TIDMPUAL
RNS Number : 7207D
Puma Alpha VCT PLC
30 June 2021
HIGHLIGHTS
- Raised GBP4.7m during the year, with a further GBP3.7m raised post year end
- Five additional qualifying investments made
- 18% increase in Net Asset Value ("NAV") to 116.10p per share
CHAIRMAN'S STATEMENT
I am pleased to present the report and financial statements for
Puma Alpha VCT plc ('the Company') for the year to 28 February
2021.
Overview
The Company's NAV per share at the end of the year stood at
116.10p, a 17.83p and 18% uplift from the same time in the previous
year. This uplift has been driven by impressive performance across
a number of the Company's qualifying investments, which is
particularly satisfying given the prevailing market conditions. The
overall NAV movement arises from those uplifts less set-up fees and
running costs. 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 profit for the year was
GBP1.6m (2020: GBP0.1m).
Fundraising
We are happy to report that at the year end the Company had
raised GBP4.7m, and since the year end a further GBP3.7m has been
raised. This gives the Company material additional deployable funds
and will help spread fixed costs over a wider shareholder base.
This level of fundraising compared favourably to the other VCTs in
the market that were launched at the same time as the Company and
are therefore seen as relatively new. This leaves the Company in a
good position to continue to develop a robust portfolio.
Investment Activity and Portfolio
We are pleased to report that it has been an active year for the
Company with five qualifying investments having been made in the
period, alongside other Puma managed funds. These investments were:
GBP0.6m into TicTrac, an app-based health and wellness solution for
employers and insurance companies; GBP0.95m into MyKindaCrowd, a
Human Resources technology company; GBP1.1m into premium athleisure
wear brand, Ron Dorff; GBP0.9m into product design and technology
business, Ostmodern; and GBP1.0m into international fleet and
vehicle safety technology provider CameraMatics. This brings the
overall number of qualifying investments to seven.
Of note was the fact that the Manager completed these
investments during periods of extreme uncertainty arising from the
Covid-19 pandemic. This included an investment in March 2020, at
the outset of the crisis, and four more across the last quarter of
2020 and first quarter of 2021. In fact, the Manager increased pace
of deployment during the period compared with the previous period,
taking advantage of the Company's proportionally higher levels of
free investable cash versus peers. This was a period marked by
general retrenchment of investment appetite, as other VCTs
struggled to gauge the follow-on funding needs of their relatively
larger portfolios. As such, the investments were made at what
already looks to be highly advantageous pricing compared with
today's market conditions.
Within the portfolio, Le Col, the Company's premium cycling
clothing investment, continued to perform very strongly and has
been written up accordingly. Tictrac, the Company's health and
wellness app investment, has also been written up in value, despite
having been held for less than one year, aided by the highly
favourable deal structure the Investment Manager secured. The
sector has gained significant traction during the past year as
individuals and employers increasingly incorporate health and
wellbeing into their daily routines. In addition, there has also
been a focus on providing staff welfare solutions via scalable
digital technology, such as that offered by Tictrac.
At the time of writing, the Company has over GBP5m 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 Manger
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. The investment team has heads of
terms agreed for two further potential investments, which gives us
confidence that we will continue to make good progress this year.
Allocation of non-qualifying holdings will continue to be
considered by the Investment Manager as the economic outlook and
global policy response to the Covid-19 crisis continue to
evolve.
Net Asset Value
The Company's NAV per share stood at 116.10p (2020: 98.27p) at
the year end of 28 February 2021. This reflects the upwards
revaluations, totalling GBP1.9m, of the Company's qualifying
investments in Le Col and TicTrac, less running costs.
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
In the face of the pandemic, the concern for most of the last
year was the collapse of economic activity and falling prices, not
to mention considerable uncertainty. As the pandemic pressures have
started to ease, the macro-economic impact of the crisis is
becoming more apparent. There are concerns that a strong recovery
will lead to supply shortages. This would send commodity prices
higher and in turn create pressure for central banks to raise
interest rates, with downside implications for equity values.
Despite this, economists and policy makers generally see current
price pressures as a temporary phenomenon and are expecting strong
growth with inflationary pressures receding. It is nevertheless
clear that a degree of uncertainty remains, although compared to
this time last year, there are more reasons to feel optimistic.
What does this mean for Puma Alpha VCT? Perhaps most
importantly, compared with others in the market, this VCT is
relatively new and agile, and therefore can adapt quickly to a
volatile economic environment when developing its portfolio.
Notwithstanding the impact of the pandemic, 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.
Notwithstanding the ongoing uncertainty, we are confident that the
Company continues to be well-positioned to assemble a portfolio
capable of delivering attractive returns to shareholders.
Egmont Kock
Chairman
30 June 2021
INVESTMENT MANAGER'S REPORT
Introduction
The Covid-19 pandemic (or, more specifically, the policy
response to it) accelerated existing trends in many areas of life.
Examples range from remote working, to ecommerce growth, to the
application of scalable digital solutions to health, education and
staff management.
But there were also some core macroeconomic trends that have
been accelerated. As we went into the pandemic at the beginning of
2020, we were discussing as our core outlook a high debt, low
interest rate, low inflation model often loosely categorised as
'Japanification'. In a low growth, low interest rate environment,
innovative, fast growing companies tend to attract high values.
Essentially, it is easier to buy growth in such an environment than
to create it organically. Also, large cash-rich incumbents
experience the same issue as the rest of us, that yield on cash is
unacceptably low. Overall, such an environment is supportive of
small company investing, as it is stimulative of exits at good
valuations.
Now, as we hopefully emerge from Covid period, it is as if we
have been accelerated forwards on that trajectory by several years.
Our debt levels are very much higher and interest rates are still
very low. In fact, we risk being in a position where the
governments and Central Banks of the Western world (now more
entwined than they have been for probably 30 years) cannot afford
to raise interest rates. That raises material concerns about
inflation, consideration of which we formally upweighted in our
investment analysis during February of this year.
There is also considerable Brexit dislocation still to be
digested by the economy, huge levels of stimulus to be carefully
unwound, and significant geopolitical tension. In short, this
remains an uncertain investment environment.
Further, this has not been a 'conventional' recession. At the
onset of the Covid crisis the government position was highly fluid,
and we went through a very challenging time supporting portfolio
companies where we were trying to plan through what seemed like a
constantly changing policy environment. Since that initial phase
though, Government support - particularly via the Furlough scheme,
but also through the various guaranteed loan schemes - has been
simply enormous.
That government support saved the economy, and was undoubtedly a
necessary corollary of lockdown, but it means that, in our view,
one would be unwise to assume that we are now in an early cycle
recovery phase like any other.
The Company is early in its life and so has a high proportion of
investable cash. This means that it can react to changes quickly
and meaningfully, rather than having a high proportion of assets in
an illiquid legacy portfolio. The Company is also of a size where
performance in a particular portfolio holding can have a meaningful
impact on overall valuation.
We have a highly involved and hands-on approach to portfolio
management. This keeps us close to the management teams that the
Company has backed and allows us to help them through challenges
that arise. This, coupled with a focus on genuine multi-sector
diversity, has served the Company well over the period being
reported on.
Investments
Qualifying Investments
Le Col Holdings Limited - Sports Apparel
Le Col is a premium cycling apparel brand founded by former
professional cyclist, Yanto Barker. Based in the UK and exporting
to 50 countries, Le Col owns its own factory in Italy, increasing
its manufacturing and supply chain control.
Having grown strongly for several years since initial investment
by the Puma Funds, Le Col entered the Covid-19 crisis with a strong
platform. Like all businesses, Le Col faced great uncertainty in
the initial stages of the crisis but experienced a boom in sales
following lockdown due to an increased focus on exercise and
particular emphasis on cycling. Online sales performed
exceptionally strongly over the period, driven by a number of
successful marketing initiatives throughout the year.
These included a multi-sport Strava challenge which received
more than 500,000 sign-ups, partnerships with Wahoo (an indoor
cycling kit brand), Zwift rides (an online cycling training
programme) and ongoing sponsorship of Team Bahrain McLaren, a
leading Grand Tour team. In particular, the sponsorship of Team
Bahrain McLaren has been successful in attracting a number of new
customers to the brand.
As evidence of Le Col's continued success, in October 2020 the
business won the 'Best Leisure, Fitness & Outdoors eCommerce'
award at the eCommerce Awards 2020. Moving forwards, it plans to
make supply chain improvements to cope with increased demand,
including moving to larger premises in Italy where a significant
portion of Le Col's stock is manufactured.
2021 2020
Total investment by all funds
managed by Puma Investment
Management Limited GBP4.85m GBP3.80m
--------- ---------
Alpha VCT investment participation GBP0.72m GBP0.45m
--------- ---------
Alpha VCT Equity Valuation GBP2.41m GBP0.63m
--------- ---------
Multiple of Investment Cost 3.34x 1.40x
--------- ---------
Dymag Group - High performance wheel manufacturer
Dymag is a British designer and manufacturer of high-performance
car and motorbike wheels, with a specific focus on carbon fibre
wheels. The business continues to grow its presence, both in the
aftermarket through relationships with several leading US
distributors, and through project work with several leading
performance 'original equipment manufacturers' (OEM). Dymag's
wheels have been featured on several notable supercar and hypercar
projects, and in October 2020, Dymag's hybrid forged alloy and
carbon fibre wheels were used on the SSC Tuatara when it
successfully set a new world speed record for a production car. The
Tuatara reached a top speed of 331.15mph on a closed road in
Nevada, USA.
The Company's investments have supported an ongoing process of
driving efficiencies in Dymag's production processes to lower unit
cost, including relocation to a new factory in Chippenham which was
open and fully operational by mid-February 2021. Investment has
also been used to develop a more sophisticated sales and marketing
function.
Dymag managed to continue production throughout lockdown but
suffered from complications around staffing and supply chain. Order
volumes were also impacted as driving and racing activities were
curtailed and trade fairs were cancelled. However, Dymag
proactively focused on deepening its distributor relationships and
working through engineering projects with long lead times.
2021 2020
Total investment by all funds
managed by Puma Investment
Management Limited GBP5.65m GBP4.80m
--------- ---------
Alpha VCT investment participation GBP0.60m GBP0.48m
--------- ---------
Alpha VCT Equity Valuation GBP0.60m GBP0.48m
--------- ---------
Multiple of Investment Cost 1.00x 1.00x
--------- ---------
TicTrac Limited - Health Engagement Platform
TicTrac is a personalised health and wellness platform that
provides exclusive content to its users, as well as taking
information from their wearable fitness trackers to give targeted
feedback and action plans. TicTrac has gathered powerful evidence
that use of its platform reduces sedentary behaviour amongst large
workforces, with associated positive outcomes for engagement and
wellbeing.
TicTrac's main customers are large insurance companies, such as
Aviva, Allianz and Prudential, Generali Employee Benefits and Bupa
Hong Kong. During 2020, TicTrac also launched a software as a
service (SaaS) offer, selling direct to corporates, again for the
provision of the TicTrac platform to staff as an employee
benefit.
The Covid-19 pandemic accelerated an already prevalent focus on
health and wellness, highlighting the need for flexible, scalable
digital solutions. These trends are very positive for TicTrac.
Whilst corporate spending was scrutinised in most areas during
2020, TicTrac's multi-year contracts with large insurers provided a
buffer from this scrutiny and afforded the business with good
levels of revenue visibility. Coupled with the investment from Puma
funds (and co-investment partner Aviva Ventures) the business has
been able to remain in growth mode and continue developing the
skillsets it needs for expansion.
Post period end, the company has announced some significant
client wins, again on valuable multi-year contracts. This year the
business will continue to grow its staff base across the sales,
account management, product and technology teams, with a focus on
scaling and refining sales and marketing strategy.
2021 2020
Total investment by all funds
managed by Puma Investment
Management Limited GBP5.00m -
--------- -----
Alpha VCT investment participation GBP0.60m -
--------- -----
Alpha VCT Equity Valuation GBP1.05m -
--------- -----
Multiple of Investment Cost 1.74x -
--------- -----
MySafeDrive Limited ('CameraMatics') - Fleet and Vehicle Safety
Technology
CameraMatics provides an award-winning solution for risk
management within large fleets of vehicles. Working across Ireland,
the UK and US, the business is positioned at the forefront of fleet
and vehicle safety technology. Its disruptive solution incorporates
artificial intelligence, machine learning, camera technology,
vision systems and telematics to help fleet operators reduce risks
and drive new safety standards. The business has grown steadily
since launching and now has a number of largescale clients who
offer significant opportunities for further growth. The market fit
and credibility of CameraMatics' offering was evidenced by its
triple digit percentage growth in recurring revenue in 2020 despite
the Covid-19 pandemic limiting the business's ability to drive
on-the-ground sales .
Since investment , business performance has been far greater
than outlined in the initial business plan. Regulation has driven
greater product adoption due to the introduction of the Direct
Vision Standard for commercial vehicles, which was launched in 2019
and measures how much an HGV driver can see directly through their
cab windows . Following its implementation, CameraMatics has seen
an uptick in business.
The business's focus for the rest of the year is to: scale up an
effective sales team ; enhance and grow its marketing function ;
and build on an already robust pipeline of international
opportunities.
2021 2020
Total investment by all funds
managed by Puma Investment
Management Limited GBP2.16m -
--------- -----
Alpha VCT investment participation GBP1.00m -
--------- -----
Alpha VCT Equity Valuation GBP1.00m -
--------- -----
Multiple of Investment Cost 1.00x -
--------- -----
NQOCD Consulting Limited ('Ron Dorff') - Premium
Athleisurewear
Ron Dorff is a well-respected premium bodywear brand, having
been voted one of the best three swimwear brands for men in 2020 by
Vogue Magazine, and one of the top-10 best underwear brands for men
by GQ Magazine. It counts Michael Fassbender, Orlando Bloom and
Alexander Skarsgard, amongst others, as brand ambassadors.
Having launched in 2012, Ron Dorff has five own-brand stores in
London, Paris and Berlin, and a network of over 70 high-end
wholesale partners globally. It has a committed omnichannel sales
approach with its website selling to customers in over 80
countries. Our investment will be used to support the company's
growth strategy and expansion into the US, where e-commerce trends
have indicated significant untapped demand for the product. Ron
Dorff will open a flagship Manhattan store and distribution centre
in September 2021.
Over the period, e-commerce and wholesale sales had significant
uplift on the prior year. This performance was encouraging, given
that independent and wholesale stores in UK, France and Germany
were forced to close for their respective periods of lockdown. To
boost online sales further, the business has invested in new
systems such as website migration to optimise the shopping
experience for customers in all countries.
Post period end, the store in London was able to open in March,
and Paris stores in May. Pleasingly, sales in March were 85% ahead
of the prior year, which compensated for store closures in Berlin
and Paris. The business had continued success, with April
representing its strongest ever sales month driven by e-commerce
performance.
2021 2020
Total investment by all funds
managed by Puma Investment
Management Limited GBP3.59m -
--------- -----
Alpha VCT investment participation GBP1.08m -
--------- -----
Alpha VCT Equity Valuation GBP1.08m -
--------- -----
Multiple of Investment Cost 1.00x -
--------- -----
MyKindaCrowd Limited - Human Resources Technology
MyKindaFuture (MKF) is an award-winning Human Resources
technology company specialising in helping underrepresented talent
to gain employment. Through its Connectr 2.0 platform, MKF provides
large corporates with a comprehensive digital engagement tool to
increase attraction and retention rates amongst potential graduate
hires and apprentices. MKF partners with organisations such as
Deloitte, Cisco, the NHS, Thalys and National Grid to help recruit
young people from a wider range of social backgrounds than
typically delivered by traditional channels.
The Connectr 2.0 platform also incorporates one-to-one digital
mentoring, which is a new feature that is rapidly gaining
commercial traction. It is particularly well suited to the
distanced working practices that are likely to be significantly
more widespread post Covid, as it offers large employers a digital
and scalable solution for career development and mentoring, even in
a remote working world.
Trading through the period remained strong, with particularly
rapid growth in recurring digital revenues. In February 2021, just
prior to the period end, the company launched a pilot program with
the Department for Work and Pensions that trialled the Connectr 2.0
platform in Job Centre Plus locations across London and the
South-East, ahead of a possible nationwide roll-out. This places
Connectr 2.0 at the centre of networks of potential employees, each
of whom is exposed to the platform and is a potential customer.
This trial has already led to client wins and is a hugely exciting
opportunity for the business.
2021 2020
Total investment by all funds
managed by Puma Investment
Management Limited GBP3.70m -
--------- -----
Alpha VCT investment participation GBP0.95m -
--------- -----
Alpha VCT Equity Valuation GBP0.95m -
--------- -----
Multiple of Investment Cost 1.00x -
--------- -----
ABW Group Limited ('Ostmodern') - Digital Product and Design
Technology
Ostmodern has been at the forefront of innovation in digital
product development for over 10 years, creating video platforms for
some of the world's leading media, broadcast and sport brands. For
example, the company worked with Formula One (F1), creating a
world-class streaming service. They led F1's first ever
direct-to-consumer product, delivering live and on-demand race
content, including all drivers' on-board cameras, broadcast to 108
countries. Ostmodern also designed and built Arsenal's new suite of
digital products. The business has also completed other projects
for hayu, the subscription-based video streaming service and All4,
Channel 4's on-demand video streaming service.
The Company's investment will accelerate the growth of
Ostmodern's Skylark Platform. Developed in-house, the unique
platform is the company's CMS, VMS and API for content-first
businesses .
Since investment, Ostmodern has started transitioning processes
and professionalising its structure to focus on separating the
product side of the business, Skylark, from the services side of
the business. Through the Skylark platform, the business seeks to
significantly reduce the setup costs and deployment times it can
offer customers, consequently allowing the platform to be
applicable to a broader target market.
2021 2020
Total investment by all funds
managed by Puma Investment
Management Limited GBP2.00m -
--------- -----
Alpha VCT investment participation GBP0.90m -
--------- -----
Alpha VCT Equity Valuation GBP0.90m -
--------- -----
Multiple of Investment Cost 1.00x -
--------- -----
Investment Strategy
We are pleased to have invested the Company's funds in a diverse
range of businesses. We remain focused on generating strong risk
adjusted returns for the Company. We remain confident that our
portfolio and our diligent, hands-on approach to portfolio
management, mean we are well-positioned to deliver positive returns
to shareholders over time.
Puma Investment Management Limited
30 June 2021
Investment Portfolio Summary
As at 28 February 2021
Valuation
as a % of
Valuation Cost Gain/(loss) Net Assets
GBP'000 GBP'000 GBP'000
Qualifying Investments
ABW Group Limited ('Ostmodern') 900 900 - 9%
Dymag Group Limited 603 603 - 6%
Le Col Holdings Limited 2,405 719 1,686 24%
MyKindaCrowd Limited 950 950 - 9%
MySafeDrive Limited ('CameraMatics') 995 995 - 10%
NQOCD Consulting Limited
('Ron Dorff') 1,079 1,079 - 11%
Tictrac Limited 1,045 600 445 10%
Total Qualifying Investments 7,977 5,846 2,131 79%
---------- -------- ------------ ------------
Total Investments 7,977 5,846 2,131 79%
Balance of Portfolio 2,056 2,056 - 21%
Net Assets 10,033 7,902 2,131 100%
---------- -------- ------------ ------------
Of the investments held at 28 February 2021, all are
incorporated in England and Wales, except MySafeDrive Limited which
was incorporated in Ireland.
Income Statement
For the year ended 28 February 2021
Period from 11 April
Year ended 28 February 2019 to 29 February
2021 2020
Note Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain on investments 7 (b) - 1,953 1,953 - 178 178
- 1,953 1,953 - 178 178
-------- -------- -------- -------- --------
Investment management
fees 2 (33) (99) (132) (2) (6) (8)
Other expenses 3 (180) - (180) (36) - (36)
(213) (99) (312) (38) (6) (44)
-------- -------- -------- -------- --------
Profit/(loss) before
taxation (213) 1,854 1,641 (38) 172 134
Taxation 4 - - - - - -
Profit/(loss) and total
comprehensive income
for the year (213) 1,854 1,641 (38) 172 134
======== ======== ======== ======== ======== ========
Basic and diluted
Return/(loss) per Ordinary
Share (pence) 5 (3.34p) 29.11p 25.77p (1.08p) 4.89p 3.81p
======== ======== ======== ======== ======== ========
All items in the above statement derive from continuing
operations.
There are no gains or losses other than those disclosed in the
Income Statement.
The total column of this statement is the Statement of Total
Comprehensive Income of the Company prepared in accordance with FRS
102 'The Financial Reporting Standard applicable in the UK and
Republic of Ireland'. The supplementary revenue and capital columns
are prepared in accordance with the Statement of Recommended
Practice, 'Financial Statements of Investment Trust Companies and
Venture Capital Trusts' issued by the Association of Investment
Companies.
Balance Sheet
As at 28 February 2021
As at As at
28 February 29 February
Note 2021 2020
GBP'000 GBP'000
Fixed Assets
Investments 7 7,977 1,103
------------- -------------
Current Assets
Debtors 8 29 585
Cash 2,060 2,455
------------- -------------
2,089 3,040
Creditors - amounts falling due
within one year 9 (33) (206)
Net Current Assets 2,056 2,834
------------- -------------
Total Assets less Current Liabilities 10,033 3,937
Net Assets 10,033 3,937
============= =============
Capital and Reserves
Called up share capital 11 86 40
Share premium account 8,172 3,763
Capital reserve - realised (105) (6)
Capital reserve - unrealised 2,131 178
Revenue reserve (251) (38)
Total Equity 10,033 3,937
============= =============
Net Asset Value per Ordinary
Share 12 116.10p 98.27p
============= =============
The financial statements on pages 35 to 49 were approved and
authorised for issue by the Board of Directors on 30 June 2021 and
were signed on their behalf by:
Egmont Kock
Chairman
Statement of Cash Flows
For the year ended 28 February 2021
Period from
11 April
Year ended 2019 to 29
28 February February
2021 2020
GBP'000 GBP'000
Reconciliation of profit after
tax to net cash generated from/(used
in) operating activities
Profit after tax 1,641 134
Gain on investments (1,953) (178)
Increase in debtors (16) (13)
(Decrease)/increase in creditors (10) 43
Net cash generated from/(used in)
operating activities (338) (14)
------------- ------------
Cash flow from investing activities
Purchase of investments (4,921) (925)
Net cash used for investing activities (4,921) (925)
------------- ------------
Cash flow from financing activities
Proceeds received from issue of
ordinary share capital 5,164 3,381
Proceeds from issue of redeemable
preference shares - 13
Redemption of preference shares (13) -
Expense paid for issue of share
capital (287) -
Net cash generated from financing
activities 4,864 3,394
------------- ------------
Net (decrease)/increase in cash
and cash equivalents (395) 2,455
Cash and cash equivalents at the
beginning of the period 2,455 -
Cash and cash equivalents at the
end of the period 2,060 2,455
============= ============
Statement of Changes in Equity
For the year ended 28 February 2021
Called Share Capital Capital
up share premium reserve reserve Revenue
capital account - realised - unrealised reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 11 April
2019 - - - - - -
Shares issues in the
period 40 3,966 - - - 4,006
Expenses of share
issues - (203) - - - (203)
Total comprehensive
income for the period - - (6) 178 (38) 134
Balance as at 29 February
2020 40 3,763 (6) 178 (38) 3,937
Shares issues in the
year 46 4,694 - - - 4,740
Expenses of share
issues - (285) - - - (285)
Total comprehensive
income for the year - - (99) 1,953 (213) 1,641
Balance as at 28 February
2021 86 8,172 (105) 2,131 (251) 10,033
========== ========= ============ ============== ========= ========
Distributable reserves comprise: Capital reserve-realised,
Capital reserve-unrealised (excluding gains on unquoted
investments) and the Revenue reserve. At the year end,
distributable reserves were nil (2020: nil).
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.
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. After making
enquiries, including consideration of the impact of COVID-19 on the
Company's current financial position and expected cash flows for
the period of the review, the Directors believe that it is
appropriate to continue to apply the going concern basis in
preparing the financial statements. This is appropriate as the
Company has adequate cash reserves to meet its running costs .
Investments
All investments are measured at fair value. They are all held as
part of the Company's investment portfolio and are managed in
accordance with the investment policy set out on page 16.
Listed investments are stated at bid price at the reporting
date.
Unquoted investments are stated at fair value by the Directors
with reference to the International Private Equity and Venture
Capital Valuation Guidelines ("IPEV") as follows:
-- Investments which have been made within the last twelve
months or where the investee company is in the early stage of
development will usually be valued at either the price of recent
investment or cost except where the company's performance against
plan is significantly different from expectations on which the
investment was made, in which case a different valuation
methodology will be adopted.
-- Investments in debt instruments will usually be valued by
applying a discounted cash flow methodology based on expected
future returns of the investment.
-- Alternative methods of valuation such as multiples or net
asset value may be applied in specific circumstances if considered
more appropriate.
Realised surpluses or deficits on the disposal of investments
are taken to realised capital reserves, and unrealised surpluses
and deficits on the revaluation of investments are taken to
unrealised capital reserves.
Income
Dividends receivable on listed equity shares are brought into
account on the ex-dividend date. Dividends receivable on unquoted
equity shares are brought into account when the Company's right to
receive payment is established and there is no reasonable doubt
that payment will be received. Interest receivable is recognised
wholly as a revenue item on an accruals basis.
Performance fees
Upon its inception, the Company agreed performance fees payable
to the Investment Manager, Puma Investment Management Limited, and
members of the investment management team at 20% of the 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 charged to capital; and
-- the investment management fee, 75% of which has been charged
to capital to reflect an element which is, in the directors'
opinion, attributable to the maintenance or enhancement of the
value of the Company's investments in accordance with the Board's
expected long-term split of return; and
-- the performance fee which is allocated proportionally to
revenue and capital based on the respective contributions to the
Net Asset Value.
Taxation
Corporation tax is applied to profits chargeable to corporation
tax, if any, at the applicable rate for the year. The tax effect of
different items of income/gain and expenditure/loss is allocated
between capital and revenue return on the marginal basis as
recommended by the SORP.
Deferred tax is recognised in respect of all timing differences
that have originated but not reversed at the balance sheet date,
where transactions or events that result in an obligation to pay
more, or right to pay less, tax in the future have occurred at the
balance sheet date. This is subject to deferred tax assets only
being recognised if it is considered more likely than not that
there will be suitable taxable profits from which the future
reversal of the underlying timing differences can be deducted.
Timing differences are differences arising between the Company's
taxable profits and its results as stated in the financial
statements which are capable of reversal in one or more subsequent
periods. Deferred tax is measured on a non-discounted basis at the
tax rates that are expected to apply in the periods in which timing
differences are expected to reverse, based on tax rates and laws
enacted or substantively enacted at the balance sheet date.
Reserves
Realised losses and gains on investments, transaction costs, the
capital element of the investment management fee and taxation are
taken through the Income Statement and recognised in the Capital
Reserve - Realised on the Balance sheet. Unrealised losses and
gains on investments and the capital element of the performance fee
are also taken through the Income Statement and are recognised in
the Capital Reserve - Unrealised.
Debtors
Debtors include other debtors and accrued income which is
recognised at amortised cost, equivalent to the fair value of the
expected balance receivable.
Creditors
Creditors are initially measured at the transaction price and
subsequently measured at amortised cost, being the transaction
price less any amounts settled.
Dividends
Final dividends payable are recognised as distributions in the
financial statements when the Company's liability to make payment
has been established. The liability is established when the
dividends proposed by the Board are approved by the Shareholders.
Interim dividends are recognised when paid.
Key accounting estimates and assumptions
The Company makes estimates and assumptions concerning the
future. The resulting accounting estimates and assumptions will, by
definition, seldom equal the related actual results. The estimates
and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets within the next
financial year relate to the fair value of unquoted investments,
especially due to the ongoing impact of COVID-19. Further details
of the unquoted investments are disclosed in the Investment
Manager's Report on pages 4 to 9 and notes 7 and 13 to the
financial statements.
2. Investment Management Fees
Period from 11 April
Year ended 28 February 2019 to 29 February
2021 2020
GBP'000 GBP'000
Puma Investments fees 132 8
132 8
======================= =====================
Puma Investment Management Limited ("Puma Investments") has been
appointed as the Investment Manager of the Company for an initial
period of five years, which can be terminated by not less than
twelve months' notice, given at any time by either party, on or
after the fifth anniversary. The Board is satisfied with the
performance of the Investment Manager. Under the terms of this
agreement Puma Investments will be paid an annual fee of 2% of the
Net Asset Value payable quarterly in arrears calculated on the
relevant quarter end NAV of the Company. These fees commenced on 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
(2020: 1.1%).
In addition to the investment manager fees disclosed above,
during the year ended 28 February 2021, Puma Investments Management
Limited charged fees totalling GBP142,197 (2020: GBP120,194) in
relation to share issue costs. The fees were to cover the costs of
launching the VCT.
3. Other expenses
Period from 11 April
Year ended 28 February 2019 to 29 February
2021 2020
GBP'000 GBP'000
Administration - Puma
Investments 23 2
Directors' Remuneration 60 8
Social security costs 3 1
Auditor's remuneration
for statutory audit 29 18
Insurance 5 2
Legal and professional
fees 8 5
Other expenses 52 -
180 36
======================= =====================
Puma Investment 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.
Remuneration for each Director for the year is disclosed in the
Directors' Remuneration Report on page 23. The Company had no
employees (other than Directors) during the year (2020: none). The
average number of non-executive Directors during the year was 3
(2020: 3).
The Auditor's remuneration of GBP24,000 (2020: GBP15,000) has
been grossed up in the table above to be inclusive of VAT. No
non-audit fees were charged in the year (2020: GBPnil).
4. Taxation
Period from
Year ended 11 April 2019
28 February to 29 February
2021 2020
GBP'000 GBP'000
UK corporation tax charge
for the year - -
============= ================
Factors affecting tax charge
for the year
Profit before taxation 1,641 134
============= ================
Tax charge calculated on
profit before taxation at
the applicable rate of 19% 312 25
Gains on investments (372) (32)
Tax losses carried forward 60 7
- -
============= ================
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.
5. Basic and diluted return/(loss) per Ordinary Share
Year ended 28 February 2021
Revenue Capital Total
Total comprehensive income
for the year (GBP'000) (213) 1,854 1,641
Weighted average number
of shares 6,368,652 6,368,652 6,368,652
----------- ----------- ----------
Return/(loss) per share (3.34)p 29.11p 25.77p
Period from 11 April 2019 to 29
February 2020
Revenue Capital Total
Total comprehensive income
for the period (GBP'000) (38) 172 134
Weighted average number
of shares 497,489 497,489 497,489
----------- ----------- ----------
Return/(loss) per share (7.63)p 34.57p 26.94p
6. Dividends
The Directors will not propose a resolution at the Annual
General Meeting to pay a final dividend (2020: nil) .
7. Investments
Qualifying
(a) Movements in investments investments Total
GBP'000 GBP'000
Book cost at 29 February
2020 925 925
Net unrealised gain at
29 February 2020 178 178
Valuation at 29 February
2020 1,103 1,103
Purchases at cost 4,921 4,921
Net unrealised gain 1,953 1,953
Valuation at 28 February
2021 7,977 7,977
============= ============
Book cost at 28 February
2021 5,846 5,846
Unrealised gains at 28
February 2021 2,131 2,131
Valuation at 28 February
2021 7,977 7,977
============= ============
(b) Gains/(losses) on
investments
Period from
11 April
Year ended 2019 to 29
28 February February
2021 2020
GBP'000 GBP'000
Unrealised gains in period 1,953 178
1,953 178
============= ============
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 29 February 2020 and 28
February 2021 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, Investment Portfolio Summary and
Significant Investments on pages 1 to 14 of the Annual Report.
8 . Debtors
As at 28 February As at 29 February
2021 2020
GBP'000 GBP'000
Other debtors - 545
Prepayments 29 40
29 585
================== ==================
Other debtors in 2020 included cash held by the company share
registrar of GBP530,000.
9. Creditors - amounts falling due within one year
As at 28 February As at 29 February
2021 2020
GBP'000 GBP'000
Accruals 29 43
Other creditors 4 150
Redeemable preference
shares - 13
33 206
================== ==================
10. 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 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.
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.
The profit and loss expense for the year in relation to this
Agreement is GBPnil (2020: GBPnil).
11. Called Up Share Capital
As at 28 As at 29 As at 28 As at 29
February February February February
2021 2020 2021 2020
GBP'000 GBP'000
Allotted, called up and
fully paid:
Ordinary shares of GBP0.01
each 8,641,327 4,006,472 86 40
========== ========== ========== ==========
Allotted, called up and
partly paid:
Redeemable preference
shares of GBP1 each - 50,000 - 13
========== ========== ========== ==========
The Company was incorporated on 11 April 2019 with 2 Ordinary
shares issued at par and on 25 June 2019, 50,000 GBP1 redeemable
preference shares were issued as one quarter paid up for cash
consideration of GBP12,500. These were fully redeemed by the
company on 30 June 2020.
During the year, 4,634,855 shares were issued at an average
price of 102.3p per share (2020: 4,006,470 shares were issued at a
price of 100p per share). The consideration received for these
shares was GBP4.7 million (2020: GBP4 million).
Following the year end, a further 3,481,495 shares were issued
at an average price of 107.6p. The consideration received for these
shares was GBP3.7 million.
12. Net Asset Value per Ordinary Share
As at As at
28 February 29 February
2021 2020
Net assets GBP10,033,000 GBP3,937,000
-------------- -------------
Number of shares in issue
for purposes of Net
Asset Value per share calculation 8,641,327 4,006,472
-------------- -------------
Net asset value per share 116.10p 98.27p
13. 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:
As at 28 February As at 29 February
2021 2020
GBP'000 GBP'000
Financial assets at fair
value through profit or
loss 7,977 1,103
Financial assets measured
at amortised cost - 545
Financial liabilities measured
at amortised cost (33) (206)
7,944 1,442
================== ==================
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 29 February
2021 2020
GBP'000 GBP'000
Cash at bank and in hand 2,060 2,455
Other receivables 29 585
2,089 3,040
------------------ ------------------
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.
Market price risk
Market price risk arises mainly from uncertainty about future
prices of financial instruments held by the Company. It represents
the potential loss the Company might suffer through holding
investments in the face of price movements. The Investment Manager
actively monitors market prices and reports to the Board, which
meets regularly in order to consider investment strategy.
The Company's strategy on the management of market price risk is
driven by the Company's investment policy as outlined in the
Strategic Report on page 16. The management of market price risk is
part of the investment management process. The portfolio is managed
with an awareness of the effects of adverse price movements through
detailed and continuing analysis, with an objective of maximising
overall returns to shareholders.
Holdings in unquoted investments may pose higher price risk than
quoted investments. Some of that risk can be mitigated by close
involvement with the management of the investee companies along
with review of their trading results.
All of the Company's investments are unquoted investments.
Liquidity risk
Details of the Company's unquoted investments are provided in
the Investment Portfolio summary on page 10. 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
0.1% at 28 February 2021 (2020: 0.75%).
Cash flow interest rate risk
The Company has exposure to interest rate movements primarily
through its cash deposits which track either the Bank of England
base rate or LIBOR.
Interest rate risk profile of financial assets
The Company's only asset at 29 February 2020 that earning
interest was cash at bank of GBP2,455,000, which was accruing
interest at 0.25% p.a.. The cash at bank at 28 February 2021 of
GBP2,060,000 is in a non-interest bearing bank account.
Foreign currency risk
The reporting currency of the Company is Sterling. The Company
has not held any non-Sterling investments during the year.
Fair value hierarchy
Financial assets and liabilities measured at fair value are
disclosed using a fair value hierarchy that reflects the
significance of the inputs used in making the fair value
measurements, as follows:-
-- Level 1 - Fair value is measured using the unadjusted quoted
price in an active market for identical assets.
-- Level 2 - Fair value is measured using inputs other than
quoted prices that are observable using market data.
-- Level 3 - Fair value is measured using unobservable inputs.
Fair values have been measured at the end of the reporting
period as follows:-
As at 28 February As at 29 February
2021 2020
GBP'000 GBP'000
Level 3
Unquoted investments 7,977 1,103
7,977 1,103
------------------ ------------------
The Level 3 investments have been valued in line with the
Company's accounting policies and IPEV guidelines. Further details
of these investments are provided in the Significant Investments
section of the Annual Report on pages 11 to 14.
14. 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.
15. Contingencies, Guarantees and Financial Commitments
There were no commitments, contingencies or guarantees of the
Company at the year-end (2020: none).
16. Controlling Party
In the opinion of the Directors there is no immediate or
ultimate controlling party.
17. Post Balance Sheet Events
As detailed in note 11, since the year end 3,481,495 ordinary
shares have been issued for cash consideration of GBP3.7
million.
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 2021, but has been extracted from the statutory
financial statements for the year ended 28 February 2021 which were
approved by the Board of Directors on 30 June 2021 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 period ended 29 February 2020
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 2021 will be available to the public at
the registered office of the Company at Cassini House, 57 St
James's Street, London, SW1A 1LD and will be available for download
from www.pumainvestments.co.uk.
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END
FR URUVRAVUNOAR
(END) Dow Jones Newswires
June 30, 2021 11:27 ET (15:27 GMT)
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