TIDMPU11
RNS Number : 2913R
Puma VCT 11 PLC
29 June 2020
HIGHLIGHTS
-- Funds substantially invested in a diverse range of businesses and projects.
-- 16p per share of dividends paid since inception (including 6p
interim dividend paid in February 2020).
-- NAV per share at the year-end was 92.85p (after adding back dividends paid to date).
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the Company's fifth annual report for
the year ended 29 February 2020.
Background
These final results have been prepared using the information we
have available, but against the backdrop of major economic
disruption. Measures to deal with COVID-19 have impacted the entire
economy of the world and, most probably, touched every sector. It
is too early to comment on the medium-term effects on investment
markets and values. We can only at this stage comment upon the
short term impacts on the Company's portfolio.
The Company was launched and began investing in Spring 2015,
with a planned life of five years. In this, its fifth year, the
process of realising the Company's investments and preparing to
return capital to investors has commenced although it has been
hindered by the current COVID-19 pandemic. We remain focused on
shareholders' wish to liquidate the portfolio on reasonable terms
as soon as possible following the fifth anniversary of the launch
of the Company.
Dividend
As envisaged in the Company's prospectus, the Company paid a
dividend of 6p per ordinary share just before the end of the
year.
Investments
At the end of the year, the Company had just under GBP20 million
invested in a mixture of qualifying and non-qualifying investments
whilst maintaining our VCT qualifying status. Details of these
investments can be found in the Investment Manager's report on
pages 3 to 8. As the Board concluded that the pandemic was a
non-adjusting post balance sheet event, the impact of COVID-19 is
not reflected in the fair value of the Company's investments as at
29 February 2020. We understand that this treatment is being
adopted by other funds with similar year-ends.
Results
The Company reported a small loss before tax of GBP63,000 for
the year (2019: GBP1,621,000 loss including GBP1,500,000 provision
in respect of Warm Hearth Limited), a post-tax loss of 0.21p (2019:
5.33p including 4.92p due to Warm Hearth Limited provision) per
ordinary share (calculated on the weighted average number of
shares). The Net Asset Value per ordinary share ("NAV") at 29
February 2020 after adding back the 16p of dividends paid to date
was 92.85p (2019: 93.06p).
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 monitoring rule compliance as the Company
approaches the end of its planned life.
Annual General Meeting and Delay to Proposal to Wind-Up the
Company
The Annual General Meeting of the Company will be held at
Cassini House, 57 St James's Street, London, SW1A 1LD on 24(th)
August 2020 at 3p.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. It was
envisaged in the Company's Prospectus that the Board would convene
a General Meeting of the Company at which resolutions would be
proposed to place the Company into members' solvent liquidation.
However, in light of the delays to realisations likely to be caused
by the COVID-19 crisis, the Board has decided to delay this step,
which it will keep under regular review.
Once such resolutions have been proposed and, if thought fit,
passed by shareholders, for a maximum period of three years, many
of the VCT rules - including the 80 per cent qualifying rule - are
suspended whilst the Company retains its VCT status of tax-free
distribution to UK taxpayers. The intention remains to return the
balance of the capital in an orderly way, with disposals timed
appropriately to enable further substantial distributions as the
liquidation progresses. However, whilst discussions are underway
regarding potential exits from portfolio companies, it is likely
that, in light of the COVID-19 outbreak, a number of these exit
processes will have to be put on hold until there is a greater
degree of economic certainty.
Harold Paisner
Chairman
26 June 2020
INVESTMENT MANAGER'S REPORT
Introduction
Since the Company's year end, the global economy and financial
markets have been impacted significantly by the COVID-19 pandemic.
These are unprecedented times which have disrupted personal and
working life for almost everyone. Since the emergence of the
pandemic in the UK, we have been actively working with portfolio
companies to protect Shareholder value whilst, at the same time,
complying with Government guidelines. Our existing monitoring cycle
involves very close contact with portfolio companies. However, we
have significantly increased our level of interaction with
portfolio companies and changed our portfolio review meeting from
monthly to weekly, as we carefully assess each company's cash
management and outlook.
During this time, we have worked closely with advisers to
support our portfolio companies. This has involved providing
companies with in-depth information on available support packages
and hosting calls with advisers to deliver guidance on key topics
such as employment law, available funding and scenario cash
planning. Our aim was to ensure management teams could concentrate
on running their businesses rather than scrutinising Government
support schemes. Where appropriate, portfolio companies have made
use of Government-led support, including the Coronavirus Job
Retention Scheme and the Coronavirus Business Interruption Loan
Scheme (CBILS).
As the situation has evolved, we have continued to work closely
with portfolio companies to help them with strategies to conserve
cash during this period of contraction and, if required, outline
emergency funding options. Retaining a long-term view, the team has
also worked with portfolio companies to position them to capitalise
on the opportunities for growth that may arise. We have placed
particular emphasis on helping them manage costs as aggressively as
possible, making appropriate use of government support schemes and
assessing opportunities to reopen efficiently with a focus on agile
trading, adapted to new consumer and business behaviours.
Investments
Qualifying Investments
Pure Cremation - Crematorium and Direct Cremations
In November 2017, the Company invested GBP2 million in Pure
Cremation Holdings Limited (as part of a GBP7.35 million qualifying
investment alongside another Puma VCT). Pure Cremation is a leading
provider of direct cremations, meeting the needs of a growing
number of people in the United Kingdom who want a respectful
cremation arranged without any funeral, leaving them free to say
farewell how, where and when is right for them. The business has
continued to perform strongly during the year with strong revenue
growth across all of its sales channels. Reflecting the business's
move into profitability and continued growth, the Board have agreed
to write up the value of the holding, generating an unrealised gain
of GBP391,000.
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.
Works are well underway on the site and the directors of Growing
Fingers had expected the nursery to open in the summer of 2020.
Post year-end, the works were interrupted by the policy response
to the COVID-19 pandemic and steps had to be taken to secure
building materials and the site. Works have now resumed so whilst
there will be a delay to opening, the directors of the business are
hopeful that it will not be too significant.
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 mature children's day nurseries in Scotland
- in Murrayfield, an affluent part of Edinburgh, and in Shawlands,
Glasgow. During the period the business acquired a third site in
Whitburn, West Lothian. Post-acquisition all three sites were
performing well and contributing material EBITDA. In light of this
the Board have agreed to write up the value of the holding,
generating an unrealised gain of GBP189,000.
Post year-end, the nurseries were closed following Government
guidelines in light of the COVID-19 pandemic. The business was able
to take advantage of a range of Government support measures and has
continued to receive certain state funding lines per pupil. Given
this, the directors of the business chose not to ask parents to pay
fees during the lockdown period and are hopeful of a rapid return
to normal trading after the lockdown, albeit with complexities (and
additional costs) to meet with social distancing guidelines.
Warm Hearth - Pubs with Microbreweries
As noted in the Company's last annual report, the Board decided
to provide GBP1.5m against the carrying value of the Company's
GBP2.5 million investment in Warm Hearth Limited, a pub business
seeking to capitalise on the strong growth trends within the craft
beer sub-market. Warm Hearth had entered into a franchise agreement
with Brewhouse & Kitchen Limited ("B&K"), a national
branded operator, offering craft micro-brewing activities within
each of its pub units as a point of focus. Warm Hearth owns and
operates two substantial freehold pub assets, in Chester and
Wilmslow. P erformance of these units had been significantly below
our expectations for some time and as a result the Board had
decided to provide against the carrying value of this investment in
the last annual report. As reported in the Company's last interim
report, a significant planning permission was granted for Chester
during the period, for the development of 17 letting rooms.
Notwithstanding this, and with performance still below
expectations, the Board have agreed to write down the value of the
holding, generating an unrealised loss of GBP192,000.
Post year-end, the business had to close both units in light of
the COVID-19 pandemic. The business is taking advantage of
Government support packages including the Job Retention Scheme
(furlough) and Rate Reliefs and is working on detailed scenarios
and action plans for how the pubs may be allowed to operate during
the different phases of lockdown release.
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 ("Signal") is currently working on the
construction of a 14-apartment supported living scheme in
Sutton-in-Ashfield. We are pleased to report that the 22-apartment
supported living scheme in Wigan, which Signal has also recently
been working on completed successfully during the year, generating
attractive returns for Signal which will benefit the Company when
its investment in Signal is repaid in due course.
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 nurseries, together with an experienced
developer and contractor. The business' site, a custom-built 120
place children's day nursery in Altrincham, South Manchester opened
in September 2018 and has been continuing to ramp up as occupancy
builds, reaching profitability in the period. Following the
COVID-19 outbreak in the UK, the nursery has remained open for
provision of childcare to key workers.
Knott End Pub Company - Pubs with Microbreweries
As previously noted, 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. Knott End owns and operates two
pub assets in Horsham and Milton Keynes. The pub in Milton Keynes
had experienced some disappointing trading but was showing good
year-on-year growth towards the end of the period. In light of
these trading challenges, the Board have agreed to write down the
value of the holding, generating an unrealised loss of
GBP108,000.
Post year-end, the business had to close both units in light of
the COVID-19 pandemic. It is taking advantage of Government support
packages including the Job Retention Scheme (furlough) and Rate
Reliefs. The business is working on detailed scenarios and their
respective action plans in relation to how pubs may be allowed to
operate during the different phases of lockdown release.
Kid & Play - Children's Nursery
In October 2017, the Company made a GBP1.7 million qualifying
investment in Kid & Play Limited, alongside funds invested by
another Puma VCT totalling GBP3.4 million. As previously reported,
the company is developing a 110 place children's day nursery which
was expected to open in Spring 2020. Advance interest in the
nursery has been very encouraging following a well-run
pre-marketing campaign.
Following the year-end, there have been interruptions to the
building works on site due to COVID-19 but the site has now
achieved Practical Completion and the directors of the business
have well advanced plans to open the nursery in September 2020,
subject to lockdown easing.
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. The business's first school in
Stafford, West Midlands opened strongly and has traded ahead of
budget. Development of the business's second school in Crewe is
well advanced and awaits Ofsted inspection.
The school at Stafford has remained open during lockdown whilst
works at Crewe have continued. However, Sunlight is expecting
delays to the opening of Crewe because of a longer than normal wait
for an Ofsted inspection and approval.
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. During the year, the entrepreneur behind Welcome
Health refinanced the group which facilitated the redemption of the
Company's investment .
South-West Cliffe - Children's Nursery
The Company has invested GBP2.1 million (as part of a GBP4.2
million qualifying investment alongside another Puma VCT) in
South-West Cliffe Limited, supporting an experienced management
team to roll out a portfolio of purpose-built day nurseries. As
previously reported, despite best efforts, the management team have
been unable to agree terms on a site and therefore, during the
year, took the decision to place South-West Cliffe Limited into a
solvent members' liquidation. Subsequent to the year end, the
Company received 97p in the pound invested.
Non-Qualifying Investments
Supported Living, Nottingham and Liverpool
During the year, a loan of GBP1,623,000 was advanced (through an
affiliate, Mayfield Lending Limited) to various entities within the
Carislease group of companies to facilitate the acquisition and
development of a series of supported living schemes in Nottingham
and Liverpool. This loan, together with loans from other vehicles
managed and advised by the Investment Manager totalling GBP4.8
million, are secured with a first charge over the sites, many of
which have already been pre-sold.
Care Homes for the Elderly, Willenhall and Lichfield
A loan of GBP1,926,000 was advanced during the year (through
affiliates, Mayfield Lending Limited and Meadow Lending Limited) to
various entities within the Macc Care group of companies to support
the stabilisation of a newly built 73-bed care home in Willenhall
(between Wolverhampton & Walsall) and the acquisition of a site
in Lichfield which is the subject of a planning application for a
90-bed care home. This loan, together with loans from other
vehicles managed and advised by the Investment Manager totalling
GBP7.7 million, is secured with a first charge over the two sites.
Occupancy at Willenhall is ahead of budget and the planning
application at Lichfield is expected to be determined in the coming
months.
Purpose Built Student Accommodation, Brighton
During the year, a loan of GBP1,250,000 was agreed (through an
affiliate, Meadow Lending Limited) to Alumno Student Brighton
Living (Brighton) Limited to facilitate the acquisition and
development of a 71-unit purpose built student accommodation unit
in Brighton. This loan, together with loans from other vehicles
managed and advised by the Investment Manager totalling GBP8.47
million, is secured with a first charge over the site. Brighton is
one of the university towns which has had a strong demand for
new-build quality student accommodation and the developer has a
long track record, having developed over 5,000 units to date.
Aparthotel, Glasgow
A pre-development bridge loan of GBP836,000 was advanced during
the year (through affiliates, Palmer Lending Limited and Meadow
Lending Limited) to Citihome Glasgow Limited against a site with
planning permission for a 156-room aparthotel in central Glasgow.
This loan, together with loans from other vehicles managed and
advised by the Investment Manager totalling GBP3.3 million, is
secured with a first charge over the site and is backed by a
personal guarantee from the developer. Since the loan was advanced,
the developer successfully increased the planning permission to 204
rooms.
Supported Living, Atherstone
During the year, a loan of GBP540,000 was agreed (through
affiliates, Meadow Lending Limited and Sloane Lending Limited) to
HBP Group Limited to facilitate the development of 16
supported-living flats in Atherstone, Warwickshire. This loan,
together with loans from other vehicles managed and advised by the
Investment Manager totalling GBP1.7 million, is secured with a
first charge over the property which benefits from a pre-let with a
leading housing association and a rental void agreement with a
large care provider.
Mixed Residential Commercial Development, Bloomsbury
As previously reported, a 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 and
Meadow Lending Limited) to fund the construction of a mixed
residential and commercial development in Bloomsbury, London, close
to the British Museum and 600m from King's Cross station. We are
pleased to report that the loan was repaid in full following the
year end.
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 to facilitate the
construction of a 9-apartment supported living scheme in
Northumberland. We are pleased to report that the loan was repaid
in full following the year end.
Care Home for the Elderly, Formby
We are pleased to report that the GBP800,000 loan to New Care
(Sefton) Limited (through an affiliate, Sloane Lending Limited) in
connection with the development and initial trading of a 75-bed
purpose-built care home in Formby, Merseyside, was repaid in full
during the year.
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 that the loans were
repaid in full during the year.
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 during the year, the loan has been repaid in
full.
Investment Strategy
The Company's funds are invested in a balanced portfolio of both
qualifying and non-qualifying investments. Whilst the COVID-19
pandemic has presented a number of significant unforeseen economic
and social challenges for the UK and global economy, the management
teams in our portfolio companies and the developers who have
received loans from our affiliates have responded and we hope to
report on more normal trade in due course. 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
26 June 2020
Investment Portfolio Summary
As at 29 February 2020
Valuation
as a % of
Valuation Cost Gain/(loss) Net Assets
GBP'000 GBP'000 GBP'000
Qualifying Investments
Applebarn Nurseries
Limited 1,133 1,133 - 5%
Growing Fingers Limited 980 980 - 4%
Kid& Play Limited 1,694 1,694 - 7%
Knott End Pub Company
Limited 2,292 2,400 (108) 10%
Mini Rainbows Limited 2,689 2,500 189 11%
Pure Cremation Holdings
Limited 2,391 2,000 391 10%
Signal Building Services
Limited 971 1,000 (29) 4%
Sunlight Education Nucleus
Limited 1,350 1,350 - 6%
Warm Hearth Limited 808 2,500 (1,692) 3%
South-West Cliffe Limited 2,040 2,100 (60) 9%
Total Qualifying Investments 16,348 17,657 (1,309) 69%
---------- -------- ------------ ------------
Non-Qualifying Investments
Palmer Lending Limited 260 260 - 1%
Mayfield Lending Limited 1,160 1,160 - 5%
Latimer Lending Limited 1 1 - 0%
Meadow Lending Limited 1,448 1,448 - 6%
Sloane Lending Limited 780 780 - 3%
Total Non-Qualifying
Investments 3,649 3,649 - 15%
---------- -------- ------------ ------------
Total Investments 19,997 21,306 (1,309) 84%
Balance of Portfolio 3,451 3,451 - 16%
Net Assets 23,448 24,757 (1,309) 100%
---------- -------- ------------ ------------
Of the investments held at 29 February 2020, all are
incorporated in England and Wales.
Income Statement
For the year ended 29 February 2020
Year ended 29 February Year ended 28 February
2020 2019
Note Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain/(Loss) on investments 8 (b) - 166 166 - (1,500) (1,500)
Income 2 505 - 505 698 - 698
505 166 671 698 (1,500) (802)
------------------- -------- -------- -------- --------
Investment management
fees 3 (125) (374) (499) (143) (431) (574)
Other expenses 4 (235) - (235) (245) - (245)
(360) (374) (734) (388) (431) (819)
------------------- -------- -------- -------- --------
(Loss)/profit before
taxation 145 (208) (63) 310 (1,931) (1,621)
Taxation 5 (28) 28 - (59) 54 (5)
(Loss)/profit and total
comprehensive income
for the year 117 (180) (63) 251 (1,877) (1,626)
=================== ======== ======== ======== ======== ========
Basic and diluted
(Loss)/profit per Ordinary
Share (pence) 6 0.38p (0.59p) (0.21p) 0.82p (6.15p) (5.33p)
=================== ======== ======== ======== ======== ========
All items in the above statement derive from continuing
operations.
There are no gains or losses other than those disclosed in the
Income Statement.
The total column of this statement is the Statement of Total
Comprehensive Income of the Company prepared in accordance with FRS
102 'The Financial Reporting Standard applicable in the UK and
Republic of Ireland'. The supplementary revenue and capital columns
are prepared in accordance with the Statement of Recommended
Practice, 'Financial Statements of Investment Trust Companies and
Venture Capital Trusts' issued by the Association of Investment
Companies.
Balance Sheet
As at 29 February 2020
As at As at
29 February 28 February
Note 2020 2019
GBP'000 GBP'000
Fixed Assets
Investments 8 (a) 19,997 22,556
------------- -------------
Current Assets
Debtors 9 3,307 2,920
Cash 214 42
------------- -------------
3,521 2,962
Creditors - amounts falling
due within one year 10 (70) (176)
Net Current Assets 3,451 2,786
------------- -------------
Net Assets 23,448 25,342
============= =============
Capital and Reserves
Called up share capital 12 19 19
Capital reserve - realised (1,817) (1,446)
Capital reserve - unrealised (1,309) (1,500)
Revenue reserve 26,555 28,269
Total Equity 23,448 25,342
============= =============
Net Asset Value per Ordinary
Share 13 76.85p 83.06p
============= =============
The financial statements on pages 36 to 51 were approved and
authorised for issue by the Board of Directors on 26 June 2020 and
were signed on their behalf by:
Harold Paisner
Chairman
Statement of Cash Flows
For the year ended 29 February 2020
Year ended Year ended
29 February 28 February
2020 2019
GBP'000 GBP'000
Loss after tax (63) (1,626)
Tax charge for the year - 5
Realised loss on investment 25 -
Unrealised (gain)/loss on investments (191) 1,500
Increase in debtors (387) (555)
Decrease in creditors (106) (7)
Cash outflow from operations (722) (683)
------------- -------------
Corporation tax paid - (57)
Net cash outflow from operating activities (722) (740)
------------- -------------
Cash flow from investing activities
Proceeds from disposal of investments
and repayments of loans 2,725 2,720
Net cash generated from investing
activities 2,725 2,720
------------- -------------
Cash flow from financing activities
Dividends paid (1,831) (2,136)
Net cash used for financing activities (1,831) (2,136)
------------- -------------
Net increase/(decrease) in cash and
cash equivalents 172 (156)
Cash and cash equivalents at the beginning
of the year 42 198
Cash and cash equivalents at the end
of the year 214 42
============= =============
Statement of Changes in Equity
For the year ended 29 February 2020
Called Share Capital Capital
up share premium reserve reserve Revenue
capital account - realised - unrealised reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1 March
2018 19 29,473 (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
Total comprehensive
income for the year - - (371) 191 117 (63)
Dividends paid - - - - (1,831) (1,831)
Balance as at 29 February
2020 19 - (1,817) (1,309) 26,555 23,448
========== ========= ============ ============== ========= ========
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 GBP26,555,000 (2019:
GBP28,269,000).
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 Cassini House, 57 St James's
Street, London SW1A 1LD. The Company is a public limited company
(limited by shares) whose shares are listed on LSE with a premium
listing. The Company's principal activities and a description of
the nature of the Company's operations are disclosed in the
Strategic Report.
The financial statements have been prepared under the historical
cost convention, modified to include investments at fair value, and
in accordance with the requirements of the Companies Act 2006,
including the provisions of the Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations 2008 and with FRS 102
'The Financial Reporting Standard applicable in the UK and Republic
of Ireland' ("FRS 102") and the Statement of Recommended Practice,
'Financial Statements of Investment Trust Companies and Venture
Capital Trusts' issued in October 2019 by the Association of
Investment Companies ("the SORP").
Monetary amounts in these financial statements are rounded to
the nearest whole GBP1,000, except where otherwise indicated.
Going concern
The Directors have considered a period of 12 months from the
date of this report for the purposes of determining the Company's
going concern status which has been assessed in accordance with the
guidance issued by the Financial Reporting Council. After making
enquiries, including consideration of the impact of COVID-19 on the
Company's current financial position and expected cash flows for
the period of the review, the Directors believe that it is
appropriate to continue to apply the going concern basis in
preparing the financial statements. This is appropriate as the
Company has access to cash reserves greater than the anticipated
annual running costs of the Company.
Investments
All investments are measured at fair value. They are all held as
part of the Company's investment portfolio and are managed in
accordance with the investment policy set out on page 18.
Unquoted investments are stated at fair value by the Directors
with reference to the International Private Equity and Venture
Capital Valuation Guidelines ("IPEV") as follows:
-- Investments which have been made within the last twelve
months or where the investee company is in the early stage of
development will usually be valued at either the price of recent
investment or cost except where the company's performance against
plan is significantly different from expectations on which the
investment was made, in which case a different valuation
methodology will be adopted.
-- Investments in debt instruments will usually be valued by
applying a discounted cash flow methodology based on expected
future returns of the investment.
-- Alternative methods of valuation such as multiples or net
asset value may be applied in specific circumstances if considered
more appropriate.
Realised surpluses or deficits on the disposal of investments
are taken to realised capital reserves, and unrealised surpluses
and deficits on the revaluation of investments are taken to
unrealised capital reserves.
Income
Dividends receivable on listed equity shares are brought into
account on the ex-dividend date. Dividends receivable on unquoted
equity shares are brought into account when the Company's right to
receive payment is established and there is no reasonable doubt
that payment will be received. Interest receivable is recognised
wholly as a revenue item on an accruals basis.
Performance fees
Upon its inception, the Company agreed performance fees payable
to the Investment Manager, Puma Investment Management Limited, and
members of the investment management team at 20% of the aggregate
excess of the amounts realised over GBP1 per Ordinary Share
returned to Ordinary Shareholders. This incentive will only be
effective once the other holders of Ordinary Shares have received
distributions of GBP1 per share.
The performance incentive has been satisfied through the issue
of 7,627,992 Ordinary Shares (as set out in note 11 to the
financial statements) to the Investment Manager and members of the
investment management team being 20% of the total issued Ordinary
Share capital of 38,139,963. 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,
especially due to the impact of COVID-19, which is a non-adjusting
post balance sheet event as disclosed in note 18. Further details
of the unquoted investments are disclosed in the Investment
Manager's Report on pages 3 to 8 and notes 8 and 14 to the
financial statements.
2. Income
Year ended 29 February Year ended 28 February
2020 2019
GBP'000 GBP'000
Income from investments
Loan stock interest 503 697
Other income
Bank deposit income 2 1
505 698
======================= =======================
3. Investment Management Fees
Year ended 29 February Year ended 28 February
2020 2019
GBP'000 GBP'000
Puma Investments fees 499 574
499 574
======================= =======================
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 2.5% (2019: 2.8 %) of the funds raised. Graham Shore
(a director) holds a Directorship of the parent of the Investment
Manager.
4. Other expenses
Year ended 29 February Year ended 28 February
2020 2019
GBP'000 GBP'000
PI Administration Services
fees 88 100
Directors' remuneration 48 48
Social security costs 2 2
Auditor's remuneration
for statutory audit 29 25
Legal and professional
fees 24 25
Other expenses 44 45
235 245
======================= =======================
PI Administration Services Limited provides administrative
services to the Company for an aggregate annual fee of 0.35% of the
Net Asset Value of the Fund, payable quarterly in arrears.
Remuneration for each Director for the year is disclosed in the
Directors' Remuneration Report on page 25. The Company had no
employees (other than Directors) during the year (2019: none). The
average number of non-executive Directors during the year was 3
(2019: 3). The non-executive Directors are considered to be the Key
Management Personnel of the Company with total remuneration for the
year of GBP50,000 (2019: GBP50,000) including social security
costs.
The Auditor's remuneration of GBP24,000 (2019: GBP21,000) has
been grossed up in the table above to be inclusive of VAT.
Non-audit fees charged during the year were GBP250 (2019: GBP250)
for iXBRL tagging of the 2019 (2019: 2018) financial
statements.
5. Taxation
Year ended 29 Year ended 28
February 2020 February 2019
GBP'000 GBP'000
UK corporation tax charged
to revenue reserve 28 59
UK corporation tax charged
to capital reserve (28) (54)
UK corporation tax charge
for the period - 5
=============== ===============
Factors affecting tax
charge for the period
Loss before taxation (63) (1,621)
=============== ===============
Tax charge calculated
on loss before taxation
at the applicable rate
of 19% (12) (308)
(Gain)/loss on investments (32) 285
Tax losses carried forward 44 23
Adjustments relating to
prior periods - 5
- 5
=============== ===============
Capital returns are not taxable as the Company is exempt from
tax on realised capital gains whilst it continues to comply with
the VCT regulations, so no corporation tax is recognised on capital
gains or losses. Due to the intention to continue to comply with
the VCT regulations, the Company has not provided for deferred tax
on any realised or unrealised capital gains and losses. No deferred
tax asset has been recognised in respect of the tax losses carried
forward due to the uncertainty as to recovery.
6. Basic and diluted return/(loss) per Ordinary Share
Year ended 29 February 2020
Revenue Capital Total
Total comprehensive income
for the year GBP117,000 (GBP180,000) (GBP63,000)
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 0.38p (0.59p) (0.21p)
6. Basic and diluted return/(loss) per Ordinary Share (continued)
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)
7. Dividends
The Directors do not propose a final dividend in relation to the
year ended 29 February 2020 (2019: GBPnil). An interim dividend of
6p (2019: 5p) per ordinary share was paid from revenue reserves in
the year ended 29 February 2020 totalling GBP1,831,000 (2019:
GBP1,526,000). In addition, during the year ended 28 February 2019,
a final dividend of 2p was paid in relation to the year ended 28
February 2018 totalling GBP610,000, which was approved at the 2018
Annual General Meeting.
8. Investments
Qualifying Non qualifying
(a) Movements in investments investments investments Total
GBP'000 GBP'000 GBP'000
Purchased at cost 20,157 3,899 24,056
Unrealised losses (1,500) - (1,500)
Valuation as at 1 March
2019 18,657 3,899 22,556
Disposal of investments
and repayments of loans
and loan notes
- Proceeds (2,475) (250) (2,725)
- Realised loss (25) - (25)
Unrealised gain 191 - 191
Valuation at 29 February
2020 16,348 3,649 19,997
============= =============== ========
Book cost at 29 February
2020 17,657 3,649 21,306
Unrealised losses at
29 February 2020 (1,309) - (1,309)
Valuation at 29 February
2020 16,348 3,649 19,997
============= =============== ========
(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
29 February 28 February
2020 2019
GBP'000 GBP'000
Realised losses in year (25) -
Unrealised losses in
year 191 (1,500)
166 (1,500)
============= =============
During the year, the Company's investment of GBP2,500,000 in
Welcome Health Limited was realised for GBP2,475,000. This
investment was held at a fair value of GBP2,500,000 as at 28
February 2019, so a loss of GBP25,000 was realised in the year. The
Company's investments are revalued each year, so until they are
sold any unrealised gains or losses are included in the fair value
of the investments.
(c) Quoted and unquoted investments
Market value Market value
as at 29 as at 28
February February
2020 2019
GBP'000 GBP'000
Unquoted investments 19,997 22,556
============= =============
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 16 of the Annual Report.
9. Debtors
As at 29 February As at 28 February
2020 2019
GBP'000 GBP'000
Other debtors - 8
Prepayments and accrued
income 3,307 2,912
3,307 2,920
================== ==================
10. Creditors - amounts falling due within one year
As at 29 February As at 28 February
2020 2019
GBP'000 GBP'000
Accruals 56 162
Other creditors 14 14
70 176
================== ==================
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
2020 2019
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
29 February 2020 28 February 2019
Net assets GBP23,448,000 GBP25,342,000
------------------ ------------------
Number of shares in issue 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 and diluted 76.85p 83.06p
14. Financial Instruments
The Company's financial instruments comprise its investments,
cash balances, debtors and certain creditors. The fair value of all
of the Company's financial assets and liabilities is represented by
the carrying value in the Balance Sheet. Excluding cash balances,
the Company held the following categories of financial instruments
at 29 February 2020:
2020 2019
GBP'000 GBP'000
Financial assets at fair value
through profit or loss 19,997 22,556
Financial assets that are debt
instruments measured at amortised
cost 3,307 2,920
Financial liabilities measured
at amortised cost (70) (176)
23,234 25,300
======== ========
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:
2020 2019
GBP'000 GBP'000
Investments in loans, loan
notes and bonds 8,646 9,646
Cash at bank and in hand 214 42
Interest, dividends and
other receivables 3,307 2,920
12,167 12,608
======== ========
The cash held by the Company at the year-end is held in one U.K.
bank. Bankruptcy or insolvency of the bank may cause the Company's
rights with respect to the receipt of cash held to be delayed or
limited. The Board monitors the Company's risk by reviewing
regularly the financial position of the bank and should it
deteriorate significantly the Investment Manager will, on
instruction of the Board, move the cash holdings to another
bank.
Credit risk associated with interest, dividends and other
receivables are predominantly covered by the investment management
procedures.
Investments in loans and loan notes comprises a fundamental part
of the Company's venture capital investments, therefore credit risk
in respect of these assets is managed within the Company's main
investment procedures.
Market price risk
Market price risk arises mainly from uncertainty about future
prices of financial instruments held by the Company. It represents
the potential loss the Company might suffer through holding
investments in the face of price movements. The Investment Manager
actively monitors market prices and reports to the Board, which
meets regularly in order to consider investment strategy.
The Company's strategy on the management of market price risk is
driven by the Company's investment policy as outlined in the
Strategic Report on page 18. The management of market price risk is
part of the investment management process. The portfolio is managed
with an awareness of the effects of adverse price movements through
detailed and continuing analysis, with an objective of maximising
overall returns to shareholders.
Holdings in unquoted investments may pose higher price risk than
quoted investments. Some of that risk can be mitigated by close
involvement with the management of the investee companies along
with review of their trading results.
100% (2019: 100%) of the Company's investments are unquoted
investments.
Liquidity risk
Details of the Company's unquoted investments are provided in
the Investment Portfolio summary on page 9. By their nature,
unquoted investments may not be readily realisable and the Board
considers exit strategies for these investments throughout the
period for which they are held. As at the year end, the Company had
no borrowings.
The Company's liquidity risk associated with investments is
managed on an ongoing basis by the Investment Manager in
conjunction with the Directors and in accordance with policies and
procedures in place as described in the Strategic Report and the
Directors' Report. The Company's overall liquidity risks are
monitored on a quarterly basis by the Board. The Company maintains
access to cash reserves sufficient to pay accounts payable and
accrued expenses.
Fair value interest rate risk
The benchmark that determines the interest paid or received on
the current account is the Bank of England base rate, which was
0.75% at 29 February 2020 (2019: 0.75%). All of the loan and loan
note investments are unquoted and hence not directly subject to
market movements as a result of interest rate movements.
Cash flow interest rate risk
The Company has exposure to interest rate movements primarily
through its cash deposits and loan notes which track either the
Bank of England base rate or LIBOR.
Interest rate risk profile of financial assets
The following analysis sets out the interest rate risk of the
Company's financial assets as at 29 February 2020.
Average
interest Period
Rate status rate until maturity Total
GBP'000
Cash at bank - RBS Floating 0.01% - 214
Loans and loan notes Floating 2.75% 8 months 1,500
Loans and loan notes Fixed 16.45% 23 months 7,146
Non-interest
Balance of assets bearing - 14,658
23,518
========
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
========
Foreign currency risk
The reporting currency of the Company is Sterling. The Company
has not held any non-Sterling investments during the year.
Fair value hierarchy
Financial assets and liabilities measured at fair value are
disclosed using a fair value hierarchy that reflects the
significance of the inputs used in making the fair value
measurements, as follows:-
-- Level 1 - Fair value is measured using the unadjusted quoted
price in an active market for identical assets.
-- Level 2 - Fair value is measured using inputs other than
quoted prices that are observable using market data.
-- Level 3 - Fair value is measured using unobservable inputs.
Fair values have been measured at the end of the reporting year
as follows:-
2020 2019
GBP'000 GBP'000
Level 3
Unquoted investments 19,997 22,556
19,997 22,556
======== ========
The Level 3 investments have been valued in line with the
Company's accounting policies and IPEV guidelines. Further details
of these investments are provided in the significant investments
section of the Annual Report on pages 10 to 16.
15. Capital management
The Company's objectives when managing capital are to safeguard
the Company's ability to continue as a going concern, so that it
can provide an adequate return to shareholders by allocating its
capital to assets commensurate with the level of risk.
By its nature, the Company 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 has risen
to 80%.
The Company accordingly has limited scope to manage its capital
structure in the light of changes in economic conditions and the
risk characteristics of the underlying assets. Subject to this
overall constraint upon changing the capital structure, the Company
may adjust the amount of dividends paid to shareholders, issue new
shares, or sell assets to maintain a level of liquidity to remain a
going concern.
The Board has the opportunity to consider levels of gearing,
however there are no current plans to do so. It regards the net
assets of the Company as the Company's capital, as the level of
liabilities is small and the management of those liabilities is not
directly related to managing the return to shareholders.
16. Contingencies, Guarantees and Financial Commitments
There were no commitments, contingencies or guarantees of the
Company at the year-end (2019: none).
17. Controlling Party
In the opinion of the Directors there is no immediate or
ultimate controlling party.
18. Post Balance Sheet Events
On 11 March 2020, the World Health Organisation declared
COVID-19 a global pandemic and on 23 March 2020, the UK Government
imposed a lockdown on the whole population. The Directors consider
that COVID-19 is a non-adjusting post balance sheet event. The
pandemic will significantly impact the UK economy and may
materiality impact the prospects of a number of the Company's
investments and cause a material reduction in the fair value of the
Company's investments. The Directors are unable to quantify the
full financial impact of COVID-19 on the fair value of its
investment portfolio as a material proportion of the investments
remains remain in lockdown. Further details of the investments are
set out in the Investment Manager's Report on pages 3 to 8.
The financial information set out in this announcement does not
constitute the Company's statutory financial statements in
accordance with section 434 Companies Act 2006 for the year ended
29 February 2020, but has been extracted from the statutory
financial statements for the year ended 29 February 2020 which were
approved by the Board of Directors on 26 June 2020 and will be
delivered to the Registrar of Companies. The Independent Auditor's
Report on those financial statements was unqualified and did not
contain any emphasis of matter nor statements under s 498(2) and
(3) of the Companies Act 2006.
The statutory accounts for the year ended 28 February 2019 have
been delivered to the Registrar of Companies and received an
Independent Auditors report which was unqualified and did not
contain any emphasis of matter nor statements under s 498(2) and
(3) of the Companies Act 2006.
Copies of the full annual report and financial statements for
the year ended 29 February 2020 will be available to the public at
the registered office of the Company at Cassini House, 57 St
James's Street, London, SW1A 1LD and will be available for download
from www.pumainvestments.co.uk.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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