TIDMPNEA
RNS Number : 3380E
Pennine AIM VCT 6 PLC
17 December 2009
Company: Pennine AIM VCT 6 plc
TIDM: PNEA
Headline:Final Results
Release time: Immediate
PENNINE AIM VCT 6 PLC
FINAL RESULTS for the year ended 30 SEPTEMBER 2009
FINANCIAL HIGHLIGHTS
+------------------------------+--------+--------+
| | 2009 | 2008 |
+------------------------------+--------+--------+
| | Pence | Pence |
+------------------------------+--------+--------+
| | | |
+------------------------------+--------+--------+
| Net asset value per share | 41.60 | 76.40 |
| ("NAV") | | |
+------------------------------+--------+--------+
| Total distributions paid | 30.30 | 2.15 |
| since inception | | |
+------------------------------+--------+--------+
| Total return | 71.60 | 78.55 |
+------------------------------+--------+--------+
| | | |
+------------------------------+--------+--------+
CHAIRMAN'S STATEMENT
Introduction
The year ended 30 September 2009 has seen a shift in market conditions, with
substantial falls in stock prices over the first half of the year being
countered, to some extent, by a reasonably sustained period of increasing prices
in the second half of the year.
Your Company's results have naturally been heavily influenced by these market
conditions, although the falls in the Company's NAV over the early part of the
year have only been partially recovered in the latter part.
Despite the difficult conditions the Company met one of its primary goals during
the year with the payment of a dividend of 26.85p per share on 31 July 2009,
such that Shareholders received a total of 30p per share from the Company within
approximately three years after the close of the offer for subscription.
Net Asset Value
At 30 September 2009, the Company's NAV stood at 41.6p, a decrease of 6.95p
(9.1%) over the year after taking into account the two dividends of 1.0p and
26.85p per share paid during the year.
Since 31 March 2009, the NAV has increased by 2.55p per share, which is
equivalent to 3.9% after adjusting for the dividend paid in the period.
Venture capital investments
At the year end the Company held a portfolio of 37 investments which were valued
at GBP10.5 million. The portfolio generated unrealised losses of GBP1.7 million
and realised gains of GBP203,000.
Further details of the Company's venture capital investments, including
additions, disposals and performance during the year, are contained within the
Investment Manager's Report and Review of Investments below.
Listed fixed income securities
During the year, the gilt held by the Company matured. The proceeds of which
were used to provide funds for the dividend paid on 31 July 2009.
Results and dividend
The loss on activities after taxation for the year was GBP1,851,000 (2008:
GBP3,812,000) comprising a revenue loss of GBP115,000 and a capital loss of
GBP1,736,000.
As Shareholders received a significant dividend during the year, the Board is
not proposing to pay a final dividend for the year under review.
Share buybacks
As announced previously, the Company temporarily suspended its share buyback
policy following the payment of the dividend in July.
The Board has reviewed this position and, in view of the proposed merger plans
described below, has decided to continue the suspension of the policy for the
time being. It is however the Board's firm intention to resume share buybacks at
an appropriate time in the near future.
In order to give the Board the flexibility to resume the share buyback policy at
any time, a special resolution is proposed for the forthcoming AGM to give
authority for the Company to purchase its own shares.
"IHT option"/Distribution in specie
In my statement with the Half-Year Report, I explained that the Board had
reviewed the "IHT Option" whereby the Company may offer Shareholders who hold
more than 30,000 shares the option to receive a distribution in specie of the
relevant proportion of the Company's investment portfolio. Shareholders will
recall that, for several reasons that were set out in the Half-Year Report, the
Board had decided not to offer this option at that time.
The Board has given further consideration to this option and has concluded that
there has been no significant shift in the conditions which originally led them
to decide that it was not in the best interests of all Shareholders to offer
this facility. Additionally, there has been very little feedback from
Shareholders regarding this matter. As a result, and in order to facilitate the
merger plans described below, the Board has decided not to offer this option now
or in the future.
Merger discussions
The Board has spent some considerable time reviewing options for the future of
the Company and believes that it has identified a path which best satisfies the
needs of Shareholders.
On 30 November 2009, the Company announced that it has, in principle, agreed
terms for a merger with two other VCTs (Pennine AIM VCT 5 plc and The AIM
Distribution Trust plc) by way of schemes of reconstruction (which would be
outside the City Code on Takeovers and Mergers) and will be subject to
Shareholder approval. Full details will be sent to Shareholders as soon as any
formal proposals are available.
VCT continuation
In line with the Articles of Association, a resolution that the Company continue
as a Venture Capital Trust is proposed at the forthcoming AGM. In view of the
merger plans discussed above, the Directors recommend that Shareholders' vote
for the resolution in order to give the Board flexibility for future plans.
Annual General Meeting
The Company's next AGM will be held at Kings Scholars House, 230 Vauxhall Bridge
Road, London, SW1V 1AU at 11.30 am on 24 February 2010.
Two items of special business are proposed at the meeting:
1. to renew the authority to allow the Company to make market purchases of the
Company's shares.
2. to continue as a Venture Capital Trust.
Outlook
The Board is pleased that the Company has been able to fulfil its target of
returning 30p to Shareholders within approximately three years of the close of
its fundraising. However, a major consequence of this has been a significant
reduction in the size of the Company, which has led to the proposals to merge
the Company with two other VCTs.
Although the potential merger cannot fully protect the Company against the sort
of volatile market conditions that we have experienced over the last two years,
the Board believes that it can provide many benefits which, in the longer term,
may support improved performance for Shareholders. I look forward to presenting
full details of the proposals in due course.
Christopher Powell
Chairman
INVESTMENT MANAGER'S REPORT
We present an overview of the investment management activities for the year
ended 30 September 2009.
The last 12 months has been a period of extreme volatility, with equity markets
at the start of the Company's financial year under considerable pressure. The UK
economy was heading towards recession and this, coupled with the fragile state
of the financial system, particularly the banks, saw investors take an extreme
aversion to any risk. Company share prices spiralled downwards, and the
illiquidity of smaller companies resulted in price falls which were compounded
by forced sellers from Unit Trust redemptions. The re-pricing of credit
facilities and in several cases the inability to access credit had a
considerable impact on smaller companies, particularly those with leveraged
balance sheets.
Unprecedented monetary policy action saw UK interest rates fall to just 0.5% and
this, combined with various Government stimulus packages, stabilised the
financial system. Believing the worst to be past, investor optimism improved and
equity markets recovered strongly from March onwards.
After heavy falls over the first six months of your Company's financial year,
equity markets recovered strongly in the second half. For the record, the FTSE
100 Share Index showed a net rise of 4.7% over the Company's financial year
whilst the AIM Index rose 3.9%. The AIM Index was particularly volatile, being
influenced by the heavily weighted sectors of Mining, Oil and Gas, and Real
Estate, which initially fell before leading the recovery. These sectors are
generally not open to qualifying VCT investment.
Portfolio
In anticipation of the balance of the 30p dividend being returned to
shareholders at the end of the three year investment period, the Company held
monies in cash and a GBP6.4 million Gilt (which matured in March 2009) until
July 2009, at which point the dividend totalling GBP7.1 million was paid out to
investors.
New investment activity has therefore been low with just two follow-on
investments totalling GBP350,000 into Hoole Hall Country Club Holdings and Hoole
Hall Spa and Leisure. In addition two investments underwent re-structuring, with
the GBP1 million investment in Hoole Hall Country Club Limited being hived up
into a holding company, and Concateno being taken over by Inverness Medical
Innovations Inc, with proceeds thereon being GBP525,000 received in the form of
shares and cash.
The Company also made a number of other disposals realising proceeds of GBP1.0
million.
A summary of the additions and disposals during the year is shown below.
Portfolio performance
The top ten investments account for 62.7% of the portfolio with the largest four
holdings, all of which are unquoted, being 36.1%. These unquoted companies, the
majority of which have the asset backing of bricks and mortar, have provided
some stability to the portfolio whilst the quoted AIM investments have shown
individually sharply contrasting performances.
The three largest holdings, Hoole Hall Country Club, Cadbury House and Hoole
Hall Spa and Leisure are all unquoted and have performed satisfactorily in a
difficult climate.
In 2007 the Company made its original investment, in Hoole Hall Country Club, to
help fund the acquisition and refurbishment of the conference and banqueting
facilities. A follow-on investment in May 2008 was made to fund a separate
company for the construction of the spa and health club (Hoole Hall Spa and
Leisure), which opened in November 2009 with over 1,000 members. In December
2008, Hoole Hall Country Club was restructured and the investment rolled up into
a new company, Hoole Hall Country Club Holdings. During the year the property
was re-badged DoubleTree by Hilton which has led to the business benefiting from
additional bookings generated through Hilton's powerful reservation system.
Cadbury House continues to grow as a wedding venue, whilst Doubletake Portraits
has, despite the consumer downturn, continued its strong profits growth.
Craneware provides proprietary software solutions for the US healthcare
providers market. Profits continue to grow strongly and the company now has its
software installed in over 1,000 US hospitals. The share price has performed
exceptionally well and some profits were taken by selling a proportion of the
holding for GBP136,000, realising a profit of GBP77,000. The shares of
Animalcare Group and IS Pharma have also performed well with the former
benefiting from strong veterinary sales and the latter the integration of two
acquisitions to further their portfolio of pharmaceutical and medical devices.
Some profits were taken in both companies, in Animalcare a profit of GBP37,000
was realised on proceeds of GBP120,000, whilst in IS Pharma a profit of
GBP10,000 was crystallised against proceeds of GBP160,000.
Tristel, an infection control company, is benefiting from the drive for cleaner
hospitals to control infectious diseases such as MRSA, C.dificil and vCJD.
Ludorum, the makers of Chuggington, an animated series of train adventures for
children, has been successfully sold in 165 countries, including the Disney
channel in America. The shares have doubled over the year. The takeover of
Concateno, took over a year to conclude, with the US company Inverness Medical
Innovations acquiring the company for part cash and shares. Since the Company's
year end, the shares in Inverness Medical Innovations have been sold realising a
small profit.
A weak performance from Servoca saw a change in management and refinancing.
Plastics Capital's share price halved owing to a weak manufacturing outlook and
high levels of debt. In a weak recruitment market Kellan Group shares fell by
two thirds. Boomerang Plus, the independent television production company,
issued a profits warning citing the difficult economic climate leading to
project delays and cancellations. The company does though remain profitable with
cash on the balance sheet, a growing pipeline of business and a very strong
position in Welsh language productions. Boardroom upheaval at Travelzest and a
profits warning citing the recession and sterling weakness hurting the UK travel
business, resulted in a refinancing of the business, which your Company did not
take part in.
Poor trading at the unquoted restaurant, conference centre and public house,
West Tower Holdings (trading as West Tower and The Swan) based near Ormskirk,
has necessitated a reduction in the valuation of the business. This is being
addressed with an extension to West Tower and a refocusing of the business as a
wedding venue. The Swan is to be refurbished and rebranded as a Marco Pierre
White restaurant.
As planned, The Thames Club, an unquoted health and fitness club based in
Staines, has undertaken alterations and refurbishment. The club has traded to
budget but a write down of the value of the investment has been necessary due to
the lower valuations of businesses generally. With the improvements now largely
complete, we expect an increase in membership and profitability. We still
believe this will prove to be a successful investment for your Company. Too much
debt resulted in both Fishworks and FSG Security going into administration
during the year. The former blamed a weak restaurant format on poor trading,
whilst FSG Security suffered contract losses and made a poor acquisition of a
similar man-guarding business.
In August 2007 Clerkenwell Ventures raised GBP26 million to add to the GBP4
million which had been raised at their original flotation on AIM in 2004. Its
strategy had been to acquire restaurant businesses. Although a number of
potential acquisitions had been considered, no businesses have been acquired due
to inflated restaurant valuations which did not recognise the weak outlook for
consumer spending. As a result of not investing the money raised, the investment
became non-qualifying for VCT investment. In March this year, Clerkenwell
underwent a restructuring, returning GBP27 million to shareholders of its near
GBP30 million of cash, of which GBP514,000 was received by the Company. The
shares continue to trade at a discount to cash whilst the company looks to make
more modest restaurant acquisitions.
Outlook
As recessionary pressures have eased, equity markets, and particularly AIM, have
staged a sharp recovery from the lows in March in the belief that economic
growth will resume in 2010 and company profitability improve. The worst of the
impact of companies de-stocking and cost cutting appears to be past and although
companies with leveraged balance sheets are still having difficult negotiations
with their banks, the ability to access credit has improved. Economic
improvement remains fragile and clearly many challenges remain, including huge
Government debt and unemployment.
The return to more normal levels of investor appetite for risk has fuelled the
rise in smaller company share prices from, in many cases, overly depressed
levels. Despite the rise, there remains value in the medium to longer term, but
there is the danger that markets are pricing in a faultless recovery without
recognising that improvements in consumer demand and company profitability may
well take time. Although the Company is relatively fully invested, we will
continue to look for investment opportunities of quoted and unquoted quality
smaller companies, particularly looking for companies offering a yield. In the
meantime, we believe that the spread of investments offers an attractive
diversified portfolio with a good number of the companies growing and maturing,
whose share prices should benefit as the economy improves.
Rathbone Investment Management Limited
REVIEW OF INVESTMENTS
Portfolio of investments
The following investments, all of which are incorporated in England and Wales,
with the exception of Inverness Medical Innovations Inc. which is a US company,
were held at 30 September 2009.
+-------------------------------+---------+-----------+-----------+-----------+
| | | | Valuation | |
+-------------------------------+---------+-----------+-----------+-----------+
| | | | movement | |
| | | | | |
+-------------------------------+---------+-----------+-----------+-----------+
| | Cost | Valuation | in | % of |
| | | | year | |
+-------------------------------+---------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | portfolio |
| | | | | |
+-------------------------------+---------+-----------+-----------+-----------+
| Ten largest venture capital | | | |
| investments (by value) | | | |
+-----------------------------------------+-----------+-----------+-----------+
| Hoole Hall Country Club | 1,200 | 1,200 | - | 10.9% |
| Holdings Limited * | | | | |
+-------------------------------+---------+-----------+-----------+-----------+
| Cadbury House Limited * | 1,000 | 1,000 | - | 9.1% |
+-------------------------------+---------+-----------+-----------+-----------+
| Hoole Hall Spa and | 900 | 900 | - | 8.2% |
| Leisure Limited * | | | | |
+-------------------------------+---------+-----------+-----------+-----------+
| Doubletake Portraits | 895 | 877 | 264 | 7.9% |
| Limited * | | | | |
+-------------------------------+---------+-----------+-----------+-----------+
| Craneware plc | 244 | 616 | 177 | 5.6% |
+-------------------------------+---------+-----------+-----------+-----------+
| Animal Care Group plc | 418 | 609 | 205 | 5.5% |
+-------------------------------+---------+-----------+-----------+-----------+
| IS Pharma plc | 539 | 588 | 133 | 5.3% |
+-------------------------------+---------+-----------+-----------+-----------+
| First Care Limited * | 375 | 375 | - | 3.4% |
+-------------------------------+---------+-----------+-----------+-----------+
| Servoca plc | 751 | 375 | (200) | 3.4% |
+-------------------------------+---------+-----------+-----------+-----------+
| Tristel plc | 288 | 372 | 77 | 3.4% |
+-------------------------------+---------+-----------+-----------+-----------+
| | 6,610 | 6,912 | 656 | 62.7% |
+-------------------------------+---------+-----------+-----------+-----------+
| Other venture capital | | | | |
| investments | | | | |
+-------------------------------+---------+-----------+-----------+-----------+
| Keycom plc ** | 946 | 349 | (116) | 3.2% |
+-------------------------------+---------+-----------+-----------+-----------+
| Boomerang Plus plc | 676 | 321 | (415) | 2.9% |
+-------------------------------+---------+-----------+-----------+-----------+
| Zamano plc | 376 | 297 | 23 | 2.7% |
+-------------------------------+---------+-----------+-----------+-----------+
| Ludorum plc | 123 | 274 | 144 | 2.5% |
+-------------------------------+---------+-----------+-----------+-----------+
| Hasgrove plc | 352 | 228 | (50) | 2.1% |
+-------------------------------+---------+-----------+-----------+-----------+
| Blanc Brasseries | 275 | 225 | (50) | 2.0% |
| Holdings plc * | | | | |
+-------------------------------+---------+-----------+-----------+-----------+
| Plastics Capital plc | 695 | 222 | (194) | 2.0% |
+-------------------------------+---------+-----------+-----------+-----------+
| Sheildtech plc | 501 | 220 | 120 | 2.0% |
+-------------------------------+---------+-----------+-----------+-----------+
| Universe Group plc | 309 | 199 | 55 | 1.8% |
+-------------------------------+---------+-----------+-----------+-----------+
| Brulines Group plc | 195 | 182 | (47) | 1.6% |
+-------------------------------+---------+-----------+-----------+-----------+
| The Thames Club | 350 | 175 | (175) | 1.6% |
| Limited * | | | | |
+-------------------------------+---------+-----------+-----------+-----------+
| West Tower Holdings | 500 | 167 | (333) | 1.5% |
| Limited * | | | | |
+-------------------------------+---------+-----------+-----------+-----------+
| Telephonetics plc | 415 | 145 | (26) | 1.3% |
+-------------------------------+---------+-----------+-----------+-----------+
| Inverness Medical | 120 | 141 | 21 | 1.3% |
| Innovations Inc. *** | | | | |
+-------------------------------+---------+-----------+-----------+-----------+
| The Mission Marketing | 502 | 134 | (117) | 1.2% |
| Group plc | | | | |
+-------------------------------+---------+-----------+-----------+-----------+
| The Kellan Group plc | 750 | 108 | (211) | 1.0% |
+-------------------------------+---------+-----------+-----------+-----------+
| IDOX plc | 47 | 60 | (1) | 0.6% |
+-------------------------------+---------+-----------+-----------+-----------+
| Travelzest plc | 501 | 40 | (342) | 0.4% |
+-------------------------------+---------+-----------+-----------+-----------+
| Clerkenwell Ventures | 60 | 38 | (5) | 0.4% |
| plc | | | | |
+-------------------------------+---------+-----------+-----------+-----------+
| NetServices plc | 375 | 16 | (17) | 0.1% |
+-------------------------------+---------+-----------+-----------+-----------+
| Accuma Group plc | 351 | 15 | 10 | 0.1% |
+-------------------------------+---------+-----------+-----------+-----------+
| Sport Media Group plc | 250 | 14 | (41) | 0.1% |
+-------------------------------+---------+-----------+-----------+-----------+
| Relax Group plc | 150 | 10 | (11) | 0.1% |
+-------------------------------+---------+-----------+-----------+-----------+
| Chariot (UK) plc **** | 250 | - | - | - |
+-------------------------------+---------+-----------+-----------+-----------+
| Fishworks plc **** | 288 | - | (144) | - |
+-------------------------------+---------+-----------+-----------+-----------+
| FSG Security plc **** | 650 | - | (404) | - |
+-------------------------------+---------+-----------+-----------+-----------+
| MyHome International | 187 | - | - | - |
| plc **** | | | | |
+-------------------------------+---------+-----------+-----------+-----------+
| | 10,194 | 3,580 | (2,326) | 32.5% |
+-------------------------------+---------+-----------+-----------+-----------+
| | | | | |
+-------------------------------+---------+-----------+-----------+-----------+
| Sub-total | 16,804 | 10,492 | (1,670) | 95.2% |
+-------------------------------+---------+-----------+-----------+-----------+
| Cash at bank and in hand | | 530 | | 4.8% |
+-------------------------------+---------+-----------+-----------+-----------+
| Total investments | | 11,022 | | 100.0% |
+-------------------------------+---------+-----------+-----------+-----------+
All investments are quoted on AIM unless otherwise stated.
* Unquoted
** Traded on the PLUS Market
*** Traded on the New York Stock Exchange ("NYSE")
**** Delisted
Investment movements for the year ended 30 September 2009
Additions
+---------------------------------------------------------------------+---------+
| | Total |
+---------------------------------------------------------------------+---------+
| | GBP'000 |
+---------------------------------------------------------------------+---------+
| Acquisition arising on a takeover | |
+---------------------------------------------------------------------+---------+
| Inverness Medical Innovations Inc. | 120 |
+---------------------------------------------------------------------+---------+
| | |
+---------------------------------------------------------------------+---------+
| Follow on investments | |
+---------------------------------------------------------------------+---------+
| Sundry investments | 2 |
+---------------------------------------------------------------------+---------+
| | |
+---------------------------------------------------------------------+---------+
| Unquoted investments | |
+---------------------------------------------------------------------+---------+
| Hoole Hall Country Club Holdings Limited | 200 |
+---------------------------------------------------------------------+---------+
| Hoole Hall Spa and Leisure Limited | 150 |
+---------------------------------------------------------------------+---------+
| | 350 |
+---------------------------------------------------------------------+---------+
| Restructuring of investment | |
+---------------------------------------------------------------------+---------+
| Hoole Hall Country Club Holdings Limited | 1,000 |
+---------------------------------------------------------------------+---------+
| | |
+---------------------------------------------------------------------+---------+
| | 1,472 |
+---------------------------------------------------------------------+---------+
Disposals
+--------------------------------+---------+-----------+----------+---------+----------+
| | Cost | MV at | Proceeds | Profit/ | Realised |
| | | 01/10/08* | | (loss) | gain/ |
| | | | | vs cost | (loss) |
+--------------------------------+---------+-----------+----------+---------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+---------+-----------+----------+---------+----------+
| Disposal arising on a takeover | | | | | |
+--------------------------------+---------+-----------+----------+---------+----------+
| Concateno plc | 378 | 555 | 525 | 147 | (30) |
+--------------------------------+---------+-----------+----------+---------+----------+
| | | | | | |
+--------------------------------+---------+-----------+----------+---------+----------+
| Restructuring of investment | | | | | |
+--------------------------------+---------+-----------+----------+---------+----------+
| Clerkenwell Ventures plc | 541 | 389 | 514 | (27) | 125 |
+--------------------------------+---------+-----------+----------+---------+----------+
| Hoole Hall Country Club | 1,000 | 1,000 | 1,000 | - | - |
| Limited | | | | | |
+--------------------------------+---------+-----------+----------+---------+----------+
| | | | | | |
+--------------------------------+---------+-----------+----------+---------+----------+
| Disposals in the market | | | | | |
+--------------------------------+---------+-----------+----------+---------+----------+
| Animalcare Group plc | 83 | 80 | 120 | 37 | 40 |
+--------------------------------+---------+-----------+----------+---------+----------+
| Craneware plc | 59 | 104 | 136 | 77 | 32 |
+--------------------------------+---------+-----------+----------+---------+----------+
| IS Pharma plc | 150 | 127 | 160 | 10 | 33 |
+--------------------------------+---------+-----------+----------+---------+----------+
| Ludorum plc | 2 | 2 | 4 | 2 | 2 |
+--------------------------------+---------+-----------+----------+---------+----------+
| Tristel plc | 21 | 21 | 22 | 1 | 1 |
+--------------------------------+---------+-----------+----------+---------+----------+
| | | | | | |
+--------------------------------+---------+-----------+----------+---------+----------+
| Liquidations | | | | | |
+--------------------------------+---------+-----------+----------+---------+----------+
| Telephone Maintenance Group | 251 | - | - | (251) | - |
| plc | | | | | |
+--------------------------------+---------+-----------+----------+---------+----------+
| | | | | | |
+--------------------------------+---------+-----------+----------+---------+----------+
| Listed fixed income securities | | | | | |
+--------------------------------+---------+-----------+----------+---------+----------+
| Treasury 4% Stock 07/03/2009 | 6,305 | 6,452 | 6,440 | 135 | (12) |
+--------------------------------+---------+-----------+----------+---------+----------+
| | 8,790 | 8,730 | 8,921 | 131 | 191 |
+--------------------------------+---------+-----------+----------+---------+----------+
* After adjusting for purchases in the year.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report, the Directors
Remuneration Report, and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have elected to prepare the
financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and applicable law).
Under company law the directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs
of the Company and of the profit or loss of the Company for that period. In
preparing those financial statements, the Directors are required to:
* select suitable accounting policies and then apply them consistently;
* make judgements and estimates that are reasonable and prudent;
* state whether applicable UK Accounting Standards have been followed, subject to
any material departures disclosed and explained in the financial statements; and
* prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping accounting records that are sufficient
to show and explain the Company's transactions and disclose with reasonable
accuracy at any time the financial position of the Company and to enable them to
ensure that the financial statements, and the Directors Remuneration Report,
comply with the requirements of the Companies Act 2006. They are also
responsible for safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
Directors' statement pursuant to the Disclosure and Transparency Rules
Each of the Directors confirms that, to the best of each person's knowledge:
* the financial statements, prepared in accordance with United Kingdom Generally
Accepted Accounting Practice, give a true and fair view of the assets,
liabilities, financial position and loss of the Company; and
* the Directors' Report contained in the Annual Report includes a fair review of
the development and performance of the business and the position of the company
together with a description of the principal risks and uncertainties that it
faces.
Statement as to disclosure of information to Auditor
The Directors in office at the date of the report have confirmed that, as far as
they are aware, there is no relevant audit information of which the Auditor is
unaware. Each of the Directors has confirmed that they have taken all the steps
that they ought to have taken as directors in order to make themselves aware of
any relevant audit information and to establish that it has been communicated to
the Auditor.
By order of the Board
Grant Whitehouse
Secretary
Pennine AIM VCT 6 plc
Company Number: 5571442
Registered Office:
Kings Scholars House
230 Vauxhall Bridge Road
London SW1V 1AU
INCOME STATEMENT
for the year ended 30 September 2009
+-----------------------+---------+---+---------+--+---------+--+---------+--+---------+--+---------+
| | 2009 | | 2008 |
+-----------------------+------------------------------------+--+-----------------------------------+
| | | | |
+-----------------------+------------------------------------+--+-----------------------------------+
| | Revenue | | Capital | | Total | | Revenue | | Capital | | Total |
+-----------------------+---------+---+---------+--+---------+--+---------+--+---------+--+---------+
| | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
+-----------------------+---------+---+---------+--+---------+--+---------+--+---------+--+---------+
| | | | | | | | | | | | |
+-----------------------+---------+---+---------+--+---------+--+---------+--+---------+--+---------+
| Income | 262 | | - | | 262 | | 722 | | - | | 722 |
+-----------------------+---------+---+---------+--+---------+--+---------+--+---------+--+---------+
| | | | | | | | | | | | |
+-----------------------+---------+---+---------+--+---------+--+---------+--+---------+--+---------+
| Losses on | - | | (1,479) | | (1,479) | | - | | (3,845) | | (3,845) |
| investments | | | | | | | | | | | |
+-----------------------+---------+---+---------+--+---------+--+---------+--+---------+--+---------+
| | | | | | | | | | | | |
+-----------------------+---------+---+---------+--+---------+--+---------+--+---------+--+---------+
| | 262 | | (1,479) | | (1,217) | | 722 | | (3,845) | | (3,123) |
+-----------------------+---------+---+---------+--+---------+--+---------+--+---------+--+---------+
| | | | | | | | | | | | |
+-----------------------+---------+---+---------+--+---------+--+---------+--+---------+--+---------+
| Investment | (85) | | (256) | | (341) | | (104) | | (313) | | (417) |
| management fees | | | | | | | | | | | |
+-----------------------+---------+---+---------+--+---------+--+---------+--+---------+--+---------+
| | | | | | | | | | | | |
+-----------------------+---------+---+---------+--+---------+--+---------+--+---------+--+---------+
| Other expenses | (292) | | (1) | | (293) | | (258) | | (1) | | (259) |
+-----------------------+---------+---+---------+--+---------+--+---------+--+---------+--+---------+
| | | | | | | | | | | | |
+-----------------------+---------+---+---------+--+---------+--+---------+--+---------+--+---------+
| (Loss)/ | (115) | | (1,736) | | (1,851) | | 360 | | (4,159) | | (3,799) |
| return on | | | | | | | | | | | |
| ordinary | | | | | | | | | | | |
| activities | | | | | | | | | | | |
| before tax | | | | | | | | | | | |
+-----------------------+---------+---+---------+--+---------+--+---------+--+---------+--+---------+
| | | | | | | | | | | | |
+-----------------------+---------+---+---------+--+---------+--+---------+--+---------+--+---------+
| Tax on ordinary | - | | - | | - | | (88) | | 75 | | (13) |
| activities | | | | | | | | | | | |
+-----------------------+---------+---+---------+--+---------+--+---------+--+---------+--+---------+
| | | | | | | | | | | | |
+-----------------------+---------+---+---------+--+---------+--+---------+--+---------+--+---------+
| (Loss)/ | (115) | | (1,736) | | (1,851) | | 272 | | (4,084) | | (3,812) |
| return | | | | | | | | | | | |
| attributable | | | | | | | | | | | |
| to equity | | | | | | | | | | | |
| shareholders | | | | | | | | | | | |
+-----------------------+---------+---+---------+--+---------+--+---------+--+---------+--+---------+
| | | | | | | | | | | | |
+-----------------------+---------+---+---------+--+---------+--+---------+--+---------+--+---------+
| Basic and diluted | (0.5p) | | (6.5p) | | (7.0p) | | 1.0p | | (15.3p) | | (14.3p) |
| (loss)/return per | | | | | | | | | | | |
| share | | | | | | | | | | | |
+-----------------------+---------+---+---------+--+---------+--+---------+--+---------+--+---------+
The revenue and capital movements in the year relate to continuing operations
and represent one geographical and business segment. 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 within the Income Statement shown above.
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
for the year ended 30 September 2009
+---------------------------+---------+--------+---------+
| | 2009 | | 2008 |
+---------------------------+---------+--------+---------+
| | GBP'000 | | GBP'000 |
+---------------------------+---------+--------+---------+
| | | | |
+---------------------------+---------+--------+---------+
| Opening shareholders' | 20,333 | | 24,527 |
| funds | | | |
+---------------------------+---------+--------+---------+
| Purchase of own shares | - | | (49) |
+---------------------------+---------+--------+---------+
| Total recognised losses | (1,851) | | (3,812) |
| for the year | | | |
+---------------------------+---------+--------+---------+
| Distributions | (7,410) | | (333) |
+---------------------------+---------+--------+---------+
| Closing shareholders' | 11,072 | | 20,333 |
| funds | | | |
+---------------------------+---------+--------+---------+
| | | | |
+---------------------------+---------+--------+---------+
BALANCE SHEET
as at 30 September 2009
+--------------------------------------+---------+---------+--+---------+---------+
| | | 2009 | | | 2008 |
+--------------------------------------+---------+---------+--+---------+---------+
| | | | | |
+--------------------------------------+---------+---------+--+-------------------+
| | GBP'000 | GBP'000 | | GBP'000 | GBP'000 |
+--------------------------------------+---------+---------+--+---------+---------+
| Fixed Assets | | | | | |
+--------------------------------------+---------+---------+--+---------+---------+
| Investments | | 10,492 | | | 19,420 |
+--------------------------------------+---------+---------+--+---------+---------+
| | | | | | |
+--------------------------------------+---------+---------+--+---------+---------+
| Current assets | | | | | |
+--------------------------------------+---------+---------+--+---------+---------+
| Debtors | 124 | | | 145 | |
+--------------------------------------+---------+---------+--+---------+---------+
| Cash at bank and in hand | 530 | | | 870 | |
+--------------------------------------+---------+---------+--+---------+---------+
| | 654 | | | 1,015 | |
+--------------------------------------+---------+---------+--+---------+---------+
| | | | | | |
+--------------------------------------+---------+---------+--+---------+---------+
| Creditors: amounts falling due | (74) | | | (102) | |
| within one year | | | | | |
+--------------------------------------+---------+---------+--+---------+---------+
| | | | | | |
+--------------------------------------+---------+---------+--+---------+---------+
| Net current assets | | 580 | | | 913 |
+--------------------------------------+---------+---------+--+---------+---------+
| | | | | | |
+--------------------------------------+---------+---------+--+---------+---------+
| Net assets | | 11,072 | | | 20,333 |
+--------------------------------------+---------+---------+--+---------+---------+
| | | | | | |
+--------------------------------------+---------+---------+--+---------+---------+
| Capital and reserves | | | | | |
+--------------------------------------+---------+---------+--+---------+---------+
| Called up share capital | | 266 | | | 266 |
+--------------------------------------+---------+---------+--+---------+---------+
| Capital redemption reserve | | 1 | | | 1 |
+--------------------------------------+---------+---------+--+---------+---------+
| Special reserve | | 17,169 | | | 24,247 |
+--------------------------------------+---------+---------+--+---------+---------+
| Capital reserve - realised | | - | | | 191 |
+--------------------------------------+---------+---------+--+---------+---------+
| Investment holding losses | | (6,312) | | | (4,701) |
+--------------------------------------+---------+---------+--+---------+---------+
| Revenue reserve | | (52) | | | 329 |
+--------------------------------------+---------+---------+--+---------+---------+
| | | | | | |
+--------------------------------------+---------+---------+--+---------+---------+
| Equity shareholders' funds | | 11,072 | | | 20,333 |
+--------------------------------------+---------+---------+--+---------+---------+
| | | | | | |
+--------------------------------------+---------+---------+--+---------+---------+
| Basic and diluted net asset value | | 41.6p | | | 76.4p |
| per share | | | | | |
+--------------------------------------+---------+---------+--+---------+---------+
CASH FLOW STATEMENT
for the year ended 30 September 2009
+----------------------------------------+----------+-----+---------+
| | 2009 | | 2008 |
+----------------------------------------+----------+-----+---------+
| | GBP'000 | | GBP'000 |
+----------------------------------------+----------+-----+---------+
| Net cash outflow from operating | (323) | | (11) |
| activities | | | |
+----------------------------------------+----------+-----+---------+
| | | | |
+----------------------------------------+----------+-----+---------+
| Taxation | (13) | | (49) |
+----------------------------------------+----------+-----+---------+
| | | | |
+----------------------------------------+----------+-----+---------+
| Capital expenditure | | | |
+----------------------------------------+----------+-----+---------+
| Purchase of investments | (352) | | (7,477) |
+----------------------------------------+----------+-----+---------+
| Sale of investments | 7,758 | | 7,143 |
+----------------------------------------+----------+-----+---------+
| Net cash inflow/(outflow) from capital | 7,406 | | (334) |
| expenditure | | | |
+----------------------------------------+----------+-----+---------+
| | | | |
+----------------------------------------+----------+-----+---------+
| Equity distributions paid | (7,410) | | (333) |
+----------------------------------------+----------+-----+---------+
| | | | |
+----------------------------------------+----------+-----+---------+
| Net cash outflow before financing | (340) | | (727) |
+----------------------------------------+----------+-----+---------+
| | | | |
+----------------------------------------+----------+-----+---------+
| Financing | | | |
+----------------------------------------+----------+-----+---------+
| Purchase of own shares | - | | (49) |
+----------------------------------------+----------+-----+---------+
| Net cash outflow from financing | - | | (49) |
+----------------------------------------+----------+-----+---------+
| | | | |
+----------------------------------------+----------+-----+---------+
| Decrease in cash | (340) | | (776) |
+----------------------------------------+----------+-----+---------+
NOTES TO THE ACCOUNTS
for the year ended 30 September 2009
1. Accounting policies
Basis of accounting
The Company has prepared its financial statements 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"
January 2009 ("SORP").
The financial statements are prepared under the historical cost convention
except for certain financial instruments measured at fair value.
The Company implements new Financial Reporting Standards ("FRS") issued by the
Accounting Standards Board when required. No new standards were issued for
implementation for the year under review. The Association of Investment
Companies issued a new SORP in January 2009, which has been adopted for these
financial statements. No comparative restatements have been required as a result
of the implementation of the SORP.
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
Venture capital investments are designated as "fair value through profit or
loss" assets due to investments being managed and performance evaluated on a
fair value basis. A financial asset is designated within this category if it is
both acquired and managed, with a view to selling after a period of time, in
accordance with the Company's documented investment policy. The fair value of an
investment upon acquisition is deemed to be cost (translated at the spot rate
where appropriate). Thereafter investments are measured at fair value in
accordance with the International Private Equity and Venture Capital Valuation
Guidelines "IPEV" together with FRS26 "Financial Instruments: Measurement".
Listed fixed income investments and quoted investments are measured using bid
prices in accordance with the IPEV, and where applicable are converted into
sterling using the spot rate at the relevant period end.
In respect of unquoted instruments, fair value is established by using the IPEV.
The valuation methodologies for unquoted entities used by the IPEV to ascertain
the fair value of an investment are as follows:
* Price of recent investment;
* Earnings multiple;
* Net assets;
* Discounted cash flows or earnings (of underlying business);
* Discounted cash flows (from the investment); and
* Industry valuation benchmarks.
The methodology applied takes account of the nature, facts and circumstances of
the individual investment and uses reasonable data, market inputs, assumptions
and estimates in order to ascertain fair value.
Where an investee company has gone into receivership or liquidation the loss on
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 are expensed, and translated at the spot rate where appropriate.
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 shareholder's right 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 acquisition of an investment are deducted
from the Capital Account.
* 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 enacted and substantially enacted at the balance sheet
date. 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. Deferred tax assets are only recognised if it
is expected that future taxable profits will utilise such assets.
Other debtors and other creditors
Other debtors (including accrued income) and other creditors are included within
the accounts at amortised cost, equivalent to the fair value of the expected
balance receivable/ payable by the Company.
2. Return per ordinary share
Revenue return per ordinary share is based on the net revenue loss after
taxation of GBP115,000 (2008 return: GBP272,000), in respect of 26,606,102
(2008: 26,632,099) 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 GBP1,736,000 (2008: GBP4,084,000), in respect of 26,606,102
(2008: 26,632,099) 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 the basic and diluted return per Ordinary
share.
3. Net asset value per ordinary share
+--------------+-+-------+--------+--+-------+--------+--+-------+--------+--+-------+--------+
| | | | | 2009 | | | | 2008 |
+--------------+-+----------------+--+----------------+--+----------------+--+----------------+
| | | Net asset | | | | Net asset | | |
| | | value | | | | value | | |
+--------------+-+----------------+--+----------------+--+----------------+--+----------------+
| | | per share | | Net asset | | per share | | Net asset |
| | | | | value | | | | value |
+--------------+-+----------------+--+----------------+--+----------------+--+----------------+
| | | Pence | | GBP'000 | | Pence | | GBP'000 |
+--------------+-+----------------+--+----------------+--+----------------+--+----------------+
| | | | | | | | | |
+--------------+-+----------------+--+----------------+--+----------------+--+----------------+
| Ordinary | | 41.6 | | 11,072 | | 76.4 | | 20,333 |
| shares | | | | | | | | |
+--------------+-+-------+--------+--+-------+--------+--+-------+--------+--+-------+--------+
Net asset value per ordinary share is based on net assets at the year end, and
on 26,606,102 (2008: 26,606,102) Ordinary shares, being the number of Ordinary
shares in issue at the year end.
4. Principal financial risks
As a Venture Capital Trust ("VCT"), the majority of the Company's assets are
represented by financial instruments which are held as part of the investment
portfolio. In order to ensure continued compliance with relevant VCT regulation
and to be in a position to deliver the long term capital growth which is part of
the Company's investment objective, the Board is very much aware of the need to
manage and mitigate the risks associated with the financial instruments held
within the investment portfolio.
The management of these risks starts with the application of a clear investment
strategy which has been developed by the Board and comprises of experienced
investment professionals. Furthermore, the Board has appointed an experienced
investment manager to whom they have communicated the Company's investment
strategy and whose remuneration is linked to the achievement of that strategy.
The Investment Manager reports regularly to the Board on performance, and to
facilitate the direct Board involvement with key decisions, on whether or not to
invest, disinvest and the nature, terms and the security of investments being
made.
In assessing the risk profile of its investment portfolio, the Board has
identified five principal classes of investment. All such financial investments
are "fair value through the profit and loss account" and are recognised as such
on initial recognition.
In addition to its investment portfolio, the VCT holds cash balances with two of
the main UK banks and the Investment Manager. The Directors consider that by
splitting the cash balances between the banks and the Investment Manager, the
risk profile associated with cash deposits is reduced to a low level, thus the
carrying value in the financial statements is a close approximation of its fair
value.
The Board has reviewed the Company's financial risk profile and concluded that
the current sensitivity level remains appropriate.
A review of the specific financial risks faced by the Company follows.
Market risks
The key market risks to which the Company is exposed are interest rate risk and
market price risk.
Interest rate risk
The Company receives interest on cash deposits at a rate agreed with its banker,
while investments in loan stock and fixed interest investments predominately
attract interest at fixed rates. As the Company must comply with the VCT
regulations, increases in interest rates could lead to a potential breach of
these regulations as the proportion of the Company's income from sources other
than shares and securities could exceed the required level. The Company
therefore monitors the level of income received from fixed, floating and non
interest bearing assets to ensure that the regulations are not breached.
The Company has reviewed the financial impact of the interest rate risk, with
0.5% change in base rate (i.e. reducing base rate to Nil) changing income and
the return for the year by GBP2,000, equivalent to a 1.5% impact on overall
income receivable by the Company. Such a change would have an immaterial impact
on Net Asset Value.
Market price risk
Quoted investments
Market price risk arises from uncertainty about the future prices of financial
instruments held in accordance with the Company's investment objectives. It
represents the potential loss that the Company might suffer through holding
market positions in the face of market movements. At 30 September 2009, the net
unrealised loss on the quoted portfolios (NYSE - quoted, AIM-quoted, PLUS-quoted
and non-qualifying investments) was GBP5.0 million (2008: GBP3.9 million).
The investments the Company holds are, in the main, thinly traded (due to being
traded on the AIM and PLUS Markets) and, as such, the prices are more volatile
than those of more widely traded, full list, securities. In addition, the
ability of the Company to realise the investments at their carrying value may at
times not be possible if there are no willing purchasers. The ability of the
Company to purchase or sell investments is also constrained by the requirements
set down for VCTs.
The Board considers each investment purchase to ensure that an acquisition will
enable the Company to continue to have an appropriate spread of market risk and
that an appropriate risk reward profile is maintained.
It is not the Company's policy to use derivative instruments to mitigate market
risk, as the Board believes that the effectiveness of such instruments does not
justify the cost involved.
Credit risk
Credit risk is the risk that the counterparty to a financial instrument is
unable to discharge a commitment to the Company made under that instrument.
Credit risk in respect of investments in listed fixed interest investments is
minimised by investing in UK Government Stocks (when undertaken by the Company).
Investments in loan stocks comprise a fundamental part of the Company's venture
capital investment and are managed within the main investment management
procedures.
Interest, dividends and other receivables are predominantly covered within the
investment management procedures.
Liquidity risk
Liquidity risk is the risk that the Company encounters difficulties in meeting
obligations associated with its financial liabilities. As the Company only ever
has a very low level of creditors and has no borrowings, the Board believes that
the Company's exposure to liquidity risk is minimal.
5. Related party transactions
The Company has appointed Downing Management Services Limited, a company in
which Nicholas Lewis is a director, to provide accounting, secretarial and
administrative services for an annual fee of 0.5% of gross funds raised under
the prospectus (not to exceed GBP60,000) (plus VAT and RPI). During the year
GBP76,000 (2008: GBP76,000) was due in respect of administration fees to Downing
Management Services Limited. No amounts were outstanding at either year end.
Announcement based on audited accounts
The financial information set out in this announcement does not constitute the
Company's statutory financial statements in accordance with section 434
Companies Act 2006 for the year ended 30 September 2009, but has been extracted
from the statutory financial statements for the year ended 30 September 2009,
which were approved by the Board of Directors on 17 December 2009 and 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 s
498(2) and (3) of the Companies Act 2006.
The statutory accounts for the year ended 30 September 2008 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.
A copy of the full annual report and financial statements for the year ended 30
September 2009 will be printed and posted 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 will be available
for download from www.downing.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UBRBRKURUAAA
Pennine Aim Vct 6 (LSE:PNEA)
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