Northern AIM VCT PLC – Final Results

20th December 2006


RNS Number:3707O
Northern AIM VCT PLC
20 December 2006

20 DECEMBER 2006

NORTHERN AIM VCT PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 OCTOBER 2006

Northern AIM VCT PLC is a Venture Capital Trust (VCT) managed by Northern
Venture Managers. The trust was launched in October 2000; its portfolio of
VCT-qualifying investments is focused on companies quoted on the Alternative
Investment Market (AiM) but also includes a number of later-stage unquoted
holdings.

Financial highlights – year ended 31 October 2006:
(comparative figures as at 31 October 2005 in italics)
2006 2005
Re-stated
* Net assets #13,250,000 #14,308,000
* Net asset value per share 57.6p 60.4p
* Return per share:
Revenue 0.4p 0.8p
Capital (1.3)p (2.3)p
Total (0.9)p (1.5)p
* Dividend per share declared
in respect of the year:
Revenue 0.4p 0.8p
Capital 0.6p 3.2p
Total 1.0p 4.0p
* Cumulative return to shareholders
since launch:
Net asset value per share 57.6p 60.4p
Dividends paid per share* 12.3p 10.3p
Net asset value plus
dividends paid per share 69.9p 70.7p
* Share price at end of year 53.0p 58.0p

* Excluding proposed final dividend

For further information, please contact:
Northern Venture Managers Limited
Norman Yarrow, Investment Director 0131 260 1000
Website: www.nvm.co.uk
Lansons Communications

Alison Boucher 020 7294 3616

NORTHERN AIM VCT PLC

CHAIRMAN’S STATEMENT

The Chairman of Northern AIM VCT PLC, James Dawnay, included the following
points in his statement to shareholders:

Overview of the year

The AiM market index rose strongly over the first half of the company’s
financial year but fell back subsequently to end the year up by only 0.8%.
Northern AIM VCT’s funds have remained over 90% invested in AiM-quoted and
unquoted venture capital holdings, producing a marginally negative return over
the year. A dividend of 1.0p per share has been declared.

Performance

The net asset value per share as at 31 October 2006 was 57.6p, compared with
60.4p (re-stated) at 31 October 2005. Before deducting dividends of 2.0p which
were charged to reserves during the year, the total return was minus 0.8p per
share, equivalent to 1.3% of the opening net asset value. Over the same period
the FTSE AiM total return index increased by 1.6%.

Investments

During the year five new AiM-quoted holdings were added to the portfolio at a
cost of #1.3 million and one new unquoted investment was completed at a cost of
#248,000. The proportion of the company’s investments represented by AiM-quoted
holdings has remained virtually unchanged at 64%. As in the previous year, the
AiM holdings achieved a positive return overall but there was a small net
reduction in the value of the unquoted portfolio as a result of disappointing
trading performance from three of our companies.

Presentation of accounts

The introduction of new UK financial reporting standards has led to changes in
the way in which the company’s annual accounts are presented. The old Profit
and Loss Account, Statement of Total Recognised Gains and Losses and Note of
Historical Cost Profits and Losses have been replaced by an Income Statement
which includes all recognised gains and losses for the year in a single table.
Quoted investments are now valued at bid rather than mid-market price, and
proposed dividends are no longer included in the year-end balance sheet. The
comparative figures for the year ended 31 October 2005 have been re-stated
accordingly.

Dividend

At the half-year stage I reported that the board had decided not to declare an
interim dividend and to review the position at the year end. The revenue return
per share for the year was 0.4p and this will be distributed by way of final
dividend, together with a capital dividend of 0.6p representing part of the
gains realised on investment sales during the year. The proposed final dividend
therefore totals 1.0p per share and will, subject to shareholders’ approval at
the annual general meeting, be paid on 2 March 2007 to shareholders on the
register on 2 February 2007.

The directors believe it is important that they achieve an appropriate balance
between maximising dividend distributions and maintaining the company’s capital
base and hence its long-term viability. This year’s dividend is therefore at a
lower level than those declared in the two preceding years. However we are well
aware that tax-free distributions to shareholders are one of the main
attractions of VCTs, and your board and managers are clearly focussed on the
need to resume a higher rate of dividend in the near future by achieving
improved investment returns.

Shareholder issues

The level of secondary market demand for VCT shares has continued to be low,
with most investors preferring to subscribe for new shares in public offers by
VCTs with the benefit of initial tax reliefs. Your board has continued to use
its authority to purchase shares in the market, at a 10% discount to net asset
value in line with our stated policy; during the year a total of 806,458
shares, representing approximately 3.4% of the opening share capital, were
purchased for cancellation at a cost of #431,000. Buying back shares in this
way not only provides liquidity for shareholders who wish to sell but also
enhances the underlying value of the remaining shareholdings. We believe that
it is in the interests of all VCTs and their shareholders that the investing
public is better informed about the attractions of VCTs, and your company is one
of approximately 70 VCTs which have recently taken up membership of the
Association of Investment Companies with the intention of promoting VCTs more
widely.

The company did not launch any public offers of new shares during the year, and
the 2006 Finance Act changes, which included a reduction of initial income tax
relief on VCT subscriptions from 40% to 30% and a tightening of the size limits
for companies in which VCTs invest, mean that we are unlikely to do so in the
foreseeable future. The company’s dividend investment scheme continues to
operate and 105,910 shares were allotted during the year for proceeds of
#61,000.

VCT qualifying status

The company has throughout the year continued to meet the qualifying conditions
laid down by HM Revenue & Customs for maintaining its approval as a venture
capital trust. The board retains PricewaterhouseCoopers LLP as advisers on VCT
taxation matters.

Prospects

Small companies in the UK have faced challenging conditions in recent months,
with interest rates on an upward trend and consumer expenditure reflecting
concerns about household debt levels and employment prospects. Against this
background, the immediate prospects for the AiM market generally and for new
issues in particular must be viewed cautiously. However, with a fully-invested
portfolio we have the benefit of being under no immediate pressure to make new
investments, and we share our managers’ belief that there is considerable growth
potential to be unlocked as the portfolio matures and that the flat performance
of the past three years should be improved upon in the future.

James Dawnay

Chairman

The audited financial statements for the year ended 31 October 2006 will show
the results set out below.

INCOME STATEMENT

for the year ended 31 October 2006

Year ended 31 October 2006 Year ended 31 October 2005

Re-stated
Revenue Capital Total Revenue Capital Total

#000 #000 #000 #000 #000 #000
Gain on disposal of investments – 70 70 – 213 213
Unrealised adjustments to fair value of – (123) (123) – (506) (506)
investments
———- ———- ———- ———- ———- ———-
– (53) (53) – (293) (293)

Income 332 – 332 449 – 449
Investment management fee (84) (251) (335) (84) (253) (337)
Other expenses (154) – (154) (160) – (160)
———- ———- ———- ———- ———- ———-
Return on ordinary activities
before tax 94 (304) (210) 205 (546) (341)
Tax on return on ordinary activities – – – (15) 15 –
———- ———- ———- ———- ———- ———-
Return on ordinary activities
after tax 94 (304) (210) 190 (531) (341)
———- ———- ———- ———- ———- ———-

Return per share 0.4p (1.3)p (0.9)p 0.8p (2.3)p (1.5)p

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS

for the year ended 31 October 2006

Year ended Year ended

31 October 2006 31 October 2005

Re-stated
Total Total

#000 #000
Equity shareholders’ funds
at 1 November 2005
As previously reported 14,051 13,751
Prior year adjustment 257 825
———- ———-
As re-stated 14,308 14,576

Return on ordinary activities after tax (210) (341)
Dividends recognised in the year (472) (1,541)
Net proceeds of share issues 55 2,103
Shares purchased for cancellation (431) (489)
———- ———-
Equity shareholders’ funds
at 31 October 2006 13,250 14,308
———- ———-

BALANCE SHEET

as at 31 October 2006

31 October 31 October
2006 2005

#000 Re-stated

#000
Venture capital
investments:
Quoted on AiM 8,274 7,469
Unquoted 4,697 4,762
———- ———-

Total fixed asset 12,971 12,231
investments
———- ———-

Current assets:
Debtors 97 59
Cash at bank 232 2,079
———- ———-

329 2,138
Creditors (amounts
falling due
within one year) (50) (61)
———- ———-

Net current assets 279 2,077
———- ———-

Net assets 13,250 14,308
———- ———-

Capital and reserves:
Called-up equity share 1,150 1,185
capital
Share premium 11,896 11,846
Capital redemption 112 72
reserve
Capital reserve:
Realised 74 1,061
Unrealised (132) (53)
Revenue reserve 150 197
———- ———-

Total equity 13,250 14,308
shareholders’ funds
———- ———-

Net asset value per 57.6p 60.4p
share

CASH FLOW STATEMENT

for the year ended 31 October 2006
Year ended Year ended
31 October 2006 31 October 2005
Re-stated
#000 #000 #000 #000
Net cash outflow
from operating (158) (51)
activities
Taxation:
Corporation tax – –
paid
Financial
investment:
Purchase of (1,839) (2,627)
investments
Sale/repayment of 998 1,918
investments
———- ———-

Net cash outflow
from
financial (841) (709)
investment
Equity dividends (472) (1,541)
paid
———- ———-

Net cash outflow
before
financing (1,471) (2,301)
Financing:
Issue of ordinary 61 2,218
shares
Share issue (6) (115)
expenses
Purchase of
ordinary shares
for (431) (489)
cancellation
———- ———-

Net cash
(outflow)/inflow
from financing (376) 1,614
———- ———-

Decrease in cash (1,847) (687)
at bank
———- ———-

Reconciliation of
return before
tax to net cash
flow from
operating
activities
Return on
ordinary
activities
before tax (210) (341)
Gain on disposal (70) (213)
of investments
Unrealised
adjustments to
fair value of 123 506
investments
Decrease/ 10 (10)
(increase) in
debtors
(Decrease)/ (11) 7
increase in
creditors
———- ———-

Net cash outflow
from
operating (158) (51)
activities
———- ———-

Analysis of
movement in net
funds

1 November 2005 Cash flows 31 October 2006
#000 #000 #000
Cash at bank 2,079 (1,847) 232
———- ———- ———-

INVESTMENT PORTFOLIO SUMMARY

as at 31 October 2006
Valuation % of net assets

#000 by valuation
Venture capital investments
(* denotes unquoted, others quoted on AiM)
Pilat Media Global 1,013 7.6
DMN* 832 6.3
John Laing Partnership* 815 6.2
Longhirst Group* 638 4.8
Aero Inventory 618 4.7
Stainton Metal Company* 563 4.2
Bond International Software 526 4.0
RC Group (Holdings) 513 3.9
Crantock Bakery* 490 3.7
Jelf Group 479 3.6
IG Doors* 431 3.3
Colliers CRE 428 3.2
Zenith Hygiene Group 414 3.1
Cello Group 367 2.8
Inspicio 350 2.6
———- ———-
Fifteen largest venture capital investments 8,477 64.0
SectorGuard 304 2.3
Prologic 300 2.2
Andor Technology 272 2.0
Computer Software Group 264 2.0
Pivotal Laboratories Holdings* 250 1.9
Quadnetics Group 248 1.9
Nightingales Holdings* 248 1.9
KCS Global Holdings* 234 1.8
PM Group 213 1.6
InterCytex Group 208 1.6
Adept Telecom 207 1.5
Fountains 190 1.4
1st Dental Laboratories 182 1.4
Belgravium Technologies 179 1.3

Twenty 158 1.2
GB Industries* 148 1.1
Media Square 146 1.1
IDOX 125 0.9
Spectrum Interactive 113 0.9
OMG 93 0.7
Widney 77 0.6
First Artist Corporation 75 0.6
Atlantic Global 72 0.5
PKL Holdings* 48 0.4
Bank Restaurant Group 41 0.3
Fulcrum Pharma 37 0.3
Hartest Holdings 34 0.3
Baydonhill 27 0.2
Warthog 1 –
———- ———-
Total fixed asset investments 12,971 97.9
Net current assets 279 2.1
———- ———-
Net assets 13,250 100.0
———- ———-

The above summary of results for the year ended 31 October 2006 does not
constitute statutory financial statements within the meaning of Section 240 of
the Companies Act 1985 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 235 of the Companies Act 1985 is unqualified and does not contain
a statement under Section 237(2) or (3) of the Companies Act 1985.

The company is required to comply with a number of new UK Financial Reporting
Standards (FRS), which now represent UK Generally Accepted Accounting Practice
(UK GAAP), in presenting its financial statements for the year ended 31 October
2006. These Standards have been introduced as part of the process of aligning UK
accounting principles with International Accounting Standards.

The revised accounting policies differ from those used in preparing the annual
financial statements for the year ended 31 October 2005 in the following
respects:

* The unrealised gain or loss resulting from the revaluation of fixed
asset investments held at fair value is now recognised in the income statement,
as required by FRS 26 ‘Financial Instruments: Measurement’;

* Quoted investments are valued at bid price rather than mid-market
price, as required by FRS 26 ‘Financial Instruments: Measurement’; and

* Dividends to shareholders are accounted for in the period in which
the company is liable to pay them, rather than in the period in respect of which
they are declared, as required by FRS 21 ‘Events after the Balance Sheet Date’.
Dividends payable are treated as a charge on reserves and accounted for through
the reconciliation of movements in shareholders’ funds rather than in the profit
and loss account as previously.

The comparative figures for the year ended 31 October 2005 have been re-stated
accordingly.

The effect of the above changes on the reported net assets and net asset value
per share of the company is as follows:

31 October 2005 1 November 2004
Net asset Net asset
Net value per Net value per
assets share assets share
#000 p #000 p
As reported under previous UK GAAP 14,051 59.3 13,751 64.3
Less: adjustment in valuation of quoted investments to (217) (0.9) (244) (1.1)
bid price
Add: proposed dividends not accounted for until declared 474 2.0 1,069 5.0
and paid
———- ——– ———- ——–
As reported under revised UK GAAP 14,308 60.4 14,576 68.2
———- ——– ———- ——–

The proposed final dividend of 1.0p per share for the year ended 31 October 2006
will, if approved by shareholders, be paid on 2 March 2007 to shareholders on
the register at the close of business on 2 February 2007.

The full annual report including financial statements for the year ended 31
October 2006 is expected to be posted to shareholders on 12 January 2007 and
will be available to the public at the registered office of the company at
Northumberland House, Princess Square, Newcastle upon Tyne NE1 8ER.

ENDS

This information is provided by RNS
The company news service from the London Stock Exchange
END

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