TIDMPUAL
RNS Number : 8939C
Puma Alpha VCT PLC
15 June 2023
Highlights
-- All funds raised in prior periods have met their 80% qualifying investment target before their 1 March 2023
deadline
-- GBP7.5 million raised in new equity
-- Additional GBP2.3m raised post-period end
Chairman Statement
INTRODUCTION
I am pleased to present the report and financial statements for
Puma Alpha VCT plc ("the Company") for the year to 28 February
2023.
OVERVIEW
The Company's Net Asset Value ("NAV") per share at the end of
the year stood at 130.53p a decrease of 5.95p and -4.36% from the
same time in the previous year.
The Company has not to-date held listed equities or other
liquidity management tools outside cash, so has not suffered from
associated volatility. The Company's loss for the year was -GBP386k
(2022: profit GBP3.0m).
FUNDRAISING
We are happy to report that at the year end the Company had
raised GBP7.5m, and since the year end a further GBP2.3m has been
raised. This gives the Company additional deployable funds to
continue building a robust portfolio and will help spread fixed
costs over a wider shareholder base.
INVESTMENT ACTIVITY AND PORTFOLIO
We are pleased to report that 2022-23 has been an active year
for the Company with two new qualifying investments having been
made in the period, alongside other Puma managed funds. These
investments were: GBP0.5m into MUSO, an anti-piracy data company
and GBP0.3m into HR Duo, a HR solutions software company. In
addition, follow-on investments were made; GBP0.8m into Ron Dorff;
GBP1.9m into Le Col; GBP1.2m into Everpress and GBP0.6m into Dymag.
This brings the overall number of qualifying investments to 10.
Post period end, an investment was made into Iris for GBP0.2m, an
advanced audio technology company.
Within the portfolio, The Company's holdings in CameraMatics and
Everpress have generated positive valuation movements. In all
cases, the Company benefits from a defensive investment structure
which has helped secure value.
CameraMatics has had a write up of GBP1.5m due to its continued
strong performance. In the last year it has acquired UK telematics
provider, Telematicus and launched DashMatics, an innovative
software solution designed to improve visibility, digitise
processes and manage risks.
Everpress has had a significant write up of GBP1.2m which is
substantially driven by structural protection within the
investment. It has benefitted from a number of high-profile
campaigns with creators that align with the company's core
values.
Connectr has had a GBP1.2m write down due to significant cost
cutting and cash burn has been slowed substantially, with sales
pipeline building. There remains a need for a prudent valuation at
the current point in time.
At the time of writing, the Company has over GBP4.3m ready to
deploy. This, together with the fact that the VCT is still
relatively new and therefore not burdened with a large legacy
portfolio to defend, positions the Company well to continue taking
advantage of the post Covid landscape. The Investment Manager
continues to see several hundred investment opportunities a year,
and your Board is optimistic that the rapid deployment the Company
has enjoyed to-date will continue.
Allocation of non-qualifying holdings will continue to be
considered by the Investment Manager as the economic outlook
continues to evolve.
NET ASSET VALUE ("NAV")
The Company's NAV stood at 130.53p (2022: 136.48p) at the year
end of 28 February 2023. This impairment is largely driven by less
significant valuation gains in the year offset by the management
fees and other expenses incurred in the year.
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. PwC will continue to monitor rule compliance and
maintaining the qualifying status of the Company's holdings in the
future.
OUTLOOK
The global economic picture has improved slightly since this
time last year. Whilst the war in Ukraine continues to undermine
sentiment, energy prices have moved lower, inflationary pressures
are easing in some regions, particularly the US and the Eurozone,
and we are seeing a rebound of growth in China. The UK is
experiencing greater political stability with increased emphasis on
the need to encourage investment and innovation in the private
sector. This is having a positive effect on business sentiment
evidenced by recent surveys of the business community. Whilst this
is encouraging compared to this time last year challenges remain.
Inflation is proving to be especially sticky in the UK with little
sign of a reversal in the cost of living crisis. The risk of a wage
price spiral is exercising policy makers with continued upward
pressure on interest rates. The picture therefore remains uncertain
with most forecasters expecting the UK economy to either flatline
or contract this year.
Nevertheless, challenging conditions always present
opportunities for agile businesses focused on resilient sectors.
This VCT is in a position to adapt quickly to changes in the
economic environment when developing its portfolio. Notwithstanding
ongoing uncertainty, the UK continues to benefit from an active and
well-established SME market in which the Manager has a strong
reputation as a provider of capital. This applies especially to
well-managed, later-stage SMEs where bank lending, despite some
policy support, continues to remain challenging for even the best
of these businesses. This, alongside the institutional support the
Manager is able to offer, continues to make for a compelling equity
offer from the Company. The ongoing uncertainty places added
emphasis on the Company's ability to focus efforts on sectors that
are well placed to navigate the current headwinds. We are confident
that we have the team to do this and assemble a portfolio capable
of delivering attractive returns to shareholders.
Egmont Kock
Chairman
15 June 2023
Investment Manager's Report
Despite the lockdown memories now beginning to fade, the global
pandemic has continued to cast a shadow over the UK economy. The
last 12 months have seen several ongoing challenges for British
businesses: from supply constraints and delays in logistics, to
high staff vacancy rates and staff shortages. There remain more
than a million vacancies across the UK, exacerbated by a worrying
increase in long-term sickness. Alongside the ongoing war in
Ukraine, these economic headwinds have driven up inflation, which,
as the latest data indicates, is proving stubbornly slow to come
down. Unfortunately none of us are exempt from the impacts of such
significant price growth, and all economic actors - consumers,
investors and businesses alike - have felt its damaging effects. No
wonder then, that in a bid to wrestle it under control and prevent
further damage to the economy, the Bank of England has been forced
to drive up rates so quickly, now surpassing the base case forecast
of 4% as outlined last September in our Prosper magazine.
It is not yet known what this means for the UK plc, although we
seem to have narrowly avoided a recession so far. Indeed, there are
a number of positive signs that the economy may actually be
starting to strengthen as we move into the summer period.
High energy prices did not last as long as had been predicted.
The UK Government provided a sustained and welcome level of
financial support, so that UK consumers were somewhat cushioned,
and price rises were much less severe than had been feared. As
wholesale energy prices have started to fall, the coming months are
due to see these lower prices translate into retail markets -
which, in turn, should bring down inflation as well as bolster
consumer spending. Indeed, we appear to now be seeing some small
green shoots of growing confidence, with GFK reporting in its
latest consumer index, that overall consumer confidence is now up
for its fifth consecutive month - albeit at -27 points.
According to the Institute of Directors, half of all the 900
firms it surveyed across all parts of the economy, reported that
their order books were healthier than at the end of 2022 -
highlighting a pick-up in outlook across all sectors.
From an investment perspective, the very high valuations that we
saw in the first half of 2022 have come down considerably. For
those like ourselves with capital to invest, there are now a number
of exciting opportunities - although good companies are sometimes
cautious about coming forward for funding when valuations are
depressed. Fortunately, we have a strong and established network of
introducers. During 2022 we saw more than 445 companies for an
initial review - and inflows in the early months of 2023 have
exceeded the same time last year. To support this growth in
activity, and to ensure we maintain the very hands-on approach that
we have refined over many years, we have invested heavily in our
team. We added to our value creation function in 2022 with the
appointment of James Craig who brings consultancy training and
mindset after working with Accenture and Baringa. More recently
we've taken on our first dedicated regional staff member, welcoming
Mark Lyons as an Investment Director in Manchester. Mark's primary
focus will be on scaling businesses in the North of England, where
we know there is huge growth and a lot of interesting businesses
looking for funding.
The past 12 months have re-affirmed the benefits of our
generalist, multi-sector approach. The dangers of pooling large
numbers of similar assets and viewing that as protective
diversification was evident during the global financial crisis,
which struck at the end of 2007 and continued into 2008. The
turmoil was a direct result of derivatives that were backed by
cheap, carelessly diligenced mortgages in the US; mortgages that
were supposed to benefit from the protection of diversification by
their sheer number, but instead turned out to be highly correlated.
As turmoil flowed through the entire US property market, they all
crashed together, and contagion and fear brought much of the global
banking system along too.
More recently, commentators have been talking about
'diversification' when describing funds that have a large number of
very similar companies - all at the same stage, operating in the
same sector. In our view, such portfolios offer very little
diversification since companies in the same sector have very
similar valuation movements (in response to interest rates) or have
customers with very similar demand patterns. Companies in the same
sector have hidden shared dependencies, and that drives up
risk.
Many of you will have seen the recent collapse of Silicon Valley
Bank - the $212 billion tech-lender, whose demise triggered
dreadful memories of 2007/8. Its downfall has been yet another
stark reminder that all sectors have dominant counterparties (be
they banks, suppliers, logistics providers etc), and a portfolio
that is highly concentrated in a single sector brings significant
exposure to those counterparties in ways that are not immediately
obvious. As a specialist technology lender, the collapse of SVB had
huge repercussions for those that were invested in tech. So, while
sector focus may bring specialism - it can also bring danger.
Our approach has always been purposefully multi-sector so that
we can mitigate against such risks and take a more holistic view
across the whole economy. We always have been, and will always be,
as a sector-agnostic, generalist investor, avoiding the 'hottest'
or faddiest sectors. It's an approach that continues to stand the
test of time, and ensures we are best placed to weather whatever
economic storms the global macroeconomic environment might throw at
us.
Rupert West
Managing Director
CameraMatics: Continuing to drive its overseas expansion
CameraMatics provides a range of fleet management solutions
which transform how businesses operate and deliver value to their
customers. Designed from a deep understanding of customers' needs,
its vehicle operations cloud platform has been developed to support
mobile workers and fleet managers automate the manual processes
involved in transportation and logistics and reduce risks. In 2021,
Puma Funds invested GBP4.72 million into CameraMatics. The
investment has been primarily focused on supporting the expansion
of the US branch of CameraMatics, and growing its offering to large
enterprise customers, following recent successes in the UK.
SECTOR OVERVIEW
According to Fortune Business Insights, the global fleet
management software market was valued at $18.2 billion in 2021 and
is projected to grow to $67.38 billion by 2029. Increasingly fleet
managers are looking for software solutions to monitor holistic
fleet performance - not only to provide real-time data insights
that optimise fleet efficiency, but also to meet Net Zero and
Vision Zero targets requiring safer fleets with a reduced carbon
footprint.
OUR VIEW ON THE SECTOR
"The regulatory-driven adoption of systems, and the increased
focus on driver safety and wellness, are driving demand for systems
which provide complete visibility of fleet management. With AI and
other new technologies coming on stream at an ever-increasing pace,
the fleet management solutions sector promises sustained
opportunities for growth."
Ben Leslie, Investment Director, Puma Private Equity
KEY RECENT SUCCESSES
In May 2022, CameraMatics acquired Telematicus to extend its
green fleet management capabilities and to improve its support for
the insurance industry. Telematicus was founded in 2009, and
quickly became a visible and respected player working within the
insurance sector, focused on reducing risk for insurers and running
high-profile projects, such as the technology partner of choice for
O2 and its O2Drive campaign. The driver app runs on IOS and Android
smartphones, and helps drivers manage risk, environmental impact
and vehicle running costs.
In the summer of 2022, CameraMatics launched DashMatics - an
innovative software solution designed to improve visibility,
digitise processes and manage risks. The system helps to prevent
accidents, but can be also used if an incident does occur. The app
allows both fleet managers and drivers to manage the process,
making manual paper-based reports a thing of the past.
In September 2022, CameraMatics hired a number of key personnel
in the US. It launched a new website specifically designed for
decision-makers managing US trucking fleets and business vehicle
operators, to help them improve safety, efficiency and compliance
in their vehicles. CameraMatics is also expanding into mainland
Europe and the Middle East and expects to create more than 50 jobs
over the next two to three years in the UK and Ireland.
SUSTAINABILITY
Many governments have made commitments to reach Net Zero by
2050. One area of focus for the Net Zero standard is cutting the
emissions from supply chains since transportation is one of the
largest contributors to global emissions, better optimisation of
fleet operations plays a central and critical role in an
organisation's ability to reduce its emissions.
CameraMatics not only offers a comprehensive range of products
which enable companies to gather key insights and information to
better manage their sustainability goals, it also provides support
for transitioning to electric fleets. In addition, analysis by
CameraMatics has shown that its products have enabled companies to
benefit from up to a 30% reduction in fuel usage - saving money as
well as helping reduce carbon emissions.
WHY WE'VE INVESTED
CameraMatics provides a comprehensive range of scalable,
innovative and customer-centric solutions for fleet managers. These
help to meet a wide range of commercial, regulatory and safety
needs identified through the team's deep understanding of the
logistics and transportation industry. Its focus on its customers
with continued development of new propositions to support
day-to-day needs is a key USP for the business. It has a sustained
track record of winning new contracts, and now has more than 85
employees and services more than 1,000 commercial fleets.
4.7m investment (Alpha VCT participation 1.6m)
OUR INVESTMENT VIEW
"CameraMatics is leading the way in fleet safety technology
solutions, and our funding has enabled it to expand into both the
US and Europe, thereby strengthening its position in the global
market. In the last 12 months its new product launches have
supported its existing product suite and allowed it to enter new
market verticals. The business is now focused on unlocking the
opportunity to scale in the US, and we are pleased with the
progress it has made."
Ben Leslie, Investment Director, Puma Private Equity
CAMERAMATIC'S VIEW
"We have worked with Puma Private Equity for the last three
years. We have found them to be supportive, strategic and practical
to work with over this time. While most VCs say they are
'founder-friendly' we have found that Puma actually are, and they
have become a key part of our team as we continue to scale
internationally. Their advice is always honest, insightful and in
the best interests of the business and all stakeholders."
Mervyn O'Callaghan, CEO and Co-Founder, CameraMatics
Connectr: Building better engagement and equity in the
workforce
Connectr is an award-winning, industry-leading provider of
cloud-based mentoring software for enterprise-level organisations.
It supports many of the world's largest employers to attract,
recruit, progress and retain future and existing hires, with
high-impact, scalable mentoring programmes which drive engagement,
inclusion and belonging via its online platforms - Connectr for
Candidates and Connectr for Employees.
Puma Funds initially invested GBP2.75 million in August 2019, to
support Connectr to develop its core product. Following impressive
revenue growth in the following two years, Puma invested another
GBP6 million in two later investment rounds (October 2020 and
December 2021) to capitalise on the expansion opportunities
available to the company.
SECTOR OVERVIEW
Despite some progress in diversity, equity and inclusion
(DE&I) policies being implemented, there is progress to be made
in ensuring greater equity in the workplace. A recent study by the
Chartered Institute of Personnel and Development showed that just
under half (47%) of UK employers surveyed do not have a dedicated
DE&I strategy in place. Only 38% of employers said they
collected some kind of equal opportunities monitoring data, and
managers in 28% of organisations stated they were not given the
time and resources to foster an inclusive and diverse team.
In addition, while the commercial and moral case for DE&I is
clear, too many individuals from working class or underprivileged
backgrounds find themselves disadvantaged in the workplace. The
Global Social Mobility Report 2020: Equality, Opportunity and a New
Economic Imperative, found that the UK ranked among the worst
countries in terms of progression for those from poorer
socio-economic backgrounds.
The growth in HR and technology systems that support the
DE&I market continues, as companies seek solutions to help them
better understand and promote policies and practices which support
equity in the workplace. A report by Mercers in February 2019
suggested that the market was worth upwards of $100 million. And in
a recent study, Gartner stated that by 2025, 60% of global
mid-market and large enterprises will have invested in a
cloud-deployed human capital management suite for administrative HR
and talent management.
OUR VIEW ON THE SECTOR
"Mentoring has moved into the mainstream, as more and more HR
leaders understand its benefits. The people function in many
organisations is increasingly utilising technology to help combat
the challenges they face in hiring, engaging and retaining staff.
Hybrid working patterns have fundamentally changed the working
landscape, and we see huge opportunities for tech adoption in the
HR space."
Ben Leslie, Investment Director, Puma Private Equity
KEY RECENT SUCCESSES
The team has had a busy 12 months, with expansions in several
areas. It has invested in adding new functionality to its existing
products, as well as bringing to market Connectr for Employees,
which expands the product offering from the recruitment cycle to
the entire employee lifecycle. It has also had a number of large
new client wins, including the Phoenix Group, which is one of the
UK's largest life and pensions organisations.
AWARDS
The team continues to be recognised for its innovation, with the
following awards in the last 12 months:
-- Learning Platform of the Year (Bronze) at the Learning and
Performance Institute's Learning Awards
-- Highly Commended for the Marriott Harrison Candidate Experience Solution of the Year
-- Nominated for D&I Initiative of the Year at the British HR Awards
WHY WE'VE INVESTED
Connectr provides a growing platform for HR solutions which
enable employers to attract, retain and develop their people. It
has a growing track record of securing and retaining new clients,
and in the last 12 months alone, more than 20,000 new users have
connected with its platform and more than 70,000 learning content
tasks have been completed.
8.7m investment (Alpha VCT participation 1.7m)
OUR INVESTMENT VIEW
"Connectr creates a positive social impact for businesses,
employees and under-represented groups across the UK. Our
investment allows Connectr to continue setting the standard for its
sector, further develop its market leading mentor platform, and
support customers to attract the best talent. Connectr helps HR and
people teams create an environment where individuals can
thrive.
"We are delighted to continue supporting the growing team at
Connectr on the next stages of its journey."
Ben Leslie, Investment Director, Puma Private Equity
CONNECTR'S VIEW
"We are excited about the future. Puma's continued financial and
strategic support enables us to continue investing in building out
our product suite, enabling us to be integrated far deeper into the
candidate and employee journey."
Will Akerman, CEO Connectr
Dymag: Driving wheel innovation since 1974
Dymag is a British designer and manufacturer of high-performance
car and motorbike wheels, which was founded in 1974 by Max Bostrom.
The company has been making carbon motorcycle wheels since 1995,
and carbon-hybrid automotive wheels since 2004, and considers
itself a racing and road pioneer. The business continues to grow
its presence, both in aftermarket wheels using relationships with
several leading US distributors, and through project work with
several leading-performance original equipment manufacturers
(OEMs).
Puma Funds has made a number of investments into Dymag: GBP3.6
million in December 2018, GBP2.9 million during 2020, GBP1.5
million in October 2021 and GBP750,000 in December 2022. These
investments have been made to improve scale and reduce production
costs - particularly of carbon-hybrid automotive wheels, which are
seeing significant demand growth.
SECTOR OVERVIEW
The automotive sector has faced numerous challenges in recent
years, with Covid-19 and well-publicised chip shortages that were
further exacerbated by the war in Ukraine. Although the global chip
shortage has affected many industries, the automotive sector - as
ardent followers of a 'just in time' manufacturing strategy - has
been particularly badly hit, and many manufacturers have removed
options available on their cars due to the limited availability of
semi-conductors. This has pushed up demand and the price of used
cars, with many manufacturers reporting lengthy wait times of
months - in some cases years - for some new models.
At the same time, the industry is seeing huge changes as new
regulations, technologies and consumer preferences combine to
create a growing need for electric vehicles (EVs). McKinsey
estimates that about $115 billion of investment has gone into EVs
since 2010 and worldwide demand for EVs will grow sixfold from 2021
to 2030, with annual unit sales going from 6.5 million to roughly
40 million over that period. The automotive sector remains a huge
industry and one that continues to grow.
KEY RECENT SUCCESSES
Lightweight components go hand in hand with the desire to
electrify, and Dymag is well positioned to capitalise on the
growing demand for EVs. Having coped with the significant labour
and supply chain shortages in recent years, Dymag has posted
material revenue growth. This has been underpinned by streamlined
new production methodologies introduced under the new Director of
Manufacturing and Quality - Simon Locke - who joined after 22 years
at Dyson. Dymag has also recently signed a strategic partnership
with Hankuk Carbon, a listed composites manufacturing group
headquartered in South Korea, to explore the mass production of its
state-of-the-art carbon composite wheels for the automotive
industry.
MANAGEMENT TEAM CHANGES
Tom de Lange joined Dymag as COO in May 2019, becoming Managing
Director in January 2020 and finally CEO in January 2021. Tom was
previously Head of Research, Process Improvement at Dyson, and had
a stellar career in automotive racing and aerodynamic engineering
with NASCAR and F1 before Dyson. Simon Locke joined Dymag in August
2022 as the new Director of Manufacturing and Quality, and Tom
Ellaway joined in March 2022 as Head of Sales and Marketing.
WHY WE'VE INVESTED
EVs are the future, but they require more innovation than just
advances in electric motors and batteries - the EVs that we will
see in the coming years need super-light, super-strong components
to optimise journey efficiency. The advances being made in
lightweight alloys are as important to EVs as any advances being
made in aerodynamics or battery cells in the last decade, and Dymag
is at the cutting edge of advances in wheel technology.
10.3m investment (Alpha VCT participation 1.7m)
OUR INVESTMENT VIEW
"We see the growth in demand for EVs continuing, and this
provides a huge opportunity for Dymag as an innovator in automotive
wheel technology. The expertise it has brought into the business,
as well as the strategic partnerships it is forging, will help
drive growth and improve operational efficiency, and we believe it
is well positioned to accelerate its plans in the coming
months."
Rupert West, Managing Director, Puma Private Equity
DYMAG'S VIEW
"We're pleased with the progress we are making in
cost-optimising our wheels and designing them for more scalable
manufacture. Our next big step is to increase production capability
from 2,000 units a year to 10,000 units a year. We're currently
investigating how we can utilise microfactories to help us achieve
this scale flexibly and at lower capital cost than traditional
factories, where clients need them, which will save hugely on
emissions and shipping costs. The investments made into Dymag have
also helped us look at more sustainable operations, including
recycling composites and new materials that could be leveraged in
future wheels. We are excited about the role our wheels can play in
EVs as part of an overall system designed to save energy, and have
a much lower impact on its environment in the future."
Tom de Lange, CEO, Dymag
Everpress: Enabling creativity to flourish
Everpress started with a simple mission - to support grassroots
creators and reduce waste in fashion. Today, it provides a
full-service solution through which creators can upload their
designs and create campaigns - using the platform's toolkit to
choose garment types, sale duration and prices - before launching
to a global audience via Everpress's website.
In August 2021, Puma Funds invested GBP3.2 million into
Everpress, with a further investment of GBP3.2 million in August
2022, to help the business execute on plan with a focus on driving
up profitability.
SECTOR OVERVIEW
According to data from the Office for National Statistics (ONS),
the Retail Sales Index shows that the volume of sales in clothing
stores unexpectedly saw small increases in November and December
2022, with 1.1% and 1% rises respectively. Despite falling
confidence in the economy, the ONS has stated that consumers have
"increased their spending this winter to maintain their level of
consumption of clothing and footwear as opposed to cutting back".
However, figures released in February 2023 by the British Retail
Consortium (BRC) and KPMG indicated that while sales of health,
beauty, footwear, jewellery and watches were up, sales of clothing
were down. Paul Martin, the UK Head of Retail at KPMG, stated,
"Consumers are continuing to hold back on non-essential spending
with sales of clothing, footwear and accessories - which have been
very influential in spending for many months - continuing to
decline in February." With inflation appearing to be easing, it is
hoped that consumer confidence will return and discretionary
spending increase in the coming months.
OUR VIEW ON THE SECTOR
"We know that the market for clothing has remained challenging -
but against the backdrop of increasingly environmentally conscious
consumers, the ability to deliver discrete, small-run, personalised
clothing is positive. Clothing which enables individuals to connect
with their favourite creators while expressing themselves and their
values will remain desirable."
Ben Leslie, Investment Director, Puma Private Equity
KEY RECENT SUCCESSES
The last 12 months have seen Everpress launch a number of
high-profile campaigns with creators that align with Everpress's
core values, as well as fundraising initiatives for various
charities and appeals. These have included Choose Love with the
likes of Sebastian Croft, Taron Egerton and Olivia Colman, as well
as fundraisers for the war in Ukraine, and disaster relief for
those in Turkey and Syria following the earthquake earlier this
year.
Everpress has also successfully launched integrations with other
e-commerce platforms, including Shopify, Spotify, Etsy and
Trekstock.
SUSTAINABILITY
Everpress was created with sustainability at its heart and
having spent a considerable amount of time and effort, received its
final B Corp accreditation in July 2022. This provides validation
to consumers of its ethical credentials, and differentiates it from
fast-fashion brands. In addition, Everpress has launched a number
of campaigns in the last 12 months which have raised significant
funds for a range of appeals and charities supporting equality,
diversity and inclusion.
WHY WE'VE INVESTED
While some fashion brands are faced with high levels of stock,
and rising costs that cannot easily be passed onto the consumer,
Everpress has a model of limited time campaigns and printing, which
limits its exposure to excess inventory that ties up cashflow. It
has brought on key new hires in sales and business development, and
has a number of initiatives planned. These include:
-- Creator weekends - planned for every quarter, with 25% more
profits going to creators/fundraisers after its 'anti' Black Friday
campaign success.
-- Integrations - further partnerships are in the pipeline which
integrate Everpress with other brand platforms - thereby unlocking
further distribution as well as access to more creatives.
-- Initiatives calendar - with key themes each month which
resonate with its wider community, such as solidarity/power for
events including Pride, International Women's Day and Black History
Month.
6.4m investment (Alpha VCT participation 2.1m)
OUR INVESTMENT VIEW
"Everpress has a unique business model which ensured the company
continued to thrive despite challenging market conditions in the
consumer sector. The Everpress platform enables creators to engage
with and grow their following, which is ever-more important in the
current environment. The pre-order model ensures the company
carries limited stock and is able to be agile in line with market
evolutions."
Ben Leslie, Investment Director, Puma Private Equity
EVERPRESS'S VIEW
"Puma Private Equity has been a long-term supporter of Everpress
and shares our mission and our values. The team has helped us
succeed on our journey, and with the additional investment they
have made as well as their skills, knowledge, expertise and
contacts, I am confident that we can realise our vision."
Alex Econs, CEO, Everpress
Deazy: Development made easy
Deazy is a platform which enables enterprises, including
PE/VC-backed growth companies to hire high-quality software
developers, by intelligently matching developers with project
requirements. Founded in 2016, Puma Funds invested GBP5 million of
equity into Deazy in December 2021, to enable the business to scale
its commercial teams and accelerate its growth plans.
SECTOR OVERVIEW
The demand for highly skilled software developers continues to
grow to address priorities such as digital transformation and
modernising legacy applications, to improving cyber defences and
cloud migration. According to Forbes, there will be a shortfall of
four million developers by 2025, with the US Bureau of Labor
Statistics showing that almost 200,000 developer jobs will need
filling each year to the end of the decade. Budget constraints can
make it challenging to recruit sufficient staff to manage in-house
requirements, and research and development tax cuts have impacted
the level of claims that scale-ups can obtain from HMRC -
effectively increasing the cost of in-house developers. Getting
access to external, flexible software development resources as and
when businesses need them, is therefore becoming increasingly
essential.
KEY RECENT SUCCESSES
Deazy continues to grow at pace, and achieved its highest
monthly revenue ever in January 2023. It recently announced that it
was ranked 13(th) in the 2022 Deloitte UK Technology Fast 50 (which
ranks the 50 fastest-growing tech companies in the UK). It has also
made a number of significant new hires:
-- Ben Morris was appointed as the Head of People and Culture at
the end of the summer, to help the business double its
headcount.
-- In December 2022, Freya Wordsworth joined as Partnership
Manager to focus on strategic partnerships, consultancies and
PE/VC-backed business service providers.
-- Laura Wall recently joined as Head of Marketing. Laura joins
from Codurance (a global software company) where she was the Global
Head of Marketing.
WHY WE'VE INVESTED
Puma invested in Deazy on the back of the company showing
impressive growth in its revenue - annual turnover growth over the
last three years has been in excess of 100%. The management team is
firmly focused on scaling customer acquisition, with a number of
experienced new hires. We see the challenges of software developer
shortages in a number of our portfolio companies, and we believe
this is a sector that will continue to experience growth. Deazy is
well positioned to capitalise on that growth, with a differentiated
offer that focuses on working with established teams.
5.0m investment (Alpha VCT participation 1.0m)
OUR INVESTMENT VIEW
"Deazy now works in over 25 countries around the world and has
more than 5,000 developers in its ecosystem. We have been working
closely with it in refining its strategy and helping it to recruit
key staff members to support its growth ambitions. We believe Deazy
is the perfect delivery partner for a growing number of companies
who need flexible, scalable, on-demand services."
Kelvin Reader, Investment Director, Puma Private Equity
DEAZY'S VIEW
"There is a long-term skills gap in technology and our platform
makes it easy for organisations to fill that gap - that's what's
been powering our growth and what will see us grow even faster in
the future. We've spent 2022 developing our proposition and
building the team so that the company is ready for further growth
during 2023."
Any Peddar, CEO and Co-Founder, Deazy
HR Duo: Intelligent HR solutions for modern workplaces
HR Duo provides HR solutions to SMEs, by integrating industry
knowledge with the latest technology to deliver a number of HR
requirements automatically. Its easy, low-cost, cloud-based
subscription service has been specially developed to act as a
bolt-on support to HR personnel, or as an HR back-up for companies
without a dedicated HR department, ideal for SMEs with 50-1,000
employees.
In December 2022, Puma Funds invested EUR3.75m into HR Duo, to
accelerate product development, grow its workforce and drive
international expansion.
SECTOR OVERVIEW
Galvanised by the pandemic, worker engagement and happiness
continue to be a key focus for companies, driving growth in the HR
tech space. Digital products are rendering workforce management
more efficient, with a large greenfield opportunity to target SMEs
which are resource-constrained and often require investment in
their HR function.
This is a high-growth sector, with growing levels of funding and
competition. In 2021, venture investors funnelled more than $12.3
billion into global HR tech start-ups across 809 deals, roughly 3.6
times the amount of capital invested in 2020, according to
PitchBook data. Fortune Business Insights estimates the global HR
tech market at $24 billion in 2022 and expects it to grow to $39.9
billion by 2029 (7.5% CAGR).
KEY RECENT SUCCESSES
During the last 12 months, HR Duo has seen a 38% growth in
revenues and a 28% growth in clients. It has also seen an increase
in its average and median contract values, as its clients see the
value of its services in supporting their businesses. The funding
provided in December has enabled HR Duo to establish a UK-based
sales team, which is already showing initial signs of success in
the market. It has also completed a rebrand of the company with a
keen focus on the 'Duo' aspect of the brand, and has launched a new
website.
WHY WE'VE INVESTED
Puma Funds invested to fund the existing sales plans and to
drive growth, particularly in the UK domestic market, where there
are more than 5.5 million SMEs. HR Duo's team of 52 is continuing
to recruit talent to help drive growth and capitalise on the
product investments already made. Over the coming months, the team
intends to grow its presence in Ireland, and expand its product
offering to include third-party integrations which provide a wider
suite of functionality.
3.2m investment (Alpha VCT participation 0.3m)
OUR INVESTMENT VIEW
With the UK's HR tech market rapidly growing and SMEs
increasingly seeking to improve their employees' working
experience, it's the perfect time for an innovative and ambitious
company such as HR Duo to expand into the UK market.
"We see significant potential to empower UK SMEs - harnessing
the management team's established HR experience through a
comprehensive tech solution. We are thrilled to be working with HR
Duo and its management team, and are excited to see where this
journey takes us."
Henri Songeur, Investment Manager, Puma Private Equity
HR DUO'S VIEW
"We are delighted to welcome Puma on board, who will provide not
only the necessary funding but also the expertise that will help
drive our ambitious growth strategy. Our near to mid-term
objectives are rapid revenue growth and staff expansion - not only
in Ireland but in the UK where we see an enormous untapped
opportunity for the unique services that HR Duo offers. This is an
exciting time for the company and we look forward to a bright
future revolutionising the HR needs of thousands of SMEs
worldwide."
Jerome Forde, CEO, HR Duo
Le Col: Helping the world's fastest cyclists go faster
Le Col has a very clear ambition to be the pre-eminent
performance cycling apparel company in the world.
In 2018, Puma Funds invested GBP2.35 million to support Le Col's
initial growth plans, and following continued strong performance, a
further GBP2.5 million was invested in 2019. In 2022, additional
investment was provided to fuel the company's overseas expansion,
as well as its sales and marketing efforts, which have
significantly raised the brand's profile over the last two years.
In 2022, Puma Funds invested a further GBP9.5 million to support
the brand's long-term growth trajectory.
SECTOR OVERVIEW
The current cost-of-living crisis is having a global impact,
with Covid and the ongoing war in Ukraine playing a significant
role. Consumers are feeling the pinch of the highest prices they've
seen in a generation, with energy bills soaring, food costs rising,
and mortgage interest rates reaching 15-year highs. It's no wonder
then that individuals are spending less as they become more
cautious with their money.
Online sales - which saw intense growth over the pandemic - have
fallen back, and latest analysis from the ONS shows that UK
ecommerce sales are now down to their lowest peak since January
2021, accounting for just 26.6% of total retail sales in January
2023, compared with a 37.8% peak two years ago.
Bike sales reached their lowest level in two decades in 2022.
Total UK mechanical bike volumes fell 22% to an estimated 1.88
million units in 2022. This was 27% below pre-Covid levels in 2019,
according to data from the Bicycle Association. With falling
consumer confidence and increasing costs, the cycling industry as
seen several brands fail in recent months including Milltag and
VeloVixen.
OUR VIEW ON THE SECTOR
"Having experienced phenomenal growth, in the last 18 months we
have seen a significant slowdown in demand for cycling equipment
and apparel. While the outlook remains challenging, products that
are at the cutting edge of technology and innovation in this sector
will remain in demand."
Harriet Rosethorn Investment Director, Puma Private Equity
KEY RECENT SUCCESSES
The team at Le Col has continued to focus on the US, where it
continues to see encouraging signs of growth. This includes
building a custom offering for the US market (such as supporting
cycling clubs), and it has recently launched onto Amazon
Marketplace in the US.
In 2022 the team returned to the UCI World Tour with
BORA-hansgrohe, and it has spent the last year putting together a
world-beating package of kit that includes the fastest skinsuits
and speedsuits - harnessing technology from its Project Aero
collaboration with McLaren. Jai Hindley won the Giro d'Italia in Le
Col kit - proving that Le Col provides the fastest cycling apparel
to the fastest cyclists in the world today.
WHY WE'VE INVESTED
Le Col has grown rapidly over the investment period - fuelled in
part by renewed interest in the cycling sector, but also because of
the quality of its product, which has helped deliver results,
particularly for competitive cycling. The business has had to
navigate significant growth challenges, as well as external
political and economic factors such as Brexit, Covid and ongoing
supply chain challenges. The business has an impressive management
team and we have been working with it extensively to help the
organisation flex and shape, so it is in an increasingly strong
position to stabilise and grow.
14.4m investment (Alpha VCT participation 2.6m)
OUR INVESTMENT VIEW
"Le Col is a best-in-class provider of cycling apparel, and we
are committed to providing it with the necessary capital and
strategic support to enable the business to continue to scale. We
are impressed with the way in which it has navigated significant
growth challenges, and we are working closely with the team on its
amazing journey."
Harriet Rosethorn, Investment Director, Puma Private Equity
LE COL's VIEW
"Le Col has always been agile and fleet of foot - constantly
exploring new ways of doing things. This is a key business strength
and one that has allowed us to accelerate our growth in recent
times. It is clear from what we are seeing across our core markets
that the economic climate has taken a remarkable turn with pressure
coming from general inflation, interest rate increases and high
energy prices. We need to ensure our business is in a strong
position to enable us to weather such changes. Our most recent
investment by Puma Funds enables us to transition to a more
efficient operational model: one that will help to solidify our
position and enable us to act nimbly in what is fast becoming a
volatile operating market. It will also enable us to continue
making strategic investments that support our growth plan."
Yanto Barker, Founder and CEO, Le Col
MUSO: Dominating the market for global piracy
MUSO is a London-based data company which provides a complete
and trusted view of global piracy and unlicensed media consumption.
Its unique and transformative data is fast becoming a must-have
data currency for entertainment companies, and is already used by,
among others, Amazon Studios, National Association of Theatre
Owners (NATO), NOS, Lionsgate, MNRK (formerly eOne Music) and Sony
Interactive Entertainment Europe. MUSO's technology measures
hundreds of billions of visits to piracy websites each year and
provides unrivalled consumption and audience data allowing
rights-holders to strengthen the protection of their content from
piracy.
In August 2022, MUSO received a GBP3.2 million investment from
Puma Funds. The investment will support the establishment of MUSO's
marketing function and larger build-out of its sales teams, in both
the UK and the US.
SECTOR OVERVIEW
MUSO's data points to the continuation of the rise in digital
piracy for film and TV in 2023, fuelled by a combination of
factors, including the increasing volume of content post-pandemic,
releases being increasingly exclusive to a large number of legal
subscription platforms, and global inflationary and economic
pressures. Film piracy increased by 38.6% and visits to piracy
websites for TV content grew by 8.8% in 2022, when compared with
2021.
This trend continues to be a major issue for the industry,
significantly impacting the revenues and livelihoods of all
involved - particularly smaller, independent creators - and
damaging the wider economy. According to the Motion Picture
Association (MPA), o nline TV and film piracy costs the US economy
at least $29 billion in lost revenue each year. What's more,
spiralling global visits to such sites are also estimated to be
robbing the entertainment industry of hundreds of thousands of
jobs.
OUR VIEW ON THE SECTOR
"Data shows that with the cost-of-living challenges that many
consumers are facing, global piracy is on the increase. The need to
protect revenues in music, film and TV will be increasingly
important for all organisations in this sector - to secure jobs and
industry futures as much as secure profits."
Harriet Rosethorn, Investment Director, Puma Private Equity
KEY RECENT SUCCESSES
Following the investment in August 2022, MUSO has recruited a
number of new hires. In October, Alaina Creedy joined as Head of
Customer Success. Alaina was previously at Incopro where she was
Vice President, Alliances & Partnerships. Neil Harvey joined in
November 2022 as Marketing Director. Neil joined from Ekimetrics,
where he was Director for Global Demand Generation. And Tim Colyer
also joined the team in November 2022, as Enterprise Sales
Director. Tim was previously a Sales Executive at Corsearch and
prior to that a Director at Entura International.
Together the team is focused on client acquisition and client
management.
WHY WE'VE INVESTED
Puma Funds invested to help the team fund growth and expand
overseas - particularly into the US. MUSO is well recognised as a
leader in global piracy, and has an impressive roster of clients,
including some of the biggest names in film, music and TV.
3.2m investment (Alpha VCT participation 0.5m)
OUR INVESTMENT VIEW
"We're really excited to be working with MUSO, as we believe the
business shows significant growth potential to capitalise on the
rise in global piracy. The team has made a number of significant
hires in recent months to strengthen its sales and marketing
efforts, and this is starting to translate into new client wins. We
are enjoying working closely with the team to achieve their
goals."
Harriet Rosethorn, Investment Director, Puma Private Equity
MUSO'S VIEW
"MUSO has made excellent progress since Puma's investment, with
growth in revenue and customer numbers, and hitting product
milestones. Our focus for FY24 remains on delivering triple-digit
ARR growth and adding to its global enterprise customer logos,
which currently include Disney, Amazon, Sony Interactive,
PlayStation, Krafton and AMC. We remain the only company in the
market that measures audience demand from unlicensed streaming
websites and are well resourced to capture significant market share
and become omnipresent as the market authority."
Andy Chatterley, CEO and Founder, MUSO
Ostmodern: Riding the tidal wave of new video content
Ostmodern is a digital product specialist and creative
technology company. The team collaborates with businesses to
develop unique digital products and services. It has produced
bespoke rich media and video on demand (VOD) for many high-profile
clients across the world, including Formula 1, Sky NZ and Rakuten.
Building on the management's expertise in the VOD sector, Ostmodern
has developed a content management system (CMS) for rich media,
Skylark, to enable content owners to better manage and
commercialise their video content.
In December 2020, Puma Funds invested GBP2 million in Ostmodern,
to enable it to further develop the Skylark product and continue
its transition from a service provider to a productised offering.
The ultimate goal is to provide an affordable and easy-to-plug-in
CMS to a wider range of content owners.
SECTOR OVERVIEW
The proliferation of VOD has continued, as more tools are
developed to enable content owners to publish and commercialise
their rich media assets direct to their audience. Ostmodern is part
of this wave, providing best-in-breed development services and
solutions around the provision of video content online.
According to Fortune Business Insights, the global VOD market is
projected to grow from $82.77 billion in 2022 to $257.59 billion by
2029, at a CAGR of 17.6%. This growth is being fuelled by a number
of factors, including growing global mobile internet penetration
and a huge surge post-pandemic in demand for subscription-based TV,
movies and documentaries.
Kantar's Entertainment on Demand study in the US has found that
from September to December 2022, the number of households with
video streaming rose 2.5 million, reaching a total of 115.6 million
households. Household penetration of video streaming is now 89%.
The average US household now accesses 5.4 different streaming
services, up from 5.2 in Q3 2022.
KEY RECENT SUCCESSES
The team at Ostmodern has worked hard in the last 12 months, to
drive operational efficiencies and grow revenue in line with its
plans to achieve profitability. The last six months of 2022 saw
significant gains in sales, with overall revenues growing 37% on
the same period in 2021.
Much of this growth has been driven by the expansion of the
services side of the business, with the management team
successfully designing and implementing a more formalised account
management structure, which provided better client service and
clearer visibility on projects. During the remainder of this year
it wishes to continue improvements in this space - building on its
reputation as a provider of high-quality digital services. The
services part of the business is planned to reach profitability by
the end of H1 2023.
The team also successfully launched Skylark 10 in beta - its
latest iteration of its headless CMS solution - and it has forecast
a significant sales drive from this launch in 2023, with the aim
that this will be the best-in-breed headless CMS on the market.
WHY WE'VE INVESTED
Puma has backed a relatively established business (services
side) with a best-in-breed SaaS product growth option (Skylark).
The management team has a strong reputation in the sector for
providing digital services of the highest quality around VOD.
The commercialisation of content online continues to grow.
Sectors such as sports, education, retail are expected to move in a
similar direction to media companies, thereby significantly
increasing the serviceable market for Ostmodern and Skylark.
2.0m investment (Alpha VCT participation 0.9m)
OUR INVESTMENT VIEW
"We are delighted to be supporting Ostmodern's strong management
team, as it draws on its long-standing experience in the industry
to capitalise on the considerable growth of video on demand that we
are seeing worldwide. With customer and end-user experience
becoming increasingly important in our new digital landscape, we
look forward to seeing the team lead the way in the rich media
market."
Kelvin Reader, Investment Director, Puma Private Equity
OSTMODERN'S VIEW
"Puma Private Equity's funding and strategic support enables us
to put in place appropriate plans for growth, and over the coming
months, set up our reseller channel and referral partner network.
We are excited about the future."
Tom Williams, CEO, Ostmodern
Ron Dorff: Exploiting growing demand for luxury athleisure
wear
In 2020, the Puma Funds invested GBP3.59 million into men's
athleisure wear business, Ron Dorff. Aligning Swedish functionality
with French style, Ron Dorff is a well-respected premium bodywear
brand, having been voted one of the three best swimwear brands for
men in 2020 by Vogue magazine. In February 2022, Puma Funds made a
further investment of GBP1.67 million, to enable the business to
continue its overseas expansion, particularly in the US.
SECTOR OVERVIEW
According to research by McKinsey, after experiencing 18 months
of robust growth (early 2021 to mid-2022), the fashion industry is
again facing a tough time. Inflation, and depressed customer
confidences, resulted in declining growth rates in the second half
of 2022, and it expects that the slowdown to continue through 2023.
However, the luxury sector will outperform the rest of the
industry, as wealthy shoppers continue to travel and spend. The
luxury sector is expected to grow 5-10% in 2023, driven by strong
momentum in China (projected to grow 9-14%) and in the US
(projected to grow 5-10%). In addition, according to the Boston
Consulting Group, the global luxury industry is expected to climb
from an estimated EUR388 billion in 2022 to an estimated EUR494
billion in 2026.
OUR VIEW ON THE SECTOR
"While clothing in general has been affected by the economic
slowdown, demand for premium and luxury clothing continues to
climb. We are seeing a number of brands release collaborations and
design partnerships to huge success, and we see this trend
continuing in this premium space."
Ben Leslie, Investment Director, Puma Private Equity
KEY RECENT SUCCESSES
The team has had an incredibly busy year, with double-digital
growth in revenue across all primary channels, a number of new
hires and some successful collaborations. It also won Best
Sportswear Brand in Robb Report's Annual Best of the Best 2022.
In the spring of 2022 it donated underwear, T-shirts and socks
shipped by truck via Poland into western Ukraine, following
requests from Vogue UA Venya Brykalin . Ron Dorff also launched a
charity 'Independent Boy' T-shirt in support of Ukraine, building
on the existing range, which focuses on locations the company
operates in.
In the summer Ron Dorff opened a successful pop-up store in Fire
Island, which it will be repeating from May 2023. It also launched
a limited-edition collection in a collaboration with Rivieras.
Recognised as a classic, the Rivieras beach loafer is simple and
timeless - and by aligning with Ron Dorff on a capsule collection,
this exclusive collaboration was a great success.
In September 2022 it launched its Papa collection with Neil
Patrick Harris. The 20-piece limited-edition collection of Ron
Dorff's minimalist wardrobe basics donates 15% of its proceeds to
the World Central Kitchen charity.
Ron Dorff has also signed new wholesale relationships with
lighthouse partners, including Harrods, Equinox and
Pantechnicon.
WHY WE'VE INVESTED
Ron Dorff continues to deliver on its strategic plans, and the
business has continued revenue growth in its core markets. It has
shown to be able to not just cope, but actively thrive in a
challenging economic climate, through its ability to innovate and
collaborate with brands that resonate with its growing customer
base.
7.6m investment (Alpha VCT participation 1.9m)
OUR INVESTMENT VIEW
"Ron Dorff has gone from strength to strength following our
initial investment in 2020. Its successful launch into the US
market, brand collaborations, and a significant upgrade to the
company's e-commerce capability, have all contributing to the
brand's success. We are delighted to continue our support for Ron
Dorff with further investment, and look forward to a prosperous
journey ahead."
Ben Leslie, Investment Director, Puma Private Equity
RON DORFF'S VIEW
"Back in 2020, despite lockdowns and a general world crisis, the
team at Puma Private Equity believed in Ron Dorff and our strategy
that the US was the way to go. Thanks to them we opened our US
flagship store in New York, and in parallel invested heavily
online, making the US our number one, most profitable marketplace.
An LA store will open in May 2023 and Miami is just around the
corner - both of which will support online sales in these two key
States. This was all part of the business plan that Puma Private
Equity approved back in 2020 when the world looked very different.
A plan is only a plan until it becomes real. And it became real
thanks to a fantastic team at Puma who have supported us from day
one."
Claus Lindorff, CEO, Ron Dorff
Investment Portfolio Summary
As at 28 February 2023
Of the investments held at 28 February 2023, all are
incorporated in England and Wales, except for MySafeDrive Limited
and HR Duo Limited who are incorporated in Ireland.
Valuation Cost Gain/(loss) Valuation Multiple
as a %
of Net
Assets
GBP'000 GBP'000 GBP'000
Qualifying Investments
ABW Group Limited ("Ostmodern") 981 900 81 4% 1.09x
Deazy Limited 1,076 1,000 76 4% 1.08x
Dymag Group Limited 1,713 1,680 33 7% 1.02x
Everpress Limited 3,304 2,100 1,204 14% 1.57x
Forde Resolution Company
("HR Duo Limited") 347 347 - 1% 1.00x
Le Col Holdings Limited 2,730 2,599 131 11% 1.05x
Muso Limited 500 500 - 2% 1.00x
MyKindaCrowd Limited
("Connectr") 1,544 1,650 (106) 6% 0.94x
MySafeDrive Limited
("CameraMatics") 5,393 1,593 3,800 22% 3.38x
NQOCD Consulting Limited
("Ron Dorff") 2,591 1,870 721 11% 1.39x
Total Qualifying Investments 20,180 14,239 5,941 84% 1.42x
---------- -------- ------------ ---------- ---------
Total Investments 20,180 14,239 5,941 84%
Balance of Portfolio 3,915 3,915 - 16%
Net Assets 24,095 18,154 5,941 100%
---------- -------- ------------ ----------
Strategic Report
The Directors present their Strategic Report of the Company for
the year ended 28 February 2023. The purpose of the report is to
inform members of the company and help them assess how the
directors have performed their duty to promote the success of the
company.
Principal Activities and Status
The Company was incorporated on 11 April 2019. The principal
activity of the Company is the making of investments in qualifying
and non-qualifying holdings of shares or securities. The Company is
an investment company within the meaning of Section 833 of the
Companies Act 2006. The Company has been granted provisional
approval by the Inland Revenue under Section 274 of the Income Tax
Act 2007 as a Venture Capital Trust. The Directors have managed,
and continue to manage, the Company's affairs in such a manner as
to comply with Section 274 of the Income Tax Act 2007. The
Company's ordinary shares of 0.01p each were listed on the Official
List of the UK Listing Authority on 5 June 2020.
Business Model and Strategy
The Company operates as a VCT to enable its shareholders to
benefit from tax reliefs available. The Directors aim to maximise
tax free distributions to shareholders by way of dividends paid out
of income received from investments and capital gains received
following successful realisations. The Company's strategy is set
out in the Investment Policy set out below.
Investment Policy
Puma Alpha VCT plc seeks to achieve its overall investment
objective (of proactively managing the assets of the fund with an
emphasis on realising gains in the medium term) to maximise
distributions from capital gains and income generated from the
Company's assets. It intends to do so whilst maintaining its
qualifying status as a VCT, by pursuing the following Investment
Policy:
The Company may invest in a mix of qualifying and non-qualifying
assets. The qualifying investments may be quoted on AIM or a
similar market or be unquoted companies. The Company may invest in
a diversified portfolio of growth orientated qualifying companies
which seek to raise new capital on flotation or by way of a
secondary issue. The Company will target investments in unquoted
companies with a strong and experienced management team, a
proposition that is commercially validated through sales volume, a
clear and comprehensive plan for growth, and operating in a
well-defined market niche with proven market fit. The Company had
to have in excess of 80% of its assets invested in qualifying
investments as defined for VCT purposes by 28 February 2023.
The portfolio of non-qualifying investments will be managed with
the intention of ensuring the Company has sufficient liquidity to
invest in Qualifying Investments as and when opportunities arise.
Subject to the Board and Investment Manager's view from time to
time of desirable asset allocation, it will comprise quoted and
unquoted investments (direct or indirect) in cash or cash
equivalents, secured loans, bonds, equities, vehicles investing in
property and funds of funds or on cash deposit.
A full text of the Company's investment policy can be found
within the Company's prospectus at www.pumainvestments.co.uk .
Principal Risks and Uncertainties
The Board have carried out a robust assessment of the Company's
emerging and principal risks, including those that might threaten
the Company's business model, future performance, solvency or
liquidity and reputation. The Board receives regular reports from
the Investment Manager and uses this information along with their
own knowledge and experience to identify any emerging risks, so
that appropriate procedures can be put in place to manage or
mitigate such risks.
The principal risks facing the Company relate to its investment
activities, specifically market price risk, as well as interest
rate risk, credit risk and liquidity risk. An explanation of these
risks and how they are managed is contained in note 14 to the
financial statements. Additional risks faced by the Company are as
follows:
Market Conditions
There is a risk that geo-political and economic events, can have
an impact on the prospects of certain of the Company's investments.
The Investment Manager maintains close contact with all investee
companies to endeavour to mitigate the risk as far as possible.
Further details of the investments are set out in the Investment
Manager's Report.
Investment Risk
Inappropriate stock selection leading to underperformance in
absolute and relative terms is a risk which the Investment Manager
and the Board mitigate by reviewing performance throughout the year
and formally at Board meetings. There is also a regular review by
the Board of the investment mandate and long-term investment
strategy and monitoring of whether the Company should change its
investment strategy.
Regulatory Risk
The Company operates in a complex regulatory environment and
faces a number of related risks. A breach of s274 of the Income Tax
Act 2007 could result in the Company being subject to capital gains
on the sale of investments. A breach of the VCT Regulations could
result in the loss of VCT status and consequent loss of tax relief
currently available to shareholders. Serious breach of other
regulations, such as the UKLA Listing Rules and the Companies Act
2006 could lead to suspension from the Stock Exchange.
The Board receives quarterly reports in order to monitor
compliance with regulations.
In addition, to the principal risks explained above, the
principal uncertainty that may affect the Company relate to
material changes to the VCT regulations. The Board will continue to
monitor this and take appropriate action if required.
Risk Management
The Company's investment policy allows for a large proportion of
the Company's assets to be held in unquoted investments. These
investments are not publicly traded so there is not a liquid market
for them. Therefore, these investments may be difficult to
realise.
The Company manages its investment risk within the restrictions
of maintaining its qualifying VCT status by using the following
methods:
-- the active monitoring of its investments by the Investment Manager and the Board;
-- seeking Board representation associated with each investment, if possible;
-- seeking to hold larger investment stakes by co-investing with
other companies managed by the Investment Manager, so as to gain
more influence over the investment;
-- ensuring a spread of investments is achieved.
Business Review and Future Developments
The Company's business review and future developments are set
out in the Chairman's Statement, the Investment Manager's Report
and Investment Portfolio Summary.
Key Performance Indicators
At each board meeting, the Directors consider a number of
performance measures to assess the Company's success in meeting its
objectives. The Board believes the Company's key performance
indicators are movement in Net Asset Value per ordinary share and
Total Return per ordinary share. The Board considers that the
Company has no non-financial key performance indicators. In
addition, the Board considers the Company's compliance with the
Venture Capital Trust Regulations to ensure that it will maintain
its VCT status. An analysis of the Company's key performance
indicators and the performance of the Company's portfolio and
specific investments is included in the Chairman's Statement, the
Investment Manager's Report and the Investment Portfolio
Summary.
Viability Statement
The Directors have conducted a robust assessment of the
principal risks facing the Company including those that would
threaten its business model, future performance, solvency or
liquidity. This is summarised above. The Directors have assessed
the prospects of the Company for the three-year period from the
balance sheet date. This is a period for which developments are
considered to be reasonably foreseeable.
This review included consideration of compliance with VCT
regulations, the Company's current financial position and expected
cash flows for the period and the current economic outlook.
Based on this review, the Directors have concluded that there is
a reasonable expectation that the Company has adequate cash
resources to enable it to continue in operation and meet its
liabilities as they fall due over the three-year period to 28
February 2026.
Section 172 Statement - Duty to promote the success of the
company
Section 172 of the Companies Act requires directors of a company
to act in the way they consider, in good faith, would be most
likely to promote the success of the company for the benefit of its
members as a whole, and in doing so have regard (amongst other
matters) to:
a) the likely consequences of any decision in the long term,
b) the interests of the company's employees,
c) the need to foster the company's business relationships with
suppliers, customers and others,
d) the impact of the company's operations on the community and the environment,
e) the desirability of the company maintaining a reputation for
high standards of business conduct, and
f) the need to act fairly between members of the company.
This section of the Strategic Report also sets out the
disclosures required in respect of how the company engages with
suppliers, customers and others in a business relationship with the
company.
The company does not have any employees and delegates day to day
operations to service providers. The board's principal concern is
to focus on the needs and priorities of its shareholders as well as
considering the wider community including the company's service
providers and its investee companies (as disclosed in the
Investment Manager's Report). The board consider that the company's
shareholders are its customers, and its suppliers are the service
providers.
The Annual Report as a whole sets out how the board promotes the
success of the company for the benefit of its shareholders. The
board is focused on high standards of business conduct and
recognises the need to act fairly between shareholders.
The board engages with the investment manager at every board
meeting to ensure that there is a close and constructive working
relationship and a good understanding of the investee companies.
The company also engages regularly with its other service
providers. The board ensures that the interests of current and
potential stakeholders, and the impact of the company's investments
on the wider community and the environment are taken into account
when decisions are made.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Strategic Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law, the Directors
have elected to prepare the financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, comprising FRS 102 "The Financial
Reporting Standard applicable in the UK and Republic of Ireland",
and applicable law). Under company law, the Directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that period.
In preparing those financial statements, the directors are required
to:
a) select suitable accounting policies and then apply them consistently;
b) make judgements and accounting estimates that are reasonable and prudent;
c) state whether applicable UK Accounting Standards (comprising
FRS 102 "The Financial Reporting Standard applicable in the UK and
Republic of Ireland", and applicable law). have been followed,
subject to any material departures disclosed and explained in the
financial statements;
d) prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
Directors' statement pursuant to the disclosure and transparency
rules
Each of the Directors confirms that, to the best of each
person's knowledge:
a) the financial statements, prepared in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 102 "The Financial Reporting
Standard applicable in the UK and Republic of Ireland", and
applicable law), give a true and fair view of the assets,
liabilities, financial position and profit/ (loss) of the Company;
and
b) the Chairman's Statement, Investment Manager's Report, the
Strategic Report contained in the Annual Report include a fair
review of the development and performance of the business and the
position of the Company together with a description of the
principal risks and uncertainties that it faces.
Directors' Statement Regarding Annual Report and Accounts
The Directors consider that the annual report and accounts,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Company's
position and performance, business model and strategy.
Electronic Publication
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. The financial statements are published on
www.pumainvestments.co.uk, a website maintained by the Investment
Manager.
Legislation in the United Kingdom regulating the preparation and
dissemination of the financial statements may differ from
legislation in other jurisdictions.
On behalf of the Board.
Egmont Kock
Chairman
15 June 2023
Income Statement
For the year ended 28 February 2023
Year ended 28 February Year ended 28 February
2023 2022
Note Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
8
Gain on investments (b) - 316 316 - 4,051 4,051
Income 2 35 - 35 6 - 6
35 316 351 6 4,051 4,057
-------- -------- -------- -------- --------
Investment management
fees 3 (111) (332) (443) (71) (212) (283)
Performance fee 3 - - - - (519) (519)
Other expenses 4 (294) - (294) (224) - (224)
(405) (332) (737) (295) (731) (1,026)
-------- -------- -------- -------- --------
(Loss)/profit before
tax (370) (16) (386) (289) 3,320 3,031
Tax 5 - - - - - -
(Loss)/profit after
tax (370) (16) (386) (289) 3,320 3,031
======== ======== ======== ======== ======== ========
Basic and diluted
(loss)/return per
Ordinary Share (pence) 6 (2.17p) (0.09p) (2.26p) (2.48p) 28.51p 26.03p
======== ======== ======== ======== ======== ========
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.
There were no items of other comprehensive income during the
year.
Balance Sheet
As at 28 February 2023
Note As at As at
28 February 28 February
2023 2022
GBP'000 GBP'000
Fixed Assets
Investments 8 20,180 15,753
------------- -------------
Current Assets
Debtors 9 185 124
Cash 3,911 1,980
------------- -------------
4,096 2,104
Creditors - amounts falling
due within one year 10 (181) (654)
Net Current Assets 3,915 1,450
------------- -------------
Total Assets less Current Liabilities 24,095 17,203
Net Assets 24,095 17,203
============= =============
Capital and Reserves
Called up share capital 12 185 126
Share premium account 1,938 12,271
Capital reserve - realised (612) (836)
Capital reserve - unrealised 5,941 6,182
Revenue reserve 16,643 (540)
Total Equity 24,095 17,203
============= =============
Net Asset Value per Ordinary
Share 13 130.53p 136.48p
============= =============
The financial statements were approved and authorised for issue
by the Board of Directors on 15 June 2023 and were signed on their
behalf by:
Egmont Kock
Chairman
Statement of Cash Flows
For the year ended 28 February 2023
Year ended Year ended
28 February 28 February
2023 2022
GBP'000 GBP'000
Reconciliation of (loss) after
tax
(Loss)/profit before tax (386) 3,031
(Gain) on investments (316) (4,051)
(Increase) in debtors (61) (95)
(Decrease)/Increase in creditors (473) 621
Net cash (used in) operating activities (1,236) (494)
------------- -------------
Cash flow from investing activities
Purchase of investments (5,268) (3,725)
Proceeds from disposal of investments 1,157 -
(Outflow) from investing activities (4,111) (3,725)
------------- -------------
C ash flow from financing activities
Proceeds received from issue of
ordinary share capital 7,476 4,277
Expense paid for issue of share
capital (198) (138)
Inflow from financing activities 7,278 4,139
------------- -------------
Net increase/(decrease) in cash
and cash equivalents 1,931 (80)
Cash and cash equivalents at the
beginning of the year 1,980 2,060
Cash and cash equivalents at the
end of the year 3,911 1,980
============= =============
Statement of Changes in Equity
For the year ended 28 February 2023
Called Share Capital Capital Revenue Total
up share premium reserve reserve reserve
capital account - realised - unrealised
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1 March
2021 86 8,172 (105) 2,131 (251) 10,033
Comprehensive income
for the year
Profit after tax - - (731) 4,051 (289) 3,031
Total comprehensive
income for the year - - (731) 4,051 (289) 3,031
Transactions with
owners, recognised
directly in equity
Issue of shares 40 4,237 - - - 4,277
Share issue cost - (138) - - - (138)
Total transactions
with owners, recognised
directly in equity 40 4,099 - - - 4,139
Balance as at 28 February
2022 126 12,271 (836) 6,182 (540) 17,203
Comprehensive income
for the year
Profit after tax - - (327) 310 (369) (386)
Total comprehensive
income for the year - - (327) 310 (369) (386)
Transactions with
owners, recognised
directly in equity
Issue of shares 59 7,417 - - - 7,476
Share issue cost - (198) - - - (198)
Cancellation of share
premium (17,552) 17,552 -
Total transactions
with owners, recognised
directly in equity 59 (10,333) - - 17,552 7,278
Other movements
Prior year fixed asset
gains now realised - - 551 (551) - -
Total other movements - - 551 (551) - -
Balance as at 28 February
2023 185 1,938 (612) 5,941 16,643 24,095
========== ========= ============ ============== ========= ========
There is GBP16 million (2022: nil) considered to be
distributable to shareholders.
The capital reserve - realised will include gains/losses that
have been realised 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 account represents premium on shares issued less
issue costs.
The revenue reserve represents the cumulative revenue earned
less cumulative distributions.
Share premium cancellation represents amounts approved by the
High Court of Justice to be cancelled to create a pool of
distributable reserves as approved by shareholders at the 2021
AGM.
1. Accounting Policies
Accounting convention
Puma Alpha VCT plc ("the Company") was incorporated in England
on 11 April 2019 and is registered and domiciled in England and
Wales. The Company's registered number is 11939975. 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. The Directors
have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable
future and 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 through profit or
loss. They are all held as part of the Company's investment
portfolio and are managed in accordance with the investment
policy.
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 as the closest approximation to fair value,
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.
-- For investments that have been held for longer than twelve
months, methods of valuation such as earnings or revenue-based
multiples or net asset value may be used to arrive at the fair
value.
-- Investments in debt instruments are held at amortised cost
and accrue interest at the rate agreed within the Investment
Agreement. Interest is shown separately within debtors.
-- Realised gains and losses on the disposal of investments are
first recognised in the profit and loss and subsequently taken to
realised capital reserves.
-- Unrealised gains and losses on the revaluation of investments
are first recognised in the profit and loss and subsequently taken
to unrealised capital reserves.
-- In preparation of the valuations of assets the Directors are
required to make judgements and estimates that are reasonable and
incorporate their knowledge of the performance of the portfolio
companies. A key judgement made in applying the above accounting
policy relates to impairment of the investments. Valuations are
based upon financial information received from the underlying
investee companies, together with the extensive knowledge and
expertise of the team who work closely with the investee companies,
a fair value is reached using appropriate valuation techniques
consistent with the IPEV guidelines. Any deviations in expectations
of performance of the underlying companies are captured within the
information received and as such, reflected in the fair value.
-- Impairment of debt instruments is considered when arriving at
the valuations for equity shareholders. Loan notes are deducted
from the overall enterprise value before distributing in line with
the appropriate waterfall arrangements between equity shareholders.
If the enterprise value is greater than the debt instrument, the
loan note is not considered to be impaired.
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 amount by
which the Performance Value per Share at the end of an accounting
period exceeds the High Water Mark (being the higher of 120p and
the highest Performance Value per Share at the end of any previous
accounting period), and multiplied by the number of Shares in issue
at the end of the relevant period.
At each balance sheet date, the Company accrues for any
performance fee payable based on the calculation set out above.
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 and performance fees 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.
Tax
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, performance 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 are also taken through the Income
Statement and are recognised in the Capital Reserve -
Unrealised.
Debtors
Debtors include other debtors and accrued income. These are
initially recorded at the transaction price and subsequently
measured at amortised cost, being the transaction price less any
amounts settled.
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.
Unquoted investments are stated at fair value at each measurement
date in accordance with the appropriate valuation techniques
consistent with the IPEV guidelines outlined in the Investments
section in note 1 to the financial statements. Valuations are based
upon financial information received from the underlying investee
companies, together with the extensive knowledge and expertise of
the team who work closely with the investee companies. Any
deviations in expectations of performance of the underlying
companies are captured within the information received and as such,
reflected in the fair value.
Further details of the unquoted investments are disclosed in the
Investment Manager's Report and notes 8 and 14 to the financial
statements.
2. Income
Year ended 28 February Year ended 28 February
2023 2022
GBP'000 GBP'000
Income from investments
Qualifying interest
income 35 6
35 6
======================= =======================
3. Investment Management Fee
Year ended 28 February Year ended 28 February
2023 2022
GBP'000 GBP'000
Investment management
Fee 443 283
Performance fee - 519
443 802
======================= =======================
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 no 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 16
January 2020 (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 Net Asset
Value. Total costs this year were 3.1% of the Net Asset Value
(2022: 2.9%).
In addition to the investment manager fees disclosed above,
during the year ended 28 February 2023, Puma Investments Management
Limited charged fees totalling GBP66,060 (2022: GBP60,521) in
relation to share issue costs.
4. Other Expenses
Year ended 28 February Year ended 28 February
2023 2022
GBP'000 GBP'000
Administration - Puma Investments 77 47
Directors Remuneration 60 60
Social security costs 5 5
Auditor's remuneration for
statutory audit 61 48
Insurance 9 8
Legal and professional fees 6 -
Other expenses 76 56
294 224
======================= =======================
Puma Investments Management Limited ('Puma Investments) 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.
The Company has no employees other than non-executive Directors
(2022: none). The average number of non-executive Directors during
the year was 3 (2022: 3).
Auditor's fees of GBP52,800 (2022: GBP40,000) has been grossed
up in the table above to be inclusive of VAT. No non-audit services
were provided by the Company's auditor in the year (2022:
GBPnil).
Other expenses are made up of several smaller items, the largest
of these being fees paid for registrar services.
5. Taxation
Year ended Year ended
28 February 28 February
2023 2022
GBP'000 GBP'000
UK corporation tax charge for - -
the period
============= =============
Factors affecting tax charge
for the period
(Loss)/profit before taxation (386) 3,031
============= =============
Tax charge calculated on (loss)/profit
before taxation at the applicable
rate of 19% (73) 576
Gains on investments (60) (770)
Tax losses carried forward 133 194
- -
============= =============
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 profit/(loss) per Ordinary Share
Year ended 28 February 2023
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Loss for the year (370) (16) (386)
Weighted average number
of shares 17,073,079 17,073,079 17,073,079
----------- ----------- -----------
(Loss)/profit per share (2.17)p (0.09)p (2.26)p
Year ended 28 February 2022
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Profit for the year (289) 3,320 3,031
Weighted average number
of shares 11,645,061 11,645,061 11,645,061
----------- ----------- -----------
(Loss)/profit per share (2.48)p 28.51p 26.03p
7. Dividends
The Directors will not propose a resolution at the Annual
General Meeting to pay a final dividend (2022: nil).
8. Investments
(a) Movements in investments Qualifying Total
investments
GBP'000 GBP'000
Book cost at 1 March 2022 9,571 9,571
Net unrealised gains at
1 March 2022 6,182 6,182
Valuation at 1 March
2022 15,753 15,753
Purchases at cost 5,268 5,268
Proceeds from disposal
of investments (1,157) (1,157)
Realised gains on disposals 6 6
Net unrealised gains 310 310
Valuation at 28 February
2023 20,180 20,180
============= =============
Book cost at 28 February
2023 14,239 14,239
Unrealised gains at 28
February 2023 5,941 5,941
Valuation at 28 February
2023 20,180 20,180
============= =============
(b) Gains/(losses) on
investments
Year ended Year ended
28 February 28 February
2023 2022
GBP'000 GBP'000
Realised gains in the 6 -
period
Unrealised gains in period 310 4,051
316 4,051
============= =============
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.
All the Company's investments as at 28 February 2023 and 28
February 2022 were unquoted.
Further details of these investments (including the unrealised
gain in the year) are disclosed in the Chairman's Statement,
Investment Manager's Report and Investment Portfolio Summary.
9. Debtors
As at 28 February As at 28 February
2023 2022
GBP'000 GBP'000
Other debtors 35 6
Prepayments 150 118
185 124
================== ==================
Contained within prepayments are admission fees to the London
Stock Exchange of GBP99,000 (2022: GBP62,000).
10. Creditors - amounts falling due within one year
As at 28 February As at 28 February
2023 2022
GBP'000 GBP'000
Accruals 181 654
181 654
================== ==================
Contained within the accruals is an accrued performance fee of
GBPnil (2022: GBP519,000).
11. Management Performance Incentive Arrangement
On 5 July 2019, the Company entered into an Agreement with the
Investment Manager such that they will be entitled to a Performance
Incentive Fee ("PIF") payable in relation to each accounting
period, subject to the Performance Value per Share being at least
120p at the end of the relevant period. The amount of the
performance incentive fee will be equal to 20% of the amount by
which the Performance Value per Share at the end of an accounting
period exceeds the High Water Mark (being the higher of 120p and
the highest Performance Value per Share at the end of any previous
accounting period) and multiplied by the number of Shares in issue
at the end of the relevant period.
Upon review of the operation of the current PIF arrangements,
and following consultation with the Board and the Company's
sponsor, the Company is proposing to put forth, for shareholder
approval, an amended methodology for calculating the PIF for the
accounting period beginning 1 March 2022 (with retrospective
effect) and subsequent accounting periods at a general meeting to
be held on or around the date of the Company's 2023 AGM. Under this
amended methodology, a provision for the PIF of GBPnil has been
included in the February 2023 year-end accounts. A circular setting
out the details of the proposed changes will be distributed to
shareholders in advance of the general meeting.
12. Called Up Share Capital
As at As at As at As at
28 February 28 February 28 February 28 February
2023 2022 2023 2022
GBP'000 GBP'000
Allotted, called up
and fully paid:
Ordinary shares of
GBP0.01 each 18,460,066 12,604,822 185 126
============= ============= ============= =============
Allotted, called up
and partly paid:
Redeemable preference - - - -
shares of GBP1 each
============= ============= ============= =============
13. Net Asset Value per Ordinary Share
As at As at
28 February 2023 28 February 2022
Net assets 24,095,381 17,202,908
------------------ ------------------
Number of shares in issue
for purposes of Net
Asset Value per share calculation 18,460,066 12,604,822
------------------ ------------------
Net Asset Value per share 130.53p 136.48p
14. Financial Instruments
The Company's financial instruments comprise its investments,
cash balances, debtors and certain creditors. The fair value of all
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:
As at 28 As at 28
February 2023 February 2022
GBP'000 GBP'000
Financial assets at fair value through
profit or loss 19,731 15,454
Financial assets measured at amortised
cost 634 423
Financial liabilities measured at
amortised cost (181) (654)
20,184 15,223
=============== ===============
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
period.
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
2023 2022
Investments in loan notes 449 299
Cash at bank and in hand 3,911 1,980
Other receivables 185 124
4,545 2,403
------------------ ------------------
The cash held by the Company at the year-end is held in RBS.
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 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 views on the economic environment which also
impacts market price risk are discussed in the Investment Manager's
Report. 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. 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% (2022: 100%) of the Company's investments are unquoted
investments held at fair value. 96% of the portfolio (80% of net
assets) is valued using the application of earnings/revenue-based
multiples. An increase in the multiple used by 20% would increase
the net asset value by 9.6% (GBP26.4m). Conversely, a decrease in
the multiple used by 20% would decrease the net asset value by
17.0% (GBP20.0m). The 20% sensitivity used provides the most
meaningful impact of average multiple changes across the
portfolio.
Liquidity risk
Details of the Company's unquoted investments are provided in
the Investment Portfolio summary. 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 Directors' Report and the
Strategic 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
4.0% at 28 February 2023 (2022: 0.5%).
Cash flow interest rate risk
The Company has exposure to interest rate movements primarily
through its cash deposits which track the Bank of England base
rate.
Interest rate risk profile of financial assets
The Company's only asset was cash at bank at 28 February 2023 of
GBP3,911,000 which is in a non-interest bearing bank account.
Foreign currency risk
The Company's functional and presentation currency is Sterling.
The Company has not held any non-Sterling investments during the
year.
Fair value hierarchy
Financial assets and liabilities measured at fair value are
disclosed using a fair value hierarchy that reflects the
significance of the inputs used in making the fair value
measurements, as follows:-
-- Level 1 - Fair value is measured using the unadjusted quoted
price in an active market for identical assets.
-- Level 2 - Fair value is measured using inputs other than
quoted prices that are observable using market data.
-- Level 3 - Fair value is measured using unobservable inputs.
Fair values have been measured at the end of the reporting
period as follows:-
As at 28 February As at 28 February
2023 2022
Level 3
Unquoted investments 20,180 15,753
20,180 15,753
------------------ ------------------
The Level 3 investments have been valued in line with the
Company's accounting policies and IPEV guidelines. This comprises
of both loan and equity instruments, which are considered to be one
instrument due to them being bound together when assessing the
portfolio's returns to the shareholders.
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.
The Company must have an amount of capital, at least 80% (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.
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 (2022: none).
17. Related Party Disclosures
The Company has delegated the investment management of the
portfolio to Puma Investment Management Limited. Further details of
the transactions with these entities are disclosed in note 3 of the
financial statements.
18. Post Balance Sheet Events
Post year-end, a further 1,762,258 ordinary shares have been
issued for cash consideration of GBP2.3m.
Upon review of the operation of the current PIF arrangements,
and following consultation with the Board and the Company's
sponsor, the Company is proposing to put forth, for shareholder
approval, an amended methodology for calculating the PIF for the
accounting period beginning 1 March 2022 (with retrospective
effect) and subsequent accounting periods at a General Meeting to
be held on or around the date of the Company's 2023 AGM. A circular
setting out the details of the proposed changes will be distributed
to shareholders in advance of the General Meeting.
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 2023 but has been extracted from the statutory
financial statements for the year ended 28 February 2023 which were
approved by the Board of Directors on 15 June 2023 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 2022 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 2023 are 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
https://www.pumainvestments.co.uk/pages/view/investors-information-vcts.
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.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
ACSUVASRORUNAAR
(END) Dow Jones Newswires
June 15, 2023 10:14 ET (14:14 GMT)
Puma Alpha Vct (LSE:PUAL)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
Puma Alpha Vct (LSE:PUAL)
Gráfica de Acción Histórica
De May 2023 a May 2024