TIDMPU11
RNS Number : 9278C
Puma VCT 11 PLC
20 June 2019
HIGHLIGHTS
-- Funds substantially invested in a diverse range of businesses and projects
-- HMRC requirement that qualifying investments are 70% of the fund is now met
-- 10p per share of dividends paid since inception (including 5p
interim dividend paid in February 2019)
-- Provision of GBP1.5 million against the carrying value of our
investment in Warm Hearth, a company owning two freehold pubs, to
reflect difficult trading
-- Loss before tax of GBP1,621,000 representing 5.33p per share
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the Company's fourth annual report for
the year ended 28 February 2019.
The Company has now effectively deployed substantially all its
funds in both qualifying and non-qualifying investments. As a
result, it has met its minimum qualifying investment percentage (on
an HMRC basis) of 70 per cent.
Investments
At the end of the year, the Company had just under GBP23 million
invested in a mixture of qualifying and non-qualifying investments
whilst maintaining our VCT qualifying status.
Further details of all our investments can be found in the
Investment Manager's report on pages 3 to 6. This includes a
discussion about Warm Hearth Limited, against which we have made a
provision of GBP1.5 million.
Results
Before taking account of the provision, the Company had a small
loss before tax of GBP121,000 for the year (2018: GBP273,000
profit), a post-tax loss of 0.41p (2018: 0.72p gain) per ordinary
share (calculated on the weighted average number of shares). The
provision reduced this to a pre-tax loss of GBP1,621,000 for the
year resulting in a post-tax loss of 5.33p per ordinary share.
Reflecting the provision against the Warm Hearth investment, the
Net Asset Value per ordinary share ("NAV") at 28 February 2019 was
93.06p (2018: 98.39p) after adding back dividends paid to date.
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.
Dividend
As envisaged in the Company's prospectus, the Company paid a
dividend of 5p per ordinary share just before the end of the
year.
Outlook
We are naturally disappointed with the performance of our
investment in Warm Hearth. However, we remain focused on generating
attractive risk-adjusted returns for the Company from both the
qualifying and non-qualifying portfolio.
Whilst there will probably be some further changes in the
composition of the portfolio, the Board expects to concentrate in
the future on the monitoring of our existing investments and
considering the options for exits in due course.
Harold Paisner
Chairman
20 June 2019
INVESTMENT MANAGER'S REPORT
Introduction
The Company's funds are now substantially deployed in both
qualifying and non-qualifying investments, having met its minimum
qualifying investment percentage of 70 per cent during the year. We
report on all our portfolio holdings below.
Investments
Qualifying Investments
Pure Cremation - Crematorium and Direct Cremations
In November 2017, the Company invested GBP2 million in Pure
Cremation Holdings Limited (as part of a GBP5 million qualifying
investment alongside another Puma VCT). Pure Cremation is a leading
provider of so-called direct cremations, meeting the needs of a
growing number of people in the United Kingdom who want a
respectful direct cremation arranged without any funeral, leaving
them free to say farewell how, where and when is right for them.
The Pure Cremation team have many years' experience in the funeral
services sector and acquired a site near Andover to develop a new
crematorium and central facility. We are pleased to report that the
Andover facility opened earlier this year and the business is
performing well.
Growing Fingers - Children's Nursery
As previously reported, the Company has invested GBP0.98 million
(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.
Welcome Health - Chain of Pharmacies
The Company had previously invested GBP2.5 million (as part of a
GBP5 million investment alongside other Puma VCTs) in Welcome
Health Limited. Welcome Health owns and operates a series of mature
pharmacies across the North East of England, focusing on providing
pharmaceutical services to a currently underserviced and relatively
deprived market. We are pleased to report that, following the year
end, the entrepreneur behind Welcome Health has refinanced the
group which should facilitate the redemption of the Company's
investment in full in the coming months.
Mini Rainbows - Children's Nurseries
Mini Rainbows Limited (in which the Company invested GBP2.5
million as part of a GBP5 million investment alongside other Puma
VCTs) owns and operates two mature children's day nurseries in
Scotland - in Murrayfield, an affluent part of Edinburgh, and in
Shawlands, Glasgow. Both sites are performing well with occupancy
ahead of forecast.
Warm Hearth - Pubs with Microbreweries
In late 2015, the Company invested GBP2.5 million (as part of a
GBP5 million investment alongside other Puma VCTs) in Warm Hearth
Limited, a pub business seeking to capitalise on the strong growth
trends within the craft beer sub-market. Warm Hearth entered into a
franchise agreement with Brewhouse & Kitchen Limited
("B&K"), a strong and fast-growing national branded operator,
offering craft micro-brewing activities within each of its pub
units as a point of focus. Warm Hearth currently owns and operates
two substantial freehold pub assets in Chester and Wilmslow. As
previously reported, performance of these units has been
significantly below our expectations for some time. Moreover, the
market for pubs offering food has deteriorated over the last year
and whilst the micro-brewing is a differentiator, it has not
protected Warm Hearth from these trends. Management remain focused
on improving performance, as well as looking at planning options,
particularly at Chester to convert upstairs space into boutique
hotel rooms, which have the prospect of delivering value. This
notwithstanding, the Board has decided to provide against the
carrying value of this investment.
Signal Building Services - Construction Projects
In September 2017, the Company invested GBP1 million (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 is currently working on two projects: the
construction of a 22 apartment supported living scheme in Wigan and
the construction of a 14 apartment supported living scheme in
Sutton-in-Ashfield.
Applebarn Nurseries - Children's Nursery
The Company had previously invested GBP1.1 million in Applebarn
Nurseries Limited (as part of a GBP2.2 million qualifying
investment alongside another Puma VCT). The management team include
a successful operator of the nurseries, together with an
experienced developer and contractor, and their first site, a new
120 place children's day nursery in Altrincham, South Manchester,
opened in September 2018.
Knott End Pub Company - Pubs with Microbreweries
During the previous year, the Company invested GBP2.4 million
(as part of a GBP4.8 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. During the year,
Knott End opened its first two pubs, in Milton Keynes and Horsham,
West Sussex, both of which are trading well.
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. Kid & Play is
seeking to develop, own and operate a new children's day nursery
and has identified a number of potential sites which are currently
in various stages of planning applications.
Sunlight Education Nucleus - Special Educational Needs
Schools
In November 2017, the Company made a GBP1.35 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 educational needs
schools across the United Kingdom. We are pleased to report that,
shortly following the year end, the team at Sunlight completed on
the purchase of the site for their first school in Stafford, West
Midlands.
South-West Cliffe - Children's Nursery
As previously reported, 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.
Non-Qualifying Investments
Mixed Residential Commercial Development, Bloomsbury
As previously reported, a GBP1.2 million loan (as part of a
total facility of GBP17.97 million) was advanced to Cudworth
Limited (through the VCT's affiliate Mayfield 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. 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 we are pleased to report that
contracts have recently been exchanged to sell the commercial
units, both houses and a flat, with three further flats under
offer.
Care Home for the Elderly, Formby
The GBP800,000 loan to New Care (Sefton) Limited in connection
with the development and initial trading of a 75-bed purpose-built
care home in Formby, Merseyside, continues to perform in line with
expectations. The New Care Group is an experienced developer and
operator of care homes. The loan (through an affiliate, Sloane
Lending Limited) is part of an overall facility of GBP7.98 million
and is secured with a first charge over the site. We are pleased to
report that the borrower has agreed to sell the site on practical
completion of the development which should facilitate the repayment
of the loan in full.
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, Meadow Lending Limited and
Palmer 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, following the year end,
the loans were repaid in full.
Care Home for the Elderly, Egham
As previously reported, a loan of GBP1,208,000 had been advanced
(through an affiliate, Meadow Lending Limited) to Windsar Care (UK)
LLP to fund the development and initial trading of a 68-bed
purpose-built care home in Egham, Windsor. This loan, together with
loans from other vehicles managed and advised by the Investment
Manager totalling GBP7.2 million, are secured with a first charge
over the site. We are pleased to report that, following completion
of the development earlier this year, the loan has been repaid in
full since the reporting date.
Residential Development Project, Beckenham
A loan of GBP3 million (together with loans from other vehicles
managed and advised by your Investment Manager totalling GBP5
million) had been advanced (through an affiliate, Mayfield Lending
Limited) to Northern Land Developments Limited. The loans
facilitated the acquisition of two large residential houses in
Beckenham, Kent, funded planning costs to replace these two units
with seven town houses and planning costs to develop a larger
scheme on an adjacent larger parcel of land. As previously
reported, the borrower obtained planning permission during the
period for 105 new units comprising a mixture of four-bedroom
houses and one, two and three bedroom apartments. We are pleased to
report that the loans were repaid in full during the year giving a
good rate of return.
IVF Clinic, Wickford
As previously reported, loans of GBP400,000 were advanced
(through an affiliate, Lothian 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. During the year, the clinic opened and the loans were
repaid in full with a good rate of return.
Supported Living, Northumberland
In June 2018 the Company committed loans (through affiliates,
Mayfield Lending Limited and Latimer Lending Limited) of GBP1.46
million to Homelife Developments Hexham Ltd. The developer is
constructing a 9 apartment supported living scheme in
Northumberland which is expected to be completed by the end of
2019.
Investment Strategy
We are pleased to have invested the Company's funds in a diverse
range of businesses and projects. We remain focused on generating
strong returns for the Company in both the qualifying and
non-qualifying portfolios, whilst balancing these returns with
maintaining an appropriate risk exposure. Notwithstanding the
performance of our investment in Warm Hearth, we remain confident
that our portfolio is well positioned to deliver attractive returns
to shareholders within the Fund's expected time horizon.
Puma Investment Management Limited
20 June 2019
Investment Portfolio Summary
As at 28 February 2019
Valuation
as a % of
Valuation Cost Gain/(loss) Net Assets
GBP'000 GBP'000 GBP'000
Qualifying Investments
Warm Hearth Limited 1,000 2,500 (1,500) 4%
Mini Rainbows Limited 2,500 2,500 - 10%
Welcome Health Limited 2,500 2,500 - 10%
Growing Fingers Limited 980 980 - 4%
Applebarn Nurseries
Limited 1,133 1,133 - 4%
Sunlight Education Nucleus
Limited 1,350 1,350 - 5%
Signal Building Services
Limited 1,000 1,000 - 4%
Kid & Play Limited 1,694 1,694 - 7%
Knott End Pub Company
Limited 2,400 2,400 - 9%
Pure Cremation Holdings
Limited 2,000 2,000 - 8%
South-West Cliffe Limited 2,100 2,100 - 8%
Total Qualifying Investments 18,657 20,157 (1,500) 73%
---------- -------- ------------ ------------
Non-Qualifying Investments
Palmer Lending Limited 260 260 - 1%
Mayfield Lending Limited 1,240 1,240 - 5%
Latimer Lending Limited 1 1 - 0%
Meadow Lending Limited 1,598 1,598 - 6%
Sloane Lending Limited 800 800 - 3%
Total Non-Qualifying
Investments 3,899 3,899 - 15%
---------- -------- ------------ ------------
Total Investments 22,556 24,056 (1,500) 88%
Balance of Portfolio 2,786 2,786 - 12%
Net Assets 25,342 26,842 (1,500) 100%
---------- -------- ------------ ------------
Of the investments held at 28 February 2019, all are
incorporated in England and Wales.
Income Statement
For the year ended 28 February 2019
Year ended 28 February Year ended 28 February
2019 2018
Note Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loss on investments 8 (b) - (1,500) (1,500) - (4) (4)
Income 2 698 - 698 1,153 - 1,153
698 (1,500) (802) 1,153 (4) 1,149
-------- -------- -------- -------- --------
Investment management
fees 3 (143) (431) (574) (148) (444) (592)
Other expenses 4 (245) - (245) (284) - (284)
(388) (431) (819) (432) (444) (876)
-------- -------- -------- -------- --------
(Loss)/profit before
taxation 310 (1,931) (1,621) 721 (448) 273
Taxation 5 (59) 54 (5) (137) 85 (52)
(Loss)/profit and total
comprehensive income
for the year 251 (1,877) (1,626) 584 (363) 221
======== ======== ======== ======== ======== ========
Basic and diluted
(Loss)/return per Ordinary
Share (pence) 6 0.82p (6.15p) (5.33p) 1.91p (1.19p) 0.72p
======== ======== ======== ======== ======== ========
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 February 2018.
Balance Sheet
As at 28 February 2019
As at As at
28 February 28 February
Note 2019 2018
GBP'000 GBP'000
Fixed Assets
Investments 8 (a) 22,556 26,776
------------- -------------
Current Assets
Debtors 9 2,920 2,365
Cash 42 198
------------- -------------
2,962 2,563
Creditors - amounts falling
due within one year 10 (176) (235)
Net Current Assets 2,786 2,328
------------- -------------
Net Assets 25,342 29,104
============= =============
Capital and Reserves
Called up share capital 12 19 19
Share premium account - 29,473
Capital reserve - realised (1,446) (1,069)
Capital reserve - unrealised (1,500) -
Revenue reserve 28,269 681
Total Equity 25,342 29,104
============= =============
Net Asset Value per Ordinary
Share 13 83.06p 95.39p
============= =============
The financial statements on pages 32 to 47 were approved and
authorised for issue by the Board of Directors on 20 June 2019 and
were signed on their behalf by:
Harold Paisner
Chairman
Statement of Cash Flows
For the year ended 28 February 2019
Year ended Year ended
28 February 28 February
2019 2018
GBP'000 GBP'000
(Loss)/Profit after tax (1,626) 221
Tax charge for the year 5 52
Loss on investments 1,500 4
Increase in debtors (555) (1,145)
Decrease in creditors (7) (20)
Cash outflow from operations (683) (888)
------------- -------------
Corporation tax paid (57) (74)
Net cash outflow from operating activities (740) (962)
------------- -------------
Cash flow from investing activities
Purchase of investments - (11,971)
Proceeds from disposal of investments
and repayments of loans 2,720 14,011
Net cash generated from investing
activities 2,720 2,040
------------- -------------
Cash flow from financing activities
Dividends paid (2,136) (915)
Net cash used for financing activities (2,136) (915)
------------- -------------
Net cash (decrease)/increase in cash
and cash equivalents (156) 163
Cash and cash equivalents at the beginning
of the period 198 35
Cash and cash equivalents at end of
year 42 198
============= =============
Statement of Changes in Equity
For the year ended 28 February 2019
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
2017 19 29,473 (728) 22 1,012 29,798
Total comprehensive
income for the year - - (363) - 584 221
Realised gain from
prior period - - 22 (22) - -
Dividends paid - - - - (915) (915)
---------- --------- ------------ -------------- --------- --------
Balance as at 28
February 2018 19 29,473 (1,069) - 681 29,104
Total comprehensive
income for the year - - (377) (1,500) 251 (1,626)
Cancellation of share
premium account - (29,473) - - 29,473 -
Dividends paid - - - - (2,136) (2,136)
Balance as at 28
February 2019 19 - (1,446) (1,500) 28,269 25,342
========== ========= ============ ============== ========= ========
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 GBP28,269,000 (2018:
GBP681,000).
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 September
2018.
1. Accounting Policies
Accounting convention
Puma VCT 11 plc ("the Company") was incorporated, registered and
is domiciled in England. The Company's registered number is
09197956. 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 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 November 2014 by the Association of
Investment Companies and updated in February 2018 ("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 16.
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.
-- 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 7,627,992 Ordinary Shares (as set out in note 11 of the
financial statements) to the Investment Manager and members of the
investment management team being 20% of the total issued Ordinary
Share capital of 38,139,963. 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 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
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 other debtors and accrued income which are
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.
Further details of the unquoted investments are disclosed in the
Investment Manager's Report on pages 3 to 6 and notes 8 and 14 of
the financial statements.
2. Income
Year ended 28 February Year ended 28 February
2019 2018
GBP'000 GBP'000
Income from investments
Loan and loan note interest 697 1,137
Bond yields - 16
697 1,153
Other income
Bank deposit income 1 -
698 1,153
======================= =======================
3. Investment Management Fees
Year ended 28 February Year ended 28 February
2019 2018
GBP'000 GBP'000
Puma Investments fees 574 592
574 592
======================= =======================
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 2.8% (2018: 3.0 %) of the funds raised. Graham Shore
(a director) holds a Directorship of the parent of the Investment
Manager.
4. Other expenses
Year ended 28 February Year ended 28 February
2019 2018
GBP'000 GBP'000
PI Administration Services
fees 100 103
Directors' remuneration 48 48
Social security costs 2 2
Auditor's remuneration
for statutory audit 25 24
Legal and professional
fees 25 63
Other expenses 45 44
245 284
======================= =======================
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 22. The Company had no
employees (other than Directors) during the year (2018: none). The
average number of non-executive Directors during the year was 3
(2018: 3). The non-executive Directors are considered to be the Key
Management Personnel of the Company with total remuneration for the
year of GBP50,000 (2018: GBP50,000) including social security
costs.
The Auditor's remuneration of GBP21,000 (2018: GBP20,000) has
been grossed up in the table above to be inclusive of VAT.
Non-audit fees charged during the year were GBP250 (2018: GBPnil)
for iXBRL tagging of the 2018 financial statements.
5. Taxation
Year ended 28 Year ended 28
February 2019 February 2018
GBP'000 GBP'000
UK corporation tax charged
to revenue reserve 59 137
UK corporation tax credited
to capital reserve (54) (85)
UK corporation tax charge
for the year 5 52
=============== ===============
Factors affecting tax
charge for the year
(Loss)/profit before taxation (1,621) 273
=============== ===============
Tax charge calculated
on (loss)/profit before
taxation at the applicable
rate of 19% (308) 51
Tax on capital items not
taxable 285 1
Tax losses carried forward 23 -
Adjustments relating to
prior periods 5 -
5 52
=============== ===============
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 28 February 2019
Revenue Capital Total
Total comprehensive income
for the year GBP251,000 (GBP1,877,000) (GBP1,626,000)
Weighted average number
of shares in issue for
the year 38,139,963 38,139,963 38,139,963
Less: management incentive
shares (see note 11) (7,627,992) (7,627,992) (7,627,992)
Weighted average number
of shares for purposes
of return/(loss) per share
calculations 30,511,971 30,511,971 30,511,971
------------ --------------- ---------------
Return/(loss) per share 0.82p (6.15p) (5.33p)
Year ended 28 February 2018
Revenue Capital Total
Total comprehensive income
for the year GBP584,000 (GBP363,000) GBP221,000
Weighted average number
of shares in issue for
the year 38,139,963 38,139,963 38,139,963
Less: management incentive
shares (see note 11) (7,627,992) (7,627,992) (7,627,992)
Weighted average number
of shares for purposes
of return/(loss) per share
calculations 30,511,971 30,511,971 30,511,971
------------ ------------- ------------
Return/(loss) per share 1.91p (1.19p) 0.72p
7. Dividends
During the year, the directors paid the dividend approved at the
2018 AGM of 2p per share (2018: 3p paid in year, approved at 2017
AGM) resulting in a total dividend payment of GBP610,000 (2018:
GBP915,000). The Directors do not propose a final dividend in
relation to the year ended 28 February 2019. An interim dividend of
5p per ordinary share was paid from revenue reserves in the year
ended 28 February 2019 totalling GBP1,526,000 (2018: GBPnil).
8. Investments
Qualifying Non-qualifying
(a) Movements in investments investments investments Total
GBP'000 GBP'000 GBP'000
Purchased at cost 20,157 6,619 26,776
Net unrealised gains/(losses) - - -
Valuation at 1 March
2018 20,157 6,619 26,776
Purchases at cost - - -
Disposal of investments
and repayments of loans
and loan notes - (2,720) (2,720)
Net unrealised loss (1,500) - (1,500)
Valuation at 28 February
2019 18,657 3,899 22,556
============= =============== ========
Book cost at 28 February
2019 20,157 3,899 24,056
Net unrealised losses
at 28 February 2019 (1,500) - (1,500)
Valuation at 28 February
2019 18,657 3,899 22,556
============= =============== ========
(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
2019 2018
GBP'000 GBP'000
Realised losses in year - (4)
Unrealised losses in
year (1,500) -
(1,500) (4)
============= =============
(c) Quoted and unquoted investments
Market value Market value
as at 28 as at 28
February February
2019 2018
GBP'000 GBP'000
Unquoted investments 22,556 26,776
22,556 26,776
============= =============
Further details of these investments (including the unrealised
loss in the year) are disclosed in the Chairman's Statement,
Investment Manager's Report, Investment Portfolio Summary and
Significant Investments on pages 1 to 14 of the Annual Report.
9. Debtors
As at 28 February As at 28 February
2019 2018
GBP'000 GBP'000
Other debtors 8 9
Accrued income 2,912 2,356
2,920 2,365
================== ==================
10. Creditors - amounts falling due within one year
As at 28 February As at 28 February
2019 2018
GBP'000 GBP'000
Accruals 162 169
Other creditors 14 14
Corporation tax - 52
176 235
================== ==================
11. Management Performance Incentive Arrangement
On 11 September 2014, 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 7,627,992
ordinary shares being 20% of the issued share capital of
38,139,963.
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
2019 2018
GBP'000 GBP'000
38,139,963 ordinary shares of 0.05p each 19 19
======== ========
13. Net Asset Value per Ordinary Share
As at As at
28 February 2019 28 February 2018
Net assets GBP25,342,000 GBP29,104,000
------------------ ------------------
Number of shares in issue
as at 28 February 2019 38,139,963 38,139,963
Less: management incentive
shares (see note 11) (7,627,992) (7,627,992)
------------------ ------------------
Number of shares in issue
for purposes of Net
Asset Value per share calculation 30,511,971 30,511,971
------------------ ------------------
Net asset value per share
Basic 83.06p 95.39p
Diluted 83.06p 95.39p
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 2019:
2019 2018
GBP'000 GBP'000
Financial assets at fair value
through profit or loss 22,556 26,776
Financial assets that are debt
instruments measured at amortised
cost 2,920 2,365
Financial liabilities measured
at amortised cost (176) (183)
25,300 28,958
======== ========
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:
2019 2018
GBP'000 GBP'000
Investments in loans, loan
notes and bonds 9,646 12,367
Cash at bank and in hand 42 198
Interest, dividends and
other receivables 2,920 2,365
12,608 14,930
======== ========
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 16. 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% (2018: 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 7. 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
Report of the Directors. 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 28 February 2019 (2018: 0.5%). 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 28 February 2019.
Average
interest Period
Rate status rate until maturity Total
GBP'000
Cash at bank - RBS Floating 0.01% - 42
Loans and loan notes Floating 2.65% 20 months 2,250
Loans and loan notes Fixed 12.67% 33 months 7,396
Non-interest
Balance of assets bearing - 15,830
25,518
========
The following analysis sets out the interest rate risk of the
Company's financial assets as at 28 February 2018.
Average
interest Period
Rate status rate until maturity Total
GBP'000
Cash at bank -
RBS Floating 0.01% - 198
Loans and loan
notes Floating 2.25% 32 months 2,250
Loans and loan
notes Fixed 8.85% 42 months 10,117
Non-interest
Balance of assets bearing - 16,774
29,339
========
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:-
2019 2018
GBP'000 GBP'000
Level 3
Unquoted investments 22,556 26,776
22,556 26,776
======== ========
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 8 to 14.
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.
For accounting periods commencing after 5 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 (2018: 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 2019, but has been extracted from the statutory
financial statements for the year ended 28 February 2019 which were
approved by the Board of Directors on 20 June 2019 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 2018 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 2019 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
FR PGUQPQUPBGPU
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