TIDMPUM9
RNS Number : 5762J
Puma VCT 9 PLC
29 June 2017
HIGHLIGHTS
-- Fund substantially invested in a diverse range of high quality businesses and projects.
-- Profit of GBP191,000 before tax for the year, a post-tax gain of 0.60p per share
-- 18p per share of dividends paid since inception (including 6p
interim dividend paid in March 2017), equivalent to an 8.6% per
annum tax-free running yield on net investment.
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the Company's fourth Annual Report for
the year ended 28 February 2017.
Results
The Company reported a profit before tax of GBP191,000 for the
year (for the 14 month period ended 29 February 2016: GBP848,000)
and a post-tax gain of 0.60p per ordinary share (calculated on the
weighted average number of shares) (for the 14 month period ended
29 February 2016: 1.98p). The Net Asset Value per ordinary share
("NAV") at 28 February 2017 after adding back 18p dividends paid
was 98.09p (2016: 97.49p).
Dividend
As envisaged in the Company's prospectus, in March 2017, the
Company has again paid a dividend of 6p per ordinary share,
equivalent to an 8.6% tax-free annual running yield on
shareholders' net investment.
Investments
At the end of the year, the Company had just over GBP19.8
million invested in a mixture of qualifying and non-qualifying
investments whilst maintaining our VCT status. These investments
are primarily in asset-backed businesses and projects.
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 also assists the
Investment Manager in establishing the status of investments as
qualifying holdings and will continue to assist the Investment
Manager in monitoring rule compliance.
Outlook
The lack of availability of bank credit has enabled the Company
to assemble a portfolio of investments on attractive terms and we
are pleased to report that the Company's net assets are now
deployed in a diverse range of high quality businesses and
projects. There may be some further changes in the composition of
the portfolio but the Board expects to predominantly concentrate in
the future on the monitoring of our existing investments and over
the next year or so realising the portfolio to enable the
liquidation of the fund after the fifth anniversary as was
envisaged in the prospectus.
Egmont Kock
Chairman
29 June 2017
INVESTMENT MANAGER'S REPORT
Introduction
The Company's funds are now substantially deployed in both
qualifying and non-qualifying investments and we believe our
portfolio is well positioned to deliver attractive returns to
shareholders within the fund's expected remaining time horizon.
Investments
Qualifying Investments
As previously reported, in July 2014, before the passing of the
Finance Act 2014, the Company completed a GBP1.875 million
qualifying investment (as part of a GBP5 million investment
alongside other Puma VCTs) in Urban Mining Limited, a member of the
Chinook Urban Mining group of companies. Chinook Urban Mining is a
well-funded energy-from-waste business which is developing a
flagship plant in East London to generate electricity through the
gasification of municipal solid waste and will benefit from
Renewable Obligations Certificates. The investment is secured with
a first charge over the Chinook Urban Mining business and the eight
acre site of the East London plant and is yielding an attractive
return to the Company.
As reported in the Company's previous annual report, Kinloss
Trading Limited and Jephcote Trading Limited (in which the Company
had invested GBP3.5 million and GBP880,000 respectively) have, as
members of SKPB Services LLP, been engaged in a contract with
Openwide Investments Limited in relation to the construction of a
new build 134 bedroom Ibis Budget Hotel and the associated
infrastructure adjacent to Luton Airport. We are pleased to report
that the project is nearing practical completion on time and on
budget and the hotel is expected to open in the autumn.
As previously reported, a major fire occurred in February 2016
at the Materials Recycling Facility ("MRF") operated by Opes
Industries Limited ("Opes"), into which the Company has invested a
total of GBP3.6m (as part of an GBP8.8m investment by Puma
entities). As a result of the incident, and as reported in the
Company's previous annual report, the board made a provision of
GBP532,000 against the carrying value of the Company's investment
in Opes. Opes owned a 73 hectare site in north Oxfordshire with a
MRF, including a landfill site for non-hazardous materials and an
aggregates/gravel quarrying business. The Company's investment was
to provide funding for the construction and equipping of the MRF
and working capital during the build-up of the trade. The funding
was provided in the form of equity and loan stock and our interests
are covered by a first fixed and floating charge over Opes' assets.
Following the incident, the Company appointed an administrator over
Opes in order to best protect the Company's investment. We are
pleased to report that shortly after the year end, the
administrator exchanged contracts for the sale of the north
Oxfordshire site; the cash consideration is payable in stages over
a 12 month period. Moreover, discussions are continuing with Opes'
insurers regarding reimbursement of the damage to the plant and the
building and of the costs of business interruption.
The Company's investment of GBP3.4 million (alongside other Puma
VCTs) into Saville Services Limited continues to perform well.
Saville Services has been working on a series of projects,
including most recently the construction of a 77-bed, purpose-built
care home in Chester. We understand that the development is
progressing well and the care home is scheduled to open in the
first quarter of 2018.
As previously reported, the Company had invested GBP3.2 million
(alongside other Puma VCTs) into Alyth Trading Limited, a
nationwide provider of contracting services. During the year, Alyth
Trading has been working on two contracts. The first is in
connection with the construction of a 112 bed purpose built care
home in Hamilton, Scotland. We are pleased to report that the
project has recently completed successfully generating attractive
returns for Alyth Trading which will benefit the Company when its
investment is repaid in due course. The second is a contract in
connection with the construction of a 68 bed purpose built care
home in Egham, Windsor. We understand that construction is behind
schedule due to issues with the main builder but this is being
addressed by the team at Alyth Trading.
Non-Qualifying Investments
In January 2017, a GBP1 million loan (as part of a total
facility of GBP17.5 million) was advanced (through an affiliate,
Latimer Lending Limited) to Cudworth Limited to fund the
construction of a mixed residential and commercial development in
Bloomsbury, London, close to the British Museum and 600m from
King's Cross station. The development includes 8 flats, 2 houses
and 11,800 square feet of B1 commercial space. The loan is secured
with a first charge over the site.
As noted in the Company's interim report, the GBP1.41 million
loan to Kingsmead Care Home Limited, (made through an affiliate,
Latimer Lending Limited), which owns and operates a care and
dementia treatment facility in Mytchett, Surrey, was repaid in full
during the year giving a good return to the Company.
The Company's loan of GBP1 million (advanced through affiliate
Valencia Lending Limited) to various entities within the Citrus
Group continues to perform well. These loans, together with loans
from other vehicles managed and advised by the Investment Manager,
form part of a series of revolving credit facilities to provide
working capital to the Citrus PX business. Citrus PX operates a
property part exchange service facilitating the rapid purchase of
properties for developers and homeowners. The facility provides a
series of loans to Citrus PX, with the benefit of a first charge
over a geographically diversified portfolio of residential
properties on conservative terms.
In December 2016, loans of GBP400,000 were advanced (through an
affiliate, Latimer Lending Limited) to HPC (Wickford) Limited
which, together with loans from other vehicles managed and advised
by the Investment Manager totalling GBP2.85 million, will
facilitate the development and initial trading of a purpose-built
IVF Fertility Clinic in Wickford, Essex. HPC (Wickford) Limited has
entered into a lease with Bourn Hall Limited, one of the UK's
largest independent fertility clinic groups. Construction has
commenced on site and is progressing well.
As previously reported, Lothian Lending Limited (a lending
business in which the Company had previously invested) had extended
a GBP1.3 million loan which, together with another Puma VCT,
provided a facility of GBP2.6 million to RPE FL1 Limited, a member
of the Renewable Power Exchange group. The facility provided
funding towards the construction of a 1.5MW wind farm in East
Lothian, Scotland, with the electricity once generated, used to
supply those on low incomes in the local community. The loan is
secured on the site in East Lothian and is earning an attractive
rate of interest. We are pleased to report that the turbines are
operating well, generating electricity and EBITDA is in line with
forecasts. In accordance with the planned amortisation schedule,
the loan balance now stands at GBP1.09 million.
To further manage liquidity, the Company had exposure to a
GBP1.02 million bond issued by J Sainsbury plc and earning 6.5%.
This was sold during the year.
Investment Strategy
We are pleased now to have invested the Company's funds in both
qualifying and non-qualifying secured investments. We remain
focused on generating strong returns for the Company in both the
qualifying and non-qualifying portfolios whilst balancing these
returns with maintaining an appropriate risk exposure and ensuring
compliance with the HMRC VCT rules. We are now primarily focusing
on the monitoring of our existing investments and preparing the
portfolio for realisation in due course.
Puma Investment Management Limited
29 June 2017
Investment Portfolio Summary
As at 28 February 2017
Valuation
as a % of
Valuation Cost Gain/(loss) Net Assets
GBP'000 GBP'000 GBP'000
Qualifying Investments
Jephcote Trading Limited 880 880 - 4%
Kinloss Trading Limited 3,500 3,500 - 15%
Saville Services Limited 3,400 3,400 - 15%
Urban Mining Limited 1,875 1,875 - 8%
Opes Industries Limited 3,068 3,600 (532) 14%
Alyth Trading Limited 3,200 3,200 - 14%
Total Qualifying Investments 15,923 16,455 (532) 70%
---------- -------- ------------ ------------
Non-Qualifying Investments
Latimer Lending Limited 1,813 1,813 - 8%
Valencia Lending Limited 1,000 1,000 - 4%
Lothian Lending Limited 1,125 1,125 - 5%
Total Non-Qualifying
investments 3,938 3,938 - 17%
---------- -------- ------------ ------------
Total Investments 19,861 20,393 (532) 87%
Balance of Portfolio 2,762 2,762 - 13%
Net Assets 22,623 23,155 (532) 100%
---------- -------- ------------ ------------
Of the investments held at 28 February 2017, all are
incorporated in England and Wales.
Income Statement
For the year ended 28 February 2017
Period from 1 January
Year ended 28 February 2015 to 29 February
2017 2016
Note Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
8
Gain/(loss) on investments (b) - 79 79 - (559) (559)
Income 2 878 - 878 2,301 - 2,301
878 79 957 2,301 (559) 1,742
-------- -------- -------- -------- -------- --------
Investment management
fees 3 (121) (363) (484) (153) (459) (612)
Other expenses 4 (282) - (282) (282) - (282)
(403) (363) (766) (435) (459) (894)
-------- -------- -------- -------- -------- --------
Profit/(loss) before
taxation 475 (284) 191 1,866 (1,018) 848
Taxation 5 (95) 73 (22) (373) 83 (290)
Profit/(loss) and total
comprehensive income
for the year 380 (211) 169 1,493 (935) 558
======== ======== ======== ======== ======== ========
Basic and diluted
Return/(loss) per Ordinary
Share (pence) 6 1.35p (0.75p) 0.60p 5.29p (3.31p) 1.98p
======== ======== ======== ======== ======== ========
All items in the above statement derive from continuing
operations.
There are no gains or losses other than those disclosed in the
Income Statement.
The total column of this statement is the Statement of Total
Comprehensive Income of the Company prepared in accordance with FRS
102 'The Financial Reporting Standard applicable in the UK and
Republic of Ireland'. The supplementary revenue and capital columns
are prepared in accordance with the Statement of Recommended
Practice, 'Financial Statements of Investment Trust Companies and
Venture Capital Trusts' issued in November 2014 by the Association
of Investment Companies and updated in January 2017.
Balance Sheet
As at 28 February 2017
28 February 29 February
Note 2017 2016
GBP'000 GBP'000
Fixed Assets
Investments 8 19,861 21,531
------------ ------------
Current Assets
Debtors 9 4,287 2,472
Cash at bank and in hand 364 635
------------ ------------
4,651 3,107
Creditors - amounts falling
due within one year 10 (1,888) (488)
Net Current Assets 2,763 2,619
------------ ------------
Total Assets less Current Liabilities 22,624 24,150
Creditors - amounts falling
due after more than one year 11 (1) (1)
Net Assets 22,623 24,149
============ ============
Capital and Reserves
Called up share capital 12 282 282
Capital redemption reserve 1 1
Capital reserve - realised (1,324) (1,088)
Capital reserve - unrealised (532) (557)
Revenue reserve 24,196 25,511
Total Equity 22,623 24,149
============ ============
Net Asset Value per Ordinary
Share 13 80.09p 85.49p
============ ============
The financial statements on pages 26 to 41 were approved and
authorised for issue by the Board of Directors on 29 June 2017 and
were signed on their behalf by:
Egmont Kock
Chairman
29 June 2017
Statement of Cash Flows
For the year ended 28 February 2017
Period from
1 January
Year ended 2015 to 29
28 February February
2017 2016
GBP'000 GBP'000
Profit after taxation 169 558
Taxation 22 290
(Gain)/loss on investments (79) 577
Increase in debtors (1,815) (1,453)
Decrease in creditors (19) (162)
Tax paid (298) -
Net cash used in operating activities (2,020) (190)
------------- ------------
Cash flow from investing activities
Purchase of investments - (5,200)
Proceeds from disposal of investments
and repayment of loans and loan
notes 1,749 5,010
Net cash generated from/(used in)
investing activities 1,749 (190)
------------- ------------
Cash flow from financing activities
Dividends paid - (3,390)
Net cash used in financing activities - (3,390)
------------- ------------
Net decrease in cash and cash equivalents (271) (3,770)
Cash and cash equivalents at the
beginning of the year 635 4,405
Cash and cash equivalents at the
end of the year 364 635
============= ============
Statement of Changes in Equity
For the year ended 28 February 2017
Called Capital Capital Capital
up share redemption reserve reserve Revenue
capital reserve - realised - unrealised reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 31 December
2014 282 1 (730) 20 27,408 26,981
Realised on disposal - - 18 (18) - -
Total comprehensive
income for the period - - (376) (559) 1,493 558
Dividends paid - - - - (3,390) (3,390)
---------- ------------ ------------ -------------- --------- --------
Balance as at 29 February
2016 282 1 (1,088) (557) 25,511 24,149
Realised on disposal - - (25) 25 - -
Total comprehensive
income for the year - - (211) - 380 169
Dividends payable - - - - (1,695) (1,695)
Balance as at 28 February
2017 282 1 (1,324) (532) 24,196 22,623
========== ============ ============ ============== ========= ========
Distributable reserves comprise: Capital reserve-realised,
Capital reserve-unrealised (excluding gains on unquoted
investments) and the Revenue reserve. At the year-end distributable
revenue reserves were GBP24,196,000 (2016: GBP25,511,000).
The Capital reserve-realised includes gains/losses that have
been realised in the year due to the sale of investments, net of
related costs. The Capital reserve-unrealised represents the
investment holding gains/losses and shows the gains/losses on
investments still held by the Company not yet realised by an asset
sale.
The revenue reserve represents the cumulative revenue earned
less cumulative distributions.
1. Accounting Policies
Accounting convention
Puma VCT 9 plc ("the Company") was incorporated, registered and
is domiciled in England. The Company's registered number is
08238812. The registered office is Bond Street House, 14 Clifford
Street, London W1S 4JU. The Company is a public limited company
whose shares are listed on LSE with a premium listing. The
company's principal activities and a description of the nature of
the Company's operations are disclosed in the Strategic Report.
The financial statements have been prepared under the historical
cost convention, modified to include investments at fair value, and
in accordance with the requirements of the Companies Act 2006,
including the provisions of the Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations 2008, FRS 102 'The
Financial Reporting Standard applicable in the UK and Republic of
Ireland' ("FRS 102") and the Statement of Recommended Practice,
'Financial Statements of Investment Trust Companies and Venture
Capital Trusts' issued in November 2014 by the Association of
Investment Companies and updated in January 2017 ("the SORP").
Monetary amounts in these financial statements are rounded to
the nearest whole GBP1,000, except where otherwise indicated.
Investments
All investments are measured at fair value. They are all held as
part of the Company's investment portfolio and are managed in
accordance with the investment policy set out on page 13.
Listed investments are stated at bid price at the reporting
date.
Unquoted investments are stated at fair value by the Directors
with reference to the International Private Equity and Venture
Capital Valuation Guidelines ("IPEV") as follows:
-- Investments which have been made within the last twelve
months or where the investee company is in the early stage of
development will usually be valued at the price of recent
investment except where the company's performance against plan is
significantly different from expectations on which the investment
was made in which case a different valuation methodology will be
adopted.
-- Investments in debt instruments will usually be valued by
applying a discounted cash flow methodology based on expected
future returns of the investment.
-- Alternative methods of valuation such as net asset value may
be applied in specific circumstances if considered more
appropriate.
Realised surpluses or deficits on the disposal of investments
are taken to realised capital reserves, and unrealised surpluses
and deficits on the revaluation of investment are taken to
unrealised capital reserves.
Income
Dividends receivable on listed equity shares are brought into
account on the ex-dividend date. Dividends receivable on unquoted
equity shares are brought into account when the Company's right to
receive payment is established and there is no reasonable doubt
that payment will be received. Interest receivable is recognised
wholly as a revenue item on an accruals basis.
1. Accounting Policies (continued)
Performance fees
Upon its inception, the Company agreed performance fees payable
to the Investment Manager, Puma Investment Management Limited, and
members of the investment management team at 20% of the aggregate
excess of the amounts realised over GBP1 per Ordinary Share
returned to Ordinary Shareholders. This incentive will only be
exercisable once the holders of Ordinary Shares have received
distributions of GBP1 per share. The performance fee is accounted
for as an equity-settled share-based payment.
Section 26 of FRS 102 "Share-Based Payment" requires the
recognition of an expense in respect of share-based payments in
exchange for goods or services. Entities are required to measure
the goods or services received at their fair value, unless that
fair value cannot be estimated reliably in which case that fair
value should be estimated by reference to the fair value of the
equity instruments granted.
At each balance sheet date, the Company estimates that fair
value by reference to any excess of the net asset value, adjusted
for dividends paid, over GBP1 per share in issue at the balance
sheet date. Any change in fair value is recognised in the Income
Statement with a corresponding adjustment to equity.
Expenses
All expenses (inclusive of VAT) are accounted for on an accruals
basis. Expenses are charged wholly to revenue, with the exception
of:
-- expenses incidental to the acquisition or disposal of an investment charged to capital; and
-- the investment management fee, 75% of which has been charged
to capital to reflect an element which is, in the directors'
opinion, attributable to the maintenance or enhancement of the
value of the Company's investments in accordance with the Board's
expected long-term split of return; and
-- the performance fee which is allocated proportionally to
revenue and capital based on the respective contributions to the
Net Asset Value.
Taxation
Corporation tax is applied to profits chargeable to corporation
tax, if any, at the applicable rate for the year. The tax effect of
different items of income/gain and expenditure/loss is allocated
between capital and revenue return on the marginal basis as
recommended by the SORP.
Deferred tax is recognised in respect of all timing differences
that have originated but not reversed at the balance sheet date,
where transactions or events that result in an obligation to pay
more, or right to pay less, tax in the future has 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
years. Deferred tax is measured on a non-discounted basis at the
tax rates that are expected to apply in the periods in which timing
differences are expected to reverse, based on tax rates and laws
enacted or substantively enacted at the balance sheet date.
Reserves
Realised losses and gains on investments, transaction costs, the
capital element of the investment management fee and taxation are
taken through the Income Statement and recognised in the Capital
Reserve - Realised on the Balance sheet. Unrealised losses and
gains on investments and the capital element of the performance fee
are also taken through the Income Statement and are recognised in
the Capital Reserve - Unrealised.
Debtors
Debtors include accrued income which is recognised at amortised
cost, equivalent to the fair value of the expected balance
receivable.
1. Accounting Policies (continued)
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 as liabilities from the
ex-dividend date.
Key accounting estimates and assumptions
The Company makes estimates and assumptions concerning the
future. The resulting accounting estimates and assumptions will, by
definition, seldom equal the related actual results. The estimates
and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets within the next
financial year relate to the fair value of unquoted investments.
Further details of the unquoted investments are disclosed in the
Investment Manager's Report on pages 3 to 5 and notes 8 and 14 of
the financial statements.
2. Income
Period from 1 January
Year ended 28 February 2015 to 29 February
2017 2016
GBP'000 GBP'000
Income from investments
Loan stock interest 823 2,260
Bond yields 55 28
878 2,288
Other income
Bank deposit income - 13
878 2,301
======================= ======================
3. Investment Management Fees
Period from 1 January
Year ended 28 February 2015 to 29 February
2017 2016
GBP'000 GBP'000
Puma Investments fees 484 612
484 612
======================= ======================
Puma Investment Management Limited ("Puma Investments") has been
appointed as the Investment Manager of the Company for an initial
period of five years, which can be terminated by not less than
twelve months' notice, given at any time by either party, on or
after the fifth anniversary. The Board is satisfied with the
performance of the Investment Manager. Under the terms of this
agreement Puma Investments will be paid an annual fee of 2% of the
Net Asset Value ("NAV") payable quarterly in arrears calculated on
the relevant quarter end NAV of the Company. These fees are capped,
the Investment Manager having agreed to reduce its fee (if
necessary to nothing) to contain total annual costs (excluding
performance fee and trail commission) to within 3.5% of funds
raised. Total costs this year were 2.8% of the funds raised (for
the 14 month period ended 29 February 2016: 2.7%).
4. Other expenses
Year ended Period from 1 January
28 February 2015 to 29 February
2017 2016
GBP'000 GBP'000
Shore Capital Fund Administration
Services Limited 85 107
Directors' Remuneration 56 65
Social security costs 7 5
Auditor's remuneration for
statutory audit 23 23
Legal and professional fees 38 8
Trail commission 39 33
Other expenses 34 41
282 282
============= ======================
Shore Capital Fund Administration Services Limited provides
administrative services to the Company for an aggregate annual fee
of 0.35% of the Net Asset Value of the Fund, payable quarterly in
arrears.
Remuneration for each Director for the year is disclosed in the
Directors' Remuneration Report on page 18. The Company had no
employees (other than Directors) during the year (2016: none). The
average number of non-executive Directors during the year was 3
(2016: 3). The non-executive Directors are considered to be the Key
Management Personnel of the Company with total remuneration for the
year of GBP63,000 (14 month period ended 29 February 2016:
GBP70,000), including social security costs.
The Auditor's remuneration of GBP19,500 (2016: GBP18,750) has
been grossed up in the table above to be inclusive of VAT.
5. Taxation
Year ended Period from 1 January
28 February 2015 to 29 February
2017 2016
GBP'000 GBP'000
UK corporation tax charged
to revenue reserve 95 373
UK corporation tax credited
to capital reserve (73) (83)
UK corporation tax charge
for the year 22 290
============= ======================
Factors affecting tax charge for the year
Profit before taxation 191 848
============= ======================
Tax charge calculated on profit
before taxation at 20% 38 170
Capital (gains not taxable)
/ losses not deductible (16) 112
Other differences - 8
22 290
============= ======================
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.
6. Basic and diluted return/(loss) per Ordinary Share
Year ended 28 February 2017
Revenue Capital Total
Profit/(loss) for the
year (GBP'000) 380 (211) 169
Weighted average number
of shares 28,248,823 28,248,823 28,248,823
Return/(loss) per share 1.35p (0.75)p 0.60p
Period from 1 January 2015 to 29
February 2016
Revenue Capital Total
Profit/(loss) for the
period (GBP'000) 1,493 (935) 558
Weighted average number
of shares 28,248,823 28,248,823 28,248,823
Return/(loss) per share 5.29p (3.31)p 1.98p
7. Dividends
No interim dividends were paid in the year (14 month period
ended 29 February 2016: two interims dividends of 6p each were paid
totalling GBP3,390,000). The Directors do not propose a final
dividend in relation to the year ended 28 February 2017 (2016:
GBPnil). An interim dividend of 6p per ordinary share, with an
ex-dividend date of 16 February 2017, was paid on 3 March 2017
totalling GBP1,695,000.
8. Investments
Qualifying Non qualifying
(a) Movements in investments investments investments Total
GBP'000 GBP'000 GBP'000
Book cost at 1 March 2016 16,455 5,633 22,088
Net unrealised losses at 1 March
2016 (532) (25) (557)
Valuation at 1 March 2016 15,923 5,608 21,531
Purchases at cost - 1,400 1,400
Disposal of investments and
repayment of loans and loan
notes:
- Proceeds - (3,149) (3,149)
- Realised net gains on disposals - 79 79
Valuation at 28 February 2017 15,923 3,938 19,861
============= =============== ========
Book cost at 28 February 2017 16,455 3,938 20,393
Net unrealised losses at 28
February 2017 (532) - (532)
Valuation at 28 February 2017 15,923 3,938 19,861
============= =============== ========
As previously reported, a major fire occurred in February 2016
at the Materials Recycling Facility ("MRF") operated by Opes
Industries Limited ("Opes"), into which the Company has invested a
total of GBP3.6m (as part of an GBP8.8m investment by Puma
entities). As a result of the incident, and as reported in the
Company's previous annual report, the board made a provision of
GBP532,000 against the carrying value of the Company's investment
in Opes. Opes owned a 73 hectare site in north Oxfordshire with a
MRF, including a landfill site for non-hazardous materials and an
aggregates/gravel quarrying business. The Company's investment was
to provide funding for the construction and equipping of the MRF
and working capital during the build-up of the trade. The funding
was provided in the form of equity and loan stock and our interests
are covered by a first fixed and floating charge over Opes' assets.
Following the incident, the Company appointed an administrator over
Opes in order to best protect the Company's investment. We are
pleased to report
that shortly after the year end, the administrator exchanged
contracts for the sale of the north Oxfordshire site; the cash
consideration is payable in stages over a 12 month period.
Moreover, discussions are continuing with Opes' insurers regarding
reimbursement of the damage to the plant and the building and of
the costs of business interruption.
During the year, the Company sold its quoted bonds in J
Sainsbury plc for GBP1,102,000, which were originally acquired for
GBP1,048,000. These bonds were stated at GBP1,023,000 as at 29
February 2016.
(b) Gains and losses on investments
The gains and losses on investments for the year shown in the
Income Statement is analysed as follows:
Period from
1 January
Year ended 2015 to 29
28 February February
2017 2016
GBP'000 GBP'000
Realised gains/(losses) on disposals
in the year 79 (2)
Unrealised losses in
year - (557)
79 (559)
============= ============
8. Investments (continued)
(c) Quoted and unquoted investments
Market value Market value
as at 28 as at 29
February February
2017 2016
GBP'000 GBP'000
Quoted investments - 1,023
Unquoted investments 19,861 20,508
19,861 21,531
============= =============
Further details of these investments are disclosed in the
Investment Portfolio Summary on pages 6 to 11 of the Annual
Report.
9. Debtors
As at 28 February As at 29 February
2017 2016
GBP'000 GBP'000
Other debtors 1,757 1
Prepayments and accrued
income 2,530 2,471
4,287 2,472
================== ==================
Other debtors include GBP1,695,000 (2016: GBPnil) of monies paid
to the registrar to enable the interim dividend to be paid on 3
March 2017 (see note 7).
10. Creditors - amounts falling due within one year
As at 28 February As at 29 February
2017 2016
GBP'000 GBP'000
Accruals 171 190
Corporation tax 22 298
Dividends payable (see
note 7) 1,695 -
1,888 488
================== ==================
11. Creditors - amounts falling due after more than one year
As at 28 February As at 29 February
2017 2016
GBP'000 GBP'000
Loan notes 1 1
================== ==================
On 30 October 2012, the Company issued Loan Notes in the amount
of GBP1,000 to a nominee on behalf of the Investment Manager and
members of the investment management team. The Loan Notes accrue
interest of 5% per annum.
The Loan Notes entitle the Investment Manager and members of the
investment management team to receive a performance related
incentive of 20% of the aggregate amounts realised by the Company
in excess of GBP1 per Ordinary Share. The Shareholders will be
entitled to the balance. This incentive, to be effected through the
issue of shares in the Company, will only be exercised once the
holders of Ordinary Shares have received dividends of GBP1 per
share (whether capital or income). The performance incentive
structure provides a strong incentive for the Investment Manager to
ensure that the Company performs well, enabling the Board to
approve distributions as high and as soon as possible.
In the event that distributions to the holders of Ordinary
Shares totalling GBP1 per share have been made the Loan Notes will
convert into sufficient Ordinary Shares to represent 20% of the
enlarged number of Ordinary Shares. The amount of the performance
fee will be calculated as 20% of the excess of the net asset value
(adjusted for dividends paid) over GBP1 per issued share.
12. Called Up Share Capital
As at 28 February As at 29 February
2017 2016
GBP'000 GBP'000
28,248,823 ordinary shares
of 1p each 282 282
================== ==================
13. Net Asset Value per Ordinary Share
As at As at
28 February 2017 29 February 2016
Net assets GBP22,623,000 GBP24,149,000
Shares in issue 28,248,823 28,248,823
Net asset value per
share
Basic 80.09p 85.49p
Diluted 80.09p 85.49p
14. Financial Instruments
The Company's financial instruments comprise its investments,
cash balances, debtors and certain creditors. The fair value of all
of the Company's financial assets and liabilities is represented by
the carrying value in the Balance Sheet. Excluding cash balances,
the Company held the following categories of financial instruments
at 28 February 2017:
As at 28 February As at 29 February
2017 2016
GBP'000 GBP'000
Financial assets at fair value
through profit or loss 19,861 21,531
Financial assets that are debt
instruments measured at amortised
cost 4,287 2,472
Financial liabilities measured
at amortised cost (1,867) (191)
22,281 23,812
================== ==================
Management of risk
The main risks the Company faces from its financial instruments
are market price risk, being the risk that the value of investment
holdings will fluctuate as a result of changes in market prices
caused by factors other than interest rate or currency movements,
liquidity risk, credit risk and interest rate risk. The Board
regularly reviews and agrees policies for managing each of these
risks. The Board's policies for managing these risks are summarised
below and have been applied throughout the year.
Credit risk
Credit risk is the risk that the counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Company. The Investment Manager
monitors counterparty risk on an ongoing basis. The carrying amount
of financial assets best represents the maximum credit risk
exposure at the balance sheet date. The Company's financial assets
and maximum exposure to credit risk is as follows:
As at 28 February As at 29 February
2017 2016
GBP'000 GBP'000
Investments in loans, loan
notes and bonds 8,874 10,544
Cash at bank and in hand 364 635
Accrued interest income 2,530 2,471
Other debtors 1,757 1
13,525 13,651
================== ==================
The cash held by the Company at the year end is split between
two U.K. banks. Bankruptcy or insolvency of either 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 banks and should
it deteriorate significantly the Investment Manager will, on
instruction of the Board, move the cash holdings to another
bank.
Other debtors includes GBP1,695,000 of monies advanced to the
registrar for payment of the interim dividend on 3 March 2017.
Credit risk associated with accrued interest income and balance
of other debtors are predominantly covered by the investment
management procedures.
14. Financial Instruments (continued)
Investments in loans, loan notes and bonds comprises a
fundamental part of the Company's venture capital investments,
therefore credit risk in respect of these assets is managed within
the Company's main investment procedures.
Market price risk
Market price risk arises mainly from uncertainty about future
prices of financial instruments held by the Company. It represents
the potential loss the Company might suffer through holding
investments in the face of price movements. The Investment Manager
actively monitors market prices and reports to the Board, which
meets regularly in order to consider investment strategy.
The Company's strategy on the management of market price risk is
driven by the Company's investment policy as outlined in the
Strategic Report on page 13. 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.
None (2016: 5%) of the Company's investments are listed on the
London Stock Exchange and 100% (2016: 95%) are unquoted
investments.
Liquidity risk
Details of the Company's unquoted investments are provided in
the Investment Portfolio summary on page 6. By their nature,
unquoted investments may not be readily realisable, 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, other than loan notes amounting to GBP1,000 (2016:
GBP1,000) (see note 11).
The Company's liquidity risk associated with investments is
managed on an ongoing basis by the Investment Manager in
conjunction with the Directors and in accordance with policies and
procedures in place as described in the Strategic Report and the
Report of the Directors. The Company's overall liquidity risks are
monitored on a quarterly basis by the Board. The Company maintains
sufficient investments in cash and readily realisable securities to
pay accounts payable and accrued expenses.
Fair value interest rate risk
The benchmark that determines the interest paid or received on
the current account is the Bank of England base rate, which was
0.25% at 28 February 2017 (2016: 0.5%). All of the loan and loan
note investments are unquoted and hence not directly subject to
market movements as a result of interest rate movements.
Cash flow interest rate risk
The Company has exposure to interest rate movements primarily
through its cash deposits and loan notes which track either the
Bank of England base rate or LIBOR.
14. Financial Instruments (continued)
Interest rate risk profile of financial assets
The following analysis sets out the interest rate risk of the
Company's financial assets as at 28 February 2017.
Weighted Weighted
average average
interest period
Rate status rate until maturity Total
GBP'000
Cash at bank - RBS Floating 0.01% - 364
Cash at bank - Lloyds Floating 0.01% - -
Loans, loan notes and
bonds Floating 8.89% 27 months 2,092
Loans, loan notes and
bonds Fixed 17.77% 29 months 3,943
Balance of assets Non-interest bearing - 18,114
24,513
========
The following analysis sets out the interest rate risk of the
Company's financial assets as at 29 February 2016.
Weighted Weighted
average average
interest period
Rate status rate until maturity Total
GBP'000
Cash at bank - RBS Floating 0.15% - 560
Cash at bank - Lloyds Floating 0.50% - 75
Loans, loan notes and
bonds Floating 15.47% 38 months 3,969
Loans, loan notes and
bonds Fixed 18.11% 43 months 5,416
Balance of assets Non-interest bearing - 14,618
24,638
========
Foreign currency risk
The reporting currency of the Company is Sterling. The Company
has not held any non-Sterling investments during the year.
Fair value hierarchy
Financial assets and liabilities measured at fair value are
disclosed using a fair value hierarchy that reflects the
significance of the inputs used in making the fair value
measurements, as follows:-
-- Level 1 - Fair value is measured using the unadjusted quoted price in an active market.
-- Level 2 - Fair value is measured using inputs other quoted
prices that are observable using market data.
-- Level 3 - Fair value is measured using unobservable inputs.
The Company has early adopted the changes to FRS 102 published
by the FRC in March 2016 in relation to these disclosures.
14. Financial Instruments (continued)
Fair values have been measured at the end of the reporting year
as follows:-
As at 28 February As at 29 February
2017 2016
GBP'000 GBP'000
Level 1
Investments listed on LSE - 1,023
Level 3
Unquoted investments 19,861 20,508
19,861 21,531
================== ==================
The Level 3 investments have been valued in line with the
Company's accounting policies and IPEV guidelines. Further details
of these investments are provided in the Significant Investments
section of the Annual Report.
15. Capital management
The Company's objectives when managing capital are to safeguard
the Company's ability to continue as a going concern, so that it
can provide an adequate return to shareholders by allocating its
capital to assets commensurate with the level of risk.
By its nature, the Company has an amount of capital, at least
70% (as measured under the tax legislation) of which must be, and
remain, invested in the relatively high risk asset class of small
UK companies within three years of that capital being
subscribed.
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 (2016: none).
17. Controlling Party
In the opinion of the Directors there is no immediate or
ultimate controlling party.
The financial information set out in this announcement does not
constitute the Company's statutory financial statements in
accordance with section 434 Companies Act 2006 for the year ended
28 February 2017, but has been extracted from the statutory
financial statements for the year ended 28 February 2017 which were
approved by the Board of Directors on 29 June 2017 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 statements under s 498(2) and (3) of the Companies Act
2006. The Independent Auditor's Report included an emphasis of
matter paragraph highlighting the uncertainties associated with the
fair value of investment in Opes Industries Limited.
The statutory accounts for the period ended 29 February 2016
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 2017 will be available to the public at
the registered office of the Company at Bond Street House, 14
Clifford Street, London, W1S 4JU and will be available for download
from www.pumainvestments.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FMGZVLLGGNZG
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