DJ Northern Aim VCT plc Annual Financial Report

15th December 2010


15 DECEMBER 2010



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 - year ended 31 October 2010:
(comparative figures as at 31 October 2009 in italics):

2010 2009

· Net assets ÂGBP7.0m ÂGBP7.6m

· Net asset value per share 31.6p 34.4p

· Return per share

Revenue 0.2p 0.1p

Capital 0.1p 4.6p

Total 0.3p 4.7p

· Dividend per share proposed

in respect of the year

Revenue 0.1p -

Capital 2.9p 3.0p

Total 3.0p 3.0p

· Cumulative return to

shareholders since launch

Net asset value per share 31.6p 34.4p

Dividends paid per share* 22.3p 19.3p

Net asset value plus dividends

paid per share 53.9p 53.7p

· Share price at end of year 25.5p 26.0p

*Excluding proposed final dividend

For further information, please contact:

NVM Private Equity Limited
Alastair Conn/Christopher Mellor 0191 244 6000



Overview of the year
During the past year the UK economy has begun a tentative recovery from the deep
recession whose low point was reached in the first half of 2009. The new
Government has maintained an expansionary monetary policy whilst seeking to
impose a severe fiscal tightening over the next few years, based on revenue-
raising measures such as the imminent increase in VAT as well as significant
cuts in public expenditure. These and other factors have combined to prolong
the general uncertainty which has overshadowed the activities of smaller
companies in the UK.

The AIM market made little progress between November 2009 and July 2010 but then
rose sharply over the last quarter of our financial year to 31 October 2010,
ending the year 25% higher overall. The number of VCT-qualifying new issues on
AIM has again been disappointingly low. Whilst a number of our investee
companies have made encouraging progress despite the difficult conditions, in
most cases this has yet to be reflected in a re-rating of the share price. As a
result Northern AIM VCT has generated only a modest return over the past year.
However it is pleasing that we have been able to maintain the annual dividend at
3.0p, in line with our stated objective, for a fourth successive year.

Performance and dividend
The return per share for the year as shown in the income statement was 0.3p,
equivalent to 0.9% of the opening net asset value (NAV) per share, compared with
4.7p in the preceding year. Investment income was slightly down from the
corresponding period, but a reduction in the level of revenue expenses led to a
small increase in the revenue surplus for the year. The capital value of the
investment portfolio showed little overall growth and, after taking account of
the 3.0p dividend paid in March 2010, the NAV per share fell to 31.6p at 31
October 2010 from 34.4p a year ago.

The proposed final dividend of 3.0p per share in respect of the year ended 31
October 2010 will, subject to shareholders' approval at the annual general
meeting, be paid on 18 March 2011 to shareholders on the register on 18 February
2011. This will take the cumulative total dividends paid by the company to
25.3p per share.

The business review in the annual report contains a detailed discussion of
developments in the investment portfolio during the year. Three new investments
were added, one of which resulted from the restructuring of an existing holding,
and a number of disposals were completed so as to maintain an adequate level of
cash reserves.

Although the AIM market as a whole has performed well over the past two years,
many of the smaller VCT-qualifying companies on AIM have seen their market value
stagnate or fall due to a lack of significant buying interest. Our policy of
holding a significant weighting in unquoted UK companies continues, though in
the prevailing economic conditions we have felt it right to take a cautious view
on the valuation of unquoted holdings and consequently this part of the
portfolio did not achieve a positive contribution this year.

Shareholder issues
During the year the directors have again maintained a policy of not buying back
the company's own shares in the market. Over the past year there has been a
steady level of secondary market activity in the shares, generally at a discount
of around 20% to NAV, and it remains our view that the company's distributable
reserves and cash resources should be focussed on making dividend distributions
which benefit all shareholders equally.

The company has now been in existence for ten years, and at the annual general
meeting on 11 March 2011 shareholders will be invited to vote on the five-yearly
resolution for the continuation of the company. Whilst the directors are
recommending shareholders to vote in favour of continuation, it is important to
emphasise that the future direction of the company is being kept under careful
review, with a number of possible strategic options being considered. High
priority will be given to protection of the capital gains deferral obtained by
many shareholders when making their original investment in the company.

Shareholders will receive with the annual report a separate circular giving
details of all the business to be transacted at the annual general meeting.

VCT qualifying status
The company has continued to comply with the qualifying conditions for
maintaining its approval by HM Revenue & Customs as a venture capital trust.
The board retains PricewaterhouseCoopers LLP as advisers on VCT taxation

Although the financial markets have been on an upward trend in recent months,
many observers remain pessimistic about the short to medium term prospects for
the UK economy. The impact of higher VAT and spending cuts has yet to be felt
and it seems likely that some difficult times still lie ahead. This is bound to
have some effect on the performance of our portfolio. However we believe that
our investments, both quoted and unquoted, are currently held at a valuation
which leaves some room for future enhancement. We will continue to seek ways to
realise this potential for the benefit of shareholders.

James Dawnay

The audited financial statements for the year ended 31 October 2010 are set out

for the year ended 31 October 2010

Year ended 31 October 2010 Year ended 31 October 2009

Revenue Capital Total Revenue Capital Total

on disposal

investments - (106) (106) - 135 135

Movements in
fair value

of - 197 197 - 895 895

---------- ---------- ---------- ---------- ---------- ----------

- 91 91 - 1,030 1,030

Income 218 - 218 236 - 236

Investment (25) (74) (99) (18) (55) (73)

Recoverable - - - 7 22 29

Other (154) - (154) (199) - (199)

---------- ---------- ---------- ---------- ---------- ----------

Return on

activities 39 17 56 26 997 1,023
before tax

Tax on return

ordinary - - - - - -

---------- ---------- ---------- ---------- ---------- ----------

Return on

activities 39 17 56 26 997 1,023
after tax

---------- ---------- ---------- ---------- ---------- ----------

Return per 0.2p 0.1p 0.3p 0.1p 4.6p 4.7p

for the year ended 31 October 2010

Year ended Year ended
31 October 2010 31 October 2009

Equity shareholders' funds

at 1 November 2009 7,585 7,152

Return on ordinary

activities after tax 56 1,023

Dividends recognised in the year (662) (653)

Net proceeds of share issues 67 63

Equity shareholders' funds ---------- ----------

at 31 October 2010 7,046 7,585

---------- ----------

as at 31 October 2010

31 October 31 October
2010 2009

Fixed asset investments

Quoted on AIM 3,464 3,734

Unquoted 2,318 2,138

---------- ----------

Total fixed asset investments 5,782 5,872

---------- ----------

Current assets:

Debtors 40 353

Cash at bank 1,318 1,461

---------- ----------

1,358 1,814

Creditors (amounts falling due

within one year) (94) (101)

---------- ----------

Net current assets 1,264 1,713

---------- ----------

Net assets 7,046 7,585

---------- ----------

Capital and reserves:

Called-up equity share capital 1,116 1,103

Share premium 2,092 2,038

Capital redemption reserve 183 183

Capital reserve 5,147 7,272

Revaluation reserve (1,609) (3,089)

Revenue reserve 117 78

---------- ----------

Total equity shareholders' funds 7,046 7,585

---------- ----------

Net asset value per share 31.6p 34.4p

for the year ended 31 October 2010

Year ended Year ended
31 October 2010 31 October 2009


Net cash inflow from operating 271 267


Corporation - -
tax paid


Purchase of (1,343) (476)

Sale/repayment of investments 1,524 2,222

---------- ----------

Net cash inflow from financial 181 1,746

Equity (662) (653)

---------- ----------

Net cash inflow/(outflow) before (210) 1,360


Issue of 77 77

Share issue (10) (14)

---------- ----------

Net cash inflow from 67 63

---------- ----------

Increase/(decrease) in cash at (143) 1,423

---------- ----------

Reconciliation of return before

to net cash flow from operating

Return on ordinary activities 56 1,023
before tax

(Gain)/loss on 106 (135)
disposal of

Movements in fair (197) (895)
value of investments

Decrease in debtors 313 220

Increase/(decrease) (7) 54
in creditors

---------- ----------

Net cash inflow from operating 271 267

---------- ----------

Reconciliation of movement in
net funds

1 November 2009 Cash flows 31 October 2010


Cash at 1,461 (143) 1,318

---------- ---------- ----------

as at 31 October 2010

Valuation % of net assets
ÂGBP000 by value

Venture capital investments

(*denotes unquoted, others quoted on AIM)

Crantock Bakery* 756 10.7

Andor Technology 441 6.3

IS Pharma 417 5.9

IG Doors* 364 5.2

Pilat Media Global 361 5.1

Advanced Computer Software Group 351 5.0

Longhirst Venues* 349 5.0

Nationwide Accident Repair Services 332 4.7

Axial Systems Holdings* 287 4.1

IDOX 260 3.7

Kerridge Commercial Systems* 251 3.5

Brulines Group 214 3.0

Bond International Software 204 2.9

Britspace Group* 186 2.6

Jelf Group 160 2.3

---------- ----------

Fifteen largest holdings 4,933 70.0

Quadnetics Group 155 2.2

Cello Group 135 1.9

CVS Group 134 1.9

Optilan Group* 125 1.8

Prologic 120 1.7

Baydonhill 42 0.6

Colliers International UK 37 0.5

Adept Telecom 35 0.5

Twenty 32 0.5

Belgravium Technologies 20 0.3

First Artist Corporation 10 0.1

Individual Restaurant Company 4 0.1

Spectrum Interactive* - -

---------- ----------

Total fixed asset investments 5,782 82.1

Net current assets 1,264 17.9

---------- ----------

Net assets 7,046 100.0

---------- ----------


The board carries out a regular review of the risk environment in which the
company operates. The main areas of risk identified by the board are as

Investment risk: The majority of the company's investments are in small and
medium-sized unquoted and AIM-quoted companies which are VCT qualifying
holdings, and which by their nature entail a higher level of risk and lower
liquidity than investments in large quoted companies. The directors aim to limit
the risk attaching to the portfolio as a whole by careful selection and timely
realisation of investments, by carrying out rigorous due diligence procedures
and by maintaining a wide spread of holdings in terms of financing stage,
industry sector and geographical location. The board reviews the investment
portfolio with the investment managers on a regular basis.

Financial risk: As most of the company's investments involve a medium to long-
term commitment and many are relatively illiquid, the directors consider that it
is inappropriate to finance the company's activities through borrowing except on
an occasional short-term basis. The company has very little exposure to foreign
currency risk and does not enter into derivative transactions.

Economic risk: Events such as economic recession or general fluctuations in
stock markets and interest rates may affect the valuation of investee companies
and their ability to access adequate financial resources, as well as affecting
the company's own share price and discount to net asset value.

Stock market risk: The majority of the company's investments are quoted on the
AIM market and will be subject to market fluctuations upwards and downwards.

External factors such as terrorist activity can negatively impact stock markets
worldwide and the AIM market is no exception to this. In times of adverse
sentiment there tends to be very little, if any, market demand for shares in the
smaller companies quoted on AIM.

Liquidity risk: The company's investments may be difficult to realise. The
fact that a stock is quoted on AIM does not guarantee its liquidity and there
may be a large spread between bid and offer prices. Unquoted investments are
not traded on a recognised stock exchange and are inherently illiquid.

Internal control risk: The board regularly reviews the system of internal
controls, both financial and non-financial, operated by the company and the
manager. These include controls designed to ensure that the company's assets
are safeguarded and that proper accounting records are maintained.

VCT qualifying status risk: The company is required at all times to observe the
conditions laid down in the Income Tax Act 2007 for the maintenance of approved
VCT status. The loss of such approval could lead to the company losing its
exemption from corporation tax on capital gains, to investors being liable to
pay income tax on dividends received from the company and, in certain
circumstances, to investors being required to repay the initial income tax
relief on their investment. The manager keeps the company's VCT qualifying
status under continual review and reports to the board on a quarterly basis.
The board has also retained PricewaterhouseCoopers LLP to undertake an
independent VCT status monitoring role.


The directors are responsible for preparing the annual financial report 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 UK Accounting Standards. The financial statements are required by law to
give a true and fair view of the state of affairs of the company at the end of
the financial period and of the return of the company for that period. In
preparing these financial statements, the directors are required to (i) select
suitable accounting policies and then apply them consistently; (ii) make
judgements and estimates that are reasonable and prudent; (iii) state whether
applicable UK Accounting Standards have been followed, subject to any material
departures disclosed and explained in the financial statements; and (iv)
prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.

In relation to the financial statements for the year ended 31 October 2010 each
of the directors has confirmed that to the best of his knowledge (i) the
financial statements, which have been prepared in accordance with the applicable
set of accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the company; and (ii) the
directors' 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 which it faces.

The directors are also responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
company and enable them to ensure that its financial statements comply with the
Companies Act 2006. They have general responsibility for taking such steps as
are reasonably open to them to safeguard the assets of the company and to
prevent and detect fraud and other irregularities.

Under applicable law and regulations, the directors are also responsible for
preparing a directors' report, directors' remuneration report and corporate
governance statement that comply with that law and those regulations.

The company's financial statements are published on the NVM Private Equity
Limited website, The maintenance and integrity of this website
is the responsibility of NVM and not of the company. Visitors to the website
should be aware that legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in other

The directors of the company at the date of this announcement were Mr C J P
Dawnay (Chairman), Mr S D Bullock, Mr A M Conn, Mr I A Macdonald and Mr J W J


The above summary of results for the year ended 31 October 2010 does not
constitute statutory financial statements within the meaning of Section 435 of
the Companies Act 2006 and has not been delivered to the Registrar of
Companies. Statutory financial statements will be filed with the Registrar of
Companies in due course; the independent auditors' report on those financial
statements under Section 495 of the Companies Act 2006 is unqualified and does
not contain a statement under Section 498(2) or (3) of the Companies Act 2006.

The proposed final dividend of 3.0p per share for the year ended 31 October
2010 will, if approved by shareholders, be paid on 18 March 2011 to shareholders
on the register at the close of business on 18 February 2011.

The full annual report including financial statements for the year ended 31
October 2010 is expected to be posted to shareholders on 14 January 2011 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,

Neither the contents of the NVM Private Equity Limited website nor the contents
of any website accessible from hyperlinks on the NVM Private Equity Limited
website (or any other website) is incorporated into, or forms part of, this

This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.

Source: Northern AIM VCT PLC via Thomson Reuters ONE


(END) Dow Jones Newswires

December 15, 2010 09:16 ET (14:16 GMT)