TIDMPU12
RNS Number : 3365J
Puma VCT 12 PLC
28 June 2017
HIGHLIGHTS
-- Fund raising of just under GBP31m completed, the largest
raising by a planned exit VCT in the 2015/2016 tax year.
-- Substantial proportion of funds raised now deployed in high
quality projects generating an attractive return.
-- Strong pipeline of potential deals at the Company's first anniversary.
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present to you as Chairman the first annual
report for Puma VCT 12 plc for the period to 28 February 2017,
which was the Company's first period of investment following the
completion of the fund raising last summer.
The Company launched its Prospectus in October 2015 and the
offer closed in June 2016, raising just under GBP31 million,
representing more than half of the entire funds raised by planned
exit VCTs in the 2015/2016 tax year. The Investment Manager, Puma
Investments, now has GBP121 million of VCT money under management
in this and other Puma VCTs and a well-established, experienced VCT
team to manage the Company's deal flow.
Investments
During the period, the Company participated in a series of
investments, including first charge secured loans and subscription
for investment grade liquid securities, for a total of just under
GBP19 million. Details of these investments can be found in the
Investment Manager's report below.
The Investment Manager has continued to review a number of
suitable investment opportunities, generated by a strong pipeline,
and expects, in particular, to make further qualifying investments
during the coming year to ensure the Company is on course to meet
its HMRC qualifying target.
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 establishing the status of potential
investments as qualifying holdings in the future.
Results
The Company reported a loss of GBP370,000 for the period, a loss
of 1.84p per ordinary share (calculated on the weighted average
number of shares). This is a result of the running costs of the
Company exceeding its income during this initial period whilst the
Company assembles suitable investments. The Net Asset Value per
ordinary share ("NAV") at 28 February 2017 was 95.38p. In line with
the Company's dividend policy as stated in the Prospectus, no
dividend was declared in respect of this first accounting
period.
Outlook
We are pleased, at the Company's first anniversary, that the
Investment Manager has invested a substantial proportion of funds
raised. Although there is increased demand from smaller companies
seeking finance, the availability of bank finance continues to be
restricted. Moreover the terms on which target companies can raise
finance from banks remain problematic. This continues to drive the
demand for our offering and should also allow us to continue to
secure favourable terms when we offer finance. There are many
suitable companies which are well-managed, in good market
positions, and which can offer security and need our finance. We
therefore believe the Company is strongly positioned to select a
portfolio which can deliver attractive returns to shareholders in
the medium to long term.
Ray Pierce
Chairman
27 June 2017
INVESTMENT MANAGER'S REPORT
Introduction
As set out in the Chairman's Statement, availability of finance
continues to be restricted for small and medium sized businesses
(SMEs). As a consequence, the Company has been able to make a
number of attractive investments, including its first qualifying
investment, to smaller companies on a secured basis. We have also
continued to see a strong pipeline of potential investments,
particularly opportunities to make further qualifying investments
to ensure the Company meets its HMRC qualifying target.
Investments
Qualifying Investments
During the period, the Company made a GBP294,000 qualifying
investment (as part of a GBP2.8 million investment alongside other
Puma VCTs) in Growing Fingers Limited, a further GBP126,000 was
invested after the year end. The investment will fund 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 company headed by
a management team with many years' operational experience of
nurseries and healthcare facilities. The Company benefits from
first charge security over the Wendover site and the Growing
Fingers business and is expected to produce an attractive return to
the Company.
Non-Qualifying Investments
As previously reported, we have adopted a strategy for the
non-qualifying portfolio of secured loans (and other similar
instruments) offering a good yield with hopefully limited downside
risk. To that end, the Company had invested just under GBP22
million in a series of lending businesses with this strategy. The
lending businesses have invested just under GBP14m of this into a
series of first charge secured loans and subscription for
investment grade liquid securities at 28 February 2017. Details of
the loans that these lending businesses have made are set out
below.
During the period, GBP2.3 million was advanced (through an
affiliate, Sloane Lending Limited), secured against a portfolio of
freehold assets and the associated ground rents, as part of a
package from other vehicles managed and advised by the Investment
Manager totalling GBP4.3 million. The portfolio of ground rents
consisted of 1,645 individual units in total across 17 freeholds,
with all leases in excess of 90 years. The sponsor of the
transaction was Grangeford Asset Management, a manager of some
7,000 individual ground rents across 130 properties in the United
Kingdom valued at GBP50 million. We are pleased to report that,
following the period end, the loan was repaid in full giving a good
rate of return.
In July 2016, a loan of GBP1.5 million, together with loans from
other vehicles managed and advised by the Investment Manager
totalling GBP2.5 million, was advanced (through an affiliate,
Sloane Lending Limited) to Pall Mall Investments 2016 Limited. The
loan was used to acquire Rovex Business Park, an industrial
business park in Birmingham. We anticipate the asset will increase
in value with capital expenditure from Pall Mall Investments. This
should increase rental income and, as such, provide more than
adequate headroom on the serviceability of interest.
During the period, a series of loans totalling GBP1.7 million
were advanced (through affiliates Valencia Lending Limited and
Tottenham Lending Limited) to various entities within the Citrus
Group. 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. Following the period end, the Company's
exposure was reduced to GBP1 million following repayment of
GBP700,000 of principal (together with all accrued interest).
As indicated in the Company's interim report, a loan of GBP1.03
million was advanced (through an affiliate, Piccadilly Lending
Limited) to Zinbake Limited to facilitate the acquisition of the
assets of a pharmacy business located on Portobello Road in Notting
Hill, London. The borrower is an experienced operator and has
carried out an extensive refurbishment program at the new unit
which has a good mix of NHS and over-the-counter income. The loan
is also secured with a first charge on the new pharmacy business
and a first charge over the borrower's existing pharmacy located in
south west London.
During the period, a GBP800,000 facility (as part of a total
facility of GBP5 million) was completed (through an affiliate,
Tottenham Lending Limited) with an entity within the Ironbridge
Group. The facility provides the senior 70% slice of "stretched
senior" bridging loans on non-owner-occupied properties in London
and the South East with Ironbridge funding the subordinated 30%
slice. Ironbridge operate a bridge lending business and have
successfully deployed over GBP50m of customer loans to date. Loans
are being advanced from 6 to 24 months with the senior slice at a
conservative loan-to-value ratio.
In September 2016, a GBP608,000 loan (as part of an overall
facility of GBP7.4 million) was agreed (through an affiliate,
Victoria Lending Limited) with New Care (Chester) Limited to fund
the development and initial trading of a 77-bed purpose-built care
home in Chester. 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.
Construction has commenced on site and is progressing well.
In November 2016, a GBP1.8 million loan ((together with loans
from other vehicles managed and advised by the Investment Manager
totalling GBP4.3 million) was agreed (through an affiliate, Marble
Lending Limited) with Empire TBR Limited to fund the construction
of a mixed residential and commercial development near Tower
Bridge, London. The location is well suited to the target market,
with good transport links and local amenities, and the developer
has successfully completed several similar redevelopments in
central London. The loan is secured with a first charge over the
site and is expected to generate an attractive return.
In January 2017, a GBP3.9 million loan (as part of a total
facility of GBP17.5 million) was agreed (through affiliates
Victoria Lending Limited, Tottenham Lending Limited and Marble
Lending Limited) with Cudworth Limited to fund the construction of
a mixed residential and commercial development in Bloomsbury,
London, close to the British Museum and 600m from King's Cross
station. The development includes 8 flats, 2 houses and 11,800
square feet of B1 commercial space. The loan is secured with a
first charge over the site.
To manage liquidity, the Company invested GBP1.6 million in a
floating rate note issued by Royal Bank of Canada, GBP1.2 million
in a floating rate note issued by Commonwealth Bank of Australia
and GBP2 million in a short term bond issued by J Sainsbury plc,
that was sold following the period end. It is intended that these
other positions will be liquidated in due course as the Company
makes qualifying investments.
Investment Strategy
We are pleased, at the Company's first anniversary, to have
invested a substantial proportion of funds raised. Demand from
smaller companies seeking finance continues whilst the availability
of bank finance remains restricted. Moreover the terms on which
target companies can raise finance from banks remain problematic.
This continues to drive the demand for our offering and should also
allow us to continue to secure favourable terms when we offer
finance. There are many suitable companies which are well-managed,
in good market positions, and which can offer security and need our
finance. We therefore believe the Company is strongly positioned to
select a portfolio which can deliver attractive returns to
shareholders in the medium to long term.
The Investment Management team continues to meet with companies
which are potentially suitable for investment. In accordance with
our mandate we have maintained a cautious approach and are
performing due diligence work on several potential investments.
Over the course of the next year, the Company will seek
opportunities to continue to build the qualifying portfolio. We
have a strong deal-flow and are meeting many potential investee
companies with several interesting opportunities to make further
qualifying investments.
Puma Investment Management Limited
27 June 2017
Investment Portfolio Summary
As at 28 February 2017
Valuation
as a % of
Valuation Cost Gain/(loss) Net Assets
GBP'000 GBP'000 GBP'000
Qualifying Investments
Growing Fingers Limited 294 294 - 1%
Total Qualifying Investments 294 294 - 1%
---------- -------- ------------ ------------
Non-Qualifying Investments^
Piccadilly Lending Limited 2,400 2,400 - 8%
Bayswater Lending Limited 1,900 1,900 - 6%
Victoria Lending Limited 3,800 3,800 - 13%
Tottenham Lending Limited 3,800 3,800 - 13%
Sloane Lending Limited 3,800 3,800 - 13%
Marble Lending Limited 3,800 3,800 - 13%
Valencia Lending Limited 2,441 2,441 - 8%
Total Non-Qualifying
investments 21,941 21,941 - 74%
---------- -------- ------------ ------------
Liquidity Management
Royal Bank of Canada
Bond* 1,611 1,610 1 6%
J Sainsbury Plc Bond* 2,062 2,045 17 7%
Commonwealth Bank of
Australia Bond* 1,221 1,213 8 4%
Total Liquidity Management
investments 4,894 4,868 26 17%
---------- -------- ------------ ------------
Total Investments 27,129 27,103 26 92%
Balance of Portfolio 2,353 2,353 - 8%
Net Assets 29,482 29,456 26 100%
---------- -------- ------------ ------------
Of the investments held at 28 February 2017, all are
incorporated in England and Wales.
^ Non-qualifying investments comprises monies advanced to
affiliated lending businesses of which just under GBP14m has been
invested by those affiliates as at 28 February 2017.
* Quoted investment listed on the LSE.
Income Statement
For the period ended 28 February 2017
Period from 2 September
2015 to 28 February 2017
Note Revenue Capital Total
GBP'000 GBP'000 GBP'000
Gain on investments 8 (b) - 26 26
Income 2 477 - 477
477 26 503
--------- --------- --------
Investment management
fees 3 (144) (432) (576)
Other expenses 4 (297) - (297)
(441) (432) (873)
--------- --------- --------
Profit/(loss) before
taxation 36 (406) (370)
Taxation 5 (7) 7 -
Profit/(loss) and total
comprehensive income
for the period 29 (399) (370)
========= ========= ========
Basic and diluted
Return/(loss) per Ordinary
Share (pence) 6 0.14p (1.98p) (1.84p)
========= ========= ========
All items in the above statement derive from continuing
operations.
There are no gains or losses other than those disclosed in the
Income Statement.
The total column of this statement is the Statement of Total
Comprehensive Income of the Company prepared in accordance with FRS
102 'The Financial Reporting Standard applicable in the UK and
Republic of Ireland'. The supplementary revenue and capital columns
are prepared in accordance with the Statement of Recommended
Practice, 'Financial Statements of Investment Trust Companies and
Venture Capital Trusts' issued in November 2014 by the Association
of Investment Companies and updated in January 2017.
Balance Sheet
As at 28 February 2017
As at
28 February
Note 2017
GBP'000
Fixed Assets
Investments 8 27,129
-------------
Current Assets
Debtors 9 458
Cash at bank and in hand 2,060
-------------
2,518
Creditors - amounts falling
due within one year 10 (165)
Net Current Assets 2,353
-------------
Net Assets 29,482
=============
Capital and Reserves
Called up share capital 12 19
Share premium account 29,833
Capital reserve - realised (425)
Capital reserve - unrealised 26
Revenue reserve 29
Total Equity 29,482
=============
Net Asset Value per Ordinary
Share 13 95.38p
=============
The financial statements on pages 25 to 40 were approved and
authorised for issue by the Board of Directors on 27 June 2017 and
were signed on their behalf by:
Ray Pierce
Chairman
27 June 2017
Statement of Cash Flows
For the period ended 28 February 2017
Period from
2 September
2015 to 28
February
2017
GBP'000
Loss after tax (370)
Gain on investments (26)
Increase in debtors (458)
Increase in creditors 165
Net cash used in operating activities (689)
-------------
Cash flow from investing activities
Purchase of investments (27,103)
Net cash used in investing activities (27,103)
-------------
Cash flow from financing activities
Proceeds received from issue of ordinary
share capital 30,909
Expense paid for issue of share capital (1,057)
Proceeds received from issue of redeemable
preference shares 13
Redemption of redeemable preference
shares (13)
Net cash generated from financing
activities 29,852
-------------
Net increase in cash and cash equivalents 2,060
Cash and cash equivalents at the beginning
of the period -
Cash and cash equivalents at the end
of the period 2,060
=============
Statement of Changes in Equity
For the period ended 28 February 2017
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
Shares issues in the
period 19 30,890 - - - 30,909
Expenses of share
issues - (1,057) - - - (1,057)
Total comprehensive
income for the period - - (425) 26 29 (370)
Balance as at 28 February
2017 19 29,833 (425) 26 29 29,482
========== ========= ============ ============== ========= ========
Distributable reserves comprise: Capital reserve-realised,
Capital reserve-unrealised (excluding gains on unquoted
investments) and the Revenue reserve. At the period end,
distributable revenue reserves were GBP29,000.
The Capital reserve-realised includes gains/losses that have
been realised in the period 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.
Share premium represents premium on shares issued less issue
costs.
The revenue reserve represents the cumulative revenue earned
less cumulative distributions.
1. Accounting Policies
Accounting convention
Puma VCT 12 plc ("the Company") was incorporated on 2 September
2015 and is registered and domiciled in England and Wales. The
Company's registered number is 09758309. The registered office is
Bond Street House, 14 Clifford Street, London W1S 4JU. The Company
is a public limited company 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 (including
early-adoption of the 2015 changes) 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 January 2017 ("the SORP").
Monetary amounts in these financial statements are rounded to
the nearest whole GBP1,000, except where otherwise indicated.
Investments
All investments are measured at fair value. They are all held as
part of the Company's investment portfolio and are managed in
accordance with the investment policy set out on page 12.
Listed investments are stated at bid price at the reporting
date.
Unquoted investments are stated at fair value by the Directors
with reference to the International Private Equity and Venture
Capital Valuation Guidelines ("IPEV") as follows:
-- Investments which have been made within the last twelve
months or where the investee company is in the early stage of
development will usually be valued at the price of recent
investment except where the company's performance against plan is
significantly different from expectations on which the investment
was made in which case a different valuation methodology will be
adopted.
-- Investments in debt instruments will usually be valued by
applying a discounted cash flow methodology based on expected
future returns of the investment.
-- Alternative methods of valuation such as net asset value may
be applied in specific circumstances if considered more
appropriate.
Realised surpluses or deficits on the disposal of investments
are taken to realised capital reserves, and unrealised surpluses
and deficits on the revaluation of investment are taken to
unrealised capital reserves.
1. Accounting Policies (continued)
Income
Dividends receivable on listed equity shares are brought into
account on the ex-dividend date. Dividends receivable on unquoted
equity shares are brought into account when the Company's right to
receive payment is established and there is no reasonable doubt
that payment will be received. Interest receivable is recognised
wholly as a revenue item on an accruals basis.
Performance fees
Upon its inception, the Company agreed performance fees payable
to the Investment Manager, Puma Investment Management Limited, and
members of the investment management team at 20% of the aggregate
excess of the amounts realised over GBP1 per Ordinary Share
returned to Ordinary Shareholders. This incentive will only be
effective once the other holders of Ordinary Shares have received
distributions of GBP1 per share.
The performance incentive has been satisfied through the issue
of 7,727,297 Ordinary Shares (as set out in Note 11 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 38,636,487. Under the terms of the incentive
arrangement, all rights to dividends will be waived until the GBP1
per Ordinary Share performance target has been met. The performance
fee is accounted for as an equity-settled share-based payment.
Section 26 of FRS 102 "Share-Based Payment" requires the
recognition of an expense in respect of share-based payments in
exchange for goods or services. Entities are required to measure
the goods or services received at their fair value, unless that
fair value cannot be estimated reliably in which case that fair
value should be estimated by reference to the fair value of the
equity instruments granted.
At each balance sheet date, the Company estimates that fair
value by reference to any excess of the net asset value, adjusted
for dividends paid, over GBP1 per share in issue at the balance
sheet date. Any change in fair value is recognised in the Income
Statement with a corresponding adjustment to equity.
Expenses
All expenses (inclusive of VAT) are accounted for on an accruals
basis. Expenses are charged wholly to revenue, with the exception
of:
-- expenses incidental to the acquisition or disposal of an investment charged to capital; and
-- the investment management fee, 75% of which has been charged
to capital to reflect an element which is, in the directors'
opinion, attributable to the maintenance or enhancement of the
value of the Company's investments in accordance with the Board's
expected long-term split of return; and
-- the performance fee which is allocated proportionally to
revenue and capital based on the respective contributions to the
Net Asset Value.
Taxation
Corporation tax is applied to profits chargeable to corporation
tax, if any, at the applicable rate for the period. The tax effect
of different items of income/gain and expenditure/loss is allocated
between capital and revenue return on the marginal basis as
recommended by the SORP.
Deferred tax is recognised in respect of all timing differences
that have originated but not reversed at the balance sheet date,
where transactions or events that result in an obligation to pay
more, or right to pay less, tax in the future have occurred at the
balance sheet date. This is subject to deferred tax assets only
being recognised if it is considered more likely than not that
there will be suitable taxable profits from which the future
reversal of the underlying timing differences can be deducted.
Timing differences are differences arising between the Company's
taxable profits and its results as stated in the financial
statements which are capable of reversal in one or more subsequent
periods. Deferred tax is measured on a non-discounted basis at the
tax rates that are expected to apply in the periods in which timing
differences are expected to reverse, based on tax rates and laws
enacted or substantively enacted at the balance sheet date.
1. Accounting Policies (continued)
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.
Foreign exchange
The functional and presentational currency of the Company is
Sterling. Transactions denominated in foreign currencies are
translated into Sterling at the rates ruling at the dates that they
occurred. Assets and liabilities denominated in a foreign currency
are translated at the appropriate foreign exchange rate ruling at
the balance sheet date. Translation differences are recorded as
unrealised foreign exchange losses or gains and taken to the Income
Statement.
Debtors
Debtors include accrued income which is recognised at amortised
cost, equivalent to the fair value of the expected balance
receivable.
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 period relate to the fair value of unquoted investments.
Further details of the unquoted investments are disclosed in the
Investment Manager's Report on pages 3 to 5 and notes 8 and 14 of
the financial statements.
2. Income
Period from 2 September
2015 to 28 February
2017
GBP'000
Income from investments
Loan stock interest 387
Bond yields 81
468
Other income
Bank deposit income 9
477
========================
3. Investment Management Fees
Period from 2 September
2015 to 28 February
2017
GBP'000
Puma Investments fees 576
576
========================
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 period were 2.9% of the funds raised.
In addition to the investment manager fees disclosed above,
during the period two payments were made to Puma Investment
Management Limited, totalling GBP1,056,000, in relation to share
issue costs. The fees were to cover the costs of launching the
funds.
4. Other expenses
Period from 2 September
2015 to 28 February
2017
GBP'000
PI Administration Services
Limited 101
LSE admission fee 54
Directors' Remuneration 58
Social security costs 2
Auditor's remuneration
for statutory audit 23
Legal and professional
fees 26
Other expenses 33
297
========================
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 period is disclosed in
the Directors' Remuneration Report on page 17. The Company had no
employees (other than Directors) during the period. The average
number of non-executive Directors during the period was 3. The
non-executive Directors are considered to be the Key Management
Personnel of the Company with total remuneration for the period of
GBP60,000 including social security costs.
The Auditor's remuneration of GBP19,500 has been grossed up in
the table above to be inclusive of VAT.
5. Taxation
Period from 2 September 2015
to 28 February 2017
GBP'000
UK corporation tax charged
to revenue reserve 7
UK corporation tax credited
to capital reserve (7)
UK corporation tax charge
for the period -
=============================
Factors affecting tax charge for the period
Loss before taxation (370)
=============================
Tax charge calculated
on loss before taxation
at 20% (74)
Tax on capital items not
taxable (5)
Tax losses carried forward 79
-
=============================
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 or deferred tax is
recognised on capital gains or losses.
No provision for deferred tax has been made in the current
accounting period. No deferred tax assets have been recognised as
the timing of their recovery cannot be foreseen with any certainty.
Due to the Company's status as a Venture Capital Trust and the
intention to continue meeting the conditions required to obtain
approval in the foreseeable future, the Company has not provided
deferred tax on any capital gains and losses arising on the
revaluation or disposal of investments.
6. Basic and diluted return/(loss) per Ordinary Share
Period from 1 September 2015 to
28 February 2017
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Total comprehensive
income for the period 29 (399) (370)
Weighted average number
of shares in issue for
the period 27,854,587 27,854,587 27,854,587
Less: management incentive
shares (see note 11) (7,727,297) (7,727,297) (7,727,297)
Weighted average number
of shares for purposes
of return/(loss) per
share calculations 20,127,290 20,127,290 20,127,290
============ ============ ============
Return/(loss) per share 0.14p (1.98)p (1.84)p
7. Dividends
The Directors do not propose a final dividend in relation to the
period ended 28 February 2017.
8. Investments
Qualifying Non qualifying
(a) Movements in investments investments investments Total
GBP'000 GBP'000 GBP'000
Purchases at cost 294 26,809 27,103
Net unrealised - 26 26
Valuation at 28 February
2017 294 26,835 27,129
============= =============== ========
Book cost at 28 February
2017 294 26,809 27,103
Net unrealised gains
at 28 February 2017 - 26 26
Valuation at 28 February
2017 294 26,835 27,129
============= =============== ========
(b) Gains and losses on investments
The gains and losses on investments for the period shown in the
Income Statement is analysed as follows:
Period from
2 September
2015 to 28
February
2017
GBP'000
Unrealised gains in
period 26
26
=============
(c) Quoted and unquoted investments
Market value
as at 28
February
2017
GBP'000
Quoted investments 4,894
Unquoted investments 22,235
27,129
=============
Further details of these investments are disclosed in the
Investment Portfolio Summary on pages 6 to 10 of the Annual
Report.
9. Debtors
As at 28 February
2017
GBP'000
Other debtors 8
Prepayments and accrued
income 450
458
==================
10. Creditors - amounts falling due within one year
As at 28 February
2017
GBP'000
Accruals 165
165
==================
11. Management Performance Incentive Arrangement
On 3 September 2015, the Company entered into an Agreement with
the Investment Manager and members of the investment management
team (together "the Management Team") such that the Management Team
will be entitled in aggregate to share in 20 per cent of the
aggregate excess on any amounts realised by the Company in excess
of GBP1 per Ordinary Share, the Performance Target.
This incentive is effective through the issue of ordinary shares
in the Company, such that the Management Team hold 7,727,297
ordinary shares being 20% of the issued share capital of
38,636,487.
The Management Team will waive all rights to dividends until a
return of GBP1 per share (whether capital or income) has been paid
to the other shareholders.
The performance incentive structure provides a strong incentive
for the Investment Manager to ensure that the Company performs
well, enabling the Board to approve distributions as high and as
soon as possible.
12. Called Up Share Capital
As at 28 February
2017
GBP'000
38,636,487 ordinary shares of 0.05p each 19
==================
On incorporation on 2 September 2015 the company issued two
Ordinary shares of 0.05p each.
On 3 September 2015 50,000 Redeemable Preference shares of GBP1
each were issued for total consideration of GBP12,500 to Puma
Investment Management Limited, one quarter paid up, so as to enable
the Company to obtain a certificate under Section 761 of the
Companies Act 2006.
Also, on 3 September 2015, the Management Team (as explained in
note 11) were allotted 11,250,000 Ordinary Shares of 0.05p each for
total consideration of GBP5,625.
Between 12 January 2016 and 31 May 2016 30,909,188 Ordinary
shares of 0.05p each were issued at GBP1 per share pursuant to the
offers for subscription to the public dated 14 October 2015.
On 23 August 2016 the 50,000 Redeemable Preference shares of
GBP1 each were redeemed at a price of GBP0.25 per share out of the
proceeds of the offers and upon redemption the shares were
cancelled. On 13 June 2016 the Management Team transferred
3,522,703 Ordinary shares to the Company for consideration of
GBP1,761 and these shares were subsequently cancelled.
As explained in note 11, the Management Team now hold 7,727,297
Ordinary shares representing 20% of the total issued share
capital.
13. Net Asset Value per Ordinary Share
As at
28 February 2017
Net assets 29,482,000
------------------
Number of shares in issue 38,636,487
Less: management incentive
shares (see note 11) (7,727,297)
------------------
Number of shares in issue
for purposes of Net
Asset Value per share calculation 30,909,190
------------------
Net asset value per share
Basic 95.38p
Diluted 95.38p
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 2017:
As at 28 February
2017
GBP'000
Financial assets at fair value through
profit or loss 27,129
Financial assets that are debt instruments
measured at amortised cost 458
Financial liabilities measured at amortised
cost (165)
27,422
==================
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 period.
Credit risk
Credit risk is the risk that the counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Company. The Investment Manager
monitors counterparty risk on an ongoing basis. The carrying amount
of financial assets best represents the maximum credit risk
exposure at the balance sheet date. The Company's financial assets
and maximum exposure to credit risk is as follows:
As at 28 February 2017
GBP'000
Investments in loans, loan
notes and bonds 26,835
Cash at bank and in hand 2,060
Interest, dividends and
other receivables 458
29,353
=======================
The cash held by the Company at the period 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.
14. Financial Instruments (continued)
Credit risk (continued)
Credit risk associated with interest, dividends and other
receivables are predominantly covered by the investment management
procedures.
Investments in loans, loan notes and bonds comprises a
fundamental part of the Company's venture capital investments,
therefore credit risk in respect of these assets is managed within
the Company's main investment procedures.
Market price risk
Market price risk arises mainly from uncertainty about future
prices of financial instruments held by the Company. It represents
the potential loss the Company might suffer through holding
investments in the face of price movements. The Investment Manager
actively monitors market prices and reports to the Board, which
meets regularly in order to consider investment strategy.
The Company's strategy on the management of market price risk is
driven by the Company's investment policy as outlined in the
Strategic Report on page 12. The management of market price risk is
part of the investment management process. The portfolio is managed
with an awareness of the effects of adverse price movements through
detailed and continuing analysis, with an objective of maximising
overall returns to shareholders.
Holdings in unquoted investments may pose higher price risk than
quoted investments. Some of that risk can be mitigated by close
involvement with the management of the investee companies along
with review of their trading results.
18% of the Company's investments are quoted investments and 82%
are unquoted investments.
Liquidity risk
Details of the Company's unquoted investments are provided in
the Investment Portfolio summary on page 6. By their nature,
unquoted investments may not be readily realisable, the Board
considers exit strategies for these investments throughout the
period for which they are held. As at the period 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 Report of the Directors and
the Strategic Report. The Company's overall liquidity risks are
monitored on a quarterly basis by the Board. The Company maintains
sufficient investments in cash and readily realisable securities to
pay accounts payable and accrued expenses.
Fair value interest rate risk
The benchmark that determines the interest paid or received on
the current account is the Bank of England base rate, which was
0.25% at 28 February 2017. 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.
14. Financial Instruments (continued)
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 2017.
Weighted Weighted
average average
interest period
Rate status rate until maturity Total
GBP'000
Cash at bank - Metro Floating 0.10% - 2,060
Loans and loan notes Floating 7.75% 52 months 3,200
Floating rate liquidity
bonds Floating 1.22% 20 months 2,832
Loans, loan notes and liquidity
bonds Fixed 7.20% 55 months 13,124
Balance of assets Non-interest bearing - 8,431
29,647
========
Foreign currency risk
The reporting currency of the Company is Sterling. The Company
has not held any non-Sterling investments during the period.
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.
-- Level 2 - Fair value is measured using inputs other quoted
prices that are observable using market data.
-- Level 3 - Fair value is measured using unobservable inputs.
The Company has early adopted the changes to FRS 102 published
by the FRC in March 2016 in relation to these disclosures.
Fair values have been measured at the end of the reporting
period as follows:-
As at 28
February
2017
GBP'000
Level 1
Investments listed on LSE 4,894
Level 3
Unquoted investments 22,235
27,129
==========
The Level 3 investments have been valued in line with the
Company's accounting policies and IPEV guidelines. Further details
of these investments are provided in the Significant Investments
section of the Annual Report on pages 7 to 10.
15. Capital management
The Company's objectives when managing capital are to safeguard
the Company's ability to continue as a going concern, so that it
can provide an adequate return to shareholders by allocating its
capital to assets commensurate with the level of risk.
By its nature, the Company must have an amount of capital, at
least 70% (as measured under the tax legislation) of which must be,
and remain, invested in the relatively high risk asset class of
small UK companies within three years of that capital being
subscribed.
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 period-end.
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 period ended
28 February 2017, but has been extracted from the statutory
financial statements for the period ended 28 February 2017 which
were approved by the Board of Directors on 27 June 2017 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.
These are the first period of accounts.
Copies of the full annual report and financial statements for
the period ended 28 February 2017 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 company news service from the London Stock Exchange
END
FR PGUCUQUPMGAM
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