |
Disposal of investments |
| - |
Net cash outflow from financial investment |
| (3,868) |
Net cash outflow before financing |
| (3,943) |
|
|
|
Financing |
|
|
Issue of shares |
| 14,122 |
Expenses of the issue of shares |
| (281) |
Net cash inflow/(outflow) from financing |
| 13,841 |
Increase/(decrease) in cash |
| 9,898 |
|
|
|
Reconciliation of net cash flow to movement in net cash |
|
|
Net cash at start of period |
| - |
Net cash at end of period |
| 9,898 |
Increase in cash during the period |
| 9,898 |
The accompanying notes are an integral part of the statement.
NOTES TO THE FINANCIAL STATEMENTS
for the period ended 30 September 2013
1. The unaudited interim financial statements have been prepared in accordance with applicable Accounting Standards and with the Statement of Recommended Practice, "Financial Statements of Investment Trust Companies and Venture Capital Trusts" ("SORP") revised in January 2009.
The accounting policies applied are consistent with those intended to be applied in the first set of annual financial statements and have been consistently applied throughout the period. Full details of accounting policies will be disclosed in the annual financial statements.
2. The (loss) per share is based on the loss attributable to shareholders for the period and the weighted average number of shares in issue during the period of 11,770,530.
3. The net asset value per share at 30 September 2013 is based on net assets of £13,702,875 and the number of shares in issue of 14,072,002.
4. The financial information set out in this report has not been audited and does not comprise full financial statements within the meaning of Section 434 of the Companies Act 2006. Statutory accounts will be prepared and audited for the Company's first accounting reference period ending 31 March 2014.
5. Related Party Transactions
The Company retains Oakley Capital Management Limited ("OCML") as its Manager.
Peter Dubens, a non-executive director of the Company, is a director and sole shareholder of OCML. During the period ended 30 September 2013 £50,809 was payable to OCML. At the period end OCML owed the Company £7,578.
On 27 November 2012 50,000 redeemable preference shares in the Company were allotted and issued to OCML at a cost of £50,000. On 13 July 2013 the redeemable preference shares were fully redeemed and subsequently cancelled. £50,000 is included in creditors in respect of the funds repayable to OCML.
Palmer Capital LLP, of which Peter Dubens is a member, acted as promoter for the Share offer during the period. The fees in the period amounted to £281,440 out of which Palmer Capital LLP paid the costs of the Share offer.
The number of ordinary shares (all of which are held beneficially) by the directors and certain members of the management team of OCML are:
30 September 2013 shares held | ||
Jonathan Djanogly | Director | 25,000 |
Laurence Blackall | Director | 200,000 |
Peter Dubens | Director | 400,000 |
Kathy Jackson | Manager | 60,000 |
Stewart Porter | Manager | 75,000 |
Save as disclosed in this paragraph there is no conflict of interest between the Company, the duties of the directors, the duties of the directors of the Manager and their private interests and other duties.
6. Copies of the half-yearly report are being sent to all shareholders. Further copies are available free of charge from The City Partnership (UK) Limited, secretary to the Company by telephoning 0131 243 7215.
CORPORATE INFORMATION
Directors | Registrar |
Jonathan Simon Djanogly | The City Partnership (UK) Limited |
Laurence Charles Neil Blackall | c/o Share Registrars |
Peter Adam Daiches Dubens | Suite E, First Floor |
9 Lion and Lamb Yard | |
all of: | Farnham |
3 Cadogan Gate | Surrey |
London | GU9 7LL |
SW1X 0AS | |
Auditors | |
Grant Thornton UK LLP | |
Secretary | Grant Thornton House |
The City Partnership (UK) Limited | Melton Street |
Thistle House | Euston Square, London |
21 Thistle Street | NW1 2EP |
Edinburgh | |
EH2 1DF | Solicitors |
Telephone: 01312437215 | Howard KennedyFsi LLP |
19 Cavendish Square | |
London | |
Manager | W1A 2AW |
Oakley Capital Management Limited | |
3 Cadogan Gate | Bankers |
London | Barclays Bank plc |
SW1X 0AS | 1st Floor |
99 Hatton Gardens | |
VCT Tax Adviser | London |
PricewaterhouseCoopers LLP | EC1N 8DN |
1 Embankment Place | |
London | |
WC2N 6RH | |
SHAREHOLDER INFORMATION
Share price
The Company's shares are listed on the London Stock Exchange.
Financial calendar
November 2013 Half-yearly report for the period ended 30 September 2013 published
February 2014 Interim management statement released
31 March 2014 Year end
June 2014 Announcement of final results for the year ended 31 March 2014
August 2014 Annual General Meeting