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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Puma Vct 12 Plc | LSE:PU12 | London | Ordinary Share | GB00BYSJJR68 | ORD GBP0.0005 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 24.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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
Hot Features
Premium
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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