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Puma VCT 12 PLC (PU12)

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Tuesday 26 November, 2019

Puma VCT 12 PLC

Half-year Report

RNS Number : 7252U
Puma VCT 12 PLC
26 November 2019
 
 
 
Puma VCT 12 plc

Interim Report

 

For the period ended 31 August 2019

 

 

 

Officers and Professional Advisers

 

 

Directors

Auditor

Raymond Pierce (Chairman)

David Brock

Graham Shore

 

RSM UK Audit LLP

Chartered Accountants

25 Farringdon Street

London EC4A 4AB

Secretary

Eliot Kaye

 

Registered Number

09758309

 

 

Sponsors and Solicitors

Howard Kennedy

No 1 London Bridge

London SE1 9BG

 

Registered Office

Cassini House

57 St James's Street

London

SW1A 1LD

 

Investment Manager

Puma Investment Management Limited

Cassini House

57 St James's Street

London

SW1A 1LD

 

Administrator

PI Administration Services Limited

Cassini House

57 St James's Street

London

SW1A 1LD

 

Bankers

The Royal Bank of Scotland plc

London City Office

PO Box 412

62-63 Threadneedle Street

London

EC2R 8LA

 

VCT Tax Advisor

PricewaterhouseCoopers LLP

1 Embankment Place

London WC2N 6RH

 

Custodian

Pershing Securities Limited

1 Canada Square

London

E14 5AL

 

 

 

Registrar

SLC Registrars

Elder House

St. Georges Business Park

Brooklands Road

Weybridge

Surrey

KT13 0TS

 

 

 

 

 

 

 

 

 

Chairman's Statement

 

Highlights 

 

·    Funds substantially invested in a diverse range of businesses and projects

·    HMRC requirement that qualifying investments are 80% of the fund is now met

·    1p per share dividend paid during the period

 

 

Chairman's Statement 

 

Introduction

 

The Company has deployed its funds in a diverse range of both qualifying and non-qualifying investments and continues to meet its minimum qualifying investment percentage of 80 per cent. We remain focused on generating returns for the Company from both the qualifying and non-qualifying portfolios as the fund enters into its fourth year.

 

Investments

 

Qualifying Investments

 

Pure Cremation - Crematorium and Direct Cremations

The Company's £4 million investment in Pure Cremation Holdings Limited (as part of a £7.35 million qualifying investment alongside another Puma VCT) continues to perform.  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' new purpose-built site near Andover opened during the period, reducing operating costs and opening up new revenue streams.  The business is performing, delivering strong revenue growth across all of its sales channels.

 

NRG Gym - Budget Gyms

The Company has invested £1.4 million in SA Holdings Limited (trading as NRG Gyms through its subsidiary, NRG GYM Limited) as part of a £5.0 million investment alongside other Puma funds.  NRG offer low price gyms aimed at price sensitive millennials with a keen interest in sports and fitness.  At the point of investment, the business was operating two units, one freehold unit in Gravesend and a second, leased, unit in Watford.  The funds raised were to expand to further units, together with continued evolution of the brand and offering, and enhancement of the two original sites.  During the period the business continued to deliver profitable trade from its original two units and opened a new unit in Walsall, Birmingham. This site has opened strongly with an above target number of members. Post period end the business entered into Heads of Terms for a new site in Lewisham, South London, and has other well-advanced pipeline sites beyond that.

 

Growing Fingers - Children's Nursery

As previously reported, the Company has invested £420,000 (as part of a £2.8 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.  The directors of Growing Fingers expect the nursery to open in the summer of 2020.

 

Sweat Union - Budget Gyms

Since going into administration, the administrator has informed the board that it will shortly be in a position to issue a notice of intended dividend to creditors.  A distribution to creditors is expected in February 2020.

 

Applebarn Nurseries - Children's Nursery

The Company had previously invested £1.1 million in Applebarn Nurseries Limited (as part of a £2.2 million qualifying investment alongside another Puma VCT). The management team include a successful operator of nurseries, together with an experienced developer and contractor.  The team's first site, a custom-built 120 place children's day nursery in Altrincham, South Manchester opened in September 2018 and is now ramping up as occupancy builds.

 

Knott End - Pubs with Microbreweries

As previously reported, the Company has invested just over £4 million (as part of a £7.3 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 currently owns and operates two pub assets in Horsham and Milton Keynes; the Horsham asset has been trading in line with expectations but the pub in Milton Keynes has been disappointing.  Management remain focused on improving performance at this site.

 

Kid and Play - Children's Nursery

In October 2017, the Company made a £1.7 million qualifying investment in Kid & Play Limited, alongside funds invested by another Puma VCT totalling £3.4 million.  Kid & Play is seeking to develop, own and operate a new children's day nursery and has identified a number of potential sites which are currently in various stages of planning applications.  We are pleased to report that during the period Kid & Play acquired a site in Bedford on which it is now developing a 110 place children's day nursery which is expected to open in Spring 2020.  Moreover, shortly following the period end, Kid & Play commenced trading by entering into a contract to provide services in relation to early childhood study tours, revenue from which will assist in running costs pending opening of the nursery.

 

Sunlight Education Nucleus - Special Educational Needs Schools

In November 2017, the Company made a £2.35 million qualifying investment (as part of a £4.7 million investment alongside other Puma VCTs) in Sunlight Education Nucleus Limited, a company seeking to develop, own and operate a series of special education needs schools across the United Kingdom. We are pleased to report that, shortly following the period end, the team at Sunlight opened their first school in Stafford, West Midlands and are now working on the development of a second site in Crewe.

 

South West Cliffe - Children's Nursery

As previously reported, the Company has invested £2.1 million (as part of a £4.2 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.  Despite best efforts, the management team have been unable to agree terms on a site and therefore, shortly after the period end, took the decision to place South-West Cliffe Limited into a solvent members' liquidation.  We expect the Company to receive in the region of 97p in the pound invested but this will be confirmed following completion of the liquidation.

 

Signal Building Services - Construction projects

The Company has invested £200,000 (as part of a total investment round of £2 million) into Signal Building Services Limited, a business specialising in delivering turnkey solutions to construction projects led by a management team with over 40 years' of combined experience in the construction sector.  Signal Building Services is currently working on the construction of a 14-apartment supported living scheme in Sutton-in-Ashfield.  Signal Building Services has also recently been working on the construction of a 22-apartment supported living scheme in Wigan which, we are pleased to report, completed successfully shortly after the period end, generating attractive returns for Signal Building Services which will benefit the Company when its investment is repaid in due course.

 

Non-Qualifying Investments

 

As previously reported, the Company had initially invested just over £20 million in a series of lending businesses offering an appropriate risk adjusted return in the short to medium term.  As intended, most of these positions have been liquidated as the Company has made qualifying investments.  Details of these lending businesses' loans are set out below.

 

Mixed Residential Commercial Development, Bloomsbury

As previously reported, a £3.9 million loan (as part of a total facility of £17.97 million) was advanced to Cudworth Limited (through affiliates, Victoria Lending Limited, Tottenham Lending Limited and Marble Lending Limited) to fund the construction of a mixed residential and commercial development in Bloomsbury, London, close to the British Museum and 600m from King's Cross station.  The loan is secured with a first charge over the site.  The development includes 11 apartments, 2 houses and 11,800 square feet of B1 commercial space and is expecting to reach practical completion by the end of the year.  We are pleased to report that contracts have been exchanged to sell the commercial units, both houses and seven of the 11 flats and we expect these sales to complete within a short period following practical completion.

 

Construction of Airport Hotel, Edinburgh

In June 2017, £1.6 million of loans (as part of an overall facility of £16 million) were advanced to Ability Hotels (Edinburgh) Limited (through affiliates, Piccadilly Lending Limited and Tottenham 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 period.

 

Dividends

 

As previously reported, the Company paid a dividend of 1p per ordinary share shortly after the period end taking dividends paid to date to 3p per ordinary share.  Reflecting this recent pay-out, your Board is not proposing a further dividend at this interim stage.

 

Results and Net Asset Value ("NAV")

 

The NAV per share at the period end was 83.30p (86.30p after adding back the dividends paid to date), reflecting the provision against the investment in Sweat.  The Company made a small loss of £132,000 in the period (representing a 0.43p per share post-tax loss). 

 

VCT Qualifying Status

 

PricewaterhouseCoopers LLP ("PwC") provides the board and the Investment Manager with advice on the ongoing compliance with HMRC rules and regulations concerning VCTs and has reported no issues in this regard for the Company to date.  PwC also assists the Investment Manager in establishing the status of investments as qualifying holdings and will continue to assist the Investment Manager in monitoring rule compliance

 

Principal risks and uncertainties

 

Growth in the UK economy has slowed and conditions for retail businesses (to which we have some exposure) in particular continue to be difficult.  The economic outlook continues to be dominated by political uncertainty.  The consequences of this for the Company's investment portfolio constitute the principal risk and uncertainty for the Company in the second half of the year.

 

Outlook

 

We remain focused on generating strong returns for the Company from both the qualifying and non-qualifying portfolios, which contain some dynamic companies.

 

Whilst there may be some further changes in the composition of the portfolio, the Board expects to concentrate in the future on the monitoring of our existing investments and considering the options for exits in due course.

 

 

 

Ray Pierce

Chairman

25 November 2019

 

 

Income Statement (unaudited)

For the period ended 31 August 2019

 

 

 

Period ended
 31 August 2019

Period ended
 31 August 2018

Year ended
 28 February 2019

 

Note

Revenue

Capital

Total

Revenue

Capital

Total

Revenue

Capital

Total

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Gains on investments

 

-

(71)

(71)

-

-

-

-

(3,350)

(3,350)

Income

 

330

-

330

603

-

603

909

-

909

 

 

 

 

 

 

 

 

 

 

 

 

 

330

(71)

259

603

-

603

909

(3,350)

(2,441)

 

 

 

 

 

 

 

 

 

 

 

Investment management fees

4

(63)

(190)

(253)

(75)

(225)

(300)

(148)

(443)

(591)

Other expenses

 

(138)

-

(138)

(165)

-

(165)

(248)

-

(248)

 

 

 

 

 

 

 

 

 

 

 

 

 

(201)

(190)

(391)

(240)

(225)

(465)

(396)

(443)

(839)

 

 

 

 

 

 

 

 

 

 

 

Return/(loss) on ordinary activities before taxation

 

129

(261)

(132)

363

(225)

138

513

(3,793)

(3,280)

Tax on return on ordinary activities

 

(25)

25

-

(12)

-

(12)

(97)

97

-

 

 

 

 

 

 

 

 

 

 

 

Return/(loss) on ordinary activities after tax attributable to equity shareholders

 

104

(236)

(132)

351

(225)

126

416

(3,696)

(3,280)

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

 

 

 

 

 

 

 

 

Return/(loss) per  Ordinary Share (pence)

2

0.34p

(0.77p)

(0.43p)

1.14p

(0.73p)

0.41p

1.35p

(11.96p)

(10.61p)

 

 

 

The total column of this statement is the profit and loss of the Company.  All revenue and capital items in the above statement derive from continuing operations.  No operations were acquired or discontinued in the period.

 

Balance Sheet (unaudited)

As at 31 August 2019

               

 

Note

As at
31 August 2019

As at
31 August 2018

As at
28 February 2019

 

 

£'000

£'000

£'000

Fixed Assets

 

 

 

 

Investments

6

23,198

27,021

23,527

 

 

 

 

 

Current Assets

 

 

 

 

Prepayments

 

2,672

2,102

2,413

Cash

 

22

373

107

 

 

2,694

2,475

2,520

Creditors - amounts falling due within one year

 

(146)

(209)

(166)

 

 

 

 

 

Net Current Assets

 

2,548

2,266

2,354

 

 

 

 

 

 

 

 

 

 

Net Assets

 

25,746

29,287

25,881

 

 

 

 

 

Capital and Reserves

 

 

 

 

Called up share capital

 

19

19

19

Share premium account

 

29,833

29,833

29,833

Capital reserve - realised

 

(1,215)

(929)

(1,050)

Capital reserve - unrealised

 

(3,421)

-

(3,350)

Revenue reserve

 

530

364

429

 

 

 

 

 

Equity Shareholders' Funds

 

25,746

29,287

25,881

 

 

 

 

 

 

 

 

 

 

Net Asset Value per Ordinary Share

3

83.30p

94.75p

83.73p

 

 

 

 

 

Diluted Net Asset Value per Ordinary Share

3

83.30p

94.75p

83.73p

 

Cash Flow Statement (unaudited)

For the period ended 31 August 2019

 

 

 

Period ended
 31 August 2019

Period ended
 31 August 2018

Year ended
 28 February 2019

 

£'000

£'000

£'000

 

 

 

 

Operating activities

 

 

 

Profit on ordinary activities after tax

(132)

126

(3,280)

Losses on investments

71

-

3,350

Increase in debtors

(262)

(601)

(912)

Increase/(decrease) in creditors

(20)

42

(1)

 

 

 

 

Net cash used in operating activities

(343)

(433)

(843)

 

 

 

 

Cash flow from investing activities

 

 

 

Purchase of investments

(71)

(1,417)

(4,823)

Proceeds from disposal of investments

329

2,368

5,918

 

 

 

 

Net cash generating from investing activities

258

951

1,095

 

 

 

 

Cash flow from financing activities

 

 

 

Dividends paid

-

(618)

(618)

 

 

 

 

Net cash used from financing activities

-

(618)

(618)

 

 

 

 

Decrease in cash

(85)

(100)

(366)

Net cash at start of the period

107

473

473

 

 

 

 

Net funds at the period end

22

373

107

 

 

 

Statement of Changes in Equity (unaudited)

For the period ended 31 August 2019

 

 

Called up share capital

Share premium account

Capital reserve - realised

Capital reserve - unrealised

Revenue reserve

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Balance as at 1 March 2018

19

29,833

(704)

-

631

29,779

Total recognised (losses)/gains for the period

-

-

(225)

-

351

126

Dividends paid

-

-

-

-

(618)

(618)

 

 

 

 

 

 

 

Balance as at 31 August 2018

19

29,833

(929)

-

364

29,287

 

 

 

 

 

 

 

Total recognised (losses)/gains for the period

-

-

(121)

(3,350)

65

(3,406)

 

 

 

 

 

 

 

Balance as at 28 February 2019

19

29,833

(1,050)

(3,350)

429

25,881

 

 

 

 

 

 

 

Dividends paid

-

-

-

-

-

-

Total recognised (losses)/gains for the period

-

-

(165)

(71)

101

(135)

 

 

 

 

 

 

 

Balance as at 31 August 2019

19

29,833

(1,215)

(3,421)

530

25,746

 

 

Notes to the Interim Report

For the period ended 31 August 2019

 

1.             Accounting Policies

 

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of fixed asset investments, and in accordance with applicable Accounting Standards and with the Statement of Recommended Practice, "Financial Statements of Investment Trust Companies and Venture Capital Trusts" ("SORP") and in accordance with the Financial Reporting Standard 102 ("FRS102").

 

2.             Return per Ordinary Share

 

The total loss per share of 0.43p is based on the loss for the period of £132,000 and the weighted average number of shares in issue as at 31 August 2019 of 30,909,188 calculated from the date of the first receipt of proceeds from the issue of ordinary share capital.

 

3.             Net asset value per share

 

 

As at
31 August 2019

As at
31 August 2018

As at
28 February 2019

Net assets

25,746,000

29,287,000

25,881,000

Shares in issue

30,909,188

30,909,188

30,909,188

 

 

 

 

Net asset value per share

 

 

 

Basic

83.30p*

94.75p

83.73p

Diluted

83.30p*

94.75p

83.73p

 

*This is net of 2p of dividends paid to date.  A further 1p dividend was paid in September 2019.

 

 

4.             Management fees

 

The Company pays the Investment Manager an annual management fee of 2% of the Company's net assets.  The fee is payable quarterly in arrears.  The annual management fee is allocated 75% to capital and 25% to revenue.

 

 

5.             Financial information provided

 

The financial information for the period ended 31 August 2019 has not been audited and does not comprise full financial statements within the meaning of Section 423 of the Companies Act 2006. The interim financial statements have been prepared on the same basis as will be used to prepare the annual financial statements.

 

 

 

 

 

Notes to the Interim Report continued

For the period ended 31 August 2019

 

 

6.             Investment portfolio summary

               

 

Valuation

Cost

Gain/(loss)

Valuation as a % of Net Assets

As at 31 August 2019

£'000

£'000

£'000

 

 

 

 

 

 

Qualifying Investments

 

 

 

 

Growing Fingers Limited

420

420

-

2%

Kid & Play Limited

1,694

1,694

-

7%

South-West Cliffe Limited

2,100

2,100

-

8%

Signal Building Services Limited

200

200

-

1%

Applebarn Nurseries Limited

1,833

1,833

-

7%

Knott End Pub Company Limited

4,053

4,053

-

15%

Sunlight Education Nucleus Limited

2,350

2,350

-

9%

Sweat Union Limited

-

3,421

(3,421)

0%

Pure Cremation Holdings Limited

4,053

4,053

-

15%

SA Fitness Holdings Limited

1,417

1,417

-

6%

 

 

 

 

 

Total Qualifying Investments1

18,120

21,541

(3,421)

70%

 

 

 

 

 

Non-Qualifying Investments

 

 

 

 

Piccadilly Lending Limited

911

911

-

4%

Victoria Lending Limited

1,617

1,617

-

6%

Tottenham Lending Limited

700

700

-

3%

Marble Lending Limited

1,850

1,850

-

7%

 

 

 

 

 

Total Non-Qualifying Investments1

5,078

5,078

-

20%

 

 

 

 

 

Total  Investments1

23,198

26,619

-

90%

Balance of Portfolio

2,548

2,548

-

10%

 

 

 

 

 

Net Assets

25,746

29,167

-

100%

 

 

 

 

Of the investments held at 31 August 2019, all are incorporated in England and Wales.

 

1 The HMRC valuation differs from FRS102, because FRS102 requires changes to reflect current market valuations whereas HMRC requires such changes when further securities of the same company are bought or sold by the VCT. It also omits the items shown as 'Balance of Portfolio'.

 

 

Copies of this Interim Statement will be made available on the website: http://www.pumainvestments.co.uk/pages/view/investors-information-vcts


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