HIGHLIGHTS

·    Return per share of 9.20p for the six months to 31 August 2021

·    Over £3.7m of new shares issued during the period

CHAIRMAN'S STATEMENT

Your Board is pleased to present the half-yearly report for Puma Alpha VCT plc ('the Company') for the period to 31 August 2021.

Fundraising

We are happy to report that at the period end the Company received shareholder approval to allow the VCT to raise further funds. This will allow the VCT to add further diversification, spread fixed costs over a wider base and, crucially, exploit the post-pandemic investment environment.

Despite this being a time of great uncertainty, the Company's offer of tax advantaged investment into well-run, innovative, scale-up businesses is chiming with investors. As a recently established VCT, unburdened by a high proportion of assets in an illiquid legacy portfolio, Puma Alpha VCT can respond with agility to the economic environment. There is an opportunity now to invest into businesses that have proven they can withstand the challenges of the past two years and are poised to benefit from today's opportunities.

We believe the Company's sector agnostic investment mandate and ability to co-invest with other Puma funds has also resonated with investors. This combination delivers portfolio diversification and enables swifter deployment of funds, giving investors access to a wider pool of investments.

Investment Portfolio

Since the last report and accounts the Company, alongside other Puma funds, has made one new investment of £0.9m into Everpress, an e-Commerce marketplace for independent designers, and follow-on investments into Dymag and MyKindaFuture. The Company has over 70% of its current NAV invested in qualifying investments and with additional funds now being raised, the Company will be in a position to take advantage of opportunities that arise as we emerge from the pandemic.

Le Col has continued to record an impressive year of trade and has contributed to an increase in the NAV of the company. However, good performance and strong revenue growth has been pleasingly broad-based across the portfolio, with MyKindaFuture (now trading as Connectr) also noteworthy.

The Investment Manger continues to see a good number of potential opportunities a year. Allocation of non-qualifying holdings will continue to be considered by the Investment Manager as appropriate.

Net Asset Value

The Company's NAV stood at 120.86p at the period end of 31 August 2021. The Company's profit for the period was £1,019,000, driven by the upwards revaluation in Le Col and MyKindaFuture, mentioned above. The Company has not to date held listed equities or other liquidity management tools outside cash, so has not suffered from the associated volatility. Allocation of non-qualifying holdings will continue to be considered by the Investment Manager as appropriate.

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 and other specialist advisors will continue to assist the Investment Manager in establishing the status of potential investments as qualifying holdings. PwC will continue to monitor rule compliance and maintaining the qualifying status of the Company's holdings in the future.

Outlook

Emerging from the pandemic, the main concern for much of the last 18 months has been of collapsing growth, not to mention considerable uncertainty. As the pandemic pressures are now easing, especially in countries with advanced vaccination programmes, markets are focussing on the threat of inflation. There are concerns that a rapid recovery is leading to supply and labour shortages which in turn are sending commodity prices and wages higher. This is creating pressure for central banks to raise interest rates, with downside implications for equity values.

The indications are that interest rate rises are imminent, although there continue to be a number of economists and policy makers who see current price pressures as a temporary phenomenon and expect strong growth with inflationary pressures eventually receding. Whilst there remains uncertainty in this respect, there are more reasons to feel optimistic compared to this time last year.

What does this mean for Puma Alpha VCT? Perhaps most importantly, we have the agility to adapt quickly to changing circumstances. Notwithstanding the impact of the pandemic, the UK continues to benefit from an active and well-established SME market in which the Manager has a strong reputation as a provider of capital. This applies especially to well-managed, later stage SMEs, where bank lending, despite some policy support, continues to remain challenging for even the best of these businesses. This, alongside the institutional support the Manager is able to offer, continues to make for a compelling equity offer from the Company. Despite the ongoing uncertainty, we are confident that the Company continues to be well-positioned to assemble a portfolio capable of delivering attractive returns to shareholders.

Egmont Kock

Chairman

19 November 2021

INVESTMENT MANAGER'S REPORT 

Investments

Qualifying Investments

ABW Group Limited (Ostmodern) - Digital product design and technology

Ostmodern has been at the forefront of innovation in digital product development for over 10 years, creating video platforms for some of the world's leading media, broadcast and sport brands. For example, the company worked with Formula One (F1), creating a world-class streaming service. They led F1's first ever direct-to-consumer product, delivering live and on-demand race content including all drivers' on-board cameras, broadcast to 108 countries. Ostmodern also designed and built Arsenal's new suite of digital products. The business has completed projects for hayu, the subscription-based video streaming service and All4, Channel 4's on-demand video streaming service. Drawing on this expertise, Ostmodern developed their own powerful media CMS platform, Skylark, which they are now selling independently of their consultancy services.

Over the period, Skylark sales have remained stable, while the professional services side of the business has now recovered as activity in the market has bounced back post lockdown. Also during the period, the company successfully completed a second phase of product development to allow more rapid deployment and implementation of the Skylark platform for new clients. Ostmodern's focus now is to continue building up its sales capability (through strategic partnerships and its own team). The company has recently recruited a senior hire with relevant experience in the media sector who will execute their go-to-market strategy.

Dymag Group Limited - High performance wheel manufacturer

Dymag is a British designer and manufacturer of high-performance car and motorbike wheels, with a specific focus on carbon fibre. The business continues to grow its presence, both in the aftermarket through relationships with several large US distributors, and through project work with a number of leading performance 'original equipment manufacturers' (OEMs).

Dymag has faced challenges during the pandemic with its operating environment and production capacity, but nonetheless sales have grown substantially from prior years, with the company recording a 63% year-on-year increase in revenue to date in 2021. The company's three major revenue lines (carbon auto barrels sold to distributors, carbon wheels sold directly to niche OEMs and Tuners, and aluminium motorcycle wheels) have all grown strongly over the period. Further, increased marketing efforts have led to a growing sales pipeline and substantial confirmed order book. Margin improvement, however, remains challenging and the company has further to go to establish a consistent level of profitability.

Dymag is in an attractive and expanding market with a technically advanced product with large barriers to entry. The evidence of wider market adoption of carbon technology continues apace, as does the market's willingness to value carbon wheel manufacturers. The business remains capital intensive and so, in order to build on the progress that the business has achieved to date, post period end the Company invested a further £0.4m into Dymag.

Everpress Limited - E-commerce marketplace for independent designers

In August 2021, the Company deployed £0.9m of investment into Everpress, an online platform that connects consumers to unique and sustainable products from independent designers.

Everpress started with a simple mission - to support grassroots creators and reduce waste in fashion. Today, it provides a full-service solution through which creators can upload their designs and create campaigns - using the platform's toolkit to choose garment types, sale duration and prices - before launching to a global audience via Everpress's website. Campaigns are run on a pre-order basis and garments are only produced once purchased, eliminating excess stock and wastage.

Everpress is well-placed to capitalise on market trends such as the growth of online shopping, which has been accelerated by the pandemic, along with increasing awareness of ethical fashion and consumers' desire to support grassroots businesses. The business has shown an impressive growth trajectory: since 2017 revenues have grown 70% year on year on average, and the business has matured from five employees in 2016 to over 40 today.

Le Col Holdings Limited - Sports Apparel

Le Col is a premium cycling apparel brand founded by former professional cyclist, Yanto Barker. Based in the UK and exporting to 50 countries, Le Col operates a factory in Italy which enables control of its manufacturing and supply chain.

Having grown strongly for several years since initial investment by Puma managed funds, Le Col experienced a boom in sales owing to consumer trends and an increased focus on exercise during the pandemic, with a notable emphasis on cycling. Online sales performed exceptionally well over the period, driven by initiatives such as a multi-sport Strava challenges, partnerships with Wahoo (an indoor cycling kit brand), Zwift rides (an online cycling training programme) and ongoing sponsorship of Team Bahrain McLaren, a leading Grand Tour team.

Over the period, Le Col launched several new product lines, such as the Project Aero with McLaren - technical kit developed using aerodynamic expertise from McLaren - as well as a line of clothing made from recycled fabrics. Post period end, a new World Tour Team sponsorship was agreed with Bora Hansgrohe for the 2022 Cycling Season. Joss Lowden, who rides for Drops Le Col (the UK's leading professional female cycling team), broke the one-hour max distance World Record at Switzerland's Grenchen velodrome on 29th September 2021.

Connectr (formerly MyKindaFuture) - Human Resources Technology

Connectr (formerly MyKindaFuture) is an award-winning HR Tech Platform specialising in helping underrepresented talent to gain employment. Connectr helps large corporates to increase attraction and retention rates amongst potential graduate hires and apprentices. Connectr partners with organisations such as Deloitte, Cisco, the NHS, Thalys and National Grid to help recruit young people from a wider range of social backgrounds than typically achieved through traditional channels.

Connectr's platform also supports one-to-one digital mentoring for large employers, as a scalable digital solution for career development, well-suited to distanced working practices that continue to be widespread even after the pandemic's restrictions have eased. Trading throughout the period for both digital and in-person services has been strong.

In February, the company launched a pilot program with the Department for Work and Pensions which trialled use of the Connectr platform in Job Centre Plus locations across London and the South-East and has since then expanded to the North-East.

Post period end, the company began a three-month pilot programme with the Ministry of Justice to explore deploying Connectr within the prison service to assist ex-offenders. In October 2021, the Company invested a further £0.7m into Connectr.

MySafeDrive Limited (Cameramatics) - Fleet and vehicle safety technology

CameraMatics provides an award-winning solution for risk management within large fleets of vehicles. Working across Ireland, the UK and US, the business is positioned at the forefront of fleet and vehicle safety technology. Its disruptive solution incorporates artificial intelligence, machine learning, camera technology, vision systems and telematics to help fleet operators reduce risks.

Since the implementation of the Direct Vision Standard, which assesses how much an HGV driver can see directly through windows, CameraMatics has seen an uptick in sales. Further easing of travel restrictions, in line with government guidelines, has also improved sales performance.

The company has been recognised for their performance this year; CameraMatics' CEO, Mervyn O'Callaghan, was chosen by the Irish government body, Enterprise Ireland, as their High Potential Start Up (HPSU) Founder of the Year 2021. Further, Maritime Transport Limited, one of the largest transport and logistics operators in the UK, has chosen CameraMatics as their Fleet Safety and Telematics Partner.

NQOCD Consulting Limited (Ron Dorff) - Premium athleisurewear

Ron Dorff is a well-respected premium bodywear brand, having been voted one of the best three swimwear brands for men in 2020 by Vogue Magazine, and one of the top-10 underwear brands for men by GQ Magazine. It counts Michael Fassbender, Orlando Bloom and Alexander Skarsgard, amongst others, as brand ambassadors.

Having launched in 2012, Ron Dorff has six own-brand stores between London, Paris, New York and Berlin, and a network of high-end wholesale partners globally. It runs an 'omnichannel' sales approach, using its stores and wholesale partners to support significant sales through its own website, with sales to over 80 countries.

Over the period, while physical stores were still closed in line with government regulations, the business had strong online sales performance. Online sales were boosted further as the business invested in new systems such as website migration to optimise the shopping experience for customers in all countries. When Ron Dorff physical stores were able to reopen, the business had its strongest sales months throughout the summer. Sales from the retail store in Earlham Street, London, and in concession stores in Paris, have performed particularly well since reopening.

Post period end, the business opened a new store in August in Royal Exchange, London, an area of high footfall, and its first store in New York.

Tictrac Limited - Health Engagement Platform

TicTrac is a personalised health and wellness platform that provides exclusive content to its users, as well as taking information from their wearable fitness trackers to give targeted feedback and action plans. TicTrac has gathered powerful evidence that use of its platform reduces sedentary behaviour amongst workforces, with associated positive outcomes for engagement and wellbeing.

TicTrac's main customers are international insurance companies, such as Aviva, Cigna, Allianz and Prudential, Generali Employee Benefits and Bupa Hong Kong. The pandemic accelerated a focus on health and wellness, as well as the need for flexible, scalable digital solutions to support this. Over the period, the company has developed the "Community Hub" for its platform, which gives more direct control to corporate customers, enabling them to manage more of the platform's features themselves. This will bring major new functionality to clients and be more efficient for TicTrac from an account management perspective.

The company engaged a new Chief Product and Technology Officer in the period, and, subsequent to the period end, also added a new Head of Sales.

Investment Strategy

The Company is now invested in eight diverse businesses and we hope to further diversify the portfolio and exploit the post-Covid investment environment over the coming months. We remain focused on generating strong returns for the Company, whilst balancing these returns with maintaining an appropriate risk exposure. Overall, we are confident that the Company is well positioned to deliver attractive returns to shareholders in the medium to long term.

Puma Investment Management Limited

19 November 2021

Income Statement (unaudited)

For the period ended 31 August 2021

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 2021

Cash Flow Statement (unaudited)

For the period ended 31 August 2021

Statement of Changes in Equity (unaudited)

For the period ended 31 August 2021

Notes to the Interim Report

For the period ended 31 August 2021

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 9.20p is based on the profit for the period of £1,019,000 and the weighted average number of shares in issue for the period ended 31 August 2021 of 11,075,548.

3.             Net asset value per share

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 2021 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.

6.             Management Performance Incentive Arrangement

On 5 July 2019, the Company entered into an Agreement with the Investment Manager such that they will be entitled to a performance incentive fee payable in relation to each accounting period, subject to the Performance Value per Share being at least 120p at the end of the relevant period. The amount of the performance incentive fee will be equal to 20% of the amount by which the Performance Value per Share at the end of an accounting period exceeds the High Water Mark (being the higher of 120p and the highest Performance Value per Share at the end of any previous accounting period), and multiplied by the number of Shares in issue at the end of the relevant period.

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.

The accrued profit and loss expense for the period in relation to this Agreement is £26,000.

7.             Investment portfolio summary

 Of the investments held at 31 August 2021, all are incorporated in England and Wales.

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