Half-yearly report

Pennine AIM VCT 6 plc Half-Yearly Report for the six months ended 31 March 2009 CHAIRMAN'S STATEMENT In order to continue to comply with the VCT regulations, the Company must have at least 70% of its funds invested in qualifying investments at all times. As a result, the Company remains heavily exposed to the AIM market which has experienced another difficult six months. The economy has moved into recession and investor confidence has continued to wane, with the impact on smaller company valuations tending to be even greater than that on larger companies. Net Asset Value At the 31 March 2009, the Net Asset Value per Share ("NAV") of the Company stood at 65.9p, a decrease of 9.5p (12.6%) since 30 September 2008 after adjusting for the dividend of 1p paid during the period. While the FTSE AIM All-Share index is not a perfect benchmark for the Company's performance, the fact that the index fell by 36.6% over the six-months ended 31 March 2009 gives some indication of the environment in which the Company has had to operate. Venture capital investments The Company had very little investment activity during the period as it is effectively fully invested. Clerkenwell Ventures returned most of its capital to its shareholders, producing proceeds of £514,000. The only other significant transaction was the reorganisation of Hoole Hall Country Club Limited where a new holding company was put in place. There were sizable falls in value across almost all AIM-quoted investments held by the Company. Total unrealised losses were £2.6 million for the period. Results The return on activities after taxation for the period was a loss of £2.5 million, comprising a revenue return of £44,000 and a capital loss of £2.6 million. "30p Return" The Company's original prospectus stated an intention to return 30p per share to Shareholders by 31 July 2009 by way of dividends and/or a tender offer. The Board is pleased to confirm that, despite the difficult economic conditions, the Company will achieve this goal. To ensure that all Shareholders benefit from the "30p Return" without having to complete and return a tender form and to save costs, the Board has decided to pay a dividend of 26.85p per share on 31 July 2009. With the dividends paid previously of 3.15p per share, this will bring total dividend paid to shareholder since launch to 30p per share. This dividend will be paid to Shareholders on 31 July 2009 to Shareholders on the register at 3 July 2009. "IHT option" / Distribution in Specie Shareholders may be aware of the intention at the Company's launch to offer an "IHT option" whereby Shareholders who hold more than 30,000 shares could elect to receive a distribution in specie of the relevant proportion of the Company's investment portfolio. With the sharp falls in the values of the Company's AIM-quoted investments, these now represent a smaller proportion of the investment portfolio than was originally anticipated. In light of this, the Board has reviewed the "IHT option" and notes the following: * a distribution in specie for most Shareholders would create a portfolio which would include some very small holdings in AIM companies; * a significant proportion of the Company's portfolio is in illiquid unquoted investments; * most of the unquoted investments include a large proportion of loan sock, which is not eligible for business property relief for IHT purposes; and * the mechanism for achieving a distribution in specie is complex and involves a substantial amount of costs in professional and other fees. In view of these factors, the Directors have decided that it is not in the best interests of Shareholders as a whole to offer the "IHT Option" to Shareholders at the current time. Share buybacks Much of the Company's cash will be used up in paying the dividend described above. The Board is therefore conscious of the need to carefully manage liquid funds. For this reason the Board does not expect to make any market purchases of it own shares over the next six-months. The Directors are aware that, in practice, this may make it difficult for Shareholders to sell their holdings or may mean that Shareholders are offered prices at a substantial discount to NAV. The Board will keep the share buyback policy under review. Future Following the completion of the "30p return", the Company will be significantly smaller. The Board is conscious that this will have an impact on the Company's running costs and other factors, and therefore intends to undertake a review of options available to the Company for the future. Naturally, the Board will update Shareholders with the conclusion of this review when complete. Risks and uncertainties Under the Disclosure and Transparency Directive, the Board is now required in the Company's half-year results 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: * investment risk associated with investing in small and immature businesses; and * failure to maintain approval as a VCT. In both cases, the Board is satisfied with the Company's approach to these risks. Although the Company has significant exposure to the relatively immature businesses quoted on AIM, by holding a well-diversified portfolio, the impact of poor performance of individual businesses or certain sectors can, to the extend that it is possible, be reduced. 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 In delivering the "30p Return" to Shareholders, there will be a significant change to the profile of the Company in that it will become significantly smaller and will become close to fully invested, mostly in investments which are reasonably illiquid. Accordingly, future performance is likely to be influenced by general AIM market conditions and the performance of existing portfolio investments. The last two months has seen steady increases in the FTSE AIM All-Share Index. At the 30 April 2009, the Company's NAV had risen by 1.3p to 67.2.p per share. Although this is welcome, we remain cautious as to whether this is the start of a sustained recovery. Christopher Powell Chairman INCOME STATEMENT for the six months ended 31 March 2009 Six months ended 31 March 2009 Revenue Capital Total £'000 £'000 £'000 Income 226 - 226 Losses on investments - (2,450) (2,450) 226 (2,450) (2,224) Investment management fees (46) (137) (183) Other expenses (126) - (126) Return on ordinary activities before taxation 54 (2,587) (2,533) Taxation (10) 10 - Return attributable to equity shareholders 44 (2,577) (2,533) Basic and diluted return per share 0.2p (9.7p) (9.5p) Six months ended Year ended 31 March 2008 30 September 2008 Revenue Capital Total Total £'000 £'000 £'000 £'000 Income 484 - 484 722 Losses on investments - (2,409) (2,409) (3,845) 484 (2,409) (1,925) (3,123) Investment management fees (55) (165) (220) (417) Other expenses (129) (1) (130) (259) Return on ordinary activities 300 (2,575) (2,275) (3,799) before taxation Taxation (13) (83) 54 (29) Return attributable to equity 217 (2,521) (2,304) (3,812) shareholders Basic and diluted return per 0.8p (9.5p) (8.7p) (14.3p) share 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. UNAUDITED SUMMARISED BALANCE SHEET as at 31 March 2009 31 Mar 31 Mar 30 Sept 2009 2008 2008 £'000 £'000 £'000 Fixed assets Investments 10,017 17,914 19,420 Current assets Debtors 153 96 145 Cash at bank and in hand 7,432 3,965 870 7,585 4,061 1,015 Creditors: amounts falling due within one year (68) (134) (102) Net current assets 7,517 3,927 913 Net assets 17,534 21,841 20,333 Capital and reserves Called up share capital 266 266 266 Capital redemption reserve 1 1 1 Special reserve 24,094 24,374 24,247 Capital reserve - realised 325 191 191 Investment holding losses (7,259) (3,265) (4,701) Revenue reserve 107 274 329 Equity shareholders' funds 17,534 21,841 20,333 Basic and diluted net asset 65.9p 82.1p 76.4p value per share RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 31 Mar 31 Mar 30 Sept 2009 2008 2008 £'000 £'000 £'000 Opening shareholders' funds 20,333 24,527 24,527 Repurchase of own shares - (49) (49) Total recognised losses for the period (2,533) (2,304) (3,812) Dividends paid in period (266) (333) (333) Closing shareholders' funds 17,534 21,841 20,333 UNAUDITED CASH FLOW STATEMENT for the six months ended 31 March 2009 31 Mar 31 Mar 30 Sept 2009 2008 2008 Note £'000 £'000 £'000 Cash (outflow)/inflow from operating activities and returns on investments 1 (125) 94 (11) Taxation - - (49) Capital expenditure Purchase of investments (1,001) (4,535) (7,477) Proceeds from sale of investments 7,954 7,142 7,143 Net cash inflow/(outflow) from 6,953 2,607 (334) capital expenditure Equity dividends paid (266) (333) (333) Net cash inflow/ (outflow) before 6,562 2,368 (727) financing Financing Repurchase of own shares - (49) (49) Net cash outflow from financing - (49) (49) Increase/ (decrease) in cash 2 6,562 2,319 (776) Notes to the cash flow statement: 1 Cash (outflow)/ inflow from operating activities and returns on investments Loss on ordinary activities before (2,533) (2,275) (3,799) taxation Losses on investments 2,450 2,409 3,845 Increase in other debtors (8) (3) (52) Decrease in other creditors (34) (37) (5) Net cash (outflow)/inflow from (125) 94 (11) operating activities 2 Analysis of net funds Beginning of period 870 1,646 1,646 Net cash inflow/(outflow) 6,562 2,319 (776) End of period 7,432 3,965 870 SUMMARY OF INVESTMENT PORTFOLIO as at 31 March 2009 Unrealised gain/(loss) % of Cost Valuation in period portfolio £'000 £'000 £'000 by value Top twenty venture capital investments Cadbury House Limited * 1,000 1,000 - 5.7% Hoole Hall Country Club 1,000 1,000 - 5.7% Holdings Limited * Hoole Hall Spa and Leisure 750 750 - 4.3% Limited * Animal Care Group plc 500 619 136 3.6% Double Take Portraits Limited 895 613 - 3.5% * IS Pharma plc 689 563 (18) 3.2% Craneware plc 302 514 (28) 3.0% West Tower Holdings Limited * 500 500 - 2.9% Concateno plc 378 416 (139) 2.4% First Care Limited * 375 375 - 2.1% Boomerang Plus plc 676 372 (363) 2.1% The Thames Club Limited * 350 350 - 2.0% Keycom plc ** 946 349 (116) 2.0% Tristel plc 309 278 (38) 1.6% Blanc Brasseries Holdings plc 275 275 - 1.6% * Plastics Capital plc 695 257 (160) 1.5% FSG Security plc ** 650 199 (204) 1.1% Hasgrove plc 352 190 (88) 1.1% Zamano plc 376 180 (94) 1.0% Servoca plc 751 175 (400) 1.0% 11,769 8,975 (1,512) 51.4% Other venture capital 5,507 1,042 (1,050) 6.0% investments 17,276 10,017 (2,562) 57.4% Cash at bank and in hand 7,432 42.6% Total investments 17,449 100.0% All venture capital investments are quoted on AIM unless otherwise stated. * Unquoted ** Quoted on the PLUS Market SUMMARY OF INVESTMENT MOVEMENTS for the six months ended 31 March 2009 Additions £'000 Hoole Hall Country Club Holdings Limited 1,000 Sundry additions 1 1,001 Disposals Market Gain/ Realised value at (loss) gain/ 1 October Disposal against (loss) in the Cost 2008 * Proceeds cost period £'000 £'000 £'000 £'000 £'000 Venture Capital disposals Clerkenwell Ventures plc 540 390 514 (26) 124 Hoole Hall Country Club Limited 1,000 1,000 1,000 - - Fixed interest securities Treasury 4% 07/03/2009 6,305 6,452 6,440 135 (12) 7,845 7,842 7,954 109 112 * Adjusted for purchases in the period NOTES TO THE UNAUDITED FINANCIAL STATEMENTS 1. The unaudited half yearly financial results cover the six months to 31 March 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 ("UK GAAP") 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 six months ended 31 March 2008 and the year ended 30 September 2008 respectively. 5. Return per share for the period has been calculated on 26,606,102 shares, being the weighted average number of shares in issue during the period. NAV per share for the period has been calculated on 26,606,102 shares, being the number of shares in issue at the period end. 6. Dividends 31 March 2009 30 Sept 2008 Revenue Capital Total Total £'000 £'000 £'000 £'000 Paid in year 2008 Final - 1.00p 266 - 266 333 7. Reserves Capital Capital Investment Special redemption reserve holding Revenue reserve reserve - realised losses reserve £'000 £'000 £'000 £'000 £'000 At 1 October 2008 24,247 1 191 (4,701) 329 Expenses capitalised - - (137) - - Tax on capital - - 10 - - expenses Gains/(losses) on - - 112 (2,562) - investments Transfer between (153) - 149 4 - reserves Retained net revenue - - - - 44 for the year Dividends paid in - - - - (266) year At 31 March 2009 24,094 1 325 (7,259) 107 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. On 21 October 2008 the Company revoked investment company status under section 833 of Companies Act 2006. The Special Reserve, Capital Reserve - Realised and Revenue Reserve are all distributable reserves. 8. 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. 9. The Directors confirm that, to the best of their knowledge, the half-yearly financial statements have been prepared in accordance with the "Statement: Half-Yearly Financial Reports" issued by the UK Accounting Standards Board and the half-yearly 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 first six months 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 remaining six months of the year; and b. DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months 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. 10. Copies of the unaudited half yearly financial reports will be sent to Shareholders shortly. Further copies can be obtained from the Company's Registered Office and will be available from download from www.downing.co.uk. ---END OF MESSAGE--- This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.