TIDMPUM9
RNS Number : 9734X
Puma VCT 9 PLC
30 November 2017
Puma VCT 9 plc
Interim Report
For the period ended 31 August 2017
Officers and Professional Advisers
Directors Auditor
Egmont Kock (Chairman) RSM UK Audit LLP
Terence Rhodes Chartered Accountants
Graham Shore 25 Farringdon Street
London EC4A 4AB
Secretary
Eliot Kaye Sponsors and Solicitors
Howard Kennedy
Registered Number No 1 London Bridge
08238812 London SE1 9BG
Registered Office Bankers
Bond Street House The Royal Bank of Scotland
14 Clifford Street plc
London W1S 4JU London City Office
PO Box 412
62-63 Threadneedle Street
Investment Manager London EC2R 8LA
Puma Investment Management
Limited Lloyds Bank International
Bond Street House Limited
14 Clifford Street Sarnia House
London W1S 4JU Le Truchot
St Peter Port
Guernsey, GY1 4EF
Registrar VCT Tax Advisor
SLC Registrars PricewaterhouseCoopers
42- 50 Hersham Road LLP
Walton-on- Thames 1 Embankment Place
Surrey KT12 1RZ London WC2N 6RH
Administrator Custodian
Shore Capital Fund Administration Howard Kennedy
Services Limited No 1 London Bridge
Bond Street House London SE1 9BG
14 Clifford Street
London W1S 4JU
Chairman's Statement
Highlights
-- Substantially invested in a diverse range of investments generating an attractive return
-- NAV per share at the period end was 98.52p (after adding back dividends paid to date)
-- 18p per share of dividends paid since inception, equivalent
to an 8.6% per annum tax-free running yield on net investment
Chairman's Statement
Introduction
As your Company enters into the final year of its expected
five-year life, I am pleased to report that your funds are
substantially deployed in both qualifying and non-qualifying
investments. We believe our portfolio is well positioned to deliver
attractive returns to shareholders within the Company's remaining
time horizon.
Results and Net Asset Value ("NAV")
The NAV per share at the period end was 80.52p (98.52p after
adding back dividends paid to date), an increase of 0.44p in the
half year, equivalent to a GBP123,000 profit for the period.
Investments
Qualifying Investments
Gasification Plant, East London
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. Following the period end, Urban
Mining Limited repaid the great majority of the Company's
investment which now stands at GBP300,000. We expect the remaining
investment (which remains secured with a first charge over the
Chinook Urban Mining business and the eight acre site of the East
London plant and continues to yield an attractive return to the
Company) to be fully redeemed early in the new year.
Kinloss and Jephcote - Construction of Ibis Hotel, Luton
Airport
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 ("SKPB"), 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, following the period end, the project has
completed successfully generating attractive returns for SKPB which
will benefit the Company when its investment is repaid in due
course.
Materials Recycling Facility, Oxfordshire
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 protect the Company's investment. During the
period, the administrator made substantial progress in recovering
the Company's investment, striking a deal which will generate cash
consideration 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.
Saville Services - Care Home Project, Chester
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.
Alyth Trading - Care Home Project, Hamilton and Egham
As previously reported, the Company had invested GBP3.2 million
(alongside other Puma VCTs) into Alyth Trading Limited, a
nationwide provider of contracting services. Alyth Trading has been
working on two contracts. The first was in connection with the
construction of a 112 bed purpose built care home in Hamilton,
Scotland; as reported in the Company's previous annual report, that
project 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 and
over budget as a result of the non-performance of the original
building contractor which has been substantially resolved by the
developer and the team at Alyth Trading.
Non-Qualifying Investments
Citrus Group
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.
Mixed Residential-Commercial Development, Bloomsbury
As previously reported, a GBP1 million loan (as part of a total
facility of GBP17.97 million, increased from 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 11 apartments, 2 houses and 11,800 square feet of B1
commercial space. The loan is secured with a first charge over the
site.
IVF Clinic, Wickford
Loans of GBP400,000 were advanced (also through Latimer Lending
Limited) to HPC (Wickford) Limited in a total loan package of
GBP2.85 million together with other vehicles managed and advised by
the Investment Manager. These loans are to 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 is well
progressed and is expected to reach practical completion in the
first quarter of 2018.
Wind Farm, East Lothian
As previously reported, a GBP1.3 million loan (through another
affiliate, Lothian Lending Limited) had been advanced as part of a
GBP2.6 million facility 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. We are pleased to report
that, following the period end, the loan was repaid in full with
all interest, generating an attractive return.
Liquidity Management
Following the period the end, to further manage liquidity, the
Company invested GBP648,000 in a floating rate note issued by
Commonwealth Bank of Australia earning 1.1%.
Dividends
As reported in the Company's annual report, the Company declared
a dividend of 6p per ordinary share in March 2017. Reflecting this
recent pay-out, your Board is not proposing a further dividend at
this interim stage but still intends to pay out a dividend of 6p
per ordinary share each year as envisaged in the Company's
prospectus.
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.
Principal risks and uncertainties
The economic environment remains uncertain and there are some
signs of a slowdown associated with high personal debt levels, low
growth in real wages and deferral of investment decisions. The
consequences of this for the Company's investment portfolio
constitute the principal risk and uncertainty for the Company in
the second half of the year.
Patient Capital Review
We are pleased that, in its response to the Financing Growth in
Innovative Firms Consultation published with the Autumn Budget on
22 November 2017 ("the Patient Capital Review"), the Government has
recognised the continuing importance of VCTs in providing much
needed investment in SMEs. We note that proposed changes arising
out of the Patient Capital Review include increasing VCTs' minimum
qualifying investment percentage threshold from 70% to 80% with
effect from 6 April 2019. This is unlikely to apply to the Company
in light of its expected remaining life as detailed below. (This
rule ceases to apply once a VCT has entered members' voluntary
liquidation).
Life of fund
The Company was established with the intention that it would
have a limited life. The Prospectus stated that after five years
the Board would propose a resolution to shareholders for an orderly
liquidation of the Company's assets. Your Board currently intends
to propose this resolution within a year of this report.
Outlook
The Company's net assets are fully deployed in a diverse range
of high quality businesses and projects which should offer the
prospect of further growth in net assets per share. Whilst there
may be some further changes in the composition of the portfolio to
ensure that the Company continues to satisfy its HMRC qualifying
targets, the Board expects to concentrate in the future primarily
on the monitoring of our existing investments and considering the
options for exits.
Egmont Kock
Chairman
30 November 2017
Income Statement (unaudited)
For the period ended 31 August 2017
Six months Six months
ended ended Period ended
31 August 31 August 28 February
2017 2016 2017
Note Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(Loss)/gain
on investments - - - - 78 78 - 79 79
Income 498 - 498 391 - 391 878 - 878
498 - 498 391 78 469 878 79 957
-------- -------- -------- -------- -------- -------- --------
Investment
management
fees 4 (56) (166) (222) (60) (180) (240) (121) (363) (484)
Other expenses (125) - (125) (138) - (138) (282) - (282)
(181) (166) (347) (198) (180) (378) (403) (363) (766)
-------- -------- -------- -------- -------- -------- --------
Return/(loss)
on ordinary
activities
before
taxation 317 (166) 151 193 (102) 91 475 (284) 191
Tax on
return
on ordinary
activities (63) 35 (28) (28) 20 (8) (95) 73 (22)
Return/(loss)
on ordinary
activities
after tax
attributable
to equity
shareholders 254 (131) 123 165 (82) 83 380 (211) 169
======== ======== ======== ======== ======== ======== ======== ======== ========
Basic and
diluted
Return/(loss)
per Ordinary
Share (pence) 2 0.90p (0.46p) 0.44p 0.58p (0.29p) 0.29p 1.35p (0.75p) 0.60p
======== ======== ======== ======== ======== ======== ======== ======== ========
The total column of this statement is the profit and loss of the
Company. All revenue and capital items in the above statement
derive from continuing operations. No operations were acquired or
discontinued in the period.
Balance Sheet (unaudited)
As at 31 August 2017
As at As at As at
31 August 31 August 28 February
Note 2017 2016 2017
GBP'000 GBP'000 GBP'000
Fixed Assets
Investments 6 19,861 21,609 19,861
----------- ----------- -------------
Current Assets
Debtors 2,981 2,812 4,287
Cash 129 347 364
----------- ----------- -------------
3,110 3,159 4,651
Creditors - amounts
falling due within one
year (224) (535) (1,888)
Net Current Assets 2,886 2,624 2,763
----------- ----------- -------------
Total Assets less Current
Liabilities 22,747 24,233 22,624
Creditors - amounts
falling due after more
than one year (including
convertible debt) (1) (1) (1)
Net Assets 22,746 24,232 22,623
=========== =========== =============
Capital and Reserves
Called up share capital 282 282 282
Capital redemption reserve 1 1 1
Capital reserve - realised (1,455) (1,248) (1,324)
Capital reserve - unrealised (532) (479) (532)
Revenue reserve 24,450 25,676 24,196
Equity Shareholders'
Funds 22,746 24,232 22,623
=========== =========== =============
Net Asset Value per
Ordinary Share 3 80.52p 85.78p 80.08p
=========== =========== =============
Diluted Net Asset Value
per Ordinary Share 3 80.52p 85.78p 80.08p
=========== =========== =============
Cash Flow Statement (unaudited)
For the period ended 31 August 2017
Six months Six months Period
ended ended ended
31 August 31 August 28 February
2017 2016 2017
GBP'000 GBP'000 GBP'000
Operating activities
Profit on ordinary activities
before tax 123 83 169
Taxation 28 8 22
(Gains)/losses on investments - (78) (79)
(Increase) in debtors 1,306 (340) (1,815)
Increase/(decrease) in
creditors (1,692) 39 (19)
Tax paid (298)
Net cash inflow/(outflow)
from operating activities (235) (288) (2,020)
----------- ----------- -------------
Capital expenditure and
financial investment
Proceeds from sale of
investments - - 1,749
Net cash outflow from
capital expenditure and
financial investment - - 1,749
----------- ----------- -------------
Decrease in cash (235) (288) (271)
Net cash at start of
the period 364 635 635
Net funds at the period
end 129 347 364
=========== =========== =============
Reconciliation of Movements in Shareholders' Funds
(unaudited)
For the period ended 31 August 2017
Called
up Capital Capital Capital
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
29 February
2016 282 1 (1,088) (557) 25,511 24,149
Total recognised
(losses)/gains
for the period (160) 78 165 83
Balance as at
31 August 2016 282 1 (1,248) (479) 25,676 24,232
Total recognised
(losses)/gains
for the period - - (51) (78) 215 86
Realised on
disposal (25) 25
Dividends paid - - - - (1,695) (1,695)
Balance as at
28 February
2017 282 1 (1,324) (532) 24,196 22,623
Total recognised
(losses)/gains
for the period - - (131) - 254 123
Balance as at
31 August 2017 282 1 (1,455) (532) 24,450 22,746
========= ============ ============ ============== ========= ========
Notes to the Interim Report
For the period ended 31 August 2017
1. Accounting Policies
The financial statements have been prepared under the historical
cost convention, modified to include the revaluation of fixed asset
investments, and in accordance with applicable Accounting Standards
and with the Statement of Recommended Practice, "Financial
Statements of Investment Trust Companies and Venture Capital
Trusts" ("SORP") and in accordance with the Financial Reporting
Standard 102 ("FRS102").
2. Return per Ordinary Share
The total return per share of 0.44p is based on the profit for
the period of GBP123,000 and the weighted average number of shares
in issue as at 31 August 2017 of 28,248,821.
3. Net asset value per share
As at As at As at
31 August 31 August 28 February
2017 2016 2017
Net assets 22,746,000 24,232,000 22,623,000
Shares in
issue 28,248,821 28,248,821 28,248,821
Net asset
value per
share
Basic 80.52p 85.78p 80.08p
Diluted 80.52p 85.78p 80.08p
4. Management fees
The Company pays the Investment Manager an annual management fee
of 2% of the Company's net assets. The fee is payable quarterly in
arrears. The annual management fee is allocated 75% to capital and
25% to revenue.
5. Financial information provided
The financial information for the period ended 31 August 2017
has not been audited and does not comprise full financial
statements within the meaning of Section 423 of the Companies Act
2006. The interim financial statements have been prepared on the
same basis as will be used to prepare the annual financial
statements.
Notes to the Interim Report continued
For the period ended 31 August 2017
6. Investment portfolio summary
Valuation
HMRC Basis
Valuation as a %
Valuation Cost Gain/(loss) HMRC Basis(1) of
GBP'000 GBP'000 GBP'000 GBP'000 Net Assets
As at 31 August
2017
Qualifying Investment
- Unquoted
Jephcote Trading
Limited 880 880 - 880 4%
Saville Services
Limited 3,400 3,400 - 3,995 19%
Kinloss Trading
Limited 3,500 3,500 - 3,500 17%
Alyth Trading
Limited 3,200 3,200 - 3,200 15%
Urban Mining Limited 1,875 1,875 - 1,875 9%
Opes Industries
Limited 3,068 3,600 (532) 3,600 17%
Total Qualifying
Investments 15,923 16,455 (532) 17,050 81%
---------- -------- ------------ --------------- ------------
Non-Qualifying
Investments
Valencia Lending
Limited 1,000 1,000 - 1,000 5%
Latimer Lending
Limited 1,813 1,813 - 1,813 9%
Lothian Lending
Limited 1,125 1,125 - 1,125 5%
Total Non-Qualifying
investments 3,938 3,938 - 3,938 19%
---------- -------- ------------ --------------- ------------
Total Investments 19,861 20,393 (532) 20,925 100%
Balance of Portfolio 2,885 2,885 - - -
Net Assets 22,746 23,278 (532) 20,925 100%
---------- -------- ------------ --------------- ------------
Of the investments held at 31 August 2017, all are incorporated
in England and Wales.
(1) The HMRC valuation differs from FRS102, because FRS102
requires changes to reflect current market valuations whereas HMRC
requires such changes when further securities of the same company
are bought or sold by the VCT. It also omits the items shown as
'Balance of Portfolio'.
Copies of this Interim Statement will be made available on the
website:
http://www.pumainvestments.co.uk/pages/view/investors-information-vcts
This information is provided by RNS
The company news service from the London Stock Exchange
END
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