TIDMPUMX
RNS Number : 9738X
Puma VCT 10 PLC
30 November 2017
Puma VCT 10 plc
Interim Report
For the period ended 31 August 2017
Officers and Professional Advisers
Directors Auditor
David Vaughan (Chairman) RSM UK Audit LLP
Stephen Hazell Smith Chartered Accountants
Graham Shore 25 Farringdon Street
London EC4A 4AB
Secretary
Eliot Kaye Sponsors and Solicitors
Howard Kennedy
Registered Number No 1 London Bridge
08714913 London SE1 9BG
Registered Office Bankers
Bond Street House The Royal Bank of Scotland
14 Clifford Street plc
London W1S 4JU London City Office
PO Box 412
62-63 Threadneedle Street
Investment Manager London EC2R 8LA
Puma Investment Management
Limited Lloyds Bank International
Bond Street House Limited
14 Clifford Street Sarnia House
London W1S 4JU Le Truchot
St Peter Port
Guernsey, GY1 4EF
Registrar VCT Tax Advisor
SLC Registrars PricewaterhouseCoopers
42- 50 Hersham Road LLP
Walton-on-Thames 1 Embankment Place
Surrey KT12 1RZ London WC2N 6RH
Administrator Custodian
PI Administration Services Howard Kennedy
Limited No 1 London Bridge
Bond Street House London SE1 9BG
14 Clifford Street
London W1S 4JU
Chairman's Statement
Highlights
-- Fund substantially invested in a diverse range of high quality businesses and projects
-- 12p per share of dividends paid since inception, equivalent
to an 8.6% per annum tax-free running yield on net investment.
-- NAV per share up 0.24p in the half year to 97.34p (adding back dividends paid to date).
Chairman's Statement
Introduction
The Company has deployed its funds in a diverse range of both
qualifying and non-qualifying investments, having met its minimum
qualifying investment percentage of 70 per cent during the previous
period. We believe our portfolio is well positioned to deliver
attractive returns to shareholders within its remaining planned
life.
Net Asset Value ('NAV')
The NAV per share at the period end was 85.34p, 97.34p after
adding back dividends paid to date, including profits after tax for
the period of GBP67,000 which represents a return of 0.24p per
ordinary share.
Qualifying Investments
Growing Fingers - Children's Nursery
As reported in the Company's previous annual report, the Company
had made a GBP980,000 qualifying investment (as part of a GBP2.8
million investment alongside other Puma VCTs) in Growing Fingers
Limited, and a further GBP420,000 was invested during the period.
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. Growing Fingers is a new venture headed by a management
team with many years' operational experience in nurseries and
healthcare facilities. The Company benefits from first charge
security over the Wendover site and the Growing Fingers business
and the investment is expected to produce an attractive return.
Mini Rainbows - Children's Nursery
As previously reported, the Company invested GBP2.5 million in
Mini Rainbows Limited (as part of a GBP5 million investment
alongside other Puma VCTs), which was established to operate a
trading business in the childcare sector and/or to acquire
businesses which operate within that sector. The investment is
qualifying because it was made before the passing of the Finance
(2) Act 2015. We are pleased to report that, shortly after the
period end, Mini Rainbows commenced its trade by acquiring a mature
children's day nursery in Murrayfield, an affluent part of
Edinburgh. The nursery was founded in 1995, has capacity for up to
90 children and is currently operating at 70% capacity so the Mini
Rainbows' experienced management team anticipate improvement in the
medium term.
Gasification Plant, East London
As previously reported, 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 and will benefit from
Renewable Obligations Certificates. Following the period end, Urban
Mining Limited repaid the great majority of the Company's
investment which now stands at GBP300,000. We expect the remaining
investment (which remains secured with a first charge over the
Chinook Urban Mining business and the eight acre site of the East
London plant and continues to yield an attractive return to the
Company) to be fully redeemed early in the new year.
Saville Services - Care Home Project, Chester
The Company's investment of GBP2.1 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 understand that the development is
progressing well and the care home is scheduled to open in the
first quarter of 2018.
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 GBP3.45m (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
GBP510,000 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 best protect the Company's investment. During
the period, the administrator made substantial progress in
recovering the Company's investment, striking a deal which will
generate cash consideration payable in stages over a 12 month
period. Moreover, discussions are continuing with Opes' insurers
regarding reimbursement of the damage to the plant and the building
and of the costs of business interruption.
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. The investment is
qualifying because it was made before the passing of the Finance
(2) Act 2015. As previously reported, 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 acquired three substantial
freehold pub assets in Chester, Wilmslow and Bedford, all of which
opened during 2016 and are trading as fully branded B&K units.
The units are taking some time to establish themselves under the
new brand and this is being addressed by the management team.
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. The investment is qualifying because it was made
before the passing of the Finance (2) Act 2015. We are pleased to
report that, during the period, Welcome Health Limited commenced
its trade, acquiring a series of mature pharmacies across the North
East of England. The entrepreneur behind Welcome Health has
experience in this geography and is focused on providing
pharmaceutical services to a currently underserviced and low
socioeconomic market. As at the date of this report, Welcome Health
owns and operates five pharmacies and expects to acquire further
units in the new year.
Sunlight Education Nucleus - Special Educational Needs
Schools
After the period end, the Company made a GBP1 million qualifying
investment (as part of a GBP4.7 million investment alongside other
Puma VCTs) in Sunlight Education Nucleus Limited, a company seeking
to develop, own and operate a series of special education needs
schools across the United Kingdom.
Non-Qualifying Investments
Care Home for the Elderly, Formby
During the period, a GBP800,000 loan (advanced through an
affiliate, Lavender Lending Limited as part of an overall facility
of GBP6.7 million) was agreed with New Care (Sefton) Limited to
fund the development and initial trading of a 75-bed purpose-built
care home in Formby, Merseyside. The New Care Group is an
experienced developer and operator of care homes. The loan is
secured with a first charge over the site and is expected to
generate an attractive return.
Care Home for the Elderly, Hamilton
In the prior year, a loan of GBP1.2 million (as part of a GBP6.9
million facility from other vehicles managed and advised by the
Investment Manager) was made (through an affiliate, Lothian Lending
Limited) to Richmond Global Properties Limited to fund the
development of a 112 bed purpose built care home in Hamilton,
Scotland. We are pleased to report that, during the period, the
loan was repaid in full, the project having reached practical
completion with the home being fitted out ready to accept its first
residents.
Care Home for the Elderly, Egham
A loan of GBP575,000 was 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. These loans, together with loans from other vehicles
managed and advised by the Investment Manager totalling GBP5.3
million, are secured with a first charge over the site. We
understand that construction is behind schedule and over budget as
a result of the non-performance of the original building contractor
which has been substantially resolved by the developer and
construction manager, Alyth Trading. However, it is anticipated
that the value of the scheme on completion of construction will
exceed the total value of the loans made.
Care Home for the Elderly, Dover
In September 2015, GBP800,000 was advanced (through an
affiliate, Lavender Lending Limited) to Athena (Alpha) Limited, as
part of a GBP4.4 million facility from other vehicles managed and
advised by the Investment Manager, to fund the development of a new
purpose-built, 80-bed residential care home in Dover, Kent. The
site occupies a prominent location adjacent to the recently opened
new community hospital, approximately a 5 minute drive from Dover
town centre. We are pleased to report that, during the period, the
borrower sold the care home shortly following practical completion
and the loan was repaid in full giving a good rate of return.
Citrus Group
The Company's loan of GBP1 million (advanced through an
affiliate, Victoria Lending Limited) to various entities within the
Citrus Group continues to perform well. These loans, together with
loans from other vehicles managed and advised by the Investment
Manager, form part of a series of revolving credit facilities to
provide working capital to the Citrus PX business. Citrus PX
operates a property part exchange service facilitating the rapid
purchase of properties for developers and homeowners. The facility
provides a series of loans to Citrus PX, with the benefit of a
first charge over a geographically diversified portfolio of
residential properties on conservative terms.
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, following the period end, the loan was repaid in full with
all interest, generating an attractive return.
Construction of Airport Hotel, Edinburgh
During the period, a GBP805,000 loan, through an affiliate,
Latimer Lending Limited (as part of an overall facility of GBP13.5
million) was agreed with Ability Hotels (Edinburgh) Limited to fund
the development of a new 175-room Hampton by Hilton hotel at
Edinburgh Airport. The hotel is scheduled to open in the summer of
2019 at which time it will be the newest and nearest hotel to the
airport terminal building. The Ability Group is an experienced
developer and operator of hotels and the loan is secured with a
first charge over the site. Following the period end, Ability
obtained planning permission to increase the number of rooms to 240
and the overall facility is anticipated to increase accordingly to
GBP17.75 million.
Housing Development Project, Aberdeen
As previously reported, a GBP474,000 loan (as part of a GBP2.9
million facility from other vehicles managed and advised by your
Investment Manager) had been extended (through an affiliate,
Valencia Lending Limited) to Churchill Homes (Culter House)
Limited. Churchill Homes is a longstanding Aberdeenshire developer
and the facility provided funding towards the construction of a
private detached housing development in one of Aberdeen's finest
residential suburbs. The loan is secured with a first charge over
the site and is earning an attractive rate of interest. Whilst the
Aberdeen housing market has slowed during the period, primarily as
a result in the reduction in the price of oil, the loan is being
serviced and the Company's security remains at an appropriate
level.
Apartment Development Project, Worthing
During the period, a loan of GBP500,000 was advanced (through an
affiliate, Valencia Lending Limited) to Columbia House Development
Limited. This loan, together with loans from other vehicles managed
and advised by the Investment Manager totalling GBP5 million,
facilitate the acquisition of an office block in Worthing, for
which the borrower is seeking planning permission for a conversion
into 144 flats. The loan is secured with a first charge over the
property at an appropriate loan to current value (the site already
has planning permission for a 102 flat scheme) and is generating an
attractive return.
Liquidity Management
The Company (through an affiliate, Latimer Lending Limited) had
exposure to a GBP872,000 bond issued by J Sainsbury plc. Following
the period end, to further manage liquidity, the Company sold this
bond and has exposure to a GBP648,000 bond issued by Commonwealth
Bank of Australia and earning 1.1%.
Dividends
As reported in the Company's annual report, the Company declared
a dividend of 6p per ordinary share in February 2017. Reflecting
this recent pay-out, your Board is not proposing a further dividend
at this interim stage but still intends to pay out a dividend of 6p
per ordinary share each year as envisaged in the Company's
prospectus.
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.
Principal risks and uncertainties
Although the economy in the UK continues to grow, there are some
signs of a slowdown associated with high personal debt levels and
low growth in real wages. The consequences of this for the
Company's investment portfolio constitute the principal risk and
uncertainty for the Company in the second half of the year.
Patient Capital Review
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. We note that proposed changes arising
out of the Patient Capital Review include increasing VCTs' minimum
qualifying investment percentage threshold from 70% to 80% with
effect from 6 April 2019. As previously reported, the Company has
already met its minimum qualifying investment percentage and we
therefore believe that it is on track to meet this revised target
in due course.
Outlook
The Company's net assets are substantially deployed in a diverse
range of high quality businesses and projects which should offer
the prospect of further growth in net assets per share. Whilst
there may be some further changes in the composition of the
portfolio to ensure that the Company continues to satisfy its HMRC
qualifying targets, the Board expects to concentrate in the future
primarily on the monitoring of our existing investments and
considering the options for exits.
David Vaughan
Chairman
30 November 2017
Income Statement (unaudited)
For the period ended 31 August 2017
Year ended
Six months ended Period ended 28 February
31 August 2017 30 June 2016 2017
Note Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(Loss)
on investments - (51) (51) - (23) (23) - 32 32
Income 487 - 487 444 - 444 1,109 - 1,109
487 (51) 436 444 (23) 421 1,109 32 1,141
-------- -------- -------- -------- -------- -------- -------- -------- --------
Investment
management
fees 4 (59) (175) (234) (62) (186) (248) (146) (438) (584)
Other expenses (122) - (122) (103) - (103) (278) - (278)
(181) (175) (356) (165) (186) (351) (424) (438) (862)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Profit/(loss)
on ordinary
activities
before
taxation 306 (226) 81 279 (209) 70 685 (406) 279
Tax on
profit
on ordinary
activities (61) 47 (14) (56) 37 (19) (158) 88 (70)
Profit/(loss)
and total
comprehensive
income
for the
year 245 (179) 67 223 (172) 51 527 (318) 209
======== ======== ======== ======== ======== ======== ======== ======== ========
Basic and
diluted
Return/(loss)
per Ordinary
Share (pence) 2 0.89p (0.65p) 0.24p 0.80p (0.62p) 0.18p 1.91p (1.15p) 0.76p
======== ======== ======== ======== ======== ======== ======== ======== ========
The revenue column of this statement is the profit and loss of
the Company. All revenue and capital items in the above statement
derive from continuing operations. No operations were acquired or
discontinued in the period.
Balance Sheet (unaudited)
As at 31 August 2017
As at As at As at
31 August 30 June 28 February
Note 2017 2016 2017
GBP'000 GBP'000 GBP'000
Fixed Assets
Investments 6 22,360 24,910 22,390
----------- --------- -------------
Current Assets
Debtors 1,463 968 1,087
Cash 99 802 243
----------- --------- -------------
1,562 1,770 1,330
Creditors - amounts
falling due within one
year (338) (1,663) (203)
Net Current Assets 1,224 107 1,127
----------- --------- -------------
Total Assets less Current
Liabilities 23,584 25,017 23,517
Net Assets 23,584 25,017 23,517
=========== ========= =============
Capital and Reserves
Called up share capital 17 17 17
Share premium account 15,624 15,624 15,624
Capital reserve - realised (1,061) (743) (933)
Capital reserve - unrealised (510) (503) (459)
Revenue reserve 9,513 10,622 9,268
Equity Shareholders'
Funds 23,584 25,017 23,517
=========== ========= =============
Net Asset Value per
Ordinary Share 3 85.34p 90.53p 85.10p
=========== ========= =============
Diluted Net Asset Value
per Ordinary Share 3 85.34p 90.53p 85.10p
=========== ========= =============
Cash Flow Statement (unaudited)
For the period ended 31 August 2017
Six months Period
ended ended Year ended
31 August 30 June 28 February
2017 2016 2017
GBP'000 GBP'000 GBP'000
Profit after tax 67 51 209
Taxation 14 19 70
Gains/(loss) on investments 50 19 (51)
Decrease/(increase) in
debtors (376) 65 (54)
Increase/(decrease) in
creditors 121 410 (985)
Tax paid - - (116)
Net cash (used in)/generated
from operating activities (124) 564 (927)
----------- --------- -------------
Cash flow from investing
activities
Purchase of investments (420) (3,575) (4,694)
Proceeds from sale of
investments 400 5,053 8,762
Net cash generated from/(used
in) investing activities (20) 1,478 4,068
----------- --------- -------------
Cash flow from financing
activities
Dividends paid - (1,658) (3,316)
Net cash used in financing
activities - (1,658) (3,316)
----------- --------- -------------
Net increase/(decrease)
in cash and cash equivalents (144) 384 (175)
Cash and cash equivalents
at the beginning of the
period 243 418 418
Cash and cash equivalents
at the end of the period 99 802 243
=========== ========= =============
Reconciliation of Movements in Shareholders' Funds
(unaudited)
For the period ended 31 August 2017
Called
up Share Capital Capital
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
January 2016 17 15,624 (575) (499) 12,057 26,624
Total recognised
(losses)/gains for
the period - - (168) (4) 223 51
Dividends paid - - - - (1,658) (1,658)
Balance as at 30
June 2016 17 15,624 (743) (503) 10,622 25,017
Realised gain in
the period - - 11 (11) - -
Total recognised
(losses)/gains for
the period - - (201) 55 304 158
Dividends paid - - - - (1,658) (1,658)
Balance as at 28
February 2017 17 15,624 (933) (459) 9,268 23,517
Realised gain in
the period - - 51 (51) - -
Total recognised
(losses)/gains for
the period - - (179) - 245 67
Balance as at 31
August 2017 17 15,624 (1,061) (510) 9,513 23,584
========= ========= ============ ============== ========= ========
Notes to the Interim Report
For the period ended 31 August 2017
1. Accounting Policies
The financial statements have been prepared under the historical
cost convention, modified to include the revaluation of fixed asset
investments, and in accordance with applicable Accounting Standards
and with the Statement of Recommended Practice, "Financial
Statements of Investment Trust Companies and Venture Capital
Trusts" ("SORP") and in accordance with the Financial Reporting
Standard 102 ("FRS102").
2. Return per Ordinary Share
The total profit per share of 0.24p is based on the profit for
the period of GBP67,000 and the weighted average number of shares
in issue as at 31 August 2017 of 27,633,222.
3. Net asset value per share
As at As at As at
31 August 30 June 28 February
2017 2016 2017
Net assets 23,584,000 25,017,000 23,517,000
Shares in
issue 27,633,222 27,633,222 27,633,222
Net asset
value per
share
Basic 85.34p 90.53p 85.10p
Diluted 85.34p 90.53p 85.10p
4. Management fees
The Company pays the Investment Manager an annual management fee
of 2% of the Company's net assets. The fee is payable quarterly in
arrears. The annual management fee is allocated 75% to capital and
25% to revenue.
5. Financial information provided
The financial information for the period ended 31 August 2017
has not been audited and does not comprise full financial
statements within the meaning of Section 423 of the Companies Act
2006. The interim financial statements have been prepared on the
same basis as will be used to prepare the annual financial
statements.
Notes to the Interim Report continued
For the period ended 31 August 2017
Valuation
HMRC basis
Valuation as a %
Valuation Cost Gain/(loss) HMRC basis(1) of
GBP'000 GBP'000 GBP'000 GBP'000 Net Assets
As at 31 August
2017
Qualifying Investment
- Unquoted
Urban Mining
Limited 1,875 1,875 - 1,875 8%
Opes Industries
Limited 2,940 3,450 (510) 3,450 14%
Saville Services
Limited 2,139 2,139 - 3,739 16%
Warm Hearth Limited 2,500 2,500 - 2,500 10%
Mini Rainbows
Limited 2,500 2,500 - 2,500 10%
Welcome Health
Limited 2,500 2,500 - 2,500 10%
Growing Fingers
Limited 1,400 1,400 - 1,400 6%
Total Qualifying
Investments 15,854 16,364 (510) 17,964 74%
---------- -------- ------------ --------------- ------------
Non-Qualifying
Investments
Valencia Lending
Limited 984 984 - 984 4%
Lothian Lending 2,325 2,325 - 2,325 10%
Lavender Lending
Limited 800 800 - 800 3%
Victoria Lending
Limited 1,000 1,000 - 1,000 4%
Meadow Lending
Limited 575 575 - 575 2%
Latimer Lending
Limited 822 822 - 822 3%
Total Non-Qualifying
investments 6,506 6,506 - 6,506 26%
---------- -------- ------------ --------------- ------------
Total Investments 22,360 22,870 (510) 24,470 100%
Balance of Portfolio 1,224 1,224 - - -
Net Assets 23,584 24,094 (510) 24,470 100%
---------- -------- ------------ --------------- ------------
6. Investment portfolio summary
Of the investments held at 31 August 2017, all are incorporated
in England and Wales.
(1) The HMRC valuation differs from FRS102, because FRS102
requires changes to reflect current market valuations whereas HMRC
requires such changes when further securities of the same company
are bought or sold by the VCT. It also omits the items shown as
'Balance of Portfolio'.
Copies of this Interim Statement will be made available on the
website:
http://www.pumainvestments.co.uk/pages/view/investors-information-vcts
This information is provided by RNS
The company news service from the London Stock Exchange
END
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