TIDMPU12

RNS Number : 7252U

Puma VCT 12 PLC

26 November 2019

Puma VCT 12 plc

Interim Report

For the period ended 31 August 2019

Officers and Professional Advisers

 
 Directors                             Auditor 
 Raymond Pierce (Chairman)             RSM UK Audit LLP 
  David Brock                           Chartered Accountants 
  Graham Shore                          25 Farringdon Street 
                                        London EC4A 4AB 
 Secretary 
  Eliot Kaye                             Sponsors and Solicitors 
                                         Howard Kennedy 
  Registered Number                      No 1 London Bridge 
  09758309                               London SE1 9BG 
 Registered Office                     Bankers 
  Cassini House                         The Royal Bank of Scotland plc 
  57 St James's Street                  London City Office 
  London                                PO Box 412 
  SW1A 1LD                              62-63 Threadneedle Street 
                                        London 
  Investment Manager                    EC2R 8LA 
  Puma Investment Management Limited 
  Cassini House                         VCT Tax Advisor 
  57 St James's Street                  PricewaterhouseCoopers LLP 
  London                                1 Embankment Place 
  SW1A 1LD                              London WC2N 6RH 
 
  Administrator                         Custodian 
  PI Administration Services Limited    Pershing Securities Limited 
  Cassini House                         1 Canada Square 
  57 St James's Street                  London 
  London                                E14 5AL 
  SW1A 1LD 
 
 Registrar 
  SLC Registrars 
  Elder House 
  St. Georges Business Park 
  Brooklands Road 
  Weybridge 
  Surrey 
  KT13 0TS 
 
 
 

Chairman's Statement

Highlights

   --    Funds substantially invested in a diverse range of businesses and projects 
   --    HMRC requirement that qualifying investments are 80% of the fund is now met 
   --    1p per share dividend paid during the period 

Chairman's Statement

Introduction

The Company has deployed its funds in a diverse range of both qualifying and non-qualifying investments and continues to meet its minimum qualifying investment percentage of 80 per cent. We remain focused on generating returns for the Company from both the qualifying and non-qualifying portfolios as the fund enters into its fourth year.

Investments

Qualifying Investments

Pure Cremation - Crematorium and Direct Cremations

The Company's GBP4 million investment in Pure Cremation Holdings Limited (as part of a GBP7.35 million qualifying investment alongside another Puma VCT) continues to perform. Pure Cremation is a leading provider of direct cremations, meeting the needs of a growing number of people in the United Kingdom who want a respectful cremation arranged without any funeral, leaving them free to say farewell how, where and when is right for them. The business' new purpose-built site near Andover opened during the period, reducing operating costs and opening up new revenue streams. The business is performing, delivering strong revenue growth across all of its sales channels.

NRG Gym - Budget Gyms

The Company has invested GBP1.4 million in SA Holdings Limited (trading as NRG Gyms through its subsidiary, NRG GYM Limited) as part of a GBP5.0 million investment alongside other Puma funds. NRG offer low price gyms aimed at price sensitive millennials with a keen interest in sports and fitness. At the point of investment, the business was operating two units, one freehold unit in Gravesend and a second, leased, unit in Watford. The funds raised were to expand to further units, together with continued evolution of the brand and offering, and enhancement of the two original sites. During the period the business continued to deliver profitable trade from its original two units and opened a new unit in Walsall, Birmingham. This site has opened strongly with an above target number of members. Post period end the business entered into Heads of Terms for a new site in Lewisham, South London, and has other well-advanced pipeline sites beyond that.

Growing Fingers - Children's Nursery

As previously reported, the Company has invested GBP420,000 (as part of a GBP2.8 million investment alongside other Puma VCTs) in Growing Fingers Limited. The investment is funding the construction and launch of a new purpose-built 108 place nursery school in Wendover, Buckinghamshire, an affluent commuter town with direct links to London. The Company benefits from first charge security over the Wendover site and the Growing Fingers business. The directors of Growing Fingers expect the nursery to open in the summer of 2020.

Sweat Union - Budget Gyms

Since going into administration, the administrator has informed the board that it will shortly be in a position to issue a notice of intended dividend to creditors. A distribution to creditors is expected in February 2020.

Applebarn Nurseries - Children's Nursery

The Company had previously invested GBP1.1 million in Applebarn Nurseries Limited (as part of a GBP2.2 million qualifying investment alongside another Puma VCT). The management team include a successful operator of nurseries, together with an experienced developer and contractor. The team's first site, a custom-built 120 place children's day nursery in Altrincham, South Manchester opened in September 2018 and is now ramping up as occupancy builds.

Knott End - Pubs with Microbreweries

As previously reported, the Company has invested just over GBP4 million (as part of a GBP7.3 million qualifying investment alongside another Puma VCT) in Knott End Pub Company Limited which has entered into a franchise agreement with Brewhouse & Kitchen Limited to roll out a portfolio of pubs offering on-site craft micro-brewing activities and good quality food. Knott End currently owns and operates two pub assets in Horsham and Milton Keynes; the Horsham asset has been trading in line with expectations but the pub in Milton Keynes has been disappointing. Management remain focused on improving performance at this site.

Kid and Play - Children's Nursery

In October 2017, the Company made a GBP1.7 million qualifying investment in Kid & Play Limited, alongside funds invested by another Puma VCT totalling GBP3.4 million. Kid & Play is seeking to develop, own and operate a new children's day nursery and has identified a number of potential sites which are currently in various stages of planning applications. We are pleased to report that during the period Kid & Play acquired a site in Bedford on which it is now developing a 110 place children's day nursery which is expected to open in Spring 2020. Moreover, shortly following the period end, Kid & Play commenced trading by entering into a contract to provide services in relation to early childhood study tours, revenue from which will assist in running costs pending opening of the nursery.

Sunlight Education Nucleus - Special Educational Needs Schools

In November 2017, the Company made a GBP2.35 million qualifying investment (as part of a GBP4.7 million investment alongside other Puma VCTs) in Sunlight Education Nucleus Limited, a company seeking to develop, own and operate a series of special education needs schools across the United Kingdom. We are pleased to report that, shortly following the period end, the team at Sunlight opened their first school in Stafford, West Midlands and are now working on the development of a second site in Crewe.

South West Cliffe - Children's Nursery

As previously reported, the Company has invested GBP2.1 million (as part of a GBP4.2 million qualifying investment alongside another Puma VCT) in South-West Cliffe Limited, supporting an experienced management team to roll out a portfolio of purpose-built day nurseries. Despite best efforts, the management team have been unable to agree terms on a site and therefore, shortly after the period end, took the decision to place South-West Cliffe Limited into a solvent members' liquidation. We expect the Company to receive in the region of 97p in the pound invested but this will be confirmed following completion of the liquidation.

Signal Building Services - Construction projects

The Company has invested GBP200,000 (as part of a total investment round of GBP2 million) into Signal Building Services Limited, a business specialising in delivering turnkey solutions to construction projects led by a management team with over 40 years' of combined experience in the construction sector. Signal Building Services is currently working on the construction of a 14-apartment supported living scheme in Sutton-in-Ashfield. Signal Building Services has also recently been working on the construction of a 22-apartment supported living scheme in Wigan which, we are pleased to report, completed successfully shortly after the period end, generating attractive returns for Signal Building Services which will benefit the Company when its investment is repaid in due course.

Non-Qualifying Investments

As previously reported, the Company had initially invested just over GBP20 million in a series of lending businesses offering an appropriate risk adjusted return in the short to medium term. As intended, most of these positions have been liquidated as the Company has made qualifying investments. Details of these lending businesses' loans are set out below.

Mixed Residential Commercial Development, Bloomsbury

As previously reported, a GBP3.9 million loan (as part of a total facility of GBP17.97 million) was advanced to Cudworth Limited (through affiliates, Victoria Lending Limited, Tottenham Lending Limited and Marble Lending 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 loan is secured with a first charge over the site. The development includes 11 apartments, 2 houses and 11,800 square feet of B1 commercial space and is expecting to reach practical completion by the end of the year. We are pleased to report that contracts have been exchanged to sell the commercial units, both houses and seven of the 11 flats and we expect these sales to complete within a short period following practical completion.

Construction of Airport Hotel, Edinburgh

In June 2017, GBP1.6 million of loans (as part of an overall facility of GBP16 million) were advanced to Ability Hotels (Edinburgh) Limited (through affiliates, Piccadilly Lending Limited and Tottenham Lending Limited) to fund the development of a new 240-room Hampton by Hilton hotel at Edinburgh Airport. We are pleased to report that the hotel opened last year and that the loans were repaid in full during the period.

Dividends

As previously reported, the Company paid a dividend of 1p per ordinary share shortly after the period end taking dividends paid to date to 3p per ordinary share. Reflecting this recent pay-out, your Board is not proposing a further dividend at this interim stage.

Results and Net Asset Value ("NAV")

The NAV per share at the period end was 83.30p (86.30p after adding back the dividends paid to date), reflecting the provision against the investment in Sweat. The Company made a small loss of GBP132,000 in the period (representing a 0.43p per share post-tax loss).

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

Growth in the UK economy has slowed and conditions for retail businesses (to which we have some exposure) in particular continue to be difficult. The economic outlook continues to be dominated by political uncertainty. 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.

Outlook

We remain focused on generating strong returns for the Company from both the qualifying and non-qualifying portfolios, which contain some dynamic companies.

Whilst there may be some further changes in the composition of the portfolio, the Board expects to concentrate in the future on the monitoring of our existing investments and considering the options for exits in due course.

Ray Pierce

Chairman

25 November 2019

Income Statement (unaudited)

For the period ended 31 August 2019

 
                                    Period ended                  Period ended                    Year ended 
                                    31 August 2019                31 August 2018                28 February 2019 
                      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 
 Gains on 
  investments                      -      (71)      (71)         -         -         -         -    (3,350)    (3,350) 
 Income                          330         -       330       603         -       603       909          -        909 
 
                                 330      (71)       259       603         -       603       909    (3,350)    (2,441) 
                            --------  --------            --------  --------            --------  ---------  --------- 
 
 Investment 
  management 
  fees                 4        (63)     (190)     (253)      (75)     (225)     (300)     (148)      (443)      (591) 
 Other expenses                (138)         -     (138)     (165)         -     (165)     (248)          -      (248) 
 
                               (201)     (190)     (391)     (240)     (225)     (465)     (396)      (443)      (839) 
                            --------  --------            --------  --------            --------  ---------  --------- 
 
 Return/(loss) 
  on ordinary 
  activities 
  before taxation                129     (261)     (132)       363     (225)       138       513    (3,793)    (3,280) 
 Tax on return 
  on ordinary 
  activities                    (25)        25         -      (12)         -      (12)      (97)         97          - 
 
 Return/(loss) 
  on ordinary 
  activities 
  after tax 
  attributable 
  to equity 
  shareholders                   104     (236)     (132)       351     (225)       126       416    (3,696)    (3,280) 
                            ========  ========  ========  ========  ========  ========  ========  =========  ========= 
 
 Basic and 
  diluted 
 Return/(loss) 
  per Ordinary 
  Share (pence)        2       0.34p   (0.77p)   (0.43p)     1.14p   (0.73p)     0.41p     1.35p   (11.96p)   (10.61p) 
                            ========  ========  ========  ========  ========  ========  ========  =========  ========= 
 

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 2019

 
                                             As at        As at          As at 
                                         31 August    31 August    28 February 
                                 Note         2019         2018           2019 
                                           GBP'000      GBP'000        GBP'000 
 Fixed Assets 
 Investments                      6         23,198       27,021         23,527 
                                       -----------  -----------  ------------- 
 
 Current Assets 
 Prepayments                                 2,672        2,102          2,413 
 Cash                                           22          373            107 
                                       -----------  -----------  ------------- 
                                             2,694        2,475          2,520 
 Creditors - amounts falling 
  due within one year                        (146)        (209)          (166) 
 
 Net Current Assets                          2,548        2,266          2,354 
                                       -----------  -----------  ------------- 
 
 
 Net Assets                                 25,746       29,287         25,881 
                                       ===========  ===========  ============= 
 
 Capital and Reserves 
 Called up share capital                        19           19             19 
 Share premium account                      29,833       29,833         29,833 
 Capital reserve - realised                (1,215)        (929)        (1,050) 
 Capital reserve - unrealised              (3,421)            -        (3,350) 
 Revenue reserve                               530          364            429 
 
 Equity Shareholders' Funds                 25,746       29,287         25,881 
                                       ===========  ===========  ============= 
 
 
 Net Asset Value per Ordinary 
  Share                           3         83.30p       94.75p         83.73p 
                                       ===========  ===========  ============= 
 
 Diluted Net Asset Value per 
  Ordinary Share                  3         83.30p       94.75p         83.73p 
                                       ===========  ===========  ============= 
 

Cash Flow Statement (unaudited)

For the period ended 31 August 2019

 
                                        Period ended   Period ended     Year ended 
                                           31 August      31 August    28 February 
                                                2019           2018           2019 
                                             GBP'000        GBP'000        GBP'000 
 
 Operating activities 
 Profit on ordinary activities 
  after tax                                    (132)            126        (3,280) 
 Losses on investments                            71              -          3,350 
 Increase in debtors                           (262)          (601)          (912) 
 Increase/(decrease) in creditors               (20)             42            (1) 
 
 Net cash used in operating 
  activities                                   (343)          (433)          (843) 
                                       -------------  -------------  ------------- 
 
 Cash flow from investing activities 
 Purchase of investments                        (71)        (1,417)        (4,823) 
 Proceeds from disposal of 
  investments                                    329          2,368          5,918 
 
 Net cash generating from investing 
  activities                                     258            951          1,095 
                                       -------------  -------------  ------------- 
 
 Cash flow from financing activities 
 Dividends paid                                    -          (618)          (618) 
 
 Net cash used from financing 
  activities                                       -          (618)          (618) 
                                       -------------  -------------  ------------- 
 
 Decrease in cash                               (85)          (100)          (366) 
 Net cash at start of the period                 107            473            473 
 
 Net funds at the period end                      22            373            107 
                                       =============  =============  ============= 
 

Statement of Changes in Equity (unaudited)

For the period ended 31 August 2019

 
                           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 1 
  March 2018                   19     29,833         (704)               -        631    29,779 
 Total recognised 
  (losses)/gains for 
  the period                    -          -         (225)               -        351       126 
 Dividends paid                 -          -             -               -      (618)     (618) 
 
 Balance as at 31 
  August 2018                  19     29,833         (929)               -        364    29,287 
 
 Total recognised 
  (losses)/gains for 
  the period                    -          -         (121)         (3,350)         65   (3,406) 
 
 Balance as at 28 
  February 2019                19     29,833       (1,050)         (3,350)        429    25,881 
 
 Dividends paid                 -          -             -               -          -         - 
 Total recognised 
  (losses)/gains for 
  the period                    -          -         (165)            (71)        101     (135) 
 
 Balance as at 31 
  August 2019                  19     29,833       (1,215)         (3,421)        530    25,746 
                       ==========  =========  ============  ==============  =========  ======== 
 

Notes to the Interim Report

For the period ended 31 August 2019

   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 loss per share of 0.43p is based on the loss for the period of GBP132,000 and the weighted average number of shares in issue as at 31 August 2019 of 30,909,188 calculated from the date of the first receipt of proceeds from the issue of ordinary share capital.

   3.             Net asset value per share 
 
                                   As at        As at          As at 
                               31 August    31 August    28 February 
                                    2019         2018           2019 
 Net assets                   25,746,000   29,287,000     25,881,000 
 Shares in issue              30,909,188   30,909,188     30,909,188 
 
 Net asset value per share 
 Basic                           83.30p*       94.75p         83.73p 
 Diluted                         83.30p*       94.75p         83.73p 
 

*This is net of 2p of dividends paid to date. A further 1p dividend was paid in September 2019.

   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 2019 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 2019

   6.             Investment portfolio summary 
 
                                                                          Valuation 
                                                                          as a % of 
                                    Valuation      Cost   Gain/(loss)    Net Assets 
 As at 31 August 2019                 GBP'000   GBP'000       GBP'000 
 
 Qualifying Investments 
 Growing Fingers Limited                  420       420             -            2% 
 Kid & Play Limited                     1,694     1,694             -            7% 
 South-West Cliffe Limited              2,100     2,100             -            8% 
 Signal Building Services 
  Limited                                 200       200             -            1% 
 Applebarn Nurseries 
  Limited                               1,833     1,833             -            7% 
 Knott End Pub Company 
  Limited                               4,053     4,053             -           15% 
 Sunlight Education Nucleus 
  Limited                               2,350     2,350             -            9% 
 Sweat Union Limited                        -     3,421       (3,421)            0% 
 Pure Cremation Holdings 
  Limited                               4,053     4,053             -           15% 
 SA Fitness Holdings 
  Limited                               1,417     1,417             -            6% 
 
 Total Qualifying Investments(1)       18,120    21,541       (3,421)           70% 
                                   ----------  --------  ------------  ------------ 
 
 Non-Qualifying Investments 
 Piccadilly Lending Limited               911       911             -            4% 
 Victoria Lending Limited               1,617     1,617             -            6% 
 Tottenham Lending Limited                700       700             -            3% 
 Marble Lending Limited                 1,850     1,850             -            7% 
 
 Total Non-Qualifying 
  Investments(1)                        5,078     5,078             -           20% 
                                   ----------  --------  ------------  ------------ 
 
 Total Investments(1)                  23,198    26,619             -           90% 
 Balance of Portfolio                   2,548     2,548             -           10% 
 
 Net Assets                            25,746    29,167             -          100% 
                                   ----------  --------  ------------  ------------ 
 

Of the investments held at 31 August 2019, 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 news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

IR UNSURKBAAUAA

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November 26, 2019 07:52 ET (12:52 GMT)

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