TIDMPUMX
RNS Number : 9276C
Puma VCT 10 PLC
20 June 2019
HIGHLIGHTS
-- 24p per share of dividends paid since inception (including 6p
interim dividend paid in February 2019), equivalent to an 8.6% per
annum tax-free running yield on net investment.
-- NAV per share at the year-end was 91.14p (after adding back dividends paid to date).
-- As envisaged in the original Prospectus, resolutions will be
put forward for a winding up of the VCT in the autumn of this
year.
-- Provision of GBP1.5 million against the carrying value of
Warm Hearth, a company owning two freehold pubs, to reflect
difficult trading.
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the Company's fifth annual report for
the year ended 28 February 2019.
The Company was launched and began investing in Spring 2014,
with a planned life of five years. In this, its fifth year, the
process of realising the Company's investments and preparing to
return capital to investors has continued to make good
progress.
Dividend
As envisaged in the Company's prospectus, the Company has for
the fourth calendar year in succession paid a dividend of 6p per
ordinary share, equivalent to a 8.6% per annum tax-free running
yield on shareholders' net investment.
Investments
At the end of the year, the Company had just over GBP16 million
invested in a mixture of qualifying and non-qualifying investments
whilst maintaining our VCT qualifying status. Details of these
investments can be found in the Investment Manager's report on
pages 3 to 6. This includes a discussion about Warm Hearth Limited,
against which we have made a provision of GBP1.5 million.
Results
Before taking account of the provision, the Company had a
pre-tax loss of GBP252,000 for the year (2018: GBP103,000 profit),
a post-tax loss of 0.97p (2018: 0.43p gain) per ordinary share
(calculated on the weighted average number of shares). The
provision reduced this to a pre-tax loss of GBP1,752,000 for the
year resulting in a post-tax loss of 6.40p per ordinary share.
Reflecting the provision against the Warm Hearth investment, the
Net Asset Value per ordinary share ("NAV") at 28 February 2019
after adding back the 24p of dividends paid to date was 91.14p
(2018: 97.54p).
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 and has reported no issues in
this regard for the Company to date. PwC will continue to assist
the Investment Manager in monitoring rule compliance as the Company
approaches the end of its planned life.
Annual General Meeting and Proposal to Wind-Up the Company
The Annual General Meeting of the Company will be held at Bond
Street House, 14 Clifford Street, London W1S 4JU on 28 August 2019
at 2.30 p.m. 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 Prospectus, the
Board expects to convene a General Meeting of the Company in the
coming months, 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 de-list from the
London Stock Exchange.
Once such resolutions have been passed by shareholders, for a
maximum period of three years, many of the VCT rules, including the
70 per cent qualifying rule, are suspended whilst the Company
retains its VCT 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 2019.
David Vaughan
Chairman
20 June 2019
INVESTMENT MANAGER'S REPORT
Introduction
In its fifth year, the Company continues to make good progress.
It is now beginning the process of returning capital to
shareholders through the realisation of investments whilst
maintaining its qualifying status. We believe our portfolio is well
positioned to deliver attractive risk-adjusted returns to
shareholders within the Company's expected remaining time
horizon.
Investments
Qualifying Investments
Growing Fingers - Children's Nursery
As previously reported, the Company has invested GBP1.4 million
(as part of a GBP2.8 million investment alongside other Puma VCTs)
in Growing Fingers Limited. The investment is funding the
construction and launch of a new purpose-built 108 place nursery
school in Wendover, Buckinghamshire, an affluent commuter town with
direct links to London. The Company benefits from first charge
security over the Wendover site and the Growing Fingers
business.
Welcome Health - Chain of Pharmacies
The Company had previously invested GBP2.5 million (as part of a
GBP5 million investment alongside other Puma VCTs) in Welcome
Health Limited. Welcome Health owns and operates a series of mature
pharmacies across the North East of England, focusing on providing
pharmaceutical services to a currently underserviced and relatively
deprived market. We are pleased to report that, following the year
end, the entrepreneur behind Welcome Health has refinanced the
group which should facilitate the redemption of the Company's
investment in full in the coming months.
Mini Rainbows - Children's Nurseries
Mini Rainbows Limited (in which the Company invested GBP2.5
million as part of a GBP5 million investment alongside other Puma
VCTs) owns and operates two mature children's day nurseries in
Scotland - in Murrayfield, an affluent part of Edinburgh, and in
Shawlands, Glasgow. Both sites are performing well with occupancy
ahead of forecast.
Warm Hearth - Pubs with Microbreweries
In late 2015, the Company invested GBP2.5 million (as part of a
GBP5 million investment alongside other Puma VCTs) in Warm Hearth
Limited, a pub business seeking to capitalise on the strong growth
trends within the craft beer sub-market. Warm Hearth entered into a
franchise agreement with Brewhouse & Kitchen Limited
("B&K"), a strong and fast-growing national branded operator,
offering craft micro-brewing activities within each of its pub
units as a point of focus. Warm Hearth currently owns and operates
two substantial freehold pub assets in Chester and Wilmslow. As
previously reported, performance of these units has been
significantly below our expectations for some time. Moreover, the
market for pubs offering food has deteriorated over the last year
and whilst the micro-brewing is a differentiator, it has not
protected Warm Hearth from these trends. Management remain focused
on improving performance, as well as looking at planning options,
particularly at Chester to convert upstairs space into boutique
hotel rooms, which have the prospect of delivering value. This
notwithstanding, the Board has decided to provide against the
carrying value of this investment.
Saville Services - Construction projects
The Company's investment of GBP2.1 million (alongside other Puma
VCTs) into Saville Services Limited continues to perform well.
Saville Services has worked on a series of projects during the
year: the team completed the construction of a 77-bed,
purpose-built care home in Chester and is currently working on the
construction of a 9-unit supported living scheme in Bishop
Auckland.
Materials Recycling Facility, Oxfordshire
As previously reported, a major fire occurred in February 2016
at the Materials Recycling Facility operated by Opes Industries
Limited ("Opes"), into which the Company invested a total of
GBP3.45m (as part of an GBP8.8m investment by Puma entities). As a
result of the incident, the Board made a provision of GBP510,000
against the carrying value of the Company's investment in Opes. The
investment was provided in the form of equity and loan stock and
our interests are covered by a first fixed and floating charge over
Opes' assets. Following the incident, the Company appointed an
administrator over Opes in order to protect the Company's
investment. The administrator has made substantial progress in
recovering the Company's investment: the site was sold and a
settlement was reached with Opes' insurers. As a result, a large
part of the original capital invested has been recovered and, as
previously reported, the directors have reversed GBP188,000 of the
original GBP510,000 impairment to reflect the current position. The
administrator continues to pursue several other avenues to recover
the balance of the Company's investment.
Sunlight Education Nucleus - Special Educational Needs
Schools
In November 2017, the Company made a GBP1 million qualifying
investment (as part of a GBP4.7 million investment alongside other
Puma VCTs) in Sunlight Education Nucleus Limited, a company seeking
to develop, own and operate a series of special educational needs
schools across the United Kingdom. We are pleased to report that,
shortly following the year end, the team at Sunlight completed on
the purchase of the site for their first school in Stafford, West
Midlands.
Non-Qualifying Investments
Mixed Residential Commercial Development, Bloomsbury
As previously reported, a GBP1.2 million loan (as part of a
total facility of GBP17.97 million) was advanced to Cudworth
Limited (through the VCT's affiliate Lothian Lending Limited) to
fund the construction of a mixed residential and commercial
development in Bloomsbury, London, close to the British Museum and
600m from King's Cross station. The development includes 11
apartments, 2 houses and 11,800 square feet of B1 commercial space.
The loan is secured with a first charge over the site, the
development is well progressed and we are pleased to report that
contracts have recently been exchanged to sell the commercial
units, both houses and a flat, with three further flats under
offer.
Apartment Development Project, Worthing
As previously reported, a loan of GBP500,000 was advanced
(through an affiliate, Valencia Lending Limited) to Columbia House
Development Limited. This loan, together with loans from other
vehicles managed and advised by the Investment Manager totalling
GBP5 million, facilitated the acquisition of an office block in
Worthing, for which the borrower sought planning permission for a
conversion into 144 flats. The loan is secured with a first charge
over the property at an appropriate loan to current value (the site
already has planning permission for a 102 flat scheme). We are
pleased to report that the borrower has now obtained the enhanced
planning consent and we expect the loan to be repaid in the coming
months.
Care Home for the Elderly, Formby
The GBP800,000 loan to New Care (Sefton) Limited in connection
with the development and initial trading of a 75-bed purpose-built
care home in Formby, Merseyside, continues to perform in line with
expectations. The New Care Group is an experienced developer and
operator of care homes. The loan (through an affiliate, Lavender
Lending Limited) is part of an overall facility of GBP7.98 million
and is secured with a first charge over the site. We are pleased to
report that the borrower has agreed to sell the site on practical
completion of the development which should facilitate the repayment
of the loan in full.
Supported Living, Wigan
During the year, a loan facility of GBP2.1 million was provided
(through affiliates, Valencia Lending Limited and Lothian Lending
Limited) to Enabling Homes Investments Ltd, an experienced
developer of supported living homes. The loans are funding the
development of a 22-apartment supported living scheme in Wigan and
are secured with a first charge over the site. Construction is
progressing well and practical completion is targeted for early
this summer. Enabling Homes Investments Ltd has agreed terms to
sell the scheme immediately following practical completion which
should generate sufficient proceeds to repay the loans.
Part Exchange, Citrus Group
As previously reported, a series of loans had been advanced to
various entities within the Citrus Group, which at the start of the
year stood at GBP1 million (through an affiliate, Victoria Lending
Limited). These loans, together with loans from other vehicles
managed and advised by your Investment Manager, formed part of a
series of revolving credit facilities to provide working capital to
the Citrus PX business. Citrus PX operates a property part exchange
service facilitating the rapid purchase of properties for
developers and homeowners. We are pleased to report that, during
the year, the loans were repaid in full.
Housing Development Project, Aberdeen
As previously reported, a GBP474,000 loan (as part of a GBP2.9
million facility from other vehicles managed and advised by your
Investment Manager) had been extended (through an affiliate,
Valencia Lending Limited) to Churchill Homes (Culter House)
Limited. Churchill Homes is a longstanding Aberdeenshire developer
and the facility provided funding towards the construction of a
private detached housing development in one of Aberdeen's finest
residential suburbs. We are pleased to report that, during the
year, the loan was repaid in full.
Construction of Airport Hotel, Edinburgh
In June 2017, GBP0.8 million of loans were advanced to Ability
Hotels (Edinburgh) Limited (as part of an overall facility of GBP16
million, through an affiliate, Latimer Lending Limited) to fund the
development of a new 240-room Hampton by Hilton hotel at Edinburgh
Airport. We are pleased to report that the hotel opened last year
and, following the year end, the loans were repaid in full.
Care Home for the Elderly, Egham
As previously reported, a loan of GBP575,000 had been advanced
(through an affiliate, Meadow Lending Limited) to Windsar Care (UK)
LLP to fund the development and initial trading of a 68-bed
purpose-built care home in Egham, Windsor. This loan, together with
loans from other vehicles managed and advised by the Investment
Manager totalling GBP7.2 million, are secured with a first charge
over the site. We are pleased to report that, following completion
of the development earlier this year, the loan has been repaid in
full after the year end.
Liquidity Management
To further manage liquidity, the Company had exposure to a
GBP199,000 bond issued by Commonwealth Bank of Australia which
matured during the year.
Investment Strategy
We are pleased to have invested the Company's funds in a
balanced portfolio of both qualifying and non-qualifying
investments and are working on improving the liquidity of the
portfolio wherever possible whilst maintaining an appropriate risk
adjusted return. We continue to focus on the monitoring of our
investments and are focused on exits. The objective remains to
achieve an orderly winding up of the Company's assets at the end of
its life, subject to shareholder approval at the forthcoming
General Meeting.
Puma Investment Management Limited
20 June 2019
Investment Portfolio Summary
As at 28 February 2019
Valuation
as a % of
Valuation Cost Gain/(loss) Net Assets
GBP'000 GBP'000 GBP'000
Qualifying Investments
Opes Industries Limited 2,328 2,650 (322) 13%
Warm Hearth Limited 1,000 2,500 (1,500) 5%
Mini Rainbows Limited 2,500 2,500 - 13%
Welcome Health Limited 2,500 2,500 - 13%
Saville Services Limited 2,139 2,139 - 12%
Growing Fingers Limited 1,400 1,400 - 8%
Sunlight Education Nucleus
Limited 1,000 1,000 - 5%
Total Qualifying Investments 12,867 14,689 (1,822) 69%
---------- -------- ------------ ------------
Non-Qualifying Investments
Valencia Lending Limited 901 901 - 5%
Lothian Lending Limited 664 664 - 4%
Latimer Lending Limited 722 722 - 4%
Lavender Lending Limited 600 600 - 3%
Victoria Lending Limited 400 400 - 2%
Meadow Lending Limited 475 475 - 3%
Total Non-Qualifying
investments 3,762 3,762 - 21%
---------- -------- ------------ ------------
Total Investments 16,629 18,451 (1,822) 90%
Balance of Portfolio 1,924 1,924 - 10%
Net Assets 18,553 20,375 (1,822) 100%
---------- -------- ------------ ------------
Of the investments held at 28 February 2019, all are
incorporated in England and Wales.
Income Statement
For the year ended 28 February 2019
Year ended 28 February Year ended 28 February
2019 2018
Note Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(Loss)/gain on investments 8 (b) - (1,501) (1,501) - 190 190
Income 2 398 - 398 644 - 644
398 (1,501) (1,103) 644 190 834
-------- -------- -------- -------- --------
Investment management
fees 3 (109) (326) (435) (117) (351) (468)
Other expenses 4 (214) - (214) (263) - (263)
(323) (326) (649) (380) (351) (731)
-------- -------- -------- -------- --------
Profit/(loss) before
taxation 75 (1,827) (1,752) 264 (161) 103
Taxation 5 (14) (2) (16) (50) 66 16
Profit/(loss) and
total comprehensive
income for the year 61 (1,829) (1,768) 214 (95) 119
======== ======== ======== ======== ======== ========
Basic and diluted
Return/(loss) per
ordinary share (pence) 6 0.22p (6.62p) (6.40p) 0.77p (0.34p) 0.43p
======== ======== ======== ======== ======== ========
All items in the above statement derive from continuing
operations.
There are no gains or losses other than those disclosed in the
Income Statement.
The total column of this statement is the Statement of Total
Comprehensive Income of the Company prepared in accordance with FRS
102 'The Financial Reporting Standard applicable in the UK and
Republic of Ireland'. The supplementary revenue and capital columns
are prepared in accordance with the Statement of Recommended
Practice, 'Financial Statements of Investment Trust Companies and
Venture Capital Trusts' issued in November 2014 by the Association
of Investment Companies and updated in February 2018.
Balance Sheet
As at 28 February 2019
As at As at
28 February 28 February
Note 2019 2018
GBP'000 GBP'000
Fixed Assets
Investments 8 16,629 20,313
------------- -------------
Current Assets
Debtors 9 2,054 1,725
Cash 25 90
------------- -------------
2,079 1,815
Creditors - amounts falling
due within one year 10 (155) (149)
Net Current Assets 1,924 1,666
------------- -------------
Net Assets 18,553 21,979
============= =============
Capital and Reserves
Called up share capital 12 17 17
Share premium account 15,624 15,624
Capital reserve - realised (1,495) (1,166)
Capital reserve - unrealised (1,821) (321)
Revenue reserve 6,228 7,825
Total Equity 18,553 21,979
============= =============
Net Asset Value per Ordinary
Share 13 67.14p 79.54p
============= =============
The financial statements on pages 32 to 46 were approved and
authorised for issue by the Board of Directors on 20 June 2019 and
were signed on their behalf by:
Peter Hewitt
Director
Statement of Cash Flows
For the year ended 28 February 2019
Year ended Year ended
28 February 28 February
2019 2018
GBP'000 GBP'000
(Loss)/profit after tax (1,768) 119
Tax charge/(credit) in the year 16 (16)
Unrealised loss on investments 1,500 -
Realised loss/(gain) on investments 1 (190)
Increase in debtors (391) (576)
Increase/(decrease) in creditors 6 (4)
Cash outflow from operations (636) (667)
------------- -------------
Corporation tax received/(paid) 45 (95)
Net cash outflow from operating activities (591) (762)
------------- -------------
Cash flow from investing activities
Purchase of investments - (2,067)
Proceeds from disposal of investments
and repayments of loans 2,184 4,334
Net cash generated from investing
activities 2,184 2,267
------------- -------------
Cash flow from financing activities
Dividends paid to shareholders (1,658) (1,658)
Net cash used for financing activities (1,658) (1,658)
------------- -------------
Decrease in cash and cash equivalents (65) (153)
Cash and cash equivalents at the beginning
of the year 90 243
Cash and cash equivalents at the end
of the year 25 90
============= =============
Statement of Changes in Equity
For the year ended 28 February 2019
Called Share Capital Capital
up share premium reserve reserve Revenue
capital account - realised - unrealised reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1 March
2017 17 15,624 (933) (459) 9,269 23,518
Realised gain from the
prior period - - 50 (50) - -
Total comprehensive income
for the year - - (283) 188 214 119
Dividends paid - - - - (1,658) (1,658)
Balance as at 28 February
2018 17 15,624 (1,166) (321) 7,825 21,979
Total comprehensive income
for the year - - (329) (1,500) 61 (1,768)
Dividends paid - - - - (1,658) (1,658)
Balance as at 28 February
2019 17 15,624 (1,495) (1,821) 6,228 18,553
========== ========= ============ ============== ========= ========
Distributable reserves comprise: Capital reserve-realised,
Capital reserve-unrealised (excluding gains on unquoted
investments) and the Revenue reserve. At the year-end distributable
revenue reserves were GBP6,228,000 (2018: GBP7,825,000).
The Capital reserve-realised includes gains/losses that have
been realised in the year due to the sale of investments, net of
related costs. The Capital reserve-unrealised represents the
investment holding gains/losses and shows the gains/losses on
investments still held by the company not yet realised by an asset
sale.
Share premium represents premium on shares issued less issue
costs.
The revenue reserve represents the cumulative revenue earned
less cumulative distributions.
1. Accounting Policies
Accounting convention
Puma VCT 10 plc ("the Company") was incorporated, registered and
is domiciled in England. The Company's registered number is
08714913. The registered office is Bond Street House, 14 Clifford
Street, London W1S 4JU. The Company is a public limited company
(limited by shares) whose shares are listed on LSE with a premium
listing. The company's principal activities and a description of
the nature of the Company's operations are disclosed in the
Strategic Report.
The financial statements have been prepared under the historical
cost convention, modified to include investments at fair value, and
in accordance with the requirements of the Companies Act 2006,
including the provisions of the Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations 2008, FRS 102 'The
Financial Reporting Standard applicable in the UK and Republic of
Ireland' ("FRS 102") and the Statement of Recommended Practice,
'Financial Statements of Investment Trust Companies and Venture
Capital Trusts' issued in November 2014 by the Association of
Investment Companies and updated in February 2018 ("the SORP").
Monetary amounts in these financial statements are rounded to
the nearest whole GBP1,000, except where otherwise indicated.
Investments
All investments are measured at fair value. They are all held as
part of the Company's investment portfolio and are managed in
accordance with the investment policy set out on page 16.
Listed investments are stated at bid price at the reporting
date.
Unquoted investments are stated at fair value by the Directors
with reference to the International Private Equity and Venture
Capital Valuation Guidelines ("IPEV") as follows:
-- 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.
-- Other investments (comprising equity and loan notes) and
investments in debt instruments will usually be valued by applying
a discounted cash flow methodology based on expected future returns
of the investment.
-- Alternative methods of valuation such as multiples or net
asset value may be applied in specific circumstances if considered
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.
Income
Dividends receivable on listed equity shares are brought into
account on the ex-dividend date. Dividends receivable on unquoted
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 agreed performance fees payable
to the Investment Manager, Puma Investment Management Limited, and
members of the investment management team at 20% of the aggregate
excess of the amounts realised over GBP1 per Ordinary Share
returned to Ordinary Shareholders. This incentive will only be
effective once the other holders of Ordinary Shares have received
distributions of GBP1 per share.
The performance incentive has been satisfied through the issue
of 6,908,306 Ordinary Shares (as set out in note 11 of the
financial statements) to the Investment Manager and members of the
investment management team being 20% of the total issued Ordinary
Share capital of 34,541,530. Under the terms of the incentive
arrangement, all rights to dividends will be waived until the GBP1
per Ordinary Share performance target has been met. The performance
fee is accounted for as an equity-settled share-based payment.
Section 26 of FRS 102 "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 in issue at the balance
sheet date. Any change in fair value 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 charged to capital; and
-- the investment management fee, 75% 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 the 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
periods. Deferred tax is measured on a non-discounted basis at the
tax rates that are expected to apply in the periods in which timing
differences are expected to reverse, based on tax rates and laws
enacted or substantively enacted at the balance sheet date.
Reserves
Realised losses and gains on investments, transaction costs, the
capital element of the investment 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 the capital element of the performance fee
are also taken through the Income Statement and are recognised in
the Capital Reserve - Unrealised.
Debtors
Debtors include accrued income which is recognised at amortised
cost, equivalent to the fair value of the expected balance
receivable.
Creditors
Creditors are initially measured at the transaction price and
subsequently measured at amortised cost, being the transaction
price less any amounts settled.
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.
Key accounting estimates and assumptions
The Company makes estimates and assumptions concerning the
future. The resulting accounting estimates and assumptions will, by
definition, seldom equal the related actual results. The estimates
and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets within the next
financial period relate to the fair value of unquoted investments.
Further details of the unquoted investments are disclosed in the
Investment Manager's Report on pages 3 to 6 and notes 8 and 14 of
the financial statements.
2. Income
Year ended 28 February Year ended 28 February
2019 2018
GBP'000 GBP'000
Income from investments
Loan and loan note interest 398 639
Bond yields - 5
398 644
======================= =======================
3. Investment Management Fees
Year ended 28 February Year ended 28 February
2019 2018
GBP'000 GBP'000
Puma Investments fees 435 468
435 468
======================= =======================
Puma Investment Management Limited ("Puma Investments") has been
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 Puma Investments will be paid an annual fee of 2% 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% of funds raised. Total costs
this year were 2.4% of the funds raised (2018: 2.7%). Graham Shore
(a director) holds a Directorship of the parent of the Investment
Manager.
4. Other expenses
Year ended 28 Year ended 28 February
February 2019 2018
GBP'000 GBP'000
PI Administration Services
Limited 76 82
Directors' Remuneration 48 48
Social security costs 3 2
Auditor's remuneration
for statutory audit 25 24
Legal and professional
fees 14 50
Other expenses 48 57
214 263
=============== =======================
PI Administration Services Limited provides administrative
services to the Company for an aggregate annual fee of 0.35% of the
Net Asset Value of the Fund, payable quarterly in arrears.
Remuneration for each Director for the year is disclosed in the
Directors' Remuneration Report on page 22. The Company had no
employees (other than Directors) during the year (2018: none). The
average number of non-executive Directors during the year was 3
(2018: 3). The non-executive Directors are considered to be the Key
Management Personnel of the Company with total remuneration for the
year of GBP51,000 (2018: GBP50,000), including social security
costs.
The Auditor's remuneration of GBP21,000 (2018: GBP20,000) has
been grossed up in the table above to be inclusive of VAT.
Non-audit fees charged during the year were GBP250 (2018: GBPnil)
for iXBRL tagging of the 2018 financial statements.
5. Taxation
Year ended
28 February Year ended 28
2019 February 2018
GBP'000 GBP'000
UK corporation tax charged
to revenue reserve 14 50
UK corporation tax charged/(credited)
to capital reserve 2 (66)
UK corporation tax charge/(credit)
for the year 16 (16)
============= ===============
Factors affecting tax charge for the year
(Loss)/profit before taxation (1,752) 103
============= ===============
Tax charge calculated on (loss)/profit
before taxation at the applicable
rate of 19% (333) 20
Tax on capital items not taxable 285 (36)
Tax losses carried forward 48 -
Adjustment in respect of prior
year 16 -
16 (16)
============= ===============
Capital returns are not taxable as the Company is exempt from
tax on realised capital gains whilst it continues to comply with
the VCT regulations, so no corporation tax is recognised on capital
gains or losses. Due to the intention to continue to comply with
the VCT regulations, the Company has not provided for deferred tax
on any realised or unrealised capital gains and losses. No deferred
tax asset has been recognised in respect of the tax losses carried
forward due to the uncertainty as to recovery.
6. Basic and diluted return/(loss) per Ordinary Share
Year ended 28 February 2019
Revenue Capital Total
Total comprehensive income
for the year GBP61,000 (GBP1,829,000) (GBP1,768,000)
------------ --------------- ---------------
Number of shares in issue 34,541,530 34,541,530 34,541,530
Less: management incentive
shares (6,908,306) (6,908,306) (6,908,306)
Number of shares in issue
for purposes of basic and
diluted return/(loss) per
share calculations 27,633,224 27,633,224 27,633,224
Basic and diluted return/(loss)
per share 0.22p (6.62p) (6.40p)
------------ --------------- ---------------
Year ended 28 February 2018
Revenue Capital Total
Total comprehensive income
the year GBP214,000 (GBP95,000) GBP119,000
------------ --------------- ---------------
Number of shares in issue 34,541,530 34,541,530 34,541,530
Less: management incentive
shares (6,908,306) (6,908,306) (6,908,306)
Number of shares in issue
for purposes of basic and
diluted return/(loss) per
share calculations 27,633,224 27,633,224 27,633,224
------------ --------------- ---------------
Based and diluted return/(loss)
per share 0.77p (0.34p) 0.43p
------------ --------------- ---------------
7. Dividends
The Directors do not propose a final dividend in relation to the
year ended 28 February 2019 (2018: GBPnil). An interim dividend of
6p per ordinary share was paid from revenue reserves in the year
ended 28 February 2019 totalling GBP1,658,000 (2018:
GBP1,658,000).
8. Investments
Qualifying Non-qualifying
(a) Movements in investments investments investments Total
GBP'000 GBP'000 GBP'000
Book cost at 28 February
2018 14,989 5,646 20,635
Unrealised gains/(losses)
at 28 February 2018 (322) - (322)
Valuation at 28 February
2018 14,667 5,646 20,313
Purchases at cost - - -
Disposal of investments
and repayment of loans
and loan notes (300) (1,883) (2,183)
Realised loss on disposal - (1) (1)
Unrealised losses (1,500) - (1,500)
Valuation at 28 February
2019 12,867 3,762 16,629
============= =============== ========
Book cost at 28 February
2019 14,689 3,762 18,451
Net unrealised gains/(losses)
at 28 February 2019 (1,822) - (1,822)
Valuation at 28 February
2019 12,867 3,762 16,629
============= =============== ========
During the year, the Company sold its quoted bonds in
Commonwealth Bank of Australia for GBP198,000. These bonds were
originally acquired for GBP199,000 and were stated at GBP199,000 as
at 28 February 2018.
(b) Gains and losses on investments
The gains and losses on investments for the year shown in the
Income Statement is analysed as follows:
Year ended Year ended
28 February 28 February
2019 2018
GBP'000 GBP'000
Realised (loss)/gain
on disposal (1) 2
Unrealised (losses)/gains
in the year (1,500) 188
(1,501) 190
============= =============
(c) Quoted and unquoted investments
Market value Market value
as at 28 as at 28
February February
2019 2018
GBP'000 GBP'000
Quoted investments - 199
Unquoted investments 16,629 20,114
16,629 20,313
============= =============
Further details of these investments (including the unrealised
loss in the year) are disclosed in the Chairman's Statement,
Investment Manager's Report, Investment Portfolio Summary and
Significant Investments on pages 1 to 14 of the Annual Report.
9. Debtors
As at 28 February As at 28 February
2019 2018
GBP'000 GBP'000
Accrued income 2,047 1,654
Other debtors 7 10
Corporation tax - 61
2,054 1,725
================== ==================
10. Creditors - amounts falling due within one year
As at 28 February As at 28 February
2019 2018
GBP'000 GBP'000
Accruals 155 149
155 149
================== ==================
11. Management Performance Incentive Arrangement
On 7 October 2013, the Company entered into an Agreement with
the Investment Manager and members of the investment management
team (together "the Management Team") such that the Management Team
will be entitled in aggregate to share in 20% of the aggregate
excess on any amounts realised by the Company in excess of GBP1 per
Ordinary Share, the Performance Target.
This incentive is effective through the issue of ordinary shares
in the Company, such that the Management Team hold 6,908,306
ordinary shares being 20% of the issued share capital of
34,541,530.
The Management Team will waive all rights to dividends until a
return of GBP1 per share (whether capital or income) has been paid
to the other shareholders.
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.
12. Called Up Share Capital
As at 28 February As at 28 February
2019 2018
GBP'000 GBP'000
34,541,530 ordinary shares
of 0.05p each 17 17
================== ==================
13. Net Asset Value per Ordinary Share
2019 2018
Net assets GBP18,553,000 GBP21,979,000
-------------- --------------
Number of shares in issue 34,541,530 34,541,530
Less: management incentive shares
(see note 11) (6,908,306) (6,908,306)
-------------- --------------
Number of shares in issue for
purposes of Net
Asset Value per share calculation 27,633,224 27,633,224
-------------- --------------
Net asset value per share
Basic 67.14p 79.54p
Diluted 67.14p 79.54p
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. Excluding cash balances,
the Company held the following categories of financial instruments
at 28 February 2019:
2019 2018
GBP'000 GBP'000
Financial assets at fair value
through profit or loss 16,629 20,313
Financial assets that are debt
instruments measured at amortised
cost 2,054 1,664
Financial liabilities measured
at amortised cost (155) (149)
18,528 21,828
======== ========
Management of risk
The main risks the Company faces from its financial instruments
are market price risk, being the risk that the value of investment
holdings will fluctuate as a result of changes in market prices
caused by factors other than interest rate or currency movements,
liquidity risk, credit risk and interest rate risk. The Board
regularly reviews and agrees policies for managing each of these
risks. The Board's policies for managing these risks are summarised
below and have been applied throughout the year.
Credit risk
Credit risk is the risk that the counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Company. The Investment Manager
monitors counterparty risk on an ongoing basis.
The Company's maximum exposure to credit risk is as follows:
2019 2018
GBP'000 GBP'000
Investments in loans, loan
notes and bonds 8,072 17,264
Cash at bank and in hand 25 90
Interest, dividends and other
receivables 2,054 1,664
10,151 19,018
======== ========
The cash held by the Company at the year-end is held in one U.K.
bank. Bankruptcy or insolvency of the 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 loans, loan notes and bonds comprise a
fundamental part of the Company's venture capital investments,
therefore credit risk in respect of these assets is managed within
the Company's main investment 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
Strategic Report on page 16. 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.
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.
0% (2018: 1%) of the Company's investments are quoted
investments and 100% (2018: 99%) are unquoted investments.
Liquidity risk
Details of the Company's unquoted investments are provided in
the Investment Portfolio summary on page 7. By their nature,
unquoted investments may not be readily realisable and the Board
considers exit strategies for these investments throughout the
period for which they are held. As at the year end, the Company had
no borrowings.
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 Strategic Report and the
Report of the Directors. The Company's overall liquidity risks are
monitored on a quarterly basis by the Board. The Company maintains
access to sufficient cash to pay accounts payable and accrued
expenses.
Fair value interest rate risk
The benchmark that determines the interest paid or received on
the current account is the Bank of England base rate, which was
0.75% at 28 February 2019 (2018: 0.5%). All of the loan and loan
note investments are unquoted and hence not directly subject to
market movements as a result of interest rate movements.
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.
Interest rate risk profile of financial assets
The following analysis sets out the interest rate risk of the
Company's financial assets as at 28 February 2019:
Weighted Weighted
average average
interest period
Rate status rate until maturity Total
GBP'000
Cash at bank - RBS Floating 0.01% - 25
Loans, loan notes
and bonds Floating 2.25% 23 months 2,650
Loans, loan notes
and bonds Fixed 13.74% 14 months 4,724
Balance of assets Non-interest bearing - 11,309
18,708
========
The following analysis sets out the interest rate risk of the
Company's financial assets as at 28 February 2018:
Weighted
Weighted average
average period
interest until
Rate status rate maturity Total
GBP'000
Cash at bank -
RBS Floating 0.01% - 90
Loans, loan notes
and bonds Floating 1.73% 38 months 3,250
Loans, loan notes
and bonds Fixed 9.6% 30 months 6,008
Balance of assets Non-interest bearing - 12,719
22,067
========
Foreign currency risk
The reporting currency of the Company is Sterling. The Company
has not held any non-Sterling investments during the year.
Fair value hierarchy
Financial assets and liabilities 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 - Fair value is measured using the unadjusted quoted
price in an active market for identical assets.
-- Level 2- Fair value is measured using inputs other than
quoted prices that are observable using market data.
-- Level 3 - Fair value is measured using unobservable inputs.
Fair values have been measured at the end of the reporting
period as follows:-
2019 2018
GBP'000 GBP'000
Level 1
Investments listed on LSE - 199
Level 3
Unquoted investments 16,629 20,114
16,629 20,313
======== ========
The Level 3 investments have been valued in line with the
Company's accounting policies and IPEV guidelines. Further details
of these investments are provided in the significant investments
section of the Annual Report on pages 8 to 14.
15. Capital management
The Company's objectives when managing capital are to safeguard
the Company's ability to continue as a going concern, so that it
can 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 must be, and
remain, invested in the relatively high-risk asset class of small
UK companies within three years of that capital being subscribed.
For accounting periods commencing after 5 April 2019 this is rising
to 80%.
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, issue new
shares, or sell assets 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 those liabilities is not
directly related to managing the return to shareholders.
16. Contingencies, Guarantees and Financial Commitments
There were no commitments, contingencies or guarantees of the
Company at the year-end (2018: none).
17. Controlling Party
In the opinion of the Directors there is no immediate or
ultimate controlling party.
The financial information set out in this announcement does not
constitute the Company's statutory financial statements in
accordance with section 434 Companies Act 2006 for the year ended
28 February 2019, but has been extracted from the statutory
financial statements for the year ended 28 February 2019 which were
approved by the Board of Directors on 20 June 2019 and will be
delivered to the Registrar of Companies. The Independent Auditor's
Report on those financial statements was unqualified and did not
contain any emphasis of matter nor statements under s 498(2) and
(3) of the Companies Act 2006.
The statutory accounts for the year ended 28 February 2019 have
been delivered to the Registrar of Companies and received an
Independent Auditors report which was unqualified and did not
contain any emphasis of matter nor statements under s 498(2) and
(3) of the Companies Act 2006.
Copies of the full annual report and financial statements for
the year ended 28 February 2019 will be available to the public at
the registered office of the Company at Bond Street House, 14
Clifford Street, London, W1S 4JU and will be available for download
from www.pumainvestments.co.uk.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
ACSPGUCPQUPBGPU
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