Final Results
14 December 2001 - 3:07AM
UK Regulatory
RNS Number:6708O
Pennine Downing Ethical VCT PLC
13 December 2001
PENNINE DOWNING ETHICAL VCT PLC
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 30 SEPTEMBER 2001
2001 2000
pence pence
Net asset value per share 71.2 94.5
Total dividends per ordinary share 0.5 0.75
Revenue return per ordinary share 0.6 1.10
Net assets #7.9 million #10.2 million
The statement to shareholders by the Chairman, Andrew Davison, includes the
following comments:
The year to 30 September 2001 has been characterised by falling stock market
indices, a continued downturn in the sentiment towards the technology sector,
catastrophic events worldwide and generally difficult conditions for
investing. Although very disappointing, it is not surprising that the Company
has experienced a significant fall in Net Asset Value per share (NAV) over the
year. At 30 September 2001 the NAV was 71.2p, a fall of 23.3p or 24.7%
compared to the value at 30 September 2000.
The principal reason for the fall is because of the significant number of
investments made into early stage technology companies, which have suffered
heavily because of the change in sentiment towards the sector. In addition,
approximately 40% of the fund is invested in companies quoted on AIM, a market
where share prices have experienced substantial falls during the year. The
FTSE techMARK 100 index fell by 69.7% and the FTSE AIM index by 53.8% over the
same period, illustrating the dramatic reduction in valuations experienced by
the sectors in which the Company invests.
Fundraising
To meet demand from potential investors, during September 2001, the Company
undertook a private placing. The Company issued 286,128 ordinary shares under
the placing, giving rise to gross proceeds of #266,099. The funds will be
allocated at the Directors' discretion.
Venture capital investments
During the year the Company invested #1.67 million in new investments and #
328,000 in follow on investments. The Company has now achieved its target of
at least 70% of its investments comprising qualifying holdings well within the
three year deadline, which expires on 30 September 2002.
The Company made three partial realisations and seven full realisations during
the year, generating a net loss of #10,000.
Investments listed on AIM are valued at mid market value. In general,
valuations of investments within the AIM portfolio have fallen during the year
particularly in respect of technology and internet related businesses.
The Directors have reviewed the valuations of investments within the unquoted
portfolio and made a number of provisions where companies have failed to
perform to target. Additionally, six investee companies failed and went into
liquidation during the year. Such investments have been fully written off and
treated as realised losses within the accounts. The Directors were
particularly disappointed to note the recent failure of Zetek Power, whose
activities in the renewable energy sector were very much in line with the
Ethical Policy.
Ethical Committee
The Ethical Committee has continued to monitor the investee companies to
ensure compliance with the Ethical Policy.
Listed fixed income securities
The Company invested #3.6 million in listed fixed income securities during the
year. Subsequently two of these investments were realised, giving rise to
losses of #17,000. This portfolio is managed by Rathbone Investment
Management Limited.
Results and dividend
Gross revenue for the year was #281,000 (2000: #250,000) and net revenue after
taxation was #62,000 (2000: #85,000). Net asset value per share (NAV) at the
year end was 71.2 pence, a reduction of 12.9 pence compared to the interim NAV
of 84.1 pence.
Your Board is proposing to pay a final dividend of 0.5p per share on 31
January 2002 to shareholders on the register at 4 January 2002.
Share repurchase
The Board is conscious that the Company's share price is affected by the
illiquidity of its shares in the market, which is largely a result of the
requirement that most shareholders must retain their shares for at least five
years in order to retain their tax benefits. In line with accepted practice
with VCTs, the Company has authorisation to purchase its own shares. However
this authority was not utilised during the period.
Annual General Meeting
The second Annual General Meeting of the Company will be held at 69 Eccleston
Square, London SW1V 1PJ at 10.30am on 23 January 2002. Three items of Special
Business are proposed in the Notice of Meeting; to authorise the Directors to
allot shares, to disapply pre-emption rights and to renew the Company's
authority to purchase up to 1,105,763 ordinary shares in the market,
representing approximately 10% of the current issued ordinary share capital.
Publication of share price
The Company's share price is quoted in the Financial Times on a daily basis in
the "Investment Companies" sector.
Outlook
The current economic climate and uncertainty mean that it is unreasonable to
expect a significantly improved performance in the short term. However, with
a well spread portfolio comprising forty six venture capital investments, the
Company is well positioned to benefit from an upturn in conditions when it
occurs.
The Company is now unlikely to make many new investments unless realisations
occur within the existing portfolios. Should circumstances allow, the
Directors will give priority to investments in businesses whose activities
fall within the socially and environmentally beneficial sectors noted within
the Ethical Policy.
Andrew Davison
Chairman
STATEMENT OF TOTAL RETURN (incorporating the revenue account)
for the year ended 31 September 2001
Year Period
ended ended
30 Sept 30 Sept
2001 2000
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
(Losses)/Gains on
investments
- realised - (27) (27) - 435 435
- unrealised - (2,443) (2,443) - (415) (415)
Income 281 - 281 250 - 250
Investment management (37) (111) (148) (31) (94) (125)
fees
Other expenses (166) - (166) (113) - (113)
Return on ordinary
activities before tax 78 (2,581) (2,503) 106 (74) 32
Taxation (16) 16 - (21) 19 (2)
Return on ordinary
activities after tax 62 (2,565) (2,503) 85 (55) 30
Dividends in respect of
equity shareholders (55) - (55) (81) - (81)
Transfer to reserves 7 (2,565) (2,558) 4 (55) (51)
Return per ordinary 0.6p (23.8p) (23.2p) 1.1p (0.7p) 0.4p
share
BALANCE SHEET
as at 30 September 2001
2001 2000
#'000 #'000 #'000 #'000
Fixed Assets
Listed fixed income securities 2,469 -
Venture capital investments 4,976 5,917
7,445 5,917
Current Assets
Debtors 169 63
Cash at bank and in hand 383 4,379
552 4,442
Creditors: amounts falling due within one (120) (177)
year
Net current assets 432 4,265
Net assets 7,877 10,182
Capital and reserves
Called up share capital 553 539
Share premium account 9,933 9,694
Capital reserve - realised (260) 360
Capital reserve - unrealised (2,360) (415)
Revenue reserve 11 4
Total equity shareholders' funds 7,877 10,182
Net asset value per ordinary share 71.2p 94.5p
CASHFLOW STATEMENT
for the year ended 30 September 2001
2001 2000
#'000 #'000
Net cash (outflow) / inflow from operating activities (168) 43
Taxation (2) -
Capital Expenditure
Purchase of fixed income securities (3,609) -
Purchase of venture capital investments (2,002) (6,498)
(5,611) (6,498)
Sale of fixed income securities 1,132 -
Sale of venture capital investments 481 601
Net cash outflow from capital expenditure (3,998) (5,897)
Equity dividends paid (81) -
Net cash outflow before financing (4,249) (5,854)
Financing
Issue of ordinary shares 266 10,772
Expense of share issue (13) (539)
Net cash outflow from financing 253 10,233
(Decrease) / increase in cash (3,996) 4,379
Reconciliation of net cash flow to movement in net funds
(Decrease)/ increase in cash during the year (3,996) 4,379
Net funds at 1 October 2000 4,379 -
Net funds at 30 September 2001 383 4,379
Reconciliation of net revenue return before taxation to net
cash inflow from operating activities
Net revenue before taxation 78 106
Management fees charged to capital (111) (94)
Increase in other debtors (10) -
Increase in prepayments and accrued income (96) (63)
(Decrease)/ increase in other creditors (29) 94
Net cash (outflow)/ inflow from operating activities (168) 43
Change in cash
Beginning of year 4,379 -
Net cash (outflow)/ inflow (3,996) 4,379
End of year 383 4,379
Notes:
1. The financial information has been prepared on the basis of the
accounting policies set out in the Company's financial statements for the year
ended 30 September 2000.
2. The financial information set out in the announcement does not
constitute the Company's statutory accounts for the year ended 30 September
2001. The statutory accounts for the period ended 30 September 2001 will be
finalised on the basis of the financial information presented by the directors
in this preliminary announcement and will be delivered to the Registrar of
Companies following the Company's Annual General Meeting.
3. The financial information for the year ended 30 September 2000
derived from the statutory accounts for that year which have been delivered to
the Register of Companies. The auditors reported on those accounts; this
report was unqualified and did not contain a statement under section 237(2) or
(3) of the Companies Act 1985.
4. A copy of the full annual report and financial statements for the
year ended 30 September 2001 will be printed and posted to shareholders.
Copies will also be available to the public at the registered office of the
company at 69 Eccleston Square, London SW1V 1PJ.
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