Final Results
December 14 2007 - 11:02AM
UK Regulatory
Final Results
PENNINE AIM VCT 5 PLC
ANNOUNCEMENT OF FINAL RESULTS
FOR THE YEAR ENDED 30 SEPTEMBER 2007
FINANCIAL SUMMARY
Year Year
ended ended
30 30
September September
2007 2006
Pence Pence
Net asset value (per share) 92.2 94.4
Cumulative distributions paid since launch (per 2.5 1.0
share)
Total return (net asset value plus cumulative 94.7 95.4
distributions paid) (per share)
The statement to shareholders by the Chairman, Andrew Davison,
includes the following comments:
The year under review saw a period of significant turbulence for
stock markets which had a negative impact on the value of many of the
Company's investments. Within the Company's well- diversified
portfolio there were a number of investments that performed very
well, mitigating most of the losses suffered above.
Net Asset Value
At 30 September 2007, the Company's Net Asset Value per share ("NAV")
stood at 92.2p, a decrease of 0.7p (0.8%) over the year (after
adjusting for dividends paid in the year). The performance over the
second half of the year has been better, showing an increase of 1.5p
(1.6%) since 31 March 2007.
The Total Return (NAV per share plus cumulative dividends paid to
date) of the Company now stands at 94.7p, which is roughly equivalent
to our starting point of 94.5p. It should be noted that in line with
our original investment strategy, the initial proceeds from the
fundraising were held in cash and fixed income investments rather
than non-qualifying equity investments. This has attributed to the
current performance of the Company.
Venture capital investments
The Company's deadline to meet the VCT test of having 70% of
investments (using HMRC valuation basis) was the 30 September 2007,
and I am pleased to report that the Company achieved this percentage
before the deadline. The percentage of qualifying investments at the
year end was 71.0%.
During the year, the Company invested �5.8 million in 18 qualifying
investments and �722,000 in non-qualifying investments. At the year
end the portfolio comprised 43 investments and was valued at �15.1
million with net unrealised losses for the year thereon being
�483,000.
Listed fixed income securities
During the year, two treasury stocks matured realising a net loss of
�9,000 against the previous carrying value. The one remaining
Treasury Stock was valued at �5.4 million at the year end with
unrealised losses thereon amounting to �14,000.
Results and dividend
The loss on activities after taxation for the year was �150,000
(2006: �172,000), comprising a revenue profit of �244,000 and a
capital loss of �394,000.
The Board is proposing to pay a dividend of 1.0p per share on 25
February 2008 to shareholders on the register at the close of
business on 25 January 2008.
Share repurchase
The Company operates a policy, subject to certain restrictions, of
buying shares that become available in the market at a price
equivalent to a 10% discount to the Company's most recently published
Net Asset Value. During the year the Company purchased 21,180 shares
for cancellation at a price of 82.5p per share.
A special resolution to continue this policy is proposed for the
forthcoming Annual General Meeting ("AGM").
Annual General Meeting
The Company's third Annual General Meeting will be held at Kings
Scholars House, 230 Vauxhall Bridge Road, London, SW1V 1AU at 12 noon
on 21 February 2008.
One item of Special Business is proposed to authorise the Directors
to make market purchases of the Company's shares as described above.
Reporting to Shareholders
The Company currently issues monthly NAV announcements at the
beginning of each month, except when it is preparing its half year
and year end accounts. Under the Disclosure and Transparency
Regulations, the Company will also be issuing quarterly Interim
Management Statements, the first of these being for the period to 31
December 2007. It is the Board's intention not to issue these to
individual shareholders due to the level of costs involved, however
copies will be available upon request.
Outlook
Stockmarkets have become increasingly turbulent since the Company's
year end. Over the month of November the FTSE AIM All Share Index
fell by 8.4%. Unsurprisingly, this has had some impact on the
Company's NAV, which at 30 November 2007 stood at 85.9p. It is
difficult to either forecast or be optimistic about the economy
generally however some encouragement can be taken from the resilience
shown by the Company's diversified portfolio during the more testing
market conditions in the latter part of the year.
As planned at the Company's outset, it is the Board's intention to
target a tax free cash return to Shareholders of 30p per �1 invested
by 31 July 2008, through a combination of a Tender Offer and dividend
payments. Including the proposed dividend, Shareholders will have
received 3.5p by way of dividend payments, therefore a further 26.5p
(approximately �6.0 million) will be targeted to be returned in July
2008. Further details of the Tender Offer plans will be included in
the half yearly financial report to 31 March 2008.
INCOME STATEMENT
For the year ended 30 September 2007
Year ended 30 September Year ended 30 September
2007 2006
Revenue Capital Total Revenue Capital Total
�'000 �'000 �'000 �'000 �'000 �'000
Income 605 - 605 811 - 811
Losses on - (164) (164) - (340) (340)
investments
605 (164) 441 811 (340) 471
Investment (94) (282) (376) (100) (301) (401)
management fees
Other expenses (215) - (215) (204) - (204)
Return on ordinary
activities before 507 (641) (134)
tax 296 (446) (150)
Tax on ordinary (52) 52 - (126) 88 (38)
activities
Return attributable
to equity 381 (553) (172)
shareholders 244 (394) (150)
Return per share 1.1p (1.7p) (0.6p) 1.7p (2.4p) (0.7p)
All Revenue and Capital items in the above statement derive from
continuing operations. The total column within the Income Statement
represents the profit and loss account of the Company.
A Statement of Total Recognised Gains and Losses has not been
prepared as all gains and losses are recognised in the Income
Statement noted above.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Year ended Year ended
30 September 2007 30 September 2006
�'000 �'000
Opening shareholders' funds 21,318 21,756
Purchase of own shares (18) (40)
Total recognised losses for the (150) (172)
year
Dividends paid (339) (226)
Closing shareholders' funds 20,811 21,318
BALANCE SHEET
as at 30 September 2007
2007 2006
�'000 �'000 �'000 �'000
Fixed assets
Investments 20,496 20,395
Current assets
Debtors 180 695
Cash at bank and in hand 213 325
393 1,020
Creditors: amounts falling due within one (78) (97)
year
Net current assets 315 923
Net assets 20,811 21,318
Capital and reserves
Called up share capital 2,257 2,259
Capital redemption reserve 8 6
Special reserve 18,414 -
Share premium account - 19,142
Capital reserve - realised 759 (233)
Capital reserve - unrealised (879) (203)
Revenue reserve 252 347
Total equity shareholders' funds 20,811 21,318
Net asset value per share 92.2p 94.4p
CASH FLOW STATEMENT
for the year ended 30 September 2007
Year Year
ended ended
30 30
September September
2007 2006
�'000 �'000
Net cash inflow from operating activities 28 41
Taxation (38) (35)
Capital expenditure
Purchase of investments (6,516) (19,794)
Sale of investments 6,753 2,818
Net cash inflow/(outflow) from capital 237 (16,976)
expenditure
Equity dividends paid (339) (226)
Net cash outflow before financing (112) (17,196)
Financing
Purchase of own shares - (40)
Net cash outflow from financing - (40)
Decrease in cash (112) (17,236)
NOTES TO THE FINAL RESULTS ANNOUNCEMENT
for the year ended 30 September 2007
1. Accounting policies
Basis of accounting
The Company has prepared its financial statements under UK Generally
Accepted Accounting Practice ("UK GAAP") and in accordance with the
Statement of Recommended Practice "Financial Statements of Investment
Trust Companies" revised December 2005 ("SORP").
The financial statements are prepared under the historical cost
convention except for the revaluation of certain financial
instruments.
Presentation of Income Statement
In order to better reflect the activities of a Venture Capital Trust
and in accordance with guidance issued by the Association of
Investment Companies ("AIC"), supplementary information which
analyses the income statement between items of a revenue and capital
nature has been presented alongside the income statement. The net
revenue is the measure the directors believe appropriate in assessing
the Company's compliance with certain requirements set out in Part 6
of the Income Tax Act 2007.
Investments
Investments are designated as "fair value through profit or loss"
assets and are initially measured at cost. Thereafter investments are
measured at fair value.
Listed fixed income investments, investments quoted on AIM and those
traded on the PLUS Market are measured using bid prices with
marketability discounts applied where deemed appropriate, in
accordance with the International Private Equity and Venture Capital
Valuation Guidelines.
In respect of unquoted instruments, fair value is established by
using International Private Equity and Venture Capital Valuation
Guidelines. Where no reliable fair value can be estimated for such
unquoted investments they are carried at cost, subject to any
provision for impairment. Where an investee company has gone into
receivership or liquidation the investment, although not physically
disposed of, is treated as being realised.
Gains and losses arising from changes in fair value are included in
the income statement as a capital item and transaction costs on
acquisition or disposal of the investment expensed.
It is not the Company'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.
Income
Dividend income from investments is recognised when the shareholders'
rights to receive payment has been established, normally the ex
dividend date.
Interest income is accrued on a time apportionment basis, by
reference to the principal sum outstanding and at the effective
interest rate applicable and only where there is reasonable certainty
of collection.
Expenses
All expenses are accounted for on an accruals basis. In respect of
the analysis between revenue and capital items presented within the
income statement, all expenses have been presented as revenue items
except as follows:
Expenses which are incidental to the disposal of an investment are
deducted from the disposal proceeds of the investment.
Expenses are split and presented partly as capital items where a
connection with the maintenance or enhancement of the value of the
investments held can be demonstrated and accordingly the investment
management fee and finance costs have been allocated 25% to revenue
and 75% to capital, in order to reflect the directors' expected
long-term view of the nature of the investment returns of the
Company.
Taxation
The tax effects on different items in the Income Statement are
allocated between capital and revenue on the same basis as the
particular item to which they relate using the Company's effective
rate of tax for the accounting period.
Due to the Company's status as a Venture Capital Trust and the
continued intention to meet the conditions required to comply with
Part 6 of the Income Tax Act 2007, no provision for taxation is
required in respect of any realised or unrealised appreciation of the
Company's investments which arises.
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 the accounts.
2. Income
2007 2006
�'000 �'000
Income from investments
Loan stock interest 132 58
Dividend income 82 38
Listed fixed income interest 326 535
540 631
Other income
Bank interest 65 180
605 811
3. Return per ordinary share
Revenue return per ordinary share is based on the net revenue return
after taxation of �244,000 (2006: �381,000), in respect of 22,591,914
(2006: 22,628,289) ordinary shares, being the weighted average number
of ordinary shares in issue during the year.
Capital return per ordinary share is based on the net capital loss
for the financial year of �394,000 (2006: �553,000), in respect of
22,591,914 (2006: 22,628,289) ordinary shares, being the weighted
average number of ordinary shares in issue during the year.
As the Company has not issued any convertible
securities or share options, there is no dilutive effect on return
per ordinary share. The return per share disclosed therefore
represents both basic and diluted return per share.
4. Net asset value per ordinary share
2007 2006
Net asset Net asset
value value
per share Net asset per share Net asset
value value
Pence �'000 Pence �'000
Ordinary 92.2 20,811 94.4 21,318
shares
Net asset value per ordinary share is based on net assets at the year
end, and on 22,570,908 (2006: 22,592,088) ordinary shares, being the
number of ordinary shares in issue at the year end.
As the Company has not issued any convertible securities or share
options, there is no dilutive effect on net asset per ordinary
share. The net asset value per share disclosed therefore represents
both basic and diluted return per share.
5. Reconciliation of loss on ordinary activities before tax to net
cash flow from operating activities
2007 2006
�'000 �'000
Loss on ordinary activities before tax (150) (134)
Losses on investments 164 340
Decrease in other debtors - 1
Decrease/(increase) in prepayments and accrued income 13 (165)
Increase/(decrease) in accruals and deferred income 1 (1)
Net cash inflow from operating activities 28 41
6. Analysis of changes in cash during the year
2007 2006
�'000 �'000
Beginning of year 325 17,561
Net cash outflow (112) (17,236)
End of year 213 325
Announcement based on audited accounts
The financial information set out in the announcement does not
constitute the Company's statutory financial statements in accordance
with section 240 Companies Act 1985 for the year ended 30 September
2007. The statutory accounts for the year ended 30 September 2006
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 S237(2) or (3) of the
Companies Act 1985. The statutory accounts for the year ended 30
September 2007, which were approved by the Board of Directors on 14
December 2007, will be delivered to the Registrar of Companies
following the Company's Annual General Meeting. The Independent
Auditor's Report on those financial statements was unqualified and
did not contain any emphasis of matter nor statements under s237 (2)
and (3) of the Companies Act 1985.
A copy of the full annual report and financial statements for the
year ended 30 September 2007 will be printed and posted to
shareholders. Copies will also be available to the public at the
registered office of the Company at Kings Scholars House, 230
Vauxhall Bridge Road, London, SW1V 1AU.
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