Northern AIM VCT PLC – Half-yearly report

2nd June 2011

3 JUNE 2011

 

NORTHERN AIM VCT PLC

 

UNAUDITED HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHS ENDED 30 APRIL 2011

 

 

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:
(with comparative figures as at 30 April 2010)

 

 

 
                         2011               2010
Net assets

 
  £6.5m   £7.3m
Net asset value per share

 
  29.0p   32.8p
Return per share:        
Revenue   (0.1)p   0.1p
Capital   0.5p   1.4p
Total

 
  0.4p   1.5p
Cumulative return to shareholders        
since launch:        
Net asset value per share   29.0p   32.8p
Dividends per share   25.3p   22.3p
Net asset value plus dividends        
paid per share

 
  54.3p   55.1p
Share price at end of period   23.5p   27.5p

 

 

 

For further information, please contact:

NVM Private Equity Limited
Alastair Conn/Christopher Mellor
Website:  www.nvm.co.uk
 

0191 244 6000

 

 

NORTHERN AIM VCT PLC

 

HALF-YEARLY MANAGEMENT REPORT TO SHAREHOLDERS

 

The period under review has seen a continuation of difficult conditions for many smaller UK companies, with the economy emerging only slowly from recession and the full impact of public sector spending cuts yet to be felt.

 

Net asset value, dividend and share price
The net asset value (NAV) per share at 30 April 2011 was 29.0p, after deducting the final dividend of 3.0p per share in respect of the preceding year which was paid in March 2011.  The NAV per share as shown in the audited accounts at 31 October 2010 was 31.6p.  The return per share for the half year was 0.4p, compared to 1.5p in the corresponding period last year.  Cash balances fell from £1,318,000 to £806,000, reflecting the dividend distribution of £670,000 which was partly offset by a small overall cash inflow from other activities.

 

The mid-market share price fell from 25.5p at 31 October 2010 to 23.5p at 30 April 2011, a discount of 19.0% to the published NAV.

 

The AIM market as a whole has remained buoyant over the past six months, with the resources sector showing particular strength.  The company’s AIM-quoted portfolio rose in value by just over 9%, but this was largely offset by a fall in the value of the unquoted portfolio.  On a total return basis (ie taking account of dividends paid), the company’s overall NAV and share price performance relative to the FTSE AIM index over the past 6 and 12 months is as follows:

 

Movement to 30 April 2011 Past 6 months Past 12 months
Northern AIM VCT PLC – NAV total return +0.2% -3.4%
Northern AIM VCT PLC – share price total return +3.9% -3.6%
FTSE AIM index – total return +13.6% +27.3%

 

As in previous years, the directors do not propose the payment of an interim dividend.

 

Investments
There was very little change in the composition of the portfolio during the period under review.  Among the AIM stocks IDOX and Andor Technology both achieved significant gains, but the general pattern was one of smaller AIM stocks continuing to trade on relatively low earnings multiples even where the underlying trading performance has been strong.  In the unquoted portfolio both IG Doors and Kerridge Commercial Systems reported excellent results but the positive impact was outweighed by falls in the value of Britspace Group and Crantock Bakery as a result of difficult trading conditions.

 

VCT qualifying status
The company retains PricewaterhouseCoopers LLP as advisers on matters relating to VCT status and has continued to satisfy the HM Revenue and Customs requirements for the maintenance of formal approval as a VCT.

 

Risk management
The board carries out a regular review of the risk environment in which the company operates.  There have been no significant changes to the key risks discussed on page 11 of the annual report for the year ending 31 October 2010 including those resulting from the size and relative illiquidity of the AIM-quoted portfolio and unquoted investments held by the company.

 

Future outlook
It was reported six months ago that the directors were reviewing the future strategy of the company.  Over the past four years an annual dividend of 3.0p per share has been maintained, but it has proven difficult to grow the capital value of the company from the recent low base.  Smaller VCT-qualifying AIM stocks, in which AIM VCTs must inevitably invest a large part of their assets, have remained largely out of favour with investors.  The prospects of raising new funds from the market are doubtful, given the lack of new qualifying issues on AIM to invest in, and with assets of around £6 million our company is too small to be properly viable as an independent entity.

 

Consequently your directors have concluded that it may be in the interests of shareholders to seek a merger with a larger VCT.  We have announced today that discussions are taking place with Northern 3 VCT, a VCT with assets of £37 million and which is also managed by NVM Private Equity, with a view to a merger (subject to shareholder approval) with Northern AIM VCT, which may or may not proceed.  If the merger does proceed then it will be by way of a scheme of reconstruction of Northern AIM VCT under the Insolvency Act 1986, which would be outside the provisions of the City Code on Takeovers and Mergers.  Shareholders in Northern AIM VCT would receive new shares in Northern 3 VCT on the basis of the respective net asset values.  The companies’ portfolios contain a number of common AIM-quoted and unquoted investments, and shareholders in the enlarged Northern 3 VCT would stand to benefit not only from economies of scale but also from a possible enhancement of the market liquidity of the company’s shares.  Whilst we expect that many of our shareholders will wish to continue to hold VCT shares in order to retain the benefit of tax reliefs, Northern 3 VCT has an established policy of buying back its shares in the market at a 15% discount to NAV in order to provide an exit for those investors who wish to realise their shareholdings.

 

It is expected that a further announcement will be made in due course.

 

On behalf of the Board

 

James Dawnay
Chairman

 

 

The unaudited half-yearly financial statements for the six months ended 30 April 2011 are set out below.

 

INCOME STATEMENT
(unaudited) for the six months ended 30 April 2011

 

  Six months ended 30 April 2011 Six months ended 30 April 2010
  Revenue 
£000 
Capital 
£000 
Total 
£000 
Revenue 
£000 
Capital 
£000 
Total 
£000 
Gain/(loss) on disposal            
  of investments –  26  26  –  25  25 
Movements in fair value            
  of investments –  55  55  –  316  316 
  ———-  ———-  ———-  ———-  ———-  ———- 
  –  81  81  –  341  341 
Income 57  –  57  116  –  116 
Investment management fee (6) (20) (26) (8) (26) (34)
Recoverable VAT 19  55  74  –  –  – 
Other expenses (94) –  (94) (88) –  (88)
  ———-  ———-  ———-  ———-  ———-  ———- 
Return on ordinary activities            
  before tax (24) 116  92  20  315  335 
Tax on return on            
  ordinary activities –  –  –  –  –  – 
  ———-  ———-  ———-  ———-  ———-  ———- 
Return on ordinary activities            
  after tax (24) 116  92  20  315  335 
  ———-  ———-  ———-  ———-  ———-  ———- 
             
Return per share (0.1)p 0.5p 0.4p 0.1p 1.4p 1.5p

 

 

    Year ended 31 October 2010
   

 
 

 
 

 
Revenue 
£000 
Capital 
£000 
Total 
£000 
Gain/(loss) on disposal            
  of investments       –  (106) (106)
Movements in fair value            
  of investments       –  197  197 
        ———-  ———-  ———- 
        –  91  91 
Income       218  –  218 
Investment management fee       (25) (74) (99)
Recoverable VAT       –  –  – 
Other expenses       (154) –  (154)
        ———-  ———-  ———- 
Return on ordinary activities            
  before tax       39  17  56 
Tax on return on            
  ordinary activities       –  –  – 
        ———-  ———-  ———- 
Return on ordinary activities            
  after tax       39  17  56 
        ———-  ———-  ———- 
             
Return per share       0.2p 0.1p 0.3p

 

 

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
(unaudited) for the six months ended 30 April 2011

 

  Six months ended  Six months ended  Year ended 
  30 April 2011  30 April 2010  31 October 2010 
  £000  £000  £000 
Equity shareholders’ funds at      
  1 November 2010 7,046  7,585  7,585 
Return on ordinary activities after tax 92  335  56 
Dividends recognised in the period (670) (662) (662)
Net proceeds of share issues 75  67  67 
  ———-  ———-  ———- 
Equity shareholders’ funds at      
  30 April 2011 6,543  7,325  7,046 
  ———-  ———-  ———- 

 

 

BALANCE SHEET
(unaudited) as at 30 April 2011

 

  30 April 2011  30 April 2010  31 October 2010 
  £000  £000  £000 
Fixed asset investments:      
Venture capital investments      
  Quoted on AIM 3,777  3,972  3,464 
  Unquoted 2,181  2,535  2,318 
  ———-  ———-  ———- 
Total fixed asset investments 5,958  6,507  5,782 
  ———-  ———-  ———- 
Current assets:      
  Debtors 37  35  40 
  Cash and deposits 806  874  1,318 
  ———-  ———-  ———- 
  843  909  1,358 
Creditors (amounts falling due      
  within one year) (258) (91) (94)
  ———-  ———-  ———- 
Net current assets 585  818  1,264 
  ———-  ———-  ———- 
       
Net assets 6,543  7,325  7,046 
  ———-  ———-  ———- 
       
Capital and reserves:      
Called-up equity share capital 1,130  1,116  1,116 
Share premium 2,153  2,092  2,092 
Capital redemption reserve 183  183  183 
Capital reserve 4,561  6,210  5,147 
Revaluation reserve (1,554) (2,374) (1,609)
Revenue reserve 70  98  117 
  ———-  ———-  ———- 
       
Total equity shareholders’ funds 6,543  7,325  7,046 
  ———-  ———-  ———- 
       
Net asset value per share 29.0p 32.8p 31.6p

 

 

CASH FLOW STATEMENT
(unaudited) for the six months ended 30 April 2011

 

  Six months ended  Six months ended  Year ended 
  30 April 2011  30 April 2010  31 October 2010 
  £000  £000  £000 
Net cash inflow      
  from operating activities 18  302  271 
       
Taxation:      
Corporation tax paid –  –  – 
       
Financial investment:      
Purchase of investments (1) (1,324) (1,343)
Sale/repayment of investments 66  1,030  1,524 
  ———-  ———-  ———- 
Net cash inflow/(outflow)      
  from financial investment 65  (294) 181 
       
Equity dividends paid (670) (662) (662)
  ———-  ———-  ———- 
Net cash outflow      
  before financing (587) (654) (210)
       
Financing:      
Issue of shares 81  77  77 
Share issue expenses (6) (10) (10)
  ———-  ———-  ———- 
Net cash inflow from financing 75  67  67 
  ———-  ———-  ———- 
Decrease in cash at bank (512) (587) (143)
  ———-  ———-  ———- 
       
Reconciliation of return before tax to      
net cash flow from operating activities      
Return on ordinary activities before tax 92  335  56 
(Gain)/loss on disposal of investments (26) (25) 106 
Movements in fair value of investments (55) (316) (197)
Decrease in debtors 318  313 
Increase/(decrease) in creditors (10) (7)
  ———-  ———-  ———- 
Net cash inflow      
  from operating activities 18  302  271 
  ———-  ———-  ———- 
       
Analysis of movement in net funds      
  1 November 2010  Cash flows  30 April 2011 
  £000  £000  £000 
       
Cash at bank 1,318  (512) 806 
  ———-  ———-  ———- 

 

 

INVESTMENT PORTFOLIO SUMMARY

 

as at 30 April 2011

 

  Cost Valuation % of net assets
  £000 £000 by valuation
Quoted investments (AIM unless otherwise indicated):      
Andor Technology 107 561 8.6
IS Pharma 404 437 6.7
IDOX 250 412 6.3
Advanced Computer Software Group 176 351 5.4
Pilat Media Global 151 338 5.2
Nationwide Accident Repair Services 296 325 5.0
Brulines Group 262 180 2.8
Quadnetics Group 235 173 2.6
Prologic 300 160 2.4
Jelf Group 297 160 2.4
Cello Group 301 149 2.3
Bond International Software 182 140 2.1
CVS Group 259 136 2.1
Adept Telecom 233 56 0.9
Baydonhill 251 48 0.7
Belgravium Technologies 143 46 0.7
First Artist Corporation 502 43 0.7
Twenty 198 30 0.5
Colliers International UK 332 29 0.4
Individual Restaurant Company 250 3
  ———- ———- ——–
  5,129 3,777 57.8
  ———- ———- ——–
Unquoted investments:      
Crantock Bakery 490 604 9.2
IG Doors 214 451 6.9
Kerridge Commercial Systems 251 419 6.4
Axial Systems Holdings 251 289 4.4
Longhirst Venues 145 230 3.5
Optilan Group 250 125 1.9
Spectrum Interactive 250 63 1.0
Britspace Group 372
  ———- ———- ——–
  2,223 2,181 33.3
  ———- ———- ——–
       
Total fixed asset investments 7,352 5,958 91.1
  ———-    
Net current assets   585 8.9
    ———- ——–
Net assets   6,543 100.0
    ———- ——–

 

 

The above summary of results for the six months ended 30 April 2011 does not constitute statutory financial statements within the meaning of Section 434 of the Companies Act 2006, has not been audited or reviewed by the company’s independent auditors and has not been delivered to the Registrar of Companies.  The figures for the year ended 31 October 2010 have been extracted from the financial statements for that year, which have been delivered to the Registrar of Companies;  the independent auditors’ report on those financial statements under Sections 495, 406 and 497 of the Companies Act 2006 was unqualified.  The half-yearly financial statements have been prepared on the basis of the accounting policies set out in the financial statements for the year ended 31 October 2010.

 

Each of the directors confirms that to the best of his 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 Rules 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 Rules 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 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 Moxon.

 

The calculation of the revenue and capital return per ordinary share is based on the return on ordinary activities after tax for the six months ended 30 April 2011 and on 22,388,164 (2010 22,147,798) ordinary shares, being the weighted average number of shares in issue during the period.

 

The calculation of the net asset value per share is based on the net assets at 30 April 2011 divided by the 22,596,942 (2010 22,321,112) ordinary shares in issue at that date.

 

A copy of the half-yearly financial report for the six months ended 30 April 2011 is expected to be posted to shareholders by 17 June 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, www.nvm.co.uk.

 

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 announcement.


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

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