RNS Number:8523X
Pennine AIM VCT 5 PLC
06 June 2007
Pennine AIM VCT 5 plc
Interim Statement for the six months ended 31 March 2007
Recent Performance Summary
31 Mar 31 Mar 30 Sept
2007 pence 2006 pence 2006
Pence
Net asset value per share 90.7 102.0 94.4
Cumulative distributions per share (paid) 2.5 1.0 1.0
Total return per share 93.2 103.0 95.4
CHAIRMAN'S STATEMENT
I present the Company's interim report for the six months ended 31 March 2007.
Net asset value
At the period end, the Net Asset Value per share ("NAV") of the Company stood at
90.7p, a decrease of 3.2p (3.4%) since 30 September 2006 (after adjusting for
the dividend of 1.5p per share paid in the period).
Venture capital investments
During the period, the Company invested #3.9 million into 10 new investee
companies and one follow on investment. At the period end the Company held
63.7% of it's funds in VCT qualifying investments and is expecting to exceed the
70% requirement comfortably before the deadline of 30 September 2007.
A number of the AIM quoted investments have performed very well over the six
months. Jelf and MyHome International have continued the good performances that
were seen during the year to 30 September 2006. Two new investments made during
the period, Concateno and Travelzest, also made substantial gains. These four
companies accounted for unrealised gains of #912,000.
Unfortunately, there were also some poor performing investments. Both Disperse
Group and Telephone Maintenance Group failed after some disastrous trading
developments. Hill Station also faced a significant crisis following the
relocation of its factory requiring a rescue fundraising round and Accuma Group
suffered from a significant loss of investor confidence in the IVA sector.
These four companies accounted for losses of #1.2 million.
The total unrealised net loss on the venture capital portfolio for the period
was #658,000.
The Investment Manager was able to achieve some profitable disposals during the
period with sales of part of the holdings in Jelf, MyHome International, RC
Group and Revenue Assurance Services generating realised gains of #266,000.
Fixed income securities portfolio
Two of the Company's holdings in Treasury stocks matured during the period,
realising losses against the previous market value of #9,000. The one remaining
Treasury stock was valued at #5.4 million at the period end.
Results
The loss on activities during the period was #485,000, comprising a revenue
profit of #121,000 and a capital loss of #606,000.
In line with the Company's policy, no interim dividend will be paid.
Share repurchase
The Company operates a policy, subject to certain restrictions, of buying shares
that become available in the market at a 10% discount to the latest published
NAV. No shares were purchased for cancellation in the period under review.
Outlook
I am pleased to be able to report that we are on course to meet the objectives
and investment strategy, as set out in the fundraising prospectus, ahead of
schedule. As at the date of this report, the Company held 68.2% of qualifying
investments by Inland Revenue valuation.
On the other hand the Board is disappointed in the performance of a few of the
investee companies. Not withstanding this performance, the Manager is confident
the portfolio as a whole has reasonable prospects.
Andrew Davison
Chairman
UNAUDITED SUMMARISED BALANCE SHEET
as at 31 March 2007
31 Mar 31 Mar 30 Sept
2007 2006 2006
#'000 #'000 #'000
Fixed asset investments 18,132 21,980 20,395
Net current assets 2,362 1,107 923
Net assets 20,494 23,087 21,318
Capital and reserves
Called up share capital 2,259 2,264 2,259
Capital redemption reserve 6 1 6
Special reserve 19,142 - -
Share premium account - 19,142 19,142
Capital reserve - realised 60 (231) (233)
Capital reserve - unrealised (1,102) 1,738 (203)
Revenue reserve 129 173 347
Total equity shareholders' funds 20,494 23,087 21,318
Net asset value per share 90.7p 102.0p 94.4p
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
31 Mar 31 Mar 30 Sept
2007 2006 2006
#'000 #'000 #'000
Opening shareholders' funds 21,318 21,756 21,756
Repurchase of own shares - - (40)
Total recognised (losses)/gains for the (485) 1,556 (172)
period
Dividends paid in period (339) (225) (226)
Closing shareholders' funds 20,494 23,087 21,318
INCOME STATEMENT
for the six months ended 31 March 2007
Six months ended
31 Mar 2007
Revenue Capital Total
#'000 #'000 #'000
Income 306 - 306
(Losses)/gains on investments - (488) (488)
306 (488) (182)
Investment management fees (48) (144) (192)
Other expenses (111) - (111)
Return on ordinary activities before 147 (632) (485)
taxation
Taxation (26) 26 -
Return attributable to equity 121 (606) (485)
shareholders
Return per share 0.5p (2.7p) (2.2p)
A Statement of Total Recognised Gains and Losses has not been prepared as all
gains and losses are recognised in the Income Statement as noted above.
Six months ended Year ended
31 March 2006 30 September 2006
Revenue Capital Total Total
#'000 #'000 #'000 #'000
Income 370 - 370 811
(Losses)/gains on investments - 1,508 1,508 (340)
370 1,508 1,878 471
Investment management fees (48) (146) (194) (401)
Other expenses (102) - (102) (204)
Return on ordinary activities before taxation 220 1,362 1,582 (134)
Taxation (54) 28 (26) (38)
Return attributable to equity shareholders 166 1,390 1,556 (172)
Return per share 0.7p 6.1p 6.8p (0.7p)
UNAUDITED CASH FLOW STATEMENT
for the six months ended 31 March 2007
31 Mar 31 Mar 30 Sept
2007 2006 2006
Note #'000 #'000 #'000
Net cash inflow/(outflow) from operating activities
and returns on investments 51 (22) 41
Taxation - - (35)
Capital expenditure
Purchase of investments (4,031) (17,829) (19,794)
Proceeds from sale of investments 6,307 1,569 2,818
Net cash outflow from capital expenditure 2,276 (16,260) (16,976)
Equity dividends paid (339) (225) (226)
Net cash inflow/(outflow) before financing 1,988 (16,507) (17,196)
Financing
Purchase of own shares - - (40)
Net cash outflow from financing - - (40)
Increase/(decrease) in cash 1,988 (16,507) (17,236)
Notes to the cash flow statement:
1. Net cash inflow from operating activities and returns on investments
Net revenue before taxation 147 268 507
Expenses charged to capital (144) (146) (301)
Decrease /(increase) in other debtors 71 (122) (164)
Decrease in other creditors (23) (22) (1)
Net cash inflow/(outflow) from operating activities 51 (22) 41
2. Analysis of net funds
Beginning of period 325 17,561 17,561
Net cash inflow/(outflow) 1,988 (16,507) (17,236)
End of period 2,313 1,054 325
SUMMARY OF INVESTMENT PORTFOLIO
as at 31 March 2007
Cost Valuation Unrealised % of
gain/(loss) portfolio
in period by value
#'000 #'000 #'000
Top twenty venture capital investments
Core Control International Limited * 532 1,122 112 5.5%
Cadbury House Hotel & Country Club Ltd * 755 1,027 45 5.0%
Hoole Hall Country Club and Spa Limited * 750 750 - 3.7%
Travelzest plc 501 656 155 3.2%
Concateno plc 377 643 265 3.1%
MyHome International plc 105 643 300 3.1%
Jelf Group Public Limited Company 253 622 191 3.0%
Zamano plc 500 584 83 2.8%
The Mission Marketing Group plc 500 550 71 2.7%
Hill Station plc 800 467 (375) 2.3%
Waterline Group plc 487 461 (51) 2.3%
Double Take Portraits Limited * 375 375 - 1.8%
Gourmet Holdings plc 500 375 - 1.8%
Neutrahealth plc 432 370 (123) 1.8%
AT Communications Group plc 445 360 (74) 1.8%
Bioganix plc 256 341 64 1.7%
FDM Group plc 200 320 115 1.6%
Autoclenz Holdings plc 425 316 (54) 1.6%
Revenue Assurance Services plc 208 305 60 1.5%
Interactive World plc 250 281 (20) 1.4%
8,651 10,568 764 51.7%
Other venture capital investments 5,103 2,187 (1,478) 10.7%
Total venture capital investments 13,754 12,755 (714) 62.4%
Listed fixed income securities 5,481 5,377 (31) 26.3%
19,235 18,132 (745) 88.7%
Cash at bank and in hand 2,313 11.3%
Total investments 20,445 100.0%
All venture capital investments are quoted on the AIM unless otherwise stated.
* Unquoted
** Quoted on the PLUS Market
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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 Section
842 Income and Corporation Taxes Act 1988.
Investments
Venture capital investments are designated as "fair value through profit or
loss" assets and are initially measured at cost. Thereafter the investments are
measured at subsequent reporting dates 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 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 equity 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 timely basis, by reference to the principal
outstanding and at the effective interest rate applicable, which is the rate
that exactly discounts estimated future cash receipts through the expected life
of the financial asset to that asset's net carrying amount, 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.
Issue costs
Issue costs have been deducted from the share premium account.
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 the accounts.
2. All revenue and capital items in the Income Statement derive from continuing
operations.
3. The Company has only one class of business and derives its income from
investments made in shares, securities and bank deposits.
4. The comparative figures were in respect of the period ended 31 March 2006 and
the year ended 30 September 2006 respectively.
Return per share for the period has been calculated on 22,592,088 shares, being
the weighted average number of shares in issue during the period.
5. Dividends
31 March 2007 30 Sept 2006
Revenue Capital Total Total
#'000 #'000 #'000 #'000
Paid in year
2006 Final - 1.5p 339 - 339 -
2005 Final - 1p - - - 226
339 - 339 226
Proposed
2006 Final - 1.5p - - - 226
- - - 226
6. Reserves
Special Share Capital Capital Capital Revenue
reserve premium redemption reserve reserve reserve
reserve reserve - realised - unrealised
#'000 #'000 #'000 #'000 #'000 #'000
At 1 October 2006 - 19,142 6 (233) (203) 347
Expenses capitalised - - - (144) - -
Tax on capital expenses - - - 26 - -
Gains/(losses) on investments - - - 257 (745) -
Transfer between reserves 19,142 (19,142) - 154 (154) -
Retained net revenue for the year - - - - - 121
Dividends paid in year - - - - - (339)
At 31 March 2007 19,142 - 6 60 (1,102) 129
The Special Reserve was created on 6 December 2006 by the cancellation of the
Share Premium account following court approval. The Special Reserve is
available to the Company to enable the purchase of its own shares in the market
without affecting its ability to pay capital distributions. The Special
Reserve, Capital Reserve - Realised and Revenue Reserve are all distributable
reserves.
7. The unaudited financial statements set out herein 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 30 September 2006 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.
Copies of the unaudited interim results will be sent to shareholders shortly.
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 and
for download from www.downing.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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