Interim Results
October 21 2005 - 11:10AM
UK Regulatory
RNS Number:0168T
Pennine AIM VCT PLC
21 October 2005
Pennine AIM VCT plc and its subsidiary
Interim Statement for the six months ended 31 July 2005
CHAIRMAN'S STATEMENT
I am pleased to present the interim results for Pennine AIM VCT plc ("P1") for
the period ended 31 July 2005. This is the first set of results the Company has
published since the acquisition of Pennine AIM VCT II plc, so I would
particularly like to welcome former Pennine AIM VCT II plc Shareholders.
Acquisition of Pennine AIM VCT II plc
On 28 May 2005, the Company made a share-for-share offer to acquire the whole of
the share capital of Pennine AIM VCT II plc ("P2"). I am pleased to report that
the Company has now completed the compulsory acquisition of the remaining P2
shares, so that P2 is now a wholly owned subsidiary. The investments and other
assets and liabilities of P2 will shortly be transferred to P1, and steps will
then be taken to wind up P2 in order to ensure that the anticipated savings in
running costs from the merger are achieved in full.
Format of Accounts
These accounts are presented in consolidated form so that a fair picture of P1
and P2 as a combined entity is shown. It is expected that the P1 will return to
presenting single entity accounts in its next Annual Report by which time P2 is
expected to have been dissolved as described above.
Net Asset Value
At 31 July 2005, the Group's Net Asset Value per share (NAV) stood at 70.6p, a
fall of 1.6p or 2.2% since 31 January 2005.
The decrease in NAV is analysed as follows:
Pence per share
Net realised loss on investments (0.4)
Net unrealised loss on investments (0.4)
Revenue loss - Pennine AIM VCT plc (0.2)
Revenue loss - Pennine AIM II VCT plc (0.2)
Costs of acquisition (1.1)
Less:
acquisition costs absorbed by P2 0.7
shareholders
Net costs of acquisition (0.4)
Total movement in NAV during the period (1.6)
As expected, the acquisition has had a small net cost to P1 Shareholders. One
of benefits of the transaction, however, is the future saving in running costs
and Investment Management fees, from which we are only now starting to be
benefit.
Since the period end, the VCT saw a steady improvement in its NAV until it
suffered from a sharp fall in the valuation of the investment in CRC Group plc
earlier this week, following a profits warning issued by the company. At close
of business on 18 October 2005, the Company's NAV stood at 71.0p per share.
Venture capital investments
During the period under review the Group made four new venture capital
investments and four follow-on investments at a total cost of #1.0 million.
These are summarised below:
#'000
New Investments
Cadbury House 225
Core Control 100
FDM Group 200
Waterline Group 200
Follow-on Investments
Computer Software Group 100
Dipford Group 45
Disperse Group 100
Keycom 50
1,020
There were also a number of disposals in the period which are summarised below:
Realised
Valuation gain in
Cost at 31/1/05 Proceeds Proceeds
#'000 #'000 #'000 #'000
Pennine AIM
Centurion Electronics 78 87 21 (66)
CRC Group 76 192 203 11
Sundry 9 9 7 (2)
163 288 231 (55)
Pennine AIM II
CRC Group 48 123 122 (1)
Synergy Healthcare 15 23 23 -
63 146 145 (1)
At the 31 July 2005 the combined venture capital portfolio comprised 42
investments with a total cost of #11.8 million.
The Group's existing portfolio had a mixed performance over the period. The
best performers were Supporta plc, The hot group plc and Connaught plc, which
accounted for total unrealised gains of #275,000. However, there were a number
of investments that lost value, including VI Group plc, Centurion Electronics
plc and Real Affinity plc, accounting for unrealised losses of #219,000.
Overall the Group's investment portfolio had a net unrealised loss of #64,000
for the period. Shareholders are reminded that our investment horizons are
medium term and should be reassured that your directors believe the current
portfolio has considerable scope for progress.
Fixed interest investments
The Group continues to hold a portfolio of fixed interest securities. At 31
July 2005 these were valued at #1.3 million. During the period this portfolio
incurred a realised loss of #7,000 and an unrealised gain of #5,000.
Revenue and Dividend
Gross revenue for the six-month period was #135,000 (2004: #190,000) and the net
revenue loss after taxation was #26,000 (2004: profit #26,000).
In line with our normal practice, no interim dividend will be paid.
Repurchase of shares
The Company's share price is affected by the illiquidity of its shares in the
market. This results mainly from the requirement that most shareholders must
retain their shares for at least three years in order to retain their tax
benefits and because investors do not receive income tax relief on the purchase
of "second-hand" shares.
As part of the acquisition of P2, the Board has stated that it will reserve up
to #550,000 to buy back shares at a 10% discount to the latest published NAV.
The Company did not buy back any shares for cancellation during the period,
principally because of regulatory restrictions connected with the acquisition of
P2. However, following the publication of these results, the Company will be
able to resume buying in shares.
Outlook
With the acquisition of P2 complete, the Company can now enjoy the benefits of
spreading its running costs over a greater asset base and the increased
flexibility that arises from having a larger investment portfolio within one
company.
The Investment Manager is continuing to see a steady flow of good quality
investment opportunities so it is expected that there will be a reasonable level
of portfolio activity over the coming months. I look forward to updating
shareholders in the Annual Report.
Hugh Gillespie
Chairman
UNAUDITED SUMMARISED GROUP BALANCE SHEET
as at 31 July 2005
31 July 31 July 31 Jan
2005 2004 2005
#'000 #'000 #'000
Fixed assets
Investments 10,760 8,294 7,413
Net current assets 44 421 1,628
Net assets 10,804 8,715 9,041
Capital and reserves
Called up share capital 1,530 1,255 1,253
Capital redemption reserve 122 75 77
Share premium account 6,385 4,984 4,984
Special reserve 1,206 1,341 1,747
Capital reserve - realised 2,118 1,306 1,092
Capital reserve - unrealised 221 - 142
Revenue reserve (778) (246) (254)
Total equity shareholders' funds 10,804 8,715 9,041
Net asset value per Ordinary share 70.6p 69.5p 72.16p
UNAUDITED GROUP STATEMENT OF TOTAL RETURN
(incorporating the revenue account)
for the six months ended 31 July 2005
Six months ended
31 July 2005
Revenue Capital Total
#'000 #'000 #'000
Income 135 - 135
Gains/(losses) on investments:
- Realised - (64) (64)
- Unrealised - (42) (42)
135 (106) 29
Management fees (75) - (75)
Other expenses (86) - (86)
Return on ordinary activities before taxation (26) (106) (132)
Tax on ordinary activities - - -
Return on ordinary activities after taxation (26) (106) (132)
Distributions - - -
Transfer from reserves (26) (106) (132)
Return per Ordinary share of 10p (0.2p) (0.8p) (1.0p)
Six months ended Year ended
31 July 2004 31 Jan 2005
Revenue Capital Total Total
#'000 #'000 #'000 #'000
Income 190 - 190 349
Gains/(losses) on investments:
- Realised - 123 123 47
- Unrealised - (198) (198) 472
190 (75) 115 868
Management fees (78) - (78) (156)
Other expenses (86) - (86) (175)
Return on ordinary activities before taxation 26 (75) (49) 537
Tax on ordinary activities - - - -
Return on ordinary activities after taxation 26 (75) (49) 537
Distributions - - - (251)
Transfer from reserves 26 (75) (49) 286
Return per Ordinary share of 10p 0.2p (0.6p) (0.4p) 4.2p
The revenue column of this statement is the profit and loss account of the
Company.
All revenue and capital items in the above statement derive from continuing
operations.
The above figures for the period to 31 July 2005 include Pennine AIM VCT plc for
the whole period and Pennine AIM VCT II plc for the period from 16 June 2005,
when the subsidiary undertakings were deemed to be acquired, to 31 July 2005.
The comparative figures are in respect of the six months ended 31 July 2004 and
the year ended 31 January 2005 respectively and are for Pennine AIM VCT plc
only.
UNAUDITED GROUP CASHFLOW STATEMENT
for the six months ended 31 July 2005
Six months Six months
ended ended Year ended
31 July 31 July 31 Jan
2005 2004 2005
Note #'000 #'000 #'000
Cash (outflow)/inflow from operating
activities and returns on investments 1 (144) 3 48
Capital expenditure
Purchase of investments (2,332) (1,609) (2,801)
Proceeds on disposal of investments 933 1,780 4,450
Net cash (outflow)/inflow from capital (1,399) 171 1,649
expenditure
Equity distributions paid (251) (252) (252)
Net cash (outflow)/inflow before financing (1,794) (78) 1,445
Financing
Purchase of own shares - (43) (53)
Net cash outflow from financing - (43) (53)
(Decrease)/increase in cash 2 (1,794) (121) 1,392
Notes to the cashflow statement:
1 Cash (outflow)/inflow from operating
activities and returns on investments
Net (loss)/revenue before taxation (26) 26 18
Merger costs capitalised (162) - -
(Decrease)/increase in other debtors (13) (19) 36
Decrease/(increase) in other creditors 7 57 (4) (6)
(Decrease)/increase in cash (144) 3 48
2 Analysis of net funds
Beginning of period 1,908 516 516
Net cash (outflow)/inflow (1,794) (121) 1,392
End of period 114 395 1,908
NOTES TO THE UNAUDITED ACCOUNTS
1. The above financial information has been prepared on the basis of the
accounting policies set out on below.
2. The Group has only one class of business and derives its income from
investments made in shares, securities and bank deposits.
3. The comparative figures are in respect of the six months ended 31 July 2004
and the year ended 31 January 2005 respectively.
4. The calculation of the revenue and capital return per ordinary share for
the period is based upon the net loss and capital loss after tax of
#26,000 and (#106,000) respectively, divided by the weighted average number
of shares in issue during the period of 12,530,076.
5. The unaudited accounts set out above do not constitute statutory accounts
within the meaning of Section 240 of the Companies Act 1985 and have not
been delivered to the Registrar of Companies. The figures for the year
ended 31 January 2005 have been extracted from the financial statements for
that year, which have been delivered to the Registrar of Companies; the
auditors' report on those financial statements was unqualified.
6. Copies of the unaudited interim results will be sent to shareholders
shortly. Further copies can be obtained from the Company's Registered
Office.
PRINCIPAL ACCOUNTING POLICIES
The accounts are prepared in accordance with applicable accounting standards and
with the Statement of Recommended Practice "Financial Statements of Investment
Trust Companies" (the "SORP") in all material aspects. The principal accounting
policies adopted are described below.
Accounting convention
The accounts are prepared under the historical cost convention, modified by the
revaluation of investments.
Group accounts
The Group accounts consolidate the accounts of the Company and its wholly owned
subsidiary, Pennine AIM VCT II plc, from 16 June 2005. The revenue account is
only presented in consolidated form as provided by Section 230 of the Companies
Act 1985. Net loss after taxation of the Company for the period amounted to
#38,000 (period ended 31 July 2004: revenue #26,000, year ended 31 January 2005:
loss #17,000).
Income
Dividends due on quoted equity shares and undated non-equity shares are brought
into account on the ex-dividend date. Fixed returns on non-equity shares and on
debt securities are recognised on a time apportionment basis so as to reflect
the effective yield on the shares and only where there is reasonable certainty
of collection.
Investments
Quoted investments, including those quoted on AIM, are valued at middle market
prices. In the event that the shares held by the Group are subject to certain
restrictions, or the holding is significant in relation to the traded issued
share capital of the investee company, then the Directors may apply a discount
to the relevant middle market price.
Realised surpluses and deficits on the disposal of investments are taken to
Capital Reserve (Realised), and unrealised surpluses and deficits on the
revaluation of investments are taken to Capital Reserve (Unrealised). When an
investee company is put into receivership or liquidation and there is little
likelihood of any significant return of funds invested, the investment, although
not disposed of, is treated as being realised.
Investments in unquoted companies are valued in accordance with British Venture
Capital Association (BVCA) guidelines. Under these guidelines the investments
are valued at fair value at the reporting date, except in situations where fair
value cannot be measured reliably. In such situations the investments are
reported at the carrying value at the previous reporting date, unless there is
evidence that the investment has since then been impaired.
It is not the Group's policy to exercise either significant or controlling
influence over investee companies. Therefore the results of these companies are
not incorporated into the revenue account except to the extent of any income
accrued.
Issue costs
Issue costs have been deducted from the share premium account in accordance with
Financial Reporting Standard No.4.
Deferred Taxation
Deferred taxation is provided in full on timing differences that result in an
obligation at the balance sheet date to pay more tax, or a right to pay less
tax, at a future date, at rates expected to apply when they crystallise based on
current tax rates and law. Timing differences arise from the inclusion of items
of income and expenditure in taxation computations in periods different from
those in which they are included in accounts.
SUMMARY OF GROUP INVESTMENT PORTFOLIO
as at 31 July 2005 % of
Cost Valuation portfolio
#'000 #'000 by value
Ten largest venture capital
investments
CRC Group plc 340 741 6.9%
Supporta plc 365 644 6.0%
MacLellan Group plc 298 541 5.0%
XKO Group plc 517 432 4.0%
Aero Inventory plc 133 412 3.8%
Connaught plc 78 406 3.8%
Pubs 'N' Bars plc 398 385 3.6%
Scarisbrick Group plc * 420 371 3.4%
hot group plc 425 355 3.3%
Synergy Healthcare plc 104 331 3.1%
3,078 4,618 42.9%
Other venture capital investments 7,510 4,885 45.4%
Listed fixed income securities 1,251 1,257 11.7%
Total 11,840 10,760 100.0%
All venture capital investments are quoted on AIM unless otherwise stated.
* Quoted on the OFEX market
This information is provided by RNS
The company news service from the London Stock Exchange
END
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