Source - RNS
RNS Number : 2591L
Puma VCT 10 PLC
30 September 2016
 
 
 
Puma VCT 10 plc

Interim Report

 

For the period ended 30 June 2016

 



 

Officers and Professional Advisers

 

 

Directors

Auditor

David Vaughan (Chairman)

Stephen Hazell Smith

Graham Shore

 

RSM UK Audit LLP

Chartered Accountants

25 Farringdon Street

London EC4A 4AB

Secretary

Eliot Kaye

 

Registered Number

08714913

 

 

Sponsors and Solicitors

Howard Kennedy

No 1 London Bridge

London SE1 9BG

 

Registered Office

Bond Street House

14 Clifford Street

London W1S 4JU

 

 

Investment Manager

Puma Investment Management Limited

Bond Street House

14 Clifford Street

London W1S 4JU

 

Bankers

The Royal Bank of Scotland plc

London City Office

PO Box  412

62-63 Threadneedle Street

London EC2R 8LA

 

Lloyds Bank International Limited
Sarnia House
Le Truchot
St Peter Port
Guernsey, GY1 4EF

 

Registrar

SLC Registrars

42- 50 Hersham Road

Walton-on- Thames

Surrey, KT12 IRZ

 

VCT Tax Advisor

PricewaterhouseCoopers LLP

1 Embankment Place

London WC2N 6RH

Administrator

PI Administration Services Limited

Bond Street House

14 Clifford Street

London W1S 4JU

 

Custodian

Pershing Securities Limited

Capstan House

One Clove Crescent

East India Dock

London E14 2BH

 



Chairman's Statement 

 

Highlights

 

·    Fund substantially invested in a diverse range of high quality businesses and projects.

·    First 6p per share dividend paid during the period, equivalent to an 8.6% per annum tax-free running yield on investment.

·    Strong pipeline of VCT qualifying investment opportunities to ensure that the Company remains on track to meet its 3-year target.

·    Full recovery of interest on loan to Ennovor Trading generated an extra £168,000 of income. 

·    NAV per share up 0.18p in the half year to 96.53p (adding back dividends paid to date).

 

 

Chairman's Statement 

 

Introduction

 

The Company has now deployed a substantial proportion of its funds in both qualifying and non-qualifying investments, and remains on track to meet its minimum qualifying investment percentage of 70 per cent within the requisite timeframe. Our portfolio is well positioned to deliver attractive returns to shareholders within its expected remaining time horizon.

 

Net Asset Value ('NAV')

 

The NAV per share at the period end was 90.53p, 96.53p after adding back dividends paid to date, comprising income for the period of £70,000 and representing a return of 0.18p per ordinary share.

 

Qualifying Investments

 

During the period, the Company made a £2 million qualifying investment in Saville Services Limited, a company providing contracting services over a series of projects across the United Kingdom.  We are pleased to confirm that, following the period end, Saville Services entered into a new contract to provide contracting services in connection with the construction of a 77-bed, purpose-built care home in Chester.

 

The Company's £1.875 million qualifying investment (as part of a £5 million investment alongside other Puma VCTs) in Urban Mining Limited, a member of the Chinook Urban Mining group of companies, continues to perform well.  Chinook Urban Mining is a well-funded energy-from-waste business which is developing a flagship plant in East London to generate electricity through the gasification of municipal solid waste and will benefit from Renewable Obligations Certificates.  The investment is secured with a first charge over the Chinook Urban Mining business and the eight acre site of the East London plant and is yielding an attractive return to the Company.

 

As previously reported, a major fire occurred on 28 February 2016 at the Materials Recycling Facility ("MRF") operated by Opes Industries Limited ("Opes"), into which the Company has invested a total of £3.45m (as part of an £8.8m investment by Puma entities). As a result of the incident, and as reported in the Company's previous annual report, the Company has made a provision of £510,000 against the carrying value of its investment in Opes.

 

Opes owns a 73 hectare site in north Oxfordshire with a MRF, including a landfill site for non-hazardous materials and an aggregates/gravel quarrying business. The Company's investment was to provide funding for the construction and equipping of the MRF and working capital during the build-up of the trade. The funding was provided in the form of equity and loan stock and our interests are covered by a first fixed and floating charge over Opes' assets.

 

Following the incident, the Company appointed an administrator over Opes in order to best protect the Company's investment.  The administrator has implemented various measures to preserve the value of Opes' assets, mitigate costs and seek to realise best value for the Company.  Discussions are also continuing with Opes' insurers regarding the reimbursement of the damage to the plant and the building and of the costs of business interruption.

 

As previously reported, before the passing of the Finance (2) Act 2015, the Company invested a total of £7.5 million in three newly established businesses.   Warm Hearth Limited, in which the Company invested £2.5 million (as part of a £5 million investment alongside other Puma VCTs), was established to operate a trading business in the hospitality and leisure sectors and/or to acquire businesses and companies that operate within those sectors.  Mini Rainbows Limited, in which the Company invested £2.5 million (as part of a £5 million investment alongside other Puma VCTs), was established to operate a trading business in the childcare sector and/or to acquire businesses and companies that operate within that sector. Welcome Health Limited, in which the Company invested £2.5 million (as part of a £5 million investment alongside other Puma VCTs), was established to operate a trading business in the healthcare sector and/or to acquire businesses and companies that operate within that sector. 

 

I am pleased to report that, during the period, Warm Hearth Limited commenced its trade, seeking to capitalise on the strong growth trends within the craft beer sub market and add value from the roll-out and use of a strong brand.  In pursuit of this strategy Warm Hearth was able to negotiate a franchise agreement with Brewhouse & Kitchen Limited ("B&K"), a strong and fast-growing branded operator. Its differentiation is to have craft micro-brewing activities within each of its pub units as a point of focus. Warm Hearth acquired three substantial freehold pub assets in Chester, Wilmslow and Bedford, two of which are now open and trading as fully branded B&K units with the third opening in early October 2016. We are pleased with the performance of the units to date.

 

We understand that the directors of Mini Rainbows Limited and Welcome Health Limited are actively pursuing opportunities to deploy their funds in the near future.  We have been advised by PwC that these investments should also be qualifying for VCT purposes but will seek confirmation from HMRC in due course.

 

Non-Qualifying Investments

 

As previously reported, we adopted a strategy for the non-qualifying portfolio of investing in secured loans (and other similar instruments) offering a good yield with hopefully limited downside risk. 

 

During the period, the Company advanced a £575,000 loan (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.  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.

 

The Company's various loans to entities within the Citrus Group, as part of a series of facilities from other vehicles managed and advised by your Investment Manager to provide working capital to the Citrus PX business, continue to deliver attractive returns to the Company. 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. At the period-end, the Company's investment (through affiliates Valencia Lending Limited and Victoria Lending Limited) totalled just over £2.5 million, including an £1 million advance during the period.

 

The Company's £1.2 million loan (advanced through an affiliate, Lothian Lending Limited) to Richmond Global Properties Limited continues to perform well.  This loan, together with loans from other vehicles managed and advised by your Investment Manager totalling £6.9 million, is being advanced to fund the development of a 112-bed purpose-built care home in Hamilton, Scotland.  The loan is secured with a first charge over the site and is expected to generate an attractive return.  The construction programme is progressing well and the care home is expected to open in Q1 2017.

 

As previously reported, the Company had extended a £1.3 million loan which (through Lothian Lending Limited) provides a facility, together with another Puma VCT, of £2.6 million to RPE FL1 Limited, a member of the Renewable Power Exchange group.  The facility provided funding towards the construction of a 1.5MW wind farm in East Lothian, Scotland, with the electricity once generated, used to supply those on low incomes in the local community.  The loan is secured on the site in East Lothian and is earning an attractive rate of interest.  We are pleased to report that the turbines are operating well, generating electricity and EBITDA is in line with forecasts.  In accordance with the planned amortisation schedule, the loan balance now stands at £1.175 million.

 

The Company's £800,000 loan (through another affiliate, Lavender Lending Limited) to Athena (Alpha) Limited continues to perform. The loan, as part of a £4.4 million facility from other vehicles managed and advised by your Investment Manager, is funding the development of a new purpose-built, 80-bed residential care home in Dover, Kent. The site occupies a prominent location adjacent to the recently opened new community hospital, approximately a 5 minute drive into Dover town centre. We are pleased to report that construction is progressing well and expects to complete before the end of the year.  We understand that the borrower, who has recently developed and sold two similar care homes, is in discussions with a potential purchaser of this care home on terms which would see the Company's loan repaid in full.

 

The Company had extended a £474,000 loan (through Valencia Lending Limited) as part of a £2.9 million facility from other vehicles managed and advised by your Investment Manager to Churchill Homes (Culter House) Limited. Churchill Homes is a longstanding Aberdeenshire developer and the facility provides funding towards the construction of a private detached housing development in one of Aberdeen's finest residential suburbs.  The loan is secured with a first charge over the site and is earning an attractive rate of interest. Whilst the Aberdeen housing market has slowed during the period, primarily as a result in the reduction in the price of oil, the loan is being serviced and the Company's security remains at an appropriate level.

 

As reported in the Company's annual report, at the start of the period the Company retained a £523,000 holding in Nextenergy Solar Fund, an investment company focusing on operational solar photovoltaic assets located in the United Kingdom. In response to a change in power-generation markets resulting from declining energy prices, the Company's position was further reduced and was fully exited during the period.

 

To further manage liquidity, the Company holds £2.5 million (through an affiliate Piccadilly Lending Limited) in a floating rate bond issued by Royal Bank of Canada and £835,000 (through Latimer Lending Limited) in a bond issued by J Sainsbury plc. During the period, the Company sold its £1 million holding (also through Latimer Lending Limited) in a floating rate bond issued by Commonwealth Bank of Australia to free up cash for the Company to make qualifying investments.

 

VCT Qualifying Status

 

PricewaterhouseCoopers LLP ('PwC') provides the board and the Investment Manager with advice on the ongoing compliance with Her Majesty's Revenue & Customs ('HMRC') rules and regulations concerning VCTs.  PwC assists the Investment Manager in establishing the status of investments as qualifying holdings and has reported that the Company has met all HMRC's criteria to date.

 

Principal risks and uncertainties

 

Although the UK economy continues to improve, it remains fragile.  The consequences of this for the Company's investment portfolio constitute the principal risk and uncertainty for the second half of 2016.

 

Outlook

 

We are pleased that a significant proportion of the Company's available cash is now invested in a diverse portfolio of qualifying and non-qualifying investments, generating an attractive return. The Investment Manager has a pipeline of further investment opportunities in legal process which are likely to lead to suitable investments in the second half of the year.  We therefore believe the Company is strongly positioned to deliver attractive returns to shareholders during its remaining expected time horizon.

 

 

David Vaughan

Chairman

30 September 2016

 



 

Income Statement (unaudited)

For the period ended 30 June 2016

 


 

Six months ended
 30 June 2016

Six months ended
 30 June 2015

Year ended
 31 December 2015


Note

Revenue

Capital

Total

Revenue

Capital

Total

Revenue

Capital

Total


 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Loss on investments

 

-

(23)

(23)

-

-

-

-

(427)

(427)

Income

 

444

-

444

607

-

607

1,336

-

1,336


 

 

 

 

 

 

 

 

 

 


 

444

(23)

421

607

-

607

1,336

(427)

909


 

 

 

 

 

 

 

 

 

 

Investment management fees

4

(62)

(186)

(248)

(67)

(201)

(268)

(135)

(405)

(540)

Other expenses

 

(103)

-

(103)

(131)

-

(131)

(222)

-

(222)


 

 

 

 

 

 

 

 

 

 


 

(165)

(186)

(351)

(198)

(201)

(399)

(357)

(405)

(762)


 

 

 

 

 

 

 

 

 

 

Profit/(loss) on ordinary activities before taxation

 

279

(209)

70

409

(201)

208

979

(832)

147

Tax on profit on ordinary activities

 

(56)

37

(19)

(7)

-

(7)

(242)

146

(96)


 

 

 

 

 

 

 

 

 

 

Profit/(loss) and total comprehensive income for the year

 

223

(172)

51

402

(201)

201

737

(686)

51


 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

 

 

 

 

 

 

 

 

Return/(loss) per  Ordinary Share (pence)

2

0.81p

(0.63p)

0.18p

1.41p

(0.71p)

0.71p

2.59p

(2.41p)

0.18p

 

 

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



Balance Sheet (unaudited)

As at 30 June 2016

 


Note

As at
30 June 2016

As at
30 June 2015

As at
31 December 2015



£'000

£'000

£'000

Fixed Assets





Investments

6

24,910

15,310

26,407

 

 

 

 

 

Current Assets

 

 

 

 

Debtors

 

968

553

1,033

Cash

 

802

11,360

418

 

 

1,770

11,913

1,451

Creditors - amounts falling due within one year

 

(1,663)

(449)

(1,234)

 

 

 

 

 

Net Current Assets

 

107

11,464

217

 

 

 

 

 

 

 

 

 

 

Net Assets

 

25,017

26,774

26,624

 

 

 

 

 

Capital and Reserves

 

 

 

 

Called up share capital

 

17

17

17

Share premium account

 

15,624

15,624

15,624

Capital reserve - realised

 

(743)

(599)

(575)

Capital reserve - unrealised

 

(503)

10

(499)

Revenue reserve

 

10,622

11,722

12,057

 

 

 

 

 

Equity Shareholders' Funds

 

25,017

26,774

26,624

 

 

 

 

 

 

 

 

 

 

Net Asset Value per Ordinary Share

3

90.53p

96.89p

96.35p

 

 

 

 

 

Diluted Net Asset Value per Ordinary Share

3

90.53p

96.89p

96.35p

 

               



Cash Flow Statement (unaudited)

For the period ended 30 June 2016

 


Six months ended
 30 June 2016

Six months ended
 30 June 2015

Year ended
 31 December 2015


£'000

£'000

£'000





Reconciliation of profit after tax to net cash generated from operating activities

 

 

 

Profit after tax

51

208

51

Taxation

19

-

96

Losses on investments

19

-

427

Decrease/(increase) in debtors

65

(461)

(941)

Increase in creditors

410

192

385

 

 

 

 

Net cash generated from operating activities

564

(61)

18


 

 

 

Cash flow from investing activities

 

 

 

Purchase of investments

(3,575)

(3,290)

(18,242)

Proceeds from sale of investments

5,053

1,009

4,940

 

 

 

 

Net cash used in investing activities

1,478

(2,281)

(13,302)

 

 

 

 

 

 

 

 

Equity dividend paid

(1,658)

-

-

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

384

(2,342)

(13,284)

Cash and cash equivalents at the beginning of the year

418

13,702

13,702

 

 

 

 

Cash and cash equivalents at the end of the year

802

11,360

418

 

 

 

 

 

 



Reconciliation of Movements in Shareholders' Funds (unaudited)

For the period ended 30 June 2016

 


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 January 2015

17

15,624

(405)

17

11,320

26,573

Total recognised (losses)/gains for the period

-

-

(194)

(7)

402

201

 

 

 

 

 

 

 

Balance as at 30 June 2015

17

15,624

(599)

10

11,722

26,774

 

 

 

 

 

 

 

Total recognised (losses)/gains for the period

-

-

24

(509)

335

(150)

 

 

 

 

 

 

 

Balance as at 31 December 2015

17

15,624

(575)

(499)

12,057

26,624

 

 

 

 

 

 

 

Total recognised (losses)/gains for the period

-

-

(168)

(4)

223

51

Dividends paid

-

-

-

-

(1,658)

(1,658)

 

 

 

 

 

 

 

Balance as at 30 June 2016

17

15,624

(743)

(503)

10,622

25,017

 



Notes to the Interim Report

For the period ended 30 June 2016

 

1.             Accounting Policies

 

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

 

2.             Return per Ordinary Share

 

The total profit per share of 0.18p is based on the profit for the period of £51,000 and the weighted average number of shares in issue as at 30 June 2016 of 27,633,222.

 

3.             Net asset value per share

 


As at
30 June 2016

As at
30 June 2015

As at
31 December 2015

Net assets

25,017,000

26,774,000

26,624,000

Shares in issue

27,633,222

27,633,222

27,633,222





Net asset value per share




Basic

90.53p

96.89p

96.35p

Diluted

90.53p

96.89p

96.35p

 

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 30 June 2016 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 30 June 2016

 

6.             Investment portfolio summary

               


Valuation

Cost

Gain/(loss)

Valuation as a % of Net Assets


£'000

£'000

£'000







As at 30 June 2016










Qualifying Investment - Unquoted

 

 

 

 

Urban Mining Limited

1,875

1,875

-

7%

Opes Industries Limited

2,940

3,450

(510)

12%

Saville Services Limited

2,000

2,000

 

8%

Warm Hearth Limited

2,500

2,500

 

10%

 

 

 

 

 

Total Qualifying Investments

9,315

9,825

(510)

37%

 

 

 

 

 

Non-Qualifying Investments

 

 

 

 

Valencia Lending Limited

2,564

2,564

-

10%

Lothian Lending Limited

2,325

2,325

-

9%

Mini Rainbows Limited

2,500

2,500

-

10%

Welcome Health Limited

2,500

2,500

-

10%

Lavender Lending Limited

800

800

-

3%

Victoria Lending Limited

1,000

1,000

-

4%

Meadow Lending Limited

575

575

-

2%

 

 

 

 

 

Total Non-Qualifying investments

12,264

12,264

-

48%

 

 

 

 

 

Liquidity Management

 

 

 

 

Piccadilly Lending (Royal Bank of Canada Bond)*

2,508

2,503

5

10%

Latimer Lending (Sainsbury (J) plc Bond)*

823

822

1

3%

 

 

 

 

 

Total Liquidity Management investments

3,331

3,325

6

13%

 

 

 

 

 

Total Investments

24,910

25,414

(504)

98%

Balance of Portfolio

107

107

 

2%

 

 

 

 

 

Net Assets

25,017

25,521

(504)

100%

 

               

*Quoted investment listed on the LSE.

 

Of the investments held at 30 June 2016, all are incorporated in England and Wales.

 

Copies of this Interim Statement will be posted to shareholders in due course and made available on the website:

http://www.pumainvestments.co.uk/pages/view/investors-information-vcts

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR EAKNNAFDKEFF

Related Charts

Puma VCT10 (PUMX)

0.00p (0.00%)
delayed 18:15PM