Half-year Report

Highlights 

· NAV at period end of 106.79p (after adding back dividends paid to that date)

· Profit of £1,849,000 recorded in the period, representing 5.98p per share

· 21p special dividend paid shortly after period end following successful exit from Pure Cremation.

Chairman's Statement 

Introduction

As we emerge from the pandemic, it is still too early to comment on the long-term effects on investment markets and values. Despite this uncertain environment, we are pleased to report that the Company was able to sell its position in Pure Cremation during the period on attractive terms, realising a 2.1x return on total funds invested.

There is also good progress with other companies in our portfolio. The Investment Manager worked closely with investee companies during the pandemic to give them support and assistance. This has continued since as the outlook for the Company has become more encouraging. Nonetheless, the disruption caused by lockdowns and government restrictions of trading will inevitably impact the timings of exits. Accordingly, and as announced earlier this year in the Company's annual report, the Board has decided to delay convening a General Meeting of the Company at which resolutions would be proposed to place the Company into members' solvent liquidation. The Board continues to keep this matter under regular review.

Results and Net Asset Value ("NAV")

The Company recorded a profit of £1,849,000 in the period (representing 5.98p per share post-tax profit). Accordingly, the NAV per share at the period end was 97.79p (106.79p after adding back the dividends paid to that date). Since this date, a 21p dividend has been paid out by way of a special dividend.

Dividends

As previously reported, the Company paid a dividend of 21p per ordinary share shortly after the period end in October, taking cumulative dividends paid to date to 30p per ordinary share. Given this large recent pay-out, your Board is not proposing a further dividend at this interim stage.

Investments

Qualifying Investments

Growing Fingers Limited - Children's Nursery

Our investment has funded the construction and launch of a new purpose-built 108-place nursery school in Wendover, Buckinghamshire, an affluent commuter town with direct links to London. The Company benefits from a first-charge security over the Wendover site and the Growing Fingers business.

Despite delays to construction at the beginning of the year, the nursery opened successfully in March and has since then traded ahead of forecasts. Occupancy is due to increase in the New Year with a number of new joiners, and the nursery's management team remains confident of achieving full-year targets based on recent enrolment and inquiry trends.

Kid and Play Limited - Children's Nursery

Kid & Play has developed a 110-place children's day nursery in Bedford, which was originally expected to open in Spring 2020 but experienced delays to building works as a result of the Covid-19 measures. It reached practical completion in May 2020 and opened in August 2020. The site has traded well since opening and has consistently been ahead of budget in terms of occupancy. Encouragingly, the unit's occupancy is heavily weighted to babies and 'early years' children who are likely to remain with the nursery for three to four years.

Building works are due to start shortly at a second site in Barnet which the business is seeking to lease. The site was previously a satellite site for an arts college and the renovation is expected to take approximately 3 months.

Signal Building Services Limited - Construction projects

Signal Building Services Limited is a business specialising in delivering turnkey solutions to construction projects, led by a management team with over 40 years' of combined experience in the construction sector. The company is currently working on the construction of a 41-unit residential scheme in North-West London and a 60-bed care home in Wilmslow. 

Applebarn Nurseries Limited - Children's Nursery

Applebarn Nurseries is a childcare business operating under the brand, Back to the Garden Childcare. The team's first site, a custom-built 120-place children's day nursery in Altrincham, South Manchester, opened in September 2018 and continues to record stable occupancy levels.

Underlying trends for the nursery are strong, however, as has been the case for the wider nursery sector, the company's performance has been impacted by the need to comply with the health authorities' requirement to work in 'bubbles'. With the loosening of isolation rules in August 2021, this issue is much improved.

Post period end, the Puma management team has been in discussion with a mainstream lender about refinancing the VCT's investment in early 2022.

Hot Copper Pub Company Limited - Pubs with Microbreweries

Brewhouse & Kitchen is the largest brewpub brand in the UK, distinctive for brewing their own unique craft beers on-site and running a participatory experience with beer tasting and brewing masterclasses. The Company invested into Knott End Pub Company in 2017, as a franchisee to the Brewhouse & Kitchen brand, to provide growth capital for the further build-out of the overall Brewhouse & Kitchen branded estate.

In December 2020, Knott End was merged with two other Brewhouse & Kitchen franchise companies which other Puma managed funds had previously invested into. This resulted in the Company now holding shares in Hot Copper Pub Company Limited, and therefore having exposure to a larger, more diverse, mostly freehold estate underpinned by a substantial free-cash buffer.

The Hot Copper sites traded strongly throughout the summer months and since then have traded ahead of sales compared to two years ago (pre-pandemic). However, this followed a period of difficulty for pub businesses due to lockdowns and extreme restrictions on trade. More recently the situation has much improved, but staffing shortages - and other logistical challenges - across the hospitality sector have impacted the Group.

Sunlight Education Nucleus Limited - Special Educational Needs Schools

Sunlight Education Nucleus (SEN) is a provider of special educational needs schools in the Midlands run by an expert management team with a proven track record of sourcing, developing and launching highly successful special needs educational settings.

Over the period, both schools - in Stafford, West Midlands, and Crewe, Cheshire - have remained ahead of forecasts in terms of pupil headcount and revenues. During the period, both schools received approval from the Department of Education to increase their number of pupils from 50 to 100. Recruitment of staff has increased to support this growth.

Post period end, the school in Stafford received an 'Outstanding' rating from Ofsted; an impressive achievement given that Oftsed has recently tightened the ranking criteria.

SA Fitness Holdings Limited ('NRG') - Budget Gyms

NRG gyms are aimed at price-sensitive millennials with a keen interest in sports and fitness. When we first invested, the business operated sites in Gravesend and Watford; it has since added gyms in Walsall and Lewisham, with a new site under development in Manchester.

All sites were able to open in line with government regulations in April 2021, and in May 2021 indoor classes and coaching for members were able to resume. Since reopening, membership has been ahead of pre-pandemic levels, which compares well with reported performance of key competitors.

Post period end, work began on a new site at Stretford, Manchester in September; this is expected to complete in mid-December 2021, and the site to open in January 2022. This will be the largest NRG Gym to date and act as a new flagship site.

Tictrac Limited - Health Engagement Platform

TicTrac is a personalised health and wellness platform which 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.

Non-Qualifying Investments

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

Aparthotel, Glasgow

A pre-development bridge loan of £836,000 was advanced (through an affiliate, Tottenham Lending Limited) to Citihome Glasgow Limited against a site with planning permission for a 156-room aparthotel in central Glasgow. This loan, together with loans from other vehicles managed and advised by the Investment Manager totalling £3.3 million, is secured with a first charge over the site and is backed by a personal guarantee from the developer. Since the loan was advanced, the developer successfully increased the planning permission to 204 rooms.

Care Home for the Elderly, Bristol

A loan of £1,512,000 was advanced to facilitate the development of a new 80-bed care home in Bristol. The loan was made through an affiliate, Marble Lending Limited, and was advanced together with facilities from other vehicles managed and advised by the Investment Manager totalling £13.4 million. The developer has significant previous experience of developing and operating care homes and the loans are secured with a first charge over the site.

Purpose Built Student Accommodation, Brighton

A loan of £1,250,000 was advanced (through an affiliate, Tottenham Lending Limited) to Alumno Student Brighton Living (Brighton) Limited. The loan was to fund the acquisition and development of a 71-unit purpose-built student accommodation unit in Brighton. This loan, together with loans from other vehicles managed and advised by the Investment Manager totalling £8.47 million, is secured with a first charge over the site. Brighton is one of the university towns with a strong demand for new-build quality student accommodation and the developer has a long track record, having developed over 5,000 units to date. Construction is now complete, the building is fully occupied and we understand that the borrower is in advanced discussions to sell the property which would result in repayment of the loan in full.

Supported Living, Atherstone

A loan of £594,000 was advanced (through affiliate Victoria Lending Limited) to HBP Group Limited to facilitate the development of 16 supported-living flats in Atherstone, Warwickshire. This loan, together with loans from other vehicles managed and advised by the Investment Manager totalling £1.7 million, is secured with a first charge over the property. The scheme benefits from a pre-let with a leading housing association and a rental void agreement with a large care provider. The development is expected to reach practical completion in the coming weeks.

Care Homes for the Elderly, the Wirral

A loan of £700,000 was advanced (through an affiliate, Victoria Lending Limited) to various entities within the Athena Healthcare group of companies. This loan is part of a package of £14 million including loans from other vehicles managed and advised by the Investment Manager. Its purpose is to finance the build-up of residents in two newly built 80-bed care homes in the Wirral, near Liverpool. The loan is at conservative leverage and neither care home has had, to-date, any serious outbreaks of Covid-19.

Care Home for the Elderly, Cambridgeshire

A loan of £1,311,000 was advanced to facilitate the development of a new 70-bed care home in Brampton, Cambridgeshire. The loan was made through an affiliate, Marble Lending Limited, and was advanced together with facilities from other vehicles managed and advised by the Investment Manager totalling £11.7 million. The developer has significant previous experience of developing and operating care homes and the loans are secured with a first charge over the site.

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, monitoring rule compliance and maintaining the qualifying status of the Company's holdings in the future.

Principal risks and uncertainties

The measures taken to deal with Covid-19 have caused, and continue to cause, major economic disruption across all sectors. The consequences of this for the value of the Company's investment portfolio constitute the principal risk and uncertainty for the Company in the second half of the year.

Outlook

The Company's funds are invested in a balanced portfolio of both qualifying and non-qualifying investments. Whilst the Covid-19 pandemic has presented a number of significant unforeseen economic and social challenges for the UK and the global economy, management teams in our portfolio companies and the developers who have received loans from our affiliates have responded well. The objective remains to achieve an orderly winding up of the Company's assets as soon as possible.

It was envisaged in the Company's Prospectus that the Board would convene a General Meeting of the Company following the fifth anniversary at which resolutions would be proposed to place the Company into members' solvent liquidation. The intention remains to return the balance of the capital in an orderly way as soon as possible following the fifth anniversary. However, whilst discussions are underway regarding potential exits from portfolio companies, it is likely that, in light of the Covid-19 outbreak, a number of these exit processes will be delayed until there is a greater degree of economic certainty. It is therefore likely that the liquidation process may take place at a later date than originally envisaged. The Board will keep this under regular review.

Ray Pierce

Chairman

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 return per ordinary share of 5.98p is based on the profit for the period of £1,849,000 and the weighted average number of shares in issue as at 31 August 2021 of 30,909,188.

3. Net asset value per share

4. Investment 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. 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