TIDMPU12
RNS Number : 6529D
Puma VCT 12 PLC
27 June 2019
HIGHLIGHTS
-- Funds invested in a diverse range of businesses and projects
-- HMRC requirement that qualifying investments are 70% of the fund is now met
-- Provision against investment in Sweat Union of GBP3.35 million
-- Loss before tax of GBP3.28 million (10.61p per share); profit
before tax and provision of GBP70,000
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present to you as Chairman the annual report for
Puma VCT 12 plc for the year to 28 February 2019, the Company's
second full year of investment.
The Company has now effectively deployed substantially all its
funds in both qualifying and non-qualifying investments. As a
result, it has met its minimum qualifying investment percentage (on
an HMRC basis) of 70 per cent.
Investments
During the year, the Company completed a series of qualifying
investments for a total of just over GBP4.8 million. At the end of
the period, the Company had just under GBP24 million invested in a
mixture of qualifying and non-qualifying investments.
The Company's portfolio of investments is generally performing
well. However, as reported on 1 May 2019, we have made a provision
of GBP3.35 million against our investment in Sweat Union Limited
("Sweat"). Sweat, a budget gym operator has been experiencing
severe trading difficulties. Sweat entered creditors' voluntary
liquidation on 14 May 2019, from which the shareholders are not
expected to make any recovery.
Notwithstanding this disappointing outcome, we remain confident
that our portfolio is well positioned to deliver positive returns
to shareholders within its expected time horizon.
Further details of all our investments can be found in the
Investment Manager's report on pages 3 to 6.
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 establishing the status of potential
investments as qualifying holdings, monitoring rule compliance and
maintaining the qualifying status of the Company's holdings in the
future.
Results
Before taking account of the provision, the Company had a profit
before tax of GBP70,000 for the year (2018: GBP297,000) and a
post-tax gain of 0.23p per ordinary share (2018: 0.96p) calculated
on the weighted average number of shares. The provision reduced
this to a pre-tax loss of GBP3.28 million for the year resulting in
a post-tax loss of 10.61p per ordinary share.
Reflecting the provision against the Sweat investment, the Net
Asset Value per ordinary share ("NAV") at 28 February 2019 was
85.73p (2018: 96.34p) after adding back dividends paid to date.
Dividend
In line with the Company's dividend policy as stated in the
Prospectus, your board paid the Company's first dividend of 2p per
share during the year. The Board will propose at the Annual General
Meeting a resolution to pay a second dividend of 1p per share.
Outlook
We are naturally disappointed with the outcome of our investment
in Sweat. We remain focused on generating strong returns for the
Company from both the qualifying and non-qualifying portfolios,
which contain some dynamic companies.
Whilst there will probably be some further changes in the
composition of the portfolio, the Board expects to concentrate in
the future on the monitoring of our existing investments and
considering the options for exits in due course.
Ray Pierce
Chairman
26 June 2019
INVESTMENT MANAGER'S REPORT
Introduction
The Company's funds are now substantially deployed in both
qualifying and non-qualifying investments, having met its minimum
qualifying investment percentage of 70 per cent during the year. We
report on all our portfolio holdings below.
Investments
Qualifying Investments
NRG Gym - Budget Gyms
During the year, the Company invested GBP1.4 million (as part of
a total investment round of GBP5 million) into S A Fitness Holdings
Limited, a budget gym business operating under the "NRG Gym" brand.
The business currently operates from two sites, in Gravesend and in
Watford, and specialises in providing an affordable gym experience
with an exceptional large selection of high-end gym equipment. The
investment will provide funds to roll the brand out further.
Pure Cremation - Crematorium and Direct Cremations
In November 2017, the Company invested GBP3 million in Pure
Cremation Holdings Limited (as part of a GBP5 million qualifying
investment alongside another Puma VCT). Pure Cremation is a leading
provider of so-called direct cremations, meeting the needs of a
growing number of people in the United Kingdom who want a
respectful direct cremation arranged without any funeral, leaving
them free to say farewell how, where and when is right for them.
The Pure Cremation team have many years' experience in the funeral
services sector and acquired a site near Andover to develop a new
crematorium and central facility. As envisaged in Pure Cremation's
business plan, the Company invested a further GBP1.05 million in
Pure Cremation (as part of a GBP2.35 million follow-on qualifying
investment alongside another Puma VCT) in November 2018. We are
pleased to report that the Andover facility opened earlier this
year and the business is performing well.
Applebarn Nurseries - Children's Nursery
The Company had previously invested GBP1.1 million in Applebarn
Nurseries Limited (as part of a GBP2.2 million qualifying
investment alongside another Puma VCT). During the year, the
Company completed a follow-on investment of GBP700,000 to further
grow and develop the business. The management team includes a
successful operator of the nurseries, together with an experienced
developer and contractor, and their first site, a new 120 place
children's day nursery in Altrincham, South Manchester, opened in
September 2018.
Knott End - Pubs with Microbreweries
During the previous period, the Company invested GBP2.4 million
(as part of a GBP4.8 million qualifying investment alongside
another Puma VCT) in Knott End Pub Company Limited which has
entered into a franchise agreement with Brewhouse & Kitchen
Limited to roll out a portfolio of pubs offering on-site craft
micro-brewing activities and good quality food. During the year,
Knott End opened its first two pubs, in Milton Keynes and Horsham,
West Sussex, both of which are trading well, and in December 2018,
the Company completed a further GBP1.65 million investment (as part
of a GBP2.5 million follow-on qualifying investment alongside
another Puma VCT) to facilitate the opening of further units.
Sweat Union - Budget Gyms
In November 2017, the Company invested GBP3.35 million (as part
of a total investment round of GBP3.75 million) into Sweat Union
Limited, a fitness business in the budget and mid-market gym space.
Sweat set out to offer a zoned fitness experience, pitched at a
slight price premium to budget rivals given its dedicated spinning
and aerobics studios. Last year it unveiled a partnership with
Debenhams to launch in-store gyms with a trial site in Sutton,
South London and the Company's investment facilitated the continued
roll-out of the brand to the current six units.
We reported in the Company's previous interim results that
trading conditions had proven more challenging for Sweat than the
business plan envisaged and some management changes had been made
to address these difficulties. Sweat's ambitious roll-out strategy
unfortunately coincided with the beginning of a steep decline in
consumer confidence and turmoil on the high street. At two of its
six clubs, businesses in the immediate vicinity closed or moved,
reducing the pool of people that the clubs could offer membership
to. Sweat also suffered from a slow membership ramp-up of its
newest unit at Sutton, not helped by the escalating speculation
about the financial strength of Debenhams and its likelihood of
survival. Ultimately the company could not sustain the level of
cash losses that were being generated.
Once the problems became apparent, we engaged actively in trying
to help the company address them. This eventually included a
proposed creditors' voluntary arrangement which could have allowed
Sweat to restructure its creditors and move forward. However, once
it became clear to the directors of Sweat that the creditors'
voluntary arrangement would not be passed, they began a process
which may lead to Sweat entering creditors' voluntary liquidation.
As reported on 1 May 2019, the Company is not expected to make any
recovery from this liquidation hence the full provision against the
carrying value of this investment.
Growing Fingers - Children's Nursery
As previously reported, the Company has invested GBP420,000 (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. Growing Fingers is a new venture with a management
team with many years' operational experience in nurseries and
healthcare facilities. The Company benefits from first charge
security over the Wendover site and the Growing Fingers
business.
Signal Building Services - Construction projects
The Company has invested GBP200,000 (as part of a total
investment round of GBP2 million) into Signal Building Services
Limited, a business specialising in delivering turnkey solutions to
construction projects led by a management team with over 40 years'
of combined experience in the construction sector. Signal Building
Services is currently working on two projects: the construction of
a 22 apartment supported living scheme in Wigan and the
construction of a 14 apartment supported living scheme in
Sutton-in-Ashfield.
Kid & Play - Children's Nursery
As previously reported, the Company made a GBP1.7 million
qualifying investment in Kid & Play Limited, alongside funds
invested by another Puma VCT totalling GBP3.4 million. Kid &
Play is seeking to develop, own and operate a new children's day
nursery and has identified a number of potential sites which are
currently in various stages of planning applications.
Sunlight Education Nucleus - Special Educational Needs
Schools
In November 2017, the Company made a GBP2.35 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. Shortly following the period
end, the team at Sunlight completed on the purchase of the site for
their first school in Stafford, West Midlands.
South-West Cliffe - Children's Nursery
The Company has invested GBP2.1 million (as part of a GBP4.2
million qualifying investment alongside another Puma VCT) in
South-West Cliffe Limited, supporting an experienced management
team to roll out a portfolio of purpose-built day nurseries.
Non-Qualifying Investments
As previously reported, the Company had initially invested just
over GBP20 million in a series of lending businesses offering an
appropriate risk adjusted return in the short to medium term. It
was intended that these positions would be liquidated in due course
as the Company made qualifying investments. Many of these loans
have now been repaid in full. Details of the loans that these
lending businesses have made are set out below.
Construction of Airport Hotel, Edinburgh
In June 2017, GBP2.8 million of loans (as part of an overall
facility of GBP16 million) were advanced (through affiliates,
Piccadilly Lending Limited and Tottenham Lending Limited) to
Ability Hotels (Edinburgh) 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.
Mixed Residential Commercial Development, Bloomsbury
As previously reported, a GBP3.9 million loan (as part of a
total initial facility of GBP17.97 million that increased to
GBP19.17 million during the period) was advanced (through
affiliates, Tottenham Lending Limited, Victoria Lending Limited and
Marble Lending Limited) to Cudworth 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.
Care Home for the Elderly, Chester
A GBP608,000 loan (as part of an overall facility of GBP7.4
million) had been advanced (through an affiliate, Victoria Lending
Limited) to New Care (Chester) Limited to fund the development and
initial trading of a 77-bed purpose-built care home in Chester. The
New Care Group is an experienced developer and operator of care
homes and the loan was secured with a first charge over the site.
We are pleased to report that, during the period, the development
was completed and the care home was refinanced resulting in the
loan being repaid in full.
Mixed Residential Commercial Development, Tower Bridge
A GBP1.8 million facility (together with loans from other
vehicles managed and advised by the Investment Manager totalling
GBP4.3 million) had been provided (through an affiliate, Marble
Lending Limited) to Empire TBR Limited to fund the construction of
a mixed residential and commercial development near Tower Bridge,
London. During the year, the loan was repaid in full.
Citrus Group
As previously reported, a series of loans had been advanced to
various entities within the Citrus Group (through affiliates,
Valencia Lending Limited and Tottenham Lending Limited), which at
the start of the period stood at GBP1 million. 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 giving a good rate of return.
Investment Strategy
We are pleased to have invested the Company's funds in a diverse
range of businesses and projects. We remain focused on generating
strong returns for the Company in both the qualifying and
non-qualifying portfolios, whilst balancing these returns with
maintaining an appropriate risk exposure. Notwithstanding the
outcome of our investment in Sweat, we remain confident that our
portfolio is well positioned to deliver positive returns to
shareholders within the Fund's expected time horizon
Puma Investment Management Limited
26 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
Growing Fingers Limited 420 420 - 2%
Kid & Play Limited 1,694 1,694 - 7%
South-West Cliffe Limited 2,100 2,100 - 8%
Signal Building Services
Limited 200 200 - 1%
Applebarn Nurseries Limited 1,833 1,833 - 7%
Knott End Pub Company
Limited 4,053 4,053 - 16%
Sunlight Education Nucleus
Limited 2,350 2,350 - 9%
Sweat Union Limited - 3,350 (3,350) -
Pure Cremations Limited 4,053 4,053 - 16%
SA Fitness Holdings Limited 1,417 1,417 - 5%
Total Qualifying Investments 18,120 21,470 (3,350) 70%
---------- -------- ------------ ------------
Non-Qualifying Investments
Piccadilly Lending Limited 1,240 1,240 - 5%
Victoria Lending Limited 1,617 1,617 - 6%
Tottenham Lending Limited 700 700 - 3%
Marble Lending Limited 1,850 1,850 - 7%
Total Non-Qualifying
investments 5,407 5,407 - 21%
---------- -------- ------------ ------------
Total Investments 23,527 26,877 (3,350) 91%
Balance of Portfolio 2,354 2,354 - 9%
Net Assets 25,881 29,231 (3,350) 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
8
Loss on investments (b) - (3,350) (3,350) - - -
Income 2 909 - 909 1,147 - 1,147
909 (3,350) (2,441) 1,147 - 1,147
-------- --------- -------- -------- --------
Investment management
fees 3 (148) (443) (591) (149) (447) (596)
Other expenses 4 (248) - (248) (254) - (254)
(396) (443) (839) (403) (447) (850)
-------- --------- -------- -------- --------
(Loss)/profit before
taxation 513 (3,793) (3,280) 744 (447) 297
Taxation 5 (97) 97 - (142) 142 -
(Loss)/profit and total
comprehensive income
for the year 416 (3,696) (3,280) 602 (305) 297
======== ========= ========= ======== ======== ========
Basic and diluted
(Loss)/return per Ordinary
Share (pence) 6 1.35p (11.96p) (10.61p) 1.95p (0.99p) 0.96p
======== ========= ========= ======== ======== ========
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 23,527 27,972
------------- -------------
Current Assets
Debtors 9 2,413 1,501
Cash 107 473
------------- -------------
2,520 1,974
Creditors - amounts falling
due within one year 10 (166) (167)
Net Current Assets 2,354 1,807
------------- -------------
Net Assets 25,881 29,779
============= =============
Capital and Reserves
Called up share capital 12 19 19
Share premium account 29,833 29,833
Capital reserve - realised (1,050) (704)
Capital reserve - unrealised (3,350) -
Revenue reserve 429 631
Total Equity 25,881 29,779
============= =============
Net Asset Value per Ordinary
Share 13 83.73p 96.34p
============= =============
The financial statements on pages 32 to 47 were approved and
authorised for issue by the Board of Directors on 26 June 2019 and
were signed on their behalf by:
Ray Pierce
Chairman
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 (3,280) 297
Loss on investments 3,350 -
Increase in debtors (912) (1,043)
(Decrease)/increase in creditors (1) 2
Net cash used in operating activities (843) (744)
------------- -------------
Cash flow from investing activities
Purchase of investments and loans
advanced (4,823) (16,957)
Proceeds from disposal of investments
and repayments of loans 5,918 16,114
Net cash generated from/(used in)
investing activities 1,095 (843)
------------- -------------
Cash flow from financing activities
Dividends paid (618) -
Net cash used for financing activities (618) -
------------- -------------
Net decrease in cash and cash equivalents (366) (1,587)
Cash and cash equivalents at the beginning
of the period 473 2,060
Cash and cash equivalents at the end
of the period 107 473
============= =============
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 28 February
2017 19 29,833 (425) 26 29 29,482
Realised gain from
prior period - - 26 (26) - -
Total comprehensive
income for the year - - (305) - 602 297
---------- --------- ------------ -------------- --------- --------
Balance as at 28 February
2018 19 29,833 (704) - 631 29,779
Dividends paid - - - - (618) (618)
Total comprehensive
income for the year - - (346) (3,350) 416 (3,280)
Balance as at 28 February
2019 19 29,833 (1,050) (3,350) 429 25,881
========== ========= ============ ============== ========= ========
Statement of Changes in Equity
For the year ended 28 February 2019
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 GBP429,000 (2018:
GBP631,000).
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 12 plc ("the Company") was incorporated in England on 2
September 2015 and is registered and domiciled in England and
Wales. The Company's registered number is 09758309. 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 and with 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.
-- 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 7,727,297 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 38,636,487. 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 year 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 908 1,111
Bond yields - 35
908 1,146
Other income
Bank deposit income 1 1
909 1,147
======================= =======================
3. Investment Management Fees
Year ended 28 February Year ended 28 February
2019 2018
GBP'000 GBP'000
Puma Investments fees 591 596
591 596
======================= =======================
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 2.8% (2018: 2.8%) of the funds raised. Graham Shore,
a director, holds a Directorship of the parent of the Investment
Manager.
4. Other expenses
Year ended 28 February Year ended 28 February
2019 2018
GBP'000 GBP'000
PI Administration Services
fees 103 104
Directors' remuneration 55 56
Social security costs 3 1
Auditor's remuneration
for statutory audit 25 24
Other expenses 62 69
248 254
======================= =======================
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. Director's remuneration
disclosed above has been grossed up, where applicable, to be
inclusive of VAT. 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
GBP58,000 (2018: GBP57,000) 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 February
2019 2018
GBP'000 GBP'000
UK corporation tax charged
to revenue reserve 97 142
UK corporation tax credited
to capital reserve (97) (142)
UK corporation tax charge
for the year - -
======================= =======================
Factors affecting tax charge for the year
(Loss)/profit before taxation (3,280) 297
======================= =======================
Tax charge calculated
on (loss)/profit before
taxation at the applicable
rate of 19% (623) 56
Tax on capital items not
taxable 637 -
Tax losses utilised (14) (56)
- -
======================= =======================
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 or deferred tax is
recognised on capital gains or losses.
No provision for deferred tax has been made in the current
accounting year. Due to the Company's status as a Venture Capital
Trust and the intention to continue meeting the conditions required
to obtain approval in the foreseeable future, the Company has not
provided deferred tax on any capital gains and losses arising on
the revaluation or disposal of investments.
6. Basic and diluted return/(loss) per Ordinary Share
Year ended 28 February 2019
Revenue Capital Total
Total comprehensive income GBP416,000 (GBP3,696,000) (GBP3,280,000)
for the year
Weighted average number
of shares in issue for the
year 38,636,487 38,636,487 38,636,487
Less: management incentive
shares (see note 11) (7,727,297) (7,727,297) (7,727,297)
Weighted average number
of shares for purposes of
return/(loss) per share
calculations 30,909,190 30,909,190 30,909,190
------------ --------------- ---------------
Return/(loss) per share 1.35p (11.96p) (10.61p)
Year ended 28 February 2018
Revenue Capital Total
Total comprehensive income GBP602,000 (GBP305,000) GBP297,000
for the year
Weighted average number
of shares in issue for the
year 38,636,487 38,636,487 38,636,487
Less: management incentive
shares (see note 11) (7,727,297) (7,727,297) (7,727,297)
Weighted average number
of shares for purposes of
return/(loss) per share
calculations 30,909,190 30,909,190 30,909,190
------------ ------------- ------------
Return/(loss) per share 1.95p (0.99p) 0.96p
7. Dividends
The Directors will propose a resolution at the Annual General
Meeting to pay a final dividend of 1p per share (2018: 2p per
share), which if approved, will result in a total dividend payment
of GBP309,000 (2018: GBP618,000).
8. Investments
Qualifying Non-qualifying
(a) Movements in investments investments investments Total
GBP'000 GBP'000 GBP'000
Purchased at cost 16,647 11,325 27,972
Net unrealised gains/(losses) - - -
Valuation at 28 February
2018 16,647 11,325 27,972
Purchases at cost 4,823 - 4,823
Disposal of investments
and repayment of loans
and loan notes - (5,918) (5,918)
Net unrealised loss (3,350) - (3,350)
Valuation at 28 February
2019 18,120 5,407 23,527
============= =============== =============
Book cost at 28 February
2019 21,470 5,407 26,877
Net unrealised losses
at 28 February 2019 (3,350) - (3,350)
Valuation at 28 February
2019 18,120 5,407 23,527
============= =============== =============
(b) Gains/(losses) on
investments
Year ended Year ended
28 February 28 February
2019 2018
GBP'000 GBP'000
Unrealised losses in
year (3,350) -
(3,350) -
=============== =============
(c) Quoted and unquoted
investments
Market value Market value
as at 28 as at 28
February February
2019 2018
GBP'000 GBP'000
Unquoted investments 23,527 27,972
23,527 27,972
=============== =============
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
Other debtors 3 -
Accrued income 2,410 1,501
2,413 1,501
================== ==================
10. Creditors - amounts falling due within one year
As at 28 February As at 28 February
2019 2018
GBP'000 GBP'000
Accruals 166 167
166 167
================== ==================
11. Management Performance Incentive Arrangement
On 3 September 2015, 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 per cent 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 7,727,297
ordinary shares being 20% of the issued share capital of
38,636,487.
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
2018 and 28 February
2019
GBP'000
38,636,487 ordinary shares of 0.05p each 19
======================
13. Net Asset Value per Ordinary Share
As at As at
28 February 28 February
2019 2018
Net assets GBP25,881,000 GBP29,779,000
-------------- --------------
Number of shares in issue 38,636,487 38,636,487
Less: management incentive
shares (see note 11) (7,727,297) (7,727,297)
-------------- --------------
Number of shares in issue
for purposes of Net
Asset Value per share calculation 30,909,190 30,909,190
-------------- --------------
Net asset value per share
Basic 83.73p 96.34p
Diluted 83.73p 96.34p
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:
As at 28 February As at 28 February
2019 2018
GBP'000 GBP'000
Financial assets at fair
value through profit or
loss 23,527 27,972
Financial assets that are
debt instruments measured
at amortised cost 2,413 1,501
Financial liabilities measured
at amortised cost (166) (167)
25,774 29,306
================== ==================
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:
As at 28 February As at 28 February
2019 2018
GBP'000 GBP'000
Investments in loans and
loan notes 9,336 16,577
Cash at bank and in hand 107 473
Interest, dividends and
other receivables 2,413 1,501
11,856 18,551
================== ==================
The cash held by the Company at the year-end is held in two U.K.
banks. 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 and loan notes comprises 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.
100% (2018: 100%) of the Company's investments 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 Report of the Directors and
the Strategic Report. The Company's overall liquidity risks are
monitored on a quarterly basis by the Board. The Company maintains
access to cash reserves sufficient 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.
Average
interest Period
Rate status rate until maturity Total
GBP'000
Cash at bank - Metro Floating 0.10% - 2
Cash at bank - RBS Floating 0.50% - 105
Loans and loan notes Fixed 10.56% 34 months 9,336
Balance of assets Non-interest bearing - 16,604
26,047
========
The following analysis sets out the interest rate risk of the
Company's financial assets as at 28 February 2018.
Weighted Weighted
average average
interest period
Rate status rate until maturity Total
GBP'000
Cash at bank - Metro Floating 0.12% - 11
Cash at bank - RBS Floating 0.25% - 462
Loans and loan notes Floating 8.00% 38 months 1,000
Loans and loan notes Fixed 7.64% 44 months 15,504
Balance of assets Non-interest bearing - 12,969
29,946
========
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 year
as follows:-
2019 2018
GBP'000 GBP'000
Level 3
Unquoted investments 23,527 27,972
23,527 27,972
======== ========
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 must have 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 26 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 2018 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
FR EANKXAAPNEEF
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June 27, 2019 05:32 ET (09:32 GMT)
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