TIDMPNV5
Pennine AIM VCT 5 plc
Interim Report for the nine months ended 31 December 2009
RECENT PERFORMANCE
31 Dec 31 Mar 31 Dec 30 Sept
2009 2009 2008 2008
pence Pence pence pence
Net asset value per share 29.3 27.0 28.1 34.2
Cumulative distributions per share (paid) 31.0 30.0 30.0 30.0
-------- -------- -------- ---------
Total return per share 60.3 57.0 58.1 64.2
CHAIRMAN'S STATEMENT
There have been some significant developments with your Company in recent
months. I am taking this opportunity to bring Shareholders up to date.
Merger discussions
At the end of November 2009, the Company announced that it was in merger
discussions with two other VCTs. The Board has agreed heads of terms with
Pennine AIM VCT 6 plc and The AIM Distribution Trust plc to create one larger
entity by way of "schemes of reconstruction" pursuant to S.110 of the Insolvency
Act 1986.
The Board believes that there are significant benefits to Shareholders in being
members of a larger VCT, particularly in reduced running costs. The Board is
also seeking to take this opportunity to ensure that the enlarged entity has an
investment policy that is able to support strong dividend and share buyback
policies.
Significant progress has now been made and I anticipate that full details of
merger proposals will be sent to Shareholders in the next few weeks.
Change of year-end
In view of the merger discussion above, the Board decided to change the
Company's year-end from 30 September to 31 March, such that the Company's next
audited accounts will be made up to 31 March 2010.
One of the benefits of the change of year-end is that, in the event that the
merger proceeds, the Company will not have to suffer the expense of a further
audit.
The Company's last report to Shareholders was the half yearly report to 31 March
2009. In view of the change of year-end, the Board has decided to prepare a
second interim report covering the nine months ended 31 December 2009.
Net asset value
At 31 December 2009, the unaudited Net Asset Value ("NAV") stood at 29.3p, an
increase of 3.3p per share (12.2%) since 31 March 2009.
Cumulative dividends paid to date to Shareholders who invested at the Company
launch stand at 31p per share. Total return (NAV plus cumulative dividends) now
stands at 60.3p per share, compared to an original cost (net of income tax
relief) of 60p per share.
Venture capital investments
With the Company effectively fully invested and liquidity within the AIM market
continuing to be poor, there has been a reasonably low level of investment
activity during the nine-month period. However, there were a small number of
realisations and part realisations which produced net realised gains of
GBP336,000.
Of the investments held throughout the period, most of the AIM-quoted stocks
showed uplifts in their values as the AIM market in general picked up after the
prolonged and substantial falls it experienced since mid-2007.
The most notable increase was the investment in Ludorum which increased in value
by GBP181,000. Ludorum produces the Chuggington children's television programme
and has been very successful in securing global distribution for the programme
which opens up substantial merchandising opportunities.
Venture capital investments (continued)
Despite the economic conditions, Double Take Portraits, one of the Company's
unquoted investments, has continued to make progress in developing its
photographic studio business. The Company now operates from six locations.
Provisions that had previously been made against the investment have now been
released, producing an uplift in value in the period of GBP156,000.
There were unfortunately some exceptions to the general upwards trend. AT
Communications and FSG Security both failed during the period producing losses
of GBP115,000 and GBP58,000 respectively. Travelzest also saw a large fall in its
share price of GBP94,000 primarily as a result of the economy on the travel
sector.
The net unrealised gain in the period was GBP538,000.
Results and dividends
The return on activities during the period was GBP714,000, comprising a revenue
loss of GBP121,000 and a capital gain of GBP835,000.
Risks and uncertainties
Under the Disclosure and Transparency Directive, the Board is now required in
the Company's interim reports to report on principal risks and uncertainties
facing the Company over the remainder of the financial year.
The Board has concluded that the key risks facing the Company over the remainder
of the financial period are as follows:
(i)investment risk associated with investing in small and immature businesses;
(ii)significant exposure to the volatile and illiquid conditions experienced by
the AIM market; and
(iii)failure to maintain approval as a VCT.
The Company's significant exposure to relatively immature businesses quoted on
AIM can, to some extent, be protected by holding a well-diversified portfolio.
With the Company effectively fully-invested, management of the exposure to the
AIM market conditions is reasonably limited. Although the risks are
significant, the Board considers that the Company's approach to these risks is
satisfactory.
The Company's compliance with the VCT regulations is continually monitored by
the Administration Manager, who regularly reports to the Board on the current
position. The Company also retains PricewaterhouseCoopers to provide regular
reviews and advice in this area. The Board considers that this approach reduces
the risk of a breach of the VCT regulations to a minimal level.
Outlook
Although it is pleasing to be able to report a reasonable increase in NAV over
the nine-month period, overall performance of the Company remains disappointing.
The small size of the Company is now a significant hindrance. The Board believes
that the potential merger with two other VCTs, along with the establishment of
clear and realistic objectives and an investment policy that makes them
achievable, is the best way forward for the Company. I expect to be able to
bring you full details of these proposals shortly.
Andrew Davison
Chairman
UNAUDITED SUMMARISED BALANCE SHEET
as at 31 December 2009
31 Dec 31 Dec 30 Sept
2009 2008 2008
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Fixed assets
Investments 5,376 5,992 7,445
--------- ------------ -----------
Current assets
Debtors 335 152 100
Cash at bank and in hand 589 151 119
--------- ------------ -----------
924 303 219
Creditors: amounts falling due within
one year (63) (41) (48)
--------- ------------ -----------
Net current assets 861 262 171
--------- ------------ -----------
Net assets 6,237 6,254 7,616
Capital and reserves
Called up share capital 2,128 2,228 2,228
Capital redemption reserve 137 37 37
Special reserve 10,999 12,257 12,946
Capital reserve - realised - - -
Investment holding losses (6,858) (8,267) (7,622)
Revenue reserve (169) (1) 27
--------- ------------ -----------
Total equity shareholders' funds 6,237 6,254 7,616
Basic and diluted net asset value per 29.3p 28.1p 34.2p
share
UNAUDITED INCOME STATEMENT
for the nine months ended 31 December 2009
(Unaudited)
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Income 43 - 43
Gains/(losses) on investments - 874 874
--------- --------- -------
43 874 917
Investment management fees (13) (39) (52)
Other expenses (note 7) (151) - (151)
--------- --------- -------
Return on ordinary activities before taxation (121) 835 714
Taxation - - -
--------- --------- -------
Return attributable to equity shareholders (121) 835 714
Basic and diluted return per share (0.5p) 3.9p 3.4p
Nine months ended Year ended
30 September
31 December 2008 2008
(Audited)
(Unaudited)
Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000
Income 253 - 253 432
Gains/(losses) on investments - (3,633) (3,633) (6,727)
--------- --------- --------- ---------------
253 (3,633) (3,380) (6,295)
Investment management fees (45) (133) (178) (331)
Other expenses (note 7) (170) (1) (171) (225)
--------- --------- --------- ---------------
Return on ordinary activities 38 (3,767) (3,729) (6,851)
before taxation
Taxation - - - -
--------- --------- --------- ---------------
Return attributable to equity 38 (3,767) (3,729) (6,851)
shareholders
Basic and diluted return per share 0.2p (16.9p) (16.7p) (30.6p)
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 as noted above.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the nine months to 31 December 2009
9 months 9 months 12 months
to to to
31 Dec 31 Dec 30 Sept
2009 2008 2008
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Opening shareholders' funds 5,736 15,886 20,811
Repurchase of own shares - - (215)
Total recognised gains/(losses) for the 714 (3,729) (6,851)
period
Dividends paid in period (213) (5,903) (6,129)
------- ------------ -----------
Closing shareholders' funds 6,237 6,254 7,616
UNAUDITED CASH FLOW STATEMENT
for the nine months ended 31 December 2009
31 Dec 31 Dec 30 Sept
2009 2008 2008
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Net cashoutflow from operating activities and
returns on investments (383) (180) (56)
------- ------------- -----------
Capital expenditure
Purchase of investments (227) (1,014) (2,868)
Proceeds from sale of investments 945 1,292 9,192
------- ------------- -----------
Net cash inflow from capital expenditure 718 278 6,324
------- ------------- -----------
Equity dividends paid (213) (5,903) (6,129)
------- ------------- -----------
122 (5,805) 139
Financing
Purchase of own shares (1) - (233)
------- ------------- -----------
Net cash outflow from financing (1) - (233)
------- ------------- -----------
------- ------------- -----------
Increase/(decrease) in cash 121 (5,805) (94)
Notes to the cash flow statement:
1.Net cash inflow from operating activities
and returns on investments
Loss on ordinary activities before taxation 714 (3,729) (6,851)
(Gains)/losses on investments (874) 3,633 6,727
(Increase)/decrease in debtors (245) (89) 80
Increase/(decrease) in creditors 22 5 (12)
------- ------------- -----------
Net cash outflow from operating activities (383) (180) (56)
2.Analysis of net funds
Beginning of period 468 5,956 213
Net cash inflow/(outflow) 121 (5,805) (94)
------- ------------- -----------
End of period 589 151 119
SUMMARY OF INVESTMENT PORTFOLIO
as at 31 December 2009
Unrealised
gain/(loss) % of
Cost Valuation in period portfolio
GBP'000 GBP'000 GBP'000 by value
Top ten investments (by value)
Cadbury House Holdings Limited * 1,000 1,000 - 16.8%
Hoole Hall Country Club Holdings 900 900 - 15.1%
Limited *
Double Take Portraits Limited * 645 519 156 8.7%
Ludorum plc 172 396 181 6.6%
IDOX plc 271 371 36 6.2%
First Care Limited * 327 327 - 5.5%
Zamano plc 316 217 66 3.6%
Servoca plc 292 163 82 2.7%
Brulines Group plc 133 149 50 2.5%
Craneware plc 52 134 45 2.2%
-------- ----------- ------------- ------------
4,108 4,176 616 69.9%
Other venture capital 8,126 1,200 (78) 20.2%
investments
-------- ----------- ------------- ------------
12,234 5,376 538 90.1%
Cash at bank and in hand 589 9.9%
----------- ------------
Total investments 5,965 100.0%
All venture capital investments are quoted on AIM unless otherwise stated.
* Unquoted
SUMMARY OF INVESTMENT MOVEMENTS
for the nine months ended 31 December 2009
Additions
GBP'000
Cadbury House Holdings Ltd ** 1,000
First Care Limited 53
Inverness Medical Innovations Inc 75
Hoole Hall Country Club Holdings plc 150
Sundry additions 2
---------
1,280
Disposals
Market Gain/
value at (loss) Total
1 April2009 * Disposal against Realised
Cost proceeds cost gain
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cadbury House Limited ** 1,000 1,000 1,000 - -
Concateno plc 241 266 335 94 69
Craneware plc 25 42 59 34 17
FDM Group plc 169 212 325 156 113
Inverness Medical Innovations
Inc 75 75 92 17 17
Ludorum plc 3 4 6 3 2
Waterline Group Limited 487 10 128 (359) 118
Liquidations/dissolutions
Bioganix plc 166 - - (166) -
Dipford Group plc 272 - - (272) -
Telephone Maintenance Group
plc 251 - - (251) -
-------------------------------------------------
2,689 1,609 1,945 (744) 336
*Adjusted for purchases in the period
**Re-invested proceeds as part of a reorganisation
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1.The unaudited interim financial results cover the nine months to 31 December
2009 and have been prepared in accordance with the accounting policies set out
in the statutory accounts for the year ended 30 September 2008 which were
prepared under UK Generally Accepted Accounting Practice and in accordance with
the Statement of Recommended Practice "Financial Statements of Investment Trust
Companies and Venture Capital Trusts" issued in January 2009 ("SORP").
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 unaudited figures for the nine
month period to 31 December 2008 and the audited figures for year ended 30
September 2008 respectively.
5.Return per share for the period has been calculated on 21,276,570 shares,
being the weighted average number of shares in issue during the period.
6.NAV per share for the period has been calculated on 21,276,570 shares, being
the number of shares in issue at the period end.
7.Other expenses within the Income Statement are analysed as follows:
Nine months Nine months ended
ended ended (Unaudited)
31 December 31 December
2009 (Unaudited)
(Unaudited)
GBP'000 GBP'000 GBP'000
Administration fees 39 60 78
Directors remuneration 26 26 35
Provision against loan stock
interest 33 26 26
Trail commission 7 2 12
Registrars fees 8 9 10
Audit fees 8 13 16
Other 30 35 48
----- ------------ ------------
151 171 225
8.Dividends
31 December 2009 30 Sept 2008
Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000
Paid
2009 Final - 1.0p - 213 213 -
2008 SpecialInterim - 26.5p - - - 5,903
2007 Final - 1.0p - - - 226
--------- --------- ------- -------------
- 213 213 6,129
9.Reserves
Capital Capital Investment
Special Redemption reserve holding Revenue
reserve reserve - realised losses reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1April 2009 11,996 137 - (8,477) (48)
Expenses capitalised - - (39) - -
Gains on investments - - 336 538 -
Transfer between reserves (997) - (84) 1,081 -
Dividends paid - - (213) - -
Retained netloss - - - - (121)
---------------------------------------------------
At 31December 2009 10,999 137 - (6,858) (169)
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 dividends/capital
distributions. Distributable reserves comprise the special reserve, capital
reserve - realised, revenue reserve, and GBP6,858,000 of investment holding
losses. At the period end there were GBP3,972,000 of reserves available for
distribution.
10.The unaudited financial statements set out herein do not constitute statutory
accounts within the meaning of Section 434 of the Companies Act 2006 and have
not been delivered to the Registrar of Companies. The figures for the year
ended 30 September 2008 have been extracted from the financial statements for
that year, which have been delivered to the Registrar of Companies; the
Independent Auditors' Report on those financial statements was unqualified.
11.The Directors confirm that, to the best of their knowledge, the interim
financial statements have been prepared in accordance with the "Statement:
Half-Yearly Financial Reports" issued by the UK Accounting Standards Board and
the interim financial report includes a fair review of the information required
by:
a.DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the initial period of the financial
year and their impact on the condensed set of financial statements, and a
description of the principal risks and uncertainties for the remainder of the
financial year; and
b.DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the initial period of the current
financial year and that have materially affected the financial position or
performance of the entity during that period, and any changes in the related
party transactions described in the last annual report that could do so.
12.Copies of the unaudited interim financial results will be sent to
Shareholders shortly. Further copies can be obtained from the Company's
Registered Office and will be available for download from www.downing.co.uk.
[HUG#1383136]
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