REG - Puma VCT 13 PLC - Annual Financial Report
14/06/2024 13:45
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RNS Number : 5538S Puma VCT 13 PLC 14 June 2024
Chairman's Statement
Highlights
- Seven new investments added to the portfolio in the year bringing
total number of investments to 20
- £36.3m raised during the year and a further £28.5m raised post
year-end
- £40.1m available for deployment into new and follow on investments
as at the year-end
Introduction
I am pleased to present the sixth report and financial statements for Puma VCT
13 plc ("the Company") for the year to 29 February 2024. It has been another
successful year for the Company and I am delighted to be able to report on its
highlights.
Overview
The Company's Net Asset Value ("NAV") per share at the end of the year stood
at 124.48p.
Six of the Company's qualifying holdings were written up in value - including
MUSO, which was written up by £1.5m, HR Duo by £0.7m and CameraMatics by
£0.6m. These businesses have seen demand for their solutions grow, with
continued domestic and overseas expansions. Seven of the Company's qualifying
holdings were marked down in value. These movements, together with running
costs, accounted for the overall NAV movement. The Company's loss for the year
was £8.1m (2023: profit £2.7m).
Further to statements made by the Company in the prospectus published back in
September 2023, Puma VCT 13 is proposing to launch a dividend reinvestment
scheme ("DRIS") under which shareholders will be able to reinvest any cash
dividends received into further shares. Details of the proposed DRIS and the
terms and conditions of the DRIS are set out at the end of the notice of
Annual General Meeting.
Fundraising
During the year, the Company undertook a further fundraising. The Company
raised £36.3m during the year, with a further £28.5m raised after the
year-end.
This equity issue gives the Company substantial deployable funds and will help
spread fixed costs over a wider shareholder base. It also gives the Company
the ability to expand the portfolio substantially.
Investment activity and portfolio
We are pleased to report that 2023-24 has been an active year for the Company
with seven new qualifying investments in this period. These were made
alongside other Puma-managed funds and bring the current number of qualifying
investments to 20.
These investments were: £1.1m into Bikmo, a specialist cycle and e-mobility
insurer; £4.6m into Iris an advanced audio technology company; £3.3m into
Lucky Saint, the UK's number 1 dedicated alcohol-free beer brand; £3.9m into
Pockit, a digital account provider; £0.8m into Thingtrax, a SaaS-based
manufacturing performance platform; £5.4m into Transreport, a fast-growing
accessibility technology company and £2.4m into TravelLocal, a global travel
marketplace.
Follow-on investments were also made: £0.8m into Ostmodern; £0.9m into
Connectr; £1.7m into Dymag; £1.9m into CameraMatics and £0.8m into Ron
Dorff.
The Company's holdings in Deazy, HR Duo, Le Col, CameraMatics, MUSO and Open
House have generated positive valuation movements. Seven of the Company's
qualifying holdings were marked down in value.
Muso saw an increase in its valuation of £1.5m in the year. Growth picked up
in 2024 following a slowdown in 2023 as a result of the actors and writers'
strikes. 2024 has seen new client wins and a strong pipeline.
Dymag's valuation decreased by £3.9m in the year as the after-market for car
wheels slowed and car manufacturers became more cautious despite ongoing
investment in product and sales capacity. Puma is working closely with
management recognising the challenges it faces.
Connectr was written down by £2.5m in the year reflecting a challenging
trading environment. Many employers are cutting back on recruitment and
associated spending on software impacting new business growth and renewal
rates alike. Puma has supported the Company through a restructure which has
had a positive impact on cashflow and profitability.
NAV
The NAV per share at the year-end was 124.48p (2023: 133.05p). This figure
reflects the initial funds raised less the costs of issue, movements in the
value of the portfolio and running costs of the Company.
VCT qualifying status
Shoosmiths LLP 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. Shoosmiths and
other specialist advisors will continue to assist the Investment Manager in
establishing the status of potential investments as qualifying holdings.
Shoosmiths will continue to monitor rule compliance and maintaining the
qualifying status of the Company's holdings in the future.
Outlook
During the period, I am pleased to report that seven new investments were
added to the portfolio, bringing the total number of companies to 20,
significantly boosting diversification. This was done in a challenging
environment and shows the appeal of the Investment Manager's proposition and
its growing presence in the market.
In 2023, the wider VCT sector saw a significant reduction in investment
activity, down by nearly 30%(1) compared to the previous year. This mirrored
broader economic challenges within the UK characterised by rising interest
rates, inflationary pressures, elevated debt levels, and subdued consumer and
business confidence. Consequently, company valuations experienced a dip during
this turbulent economic backdrop.
However, despite these concerns, the economic outlook for 2024 has begun to
exhibit signs of improvement offering some hope for recovery. The tightening
of finance imposed by the Bank of England and other central banks and an
easing in commodity prices have reduced inflation. These is now some hope for
a better outlook for the economy, although uncertainties remain and need
monitoring.
(1)Source: the AIC
David Buchler
Chairman
14 June 2024
Investment Manager's Report
The period has clearly been one of significant strain for smaller companies in
the UK, as indeed it has been for companies of all stages of growth plus
households and consumers. The challenges facing those building a business are
substantial from inflation to geopolitical conflict, supply shock, labour
shortages, strikes, energy price spikes, the list could go on.
Given these challenges and potential roadblocks, it is easy to overlook just
how much things have improved over the past 12-18 months. Inflation was still
stubbornly in double figures a little over a year ago(1), but is now forecast
to drop below 2% in the coming months (before rising again slightly)(2),
meaning interest rates may fall during the summer months. On the back of this,
Deloitte's CFO survey reported in April that sentiment among UK CFOs had risen
for the third consecutive quarter, to a point well above its long-term
average. Consumer confidence has also improved, the latest GFK Consumer
Confidence Barometer has illustrated that consumer optimism when it comes to
their personal finances has improved significantly over the past year.
Yet, despite these promising trends, many companies are experiencing stretched
balance sheets with the majority of cost management options already
exhausted. This is especially true in sectors that have been most exposed to
supply chain, labour or demand shocks. Companies in these sectors have been
weakened, and any further shocks to the economy could be difficult to absorb.
We have seen this pattern reflected in the trading data of our well
diversified portfolio of investee companies. 2023 was extremely challenging,
with particular weakness in Q3 and a soft end to the year, 2024 has opened
with considerably more momentum. Encouragingly, we are starting to see steady
like-for-like growth across a number of sectors.
We consider potential investment opportunities against a broader valuation
landscape, and from the above we can see that the period covered in these
accounts was a challenging time to be selling companies, but an advantageous
time to be investing in them. As such, we are excited to have added 7
additional investee companies in the period, increasing the size of the
portfolio by 54%. This is particularly pleasing as overall VCT investment
activity during 2023 was significantly down, by approximately 30% according to
the AIC.
New additions to the portfolio include Bikmo, a specialist cycle and
e-mobility insurer which protects over 75,000 riders in the UK, Lucky Saint,
the UK's number one dedicated alcohol-free beer brand and Iris, a cutting-edge
audio technology company with a mission to enable the world to listen well.
Naturally given the economic environment, it has been appropriate to reduce
the carrying values of some of the positions in the portfolio. New investments
made in the period have been held at cost (as is the norm under the IPEV
guidelines covering VCTs). This masks the strong momentum that many of our new
investments exhibited when we made our original investment, but the growth
from this cohort should be visible in the future.
We remain very active in our approach and engagement with the companies in our
portfolio. We continue to host networking events and workshops through our
Senior Managers Club, directed at CEOs, CFOs and other heads of department to
enable them to share ideas and insight with each other. For example, the most
recent event focused on cyber security and efficiently scaling tech teams.
This, together with the support and oversight we provide the companies in our
portfolio, means our proposition continues to prove compelling in attracting
high quality companies.
1 Source: Consumer price inflation from the Office for National Statistics
2 Bank of England, March 2024
Qualifying investments
In this section, we look at the following investments within our portfolio in
more detail.
Bikmo
Bikmo is a specialist cycle and e-mobility insurer which protects over 75,000
riders in the UK, Ireland, Germany and Austria. Capitalising on growth in the
cycle market, Bikmo offers a range of insurance products to protect every type
of cyclist - from road cyclists and triathletes to daily commuters.
The business is B-Corp certified, it is focusing on expanding into other
European markets and supporting multinational partners, including British
Cycling, Cyclescheme and Brompton.
CameraMatics
CameraMatics is an award-winning solution for Fleet Risk Management.
Continuing its mission to create safer roads for all, it released one of the
most advanced AI-powered collision avoidance system on the market. The system
promises radically to improve driver reaction times and blind spot visibility
by using deep learning algorithms, continually scanning for pedestrians,
hidden road users and cyclists.
The company has attended several trade shows across America and the UK to
bring its offerings to new audiences, with a continued focus on US expansion.
It has invested heavily into its sales and marketing team to aid this and
recently announced a new collaboration with Bosch Logistics Operating System.
This partnership will align CameraMatics with Bosch's mission to unite all
stakeholders in the logistics and transportation industry.
IRIS
IRIS is an audio specialist which has developed an AI-powered software which
removes distracting background noise from calls, integrating seamlessly with
existing platforms. IRIS achieved a top 20 placing in the Startups 100 Index
2024.
Le Col
Recently named best performance cycling brand by GQ Magazine, Le Col is
continuing its expansion into the US and is now available online at DICK'S
Sporting Goods (which has over 800 stores nationwide). In addition, Le Col has
partnered with US fabrics manufacturer Polartec to launch a new plant-based
performance fabric, 'Power Shield', which is made with 50% fewer emissions
than similar fabrics.
Lucky Saint
Lucky Saint is the UK's number one dedicated alcohol-free beer brand across
grocery and on-trade. The investment from Puma funds will support the brand's
next phase of growth both in the UK and globally.
The B-Corp certified company, voted 'Marketing Society Brand of the Year
2023', has recently expanded its offering by launching the Superior Hazy IPA,
which joins the award-winning Alcohol-Free Superior Unfiltered Lager as its
first new beer since launch in 2018. It is stocked in over 7,000 pubs, bars
and restaurants and sold in major supermarkets including Waitrose,
Sainsbury's, Tesco and Marks & Spencer.
Pockit
Pockit is a digital account provider offering pre-paid spending cards and
current accounts. The fintech company has focused on growing the senior team
and has appointed a new COO. The next phase of Pockit's growth strategy aims
to expand its customer base and introduce new services.
Ron Dorff
Ron Dorff, the premium athleisure brand, has grown sales by 42% in the two
years to December 2023 and is present across more than 50 countries including
the US, the UK, Germany and France. It launched a crowdfunding campaign, which
raised over the target, giving the Ron Dorff community an opportunity to be
part of its growth. The funds will be used to sustain global online growth, in
particular in the US, building brand awareness on and offline. It is due to
open a flagship store in Paris towards the end of 2024.
Thingtrax
Thingtrax is an IoT enabled software provider using AI and machine learning to
optimise performance in manufacturing facilities.
Its latest offering, Retail Pack Label Validation powered by AI, enables
manufacturers early detection of label discrepancies. The pairing of camera
vision with AI examines each label for specific text, dates, imagery, and
positioning, with an instant alert when a label fails to meet product
specifications, allowing mistakes to be addressed efficiently.
Transreport
Transreport's flagship technology, the Passenger Assistance app, supports
anyone who needs assistance whilst travelling, facilitating quicker and easier
use of public transport.
Since its launch in May 2021, the Passenger Assistance technology, nominated
for an Apple Design Award in the Inclusivity Category, has been downloaded
over 100,000 times, facilitating millions of passenger journeys to date.
Transreport has initially focussed on UK rail, where it works with every UK
rail operating company.
TravelLocal
TravelLocal is a leading online platform for tailor-made holidays that
connects clients directly with local experts in their destinations. Since the
business was founded in 2016, TravelLocal has helped more than 70,000
customers from 100 countries globally create the perfect trip. TravelLocal is
growing rapidly, many travellers demand genuinely authentic, more sustainable
holidays and prioritise spending on experiences, with annual bookings over USD
50m and growing over 100% year on year.
The new funding will support the company's international growth and has
already added Australia to its growing roster of over 90 international
destinations. In addition, the company looks to invest in its managed
marketplace platform and further brand marketing.
Liquidity management investments
An active approach is taken to manage any cash held, prior to investing in VCT
qualifying companies.
The rules for VCTs limit the income which can be received from bank deposits,
making them an unattractive way of holding funds waiting to be invested. As a
result, during a period where funds remain not yet deployed in qualifying
investments in smaller companies, to earn a return on these funds a VCT needs
to hold investments rather than cash deposits.
Rising interest rates have made investing in fixed-income securities more
attractive. The Company has therefore, switched from holding listed equities
into a revised liquidity management strategy focused on short term bonds held
through collective investment schemes.
Historically, to manage the Company's liquidity, a portion of the Company's
funds was invested in a diverse portfolio of UK-centric listed equities. This
had been reduced over time and was sold entirely during the year in review
resulting in £0.25 million of losses being realised.
Puma Investment Management Limited
14 June 2024
Investment portfolio summary
As at 29 February 2024
Of the investments held at 29 February 2024, all are incorporated in England
and Wales, except MySafeDrive Limited and HR Duo Limited, which are
incorporated in Ireland.
Valuation Cost Gain/(loss) Valuation as a % of Net Assets Multiple
£'000 £'000 £'000
Qualifying Investment - Unquoted
ABW Group Limited ('Ostmodern') 871 1,292 (421) 1% 0.67x
Bikmo Limited 1,107 1,107 - 1% 1.00x
Deazy Limited 3,146 2,900 246 3% 1.08x
Dymag Group Limited 1,770 5,787 (4,017) 1% 0.31x
Everpress Limited 4,986 3,514 1,472 4% 1.42x
Forde Resolution Company Limited ('HR Duo') 2,947 2,238 709 2% 1.32x
Hot Copper Pub Company Limited 305 847 (542) 0% 0.36x
Influencer Limited 11,247 1,800 9,447 9% 6.25x
Iris Audio Technologies Limited 4,555 4,555 - 4% 1.00x
Le Col Holdings Limited 10,810 8,281 2,529 9% 1.31x
MyKindaFuture Limited ('Connectr') 4,869 5,915 (1,046) 4% 0.82x
MySafeDrive Limited ('CameraMatics') 6,139 3,882 2,257 5% 1.58x
Muso Limited 3,875 2,361 1,514 3% 1.64x
Not Another Beer Co Limited ('Lucky Saint') 3,289 3,289 - 3% 1.00x
NQOCD Consulting Limited ('Ron Dorff') 4,059 3,218 841 3% 1.26x
Open House London Limited 2,003 1,800 203 2% 1.11x
Pockit Limited 3,920 3,920 - 3% 1.00x
Thingtrax Limited 750 750 - 1% 1.00x
Transreport Limited 5,418 5,418 - 5% 1.00x
TravelLocal Limited 2,433 2,433 - 2% 1.00x
Total Qualifying Investments 78,497 65,307 13,190 66% 1.20x
Total Investments 78,497 65,307 13,190 66%
Balance of Portfolio 40,049 40,049 - 34%
Net Assets 118,546 105,356 13,190 100%
Strategic Report
The Directors present their Strategic Report of the Company for the year ended
29 February 2024. The purpose of the report is to inform members of the
Company and help them assess how the Directors have performed their duty to
promote the success of the Company.
Principal activities and status
The Company was incorporated on 15 September 2016. The principal activity of
the Company is the making of investments in qualifying and non-qualifying
holdings of shares or securities. The Company is an investment company within
the meaning of Section 833 of the Companies Act 2006. The Company has been
granted provisional approval by the Inland Revenue under Section 274 of the
Income Tax Act 2007 as a Venture Capital Trust. The Directors have managed,
and continue to manage, the Company's affairs in such a manner as to comply
with s274 of the Income Tax Act 2007.
The Company's Ordinary Shares of 0.0005p each have been listed on the Official
List of the UK Listing Authority since 2 July 2018.
Business model and strategy
The Company operates as a VCT to enable its shareholders to benefit from tax
reliefs available. The Directors aim to maximise tax-free distributions to
shareholders by way of dividends paid out of income received from investments,
and capital gains received following successful realisations. The Company's
strategy is set out in the Investment Policy below.
Investment policy
Puma VCT 13 plc seeks to achieve its overall investment objective (of
proactively managing the assets of the fund with an emphasis on realising
gains in the medium term) to maximise distributions from capital gains and
income generated from the Company's assets. It intends to do so while
maintaining its qualifying status as a VCT, by pursuing the following
Investment Policy:
The Company may invest in a mix of qualifying and non-qualifying assets. The
qualifying investments may be quoted on AIM or a similar market or be unquoted
companies. The Company may invest in a diversified portfolio of
growth-orientated qualifying companies that seek to raise new capital on
flotation or by way of a secondary issue. The Company has the ability to
structure deals to invest in private companies with an asset-backed focus to
reduce potential capital loss. The Company had to have in excess of 80% of its
assets invested in qualifying investments as defined for VCT purposes by 29
February 2024.
The portfolio of non-qualifying investments will be managed with the intention
of generating a positive return. Subject to the Board and Investment Manager's
view from time to time of desirable asset allocation, it will comprise quoted
and unquoted investments (direct or indirect) in cash or cash equivalents,
secured loans, bonds, equities, vehicles investing in property and funds of
funds or on cash deposit.
A full text of the Company's investment policy can be found within the
Company's prospectus at www.pumainvestments.co.uk
(https://url.avanan.click/v2/___http:/www.pumainvestments.co.uk___.YXAxZTpzaG9yZWNhcDphOm86NTM0ZTYzZTI4ZTRhNmMwNjUyNzA5ZmJmNjY5MDVlNWI6NjozMjA4OjU2ZjY0YTZiMTU3YjkzMWU2NmUwZTZmNTlmNWQzMGY2NWQ2ODFjY2UxYzRkYmE4NWEzOWY4MmQxYjIxYWIyN2M6cDpU)
.
Principal risks and uncertainties
The Board has carried out a robust assessment of the Company's emerging and
principal risks, including those that might threaten the Company's business
model, future performance, solvency or liquidity and reputation. The Board
receives regular reports from the Investment Manager and uses this
information, along with its own knowledge and experience, to identify any
emerging risks, so that appropriate procedures can be put in place to manage
or mitigate such risks.
The principal risks facing the Company relate to its investment activities,
specifically market price risk, as well as interest rate risk, credit risk and
liquidity risk. An explanation of these risks and how they are managed is
contained in note 15 to the financial statements. Additional risks faced by
the Company are listed below.
Market conditions
There is a risk that geopolitical and economic events can impact the prospects
of some of the Company's investments. The Investment Manager mitigates the
risk by maintaining close contact with all investee companies as well as by
maintaining a diverse portfolio. Further details of the investments are set
out in the Investment Manager's Report.
Investment risk
Inappropriate stock selection leading to underperformance in absolute and
relative terms is a risk that the Investment Manager and the Board mitigate by
reviewing performance throughout the year and formally at Board meetings.
There is also a regular review by the Board of the investment mandate and
long-term investment strategy, and monitoring of whether the Company should
change its investment strategy.
Regulatory risk
The Company operates in a complex regulatory environment and faces a number of
related risks. A breach of s274 of the Income Tax Act 2007 could result in the
Company being subject to capital gains on the sale of investments. A breach of
the VCT regulations could result in the loss of VCT status and consequent loss
of tax relief currently available to shareholders. Serious breach of other
regulations, such as the UKLA Listing Rules and the Companies Act 2006, could
lead to suspension from the Stock Exchange. The Board receives quarterly
reports to monitor compliance with regulations and engages external
independent advisers to undertake an independent VCT status monitoring role.
In addition to the principal risks explained above, the principal uncertainty
that may affect the Company relates to material changes to the VCT
regulations. The Board continues to monitor this and will take appropriate
action if required.
Risk management
The Company's investment policy allows for a large proportion of the Company's
assets to be held in unquoted investments. These investments are not publicly
traded, so there is not a liquid market for them. Therefore, these investments
may be difficult to realise.
The Company manages its investment risk within the restrictions of maintaining
its qualifying VCT status by using the following methods:
· the active monitoring of its investments by the Investment Manager
and the Board;
· seeking Board representation associated with each investment, if
possible;
· seeking to hold larger investment stakes by co-investing with other
companies managed by the Investment Manager, so as to gain more influence over
the investment;
· ensuring a spread of investments is achieved.
Business review and future developments
The Company's business review and future developments are set out in the
Chairman's Statement, the Investment Manager's Report and the Investment
Portfolio Summary.
Key performance indicators
At each Board meeting, the Directors consider a number of performance measures
to assess the Company's success in meeting its objectives. The Board believes
the Company's key performance indicators are movement in NAV per Ordinary
Share and Total Return per Ordinary Share. The Board considers that the
Company has no non-financial key performance indicators. In addition, the
Board considers the Company's compliance with the VCT regulations to ensure
that it will maintain its VCT status. An analysis of the Company's key
performance indicators and the performance of the Company's portfolio and
specific investments is included in the Chairman's Statement, the Investment
Manager's Report and the Investment Portfolio Summary.
Viability statement
The Directors have conducted a robust assessment of the principal risks facing
the Company, including those that would threaten its business model, future
performance, solvency or liquidity. This is summarised above. The Directors
have assessed the prospects of the Company for the three-year period from the
Balance Sheet date. This is a period for which developments are considered to
be reasonably foreseeable. This review included consideration of compliance
with the VCT regulations, the Company's current financial position and
expected cash flows for the period and the current economic outlook.
Based on this review, the Directors have concluded that there is a reasonable
expectation that they will have access to adequate cash resources to enable
the Company to continue in operation and meet its liabilities, as they fall
due over the three-year period to 28 February 2027.
Section 172 statement - Duty to promote the success of the company
Section 172 of the Companies Act requires directors of a company to act in the
way they consider, in good faith, would be most likely to promote the success
of the company for the benefit of its members as a whole, and in doing so have
regard (among other matters) to:
a) the likely consequences of any decision in the long term,
b) the interests of the company's employees,
c) the need to foster the company's business relationships
with suppliers, customers and others,
d) the impact of the company's operations on the community and
the environment,
e) the desirability of the company maintaining a reputation
for high standards of business conduct, and
f) the need to act fairly between members of the company.
This section of the Strategic Report also sets out the disclosures required in
respect of how the Company engages with suppliers, customers and others in a
business relationship with the Company.
The Company does not have any employees, and delegates day-to-day operations
to service providers. The Board's principal concern is to focus on the needs
and priorities of its shareholders, as well as considering the wider
community, including the Company's service providers and its investee
companies (as disclosed in the Investment Manager's Repor). The Board
considers that the Company does not have customers, only shareholders, and its
suppliers are the service providers.
The Annual Report as a whole, sets out how the Board promotes the success of
the Company for the benefit of its shareholders. The Board is focused on high
standards of business conduct and recognises the need to act fairly between
shareholders. Further details on relations with shareholders is set out in the
Corporate Governance Statement.
The Board engages with the Investment Manager at every Board meeting, to
ensure that there is a close and constructive working relationship and a good
understanding of the investee companies. The Company also engages regularly
with its other service providers. The Board ensures that the interests of
current and potential stakeholders, and the impact of the Company's
investments on the wider community and the environment, are taken into account
when decisions are made.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Strategic Report and the
financial statements in accordance with applicable laws and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law, the Directors have elected to prepare the
financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102
"The Financial Reporting Standard applicable in the UK and Republic of
Ireland", and applicable law). Under company law, the Directors must not
approve the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Company and of the profit or
loss of the Company for that period. In preparing those financial statements,
the Directors are required to:
a) select suitable accounting policies and then apply them
consistently;
b) make judgements and accounting estimates that are
reasonable and prudent;
c) state whether applicable UK Accounting Standards
(comprising FRS 102 "The Financial Reporting Standard applicable in the UK and
Republic of Ireland", and applicable law)
have been followed, subject to any material departures disclosed and explained
in the financial statements;
d) prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time, the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
Directors' statement pursuant to the disclosure and transparency rules
Each of the Directors, whose names and functions are listed in the Directors'
Biographies, confirms that, to the best of each person's knowledge:
a) the financial statements, prepared in accordance with
United Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 102 "The Financial Reporting Standard
applicable in the UK and Republic of Ireland", and applicable law), give a
true and fair view of the assets, liabilities, financial position and
profit/(loss) of the Company; and
b) the Chairman's Statement, Investment Manager's Report and
Strategic Report contained in the Annual Report include a fair review of the
development and performance of the business and the position of the Company
together with a description of the principal risks and uncertainties that it
faces.
Directors' statement regarding Annual Report and Accounts
The Directors consider that the Annual Report and Accounts, taken as a whole,
is fair, balanced and understandable and provides the information necessary
for shareholders to assess the Company's position and performance, business
model and strategy.
Electronic publication
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website. The
financial statements are published on www.pumainvestments.co.uk, a website
maintained by the Investment Manager.
Legislation in the United Kingdom regulating the preparation and dissemination
of the financial statements may differ from legislation in other
jurisdictions.
On behalf of the Board.
David Buchler
Chairman
14 June 2024
Income Statement
For the year ended 29 February 2024
Year ended 29 February 2024 Year ended 28 February 2023
Note Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
(Loss)/gain on fixed asset investments 8 (b) - (6,478) (6,478) - 5,151 5,151
Gain on current asset investments - 551 551 - - -
Income 2 857 - 857 200 - 200
857 (5,927) (5,070) 200 5,151 5,351
Investment management fees 3 (572) (1,715) (2,287) (366) (1,097) (1,463)
Performance fee 3 - - - - (673) (673)
Other expenses 4 (740) - (740) (511) - (511)
(1,312) (1,715) (3,027) (877) (1,770) (2,647)
(Loss)/profit before tax (455) (7,642) (8,097) (677) 3,381 2,704
Tax 5 - - - - - -
(Loss)/profit after tax (455) (7,642) (8,097) (677) 3,381 2,704
Basic and diluted (loss)/profit per Ordinary Share (pence) 6 (0.53p) (8.89p) (9.42p) (1.28p) 6.39p 5.11p
All items in the above statement derive from continuing operations.
There are no gains or losses other than those disclosed in the Income
Statement.
The total column of this statement is the Statement of Total Comprehensive
Income of the Company prepared in accordance with FRS 102 "The Financial
Reporting Standard applicable in the UK and Republic of Ireland". The
supplementary revenue and capital columns are prepared in accordance with the
Statement of Recommended Practice, "Financial Statements of Investment Trust
Companies and Venture Capital Trusts" issued by the Association of Investment
Companies.
There were no items of other comprehensive income during the year.
Balance Sheet
As at 29 February 2024
Note As at As at
29 February 2024
28 February 2023
£'000 £'000
Fixed assets
Investments 8 78,497 58,544
Current assets
Cash at bank 15,289 34,289
Applications cash(1) 6,756 6,281
Investments 10 24,799 -
Debtors 9 619 255
47,463 40,825
Current liabilities 11 (7,414) (7,601)
Net current assets 40,049 33,224
Net assets 118,546 91,768
Capital and reserves
Called up share capital 13 50 36
Share premium 8,104 57,207
Capital reserve - realised (4,249) (2,269)
Capital reserve - unrealised 13,757 19,420
Revenue reserve (2,238) 17,374
Special distributable reserve 103,122 -
Total equity 118,546 91,768
Net Asset Value per Ordinary Share 14 124.48p 133.05p
(1) Funds raised from investors since VCT 13 opened for new investment which
have not been allotted as at year end.
The financial statements were approved and authorised for issue by the Board
of Directors on 14 June 2024 and were signed on their behalf by:
David Buchler
Chairman
Statement of Cash Flows
For the year ended 29 February 2024
Note Year ended 29 February 2024 Year ended 28 February 2023
£'000 £'000
Reconciliation of profit before tax to net cash used in operating activities
(Loss)/profit after tax (8,097) 2,704
Loss/(gain) on fixed asset investments 6,478 (5,151)
Gain on current asset investments (551) -
Increase in debtors (364) (146)
Decrease in creditors (662) (849)
Outflow from operating activities (3,196) (3,442)
Cash flow from investing activities
Purchase of fixed asset investments (27,631) (15,732)
Purchase of current asset investments (24,249) -
Proceeds from disposal of investments 1,201 3,567
Outflow from investing activities (50,679) (12,165)
Cash flow from financing activities
Proceeds received from issue of ordinary share capital 36,322 42,683
Expense paid for issue of share capital (591) (647)
Movement in applications account 475 6,281
Shares cancelled in year (856) -
Dividends paid to shareholders - (5,324)
Inflow from financing activities 35,350 42,993
Net (decrease)/increase in cash and cash equivalents (18,525) 27,386
Cash and cash equivalents at the beginning of the year 40,570 13,184
Cash and cash equivalents at the end of the year 22,045 40,570
Cash and cash equivalents comprise
Cash at bank 15,289 34,289
Applications cash 19 6,756 6,281
Cash and cash equivalents at the end of the year 22,045 40,570
Statement of Changes in Equity
For the year ended 29 February 2024
Called up share capital Share premium account Capital reserve - realised Capital reserve - unrealised Revenue reserve Special distributable reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance as at 1 March 2022 20 15,187 (2,216) 15,989 23,372 - 52,352
Comprehensive income for the year:
(Loss)/profit after tax - - (1,751) 5,129 (674) - 2,704
Total comprehensive income for the year - - (1,751) 5,129 (674) - 2,704
Transactions with owners, recognised directly in equity
Dividends paid - - - - (5,324) - (5,324)
Issue of shares 16 42,667 - - - - 42,683
Share issue cost - (647) - - - - (647)
Total transactions with owners, recognised directly in equity 16 42,020 - - (5,324) - 36,712
Other movements
Prior year fixed asset gains now realised - - 1,698 (1,698) - - -
Total other movements - - 1,698 (1,698) - - -
Balance as at 28 February 2023 36 57,207 (2,269) 19,420 17,374 - 91,768
Comprehensive income for the year:
Loss after tax - - (1,960) (5,683) (454) - (8,097)
Total comprehensive income for the year - - (1,960) (5,683) (454) - (8,097)
Transactions with owners, recognised directly in equity
Issue of shares 14 36,308 - - - - 36,322
Share issue cost - (591) - - - - (591)
Cancellation of share premium - (84,820) - - - 84,820 -
Repurchase of own shares - - - - - (856) (856)
Total transactions with owners, recognised directly in equity 14 (49,103) - - - 83,964 34,875
Other movements
Prior year fixed asset gains now realised - - (20) 20 - - -
Re-class to special distributable reserve - - - - (19,158) 19,158 -
Total other movements - - (20) 20 (19,158) 19,158 -
Balance as at 29 February 2024 50 8,104 (4,249) 13,757 (2,238) 103,122 118,546
The Capital reserve - realised includes gains/losses that have been realised
in the year due to the sale of investments, net of related costs.
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.
Revenue reserve represents the cumulative revenue earned less cumulative
expenses.
The Special distributable reserve represents reserves available for dividends
and repurchases of shares subject to additional VCT restrictions surrounding
retention of the share capital and share premium account.
1. Accounting policies
Accounting convention
Puma VCT 13 plc ("the Company") was incorporated in England on 15 September
2016 and is registered and domiciled in England and Wales. The Company's
registered number is 10376236. The registered office is Cassini House, 57 St
James's Street, London SW1A 1LD. The Company is a public limited company
(limited by shares) whose shares are listed on LSE with a premium listing. The
Company's principal activities and a description of the nature of the
Company's operations are disclosed in the Strategic Report.
The financial statements have been prepared under the historical cost
convention, modified to include investments at fair value, and in accordance
with the requirements of the Companies Act 2006, including the provisions of
the Large and Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008 and with FRS 102 "The Financial Reporting Standard applicable
in the UK and Republic of Ireland" ("FRS 102") and the Statement of
Recommended Practice, "Financial Statements of Investment Trust Companies and
Venture Capital Trusts" issued in October 2019 by the Association of
Investment Companies ("the SORP"). Monetary amounts in these financial
statements are rounded to the nearest whole £1,000, except where otherwise
indicated. The functional and presentational currency of the Company is
sterling.
Going concern
The Directors have considered a period of 12 months from the date of this
report for the purposes of determining the Company's going concern status,
which has been assessed in accordance with the guidance issued by the
Financial Reporting Council. The Directors have a reasonable expectation that
the Company has adequate resources to continue in operational existence for
the foreseeable future and believe that it is appropriate to continue to apply
the going concern basis in preparing the financial statements. This is
appropriate as the Company's listed shares are held for liquidity purposes and
will be sold as and when required to ensure the Company has adequate cash
reserves to meet the Company's running costs.
Cash and cash equivalents
Cash, for the purposes of the cash flow statement, comprises cash at bank.
Cash equivalents are current asset investments which are disposable without
curtailing or disrupting the business and are either readily convertible into
known amounts of cash at or close to their carrying values. Interest earned on
cash balances is recorded as income.
Investments
All investments are measured at fair value through profit and loss. They are
held as part of the Company's investment portfolio and are managed in
accordance with the investment policy.
Unquoted investments are stated at fair value by the Directors with reference
to the International Private Equity and Venture Capital Valuation ("IPEV")
Guidelines as follows:
· Investments which have been made within the last 12 months or where
the investee company is in the early stage of development will usually be
valued at either the price of recent investment or cost as the closest
approximation to fair value, 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.
· For investments that have been held for longer than 12 months,
methods of valuation such as earnings or revenue-based multiples or Net Asset
Value may be used to arrive at the fair value.
· Investments in debt instruments are held at amortised cost and accrue
interest at the rate agreed within the Investment Agreement. Interest is shown
separately within debtors.
· Realised gains and losses on the disposal of investments are first
recognised in the profit and loss and subsequently taken to realised capital
reserves.
· Unrealised gains and losses on the revaluation of investments are
first recognised in the profit and loss and subsequently taken to unrealised
capital reserves.
· In preparation of the valuations of assets the Directors are required
to make judgements and estimates that are reasonable and incorporate their
knowledge of the performance of the portfolio companies. A key judgement made
in applying the above accounting policy relates to impairment of the
investments. Valuations are based upon financial information received from the
underlying investee companies, together with the extensive knowledge and
expertise of the team who work closely with the investee companies; a fair
value is reached using appropriate valuation techniques consistent with the
IPEV guidelines. Any deviations in expectations of performance of the
underlying companies are captured within the information received and, as
such, reflected in the fair value.
· Impairment of debt instruments is considered when arriving at the
valuations for equity shareholders. Loan notes are deducted from the overall
enterprise value before distributing in line with the appropriate waterfall
arrangements between equity shareholders. If the enterprise value is greater
than the debt instrument, the loan note is not considered to be impaired.
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
Performance fees are payable to the Investment Manager, Puma Investment
Management Limited, and members of the investment management team at 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 110p 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.
At each balance sheet date, the Company accrues for any performance fee
payable based on the calculation set out above.
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 charged to capital.
Taxation
Corporation tax is applied to profits chargeable to corporation tax, if any,
at the applicable rate for the year. The tax effect of different items of
income/gain and expenditure/loss is allocated between capital and revenue
return on the marginal basis as recommended by the SORP.
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the Balance Sheet date, where transactions or
events that result in an obligation to pay more, or right to pay less, tax in
the future 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.
Reserves
Realised losses and gains on investments, transaction costs, the capital
element of the investment management fee, performance fee and taxation are
taken through the Income Statement and recognised in capital reserve -
realised on the Balance Sheet. Unrealised losses and gains on investments are
also taken through the Income Statement and are recognised in capital reserve
- unrealised. The special distributable reserve includes cancelled share
premium and represents reserves available for dividends and repurchases of
shares subject to additional VCT restrictions surrounding retention of the
share capital and share premium account.
Debtors
Debtors include other debtors and accrued income. These are initially recorded
at the transaction price and subsequently measured at amortised cost, being
the transaction price less any amounts settled.
Creditors
Creditors are initially measured at the transaction price and subsequently
measured at amortised cost, being the transaction price less any amounts
settled.
Dividends
Dividends payable are recognised as distributions in the financial statements
when the VCT's liability to make the payment has been established. This
liability is established on the record date, the date on which those
shareholders on the share register are entitled to the dividend.
Key accounting estimates and assumptions
The Company makes estimates and assumptions concerning the future. The
resulting accounting estimates and assumptions will, by definition, seldom
equal the related actual results. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of
assets within the next financial year relate to the fair value of unquoted
investments. Unquoted investments are stated at fair value at each measurement
date in accordance with the appropriate valuation techniques consistent with
the IPEV guidelines outlined in the Investments section in note 1 to the
financial statements above. Valuations are based upon financial information
received from the underlying investee companies, together with the extensive
knowledge and expertise of the team who work closely with the investee
companies. Any deviations in expectations of performance of the underlying
companies are captured within the information received and, as such, reflected
in the fair value.
Further details of the unquoted investments are disclosed in the Investment
Manager's Report and notes 8 and 15 to the financial statements.
2. Income
Year ended 29 February 2024 Year ended 28 February 2023
£'000 £'000
Income from investments
Qualifying interest income 305 147
Qualifying dividend income 477 53
Non-qualifying interest income 75 -
857 200
3. Investment management and performance fees
Year ended 29 February 2024 Year ended 28 February 2023
£'000 £'000
Puma Investments fees 2,287 1,463
Performance fees - 673
2,287 2,136
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 12 months' notice, given at any time
by either party, on or after the fifth anniversary. Puma Investments has been
appointed as the Investment Manager for 6 years. 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 commenced on 19 March 2018 (the date of the first share
allotment). 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 3.5% of the Company's net
assets. Total costs this year were 2.6% of the Company's net assets as at 29
February 2024 (2023: 2.2%).
In addition to the Investment Manager fees disclosed above, during the year,
Puma Investment Management Limited charged fees of £366,723 (2023: £375,197)
as commission for share issue costs.
4. Other expenses
Year ended Year ended
29 February 2024 28 February 2023
£'000 £'000
PI Administration Services fees 400 256
Directors' remuneration 64 61
Social security costs 2 4
Auditor's remuneration for statutory audit 74 68
Other expenses 200 122
740 511
Puma Investments provides accounting and administrative services to VCT 13,
payable quarterly in advance. The fee is calculated as 0.35% of VCT 13's NAV,
using the latest published NAV and the number of shares in issue at each
quarter end.
The Company has no employees other than non-executive Directors (2023: none).
The average number of non-executive Directors during the year was 3 (2023:
3).
Auditor's fees of £69,960 (2023: £59,400) have been grossed up in the table
above to be inclusive of VAT. No non-audit services were provided by the
Company's auditor in the year (2023: £nil).
Other expenses are made up of several smaller items, the largest being PR
related costs.
5. Tax
Year ended 29 February 2024 Year ended 28 February 2023
£'000 £'000
UK corporation tax charged to revenue reserve - -
UK corporation tax charged to capital reserve - -
UK corporation tax charge for the period - -
Factors affecting tax charge for the period
Profit before taxation (8,097) 2,704
Tax charge calculated on profit before taxation at the applicable rate of (2,024) 514
25%/19%
Losses/(gains) on investments 1,482 (979)
Tax losses carried forward 542 465
- -
The corporation tax rate for the current year is 25% (2023: 19%).
Capital returns are not taxable as the Company is exempt from tax on realised
capital gains while it continues to comply with the VCT regulations, so no
corporation tax is recognised on capital gains or losses. Due to the intention
to continue to comply with the VCT regulations, the Company has not provided
for deferred tax on any realised or unrealised capital gains and losses. No
deferred tax asset has been recognised in respect of the tax losses carried
forward due to the uncertainty as to recovery.
6. Basic and diluted profit/(loss) per Ordinary Share
Year ended 29 February 2024
Revenue Capital Total
£'000 £'000 £'000
Loss for the year (455) (7,642) (8,097)
Weighted average number of shares in issue for the year 89,893,382 89,893,382 89,893,382
Less: weighted average number of management incentive shares (see note 12) (3,895,834) (3,895,834) (3,895,834)
Weighted average number of shares for purposes of profit/(loss) per share 85,997,548 85,997,548 85,997,548
calculations
Loss per share (0.53p) (8.89p) (9.42p)
Year ended 28 February 2023
Revenue Capital Total
£'000 £'000 £'000
(Loss)/profit for the year (677) 3,381 2,704
Weighted average number of shares in issue for the year 56,842,635 56,842,635 56,842,635
Less: weighted average number of management incentive shares (see note 12) (3,895,834) (3,895,834) (3,895,834)
Weighted average number of shares for purposes of profit/(loss) per share 52,946,801 52,946,801 52,946,801
calculations
(Loss)/profit per share (1.28p) 6.39p 5.11p
This calculation has been carried out in accordance with IAS
33.
7. Dividends
The Directors will not propose a resolution at the Annual General Meeting to
pay a final dividend (2023: £5.3 million).
8. Investments
(a) Movements in investments Qualifying venture capital investments Non-qualifying investments Total
£'000 £'000 £'000
Book cost at 1 March 2023 37,675 1,465 39,140
Net unrealised gain/(loss) at 1 March 2023 19,424 (20) 19,404
Valuation at 1 March 2023 57,099 1,445 58,544
Purchases at cost 27,631 - 27,631
Disposal proceeds - (1,200) (1,200)
Realised net loss on disposals - (245) (245)
Net unrealised loss (6,233) - (6,233)
Valuation at 29 February 2024 78,497 - 78,497
Book cost at 29 February 2024 65,307 - 65,307
Net unrealised gains at 29 February 2024 13,190 - 13,190
Valuation at 29 February 2024 78,497 - 78,497
(b) Gains/(losses) on investments
Year ended Year ended
29 February 2024 28 February 2023
£'000 £'000
Realised (loss)/gain on investments in the year (245) 19
Unrealised (loss)/gain on investments in the year (6,233) 5,132
(6,478) 5,151
The Company received £1.2 million (2023: £3.6 million) from investments sold
in the year. The book cost of these investments when they were purchased was
£1.5 million (2023: £1.8 million). The Company's investments are revalued
each year, so until they are sold any unrealised gains or losses are included
in the fair value of the investments.
(c) Quoted and unquoted investments
Market value as at 29 February 2024 Market value as at 28 February 2023
£'000 £'000
Quoted investments - 1,445
Unquoted investments 78,497 57,099
78,497 58,544
Further details of these investments (including the unrealised gains in the
year) are disclosed in the Chairman's Statement, Investment Manager's Report
and Investment Portfolio Summary.
9. Debtors
As at 29 February 2024 As at 28 February 2023
£'000 £'000
Other debtors 39 -
Prepayments 265 120
Accrued income 315 135
619 255
10. Current asset investments
As at 29 February 2024 As at 28 February 2023
£'000 £'000
Current asset investments 24,799 -
24,799 -
Current asset investments comprise short term bonds held through collective
investment schemes and are readily convertible into cash at the option of Puma
VCT 13.
11. Current liabilities - creditors
As at 29 February 2024 As at 28 February 2023
£'000 £'000
Accruals 645 1,307
Applications cash (see note 19) 6,756 6,281
Redeemable preference shares 13 13
7,414 7,601
Included within accruals is nil (2023: £673k) in relation to performance fees
payable.
Applications cash is cash received from investors to Puma VCT 13 but not yet
allotted.
Redeemable preference shares were issued for total consideration of £12,500
to Puma Investment Management Limited, being one quarter paid up, so as to
enable the Company to obtain a certificate under s761 of the Companies Act
2006.
Each of the redeemable preference shares carries the right to a fixed,
cumulative, preferential dividend of 0.1% per annum (exclusive of any imputed
tax credit available to shareholders) on the nominal amount thereof but
confers no right to vote except as otherwise agreed by the holders of a
majority of the shares. On a winding-up, the redeemable preference shares
confer the right to be paid the nominal amount paid on such shares. The
redeemable preference shares are redeemable at par at any time by the Company
and by the holder. Each redeemable preference share which is redeemed, shall
thereafter be cancelled without further resolution or consent.
12. Management performance incentive arrangement
On 8 December 2016, 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 £1.05 per Ordinary Share ("the Performance Target").
This agreement was amended by a deed of variation on 28 June 2018 to extend
the terms of this arrangement so as to cover the offers for subscription that
were launched in 2017 and 2018.
Following shareholder approval at the 2023 AGM, the methodology for
calculating the PIF was amended to make it fairer to shareholders by removing
the impact of changes to the share capital of the Company. The amount of the
Performance Incentive Fee (PIF) is 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 110p and the highest Performance Value
per Share at the end of any previous accounting period), multiplied by the
number of relevant Ordinary Shares in issue at the end of the relevant period.
That amount will be allocated, at the discretion of the Investment Manager,
between the Investment Manager itself and the Management Team.
Under the original 2016 performance incentive arrangement (set out above)
3,895,834 Ordinary Shares are held by the Investment Manager and members of
the Management Team ("Performance Incentive Shares"). Under the terms of that
incentive arrangement, all rights to dividends are waived except that amounts
payable under the PIF will, where possible, be paid as a dividend through
these Performance Incentive Shares.
13. Called-up share capital
As at 29 February 2024 As at 28 February 2023 As at 29 February 2024 As at 28 February 2023
£'000 £'000 Number of shares Number of shares
Allotted, called up and fully paid: Ordinary shares of 0.05p each 50 36 99,130,662 72,868,008
Allotted, called up and partly paid: Redeemable preference shares of £1 each 13 13 50,000 50,000
During the year, 26,262,654 shares were issued at an average price of 138.3p
per share (2023: 32,498,045 shares were issued at an average price of 131.3p
per share). The consideration received for these shares was £36.3 million
(2023: £42.7 million).
The rights attached to the Preference Shares can be found within note 11.
14. Net Asset Value per Ordinary Share
As at As at
29 February 2024
28 February 2023
Net assets 118,546,000 91,768,000
Number of shares in issue 99,130,662 72,868,008
Less: management incentive shares (see note 12) (3,895,834) (3,895,834)
Number of shares in issue for purposes of Net
Asset Value per share calculation 95,234,828 68,972,174
Net Asset Value per share
Basic 124.48p 133.05p
15. Financial instruments
The Company's financial instruments comprise its investments, cash balances,
debtors and certain creditors. The fair value of all the Company's financial
assets and liabilities is represented by the carrying value in the Balance
Sheet. Excluding cash balances, the Company held the following categories of
financial instruments at 29 February 2024:
As at 29 February 2024 As at 28 February 2023
£'000 £'000
Financial assets at fair value through profit or loss 97,495 56,963
Financial assets measured at amortised cost 6,420 1,836
Financial liabilities measured at amortised cost (658) (1,320)
103,257 57,479
Management of risk
The main risks the Company faces from its financial instruments are market
price risk, being the risk that the value of investment holdings will
fluctuate as a result of changes in market prices caused by factors other than
interest rate or currency movements, liquidity risk, credit risk and interest
rate risk. The Board regularly reviews and agrees policies for managing each
of these risks. The Board's policies for managing these risks are summarised
below and have been applied throughout the year.
Credit risk
Credit risk is the risk that the counterparty to a financial instrument will
fail to discharge an obligation or commitment that it has entered into with
the Company. The Investment Manager monitors counterparty risk on an ongoing
basis. The Company's maximum exposure to credit risk is as follows:
As at 29 February 2024 As at 28 February 2023
£'000 £'000
Cash at bank and in hand 15,289 34,289
Applications cash (see note 11 and 19) 6,756 6,281
Investments in loan notes 5,801 1,581
Current asset investments 24,799 -
Other receivables 619 255
53,264 42,406
The cash held by the Company at the year-end is held in RBS and the
applications cash is held at NatWest. Bankruptcy or insolvency of the banks
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.
Investments in loans and loan notes comprises a fundamental part of the
Company's venture capital investments, therefore credit risk in respect of
these assets is managed within the Company's main investment procedures.
Credit risk relating to current asset investments is mitigated by investing in
a portfolio of investment instruments of high credit quality.
Credit risk associated with interest, dividends and other receivables are
predominantly covered by the investment management 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 views on the economic environment, which also impacts market
price risk, are discussed in the Investment Manager's Report. 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. The management of
market price risk is part of the investment management process. The portfolio
is managed with an awareness of the effects of adverse price movements through
detailed and continuing analysis, with an objective of maximising overall
returns to shareholders.
Holdings in unquoted investments may pose higher price risk than quoted
investments. Some of that risk can be mitigated by close involvement with the
management of the investee companies along with review of their trading
results.
100% (2023: 98%) of the Company's investments are unquoted investments held at
fair value. 73% of the portfolio (48% of net assets) is valued using the
application of earnings/revenue-based multiples. An increase in the multiple
used by 20% would increase the Net Asset Value by 7.4% (£127.3m). Conversely,
a decrease in the multiple used by 20% would decrease the Net Asset Value by
7.5% (£109.7m). The 20% sensitivity used provides the most meaningful impact
of average multiple changes across the portfolio.
The sensitivity analysis is based on the year-end position of the investments
and so may not be reflective of the year as a whole.
Liquidity risk
Details of the Company's unquoted investments are provided in the Investment
Portfolio Summary. By their nature, unquoted investments may not be readily
realisable and the Board considers exit strategies for these investments
throughout the period for which they are held. As at the year-end, the Company
had no borrowings.
The Company's liquidity risk associated with investments is managed on an
ongoing basis by the Investment Manager in conjunction with the Directors and
in accordance with policies and procedures in place as described in the
Strategic Report. The Company's overall liquidity risks are monitored on a
quarterly basis by the Board. The Company maintains access to sufficient cash
resources 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 5.25% at 29 February 2024
(2023: 4.0%).
Cash flow interest rate risk
The Company has exposure to interest rate movements primarily through its cash
deposits which track the Bank of England base rate.
Interest rate risk profile of financial assets
The following analysis sets out the interest rate risk of the Company's
financial assets as at 29 February 2024.
Rate status Average interest rate Period until maturity Total
£'000
Cash at bank - RBS Floating 0.00% 5,553
Cash at bank - RBS Floating 1.90% 9,627
Applications cash - NatWest (see note 11 and 19) Floating 0.00% 6,756
Loan notes Fixed 9.20% 53 months 4,976
Balance of assets Non-interest bearing 99,048
125,960
The following analysis sets out the interest rate risk of the Company's
financial assets as at 28 February 2023.
Rate status Average interest rate Period until maturity Total
£'000
Cash at bank - RBS Floating 0.00% 34,289
Applications cash - NatWest (see note 11 and 19) Floating 0.00% 6,281
Loan notes Fixed 10.00% 51 months 1,581
Balance of assets Non-interest bearing 57,218
99,369
Foreign currency risk
The Company's functional and presentation currency is Sterling. The Company
has not held any non-Sterling investments during the year.
Fair value hierarchy
Financial assets and liabilities measured at fair value are disclosed using a
fair value hierarchy that reflects the significance of the inputs used in
making the fair value measurements, as follows:
· Level 1 - Fair value is measured using the unadjusted quoted price in
an active market for identical assets.
· Level 2 - Fair value is measured using inputs other than quoted
prices that are observable using market data.
· Level 3 - Fair value is measured using unobservable inputs.
Fair values have been measured at the end of the reporting year as follows:
2024 2023
£'000 £'000
Level 1
Investments listed on LSE - 1,445
Current asset investments 24,799 -
Level 3
Unquoted investments 78,497 57,099
103,296 58,544
The Level 1 investments have been valued using the current quoted price.
The Level 3 investments have been valued in line with the Company's accounting
policies and IPEV guidelines. This comprises both loan and equity instruments,
which are considered to be one instrument due to their being bound together
when assessing the portfolio's returns to the shareholders.
16. 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.
The Company must have an amount of capital, at least 80% (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.
17. Contingencies, guarantees and financial commitments
There were no commitments, contingencies or guarantees of the Company at the
year-end (2023: none).
18. Related party disclosures
The Company has delegated the investment management of the portfolio to Puma
Investment Management Limited and administration services to PI Administration
Services Limited. Further details of the transactions with these entities are
disclosed in note 3 of the financial statements.
19. Re-presentation of comparative figures
The comparative figures for the year ended 28 February 2023 have been
re-presented with an additional line item for 'Applications cash' included
within current assets and current liabilities. Applications cash relates to
funds received from investors but have not yet been allotted as at the year
end. The net impact of this re-presentation on the NAV is nil and is purely a
balance sheet gross up adjustment.
20. Post Balance Sheet events
Post year-end, a further 22,404,644 Ordinary Shares have been issued for cash
consideration of £28.5 million.
On 2 May 2024 a portfolio company, Ron Dorff, raised third-party funding
through a Crowdfunding investment round, which valued the company at €27m.
The investment opportunity was made available to Ron Dorff customers as part
of the launch of Ron Dorff's new loyalty programme, Le Club Ron Dorff.
Incoming third-party investors did not benefit from EIS relief. For the VCT,
this results in a NAV uplift of £1.4m at June 2024. The valuation at February
2024 was £4.1m.
In May 2024, the Directors chose to write the value of the VCTs holdings in
its portfolio company Dymag to nil. The valuation at February 2024 was £1.8m,
meaning a net decrease to the NAV of £1.8m at June 2024. This decision was
taken on the back of the unexpected cancellation of a large OEM project which
Dymag had expected to win, and continued weakness in the aftermarket.
On 22 May 2024 a portfolio company, Iris, completed a £3.5m investment round
with a new external US investor. Puma Funds also participated in the round
with Puma VCT 13 investing an additional £0.8m. This round valued the
company at £35m which values the VCT's initial investment at 2x the invested
sum. This has resulted in a £4.6m NAV uplift at June 2024. At February 2024
Iris was held at cost of £4.6m.
The financial information set out in this announcement does not constitute the
Company's statutory financial statements in accordance with section 434
Companies Act 2006 for the year ended 29 February 2024 but has been extracted
from the statutory financial statements for the year ended 29 February 2024
which were approved by the Board of Directors on 14 June 2024 and will be
delivered to the Registrar of Companies. The Independent Auditor's Report on
those financial statements was unqualified and did not contain any emphasis of
matter nor statements under s 498(2) and (3) of the Companies Act 2006.
The statutory accounts for the year ended 28 February 2023 have been delivered
to the Registrar of Companies and received an Independent Auditors report
which was unqualified and did not contain any emphasis of matter nor
statements under s 498(2) and (3) of the Companies Act 2006.
Copies of the full annual report and financial statements for the year ended
29 February 2024 will be available to the public at the registered office of
the Company at Cassini House, 57 St James's Street, London, SW1A 1LD and is
available for download from
https://www.pumainvestments.co.uk/products/venture-capital-trusts/puma-vct-13.
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