TIDMPU13
RNS Number : 2915R
Puma VCT 13 PLC
29 June 2020
HIGHLIGHTS
-- Fund well invested with a diverse qualifying portfolio
-- 71% invested into qualifying portfolio positions at year end, rising to 84% after year end
-- Volatility in the non-qualifying holdings but income yield remains robust
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the second report and financial
statement for Puma VCT 13 plc (the "Company") for the year to 29
February 2020.
The Investment Manager has delivered rapid and purposeful
investment and the Company now holds seven qualifying investments
in six different sectors. I am also pleased to report that the
company returned a profit for the year of GBP1,707,000 (2019:
GBP927,000 loss), representing 10.95 pence (2019: 9.19p loss) per
ordinary share.
Post year end, the Company experienced volatility in the values
of its non-qualifying holdings in listed equities. These values
fell significantly before substantially recovering and remain
volatile.
Investments
Since the last report and accounts the Company has made three
further investments into qualifying portfolio companies, and one
follow on investment into automotive manufacturing business Dymag.
Post year end the Company made a fourth new investment into a
qualifying company and a small follow-on into cycling apparel
business Le Col. Together these investments took the Company's
overall qualifying holdings to 84% of Net Asset Value. As the Board
concluded that the pandemic was a non-adjusting post balance sheet
event, the impact of COVID-19 is not reflected in the fair value of
the Company's investments as at 29 February 2020. We understand
that this treatment is being adopted by other funds with similar
year-ends.
Net Asset Value ("NAV")
The NAV per share at the year end was 100.33p (2019: 89.38p).
This figure reflects the initial funds raised less the costs of
issue adjusted for movements in the value of the listed equities
and running costs of the Company, plus audited adjustments in the
carrying value of the qualifying positions. Four of the positions
have been adjusted in value with three being written up and one
being written slightly down, for a cumulative gain of GBP1,909,000
(2019: GBPnil). GBP1,292,000 of this gain is driven by the
Company's holding in Pure Cremation Limited which has seen
sustained strong trade over the period, as detailed in the
Investment Manager's Report.
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 and other specialist
advisors 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.
Outlook
The Covid-19 pandemic and the unprecedented policy measures put
in place to contain it have led to significant uncertainty.
However, we look to the future with confidence. The Investment
Manager has worked closely with the fund's portfolio companies over
the crisis and continues to support them through this.
The Company's strategy of assembling a diverse portfolio has
proven useful during this period, and we believe that will
continue, as the COVID-19 crisis impacts different sectors - and
different consumer groups - in different ways.
David Buchler
Chairman
26 June 2020
INVESTMENT MANAGER'S REPORT
Introduction
Since the Company's year end, the global economy and financial
markets have been impacted significantly by the COVID-19 pandemic.
These are unprecedented times which have disrupted personal and
working life for almost everyone. Since the emergence of the
pandemic in the UK, we have been actively working with portfolio
companies to protect Shareholder value whilst, at the same time,
complying with Government guidelines. Our existing monitoring cycle
involves very close contact with portfolio companies. However, we
have significantly increased our level of interaction with
portfolio companies and changed our portfolio review meeting from
monthly to weekly, as we carefully assess each company's cash
management and outlook.
During this time, we have worked closely with advisers to
support our portfolio companies. This has involved providing
companies with in-depth information on available support packages
and hosting calls with advisers to deliver guidance on key topics
such as employment law, available funding and scenario cash
planning. Our aim was to ensure management teams could concentrate
on running their businesses rather than scrutinising Government
support schemes. Where appropriate, portfolio companies have made
use of Government-led support, including the Coronavirus Job
Retention Scheme and the Coronavirus Business Interruption Loan
Scheme (CBILS).
As the situation has evolved, we have continued to work closely
with portfolio companies to help them with strategies to conserve
cash during this period of contraction and, if required, outline
emergency funding options. Retaining a long-term view, the team has
also worked with portfolio companies to position them to capitalise
on the opportunities for growth that may arise. We have placed
particular emphasis on helping them manage costs as aggressively as
possible, making appropriate use of government support schemes and
assessing opportunities to reopen efficiently with a focus on agile
trading, adapted to new consumer and business behaviours.
Investments
Qualifying Investments
Pure Cremation - Crematorium and Direct Cremations
In November 2018, the Company invested GBP1.3 million in Pure
Cremation Holdings Limited (as part of a total cumulative GBP7.35
million qualifying investment alongside other Puma VCTs). Pure
Cremation is a leading provider of direct cremations, meeting the
needs of a growing number of people in the United Kingdom who want
a respectful cremation arranged without any funeral, leaving them
free to say farewell how, where and when is right for them. The
business has continued to perform strongly during the year with
strong revenue growth across all of its sales channels. Reflecting
the business's move into profitability and continued growth, the
Directors have decided to write up the value of the holding,
generating an unrealised gain of GBP1,292,000.
Knott End Pub Company - Pubs with Microbreweries
As previously noted, in December 2018 the Company invested
GBP847,000 (as part of a GBP7.3 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. Knott End owns and
operates two pub assets in Horsham and Milton Keynes. The pub in
Milton Keynes had experienced some disappointing trading but was
showing good year on year growth towards the end of the year. In
light of these trading challenges, the Directors have decided to
write down the value of the holding, generating an unrealised loss
of GBP254,000.
Post year-end, the business had to close both units due the
COVID-19 pandemic. It is taking advantage of Government support and
working on plans to allow the pubs to open as soon as possible when
permitted following lockdown easing.
Dymag Group - High performance wheel manufacturer
In December 2018 the Company invested GBP583,000 into Dymag
Group Limited, as part of a GBP3.6 million investment, alongside
other Puma funds. Dymag is a British designer and manufacturer of
carbon-fibre car and motorbike wheels. These are high end,
lightweight wheels for performance use. In January 2020 the Company
made a GBP725,000 follow-on investment into Dymag to continue
supporting its work of refining production process and lowering
unit cost.
The global market for carbon wheels was developing strongly
before the impact of Covid-19, with several automotive companies
announcing medium-size production runs of carbon wheels on
high-profile vehicles. The Renault Megane RS Trophy R, which
features a carbon wheel option, is just one example of the
increasing appeal of the technology and adoption at lower price
points. The Directors have decided to hold the position at
cost.
Post year-end, the Dymag has experienced reduction and delay in
revenue levels since the outbreak of Covid-19. Decisions were made
to cut or defer operating costs, and to make full use of available
Government initiatives. Extensions of payments due to several major
suppliers and Government have been agreed. We are pleased that some
sources of revenue remain strong, such as online motorbike wheel
sales and wheel turner projects, generating short-term
cashflow.
Open House - London based food and beverage offer
In February 2019 the Company invested GBP1.8 million into Open
House London Limited, as part of a GBP5 million investment,
alongside other Puma funds. Open House owns and operates two
popular dining and drinking venues in London, The Lighterman in
King's Cross and Percy & Founders in Fitzrovia, and will be
opening a further unit in White City, West London. The company's
performances have been very strong with continued growth and
significant EBITDA generation from The Lighterman in particular. On
this basis, the Directors have decided to write up the value of the
holding, generating an unrealised gain of GBP475,000.
Post year-end, the business had to close both units as part of
the policy response to the COVID-19 pandemic. It is taking
advantage of Government support including the opportunity to
conserve cash by furloughing staff. The business is working
constructively with its landlords to support the reopening of its
sites. Trade was strong at both sites in the lead-up to the closure
of the units on 16(th) March, and the business has since then
reacted quickly and efficiently. It is well capitalised and will
consider opportunity for expansion if suitable high-profile sites
become available post lockdown.
MyKindaCrowd Limited - Human Resources Technology
In August 2019, the Company invested GBP1.8 million into
MyKindaCrowd Limited, as part of a GBP2.75 million investment
alongside other Puma funds. MyKindaCrowd, trading under the name
MyKindaFuture, is a digital platform working with large corporates
to improve engagement of potential graduates and apprentices. The
platform works with companies such as Deloitte and Cisco to help
them recruit young people from a wider range of social backgrounds
than their traditional channels through its refreshed digital
platform, 'Connectr 2.0'. The Company has added significant new
wins to its pipeline of clients.
Post year-end, in May 2020, the business took on its first
international client, and has more recently partnered with Grant
Thornton to offer a digital solution to corporates allowing them to
communicate with employees whilst on furlough.
Influencer Limited - Technology
In August 2019, the Company invested GBP1.8 million in
Influencer Limited, as part of a GBP3 million investment alongside
other Puma funds. Influencer is a high-growth, data driven social
media, influencer and digital marketing platform. The business
enables brands to connect with influencers and manage influencer
marketing campaigns across one platform. Since investment,
Influencer has performed well and revenue has continued to grow.
The business won 'Influencer Marketing Company of the Year 2019'
and is focussed on building its international reputation as a
leading influencer marketing platform. It operates within a
lucrative environment, with influencer marketing projected to
become a $15 billion industry by 2022.
Post year-end, Influencer has continued working with both new
and existing clients throughout the Covid-19 period, helping
creators work with brands to produce content on their social media
channels. Alongside this, they have built a robust pipeline of
campaign work for the coming months.
Le Col Holdings Limited - Sports Apparel
In October 2019, the Company invested GBP1 million in Le Col
Holdings, as part of a GBP4.85 million investment, GBP2.5 million
of which came as a second tranche. Le Col is a premium cycling
apparel brand founded by former professional cyclist, Yanto Barker.
The brand's mission is to bring professional level kit to the
amateur market, whilst still acknowledging technical sportswear's
increasingly fashion led desirability. Revenues have continued to
grow strongly during the period of investment especially within
E-commerce, the largest sales channel. Sponsorship of the Team
Bahrain McLaren (which is helping to bring the brand to the world
stage), and partnerships with both Bradley Wiggins and the online
community, Strava, will drive sales activation and increase overall
brand awareness. Notably, Le Col is the second largest branded
'club' outside of Strava's own. In light of these successes, the
Directors have decided to write up the value of the holding,
generating an unrealised gain of GBP396,000.
Post year-end, during the Covid lockdown, the business has
continued to perform very strongly, aided by the focus on cycling
as a permitted form of exercise. The company recently hired a Head
of Digital from Asics to support the continued growth of the
e-commerce channel.
Post year end the Company made a further investment as
follows:
Tictrac Limited - Health Engagement Platform
In March 2020, post period end, the Company invested GBP1.85
million in Tictrac Limited as part of a GBP5 million investment.
Tictrac is a personalised health and wellness platform. Tictrac
collates day-to-day data from consumers through 'wearable' fitness
trackers, to give people targeted information to help improve their
health. The Company collaborates with experts and world-renowned
centres of expertise in health, behavioural change and data science
and its customers include some of the world's biggest healthcare
providers and insurers, including Aviva, Allianz and
Prudential.
Since investment, Tictrac continues to work with its existing
client-base and insurers to roll out the platform to their
customers and end users. With the renewed emphasis on the need for
employers to engage with the health and wellbeing of their
employees during lockdown, Tictrac chose to make its platform
available on a free trial basis to UK employers who want to support
their workforce during the crisis. Tictrac has successfully built a
strong pipeline of new clients as a result of this.
Liquidity management investments
To manage the Company's liquidity, a portion of the Company's
funds are invested in a diverse portfolio of listed equities.
The Company's listed equities portfolio is managed by the
Investment Manager's in-house Listed Equities team led by
Investment Director Justin Waine. Justin is an award-winning
manager (Winner of the best AIM Investment Manager 2016 and 2017 at
the Growth Investor Awards) with 20 years' experience analysing UK
and European small and mid-sized companies. Prior to working at
Puma he was a Fund Manager of the European Forager Fund at Polar
Capital Partners and also worked as a research analyst for small
and mid-sized companies at Cazenove &Co.
In keeping with the VCT 13 mandate, the listed equity portfolio
is focussed on UK centric stocks which are listed on the main board
of the London Stock Exchange. Over the year a substantial portion
of the Company's listed equities portfolio was sold in order to
realise funds for qualifying investment. From a position at the
beginning of the year where the Company held GBP3.35 million of
listed equities, by the year end this holding had reduced to
GBP1.67 million including GBP2.4 million of disposals, GBP0.57
million of acquisitions and GBP159,000 of gains (some realised,
some not realised).
Post year end and in line with markets generally, the Company's
portfolio experienced high levels of volatility and material falls
in value. At date of writing the portfolio had recovered from its
low point, but further market volatility should be expected.
Investment Strategy
We are pleased to have invested the Company's funds in a diverse
range of businesses. We remain focused on generating strong returns
for the Company, whilst balancing these returns with maintaining an
appropriate risk exposure. Notwithstanding the recent performance
of the listed equities portfolio, 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 2020
Investment Portfolio Summary
As at 29 February 2020
Valuation
as a % of
Valuation Cost Gain/(loss) Net Assets
GBP'000 GBP'000 GBP'000
Qualifying Investments
Dymag Group Limited 1,308 1,308 - 8%
Knott End Pub Company
Limited 593 847 (254) 4%
Open House London Limited 2,275 1,800 475 15%
Pure Cremation Holdings
Limited 2,589 1,297 1,292 17%
Influencer Limited 1,800 1,800 - 12%
Le Col Holdings Limited 1,396 1,000 396 9%
MyKindaCrowd Limited 1,800 1,800 - 12%
Total Qualifying Investments 11,761 9,852 1,909 77%
---------- -------- ------------ ------------
Liquidity Management
Barclays Plc 96 116 (20) 1%
Chemring Group Plc 123 105 18 1%
Diageo Plc 120 119 1 1%
Discoverie Group Plc 165 127 38 1%
Dixons Carphone Plc 82 109 (27) 0%
Firstgroup Plc 75 58 17 0%
Headlam Group Plc 132 121 11 1%
Hyve Group Plc 130 128 2 1%
ITV Plc 88 82 6 0%
Legal & General Group
Plc 96 97 (1) 1%
Provident Financial
Plc 80 119 (39) 0%
Prudential Plc 96 133 (37) 1%
PZ Cussons Plc 83 108 (25) 0%
Royal Dutch Shell Plc 83 124 (41) 0%
Standard Chartered Plc 56 62 (6) 0%
Volution Group Plc 114 104 10 1%
WPP Plc 53 67 (14) 0%
Total Liquidity Management
investments 1,672 1,779 (107) 9%
---------- -------- ------------ ------------
Total Investments 13,433 11,631 1,802 86%
Balance of Portfolio 2,201 2,201 - 14%
Net Assets 15,634 13,832 1,802 100%
---------- -------- ------------ ------------
Of the investments held at 29 February 2020, all are
incorporated in England and Wales.
Income Statement
For the year ended 29 February 2020
Year ended 29 February Year ended 28 February
2020 2019
Note Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
8
Gain/(loss) on investments (b) - 2,094 2,094 - (550) (550)
Income 2 118 - 118 45 - 45
118 2,094 2,212 45 (550) (505)
-------- -------- -------- -------- --------
Investment management
fees 3 (70) (209) (279) (49) (147) (196)
Other expenses 4 (217) (9) (226) (200) (26) (226)
(287) (218) (505) (249) (173) (422)
-------- -------- -------- -------- --------
Profit/(loss) before
taxation (169) 1,876 1,707 (204) (723) (927)
Taxation 5 - - - - - -
Profit/(loss) and
total comprehensive
income for the year (169) 1,876 1,707 (204) (723) (927)
======== ======== ======== ======== ======== ========
Basic and diluted
Return/(loss) per
Ordinary Share (pence) 6 (1.09p) 12.04p 10.95p (2.02p) (7.17p) (9.19p)
======== ======== ======== ======== ======== ========
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 by the Association of Investment
Companies.
Balance Sheet
As at 29 February 2020
As at As at
29 February 28 February
Note 2020 2019
GBP'000 GBP'000
Fixed Assets
Investments 8 13,433 7,872
------------- -------------
Current Assets
Debtors 9 203 2,851
Cash 2,093 3,382
------------- -------------
2,296 6,233
Creditors - amounts falling
due within one year 10 (95) (176)
Net Current Assets 2,201 6,057
------------- -------------
Net Assets 15,634 13,929
============= =============
Capital and Reserves
Called up share capital 12 10 12
Share premium account 14,852 14,852
Capital reserve - realised (649) (173)
Capital reserve - unrealised 1,802 (550)
Revenue reserve (381) (212)
Total Equity 15,634 13,929
============= =============
Net Asset Value per Ordinary
Share 13 100.33p 89.38p
============= =============
The financial statements on pages 32 to 48 were approved and
authorised for issue by the Board of Directors on 26 June 2020 and
were signed on their behalf by:
David Buchler
Chairman
Statement of Cash Flows
For the year ended 29 February 2020
Year ended Year ended
29 February 28 February
2020 2019
GBP'000 GBP'000
Profit/(loss) after tax 1,707 (927)
(Gain)/loss on investments (2,094) 550
Decrease/(Increase) in debtors 820 (1,011)
(Decrease)/Increase in creditors (35) 110
Net cash generated from/(used for)
operating activities 398 (1,278)
------------- -------------
Cash flow from investing activities
Purchase of investments (5,897) (8,422)
Proceeds from disposal of investments 2,430 -
Net cash used for investing activities (3,467) (8,422)
------------- -------------
Cash flow from financing activities
Proceeds received from issue of ordinary
share capital 1,826 13,759
Expense paid for issue of share capital (46) (677)
Net cash generated from financing
activities 1,780 13,082
------------- -------------
Net (decrease)/increase in cash and
cash equivalents (1,289) 3,382
Cash and cash equivalents at the
beginning of the year 3,382 -
Cash and cash equivalents at the
end of the year 2,093 3,382
============= =============
Statement of Changes in Equity
For the year ended 29 February 2020
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
2018 6 - - - (8) (2)
Shares issued in the
year 8 15,575 - - - 15,583
Expenses of share
issues - (723) - - - (723)
Shares cancelled in
the year (2) - - - - (2)
Total comprehensive
income for the year - - (173) (550) (204) (927)
---------- --------- ------------ -------------- --------- --------
Balance as at 28 February
2019 12 14,852 (173) (550) (212) 13,929
Share cancelled in
the year (2) - - - - (2)
Reserves movement - - (430) 430 - -
Total comprehensive
income for the year - - (46) 1,922 (169) 1,707
Balance as at 29 February
2020 10 14,852 (649) 1,802 (381) 15,634
========== ========= ============ ============== ========= ========
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 nil (2019: nil).
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 13 plc ("the Company") was incorporated in England on
15 September 2016 and is registered and domiciled in England and
Wales. The Company's registered number is 10376236. The registered
office is Cassini House, 57 St James's Street, London SW1A 1LD .
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 October 2019 by the Association of
Investment Companies ("the SORP").
Monetary amounts in these financial statements are rounded to
the nearest whole GBP1,000, except where otherwise indicated.
Going concern
The Directors have considered a period of 12 months from the
date of this report for the purposes of determining the Company's
going concern status which has been assessed in accordance with the
guidance issued by the Financial Reporting Council. After making
enquiries, including consideration of the impact of COVID-19 on the
Company's current financial position and expected cash flows for
the period of the review, the Directors believe that it is
appropriate to continue to apply the going concern basis in
preparing the financial statements. This is appropriate as the
Company's listed shares are held for liquidity purposes and will be
sold as and when required to ensure the Company has adequate cash
reserves to meet the Company's running costs .
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 14.
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 either the price of recent
investment or cost 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 GBP1.05 per Ordinary Share
returned to Ordinary Shareholders. This incentive will only be
effective once the other holders of Ordinary Shares have received
distributions of GBP1.05 per share.
The performance incentive has been satisfied through the issue
of 3,895,834 Ordinary Shares (as set out in note 11 to the
financial statements) to the Investment Manager and members of the
investment management team being 20% of the total issued Ordinary
Share capital of 19,479,172 (after share cancellation on 22 March
2019 explained in note 11 of the financial statements). Under the
terms of the incentive arrangement, all rights to dividends will be
waived until the GBP1.05 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 GBP1.05 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 other debtors and 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,
especially due to the impact of COVID-19, which is a non-adjusting
post balance sheet event as disclosed in note 18. Further details
of the unquoted investments are disclosed in the Investment
Manager's Report on pages 3 to 7 and notes 8 and 14 to the
financial statements.
2. Income
Year ended 29 February Year ended 28 February
2020 2019
GBP'000 GBP'000
Income from investments
Dividends received 105 36
105 36
Other income
Bank deposit income 13 9
118 45
======================= =======================
3. Investment Management Fees
Year ended 29 February Year ended 28 February
2020 2019
GBP'000 GBP'000
Puma Investments fees 279 196
279 196
======================= =======================
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 commenced on 19
March 2018 (the date of the first share allotment). 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 3.4% (2019: 2.8%) of the funds
raised. Graham Shore, a director, holds a Directorship of the
parent of the Investment Manager.
In addition to the investment manager fees disclosed above,
during the year ended 28 February 2019, Puma Investments Management
Limited charged fees totalling GBP467,500 in relation to share
issue costs. The fees were to cover the costs of launching the
VCT.
4. Other expenses
Year ended 29 February Year ended 28 February
2020 2019
GBP'000 GBP'000
PI Administration Services
fees 49 34
Directors' Remuneration 61 58
Social security costs 4 4
Auditor's remuneration
for statutory audit 29 25
Transaction costs 9 26
Other expenses 74 79
226 226
======================= =======================
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 21. The Company had no
employees (other than Directors) during the year (2019: none). The
average number of non-executive Directors during the year was 3
(2019: 3). The non-executive Directors are considered to be the Key
Management Personnel of the Company with total remuneration for the
year of GBP65,000 (2019: GBP62,000) including social security
costs.
The Auditor's remuneration of GBP24,000 (2019: GBP20,500) has
been grossed up in the table above to be inclusive of VAT.
Non-audit fees charged during the year were GBP250 (2019: nil) for
iXBRL tagging of the 2019 (2019: 2018) financial statements.
5. Taxation
Year ended 29 February Year ended 28 February
2020 2019
GBP'000 GBP'000
UK corporation tax charged
to revenue reserve - -
UK corporation tax charged
to capital reserve - -
UK corporation tax charge
for the year - -
======================= =======================
Factors affecting tax charge for the year
Profit/(loss) before taxation 1,707 (927)
======================= =======================
Tax charge calculated
on profit/(loss) on before
taxation at the applicable
rate of 19% 324 (176)
Gain/(loss) on investments (398) 105
Tax losses carried forward 74 71
- -
======================= =======================
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 29 February 2020
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Total comprehensive income
for the year (169,000) 1,876,000 1,707,000
Weighted average number of
shares in issue for the year 19,686,535 19,686,535 19,686,535
Less: weighted average number
of management incentive shares
(see note 11) (4,103,197) (4,103,197) (4,103,197)
------------ ------------ ------------
Weighted average number of
shares for purposes of return/(loss)
per share calculations 15,583,338 15,583,338 15,583,338
------------ ------------ ------------
Return/(loss) per share (1.09)p 12.04p 10.95p
Year ended 28 February 2019
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Total comprehensive income
for the year (204,000) (723,000) (927,000)
Weighted average number of
shares in issue for the year 19,086,640 19,086,640 19,086,640
Less: weighted average number
of management incentive shares
(see note 11) (9,000,000) (9,000,000) (9,000,000)
------------ ------------ ------------
Weighted average number of
shares for purposes of return/(loss)
per share calculations 10,086,640 10,086,640 10,086,640
------------ ------------ ------------
Return/(loss) per share (2.02)p (7.17)p (9.19)p
7. Dividends
The Directors will not propose a resolution at the Annual
General Meeting to pay a final dividend (2019: nil).
8. Investments
Qualifying Non-qualifying
(a) Movements in investments investments investments Total
GBP'000 GBP'000 GBP'000
Purchased at cost 4,527 3,895 8,422
Unrealised losses - (550) (550)
Valuation at 1 March 2019 4,527 3,345 7,872
Purchases at cost 5,325 572 5,897
Disposals of investments:
- Proceeds - (2,430) (2,430)
Realised gains - 172 172
Unrealised gains 1,909 13 1,922
Valuation at 29 February
2020 11,761 1,672 13,433
============ ============== ============
Book cost at 29 February
2020 9,852 1,779 11,631
Unrealised gains/(losses)
at 29 February 2020 1,909 (107) 1,802
Valuation at 29 February
2020 11,761 1,672 13,433
============ ============== ============
(b) Gains/(losses) on investments
Year ended Year ended
29 February 28 February
2020 2019
GBP'000
Realised gains on investment 172 -
Unrealised gains/(losses) in year 1,922 (550)
2,094 (550)
============== ============
The Company received GBP2,430,000 (2019 GBPnil) from investments
sold in the year. The book cost of these investments when they were
purchased was GBP2,689,000 (2019 GBPnil). The Company's investments
are revalued each year, so until they are sold any unrealised gains
or losses are included in the fair value of the investments.
(c) Quoted and unquoted investments
Market value Market value
as at 29 February as at 28 February
2020 2019
GBP'000 GBP'000
Quoted investments 1,672 3,345
Unquoted investments 11,761 4,527
13,433 7,872
================== ==================
Further details of these investments (including the unrealised
gains in the year) are disclosed in the Chairman's Statement,
Investment Manager's Report, Investment Portfolio Summary and
Significant Investments on pages 1 to 12 of the Annual Report.
9. Debtors
As at 29 February As at 28 February
2020 2019
GBP'000 GBP'000
Other debtors 189 2,829
Prepayments and accrued
income 14 22
203 2,851
================== ==================
Other debtors includes cash held by the company share registrar
of GBPnil (2019: GBP1,824,000) and cash held by the company's
brokers of GBP177,000 (2019: GBP1,005,000).
10. Creditors - amounts falling due within one year
As at 29 February As at 28 February
2020 2019
GBP'000 GBP'000
Accruals 82 163
Redeemable preference
shares 13 13
95 176
================== ==================
Redeemable preference shares were issued for total consideration
GBP12,500 to Puma Investment Management Limited, being one quarter
paid up, so as to enable the Company to obtain a certificate under
s.761 of the Companies Act 2006.
Each of the redeemable preference shares carries the right to a
fixed, cumulative, preferential dividend of 0.1% per annum
(exclusive of any imputed tax credit available to shareholders) on
the nominal amount thereof but confers no right to vote except as
otherwise agreed by the holders of a majority of the Shares. On a
winding-up, the redeemable preference shares confer the right to be
paid the nominal amount paid on such shares. The redeemable
preference shares are redeemable at par at any time by the Company
and by the holder. Each redeemable preference share which is
redeemed, shall, thereafter be cancelled without further resolution
or consent.
11. Management Performance Incentive Arrangement
On 8 December 2016, 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 GBP1.05 per Ordinary Share, the Performance Target. This
agreement was amended by a deed of variation on 28 June 2018 to
extend the terms to cover the extended fundraising period.
This incentive is effective through the issue of ordinary shares
in the Company, such that the Management Team hold 3,895,834
ordinary shares being 20% of the issued share capital of
19,479,172. As at 28 February 2019, the Management Team held
7,500,000 Ordinary Shares, which were reduced on 22 March 2019 by
the cancellation of 3,604,166 ordinary shares in accordance with
the Terms of the Agreement.
The Management Team will waive all rights to dividends until a
return of GBP1.05 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 29 As at 28 As at 29 As at 28
February February February February
2020 2019 2020 2019
Number of Number of
GBP'000 GBP'000 shares shares
Allotted, called
up and fully paid:
Ordinary shares of
0.05p each 10 12 19,479,172 23,083,338
========== ========== =========== ===========
Allotted, called
up and partly paid:
Redeemable preference
shares of GBP1 each 13 13 50,000 50,000
========== ========== =========== ===========
As disclosed in note 11, on 22 March 2019, 3,604,166 ordinary
shares were cancelled.
13. Net Asset Value per Ordinary Share
As at As at
29 February 2020 28 February 2019
Net assets 15,634,000 13,929,000
----------------- -----------------
Number of shares in issue 19,479,172 23,083,338
Less: management incentive shares (see note 11) (3,895,834) (7,500,000)
----------------- -----------------
Number of shares in issue for purposes of Net
Asset Value per share calculation 15,583,338 15,583,338
----------------- -----------------
Net asset value per share
Basic and diluted 100.33p 89.38p
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 29 February 2020:
As at 29 February As at 28 February
2020 2019
GBP'000 GBP'000
Financial assets at fair
value through profit or
loss 13,433 7,872
Financial assets that are
debt instruments measured
at amortised cost 203 2,851
Financial liabilities measured
at amortised cost (95) (176)
13,541 10,547
================== ==================
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 29 February As at 28 February
2020 2019
GBP'000 GBP'000
Cash at bank and in hand 2,093 3,382
Interest, dividends and
other receivables 203 2,851
2,296 6,233
================== ==================
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. Other receivables as at 29 February 2020 was mainly
cash held by the company's brokers, that is subject to reviews
consistent with the banks noted above.
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 14. 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.
12% (2019: 42%) of the Company's investments are quoted
investments and 88% (2019: 58%) are unquoted investments.
Liquidity risk
Details of the Company's unquoted investments are provided in
the Investment Portfolio summary on page 8. 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
Directors' Report. The Company's overall liquidity risks are
monitored on a quarterly basis by the Board. The Company maintains
access to sufficient cash resources 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 29 February 2020 (2019: 0.75%).
Cash flow interest rate risk
The Company has exposure to interest rate movements primarily
through its cash deposits 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 29 February 2020.
Rate status Average interest Period until Total
rate maturity
GBP'000
Cash at bank - RBS Floating 0.25% - 2,093
Balance of assets Non-interest bearing - 13,636
15,729
========
The following analysis sets out the interest rate risk of the
Company's financial assets as at 28 February 2019.
Rate status Average interest Period until Total
rate maturity
GBP'000
Cash at bank - Metro Floating 0.10% - 6
Cash at bank - RBS Floating 0.25% - 3,376
Balance of assets Non-interest bearing - 10,723
14,105
========
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:-
2020 2019
GBP'000 GBP'000
Level 1
Investments listed on LSE 1,672 3,345
Level 3
Unquoted investments 11,761 4,527
13,433 7,872
======== ========
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 9 to 12.
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 increases 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 (2019: none).
17. Controlling Party
In the opinion of the Directors there is no immediate or
ultimate controlling party.
18. Post Balance Sheet Events
On 11 March 2020, the World Health Organisation declared
COVID-19 a global pandemic and on 23 March 2020, the UK Government
imposed a lockdown on the whole population. The Directors consider
that COVID-19 is a non-adjusting post balance sheet event. The
pandemic will significantly impact the UK economy and may
materiality impact the prospects of a number of the Company's
investments and cause a material reduction in the fair value of the
Company's investments. The Directors are unable to quantify the
full financial impact of COVID-19 on the fair value of its
investment portfolio as a material proportion of the investments
remains remain in lockdown. Further details of the investments are
set out in the Investment Manager's Report on pages 3 to 7.
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
29 February 2020, but has been extracted from the statutory
financial statements for the year ended 29 February 2020 which were
approved by the Board of Directors on 26 June 2020 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 2020 will be available to the public at
the registered office of the Company at Cassini House, 57 St
James's Street, London, SW1A 1LD 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 EAAKPAANEEFA
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