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| Name | Symbol | Market | Type |
|---|---|---|---|
| Blitzen Sec.62a | LSE:PUM9 | London | Bond |
| Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 19.00 | 0 | 00:00:00 |
From Mar 2020 to Mar 2025
TIDMPUM9
RNS Number : 0652T
Puma VCT 9 PLC
29 June 2018
HIGHLIGHTS
-- 24p per share of dividends paid since inception, equivalent to an 8.6% per annum tax-free running yield on net investment.
-- NAV per share at the year end was 98.59p (after adding back dividends paid to date).
-- As envisaged in the original Prospectus, resolutions will be put forward later this year for a winding up of the VCT to enable a return of capital.
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the Company's fifth annual report for the year ended 28 February 2018.
The Company was launched and began investing in Spring 2013, with a planned life of five years. In this, its fifth year, there was significant advance in the process of realising the Company's investments and preparing to return capital to investors.
Dividend
As envisaged in the Company's prospectus, the Company has for the fourth calendar year in succession paid a dividend of 6p per ordinary share, equivalent to a 8.6% per annum tax-free running yield on shareholders' net investment.
Investments
At the end of the year, the Company had just under GBP18 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 5.
Results
The Company reported a profit after tax of GBP143,000 (2017: GBP169,000) for the year, a post-tax gain of 0.51p (2017: 0.6p) per ordinary share (calculated on the weighted average number of shares). The slight reduction in profit is a result of loans redeeming and is in line with expectations as the VCT approaches its planned winding up date. The Net Asset Value per ordinary share ("NAV") at 28 February 2018 after adding back the 24p of dividend paid to date was 98.59p (2017: 98.08p).
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 will continue to assist the Investment Manager in in monitoring rule compliance as the Company approaches the end of its planned life.
Patient Capital Review and Finance Act 2018
We are pleased that, in its response to the Financing Growth in Innovative Firms Consultation published with the Autumn Budget on 22 November 2017 ("the Patient Capital Review"), the Government has recognised the continuing importance of VCTs in providing much needed investment in SMEs.
Annual General Meeting and Proposal to Wind-Up the Company
The Annual General Meeting of the Company will be held at Bond Street House, 14 Clifford Street, London W1S 4JU on 8 August 2018 at 10.30 a.m. Notice of the Annual General Meeting and Form of Proxy will be inserted within the annual accounts.
The Company has now just passed its fifth anniversary, and in accordance with the plans set out in the Company's Prospectus, the Board expect to convene a General Meeting in the coming months at which resolutions will be proposed to place the Company into members' solvent liquidation. If these are passed, liquidators will be appointed and the Company will de-list from the London Stock Exchange.
Once such resolutions have been passed by shareholders, for a maximum period of three years, many of the VCT rules, including the 70 per cent qualifying rule, are suspended whilst the Company retains its VCT status of tax free distribution to UK taxpayers. The intention is to return the balance of the capital in an orderly way, with disposals timed appropriately to enable further substantial distributions by the end of 2018.
Egmont Kock
Chairman
28 June 2018
INVESTMENT MANAGER'S REPORT
Introduction
In its fifth year, the Company continues to make good progress. It is now beginning the process of returning capital to shareholders through the realisation of investments whilst maintaining its qualifying status. We believe the Company's portfolio is well positioned to deliver attractive returns to shareholders within the Company's expected remaining time horizon.
Investments
Qualifying Investments
Gasification Plant, East London
In July 2014, before the passing of the Finance Act 2014, the Company completed a GBP1.875 million qualifying investment (as part of a GBP5 million investment alongside other Puma VCTs) in Urban Mining Limited, a member of the Chinook Urban Mining group of companies. Chinook Urban Mining is a well-funded energy-from-waste business which is developing a flagship plant in East London to generate electricity through the gasification of municipal solid waste. We are pleased to report that Company's investment was repaid in full during the year, yielding an attractive return to the Company.
Kinloss and Jephcote - Construction of Ibis Hotel, Luton Airport
As previously reported 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 ("SKPB"), been engaged in a contract with Openwide Investments Limited in relation to the construction of a new build 134 bedroom Ibis Budget Hotel and the associated infrastructure adjacent to Luton Airport. We are pleased to report that, during the year, the project completed successfully generating attractive returns for SKPB which will benefit the Company when its investment is repaid in due course.
Materials Recycling Facility, Oxfordshire
As previously reported, a major fire occurred in 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 board made a provision of GBP532,000 against the carrying value of the Company's investment in Opes.
Opes owned 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, the Company appointed an administrator over Opes in order to protect the Company's investment. During the year, the administrator made substantial progress in recovering the Company's investment. The site was sold and a settlement reached with Opes' insurers. As a result a large part of the original capital invested has been recovered. The directors have now reversed GBP196,000 of the original GBP532,000 impairment to reflect the current position. The administrator continues to pursue several further avenues to recover the balance of the Company's investment.
Saville Services - Care Home Project, Chester
The Company's investment of GBP3.4 million (alongside other Puma VCTs) into Saville Services Limited continues to perform well. Saville Services has been working on a series of projects, including most recently the construction of a 77-bed, purpose-built care home in Chester. We are pleased to report that the care home project completed successfully during the year generating attractive returns for Saville Services which will benefit the Company when its investment is repaid in due course.
Alyth Trading - Contracting Projects, Hamilton, Egham and Heywood
As previously reported, the Company had invested GBP3.2 million (alongside other Puma VCTs) into Alyth Trading Limited, a nationwide provider of contracting services. Alyth Trading has been working most recently on three contracts. The first was in connection with the construction of a 112 bed purpose built care home in Hamilton, Scotland; the project completed successfully during the year generating attractive returns for Alyth Trading which will benefit the Company when its investment is repaid in due course. The second is a contract in connection with the construction of a 68 bed purpose built care home in Egham, Windsor. Construction is behind schedule and over budget as a result of the non-performance of the original building contractor, since replaced. The problems have since been addressed by the developer and the team at Alyth Trading. We continue to closely monitor this investment. The third is a contract in connection with the construction of a 16-flat supported living scheme in Heywood, on the outskirts of Manchester, which is progressing well.
Non-Qualifying Investments
Citrus Group
As previously reported, a series of loans had been advanced to various entities within the Citrus Group, which at the start of the year stood at GBP1 million (through an affiliate, Valencia Lending Limited). These loans, together with loans from other vehicles managed and advised by your Investment Manager, formed 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. Shortly following the year end, the loans were repaid in full giving a good rate of return.
Mixed Residential-Commercial Development, Bloomsbury
As previously reported, a GBP1 million loan (as part of a total facility of GBP17.97 million, increased from GBP17.5 million) was advanced (through an affiliate, Latimer Lending Limited) to Cudworth 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 development includes 11 apartments, 2 houses and 11,800 square feet of B1 commercial space. The loan is secured with a first charge over the site. The development is well progressed and expects to reach practical completion towards the middle of next year.
IVF Clinic, Wickford
In December 2016, loans of GBP400,000 were advanced (also through Latimer Lending Limited) to HPC (Wickford) Limited in a total loan package of GBP2.85 million together with other vehicles managed and advised by the Investment Manager. These loans are to facilitate the development and initial trading of a purpose-built IVF Fertility Clinic in Wickford, Essex. HPC (Wickford) Limited has entered into a lease with Bourn Hall Limited, one of the UK's largest independent fertility clinic groups. We are pleased to report that, following the year end, the clinic opened and the loans were repaid in full giving a good rate of return.
Wind Farm, East Lothian
As previously reported, a GBP1.3 million loan (through another affiliate, Lothian Lending Limited) had been advanced as part of a GBP2.6 million facility 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. We are pleased to report that, during the year, the loan was repaid in full, generating an attractive return.
Liquidity Management
To further manage liquidity, the Company had exposure to a floating rate note issued by Commonwealth Bank of Australia of GBP1,095,000.
Investment Strategy
We are pleased to have invested the Company's funds in a balanced portfolio of both qualifying and non-qualifying investments and are working on improving the liquidity of the portfolio wherever possible whilst maintaining an appropriate risk adjusted return. We continue to focus on the monitoring of our investments and are focused on exits. The objective remains to achieve an orderly winding up of the Company's assets at the end of its life, subject to shareholder approval at the forthcoming General Meeting.
Puma Investment Management Limited
28 June 2018
Investment Portfolio Summary
As at 28 February 2018
Hot Features
Premium
Valuation
Valuation Cost Gain/(loss) as a
% of Net
GBP'000 GBP'000 GBP'000 Assets
Qualifying Investments
Jephcote Trading Limited 880 880 - 4%
Kinloss Trading Limited 3,500 3,500 - 17%
Saville Services Limited 3,400 3,400 - 16%
Opes Industries Limited 3,264 3,600 (336) 15%
Alyth Trading Limited 3,200 3,200 - 15%
Total Qualifying Investments 14,244 14,580 (336) 67%
---------- -------- ------------ ----------
Non-Qualifying Investments
Latimer Lending Limited 1,628 1,628 - 8%
Valencia Lending Limited 1,000 1,000 - 5%
Lothian Lending Limited 31 31 - 0%
Total Non-Qualifying
investments 2,659 2,659 - 13%
---------- -------- ------------ ----------
Liquidity Management
Investments
Commonwealth Bank of
Australia bond* 1,095 1,095 - 5%
Total Liquidity Management 1,095 1,095 - 5%
---------- -------- ------------ ----------
Total Investments 17,998 18,334 (336) 85%
Balance of Portfolio 3,073 3,073 - 15%
Net Assets 21,071 21,407 (336) 100%
---------- -------- ------------ ----------
Of the investments held at 28 February 2018, all are incorporated in England and Wales.
* Quoted investment listed on the LSE.
Income Statement
For the year ended 28 February 2018
Year ended 28 February Year ended 28 February
2018 2017
Note Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
8
Gain on investments (b) - 194 194 - 79 79
Income 2 650 - 650 878 - 878
650 194 844 878 79 957
-------- -------- -------- -------- --------
Investment management
fees 3 (112) (336) (448) (121) (363) (484)
Other expenses 4 (265) - (265) (282) - (282)
(377) (336) (713) (403) (363) (766)
-------- -------- -------- -------- --------
Profit before taxation 273 (142) 131 475 (284) 191
Taxation 5 (52) 64 12 (95) 73 (22)
Profit/(loss) and
total comprehensive
income for the
year 221 (78) 143 380 (211) 169
======== ======== ======== ======== ======== ========
Basic and diluted
Return/(loss) per
ordinary share
(pence) 6 0.79p (0.28p) 0.51p 1.35p (0.75p) 0.60p
======== ======== ======== ======== ======== ========
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 in November 2014 by the Association of Investment Companies and updated in January 2017.
Balance Sheet
As at 28 February 2018
As at As at
28 February 28 February
Note 2018 2017
GBP'000 GBP'000
Fixed Assets
Investments 8 17,998 19,861
------------- -------------
Current Assets
Debtors 9 3,125 4,287
Cash at bank and in hand 127 364
------------- -------------
3,252 4,651
Creditors - amounts falling
due within one year 10 (178) (1,888)
Net Current Assets 3,074 2,763
------------- -------------
Total Assets less Current Liabilities 21,072 22,624
Creditors - amounts falling
due after more than one year
(including convertible debt) 11 (1) (1)
Net Assets 21,071 22,623
============= =============
Capital and Reserves
Called up share capital 12 282 282
Capital redemption reserve 1 1
Capital reserve - realised (1,597) (1,324)
Capital reserve - unrealised (337) (532)
Revenue reserve 22,722 24,196
Total Equity 21,071 22,623
============= =============
Net Asset Value per Ordinary
Share 13 74.59p 80.08p
============= =============
The financial statements on pages 29 to 43 were approved and authorised for issue by the Board of Directors on 28 June 2018 and were signed on their behalf by:
Egmont Kock
Chairman
28 June 2018
Statement of Cash Flows
For the year ended 28 February 2018
Year ended Year ended
28 February 28 February
2018 2017
GBP'000 GBP'000
Profit after taxation 143 169
Taxation (12) 22
Gain on investments (194) (79)
Decrease/(increase) in debtors 1,174 (1,815)
Decrease in creditors (1,688) (19)
Tax paid (22) (298)
Net cash used in operating activities (599) (2,020)
------------- -------------
Cash flow from investing activities
Purchase of investments (644) -
Proceeds from disposal of investments
and repayment of loans and loan
notes 2,701 1,749
Net cash generated from investing
activities 2,057 1,749
------------- -------------
Cash flow from financing activities
Dividends paid (1,695) -
Net cash used in financing activities (1,695) -
------------- -------------
Net decrease in cash and cash equivalents (237) (271)
Cash and cash equivalents at the
beginning of the year 364 635
Cash and cash equivalents at the
end of the year 127 364
============= =============
Statement of Changes in Equity
For the year ended 28 February 2018
Called Capital Capital Capital
up 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
March 2016 282 1 (1,088) (557) 25,511 24,149
Realised on disposal - - (25) 25 - -
Total comprehensive
income for the year - - (211) - 380 169
Dividends payable - - - - (1,695) (1,695)
---------- ------------ ------------ -------------- --------- --------
Balance as at 28
February 2017 282 1 (1,324) (532) 24,196 22,623
Total comprehensive
income for the year - - (273) 195 221 143
Dividends paid - - - - (1,695) (1,695)
Balance as at 28
February 2018 282 1 (1,597) (337) 22,722 21,071
========== ============ ============ ============== ========= ========
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 GBP22,722,000 (2017: GBP24,196,000).
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.
1. Accounting Policies
Accounting convention
Puma VCT 9 plc ("the Company") was incorporated, registered and is domiciled in England. The Company's registered number is 08238812. The registered office is Bond Street House, 14 Clifford Street, London W1S 4JU. 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, 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 November 2014 by the Association of Investment Companies and updated in January 2017 ("the SORP").
Monetary amounts in these financial statements are rounded to the nearest whole GBP1,000, except where otherwise indicated.
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 12.
Listed investments are stated at bid price at the reporting date.
Unquoted investments are stated at fair value by the Directors with reference to the International Private Equity and Venture Capital Valuation Guidelines ("IPEV") as follows:
-- Investments which have been made within the last twelve months or where the investee company is in the early stage of development will usually be valued at the price of recent investment 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.
-- Other investments (comprising equity and loan notes) and 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 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 investment 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 exercisable once the holders of Ordinary Shares have received distributions of GBP1 per share. 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 has 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 years. 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 as liabilities from the ex-dividend date.
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. Further details of the unquoted investments are disclosed in the Investment Manager's Report on pages 3 to 5 and notes 8 and 14 of the financial statements.
2. Income
Year ended 28 February Year ended 28
2018 February 2017
GBP'000 GBP'000
Income from investments
Loan stock interest 647 823
Bond yields 3 55
650 878
======================= ===============
3. Investment Management Fees
Year ended 28 Year ended 28
February 2018 February 2017
GBP'000 GBP'000
Puma Investments
fees 448 484
448 484
=============== ===============
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 ("NAV") 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% of the funds raised (2017: 2.8%). Graham Shore (a director) holds a Directorship of the parent of the Investment Manager.
4. Other expenses
Year ended 28 Year ended 28 February
February 2018 2017
GBP'000 GBP'000
Shore Capital Fund Administration
Services Limited 78 85
Directors' Remuneration 56 56
Social security costs 3 7
Auditor's remuneration
for statutory audit 24 23
Legal and professional
fees 32 38
Trail commission 34 39
Other expenses 38 34
265 282
=============== =======================
Shore Capital Fund 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 19. The Company had no employees (other than Directors) during the year (2017: none). The average number of non-executive Directors during the year was 3 (2017: 3). The non-executive Directors are considered to be the Key Management Personnel of the Company with total remuneration for the year of GBP59,000 (2017: GBP63,000), including social security costs.
The Auditor's remuneration of GBP20,000 (2017: GBP19,500) has been grossed up in the table above to be inclusive of VAT.
5. Taxation
Year ended 28 Year ended 28 February
February 2018 2017
GBP'000 GBP'000
UK corporation tax charged
to revenue reserve 52 95
UK corporation tax credited
to capital reserve (64) (73)
UK corporation tax (credit)/charge
for the year (12) 22
=============== =======================
Factors affecting tax (credit)/charge for
the year
Profit before taxation 131 191
=============== =======================
Tax charge calculated on
profit before taxation
at 19% (2017: 20%) 25 38
Capital gains not taxable (37) (16)
(12) 22
=============== =======================
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.
6. Basic and diluted return/(loss) per Ordinary Share
Year ended 28 February 2018
Revenue Capital Total
Total comprehensive
income for the year
(GBP'000) 221 (78) 143
Weighted average number
of shares 28,248,823 28,248,823 28,248,823
Return/(loss) per share 0.79p (0.28p) 0.51p
Year ended 28 February 2017
Revenue Capital Total
Total comprehensive
income for the year
(GBP'000) 380 (211) 169
Weighted average number
of shares 28,248,823 28,248,823 28,248,823
Return/(loss) per share 1.35p (0.75p) 0.60p
7. Dividends
Two interim dividends of 6p per ordinary share were paid in the year totalling GBP3,390,000 (year ended 28 February 2017: no interim dividends paid). One of the two interim dividends paid had an ex-dividend date of 16 February 2017, so was recognised as a liability of GBP1,695,000 as at 28 February 2017. The Directors do not propose a final dividend (2017: GBPnil).
8. Investments
Qualifying Non qualifying
(a) Movements in investments investments investments Total
GBP'000 GBP'000 GBP'000
Cost at 1 March 2017 16,455 3,938 20,393
Net unrealised gains at 1 March
2017 (532) - (532)
Valuation at 1 March 2017 15,923 3,938 19,861
Purchases at cost - 1,738 1,738
Disposals of investments
and repayments of loans
and loan notes:
- Proceeds (1,875) (1,920) (3,795)
- Realised net (losses)
on disposals - (1) (1)
Net unrealised 196 (1) 195
Valuation at 28 February
2018 14,244 3,754 17,998
============= =============== ========
Cost at 28 February 2018 14,580 3,754 18,334
Net unrealised (losses)
at 28 February 2018 (336) - (336)
Valuation at 28 February
2018 14,244 3,754 17,998
============= =============== ========
During the year the Company purchased quoted bonds in the Commonwealth Bank of Australia for GBP644,000 and subsequently disposed of these for GBP642,000.
(b) Gains and losses on investments
The gains and losses on investments for the year shown in the Income Statement is analysed as follows:
Year ended Year ended
28 February 28 February
2018 2017
GBP'000 GBP'000
Realised (losses)/gains on disposals
in the period (1) 79
Unrealised (losses)/gains in
period 195 -
194 79
============= =============
(c) Quoted and unquoted investments
Market value Market value
as at 28 as at 28
February February
2018 2017
GBP'000 GBP'000
Quoted investments 1,095 -
Unquoted investments 16,903 19,861
17,998 19,861
============= =============
Further details of these investments are disclosed in the Investment Portfolio Summary on pages 6 to 10 of the Annual Report.
9. Debtors
As at 28 February As at 28 February
2018 2017
GBP'000 GBP'000
Other debtors 62 1,757
Accrued income 3,051 2,530
Corporation tax 12 -
3,125 4,287
================== ==================
Other debtors as at 28 February 2017 included GBP1,695,000 of monies paid to the registrar to enable the interim dividend to be paid on 3 March 2017 (see note 7).
10. Creditors - amounts falling due within one year
As at 28 February As at 28 February
2018 2017
GBP'000 GBP'000
Accruals 178 171
Corporation tax - 22
Dividends payable (see
note 7) - 1,695
178 1,888
================== ==================
11. Creditors - amounts falling due after more than one year
As at 28 February As at 28 February
2018 2017
GBP'000 GBP'000
Loan notes 1 1
================== ==================
On 30 October 2012, the Company issued Loan Notes in the amount of GBP1,000 to a nominee on behalf of the Investment Manager and members of the investment management team. The Loan Notes accrue interest of 5% per annum.
The Loan Notes entitle the Investment Manager and members of the investment management team to receive a performance related incentive of 20% of the aggregate amounts realised by the Company in excess of GBP1 per Ordinary Share. The Shareholders will be entitled to the balance. This incentive, to be effected through the issue of shares in the Company, will only be exercised once the holders of Ordinary Shares have received dividends of GBP1 per share (whether capital or income). 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.
In the event that distributions to the holders of Ordinary Shares totalling GBP1 per share have been made the Loan Notes will convert into sufficient Ordinary Shares to represent 20% of the enlarged number of Ordinary Shares. The amount of the performance fee will be calculated as 20% of the excess of the net asset value (adjusted for dividends paid) over GBP1 per issued share.
12. Called Up Share Capital
As at 28 February As at 28 February
2018 2017
GBP'000 GBP'000
28,248,823 ordinary shares
of 1p each 282 282
================== ==================
13. Net Asset Value per Ordinary Share
As at As at
28 February 2018 28 February 2017
Net assets GBP21,071,000 GBP22,623,000
Shares in issue 28,248,823 28,248,823
Net asset value per
share
Basic 74.59p 80.08p
Diluted 74.59p 80.08p
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 28 February 2018:
As at 28 February As at 28 February
2018 2017
GBP'000 GBP'000
Financial assets measured at
fair value through profit or
loss 17,998 19,861
Financial assets that are debt
instruments measured at amortised
cost 3,113 4,287
Financial liabilities measured
at amortised cost (179) (1,867)
20,932 22,281
================== ==================
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 carrying amount of financial assets best represents the maximum credit risk exposure at the balance sheet date. The Company's financial assets and maximum exposure to credit risk is as follows:
As at 28 February As at 28 February
2018 2017
GBP'000 GBP'000
Investments in loans, loan
notes and bonds 7,968 8,874
Cash at bank and in hand 127 364
Other debtors 606 1,757
Accrued income 2,519 2,530
11,220 13,525
================== ==================
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.
Other debtors as at 28 February 2017 included GBP1,695,000 of monies advanced to the registrar for payment of the 2017 interim dividend, which was paid on 3 March 2017. Credit risk associated with accrued interest income and balance of other debtors are predominantly covered by the investment management procedures.
Investments in loans, loan notes and bonds 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 12. 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.
6% (2017: none) of the Company's investments are listed on the London Stock Exchange and 94% (2017: 100%) are unquoted investments.
Liquidity risk
Details of the Company's unquoted investments are provided in the Investment Portfolio summary on page 6. By their nature, unquoted investments may not be readily realisable, 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, other than loan notes amounting to GBP1,000 (2017: GBP1,000) (see note 11).
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 Report of the Directors. The Company's overall liquidity risks are monitored on a quarterly basis by the Board. The Company maintains sufficient investments in cash and readily realisable securities 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 0.5% at 28 February 2018 (2017: 0.25%). 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.
Foreign currency risk
The reporting currency of the Company is Sterling. The Company has not held any non-Sterling investments during the year.
Interest rate risk profile of financial assets
The following analysis sets out the interest rate risk of the Company's financial assets as at 28 February 2018.
Weighted Weighted
average average
interest period
Rate status rate until maturity Total
GBP'000
Cash at bank - RBS Floating 0.01% - 127
Loans and loan notes Floating 4.49% 11 months 2,125
Loans and loan notes Fixed 6.69% 16 months 2,589
Balance of assets Non-interest bearing - 16,409
21,250
========
The following analysis sets out the interest rate risk of the Company's financial assets as at 28 February 2017.
Weighted Weighted
average average
interest period
Rate status rate until maturity Total
GBP'000
Cash at bank - RBS Floating 0.01% - 364
Cash at bank - Lloyds Floating 0.01% - -
Loans, loan notes and
bonds Floating 8.89% 27 months 2,092
Loans, loan notes and
bonds Fixed 17.77% 29 months 3,943
Balance of assets Non-interest bearing - 18,114
24,513
========
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 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:-
As at 28 February As at 28 February
2018 2017
GBP'000 GBP'000
Level 1
Investments listed on LSE 1,095 -
Level 3
Unquoted investments 16,903 19,861
17,998 19,861
================== ==================
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 7 to 10.
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 has 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. From April 2019 this is rising 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 (2017: none).
17. Controlling Party
In the opinion of the Directors there is no immediate or ultimate controlling party.
The financial information set out in this announcement does not constitute the Company's statutory financial statements in accordance with section 434 Companies Act 2006 for the year ended 28 February 2018, but has been extracted from the statutory financial statements for the year ended 28 February 2018 which were approved by the Board of Directors on 28 June 2018 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 2017 have been delivered to the Registrar of Companies and received an Independent Auditors report which was unqualified and did not contain any emphasis of matter nor statements under s 498(2) and (3) of the Companies Act 2006.
Copies of the full annual report and financial statements for the year ended 28 February 2018 will be available to the public at the registered office of the Company at Bond Street House, 14 Clifford Street, London, W1S 4JU 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.
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