RNS Number : 6630W
Northern AIM VCT PLC
13 June 2008
13 JUNE 2008
NORTHERN AIM VCT PLC
UNAUDITED HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHS ENDED 30 APRIL 2008
Northern AIM VCT PLC is a Venture Capital Trust (VCT) managed by NVM Private Equity. The trust was launched in October 2000. Its
portfolio of VCT-qualifying investments is focused on companies quoted on AIM but also includes a number of later-stage unquoted holdings.
Financial highlights:
(comparative figures for the six months ended 30 April 2007 in italics)
2008 2007
* Net assets �11.7m �14.5m
* Net asset value per share 53.7p 64.5p
* Return per share
Revenue 0.2p 0.1p
Capital (7.6)p 7.7p
Total (7.4)p 7.8p
* Interim dividend per share
in respect of the period - -
* Share price at end of period 40.5p 56.0p
* Cumulative returns to
shareholders since launch
Net asset value per share 53.7p 64.5p
Dividends paid per share 16.3p 13.3p
Net asset value plus dividends
paid per share 70.0p 77.8p
For further information, please contact:
NVM Private Equity Limited
Alastair Conn/Christopher 0191 244 6000
Mellor
Website: www.nvm.co.uk
Lansons Communications
Karen Mignon 020 7294 3685
NORTHERN AIM VCT PLC
HALF-YEARLY MANAGEMENT REPORT
FOR THE SIX MONTHS ENDED 30 APRIL 2008
The past half year has been a difficult period for the financial markets and for AIM in particular. Against a background of economic
uncertainty and falling property values, smaller quoted companies have generally been out of favour with investors and many of our company's
holdings have suffered as a consequence.
After deducting the dividend of 3.0p per share paid in March 2008, the company's net asset value (NAV) per share at 30 April 2008 was
53.7p compared to the audited year end figure of 64.0p at 31 October 2007. The negative return per share of 7.4p for the half year as shown
in the income statement is equivalent to 11.6% of the opening NAV. Whilst this result is undoubtedly disappointing in absolute terms
following the positive returns of the preceding period, in difficult market conditions Northern AIM VCT's portfolio has in fact performed
well relative to other AIM-focused VCTs and the AIM index as a whole.
On a total return basis (ie taking account of dividends paid), the company's performance relative to the FTSE AIM index over the past 6
and 12 months is as follows:
Movement to 30 April 2008 Past 6 months Past 12 months
Northern AIM VCT PLC - NAV total return -11.8% -12.5%
Northern AIM VCT PLC - share price total -16.7% -22.7%
return
FTSE AIM index - total return -14.3% -16.0%
Investments
There were relatively few changes in the AIM portfolio during the six months ended 30 April 2008. Additions comprised a new investment
of �241,000 in IS Pharma, a specialist hospital medicines developer, and a further �61,000 in Bond International Software. The only
significant sale was Inspicio where a recommended bid funded by 3i Group resulted in a cash receipt of �563,000, an excellent return on an
original investment of �250,000. Very few companies achieved an increase in share price over the period, whilst there were some significant
falls: among our larger holdings Aero Inventory was down by 16%, Pilat Media Global by 27% and Bond International Software by 40%.
The overall value of the unquoted portfolio was relatively stable during the period but there were a number of individual movements.
Good progress was reported by Stainton Metal Company and Britspace Holdings, but DMN, John Laing Partnership and IG Doors are all suffering
an adverse impact in the current year from market conditions in the infrastructure and construction sectors and this has been reflected in
our appraisal of valuation. Two new unquoted holdings were acquired, investments of �250,000 each being made in Optilan Group, a
Coventry-based telecommunications systems integration business, and Axial Systems Holdings, a supplier of distributed network management
solutions based in Maidenhead. Several of our companies are currently in discussions which may lead to exit opportunities in due course.
Shareholder issues
In the last annual report your board announced that it would no longer buy back the company's shares in the market at a fixed 10%
discount to NAV, and that priority would be given to maintaining an annual dividend of at least 3.0p per share. A final dividend of 3.0p was
paid to shareholders in March 2008 in respect of the year ended 31 October 2007, and it is intended that a final dividend of the same amount
will in due course be proposed in respect of the year ending 31 October 2008. No interim dividend has been declared.
As expected, the change in buy-back policy was followed by a fall in the company's share price, and the discount to NAV widened to
around 25% as at 30 April 2008. The directors used their buy-back authority in March 2008 to re-purchase 100,000 shares at 41p and will keep
the possibility of further occasional purchases under review.
VAT on management fees
The Government has announced that VCTs will be exempt from paying VAT on investment management fees with effect from 1 October 2008,
following a European Court of Justice judgement against the Government in a case relating to VAT payable by investment trusts. This
represents a prospective annual cost saving for our company of around �40,000. It is not yet clear whether VCTs will be able to obtain a
repayment of VAT paid on management fees in earlier periods but we will keep the position under review.
VCT qualifying status
The company retains PricewaterhouseCoopers LLP as advisers on matters relating to VCT status, and has continued to satisfy HM Revenue &
Customs' requirements for the maintenance of formal approval as a VCT.
Companies Act 2006
In anticipation of forthcoming changes to company law brought about by the Companies Act 2006, the directors intend to convene a general
meeting of shareholders at which a resolution will be proposed to alter that part of the company's articles of association which relates to
directors' conflicts of interest. An explanatory letter giving notice of the meeting will be mailed to shareholders with the half-yearly
report.
Prospects
It is difficult to find grounds for optimism about the financial markets in the short to medium term, with most commentators predicting
a period of little if any economic growth, depressed consumer spending and continuing falls in property values. Whilst we believe that many
of our AIM holdings are fundamentally undervalued, it would be unrealistic to expect any significant re-ratings in the near future, and with
few new AIM issues coming to the market it is likely that investment activity will remain at a relatively low level for the rest of the
current financial year. We hope to be able to report a more encouraging outlook in six months' time, but inevitably this will depend largely
on factors which are outside the board's and managers' control.
On behalf of the Board
JAMES DAWNAY
Chairman
The unaudited half-yearly financial statements for the six months ended 30 April 2008 are set out below.
INCOME STATEMENT
(unaudited) for the six months ended 30 April 2008
Six months ended 30 April 2008 Six months ended 30 April 2007
Revenue Capital Total Revenue Capital Total
�000 �000 �000 �000 �000 �000
Gain on disposal of - 15 15 - 193 193
investments
Unrealised adjustments to fair
value of investments - (1,543) (1,543) - 1,691 1,691
------ ------ ------ ------ ------ ------
- (1,528) (1,528) - 1,884 1,884
Income 179 - 179 133 - 133
Investment management fee (41) (123) (164) (39) (117) (156)
Other expenses (96) - (96) (82) - (82)
------ ------ ------ ------ ------ ------
Return on ordinary activities
before tax 42 (1,651) (1,609) 12 1,767 1,779
Tax on return on
ordinary activities - - - - - -
------ ------ ------ ------ ------ ------
Return on ordinary activities
after tax 42 (1,651) (1,609) 12 1,767 1,779
------ ------ ------ ------ ------ ------
Return per share 0.2p (7.6)p (7.4)p 0.1p 7.7p 7.8p
Year ended 31 October 2007
Revenue Capital Total
�000 �000 �000
Gain on disposal of investments - 380 380
Unrealised adjustments to fair
value of investments - 1,393 1,393
------ ------ ------
- 1,773 1,773
Income 318 - 318
Investment management fee (79) (236) (315)
Other expenses (170) - (170)
---------- ---------- ----------
Return on ordinary activities
before tax 69 1,537 1,606
Tax on return on
ordinary activities - - -
------ ------ ------
Return on ordinary activities
after tax 69 1,537 1,606
------ ------ ------
Return per share 0.3p 6.8p 7.1p
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
(unaudited) for the six months ended 30 April 2008
Six months ended Six months ended Year ended
30 April 2008 30 April 2007 31 October
2007
�000 �000 �000
Equity shareholders' funds at
1 November 2007 13,914 13,250 13,250
Return on ordinary activities
after tax (1,609) 1,779 1,606
Dividends recognised in the (652) (227) (228)
period
Net proceeds of share issues 77 26 26
Shares purchased for (41) (348) (722)
cancellation
Expenses charged to capital - (18) (18)
------ ------ ------
Equity shareholders' funds at
30 April 2008 11,689 14,462 13,914
------ ------ ------
BALANCE SHEET
(unaudited) as at 30 April 2008
30 April 2008 30 April 2007 31 October 2007
�000 �000 �000
Fixed asset investments at
fair value:
Venture capital investments
Quoted on AIM 5,863 8,600 7,491
Unquoted 5,423 5,331 5,560
------ ------ ------
Total fixed asset investments 11,286 13,931 13,051
------ ------ ------
Current assets:
Debtors 54 555 73
Cash at bank 387 28 837
------ ------ ------
441 583 910
Creditors (amounts falling due
within one year) (38) (52) (47)
------ ------ ------
Net current assets 403 531 863
------ ------ ------
Net assets 11,689 14,462 13,914
------ ------ ------
Capital and reserves:
Called-up equity share capital 1,089 1,121 1,087
Share premium 1,989 1,919 1,919
Capital redemption reserve 183 144 178
Capital reserve - realised 8,733 9,402 8,981
Capital reserve - unrealised (409) 1,806 1,622
Revenue reserve 104 70 127
------ ------ ------
Total equity shareholders' 11,689 14,462 13,914
funds
------ ------ ------
Net asset value per share 53.7p 64.5p 64.0p
CASH FLOW STATEMENT
(unaudited) for the six months ended 30 April 2008
Six months ended Six months ended Year ended
30 April 2008 30 April 2007 31 October 2007
�000 �000 �000 �000 �000 �000
Net cash outflow from
operating activities (71) (93) (164)
Taxation:
Corporation tax paid - - -
Financial investment:
Purchase of investments (946) (247) (544)
Sale/repayment of investments 1,183 685 2,237
------ ------ ------
Net cash inflow
from financial investment 237 438 1,693
Equity dividends paid (652) (227) (228)
------ ------ ------
Net cash inflow/(outflow)
before financing (486) 118 1,301
Financing:
Issue of ordinary shares 77 30 30
Share issue expenses - (4) (4)
Purchase of ordinary shares
for cancellation (41) (348) (722)
------ ------ ------
Net cash inflow/(outflow) from 36 (322) (696)
financing
------ ------ ------
Increase/(decrease) in cash at (450) (204) 605
bank
------ ------ ------
Reconciliation of return
before
tax to net cash flow from
operating activities
Return on ordinary activities
before tax (1,609) 1,779 1,606
Gain on disposal of
investments
held at fair value (15) (193) (380)
Unrealised adjustments to fair
value of investments 1,543 (1,691) (1,393)
Decrease in debtors 19 28 24
Increase/(decrease) in (9) 2 (3)
creditors
Expenses charged to capital - (18) (18)
reserve
------ ------ ------
Net cash outflow from
operating activities (71) (93) (164)
------ ------ ------
Analysis of movement in net
funds
1 November 2007 Cash flows 30 April 2008
�000 �000 �000
Cash at bank 837 (450) 387
------ ------ ------
INVESTMENT PORTFOLIO SUMMARY
as at 30 April 2008
Cost Valuation % of net
�000 �000 assets
by
valuatio
n
AIM-quoted investments:
Aero Inventory 373 858 7.3
Jelf Group 297 714 6.1
Pilat Media Global 301 481 4.1
RCG Holdings 236 471 4.0
Bond International Software 182 397 3.4
Cello Group 301 340 2.9
Prologic 300 300 2.6
Fountains 250 286 2.5
IS Pharma 241 284 2.4
IDOX 250 234 2.0
Colliers CRE 331 189 1.6
Shieldtech 248 178 1.5
SectorGuard 117 146 1.3
Andor Technology 292 143 1.2
Quadnetics Group 235 127 1.1
1st Dental Laboratories 350 117 1.0
Intercytex Group 250 97 0.8
Belgravium Technologies 143 97 0.8
First Artist Corporation 502 83 0.7
Twenty 198 79 0.7
Adept Telecom 233 65 0.6
Zenith Hygiene Group 320 31 0.3
Individual Restaurant Company 250 31 0.3
Spectrum Interactive 250 30 0.3
Widney 208 26 0.2
Hartest Holdings 450 25 0.2
Advance AIM Value Realisation Company 39 23 0.2
Baydonhill 251 11 0.1
------ ------ -----
7,398 5,863 50.2
------ ------ -----
Unquoted investments:
Stainton Metal Company 751 1,199 10.3
Britspace Holdings 588 1,058 9.1
Crantock Bakery 490 858 7.3
Longhirst Venues 136 503 4.3
Pivotal Laboratories Holdings 250 345 3.0
IG Doors 315 315 2.7
Axial Systems Holdings 250 250 2.1
Optilan Group 250 250 2.1
John Laing Partnership 229 229 2.0
DMN 858 215 1.8
PKL Holdings 180 201 1.7
------ ------ -----
4,297 5,423 46.4
------ ------ -----
Total fixed asset investments 11,695 11,286 96.6
------
Net current assets 403 3.4
------ -----
Net assets 11,689 100.0
------ -----
The above half-yearly financial statements for the six months ended 30 April 2008 do not constitute statutory financial statements
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 31 October 2007 have been extracted from the audited financial statements for that year, which have been delivered to the
Registrar of Companies; the independent auditors' report on those financial statements under Section 235 of the Companies Act 1985 was
unqualified. The half-yearly financial statements have been prepared on the basis of the accounting policies set out in the annual financial
statements for the year ended 31 October 2007.
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.
The calculation of the revenue and capital return per share is based on the return on ordinary activities after tax for the period and
on 21,769,137 (2007 22,787,467) ordinary shares, being the weighted average number of shares in issue during the period.
A copy of the half-yearly financial report for the six months ended 30 April 2008 is expected to be posted to shareholders on 24 June
2008 and will be available to the public at the registered office of the company at Northumberland House, Princess Square, Newcastle upon
Tyne NE1 8ER and on the NVM Private Equity Limited website, www.nvm.co.uk.
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
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