Half-yearly report
(Thomson Reuters ONE) - Pennine Downing AIM VCT 2 plcHalf Yearly Financial Report for the six months ended 31 August 2009CHAIRMAN'S STATEMENTThe six-months ended 31 August 2009 has seen calmer stock marketsthan in the previous reporting periods and some degree of recovery instock prices. On the back of this, the Company's Net Asset Value pershare ("NAV") has shown a reasonable increase over the period.Net Asset ValueAs at 31 August 2009, the Company's ("NAV") stood at 29.5p, anincrease of 2.7p (10.1%) since 28 February 2009.Venture capital investmentsThere was a limited amount of investment activity during the period.The Company invested £194,000 in two new investments and onefollow-on investment. £100,000 was invested into Financial NewsPublishing Limited, a financial publisher which has arisen fromSanastro Limited, a previous investment which had failed. Aninvestment of £34,000 was made in Tristel plc, a manufacturer ofinfection control products, and £60,000 was invested in Hoole HallSpa and Leisure Limited as a follow-on investment.There have been a small number of realisations in the period.Clerkenwell Ventures plc returned most of its surplus funds toshareholders after it was unable to find suitable restaurantbusinesses to acquire in line with its plans with the Companyreceiving £279,000, realising a gain of £40,000.Sanastro (as mentioned above) and Forward Media Limited both wentinto liquidation in the period, producing total realised losses of£93,000. The net realised loss in the period from disposals amountedto £52,000.The existing quoted portfolio showed a significant rise in value overthe six months, increasing by £709,000. The most notable risers wereSpice plc, Synergy Health plc and Ludorum plc.As usual, the Board also reviewed the valuation of the unquotedinvestments at the period end and made a small number of changes toprevious carrying values. The net movement on the unquotedvaluations was an increase of £6,000.The total unrealised gains for the six-months were £715,000.Full details of the portfolio together with the additions anddisposals in the period are shown below.Fixed income and other investmentsThe Company has a small holding in a bond fund which was valued at£149,000 at the period end, with unrealised gains over the periodamounting to £27,000. A fixed income bond, previously held, maturedduring the period with realised gains thereon amounting to £2,000.Results and dividendThe return on activities after taxation for the period was £639,000,comprising a revenue loss of £33,000 and a capital return of£672,000.In line with the Company's usual practice, no interim dividend willbe paid.Share buybacksThe Company has currently suspended its share buyback policy while itis in the process of cancelling its Share Premium account to createadditional distributable reserves. Once this is complete, the Boardwill give consideration to the Company's future share buyback policy.Risk and uncertaintiesUnder the Disclosure and Transparency Directive, the Board is nowrequired, in the Company's half year results, to report on principalrisks and uncertainties facing the Company over the remainder of thefinancial year.The Board has concluded that the key risks are:* investment risk associated with investing in young businesses;* failure to maintain approval as a VCT.In both cases the Board continues to be satisfied with the Company'sapproach to these risks. Although the Company has significantexposure to the relatively immature businesses quoted on AIM, theCompany seeks to mitigate risks associated with this as far it can byholding a well-diversified portfolio.The Company's compliance with the VCT regulations is continuallymonitored by the Administrator, who regularly reports to the Board onthe current position. The Company also retainsPricewaterhouseCoopers to provide regular reviews and advice in thisarea. The Board considers that this approach reduces the risk of abreach of the VCT regulations to a minimal level.OutlookAlthough stock market indices have shown reasonably steady andsustained growth since March, they remain well below their previouspeak levels. This is especially true in the AIM market, where forexample the FTSE AIM All Share Index currently stands nearly 50%below its 2006 peak. Whether the recovery seen in recent months cancontinue, remains to be seen, however the Board believes it isunrealistic to expect the Company's NAV to recover the ground it haslost in the short or medium-term.As I mentioned in my last report, the Board has been exploringoptions for the future of the Company. I can report that someprogress has been made and the Board is currently formulatingproposals which I expect to be in a position to put to Shareholdersin the near future.Andrew GriffithsChairman27 October 2009UNAUDITED SUMMARISED BALANCE SHEETas at 31 August 2009 31 Aug 31 Aug 28 Feb 2009 2008 2009 £'000 £'000 £'000Investments 5,962 10,002 5,608Current assetsDebtors 92 45 135Cash at bank and in hand 968 132 627 1,060 177 762Less: Creditors falling due within one (59) (51) (46)yearNet current assets 1,001 126 716Net assets 6,963 10,128 6,324Capital and reservesCalled up share capital 1,180 1,193 1,180Capital redemption reserve 170 157 170Share premium 6,506 6,506 6,506Special reserve 6,009 6,907 6,867Capital reserve - realised - 276 -Investment holding losses (6,724) (4,734) (8,254)Revenue reserve (178) (177) (145)Total equity shareholders' funds 6,963 10,128 6,324Net asset value per share 29.5p 42.4p 26.8pRECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 31 Aug 31 Aug 28 Feb 2009 2008 2009 £'000 £'000 £'000Opening shareholders' funds 6,324 13,324 13,324Repurchase of own shares - (156) (232)Total recognised gains/(losses) for the 639 (2,196) (5,924)periodDistributions paid in the period - (844) (844)Closing shareholders' funds 6,963 10,128 6,324INCOME STATEMENTfor the six months ended 31 August 2009 Six months ended 31 Aug 2009 Revenue Capital Total £'000 £'000 £'000Income 67 - 67Net gains/(losses) on investments - unrealised - 743 743 -realised (50) (50) 67 693 760Investment management fees (7) (21) (28)Other expenses (93) - (93)Return/(loss) on ordinary activities (33) 672 639Taxation - - -Return/(loss) attributable to equity (33) 672 639shareholdersReturn per Ordinary Share (0.1p) 2.8p 2.7p Six months ended Year ended 31 Aug 2008 28 Feb 2009 Revenue Capital Total Total £'000 £'000 £'000 £'000Income 162 - 162 263Net gains/(losses) on - unrealised (2,179) (2,179) (5,541)investments - realised 58 58 (334) 162 (2,121) (1,959) (5,612)Investment management fees (24) (72) (96) (105)Other expenses (140) (1) (141) (207)Return/(loss) on ordinary (2) (2,194) (2,196) (5,924)activitiesTaxation - - - -Return/(loss) attributable to (2) (2,194) (2,196) (5,924)equity shareholdersReturn per Ordinary Share - (9.1p) (9.1p) (24.7p)All Revenue and Capital items in the above statement derive fromcontinuing operations. The total column within the Income Statementrepresents the profit and loss account of the Company.A Statement of Total Recognised Gains and Losses has not beenprepared as all gains and losses are recognised within the IncomeStatement as noted above.UNAUDITED CASH FLOW STATEMENTfor the six months ended 31 August 2009 Six Six months months Year ended ended ended 31 Aug 31 Aug 28 Feb 2009 2008 2009 Note £'000 £'000 £'000Cash outflow from operatingactivities 1and returns on investments (14) (34) (91)Capital expenditurePurchase of investments (194) (789) (789)Disposal of investments 533 680 1,320Net cash inflow/(outflow) from capital 339 (109) 531expenditureAcquisitionsCash acquired 16 - - 16 - -Equity dividends paid - (848) (844)Net cash inflow/(outflow) before financing 341 (991) (404)FinancingShare issue costs - (41) (52)Purchase of own shares - (162) (243)Net cash outflow from financing - (203) (295)Increase/(decrease) in cash 2 341 (1,194) (699)Notes to the cash flow statement:1. Cash flow from operating activities and returns oninvestmentsGain/(loss) on activities before 639 (2,196) (5,924)taxation(Gains)/losses on investments (693) 2,121 5,875Decrease/(increase) in other 43 61 (33)debtorsIncrease in accruals and deferred income (3) (20) (9)Net cash outflow from operating activities (14) (34) (91)2. Analysis of net fundsBeginning of period 627 1,326 1,326Net cash inflow/(outflow) 341 (1,194) (699)End of period 968 132 627SUMMARY OF INVESTMENT PORTFOLIOas at 31 August 2009 Unrealised gain/(loss) in the % of Cost Valuation period portfolio £'000 £'000 £'000 by valueTop twenty venture capitalinvestmentsSynergy Health plc ** 622 730 208 10.5%Cadbury House Limited * 461 461 - 6.6%Nu Nu plc * 470 432 - 6.2%Aero Inventory plc 860 395 92 5.7%Hoole Hall Spa and Leisure 360 360 - 5.2%Limited *Elektron plc 459 341 (10) 4.9%Ludorum plc 161 339 158 4.9%Spice plc ** 398 315 143 4.6%Glisten plc 246 181 36 2.6%FDM Group plc 150 158 55 2.3%Pennant International Group 308 155 - 2.2%plcStraight plc 160 138 66 2.0%Supporta plc 406 134 10 1.9%The Thames Club Limited * 250 125 - 1.8%Colliers CRE plc 296 123 60 1.8%Huveaux plc 300 114 47 1.7%Interserve plc ** 213 114 36 1.6%Forest Support Services plc 160 112 26 1.6%Neutrahealth plc 230 108 (36) 1.6%Preston North End plc 141 107 (23) 1.6% 6,651 4,943 868 71.3%Other venture capital 5,886 870 (153) 12.5%investmentsOther investments 149 149 28 2.2%Total investments 12,686 5,962 743 86.0%Cash at bank and in hand 968 14.0%Total 6,930 100.0%All venture capital investments are quoted on AIM unless otherwisestated.* Unquoted** Listed on London Stock Exchange Main MarketSUMMARY OF INVESTMENT MOVEMENTSfor the six months ended 31 August 2009Additions £'000Venture capital investmentsFinancial News Publishing Ltd 100Hoole Hall Spa and Leisure Limited 60Tristel plc 34 194Disposals Market Total value at Profit/ realised 1 March Disposal loss vs gain/ Cost 2009 proceeds cost (loss) £'000 £'000 £'000 £'000 £'000Venture capital investmentsClerkenwell Ventures plc 248 239 279 31 40Ludorum plc 2 3 4 2 1Dissolutions/ liquidationsBioganix plc 98 - - (98) -Cytomyx plc 200 - - (200) -Forward Media plc 281 20 - (281) (20)Sanastro plc 315 73 - (315) (73)BondsPrudential plc 5½% 2009stock 226 248 250 24 2 1,370 583 533 (837) (50)NOTES TO THE UNAUDITED FINANCIAL STATEMENTS1. The unaudited half yearly financial results cover the six monthsto 31 August 2009 and have been prepared in accordance with theaccounting policies set out in the statutory accounts for the yearended 28 February 2009 which were prepared under UK GenerallyAccepted Accounting Practice and in accordance with the Statement ofRecommended Practice "Financial Statements of Investment TrustCompanies and Venture Capital Trusts" January 2009.2. All revenue and capital items in the income statement derive fromcontinuing operations.3. The Company has only one class of business and derives its incomefrom investments made in shares, securities and bank deposits.4. The comparative figures were in respect of the period ended 31August 2008 and the year ended 28 February 2009 respectively.5. Return per share for the period has been calculated on 23,590,014shares, being the weighted average number of shares in issue duringthe period.6. NAV per share for the period has been calculated on 23,590,014shares, being the number of shares in issue at the period end.7. Dividends 31 August 2009 28 Feb 2009 Revenue Capital Total Total £'000 £'000 £'000 £'000Paid in period2008 Final distribution - - - 8448. Reserves Capital Share Capital Investment redemption premium Special reserve holding Revenue reserve account reserve - losses reserve realised £'000 £'000 £'000 £'000 £'000 £'000At 1 March 170 6,506 6,867 - (8,254) (145)2009Expenses - - - (21) - -charged tocapitalNetgains/(losses) - - - (50) 743 -oninvestmentsRealisation ofrevaluations - - - (787) 787 -fromprevious yearsTransfer - - (858) 858 - -betweenreservesRetained net - - - - - (33)revenuelossAt 31 August 170 6,506 6,009 - (6,724) (178)2009Distributable reserves comprise the Special reserve, Capital reserve- realised, Revenue Reserve and Investment holding losses of£6,807,000. At the period end there were no reserves available fordistribution.9. The unaudited financial statements set out herein do notconstitute statutory accounts within the meaning of Section 434 ofthe Companies Act 2006 and have not been delivered to the Registrarof Companies. The figures for the year ended 28 February 2009 havebeen extracted from the financial statements for that year, whichhave been delivered to the Registrar of Companies; the auditors'report on those financial statements was unqualified.10. The Directors confirm that, to the best of their knowledge, thehalf-yearly financial statements have been prepared in accordancewith the "Statement: Half-Yearly Financial Reports" issued by the UKAccounting Standards Board and the half-yearly financial reportincludes a fair review of the information required by:(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being anindication of important events that have occurred during the firstsix months of the financial year and their impact on the condensedset of financial statements, and a description of the principal risksand uncertainties for the remaining six months of the year; and(b) DTR 4.2.8R of the Disclosure and Transparency Rules, beingrelated party transactions that have taken place in the first sixmonths of the current financial year and that have materiallyaffected the financial position or performance of the entity duringthat period, and any changes in the related party transactionsdescribed in the last annual report that could do so.11. Copies of the unaudited half yearly financial results will besent to Shareholders shortly. Further copies can be obtained from theCompany's Registered Office and will be available for download fromwww.downing.co.uk.---END OF MESSAGE---This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 27.10.2009 - 16:24 Uhr
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