TIDMPUM9

RNS Number : 5501Q

Puma VCT 9 PLC

30 November 2016

Puma VCT 9 plc

Interim Report

For the period ended 31 August 2016

Officers and Professional Advisers

 
 Directors                            Auditor 
 Egmont Kock (Chairman)               RSM UK Audit LLP 
  Terence Rhodes                       Chartered Accountants 
  Graham Shore                         25 Farringdon Street 
                                       London EC4A 4AB 
 Secretary 
  Eliot Kaye                            Sponsors and Solicitors 
                                        Howard Kennedy 
  Registered Number                     No 1 London Bridge 
  08238812                              London SE1 9BG 
 Registered Office                    Bankers 
  Bond Street House                    The Royal Bank of Scotland 
  14 Clifford Street                   plc 
  London W1S 4JU                       London City Office 
                                       PO Box 412 
                                       62-63 Threadneedle Street 
  Investment Manager                   London EC2R 8LA 
  Puma Investment Management 
  Limited                              Lloyds Bank International 
  Bond Street House                    Limited 
  14 Clifford Street                   Sarnia House 
  London W1S 4JU                       Le Truchot 
                                       St Peter Port 
                                       Guernsey, GY1 4EF 
 Registrar                            VCT Tax Advisor 
  SLC Registrars                       PricewaterhouseCoopers 
  42- 50 Hersham Road                  LLP 
  Walton-on- Thames                    1 Embankment Place 
  Surrey, KT12 IRZ                     London WC2N 6RH 
 Administrator                        Custodian 
  Shore Capital Fund Administration    Pershing Securities Limited 
  Services Limited                     1 Canada Square 
  Bond Street House                    London 
  14 Clifford Street                   E14 5AL 
  London W1S 4JU 
 
 

Chairman's Statement

Highlights

   --    Funds deployed in a diverse range of investments generating an attractive return 

-- 12p per share of dividends paid since inception, equivalent to a 9% per annum tax-free running yield on net investment

   --    NAV per share of 97.78p at period end (adding back dividends paid to date) 

Chairman's Statement

Introduction

The Company has deployed its funds in a diverse range of both qualifying and non-qualifying investments, having met its minimum qualifying investment percentage of 70 per cent during the previous period. We believe our portfolio is well positioned to deliver attractive returns to shareholders within its remaining planned life.

Qualifying Investments

The Company made a GBP1.875 million investment in Urban Mining Limited, a member of the Chinook Urban Mining group of companies, in 2014. The investment, as part of a GBP5 million investment alongside other Puma VCTs into an energy-from waste business, was to facilitate the development of a flagship plant in East London to generate electricity through the gasification of municipal solid waste. The project is seeking to benefit from favourable Contracts for Difference available to renewable projects, and is qualifying because it was made prior to the royal assent of the Finance Act 2014. The management team has a track record of delivering similar projects in other jurisdictions and is a preferred partner of Chinook Sciences, the Nottingham based technology company which has developed the award-winning "non-incineration ultra clean synthetic gas technology" which will be used in the East London plant. The investment is secured with a first charge over the Chinook Urban Mining business and the eight acre freehold site of the East London plant

As reported in the Company's previous annual report, Kinloss Trading Limited and Jephcote Trading Limited (in which the Company had invested GBP3.5 million and GBP880,000 respectively) have, as members of SKPB Services LLP, been engaged in a series of projects to provide contracting services across the country. We understand that, following the period end, SKPB Services commenced work on its latest project, the construction of a new 134 bedroom Ibis Budget Hotel and the associated infrastructure adjacent to Luton Airport. The project is expected to complete in mid-2017.

As previously reported, a major fire occurred on 28 February 2016 at the Materials Recycling Facility ("MRF") operated by Opes Industries Limited ("Opes"), into which the Company has invested a total of GBP3.6m (as part of an GBP8.8m investment by Puma entities). As a result of the incident, and as reported in the Company's previous annual report, the Company has made a provision of GBP532,000 against the carrying value of its investment in Opes. Opes owns a 73 hectare site in north Oxfordshire with a MRF, including a landfill site for non-hazardous materials and an aggregates/gravel quarrying business. The Company's investment was to provide funding for the construction and equipping of the MRF and working capital during the build-up of the trade. The funding was provided in the form of equity and loan stock and our interests are covered by a first fixed and floating charge over Opes' assets. Following the incident, we appointed an administrator over Opes in order to best protect the Company's investment. The administrator has implemented various measures to preserve the value of Opes' assets, mitigate costs and seek to realise best value for the Company. Discussions are also continuing with Opes' insurers regarding the reimbursement of the damage to the plant and the building and of the costs of business interruption.

The Company's GBP3.2 million investment (as part of a total GBP5 million investment alongside other Puma VCTs) into Alyth Trading Limited continues to perform well. Alyth Trading is a nationwide provider of contracting services and during the period has been engaged on projects including the construction of a 112 bed purpose built care home in Hamilton, Scotland, and the construction of a 68 bed purpose built care home in Egham, Windsor. We understand both projects are well progressed.

The Company's investment of GBP3.4 million (alongside other Puma VCTs) into Saville Services Limited continues to perform well. Saville Services has been providing contracting services over a series of projects, and has recently commenced work on the construction of a 77-bed purpose-built care home in Chester.

Non-Qualifying Investments

As previously reported, we adopted a strategy for the non-qualifying portfolio of investing in secured loans (and other similar instruments) offering a good yield with hopefully limited downside risk.

During the period, a series of loans totalling GBP1 million were advanced to various entities within the Citrus Group. These loans, together with loans from other vehicles managed and advised by your Investment Manager, form part of a series of revolving credit facilities to provide working capital to the Citrus PX business. Citrus PX operates a property part exchange service facilitating the rapid purchase of properties for developers and homeowners. The facility provides a series of loans to Citrus PX, with the benefit of a first charge over a geographically diversified portfolio of residential properties on conservative terms.

As previously reported, Lothian Lending Limited (a lending business in which the Company had previously invested) had extended a GBP1.3 million loan which, together with another Puma VCT, provided a facility of GBP2.6 million to RPE FL1 Limited, a member of the Renewable Power Exchange group. The facility provided funding towards the construction of a 1.5MW wind farm in East Lothian, Scotland, with the electricity once generated, used to supply those on low incomes in the local community. The loan is secured on the site in East Lothian and is earning an attractive rate of interest. We are pleased to report that the turbines are operating well, generating electricity and EBITDA is in line with forecasts. In accordance with the planned amortisation schedule, the loan balance now stands at GBP1.092 million.

As previously reported, Latimer Lending Limited (a lending business in which the Company had previously invested) had extended a GBP1.05 million loan to Churchill Homes (Aberdeen) Limited to provide funding towards the construction of a private detached housing development in the countryside outside Aberdeen. We are pleased to report that the loan was repaid in full during the period with an attractive return to the Company.

We are pleased to report that the GBP1.41 million loan to Kingsmead Care Home Limited, which owns and operates a care and dementia treatment facility in Mytchett, Surrey, was repaid in full following the period end giving a good return to the Company.

To further manage liquidity, the Company has exposure to a GBP1.1 million bond issued by J Sainsbury plc and earning 6.5%.

Net Asset Value ('NAV')

The NAV per share at the period end was 97.78p after adding back dividends paid to date of 12p. The profit after tax of GBP83,000 represents a return for the period of 0.29p per ordinary share.

VCT Qualifying Status

PricewaterhouseCoopers LLP ('PwC') provides the board and the investment manager with advice on the ongoing compliance with Her Majesty's Revenue & Customs ('HMRC') rules and regulations concerning VCTs. PwC assists the Investment Manager in establishing the status of investments as qualifying holdings and has reported that the Company has met all HMRC's criteria to date.

Principal risks and uncertainties

The economy in the UK may have become more fragile, especially in the light of recent political events. 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

The Company's net assets are fully deployed in a diverse range of high quality businesses and projects which should offer the prospect of further growth in net assets per share. Whilst there may be some further changes in the composition of the portfolio to ensure that the Company continues to satisfy its HMRC qualifying targets, the Board expects to concentrate in the future primarily on the monitoring of our existing investments and considering the options for exits.

Egmont Kock

Chairman

30 November 2016

Income Statement (unaudited)

For the period ended 31 August 2016

 
                                   Six months 
                                      ended                      Six months                   Period ended 
                                    31 August                       ended                      29 February 
                                       2016                      30 June 2015                      2016 
                    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 
 Gain/(loss) 
  on investments                 -        78        78         -       (1)       (1)         -     (559)     (559) 
 Income                        391         -       391       888         -       888     2,301         -     2,301 
 
                               391        78       469       888       (1)       887     2,301     (559)     1,742 
                          --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 
 Investment 
  management 
  fees               4        (60)     (180)     (240)      (67)     (201)     (268)     (153)     (459)     (612) 
 Other expenses              (138)         -     (138)     (141)         -     (141)     (282)         -     (282) 
 
                             (198)     (180)     (378)     (208)     (201)     (409)     (435)     (459)     (894) 
                          --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 
 Return/(loss) 
  on ordinary 
  activities 
  before 
  taxation                     193     (102)        91       680     (202)       478     1,866   (1,018)       848 
 Tax on 
  return 
  on ordinary 
  activities                  (28)        20       (8)     (112)         -     (112)     (373)        83     (290) 
 
 Return/(loss) 
  on ordinary 
  activities 
  after tax 
  attributable 
  to equity 
  shareholders                 165      (82)        83       568     (202)       366     1,493     (935)       558 
                          ========  ========  ========  ========  ========  ========  ========  ========  ======== 
 
 Basic and 
  diluted 
 Return/(loss) 
  per Ordinary 
  Share (pence)      2       0.58p   (0.29p)     0.29p     2.01p   (0.72p)     1.30p     5.29p   (3.31p)     1.98p 
                          ========  ========  ========  ========  ========  ========  ========  ========  ======== 
 

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 2016

 
                                             As at      As at          As at 
                                         31 August    30 June    29 February 
                                 Note         2016       2015           2016 
                                           GBP'000    GBP'000        GBP'000 
 Fixed Assets 
 Investments                      6         21,609     20,756         21,531 
                                       -----------  ---------  ------------- 
 
 Current Assets 
 Debtors                                     2,812      1,763          2,472 
 Cash                                          347      3,745            635 
                                       -----------  ---------  ------------- 
                                             3,159      5,508          3,107 
 Creditors - amounts 
  falling due within one 
  year                                       (535)      (611)          (488) 
 
 Net Current Assets                          2,624      4,897          2,619 
                                       -----------  ---------  ------------- 
 
 Total Assets less Current 
  Liabilities                               24,233     25,653         24,150 
 
 Creditors - amounts 
  falling due after more 
  than one year (including 
  convertible debt)                            (1)        (1)            (1) 
 
 Net Assets                                 24,232     25,652         24,149 
                                       ===========  =========  ============= 
 
 Capital and Reserves 
 Called up share capital                       282        282            282 
 Capital redemption reserve                      1          1              1 
 Capital reserve - realised                (1,248)      (931)        (1,088) 
 Capital reserve - unrealised                (479)         19          (557) 
 Revenue reserve                            25,676     26,281         25,511 
 
 Equity Shareholders' 
  Funds                                     24,232     25,652         24,149 
                                       ===========  =========  ============= 
 
 
 Net Asset Value per 
  Ordinary Share                  3         85.78p     90.81p         85.49p 
                                       ===========  =========  ============= 
 
 Diluted Net Asset Value 
  per Ordinary Share              3         85.78p     90.81p         85.49p 
                                       ===========  =========  ============= 
 

Cash Flow Statement (unaudited)

For the period ended 31 August 2016

 
                                  Six months   Six months         Period 
                                       ended        ended          ended 
                                   31 August      30 June    29 February 
                                        2016         2015           2016 
                                     GBP'000      GBP'000        GBP'000 
 
 Operating activities 
 Profit on ordinary activities 
  before tax                              83          366            558 
 Taxation                                  8          112            290 
 Unrealised (gains)/losses 
  on investments                        (78)            1            577 
 (Increase) in debtors                 (340)        (744)        (1,453) 
 Increase/(decrease) in 
  creditors                               39          139          (162) 
 
 Net cash outflow from 
  operating activities                 (288)        (126)          (190) 
                                 -----------  -----------  ------------- 
 
 Capital expenditure and 
  financial investment 
 Purchase of investments                   -            -        (5,200) 
 Proceeds from sale of 
  investments                              -        1,161          5,010 
 
 Net cash inflow/(outflow) 
  from capital expenditure 
  and financial investment                 -        1,161          (190) 
                                 -----------  -----------  ------------- 
 
 
 Equity dividend paid                      -      (1,695)        (3,390) 
                                 -----------  -----------  ------------- 
 
 Decrease in cash                      (288)        (660)        (3,770) 
 Net cash at start of 
  the period                             635        4,405          4,405 
 
 Net funds at the period 
  end                                    347        3,745            635 
                                 ===========  ===========  ============= 
 

Reconciliation of Movements in Shareholders' Funds (unaudited)

For the period ended 31 August 2016

 
                       Called 
                           up       Capital       Capital         Capital 
                        share    Redemption       reserve         reserve    Revenue 
                      capital       Reserve    - realised    - unrealised    reserve     Total 
                      GBP'000       GBP'000       GBP'000         GBP'000    GBP'000   GBP'000 
 
 Balance as at 
  1 January 2015          282             1         (730)              20     27,408    26,981 
 Total recognised 
  (losses)/gains 
  for the period            -             -         (201)             (1)        568       366 
 Dividends paid             -             -             -               -    (1,695)   (1,695) 
 
 Balance as at 
  30 June 2015            282             1         (931)              19     26,281    25,652 
 
 Total recognised 
  (losses)/gains 
  for the period            -             -         (175)           (558)        925       192 
 Realised on 
  disposal                                             18            (18) 
 Dividends paid             -             -             -               -    (1,695)   (1,695) 
 
 Balance as at 
  29 February 
  2016                    282             1       (1,088)           (557)     25,511    24,149 
 
 Total recognised 
  (losses)/gains 
  for the period            -             -         (160)              78        165        83 
 
 Balance as at 
  31 August 2016          282             1       (1,248)           (479)     25,676    24,232 
                    =========  ============  ============  ==============  =========  ======== 
 

Notes to the Interim Report

For the period ended 31 August 2016

   1.             Accounting Policies 

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of fixed asset investments, and in accordance with applicable Accounting Standards and with the Statement of Recommended Practice, "Financial Statements of Investment Trust Companies and Venture Capital Trusts" ("SORP") and in accordance with the Financial Reporting Standard 102 ("FRS102").

   2.             Return per Ordinary Share 

The total return per share of 0.29p is based on the profit for the period of GBP83,000 and the weighted average number of shares in issue as at 31 August 2016 of 28,248,821.

   3.             Net asset value per share 
 
                    As at        As at          As at 
                31 August      30 June    29 February 
                     2016         2015           2016 
 Net assets    24,232,000   25,652,000     24,149,000 
 Shares in 
  issue        28,248,821   28,248,821     28,248,821 
 
 Net asset 
  value per 
  share 
 Basic             85.78p       90.81p         85.49p 
 Diluted           85.78p       90.81p         85.49p 
 
   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 2016 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 2016

   6.             Investment portfolio summary 
 
                                                                Valuation 
                                                                   as a % 
                                                                   of Net 
                            Valuation      Cost   Gain/(loss)      Assets 
                              GBP'000   GBP'000       GBP'000 
 
 As at 31 August 
  2016 
 
 Qualifying Investment 
  - Unquoted 
 Jephcote Trading 
  Limited                         880       880             -          4% 
 Saville Services 
  Limited                       3,400     3,400             -         14% 
 Kinloss Trading 
  Limited                       3,500     3,500             -         14% 
 Alyth Trading Limited          3,200     3,200             -         13% 
 Urban Mining Limited           1,875     1,875             -          8% 
 Opes Industries 
  Limited                       3,068     3,600         (532)         13% 
 
 Total Qualifying 
  Investments                  15,923    16,455         (532)         66% 
                           ----------  --------  ------------  ---------- 
 
 Non-Qualifying 
  Investments 
 Valencia Lending 
  Limited                       1,000     1,000             -          4% 
 Latimer Lending 
  Limited                       2,460     2,460             -         10% 
 Lothian Lending 
  Limited                       1,125     1,125             -          5% 
 
 Total Non-Qualifying 
  investments                   4,585     4,585             -         19% 
                           ----------  --------  ------------  ---------- 
 
 Liquidity Management 
 J Sainsbury Plc 
  Bond (via Latimer 
  Lending Limited)              1,101     1,048            53          5% 
 
 Total Liquidity 
  Management investments        1,101     1,048            53          5% 
                           ----------  --------  ------------  ---------- 
 
 Total Investments             21,609    22,088         (479)           1 
 Balance of Portfolio           2,623     2,623             -         10% 
 
 Net Assets                    24,232    24,711         (479)        100% 
                           ----------  --------  ------------  ---------- 
 

Copies of this Interim Statement will be posted to shareholders in due course and made available on the website:

http://www.pumainvestments.co.uk/pages/view/investors-information-vcts

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR WGGMPGUPQGUU

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