TIDMPU12
RNS Number : 2914R
Puma VCT 12 PLC
29 June 2020
HIGHLIGHTS
-- Funds substantially invested in a diverse range of high quality businesses and projects
-- HMRC requirement that qualifying investments are 80% of the fund is now met
-- 3p per share dividend paid in March 2020
-- NAV per share at the year-end was 88.20p (after adding back
dividends paid to 29 February 2020).
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the Company's fourth annual report for
the year ended 29 February 2020.
Background
These final results have been prepared using the information we
have available, but against the backdrop of major economic
disruption. Measures to deal with COVID-19 have impacted the entire
economy of the world and, most probably, touched every sector. It
is too early to comment on the medium-term effects on investment
markets and values. We can only at this stage comment upon the
short term impacts on the Company's portfolio.
Dividend
The Company paid a dividend of 3p per ordinary share just
following the end of the year, bringing dividends paid to date to
6p per ordinary share.
Investments
At the end of the year, the Company had just under GBP24 million
invested in a mixture of qualifying and non-qualifying investments
whilst maintaining our VCT qualifying status. Details of these
investments can be found in the Investment Manager's report on
pages 3 to 8. As the Board concluded that the pandemic was a
non-adjusting post balance sheet event, the impact of COVID-19 is
not reflected in the fair value of the Company's investments as at
29 February 2020. We understand that this treatment is being
adopted by other funds with similar year-ends.
Results
The Company reported a profit of GBP764,000 for the year (2019:
GBP3,280,000 loss including provision of GBP3,350,000 against
investment in Sweat Union), a post-tax profit of 2.47p (2019:
10.61p loss including 10.84p due to Sweat Union provision) per
ordinary share (calculated on the weighted average number of
shares). The Net Asset Value per ordinary share ("NAV") at 29
February 2020 after adding back the 3p of dividends paid to 29
February 2020 was 88.20p (2019: 85.73p)
VCT Qualifying Status
PricewaterhouseCoopers LLP ("PwC") provides the Board and the
Investment Manager with advice on the ongoing compliance with HMRC
rules and regulations concerning VCTs and has reported no issues in
this regard for the Company to date. PwC also assists the
Investment Manager in establishing the status of investments as
qualifying holdings and will continue to assist the Investment
Manager in monitoring rule compliance
Outlook
The Company has now just passed its fourth anniversary. It was
envisaged in the Company's Prospectus that the Board would convene
a General Meeting of the Company following the fifth anniversary at
which resolutions would be proposed to place the Company into
members' solvent liquidation. The intention remains to return the
balance of the capital in an orderly way as soon as possible
following the fifth anniversary. However, whilst discussions are
underway regarding potential exits from portfolio companies, it is
likely that, in light of the COVID-19 outbreak, a number of these
exit processes will have to be put on hold until there is a greater
degree of economic certainty. It is therefore likely that the
liquidation process may be delayed. The Board will keep this under
regular review.
Ray Pierce
Chairman
26 June 2020
INVESTMENT MANAGER'S REPORT
Introduction
Since the Company's year end, the global economy and financial
markets have been impacted significantly by the COVID-19 pandemic.
These are unprecedented times which have disrupted personal and
working life for almost everyone. Since the emergence of the
pandemic in the UK, we have been actively working with portfolio
companies to protect Shareholder value whilst, at the same time,
complying with Government guidelines. Our existing monitoring cycle
involves very close contact with portfolio companies. However, we
have significantly increased our level of interaction with
portfolio companies and changed our portfolio review meeting from
monthly to weekly, as we carefully assess each company's cash
management and outlook.
During this time, we have worked closely with advisers to
support our portfolio companies. This has involved providing
companies with in-depth information on available support packages
and hosting calls with advisers to deliver guidance on key topics
such as employment law, available funding and scenario cash
planning. Our aim was to ensure management teams could concentrate
on running their businesses rather than scrutinising Government
support schemes. Where appropriate, portfolio companies have made
use of Government-led support, including the Coronavirus Job
Retention Scheme and the Coronavirus Business Interruption Loan
Scheme (CBILS).
As the situation has evolved, we have continued to work closely
with portfolio companies to help them with strategies to conserve
cash during this period of contraction and, if required, outline
emergency funding options. Retaining a long-term view, the team has
also worked with portfolio companies to position them to capitalise
on the opportunities for growth that may arise. We have placed
particular emphasis on helping them manage costs as aggressively as
possible, making appropriate use of government support schemes and
assessing opportunities to reopen efficiently with a focus on agile
trading, adapted to new consumer and business behaviours.
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 do well . 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 has continued to perform strongly during the year with
strong revenue growth across all of its sales channels. Reflecting
the business's move into profitability and continued growth, the
Board have decided to write up the value of the holding by
GBP1,636,000.
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 million investment alongside other Puma funds. NRG
offers 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 year the business continued to deliver profitable
trade from its original two units and enjoyed fast growing trade
from its new unit Walsall, Birmingham. It successfully opened a new
flagship site in Lewisham, South London towards the end of the
year. As a result, the Board have decided to write up the value of
the holding by GBP51,000.
Post year-end, the business had to close all four of its units
following Government guidelines in light of the COVID-19 pandemic .
The business is taking advantage of Government support packages
including the Job Retention Scheme (furlough) and Rate Reliefs. The
business has produced online instructional training session and is
enjoying a good level of digital engagement with its membership
during lockdown, so is hopeful of a rapid return to normal trading
after the lockdown, albeit with complexities (and additional costs)
of meeting social distancing guidelines. Refurbishment projects at
Gravesend and Watford are continuing, so members should return to
exciting new spaces once lockdown is released.
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 . Works are
well underway on the site and the directors of Growing Fingers had
expected the nursery to open in the summer of 2020.
Post year-end, the works were interrupted by the policy response
to the COVID-19 pandemic and steps had to be taken to secure
building materials and the site. Works have now resumed so whilst
there will be a delay to opening, the directors of the business are
hopeful that it will not be too significant .
Applebarn Nurseries - Children's Nursery
The Company had invested GBP1.8 million in Applebarn Nurseries
Limited (as part of a GBP3 million qualifying investment alongside
another Puma VCT). The management team include a successful
operator of nurseries, together with an experienced developer and
contractor. The business's site, a custom-built 120-place
children's day nursery in Altrincham, South Manchester opened in
September 2018 and has been continuing to ramp up as occupancy
builds, reaching profitability in the year. Following the COVID-19
outbreak in the UK, the nursery has remained open for provision of
childcare to key workers.
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 owns and
operates two pub assets in Horsham and Milton Keynes. The pub in
Milton Keynes had experienced some disappointing trading but was
showing good year-on-year growth towards the end of the year. In
light of these trading challenges, the Board have decided to write
down the value of the holding by GBP604,000.
Post year-end, the business had to close both units due to the
COVID-19 pandemic. It is taking advantage of Government support
packages including the Job Retention Scheme (furlough) and Rate
Reliefs. The business is working on detailed scenarios and their
respective action plans in relation to how pubs may be allowed to
operate during the different phases of lockdown release.
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. As previously reported
the company is developing a 110 place children's day nursery which
was expected to open in Spring 2020. Advance interest in the
nursery has been very encouraging following a well-run
pre-marketing campaign.
Following the year-end, there have been interruptions to the
building works on site due to COVID-19 but the site has now
achieved Practical Completion and the directors of the business
have well-advanced plans to open the nursery in September 2020,
subject to lockdown easing .
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 ("Signal") is currently working on the construction of a
14-apartment supported living scheme in Sutton-in-Ashfield. We are
pleased to report that the 22-apartment supported living scheme in
Wigan which Signal has also recently been working on completed
successfully during the year, generating attractive returns for
Signal which will benefit the Company when its investment in Signal
is repaid in due course.
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. The business's first school in
Stafford, West Midlands opened strongly and has traded ahead of
budget. Development of the business's second school in Crewe is
well advanced and awaits Ofsted inspection.
The school at Stafford has remained open during lockdown whilst
works at Crewe have continued. However, Sunlight is expecting
delays to the opening of Crewe because of a longer than normal wait
for an Ofsted inspection and approval .
South-West Cliffe - Children's Nursery
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. As
previously reported, despite best efforts, the management team have
been unable to agree terms on a site and therefore, during the
year, took the decision to place South-West Cliffe Limited into a
solvent members' liquidation. Subsequent to the year end, the
Company received 97p in the pound invested.
Post year end the Company made a further investment:
Tictrac Limited - Health Engagement Platform
In March 2020, post period end, the Company invested GBP2.15
million in Tictrac Limited as part of a GBP5 million investment.
Tictrac is a personalised health and wellness platform. Tictrac
collates day-to-day data from consumers through 'wearable' fitness
trackers, to give people targeted information to help improve their
health. The Company collaborates with experts and world-renowned
centres of expertise in health, behavioural change and data science
and its customers include some of the world's biggest healthcare
providers and insurers, including Aviva, Allianz and
Prudential.
Since investment, Tictrac continues to work with its existing
client-base and insurers to roll out the platform to their
customers and end users. With the renewed emphasis on the need for
employers to engage with the health and wellbeing of their
employees during lockdown, Tictrac chose to make its platform
available on a free trial basis to UK employers who want to support
their workforce during the crisis. The Company has successfully
built a strong pipeline of new clients as a result of this.
Non-Qualifying Investments
Supported Living, Nottingham and Liverpool
During the year, a loan of GBP1,623,000 was agreed (through an
affiliate, Piccadilly Lending Limited) to various entities within
the Carislease group of companies to facilitate the acquisition and
development of a series of supported living schemes in Nottingham
and Liverpool. This loan, together with loans from other vehicles
managed and advised by the Investment Manager totalling GBP4.8
million, are secured with a first charge over the sites, many of
which have already been pre-sold.
Care Homes for the Elderly, Willenhall and Lichfield
A loan of GBP1,926,000 was advanced during the year (through
affiliate Marble Lending Limited) to various entities within the
Macc Care group of companies to support the stabilisation of a
newly built 73-bed care home in Willenhall (between Wolverhampton
& Walsall) and the acquisition of a site in Lichfield which is
the subject of a planning application for a 90-bed care home. This
loan, together with loans from other vehicles managed and advised
by the Investment Manager totalling GBP7.7 million, is secured with
a first charge over the two sites. Occupancy at Willenhall is ahead
of budget and the planning application at Lichfield is expected to
be determined in the coming months.
Purpose Built Student Accommodation, Brighton
During the year, a loan of GBP1,250,000 was agreed (through an
affiliate, Tottenham Lending Limited) to Alumno Student Brighton
Living (Brighton) Limited to facilitate the acquisition and
development of a 71-unit purpose built student accommodation unit
in Brighton. This loan, together with loans from other vehicles
managed and advised by the Investment Manager totalling GBP8.47
million, is secured with a first charge over the site. Brighton is
one of the university towns which has had a strong demand for
new-build quality student accommodation and the developer has a
long track record, having developed over 5,000 units to date.
Aparthotel, Glasgow
A pre-development bridge loan of GBP836,000 was advanced during
the year (through affiliate Tottenham Lending Limited) to Citihome
Glasgow Limited against a site with planning permission for a
156-room aparthotel in central Glasgow. This loan, together with
loans from other vehicles managed and advised by the Investment
Manager totalling GBP3.3 million, is secured with a first charge
over the site and is backed by a personal guarantee from the
developer. Since the loan was advanced, the developer successfully
increased the planning permission to 204 rooms.
Supported Living, Atherstone
During the year, a loan of GBP594,000 was agreed (through
affiliate Victoria Lending Limited) to HBP Group Limited to
facilitate the development of 16 supported-living flats in
Atherstone, Warwickshire. This loan, together with loans from other
vehicles managed and advised by the Investment Manager totalling
GBP1.7 million, is secured with a first charge over the property
which benefits from a pre-let with a leading housing association
and a rental void agreement with a large care provider.
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. We are pleased to report that the loan was
repaid in full following the year end.
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 year.
Investment Strategy
The Company's funds are invested in a balanced portfolio of both
qualifying and non-qualifying investments. Whilst the COVID-19
pandemic has presented a number of significant unforeseen economic
and social challenges for the UK and global economy, the management
teams in our portfolio companies and the developers who have
received loans from our affiliates have responded and we hope to
report on more normal trade in due course.
Puma Investment Management Limited
26 June 2020
Investment Portfolio Summary
As at 29 February 2020
Valuation
as a % of
Valuation Cost Gain/(loss) Net Assets
GBP'000 GBP'000 GBP'000
Qualifying Investments
Growing Fingers Limited 420 420 - 2%
Kid & Play Limited 1,694 1,694 - 6%
South-West Cliffe Limited 2,040 2,100 (60) 8%
Signal Building Services
Limited 194 200 (6) 1%
Applebarn Nurseries Limited 1,833 1,833 - 7%
Knott End Pub Company
Limited 3,449 4,053 (604) 13%
Sunlight Education Nucleus
Limited 2,350 2,350 - 9%
Sweat Union Limited - 3,421 (3,421) 0%
Pure Cremations Limited 5,689 4,053 1,636 22%
SA Fitness Holdings Limited 1,468 1,417 51 6%
Total Qualifying Investments 19,137 21,541 (2,404) 74%
---------- -------- ------------ ------------
Non-Qualifying Investments
Piccadilly Lending Limited 610 610 - 2%
Victoria Lending Limited 1,617 1,617 - 6%
Tottenham Lending Limited 510 510 - 2%
Marble Lending Limited 1,850 1,850 - 7%
Total Non-Qualifying
investments 4,587 4,587 - 17%
---------- -------- ------------ ------------
Total Investments 23,724 26,128 (2,404) 91%
Balance of Portfolio 2,612 2,612 - 9%
Net Assets 26,336 28,740 (2,404) 100%
---------- -------- ------------ ------------
Of the investments held at 29 February 2020, all are
incorporated in England and Wales.
Income Statement
For the year ended 29 February 2020
Year ended 29 February Year ended 28 February
2020 2019
Note Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
8
Gain/(Loss) on investments (b) - 946 946 - (3,350) (3,350)
Income 2 595 - 595 909 - 909
595 946 1,541 909 (3,350) (2,441)
-------- -------- -------- --------- ---------
Investment management
fees 3 (127) (380) (507) (148) (443) (591)
Other expenses 4 (270) - (270) (248) - (248)
(397) (380) (777) (396) (443) (839)
-------- -------- -------- --------- ---------
Profit/(loss) before
taxation 198 566 764 513 (3,793) (3,280)
Taxation 5 (38) 38 - (97) 97 -
Profit/(loss) and total
comprehensive income
for the year 160 604 764 416 (3,696) (3,280)
======== ======== ======== ======== ========= =========
Basic and diluted
Return/(Loss) per Ordinary
Share (pence) 6 0.52p 1.95p 2.47p 1.35p (11.96p) (10.61p)
======== ======== ======== ======== ========= =========
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 29 February 2020
As at As at
29 February 28 February
Note 2020 2019
GBP'000 GBP'000
Fixed Assets
Investments 8 (a) 23,724 23,527
------------- -------------
Current Assets
Debtors 9 2,752 2,413
Cash 23 107
------------- -------------
2,775 2,520
Creditors - amounts falling
due within one year 10 (163) (166)
Net Current Assets 2,612 2,354
------------- -------------
Net Assets 26,336 25,881
============= =============
Capital and Reserves
Called up share capital 12 19 19
Share premium account - 29,833
Capital reserve - realised (1,392) (1,050)
Capital reserve - unrealised (2,404) (3,350)
Revenue reserve 30,113 429
Total Equity 26,336 25,881
============= =============
Net Asset Value per Ordinary
Share 13 85.20p 83.73p
============= =============
The financial statements on pages 36 to 51 were approved and
authorised for issue by the Board of Directors on 26 June 2020 and
were signed on their behalf by:
Ray Pierce
Chairman
Statement of Cash Flows
For the year ended 29 February 2020
Year ended Year ended
29 February 28 February
2020 2019
GBP'000 GBP'000
Profit/(loss) after tax 764 (3,280)
Unrealised (gain)/loss on investments (946) 3,350
Increase in debtors (339) (912)
Decrease in creditors (3) (1)
Net cash used for operating activities (524) (843)
------------- -------------
Cash flow from investing activities
Purchase of investments (71) (4,823)
Proceeds from disposal of investments
and repayments of loans 820 5,918
Net cash generated from investing
activities 749 1,095
------------- -------------
Dividends paid (309) (618)
Net cash used for financing activities (309) (618)
------------- -------------
Net decrease in cash and cash equivalents (84) (366)
Cash and cash equivalents at the beginning
of the year 107 473
Cash and cash equivalents at the end
of the year 23 107
------------- -------------
Statement of Changes in Equity
For the year ended 29 February 2020
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
Dividends paid - - - - (618) (618)
Total comprehensive
income for the year - - (346) (3,350) 416 (3,280)
---------- --------- ------------ -------------- --------- --------
Balance as at 28 February
2019 19 29,833 (1,050) (3,350) 429 25,881
Total comprehensive
income for the year - - (342) 946 160 764
Dividends paid - - - - (309) (309)
Cancellation of share
premium - (29,833) - - 29,833 -
Balance as at 29 February
2020 19 - (1,392) (2,404) 30,113 26,336
========== ========= ============ ============== ========= ========
Distributable reserves comprise: Capital reserve-realised,
Capital reserve-unrealised (excluding gains on unquoted
investments) and the Revenue reserve. At the year end,
distributable revenue reserves were GBP30,113,000 (2019:
GBP429,000).
The Capital reserve-realised includes gains/losses that have
been realised in the year due to the sale of investments, net of
related costs. The Capital reserve-unrealised represents the
investment holding gains/losses and shows the gains/losses on
investments still held by the Company not yet realised by an asset
sale.
The revenue reserve represents the cumulative revenue earned
less cumulative distributions.
The company cancelled its share premium account in October
2019.
1. Accounting Policies
Accounting convention
Puma VCT 12 plc ("the Company") was incorporated in England on 2
September 2015 and is registered and domiciled in England and
Wales. The Company's registered number is 09758309. 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 access to cash reserves greater than the anticipated
annual running costs of the Company.
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 18.
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 aggregate
excess of the amounts realised over GBP1 per Ordinary Share
returned to Ordinary Shareholders. This incentive will only be
effective once the other holders of Ordinary Shares have received
distributions of GBP1 per share.
The performance incentive has been satisfied through the issue
of 7,727,297 Ordinary Shares (as set out in note 11 to the
financial statements) to the Investment Manager and members of the
investment management team being 20% of the total issued Ordinary
Share capital of 38,636,487. Under the terms of the incentive
arrangement, all rights to dividends will be waived until the GBP1
per Ordinary Share performance target has been met. The performance
fee is accounted for as an equity-settled share-based payment.
Section 26 of FRS 102 "Share-Based Payment" requires the
recognition of an expense in respect of share-based payments in
exchange for goods or services. Entities are required to measure
the goods or services received at their fair value, unless that
fair value cannot be estimated reliably in which case that fair
value should be estimated by reference to the fair value of the
equity instruments granted.
At each balance sheet date, the Company estimates that fair
value by reference to any excess of the net asset value, adjusted
for dividends paid, over GBP1 per share in issue at the balance
sheet date. Any change in fair value is recognised in the Income
Statement with a corresponding adjustment to equity.
Expenses
All expenses (inclusive of VAT) are accounted for on an accruals
basis. Expenses are charged wholly to revenue, with the exception
of:
-- expenses incidental to the acquisition or disposal of an investment charged to capital; and
-- the investment management fee, 75% of which has been charged
to capital to reflect an element which is, in the directors'
opinion, attributable to the maintenance or enhancement of the
value of the Company's investments in accordance with the Board's
expected long-term split of return; and
-- the performance fee which is allocated proportionally to
revenue and capital based on the respective contributions to the
Net Asset Value.
Taxation
Corporation tax is applied to profits chargeable to corporation
tax, if any, at the applicable rate for the year. The tax effect of
different items of income/gain and expenditure/loss is allocated
between capital and revenue return on the marginal basis as
recommended by the SORP.
Deferred tax is recognised in respect of all timing differences
that have originated but not reversed at the balance sheet date,
where transactions or events that result in an obligation to pay
more, or right to pay less, tax in the future 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 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 impact of COVID-19, which is a non-adjusting
post balance sheet event as disclosed in note 18. Further details
of the unquoted investments are disclosed in the Investment
Manager's Report on pages 3 to 8 and notes 8 and 14 to the
financial statements.
2. Income
Year ended 29 February Year ended 28 February
2020 2019
GBP'000 GBP'000
Income from investments
Loan stock interest 595 908
595 908
Other income
Bank deposit income - 1
595 909
======================= =======================
3. Investment Management Fees
Year ended 29 February Year ended 28
2020 February 2019
GBP'000 GBP'000
Puma Investments fees 507 591
507 591
======================= ===============
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 are capped, the
Investment Manager having agreed to reduce its fee (if necessary to
nothing) to contain total annual costs (excluding performance fee
and trail commission) to within 3.5% of funds raised. Total costs
this year were 2.6% (2019: 2.8%) of the funds raised. Graham Shore,
a director, holds a Directorship of the parent of the Investment
Manager.
4. Other expenses
Year ended 29 February Year ended 28 February
2020 2019
GBP'000 GBP'000
PI Administration Services
fees 89 103
Directors' Remuneration 57 55
Social security costs 1 3
Auditor's remuneration
for statutory audit 27 25
Legal and professional
fees 56 21
Other expenses 40 41
270 248
======================= =======================
PI Administration Services Limited provides administrative
services to the Company for an aggregate annual fee of 0.35% of the
Net Asset Value of the Fund, payable quarterly in arrears.
Remuneration for each Director for the year is disclosed in the
Directors' Remuneration Report on page 25. Directors' remuneration
disclosed above has been grossed up, where applicable, to be
inclusive of VAT. The Company had no employees (other than
Directors) during the year (2019: none). The average number of
non-executive Directors during the year was 3 (2019: 3). The
non-executive Directors are considered to be the Key Management
Personnel of the Company with total remuneration for the year of
GBP58,000 (2019: GBP58,000) including social security costs.
The Auditor's remuneration of GBP24,000 (2019: GBP21,000) has
been grossed up in the table above to be inclusive of VAT.
Non-audit fees charged during the year were GBP250 (2019: GBP250)
for iXBRL tagging of the 2019 (2019: 2018) financial
statements.
5. Taxation
Year ended 29 February Year ended 28 February
2020 2019
GBP'000 GBP'000
UK corporation tax charged
to revenue reserve 38 97
UK corporation tax credited
to capital reserve (38) (97)
UK corporation tax charge
for the period - -
======================= =======================
Factors affecting tax charge for the period
Profit/(loss) before taxation 764 (3,280)
======================= =======================
Tax charge calculated
on profit/(loss) before
taxation at the applicable
rate of 19% 145 (623)
(Gain)/loss on investments (180) 637
Tax losses carried forward 35 (14)
- -
======================= =======================
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.
6. Basic and diluted return/(loss) per Ordinary Share
Year ended 29 February 2020
Revenue Capital Total
Total comprehensive income GBP160,000 GBP604,000 GBP764,000
for the year
Weighted average number
of shares in issue for the
year 38,636,487 38,636,487 38,636,487
Less: management incentive
shares (see note 11) (7,727,297) (7,727,297) (7,727,297)
Weighted average number
of shares for purposes of
return/(loss) per share
calculations 30,909,190 30,909,190 30,909,190
------------ ------------ ------------
Return/(loss) per share 0.52p 1.95p 2.47p
Year ended 28 February 2019
Revenue Capital Total
Total comprehensive income GBP416,000 (GBP3,696,000) (GBP3,280,000)
for the year
Weighted average number
of shares in issue for the
year 38,636,487 38,636,487 38,636,487
Less: management incentive
shares (see note 11) (7,727,297) (7,727,297) (7,727,297)
Weighted average number
of shares for purposes of
return/(loss) per share
calculations 30,909,190 30,909,190 30,909,190
------------ --------------- ---------------
Return/(loss) per share 1.35p (11.96p) (10.61p)
7. Dividends
The Directors do not propose a final dividend in relation to the
year ended 29 February 2020 (2019: GBPnil). Following the year end,
an interim dividend of 3p per ordinary share was paid from revenue
reserves in relation the year ended 29 February 2020 totalling
GBP927,000 (2019: GBPnil). In addition, d uring the year, the
directors paid the dividend approved at the 2019 AGM of 1p per
share (2019: 2p paid in the year, approved at the 2018 AGM)
resulting in a total dividend payment of GBP309,000 (2019:
GBP618,000).
8. Investments
Qualifying Non-qualifying
(a) Movements in investments investments investments Total
GBP'000 GBP'000 GBP'000
Purchased at cost 21,470 5,407 26,877
Net unrealised loss (3,350) - (3,350)
Valuation at 28 February
2019 18,120 5,407 23,527
Purchases at cost 71 - 71
Disposal of investments
and repayments of loans
and loan notes - (820) (820)
Net unrealised gain 946 - 946
Valuation at 29 February
2020 19,137 4,587 23,724
============= =============== =============
Book cost at 29 February
2020 21,541 4,587 26,128
Net unrealised losses
at 29 February 2020 (2,404) - (2,404)
Valuation at 29 February
2020 19,137 4,587 23,724
============= =============== =============
(b) Gains/(losses) on
investments
Year ended Year ended
29 February 28 February
2020 2019
GBP'000 GBP'000
Unrealised gains/(losses)
in year 946 (3,350)
946 (3,350)
=============== =============
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
(c) Quoted and unquoted
investments
Market value Market value
as at 29 as at 28
February February
2020 2019
GBP'000 GBP'000
Unquoted investments 23,724 23,527
23,724 23,527
============= =============
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 16 of the Annual Report.
9. Debtors
As at 29 February As at 28 February
2020 2019
GBP'000 GBP'000
Other debtors 3 3
Prepayments and accrued
income 2,749 2,410
2,752 2,413
================== ==================
10. Creditors - amounts falling due within one year
As at 29 February As at 28 February
2020 2019
GBP'000 GBP'000
Accruals 163 166
163 166
================== ==================
11. Management Performance Incentive Arrangement
On 3 September 2015, the Company entered into an Agreement with
the Investment Manager and members of the investment management
team (together "the Management Team") such that the Management Team
will be entitled in aggregate to share in 20 per cent of the
aggregate excess on any amounts realised by the Company in excess
of GBP1 per Ordinary Share, the Performance Target.
This incentive is effective through the issue of ordinary shares
in the Company, such that the Management Team hold 7,727,297
ordinary shares being 20% of the issued share capital of
38,636,487.
The Management Team will waive all rights to dividends until a
return of GBP1 per share (whether capital or income) has been paid
to the other shareholders.
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.
12. Called Up Share Capital
As at 28 February
2019 and 29 February
2020
GBP'000
38,636,487 ordinary shares of 0.05p each 19
======================
13. Net Asset Value per Ordinary Share
As at As at
29 February 28 February
2020 2019
Net assets 26,336,000 25,881,000
------------- -------------
Number of shares in issue 38,636,487 38,636,487
Less: management incentive
shares (see note 11) (7,727,297) (7,727,297)
------------- -------------
Number of shares in issue
for purposes of Net
Asset Value per share calculation 30,909,190 30,909,190
------------- -------------
Net asset value per share
Basic and diluted 85.20p 83.73p
14. Financial Instruments
The Company's financial instruments comprise its investments,
cash balances, debtors and certain creditors. The fair value of all
of the Company's financial assets and liabilities is represented by
the carrying value in the Balance Sheet. Excluding cash balances,
the Company held the following categories of financial instruments
at 29 February 2020:
As at 29 February As at 28 February
2020 2019
GBP'000 GBP'000
Financial assets at fair
value through profit or
loss 23,724 23,527
Financial assets that are
debt instruments measured
at amortised cost 2,752 2,413
Financial liabilities measured
at amortised cost (163) (166)
26,313 25,774
================== ==================
Management of risk
The main risks the Company faces from its financial instruments
are market price risk, being the risk that the value of investment
holdings will fluctuate as a result of changes in market prices
caused by factors other than interest rate or currency movements,
liquidity risk, credit risk and interest rate risk. The Board
regularly reviews and agrees policies for managing each of these
risks. The Board's policies for managing these risks are summarised
below and have been applied throughout the year.
Credit risk
Credit risk is the risk that the counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Company. The Investment Manager
monitors counterparty risk on an ongoing basis. The Company's
maximum exposure to credit risk is as follows:
As at 29 February As at 28 February
2020 2019
GBP'000 GBP'000
Investments in loans, loan
notes and bonds 8,510 9,336
Cash at bank and in hand 23 107
Interest, dividends and
other receivables 2,752 2,413
11,285 11,856
================== ==================
The cash held by the Company at the year-end is held in one U.K.
bank. 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 interest, dividends and other
receivables are predominantly covered by the investment management
procedures.
Investments in loans and loan notes comprises a fundamental part
of the Company's venture capital investments, therefore credit risk
in respect of these assets is managed within the Company's main
investment procedures.
Market price risk
Market price risk arises mainly from uncertainty about future
prices of financial instruments held by the Company. It represents
the potential loss the Company might suffer through holding
investments in the face of price movements. The Investment Manager
actively monitors market prices and reports to the Board, which
meets regularly in order to consider investment strategy.
The Company's strategy on the management of market price risk is
driven by the Company's investment policy as outlined in the
Strategic Report on page 18. 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. 100% (2019: 100%) 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 9. 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 Strategic Report and the
Directors' Report. The Company's overall liquidity risks are
monitored on a quarterly basis by the Board. The Company maintains
access to cash reserves sufficient 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
0.75% at 29 February 2020 (2019: 0.75%). All of the loan and loan
note investments are unquoted and hence not directly subject to
market movements as a result of interest rate movements.
Cash flow interest rate risk
The Company has exposure to interest rate movements primarily
through its cash deposits and loan notes which track either the
Bank of England base rate or LIBOR.
Interest rate risk profile of financial assets
The following analysis sets out the interest rate risk of the
Company's financial assets as at 29 February 2020.
Average
interest Period
Rate status rate until maturity Total
GBP'000
Cash at bank - RBS Floating 0.01% - 23
Loans and loan notes Fixed 11.88% 26 months 8,516
Balance of assets Non-interest bearing - 17,960
26,499
========
The following analysis sets out the interest rate risk of the
Company's financial assets as at 28 February 2019.
Average
interest Period
Rate status rate until maturity Total
GBP'000
Cash at bank - Metro Floating 0.10% - 2
Cash at bank - RBS Floating 0.50% - 105
Loans and loan notes Fixed 10.56% 34 months 9,336
Balance of assets Non-interest bearing - 16,604
26,047
========
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 year
as follows:-
2020 2019
GBP'000 GBP'000
Level 3
Unquoted investments 23,724 23,527
23,724 23,527
======== ========
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 10 to 16.
15. Capital management
The Company's objectives when managing capital are to safeguard
the Company's ability to continue as a going concern, so that it
can provide an adequate return to shareholders by allocating its
capital to assets commensurate with the level of risk.
By its nature, the Company must have an amount of capital, at
least 70% (as measured under the tax legislation) of which must be,
and remain, invested in the relatively high-risk asset class of
small UK companies within three years of that capital being
subscribed. For accounting periods commencing after 5 April 2019
this has risen to 80%.
The Company accordingly has limited scope to manage its capital
structure in the light of changes in economic conditions and the
risk characteristics of the underlying assets. Subject to this
overall constraint upon changing the capital structure, the Company
may adjust the amount of dividends paid to shareholders, issue new
shares, or sell assets to maintain a level of liquidity to remain a
going concern.
The Board has the opportunity to consider levels of gearing,
however there are no current plans to do so. It regards the net
assets of the Company as the Company's capital, as the level of
liabilities is small and the management of those liabilities is not
directly related to managing the return to shareholders.
16. Contingencies, Guarantees and Financial Commitments
There were no commitments, contingencies or guarantees of the
Company at the year-end (2019: none).
17. Controlling Party
In the opinion of the Directors there is no immediate or
ultimate controlling party.
18. Post Balance Sheet Events
On 11 March 2020, the World Health Organisation declared
COVID-19 a global pandemic and on 23 March 2020, the UK Government
imposed a lockdown on the whole population. The Directors consider
that COVID-19 is a non-adjusting post balance sheet event. The
pandemic will significantly impact the UK economy and may
materiality impact the prospects of a number of the Company's
investments and cause a material reduction in the fair value of the
Company's investments. The Directors are unable to quantify the
full financial impact of COVID-19 on the fair value of its
investment portfolio as a material proportion of the investments
remains remain in lockdown. Further details of the investments are
set out in the Investment Manager's Report on pages 3 to 8.
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
29 February 2020, but has been extracted from the statutory
financial statements for the year ended 29 February 2020 which were
approved by the Board of Directors on 26 June 2020 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 year ended 28 February 2019 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 29 February 2020 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.
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
FR EAAKPAAXEEFA
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