Northern AIM VCT PLC – Final Results

21st December 2007


RNS Number:5595K
Northern AIM VCT PLC
21 December 2007

21 DECEMBER 2007

NORTHERN AIM VCT PLC

RESULTS FOR THE YEAR ENDED 31 OCTOBER 2007

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 2007:

(comparative figures as at 31 October 2006 in italics):

2007 2006
* Net assets #13.9m #13.3m
* Net asset value per share 64.0p 57.6p
* Return/(loss) per share:
Revenue 0.3p 0.4p
Capital 6.8p (1.3)p
Total 7.1p (0.9)p
* Dividend per share proposed
in respect of the year 3.0p 1.0p
* Cumulative return to shareholders
since launch:
Net asset value per share 64.0p 57.6p
Dividends paid per share* 13.3p 12.3p
Net asset value plus dividends
paid per share 77.3p 69.9p
* Mid-market share price at year end 52.0p 53.0p

*Excluding proposed final dividend

For further information, please contact:

NVM Private Equity Limited

Christopher Mellor, Director 0191 244 6000

Website: www.nvm.co.uk
Lansons Communications

Karen Mignon 020 7294 3685

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 All-share index rose by 14.8% over the year to 31 October 2007,
reflecting the continuing buoyancy of the resources sector. The picture is
markedly different for many of the smaller UK-based AIM companies which VCTs
invest in, with a background of increasing uncertainty in the UK economy and the
financial markets. It is therefore pleasing to be able to report on a year of
steady progress by your company.

Net asset value, return and dividend

The net asset value (NAV) per share as at 31 October 2007 was 64.0p, compared
with 57.6p a year earlier. The return per share for the year as shown in the
income statement was 7.1p (previous year loss of 0.9p), representing in
percentage terms a return of 12.3% on the net asset value at the start of the
year. This is a good result for a period over which many AIM-focussed VCTs have
reported a negative return.

Market conditions since 31 October have been difficult, with the AIM All-share
index falling by 8.4% during the month of November. The company’s unaudited NAV
per share at 30 November 2007 was 61.1p, down by 4.5% from the year-end figure.

Your board again decided not to declare an interim dividend this year. However
in view of the improved investment performance and the increase in cash balances
over the year, we propose that a final dividend of 3.0p per share (last year
1.0p) be paid. As I reported last year, our objective is to maintain a
reasonable balance between distributing income and capital gains by way of
dividend and maintaining the company’s capital base at a size which will protect
its long-term viability. This year’s results have permitted such a balance to
be achieved whilst paying a higher dividend, and we are conscious that tax-free
distributions form an important part of the investor appeal of VCTs.

The proposed final dividend will, subject to shareholders’ approval at the
annual general meeting, be paid on 7 March 2008 to shareholders on the register
on 8 February 2008.

Investments

For most of the year under review the portfolio remained relatively fully
invested. There was a scarcity of attractive new issues on AIM and only one new
investment was made during the year. As a result of several investment
realisations, the net generation of cash from the investment portfolio was #1.7
million.

The combination of sales from the AIM portfolio and improved performance from
the unquoted investments has led to an increase in the proportion of unquoted
holdings in the portfolio, from 36% by value at 31 October 2006 to 43% this
year. The current uncertainty in the financial markets is likely to act as a
brake on the performance of small AIM-quoted companies in the short term, as
well as restricting the flow of new issues. Our managers will continue to seek
attractive new opportunities on AIM as well as taking advantage of their strong
flow of unquoted deals meeting our investment criteria.

Shareholder issues

Secondary market activity in most VCT shares has always been low, especially
since the widespread adoption by VCT boards of the policy of buying back shares
at a fixed 10% discount to NAV. The availability of 40% initial income tax
relief on new subscriptions in the 2004/05 and 2005/06 tax years is also thought
to have depressed secondary demand. Trading in your company’s shares has been
intermittent and in order to provide liquidity for investors we have continued
to purchase shares in the market for cancellation at a 10% discount to NAV.
During the year to October 2007 1.3 million shares, representing 5.7% of the
opening share capital, were purchased for cancellation at a cost of #722,000 (an
average of 55.2p per share). This represents a substantial outflow of cash from
the company’s balance sheet, which if repeated in future periods could lead to
us having to sell off some of our more liquid investments prematurely.

Over the past two years the Government has changed the VCT legislation so as to
focus investment on smaller companies, defined by reference to strict new limits
on gross assets and number of employees. The amended rules apply to funds
raised after 6 April 2007 and can be expected drastically to reduce the number
of VCTs raising funds for AIM investment in future. As a result our company is
unlikely to raise significant further funds by issuing new shares, although our
existing funds will continue to enjoy the benefit of being invested under the ‘
old’ rules.

In the light of these circumstances, the directors have concluded after a
careful review that our recent practice of buying back shares at an automatic
10% discount is no longer sustainable, and that we should give greater priority
to the payment of dividends. We have therefore decided that, with immediate
effect, we will cease buying back shares at a fixed discount and will instead
allow the share price to find its own market level – whilst retaining the
discretion to buy back shares on an ad hoc basis should this be considered
appropriate. We have also set an objective of maintaining the annual dividend
in future at not less than 3.0p per share (subject to the availability of
distributable profits), which represents a tax-free cash yield of 5.8% based on
the current mid-market share price of 51.5p. Finally, following a review of the
company’s corporate broking arrangements we have appointed Landsbanki Securities
(UK) Limited (formerly Teather & Greenwood Limited) as brokers to the company.
Landsbanki will also make a market in the company’s shares.

Shareholders should be aware that, in the short term, the change in buy-back
policy may lead to a fall in the company’s share price. Nevertheless we believe
that the combination of steps outlined above is in the longer-term interests of
shareholders as a whole, and will help to preserve the company’s investment
capability and its capacity for paying dividends in future. We will keep the
position under regular review.

VCT qualifying status

The company continues 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

Smaller companies in the UK are likely to face a testing time in the coming
months, with declining confidence in the UK economy and disruption in the
financial markets. However we are encouraged by the results of the past year
and we believe that in the medium to long term, given reasonably stable economic
conditions, our portfolio is capable of delivering a good return to investors.

James Dawnay

Chairman

The audited financial statements for the year ended 31 October 2007 are set out
below.

INCOME STATEMENT

for the year ended 31 October 2007

Year ended 31 October 2007 Year ended 31 October 2006
Revenue Capital Total Revenue Capital Total
#000 #000 #000 #000 #000 #000
Gain on disposal of
investments – 380 380 – 70 70
Unrealised adjustments
to fair value of
of investments – 1,393 1,393 – (123) (123)
—– —– —– —– —– —–
– 1,773 1,773 – (53) (53)
Income 318 – 318 332 – 332
Investment management
fee (79) (236) (315) (84) (251) (335)
Other expenses (170) – (170) (154) – (154)
—– —– —– —– —– —–
Return/(loss) on ordinary
activities before tax 69 1,537 1,606 94 (304) (210)
Tax on return/(loss) on
ordinary activities – – – – – –

—– —– —– —– —– —–
Return/(loss) on ordinary
activities after tax 69 1,537 1,606 94 (304) (210)
—– —– —– —– —– —–
Return/(loss) per share 0.3p 6.8p 7.1p 0.4p (1.3)p (0.9)p

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS

for the year ended 31 October 2007

Year ended Year ended
31 October 2007 31 October 2006
#000 #000
Equity shareholders’ funds
at 1 November 2006 13,250 14,308
Return/(loss) on ordinary
activities after tax 1,606 (210)
Dividends recognised
in the year (228) (472)
Net proceeds of share issues 26 55
Shares purchased for
Cancellation (722) (431)
Expenses charged to capital (18) –
—— ——
Equity shareholders’ funds
at 31 October 2007 13,914 13,250
—— ——

BALANCE SHEET

as at 31 October 2007

31 October 31 October
2007 2006
#000 #000
Fixed asset investments
Quoted on AIM 7,491 8,274
Unquoted 5,560 4,697
—— ——
Total fixed asset investments 13,051 12,971
—— ——
Current assets:
Debtors 73 97
Cash at bank 837 232
—— ——
910 329
Creditors (amounts falling due
within one year) (47) (50)
—— ——
Net current assets 863 279
—— ——

Net assets 13,914 13,250
—— ——

Capital and reserves:
Called-up equity share capital 1,087 1,150
Share premium 1,919 11,896
Capital redemption reserve 178 112
Capital reserve – realised 8,981 74
Capital reserve – unrealised 1,622 (132)
Revenue reserve 127 150
—— ——
Total equity shareholders’ funds 13,914 13,250
—— ——
Net asset value per share 64.0p 57.6p

CASH FLOW STATEMENT

for the year ended 31 October 2007

Year ended Year ended
31 October 2007 31 October 2006
#000 #000 #000 #000
Cash flow statement
Net cash outflow from
operating activities (164) (158)
Taxation:
Corporation tax paid – –
Financial investment:
Purchase of investments (544) (1,839)
Sale/repayment of
Investments 2,237 998
—– —–
Net cash inflow/(outflow)
from financial investment 1,693 (841)
Equity dividends paid (228) (472)
—– —–
Net cash inflow/(outflow)
before financing 1,301 (1,471)
Financing:
Issue of shares 30 61
Share issue expenses (4) (6)
Purchase of shares
for cancellation (722) (431)
—– —–
Net cash outflow from financing (696) (376)
—– —–
Increase/(decrease) in
cash at bank 605 (1,847)
—– —–
Reconciliation of return
before tax to net cash flow from
operating activities
Return/(loss) on ordinary
activities before tax 1,606 (210)
Gain on disposal of investments (380) (70)
Unrealised adjustments to
fair value of investments (1,393) 123
Decrease in debtors 24 10
Decrease in creditors (3) (11)
Expenses charged to capital (18) –
—– —–
Net cash outflow from
operating activities (164) (158)
—– —–
Reconciliation of movement
in net funds
1 November 2006 Cash flows 31 October 2007
#000 #000 #000
Cash at bank 232 605 837
—– —– —–

INVESTMENT PORTFOLIO SUMMARY

as at 31 October 2007

Valuation % of net assets
#000 by value
Venture capital investments
(*denotes unquoted, others quoted on AiM)
Aero Inventory 1,021 7.3
DMN* 858 6.2
Crantock Bakery* 841 6.0
Stainton Metal Company* 751 5.4

Jelf Group 728 5.2
Pilat Media Global 661 4.8
John Laing Partnership* 642 4.6
Develop Training* 614 4.4
RCG Holdings 592 4.3
Bond International Software 566 4.1
Inspicio 547 3.9
Longhirst Venues* 503 3.6
Britspace Holdings* 443 3.2
Cello Group 400 2.9
IG Doors* 399 2.9
—— —–
Fifteen largest holdings 9,566 68.8
Prologic 320 2.3
Pivotal Laboratories Holdings* 307 2.2
Quadnetics Group 306 2.2
Fountains 254 1.8
Andor Technology 240 1.7
IDOX 240 1.7
Colliers CRE 235 1.7
Shieldtech 233 1.7
PKL Holdings* 201 1.4
Zenith Hygiene Group 133 1.0
First Artist Corporation 133 1.0
SectorGuard 132 0.9
Twenty 124 0.9
1st Dental Laboratories 117 0.8
Belgravium Technologies 110 0.8
Intercytex Group 106 0.8
Adept Telecom 77 0.5
Individual Restaurant Company 52 0.4
Advance AIM Value Realisation Company 39 0.3
Spectrum Interactive 35 0.3
Hartest Holdings 34 0.2
Widney 32 0.2
Baydonhill 25 0.2
—— —–
Total fixed asset investments 13,051 93.8
Net current assets 863 6.2
—— —–
Net assets 13,914 100.0
—— —–

The above summary of results for the year ended 31 October 2007 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 proposed final dividend of 3.0p per share for the year ended 31 October 2007
will, if approved by shareholders, be paid on 7 March 2008 to shareholders on
the register at the close of business on 8 February 2008.

The full annual report including financial statements for the year ended 31
October 2007 is expected to be posted to shareholders on 11 January 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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