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PUM9 Blitzen Sec.62a

19.00
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Name Symbol Market Type
Blitzen Sec.62a LSE:PUM9 London Bond
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  0.00 0.00% 19.00 0 00:00:00

Puma VCT 9 PLC Annual Financial Report (0652T)

29/06/2018 10:50am

UK Regulatory


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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

 
                                                                     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.

END

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