TIDMPU11
RNS Number : 8892U
Puma VCT 11 PLC
27 November 2019
Puma VCT 11 plc
Interim Report
For the period ended 31 August 2019
Officers and Professional Advisers
Directors Auditor
Harold Paisner (Chairman) RSM UK Audit LLP
Maurice Shear Chartered Accountants
Graham Shore 25 Farringdon Street
London EC4A 4AB
Secretary
Eliot Kaye Sponsors and Solicitors
Howard Kennedy
Registered Number No 1 London Bridge
09197956 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 EC2R 8LA
Investment Manager
Puma Investment Management Limited VCT Tax Advisor
Cassini House PricewaterhouseCoopers LLP
57 St James's Street 1 Embankment Place
London London WC2N 6RH das
SW1A 1LD
Registrar Administrator
SLC Registrars PI Administration Services Limited
Elder House Cassini House
St. Georges Business Park 57 St James's Street
Brooklands Road London
Weybridge SW1A 1LD
Surrey
KT13 0TS Custodian
Pershing Securities Limited
1 Canada Square
London
E14 5AL
Chairman's Statement
Highlights
-- Fund substantially invested in a diverse range of businesses and projects.
-- 10p per share of dividends paid since inception.
-- NAV of 92.62p at the half year (adding back dividends paid to date).
Chairman's Statement
Introduction
As your Company enters into the final year of its expected
five-year life, I can report that your funds are substantially
deployed in both qualifying and non-qualifying investments. The
Company continues to meet its minimum qualifying investment
percentage of 80 per cent and we remain focused on generating
returns for the Company from both the qualifying and non-qualifying
portfolio.
Investments
Qualifying Investments
Having met and maintained its minimum qualifying investment
percentage, and in light of its remaining planned life, the Company
has not made any new qualifying investments during the period. We
report as follows on its current portfolio of qualifying
investments.
Pure Cremation - Crematorium and Direct Cremations
In November 2017, the Company invested GBP2 million in Pure
Cremation Holdings Limited (as part of a GBP5 million qualifying
investment alongside another Puma VCT). 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.
Growing Fingers - Children's Nursery
As previously reported, the Company has invested GBP0.98 million
(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.
Welcome Health - Chain of Pharmacies
The Company had previously invested GBP2.5 million (as part of a
GBP5 million investment alongside other Puma VCTs) in Welcome
Health Limited. Welcome Health owns and operates a series of mature
pharmacies across the North East of England, focusing on providing
pharmaceutical services to a currently underserviced and relatively
deprived market. We are pleased to report that, during the period,
the entrepreneur behind Welcome Health has refinanced the group
which should facilitate the redemption of the Company's investment
in the coming months.
Mini Rainbows - Children's Nurseries
Mini Rainbows Limited (in which the Company invested GBP2.5
million as part of a GBP5 million investment alongside other Puma
VCTs) owns and operates two mature children's day nurseries in
Scotland - in Murrayfield, an affluent part of Edinburgh, and in
Shawlands, Glasgow. Both sites are performing well and contributing
material EBITDA.
Warm Hearth - Pubs with Microbreweries
As noted in the Company's annual report and accounts, your Board
decided to provide against the carrying value of the Company's
investment in Warm Hearth Limited, a pub business seeking to
capitalise on the strong growth trends within the craft beer
sub-market. In late 2015, the Company invested GBP2.5 million (as
part of a GBP5 million investment alongside other Puma VCTs) in
Warm Hearth which entered into a franchise agreement with Brewhouse
& Kitchen Limited ("B&K"). B&K is a national branded
operator, offering craft micro-brewing activities within each of
its pub units as a point of focus. Warm Hearth currently owns and
operates two substantial freehold pub assets, in Chester and
Wilmslow. Performance has been significantly below our expectations
for some time. Management remain focused on improving performance,
as well as looking at planning options, particularly at Chester
where they plan to convert the upper levels of the building into
boutique hotel rooms. Such rooms have the potential to add
significant value (both from a property and a trading perspective)
as the marginal cost of operating the rooms is low, allowing a
significant portion of the room revenue to flow to the bottom line.
Your Board are pleased to report that post period end planning was
granted for these conversion works and the development of 17
letting rooms.
Signal Building Services - Construction Projects
In September 2017, the Company invested GBP1 million (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.
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 Pub Company - Pubs with Microbreweries
During the previous year, the Company invested GBP2.4 million
(as part of a GBP4.8 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 both sites.
Kid & 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 GBP1.35 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 educational 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.
Non-Qualifying Investments
Mixed Residential Commercial Development, Bloomsbury
As previously reported, a GBP1.2 million loan (as part of a
total facility of GBP17.97 million) was advanced to Cudworth
Limited (through the VCT's affiliate Mayfield 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.
Supported Living, Northumberland
In June 2018 the Company committed loans (through affiliates,
Mayfield Lending Limited and Latimer Lending Limited) of GBP1.46
million to Homelife Developments Hexham Ltd. The developer is
constructing a 9-apartment supported living scheme in
Northumberland which is expected to be completed by the end of
2019.
Care Home for the Elderly, Formby
The GBP800,000 loan to New Care (Sefton) Limited in connection
with the development and initial trading of a 75-bed purpose-built
care home in Formby, Merseyside, continues to perform in line with
expectations. The New Care Group is an experienced developer and
operator of care homes. The loan (through an affiliate, Sloane
Lending Limited) is part of an overall facility of GBP7.98 million
and is secured with a first charge over the site. We are pleased to
report that the loan was repaid in full during the period.
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, Meadow Lending Limited and
Palmer 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.
Care Home for the Elderly, Egham
As previously reported, a loan of GBP1,208,000 had been advanced
(through an affiliate, Meadow Lending Limited) to Windsar Care (UK)
LLP to fund the development and initial trading of a 68-bed
purpose-built care home in Egham, Windsor. This loan, together with
loans from other vehicles managed and advised by the Investment
Manager totalling GBP7.2 million, are secured with a first charge
over the site. We are pleased to report that, following completion
of the development earlier this year, the loan has been repaid in
full.
Results and Net Asset Value ("NAV")
The NAV per share at the period end was 82.62p, 92.62p after
adding back dividends paid to date. The Company made a small loss
of GBP133,000 in the period (representing a 0.45p per share
post-tax loss).
Dividends
As reported in the Company's annual report, the Company declared
a dividend of 5p per ordinary share in February 2019. Reflecting
this recent pay-out, your Board is not proposing a further dividend
at this interim stage. The Company hopes to achieve (although there
is no guarantee) an average dividend payment equivalent to 5p per
annum (including the dividends paid to date) over the rest of the
life of the Company.
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, partly reflecting current
political uncertainty and partly due to global trends. 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.
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
As your Company enters into the final year of its expected
five-year life, we are focused on the monitoring of our existing
investments and considering the options for exits. We remain in
close contact with the management teams of our portfolio companies
which should in time offer the prospect of further growth in net
assets per share.
Harold Paisner
Chairman
27 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
Loss on investments - - - - - - - (1,500) (1,500)
Income 240 - 240 452 - 452 698 - 698
240 - 240 452 - 452 698 (1,500) (802)
-------- -------- -------- -------- -------- -------- --------
Investment
management
fees 4 (62) (188) (250) (73) (219) (292) (143) (431) (574)
Other expenses (123) - (123) (135) - (135) (245) - (245)
(185) (188) (373) (208) (219) (427) (388) (431) (819)
-------- -------- -------- -------- -------- -------- --------
Profit/(loss)
on ordinary
activities before
taxation 55 (188) (133) 244 (219) 25 310 (1,931) (1,621)
Tax on return
on ordinary
activities (10) 10 - (5) - (5) (59) 54 (5)
Profit/(loss)
on ordinary
activities after
tax attributable
to equity
shareholders 45 (178) (133) 239 (219) 20 251 (1,877) (1,626)
======== ======== ======== ======== ======== ======== ======== ======== ========
Basic and diluted
Profit/(loss)
per Ordinary
Share (pence) 2 0.15p (0.58p) (0.45p) 0.78p (0.72p) 0.07p 0.82p (6.15p) (5.33p)
======== ======== ======== ======== ======== ======== ======== ======== ========
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 22,326 25,716 22,556
----------- ----------- -------------
Current Assets
Prepayments 3,038 2,815 2,920
Cash 2 216 42
----------- ----------- -------------
3,040 3,031 2,962
Creditors - amounts falling
due within one year (157) (232) (176)
Net Current Assets 2,883 2,799 2,786
----------- ----------- -------------
Net Assets 25,209 28,515 25,342
=========== =========== =============
Capital and Reserves
Called up share capital 19 19 19
Share premium account - 29,473 -
Capital reserve - realised (1,624) (1,288) (1,446)
Capital reserve - unrealised (1,500) - (1,500)
Revenue reserve 28,314 311 28,269
Equity Shareholders' Funds 25,209 28,515 25,342
=========== =========== =============
Net Asset Value per Ordinary
Share 3 82.61p 93.46p 83.06p
=========== =========== =============
Diluted Net Asset Value per
Ordinary Share 3 82.61p 93.46p 83.06p
=========== =========== =============
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
(Loss)/Profit after tax (133) 20 (1,626)
Tax charge for the year - - 5
Unrealised loss on investments - - 1,500
Increase in debtors (118) (450) (555)
Decrease in creditors (19) (3) (7)
Cash outflow from operations (270) (433) (683)
------------- ------------- -------------
Corporation tax paid - - (57)
Net cash outflow from operating
activities - - (57)
------------- ------------- -------------
Cash flow from investing activities
Purchase of investments - - -
Proceeds from disposal of investments
and repayment of loans 230 1,060 2,720
Net cash generated in investing
activities 230 1,060 2,720
------------- ------------- -------------
Cash flow from financing activities
Dividends paid - (609) (2,136)
Net cash used in financing activities - (609) (2,136)
------------- ------------- -------------
Increase in cash (40) 18 (156)
Cash and cash equivalents at the
beginning of the period 42 198 198
Cash and cash equivalents at the
end of year 2 216 42
============= ============= =============
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 29,473 (1,069) - 681 29,104
Total comprehensive
income for the year - - (219) - 239 20
Dividends paid (609) (609)
Balance as at 31
August 2018 19 29,473 (1,288) - 311 28,515
Total comprehensive
income for the year - - (158) (1,500) 12 (1,646)
Dividends paid - - - - (1,527) (1,527)
Cancellation of share
premium account (29,473) 29,473 -
Balance as at 28
February 2019 19 - (1,446) (1,500) 28,269 25,342
Return after taxation
attributable to equity
shareholders - - (178) - 45 (133)
Balance as at 31
August 2019 19 - (1,624) (1,500) 28,314 25,209
========== ========= ============ ============== ========= ========
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 0.45p is based on the loss for the
period of GBP133,000 and the weighted average number of shares in
issue as at 31 August 2019 of 30,511,969 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 25,209,000 28,515,000 25,342,000
Shares in issue 30,511,969 30,511,969 30,511,969
Net asset value per
share
Basic 82.61p 93.46p 83.06p
Diluted 82.61p 93.46p 83.06p
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 Cost Gain/(loss)
Valuation
as a % of
As at 31 August 2018 GBP'000 GBP'000 GBP'000 Net Assets
Qualifying Investments
Warm Hearth Limited 2,500 2,500 - 9%
Mini Rainbows Limited 2,500 2,500 - 9%
Welcome Health Limited 2,500 2,500 - 9%
Growing Fingers Limited 980 980 - 3%
Applebarn Nurseries
Limited 1,133 1,133 - 4%
Kid & Play Limited 1,694 1,694 - 6%
South-West Cliffe Limited 2,100 2,100 - 7%
Signal Building Services
Limited 1,000 1,000 - 4%
Knott End Pub Company
Limited 2,400 2,400 - 8%
Pure Cremation Holdings
Limited 2,000 2,000 - 7%
Sunlight Education Nucleus
Limited 1,350 1,350 - 5%
Total Qualifying Investments 20,157 20,157 - 71%
---------- -------- ------------ ------------
Non-Qualifying Investments
Palmer Lending Limited 260 260 - 1%
Mayfield Lending Limited 2,490 2,490 - 9%
Latimer Lending Limited 1 1 - 0%
Meadow Lending Limited 2,008 2,008 - 7%
Sloane Lending Limited 800 800 - 3%
Total Non-Qualifying
Investments 5,559 5,559 - 20%
---------- -------- ------------ ------------
Total Investments 25,716 25,716 - 91%
Balance of Portfolio 2,799 2,799 - 9%
Net Assets 28,515 28,515 - 100%
---------- -------- ------------ ------------
Of the investments held at 31 August 2019, all are incorporated
in England and Wales.
Copies of this Interim Statement will be made available on the
website:
http://www.pumainvestments.co.uk/pages/view/investors-information-vcts
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END
IR UBSSRKOAAUAA
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