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.
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solely responsible for the content of this announcement.
