Puma Vct 13 Plc Regulatory News (PU13)

HIGHLIGHTS 

· Strong portfolio performance leading to 25% increase in Net Asset Value per share

· Realisation of the Company's holding in Pure Cremation Limited at a 3.9x return in June 2021, after the year end

· Further fundraising offer of £10m completed, fully subscribed

CHAIRMAN'S STATEMENT 

Introduction 

I am pleased to present the third report and financial statements for Puma VCT 13 plc ('the Company') for the year to 28 February 2021. 

Overview 

The Company's Net Asset Value ("NAV") per share at the end of the year stood at 125.77p, a 25.44p and 25.4% uplift from the same point in the previous year. This gain has arisen from a strong performance across a broad range of the Company's qualifying investments, which is particularly encouraging given the prevailing market conditions. Five of the Company's qualifying holdings were written up in value, with one held at cost. Three of the Company's qualifying holdings were marked down in value and there was a small loss on the Company's non-qualifying holdings of listed securities; since then the losses on the listed securities have been recovered. These movements, together with running costs, accounted for the overall NAV movement. The Company's profit for the year was £4.4m (2020: £1.7m). 

Fundraising 

During the year, the company undertook a further fundraising. The Company raised £3.1m during the year, with a further £7.0m raised after the period end meaning that the new offer has been fully subscribed. This gives the Company material additional deployable funds and will help spread fixed costs over a wider shareholder base. This leaves the Company in a good position to continue to develop a robust portfolio. The Company intends to re-open for another fundraising in the second half of the year.

Life of the Fund Extended, now Evergreen

The Company did not have a fixed life but had initially envisaged a shareholders' vote on its own continuation after 8 to 10 years. As disclosed in the half-yearly report, following approval by shareholders for the change, the Company will no longer put a resolution to shareholders to vote on the Company's continuance and is now an 'evergreen' VCT.

At the same shareholder's meeting, the performance incentive structure for the Investment Manager has been revised, with a higher hurdle. The performance incentive structure has been revised from 20% of all amounts above 105p per share, payable once shareholders have received distributions above 105p per share to a 20% fee payable in relation to each accounting period, subject to performance value per share exceeding the High Water Mark (being the higher of 110p and the highest Performance Value per Share at the end of any previous accounting period). By increasing the hurdle at which a fee becomes payable from 105p to 110p, we believe this further incentivises the Manager to achieve strong performance for the benefit of shareholders.

Investment Activity and Portfolio 

We are pleased to report that 2020-21 has been an active year for the Company with four qualifying investments made in this period, alongside other Puma-managed funds. These investments were: £1.85m into Tictrac, an app-based health and wellness solution for employers and insurance companies; £0.5m into the product design and technology business, Ostmodern; a follow-on investment of £0.03m into Le Col, an ecommerce business selling premium cycling apparel; and a follow-on investment of £0.13m into Dymag, a manufacturer of specialist car and motorbike wheels. This brings the overall number of qualifying investments to nine. 

The two new investments were completed during periods of extreme uncertainty arising from the Covid-19 pandemic, including an investment in March 2020, at the outset of the crisis. As such, the investments were made at what already looks to be highly advantageous pricing compared with today's market conditions.

Within the portfolio, Le Col and Pure Cremation continued to perform very strongly and Le Col was written up accordingly. After the period end the Company sold its position in Pure Cremation to realise a 3.9x return on total funds invested. Your board expects a substantial portion of the proceeds of this realisation to be paid out as a dividend, towards the end of 2021.

Tictrac, the Company's health and wellness app investment, has also been written up in value, despite having been held for less than one year, aided by the highly favourable deal structure the Investment Manager secured. The sector has gained significant traction during the past year as individuals and employers increasingly incorporate health and wellbeing into their daily routines. In addition, there has also been a focus on providing staff welfare solutions via scalable digital technology, such as that offered by Tictrac.

The Company's holdings in Influencer, an influencer marketing business, and MyKindaFuture (MKF), a Human Resources technology business, have both generated positive valuation movements as the positions were adjusted from being held at cost to being held at market value. In both cases the Company benefits from a defensive investment structure which has helped secure value.

Three of the Company's qualifying holdings were written down in value. Two of these, Hot Copper (formerly Knott End Pub Company) and Open House, are pub businesses and have therefore been impacted by the Covid-19 pandemic and the ensuing policy responses. Following the end of the year under review, both businesses reopened and have traded well. The businesses are robustly capitalised and have strong, seasoned management teams who remain optimistic about their long-term prospects. The third business to be written down in value was UK car and motorbike wheel manufacturer Dymag. Dymag's sales are to an extent seasonal, and various lockdowns in the UK and US have limited the opportunities for racing and driving during the key spring and summer seasons, which has impacted sales. Nevertheless, Dymag's revenues grew by 14.5% over the period compared to the prior year and, post period end, enjoyed a record month of sales in March 2021 and the quarter ending June 2021 is forecast to be a record quarter for sales. 

Net Asset Value ("NAV")  

The NAV per share at the year end was 125.77p (2020: 100.33p). This figure reflects the initial funds raised less the costs of issue adjusted for movements in the value of the listed equities and running costs of the Company, plus audited adjustments in the carrying value of the qualifying positions.

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.  

Outlook 

With new funds now available for deployment the Company has the opportunity to be proactive as the economy and society recover, investing in businesses that have proven their robustness through the last year and are well positioned to grow in the new climate. Notwithstanding the considerable uncertainty arising from the Covid-19 pandemic and the unprecedented policy measures put in place to contain it, we do look to the future with confidence. The UK benefits from an active and dynamic sector of small and medium enterprises and as this Company's own portfolio shows, whilst there will be losers from the pandemic and its aftermath, there will also be winners.  

The Manager has a strong reputation as a provider of capital to well-managed, later-stage businesses and at the time of writing we are encouraged by the flow of prospective qualifying investments which are under consideration. The investment team are currently in execution phase with two further potential investments and are confident that we will continue to make good progress in executing our investment strategy and, of course, in meeting our ongoing qualifying holding tests as a VCT.  

David Buchler 

Chairman 

30 June 2021 

INVESTMENT MANAGER'S REPORT  

Introduction 

The year was of course dominated by the Covid-19 pandemic, which has dramatically accelerated a number of pre-existing trends in many areas of life. Examples range from remote working, to ecommerce growth, to the application of scalable digital solutions to health, education and staff management.

Some major macroeconomic trends have also been accelerated. As the UK entered the pandemic at the beginning of 2020, the core outlook was of a high debt, low interest rate, low inflation model. In such an environment, innovative, fast growing companies tend to attract high values as it is easier to buy growth than to create it organically. This is exacerbated by large, cash-rich incumbents being reluctant to retain high levels of liquid assets as the yield on cash is unacceptably low. Overall, such an environment is supportive of small company investing, as it is stimulative of exits at good valuations.

Now, as the country begins to emerge from the Covid dislocation, it is evident that the economy has been thrust forwards on that trajectory by several years. National debt levels are very much higher while interest rates remain very low. In fact, we risk being in a position where governments and Central Banks (now more entwined than they have been for probably 30 years) cannot afford to raise interest rates. That raises material concerns about inflation, consideration of which we formally upweighted in our investment analysis this February.

Further, this has not been a 'conventional' recession. Whilst there has been considerable uncertainly throughout, including an intensely difficult planning period at the onset of the crisis, the scale of Government support, particularly via the Furlough scheme, but also through the various guaranteed loan schemes, has been unprecedented. The majority of that support still needs to be unwound, and in our view, it would be unwise to assume that we are now in an early cycle recovery phase like any other.

The Company is early in its life and so has a high proportion of investable cash. This allows it to react to changes quickly and meaningfully, unburdened by a high proportion of assets in an illiquid legacy portfolio. The Company is also of a size where performance in a particular portfolio holding can have a material impact on overall valuation.

The Investment Manager to the Company, Puma has a highly involved and hands-on approach to portfolio management. This keeps us close to the management teams that the Company has backed and allows us to help them deal with challenges that arise. This, coupled with a focus on genuine multi-sector diversity, has served the Company well over the extraordinary last twelve months and we are confident that it will continue to do so.

Investments 

Qualifying Investments 

Pure Cremation - Crematorium and Direct Cremations 

Pure Cremation is a leading provider of direct cremations in the UK, meeting the needs of a growing number of people who want a respectful cremation arranged without any funeral, leaving them free to say farewell how, where and when is right for them. 

The business has continued to perform extremely strongly throughout the period and has expanded operations to cover mainland Scotland where Pure Cremation has now taken office space. Similarly in Andover, where its main site, headquarters and crematoria are based, it took on substantial additional office space for its expanding customer services function.  

Now profitable, the business has been using its growing free cash flow to carefully expand into adjacent end of life services and sectors. It recruited a legal team in Birmingham to help with its new will writing offer, which has initially been presented to existing pre-paid plan holders. Additional staff have also been taken on to support the business's existing trade networks and to drive at-need business in local markets. These efforts have been supported by the expansion of the group's marketing capacity, with new marketing channels added, including a digital focus to extend reach to new markets. 

The position was realised in June 2021 for £5.04m, generating a gain of £3.74m on the original £1.30m invested.

Dymag Group - 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 wheels. The business continues to grow its presence, both in the aftermarket through relationships with several leading US distributors, and through project work with several leading performance 'original equipment manufacturers' (OEM). Dymag's wheels have been featured on several notable supercar and hypercar projects, and in October 2020, Dymag's hybrid forged alloy and carbon fibre wheels were used on the SSC Tuatara when it successfully set a new world speed record for a production car. The Tuatara reached a top speed of 331.15mph on a closed road in Nevada, USA.  

The Company's investments have supported an ongoing process of driving efficiencies in Dymag's production processes to lower unit cost, including relocation to a new factory in Chippenham which was open and fully operational by mid-February 2021. Investment has also been used to develop a more sophisticated sales and marketing function.  

Dymag managed to continue production throughout lockdown but suffered from complications around staffing and supply chain. Order volumes were also impacted as driving and racing activities were curtailed and trade fairs were cancelled. However, Dymag proactively focused on deepening its distributor relationships and working through engineering projects with long lead times. 

Hot Copper - Pubs with Microbreweries

Brewhouse & Kitchen is the largest brewpub brand in the UK, distinctive for brewing their own unique craft beers onsite 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 Hot Copper benefits from a solid financial position, and sufficient free cash to exploit acquisition opportunities which may arise from the current challenging climate.

Naturally, this has been a difficult time for pub businesses due to the extreme restrictions on trade which have characterised much of the period. Although there have been some very encouraging trading figures from the pubs when they have been able to open, Hot Copper has had to focus primarily on managing cash.

Over the course of the period, Brewhouse & Kitchen invested into their "B&K On Tap" app, which allows them to digitise the customer journey, accommodating order-from-table and pay-from-table functionality. This new digital solution will not only allow them to gain better labour efficiencies and reduce wage bills but will also facilitate the company in better understanding their customer-base.

Post period end, as the hospitality sector reopened in April, trade for Hot Copper has begun well, with several units posting gains on 2019 trading levels despite operating with significant restrictions still in place. This trade benefits from ongoing government support, including rates relief, flexi-furlough and the reduction of VAT on food sales from 20% to 5%, now extended to September 2021.

Also in April, post period end, Brewhouse & Kitchen won 'Best Pub Employer' at the 2021 Publican Awards and was shortlisted as 'Best Managed Pub Company'. The reputational benefits of these awards will help Hot Copper as a franchisee.

Open House - London based food and beverage offer  

Open House owns and operates two popular dining and drinking venues in London - The Lighterman in King's Cross and Percy & Founders in Fitzrovia. The Group will be opening its third unit, an anchor building in the new TV Centre development in London's White City, in Autumn 2021. Open House was launched in 2015 by the team behind Cubitt House, a group of highly successful gastropubs in central London which were later sold to a private equity group. 

Since closing for the first lockdown, the Group has managed its cash well and negotiated successfully to receive considerable support from landlords. This has eased pressure whilst units have had to remain closed throughout the various lockdowns over the period. 

During the late summer 2020 when hospitality was temporarily allowed to reopen, The Lighterman traded well and generated a positive contribution for the company. While this unit also had to close for lockdowns over winter, post period end it opened again in April (after the financial period being reported upon) with very strong trade. The unit had several advantages for operating in the current restricted environment, including its high footfall location, generous outdoor space and familiarity with table service.  

As Fitzrovia is a more office-centric London location, the Group decided that its unit there, Percy & Founders should reopen when government guidance encourages offices to open fully, and when a higher footfall would be expected at this site. 

MyKindaCrowd Limited - Human Resources Technology 

MyKindaFuture (MKF) is an award-winning Human Resources technology company specialising in helping underrepresented talent to gain employment. Through its Connectr 2.0 platform, MKF provides large corporates with a comprehensive digital engagement tool to increase attraction and retention rates amongst potential graduate hires and apprentices. MKF 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 delivered by traditional channels.  

The Connectr 2.0 platform also incorporates one-to-one digital mentoring, which is a new feature that is rapidly gaining commercial traction. It is particularly well suited to the distanced working practices that are likely to be significantly more widespread post Covid, as it offers large employers a digital and scalable solution for career development and mentoring, even in a remote working world.  

Trading through the period remained strong, with particularly rapid growth in recurring digital revenues. In February 2021, just prior to the period end, the company launched a pilot program with the Department for Work and Pensions which trialled the Connectr 2.0 platform in Job Centre Plus locations across London and the South-East, ahead of a possible nationwide roll-out. This places Connectr 2.0 at the centre of networks of potential employees, each of whom is exposed to the platform and is a potential customer. This trial has already led to client wins and is a hugely exciting opportunity for the business. 

Influencer Limited - Technology 

Influencer is a data-driven social media, influencer and digital marketing agency. Launched in 2017, Influencer's proprietary technology is market leading in simplifying the influencer marketing process for both brands and creators. The business has worked with brands such as Pantene, Barclays, Walkers and Starbucks for their influencer campaigns and regularly works with some of the world's leading advertising agencies. 

Over the period, Influencer was named an official Facebook and Instagram Marketing Partner. Not only does this establish Influencer as a leader in the influencer marketing space, but also means the business will be able to distribute content directly through the Facebook and Instagram networks and their wider digital portfolios. Also during the period, the business made significant developments across the big six agency groups, making a number of as-yet confidential technology partnerships across the key networks. 

Historically, Influencer has been very strong in both the travel and hospitality sectors, and therefore faced significant client retrenchment during the lockdowns and other Covid-19 pandemic responses. The business focussed on managing cash and driving into new sectors through reinvigorated sales efforts. Despite a slow start to 2021, towards the end of the period the business has enjoyed some significant client wins and is moving forward with renewed momentum.  

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 owns its own factory in Italy, giving control of its manufacturing and supply chain. 

Having grown strongly for several years since initial investment by the Puma Funds, Le Col entered the Covid-19 crisis with a strong platform. Like all businesses, Le Col faced great uncertainty in the initial stages of the crisis but experienced a boom in sales following lockdown due to an increased focus on exercise and particular emphasis on cycling. Online sales performed exceptionally strongly over the period, driven by a number of successful marketing initiatives throughout the year.  

These included a multi-sport Strava challenge which received more than 500,000 sign-ups, 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. In particular, the sponsorship of Team Bahrain McLaren has been successful in attracting a number of new customers to the brand.  

As evidence of Le Col's continued success, in October 2020 the business won the 'Best Leisure, Fitness & Outdoors eCommerce' award at the eCommerce Awards 2020. Moving forwards, it plans to make supply chain improvements to cope with increased demand, including moving to larger premises in Italy where a significant portion of Le Col's stock is manufactured. 

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 large workforces, with associated positive outcomes for engagement and wellbeing.  

TicTrac's main customers are large insurance companies, such as Aviva, Allianz and Prudential, Generali Employee Benefits and Bupa Hong Kong. During 2020, TicTrac also launched a software as a service (SaaS) offer, selling direct to corporates, again for the provision of the TicTrac platform to staff as an employee benefit.  

The Covid-19 pandemic accelerated an already prevalent focus on health and wellness, highlighting the need for flexible, scalable digital solutions. These trends are very positive for TicTrac. Whilst corporate spending was scrutinised in most areas during 2020, TicTrac's multi-year contracts with large insurers provided a buffer from this scrutiny and afforded the business with good levels of revenue visibility. Coupled with the investment from Puma funds (and co-investment partner Aviva Ventures) the business has been able to remain in growth mode and continue developing the skillsets it needs for expansion.  

Post period end, the company has announced some significant client wins, again on valuable multi-year contracts. This year the business will continue to grow its staff base across the sales, account management, product and technology teams, with a focus on scaling and refining sales and marketing strategy. 

AWB 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 also completed other projects for hayu, the subscription-based video streaming service and All4, Channel 4's on-demand video streaming service. 

The Company's investment will accelerate the growth of Ostmodern's Skylark Platform. Developed in-house, the unique platform is the company's CMS, VMS and API for content-first businesses. 

Since investment, Ostmodern has started transitioning processes and professionalising its structure to focus on separating the product side of the business, Skylark, from the services side of the business. Through the Skylark platform, the business seeks to reduce the setup costs and deployment times it can offer customers, consequently allowing the platform to be applicable to a broader target market.  

Liquidity management investments 

To manage the Company's liquidity, a portion of the Company's funds are invested in a diverse portfolio of listed equities. 

This portfolio is managed by the Investment Manager's listed equities team which during the period was run by Justin Waine. Post Period end, Justin Waine stepped down from this role and was replaced by Dr Stuart Rollason. Dr Rollason is a highly experienced small and mid-cap fund manager with over 20 years in the industry. He joined the Investment Manager from Kestrel Partners LLP, and prior to that. managed a UK smaller company investment trust at Bluehone and £230m of UK smaller company pension assets at ISIS Asset Management. He was formerly an Extel-rated Research Analyst in Medical Technology and Biotech at Beeson Gregory, Panmure Gordon and Nomura, and began his career as a medical doctor practising in the NHS, before moving into research at Oxford University.

The Company's listed equity portfolio is focussed on UK centric stocks which are listed on the main board of the London Stock Exchange. As previously reported, the Company's portfolio experienced high levels of volatility and material falls in value, in line with markets generally, as a result of the Covid pandemic. At the period end, the portfolio had recovered almost all of the losses that arose following the market sell off in March and April 2020. From a position at the beginning of the year where the Company held £1.67 million of listed equities, by the year end this holding had reduced to £1.36 million after £337,000 of disposals, £74,000 of acquisitions and £54,000 of losses (some realised, some not realised).

Currently the portfolio is standing at £1.53m and has recovered all of the losses incurred in the Spring of 2020.

Puma Investment Management Limited 

30 June 2021Investment Portfolio Summary

As at 28 February 2021

Of the qualifying investments held at 28 February 2021, all are incorporated in England and Wales.

Income Statement

For the year ended 28 February 2021

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.

Balance Sheet

As at 28 February 2021

The financial statements on pages 39 to 55 were approved and authorised for issue by the Board of Directors on 30 June 2021 and were signed on their behalf by:

David Buchler

Chairman

Statement of Cash Flows

For the year ended 28 February 2021

Statement of Changes in Equity

For the year ended 28 February 2021

Distributable reserves comprise: Capital reserve-realised, Capital reserve-unrealised (excluding gains on unquoted investments) and the Revenue reserve. At the year end, distributable revenue reserves were nil (2020: nil).

The Capital reserve-realised includes gains/losses that have been realised in the year due to the sale of investments, net of related costs. The 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.

The revenue reserve represents the cumulative revenue earned less cumulative distributions.

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.

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. After making enquiries, including consideration of the impact of COVID-19 on the Company's current financial position and expected cash flows for the period of the review, the Directors 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.

Investments

All investments are measured at fair value. They are all held as part of the Company's investment portfolio and are managed in accordance with the investment policy set out on page 19.

Listed investments are stated at bid price at the reporting date.

Unquoted investments are stated at fair value by the Directors with reference to the International Private Equity and Venture Capital Valuation Guidelines ("IPEV") as follows:

· Investments which have been made within the last twelve 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 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.

· Investments in debt instruments will usually be valued by applying a discounted cash flow methodology based on expected future returns of the investment.

· Alternative methods of valuation such as multiples or net asset value may be applied in specific circumstances if considered more appropriate.

Realised surpluses or deficits on the disposal of investments are taken to realised capital reserves, and unrealised surpluses and deficits on the revaluation of investments are taken to unrealised capital reserves.

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

As approved at the General Meeting in the year, performance fee arrangements for Puma Investments and members of the investment management team have been amended. The performance incentive fee payable in relation to each accounting period (as determined from the audited annual accounts for that period) is now subject to the Performance Value per share being at least 110p at the end of the relevant period. Performance Value per Share is calculated as the total of the net asset value, the performance incentive fees previously paid or accrued by the Company for all previous accounting periods and the cumulative amount of dividends paid by the Company before the relevant accounting reference date, with the aggregate amount of these divided by the number of Ordinary Shares in issue in the Company on the relevant date (excluding the Performance Incentive Shares).

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 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 (excluding any Performance Incentive Shares). That amount will be allocated, at the discretion of the Investment Manager, between the Investment Manager itself and the Management Team.

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 allocated proportionally to revenue and capital based on the respective contributions to the Net Asset Value.

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 and taxation are taken through the Income Statement and recognised in the Capital Reserve - Realised on the Balance sheet. Unrealised losses and gains on investments and the capital element of the performance fee are also taken through the Income Statement and are recognised in the Capital Reserve - Unrealised.

Debtors

Debtors include other debtors and accrued income which is recognised at amortised cost, equivalent to the fair value of the expected balance receivable.

Creditors

Creditors are initially measured at the transaction price and subsequently measured at amortised cost, being the transaction price less any amounts settled.

Dividends

Final dividends payable are recognised as distributions in the financial statements when the Company's liability to make payment has been established. The liability is established when the dividends proposed by the Board are approved by the Shareholders. Interim dividends are recognised when paid.

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, especially due to the ongoing impact of COVID-19. Further details of the unquoted investments are disclosed in the Investment Manager's Report on pages 4 to 11 and notes 8 and 14 to the financial statements.

2. Income

3. Investment Management and Performance Fees

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 twelve months' notice, given at any time by either party, on or after the fifth anniversary. 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% the Company's net asset as at the end of the previous accounting period (2020: cap was calculated at 3.5% of funds raised). Total costs this year were 3.5% of the Company's net assets as at 28 February 2020 (2020: 3.4% of the funds raised to 29 February 2020).

In addition to the investment manager fees disclosed above, during the year, Puma Investments Management Limited charged fees of £92,746 (2020: £nil) as commission to share issue costs.

4. Other expenses

PI Administration Services Limited provides administrative services to the Company for an aggregate annual fee of 0.35% of the Net Asset Value of the Fund, payable quarterly in arrears.

Remuneration for each Director for the year is disclosed in the Directors' Remuneration Report on page 27. The Company had no employees (other than Directors) during the year (2020: none). The average number of non-executive Directors during the year was 3 (2020: 3).

The Auditor's remuneration of £27,500 (2020: £24,000) has been grossed up in the table above to be inclusive of VAT. Non-audit fees charged during the year were £nil (2020: £250 for iXBRL tagging of the year ended 28 February 2019 financial statements).

5. Taxation

Capital returns are not taxable as the Company is exempt from tax on realised capital gains whilst 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 return/(loss) per Ordinary Share

7. Dividends

The Directors will not propose a resolution at the Annual General Meeting to pay a final dividend (2020: nil).

8. Investments

The Company received £337,000 (2020: £2,430,000) from investments sold in the year. The book cost of these investments when they were purchased was £407,000 (2020: £2,689,000). 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.

Further details of these investments (including the unrealised gains in the year) are disclosed in the Chairman's Statement, Investment Manager's Report, Investment Portfolio Summary and Significant Investments on pages 1 to 17 of the Annual Report.

9. Debtors

Other debtors includes cash held by the company's brokers of £60,000 (2020: £177,000).

10. Creditors - amounts falling due within one year

Redeemable preference shares were issued for total consideration £12,500 to Puma Investment Management Limited, being one quarter paid up, so as to enable the Company to obtain a certificate under s.761 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.

11. 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 to cover the extended fundraising period.

Following approval by shareholders, on 18 November 2020 this agreement was amended by a deed of variation. Under the new agreement, Puma Investments and members of the investment management team will be entitled to a performance in relation to each accounting period as determined from the audited annual accounts for that period, subject to the Performance Value per share being at least 110p at the end of the relevant period. Performance Value per Share is calculated as the total of the net asset value, the performance incentive fees previously paid or accrued by the Company for all previous accounting periods and the cumulative amount of dividends paid by the Company before the relevant accounting reference date, with the aggregate amount of these divided by the number of Ordinary Shares in issue in the Company on the relevant date (excluding the Performance Incentive Shares).

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 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 (excluding any Performance Incentive Shares). That amount will be allocated, at the discretion of the Investment Manager, between the Investment Manager itself and the Management Team.

Under the previous performance incentive arrangement (set out above) 3,895,834 Ordinary Shares are held by the Investment Manager and members of the investment management team ("Performance Incentive Shares"). Under the terms of the incentive arrangement, all rights to dividends will be waived except, amounts payable under the new performance incentive fee will, where possible, be paid as a dividend through these Performance Incentive Shares.

A performance fee of £717,000 (2020: £nil) has been accrued for under the terms of the new performance incentive arrangement calculated as 20% of the increase in net assets before performance fee (£23,653,000) in excess of 110p per share (excluding performance incentive shares) (£20,061,000).

12. Called Up Share Capital

During the year, 2,653,672 shares were issued at an average price of 116.5p per share (2020: no shares were issued). The consideration received for these shares was £3.1 million (2020: £nil).

Following the period end, a further 6,030,886 shares were issued at an average price of 116.5p. The consideration received for these shares was £7.0 million.

13. Net Asset Value per Ordinary Share

14. Financial Instruments

The Company's financial instruments comprise its investments, cash balances, debtors and certain creditors. The fair value of all of 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 28 February 2021:

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:

The cash held by the Company at the year-end is held in one U.K. bank. Bankruptcy or insolvency of the bank 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.

Credit risk associated with interest, dividends and other receivables are predominantly covered by the investment management procedures. Other receivables as at 29 February 2020 was mainly cash held by the company's brokers, that is subject to reviews consistent with the banks noted above.

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 strategy on the management of market price risk is driven by the Company's investment policy as outlined in the Strategic Report on page 19. 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.

6% (2020: 12%) of the Company's investments are quoted investments and 94% (2020: 88%) are unquoted investments.

Liquidity risk

Details of the Company's unquoted investments are provided in the Investment Portfolio summary on page 12. 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 and the Directors' 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 0.1% at 28 February 2021 (2020: 0.75%).

Cash flow interest rate risk

The Company has exposure to interest rate movements primarily through its cash deposits which track either the Bank of England base rate or LIBOR.

Interest rate risk profile of financial assets

The following analysis sets out the interest rate risk of the Company's financial assets as at 28 February 2021.

The following analysis sets out the interest rate risk of the Company's financial assets as at 29 February 2020.

Foreign currency risk

The reporting currency of the Company 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:-

The Level 3 investments have been valued in line with the Company's accounting policies and IPEV guidelines. Further details of these investments are provided in the Significant Investments section of the Annual Report on pages 13 to 17.

15. 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.

15. Capital management (continued)

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.

16. Contingencies, Guarantees and Financial Commitments

There were no commitments, contingencies or guarantees of the Company at the year-end (2020: none).

17. Controlling Party

In the opinion of the Directors there is no immediate or ultimate controlling party.

18. Post Balance Sheet Events

As detailed in note 12, since the year end 6,030,886 ordinary shares have been issued for cash consideration of £7.0 million.

On 15 June 2021, the VCT realised its position in Pure Cremation Holdings Limited for total proceeds of £5.04m.

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 28 February 2021, but has been extracted from the statutory financial statements for the year ended 28 February 2021 which were approved by the Board of Directors on 30 June 2021 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 29 February 2020 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 28 February 2021 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 will be available for download from www.pumainvestments.co.uk.