Interim Results
October 09 2003 - 9:50AM
UK Regulatory
RNS Number:7275Q
Pennine AIM VCT II PLC
09 October 2003
PENNINE AIM VCT II PLC
INTERIM STATEMENT FOR THE SIX MONTHS ENDED 31 AUGUST 2003
CHAIRMAN'S STATEMENT
I am pleased to present the interim statement for the six months ended 31 August
2003. The start of the financial year saw markets continue their downward trend
as the threat of war in Iraq and the economic impact arising from the spread of
the SARS virus took their toll on investor confidence. However, in recent
months market indices have rallied strongly as some of the prevailing
uncertainties have lifted. The strength of the recent rally has seen many
indices scale twelve-month highs as investor sentiment has improved.
Investments
The fact that the portfolio has been fully invested in qualifying companies for
more than a year has precluded the directors from pursuing an active investment
programme. However, during the period under review, your Company has taken the
opportunity to make additions to its holdings in Hearing Enhancement and Hot
Group. These investments were funded from small sales of some of the
portfolio's more successful holdings, such as Aero Inventory, CRC Group and
MacLellan Group. A decision was also taken to dispose of the holding in Talent
Group (formerly RMR plc), which incurred a substantial loss.
Many smaller companies have seen a marked improvement in their share prices
during the recent market rally. An encouraging feature of the market over the
past few months has been the increasing number of companies that have beaten
market expectations. Several of the companies within your portfolio have made
notable progress in terms of improved trading performance. Companies such as
MacLellan Group, Pubs 'N' Bars, Synergy Healthcare and XKO have continued to
flourish in difficult economic conditions. This is testament to the fundamental
quality of their management and market positioning.
Net Asset Value
The net asset value of the company rose from 54.0p to 58.4p during the six
months ended 31 August 2003. This increase is well below the 28.4% uplift in the
AIM Index over the same period. Whilst many of the portfolios investments have
seen their share prices rise strongly during the period, a profits warning at
CRC Group and a small downward revision of the Forward Media valuation have
meant that the NAV of the company did not rise at a similar rate to that of the
AIM Index. Shareholders have now received total tax-free distributions of 41.5p
since the inception of the Company.
In accordance with shareholder authority, the Company purchased an aggregate of
63,000 ordinary shares for cancellation at prices ranging from 47.75p to 40.0p.
This has reduced the number of shares in issue to 4,217,200. As these purchases
were made at a discount to the underlying asset value of your Company, the NAV
has been enhanced slightly.
The Future
As mentioned above, investor confidence has improved in recent months.
Furthermore, the number of reported profit warnings has seen a sharp decline
this year. However, a word of caution is offered here. Economic recovery will
be a slow process as growth forecasts for this year and next have been lowered
from original expectations. In addition, a large proportion of company
out-performance seen in recent months has been as much due to the implementation
of prudent cost cutting programmes as to improving economic conditions.
That said, the general economic outlook certainly looks more positive than a
year ago. As a consequence, the directors continue to believe that the small
company sector contains many attractive and well-managed businesses whose
valuations do not seem over-stretched despite recent market gains.
John Goldschmidt
Chairman
October 2003
UNAUDITED SUMMARISED BALANCE SHEET
31 August 31 August 28 Feb
2003 2002 2003
#'000 #'000 #'000
Fixed assets
Venture capital investments 2,504 3,355 2,300
Net current (liabilities)/ (41) 133 11
assets
Net assets 2,463 3,488 2,311
Capital and reserves
Called up share capital 422 444 428
Capital redemption reserve 40 17 34
Special reserve 1,355 3,826 1,160
Capital reserve - realised 951 245 948
Capital reserve - unrealised - (842) -
Revenue reserve (305) (202) (259)
Total equity shareholders' 2,483 3,488 2,311
funds
Net asset value per Ordinary 58.4p 78.5p 54.0p
share
1. The above financial information has been prepared on the basis of the
accounting policies set out in the Financial Statements for the year ended 28
February 2003.
2. The calculation of the revenue and capital return per ordinary share for the
period is based upon the net revenue loss and capital return after tax of
#46,000 and #225,000 respectively, divided by the weighted average number of
shares in issue during the period of 4,256,471.
3. The unaudited financial statements set out above do not constitute statutory
accounts within the meaning of Section 240 of the Companies Act 1985 and have
not been delivered to the Registrar of Companies. The figures for the year
ended 28 February 2003 have been extracted from the financial statements for
that year, which have been delivered to the Registrar of Companies; the
auditors' report on those financial statements was unqualified.
4. Copies of the unaudited interim results will be sent to shareholders
shortly. Further copies can be obtained from the Company's Registered Office.
5. A copy of the above document will be submitted to the UK Listing Authority,
and will shortly be available for inspection at the UK Listing Authority's
Document Viewing Facility, which is situated at:
Financial Services Authority
25 The North Colonnade
Canary Wharf
London E14 5HS
Tel: 020 7676 1000
UNAUDITED STATEMENT OF TOTAL RETURN
(incorporating the revenue account)
Six months ended
31 August 2003
Revenue Capital Total
#'000 #'000 #'000
Income 34 - 34
Gains/(losses) on investments:
- Realised - (15) (15)
- Unrealised - 240 260
34 225 259
Management fees (18) - (18)
Other expenses (51) - (51)
Return on ordinary activities before taxation (35) 225 190
Taxation - - -
Return on ordinary activities after taxation (35) 225 190
Dividends in respect of non-equity shares (11) - (11)
Return attributable to equity shareholders (46) 225 179
Distributions in respect of equity shareholders - - -
Transfer from/(to) reserves (46) 225 179
Return per ordinary share of 10p (1.07p) 5.28p 4.21p
Six months ended Year ended
31August 2002 28 February 2003
Revenue Capital Total Total
#'000 #'000 #'000 #'000
33 - 33 51
- 23 23 (29)
- (245) (245) (1,001)
33 (222) (189) (979)
(30) - (30) (51)
(49) - (49) (92)
(46) (222) (268) (1,122)
- - -
(46) (222) (268) (1,122)
(11) - (11) (22)
(57) (222) (279) (1,144)
- - - (214)
(57) (222) (279) (1,358)
(1.27)p (4.93)p (6.20)p (25.89)p
The revenue column of this statement is the profit and loss account of the
Company.
All revenue and capital items in the above statement derive from continuing
operations.
The Company has only one class of business and derives its income from
investments made in shares, securities and bank deposits.
The comparative figures are in respect of the six months ended 31 August 2002
and the year ended 28 February 2003 respectively.
UNAUDITED CASHFLOW STATEMENT
for the six months ended 31 August 2003
Six Six
months months
ended ended Year
ended
31 August 31 Aug 28 Feb
2003
2003 2002
Note #'000 #'000 #'000
Cash outflow from operating 1 (61) (15) (74)
activities
Return on investments and servicing
of finance Preference dividends paid
(11) - (24)
Capital expenditure
Purchase of venture capital (70) (116) (141)
investments
Proceeds on disposal of fixed income - 470 470
securities
Proceeds on disposal of venture 90 81 354
capital investments
Net cash inflow from capital 20 435 683
expenditure
Equity distributions paid (213) (469) (454)
Net cash (outflow)/inflow before (265) (49) 131
financing
Financing
Purchase of own shares (28) (68) (167)
Net cash outflow from financing (28) (68) (167)
Decrease in cash 2 (293) (117) (36)
NOTES TO THE CASHFLOW STATEMENT
#'000 #'000 #'000
1 Cash outflow from operating
activities
Net revenue before taxation (35) (46) (92)
(Decrease)/increase in accrued income/ (19) 34 41
other debtors
Increase/(decrease) in other (7) (3) (23)
creditors
(61) (15) (74)
2 Analysis of net
funds
Beginning of period 256 292 292
Net cash outflow (293) (117) (36)
End of period (37) 175 256
SUMMARY OF INVESTMENT PORTFOLIO
as at 31 August 2003
Cost Valuation % of portfolio
#'000 #'000 by value
Ten largest venture capital investments
Scarisbrick Group plc ** 300 294 11.7%
CRC Group plc 252 290 11.6%
Forward Media Group Limited * 300 254 10.1%
MacLellan Group plc 127 253 10.1%
Aero Inventory plc 68 235 9.4%
Pubs 'n' Bars plc 199 183 7.3%
Hot Group plc 175 158 6.3%
VI Group plc 375 152 6.1%
XKO Group plc *** 191 139 5.6%
Oasis Healthcare plc 100 120 4.8%
2,087 2,078 83.0%
Other venture capital investments 1,960 426 17.0%
Total 4,047 2,504 100.0%
All venture capital investments are quoted on AIM unless otherwise stated.
* Unquoted
** Quoted on the OFEX market
*** Quoted on the London Stock Exchange Main Market
HISTORIC SUMMARY - ORDINARY SHARES
Per ordinary Period Year Year Year Year Year Period
share
Ended Ended Ended Ended Ended Ended Ended
31-Aug-03 28 28 28 29 28 28
Feb-03 Feb-02 Feb-01 Feb-00 Feb-99 Feb-98
Total - 5p 10p 10p 10p 3.8p 2.7p
distributions
for the year
Net asset 58.40p 54.0p 84.6p 117.5p 177.2p 114.6p 128p
value after
distributions
Total 41.50p 41.50p 36.5p 26.5p 16.5p 6.5p 2.7p
distributions
since
inception
Total return 99.9p 95.5p 121.1p 144.1p 193.7p 121.1p 130.7p
to investors
since
inception
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FSMFDUSDSEDS