Northern AIM VCT PLC – Interim Results

18th June 2006


RNS Number:7815E
Northern AIM VCT PLC
19 June 2006

19 JUNE 2006

NORTHERN AIM VCT PLC

UNAUDITED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 APRIL 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 focussed on companies quoted on the Alternative
Investment Market (AiM) but also includes a number of later-stage unquoted
holdings.

Financial highlights:

(comparative figures for the six months ended 30 April 2005 in italics)

2006 2005
Re-stated
* Net assets #14,407,000 #15,172,000

* Net asset value per share 61.6p 63.4p

* Investment income #208,000 #189,000

* Return on ordinary activities
before tax
Revenue #87,000 #61,000

Capital #663,000 #(152,000)

Total #750,000 #(91,000)

* Return per share

Revenue 0.4p 0.3p

Capital 2.8p (0.7)p

Total 3.2p (0.4)p

* Interim dividend per share
proposed in respect of the period

Revenue – 0.2p

Capital – 1.8p

Total – 2.0p

* Cumulative return to
shareholders since launch

Dividends per share 12.3p 10.3p

Net asset value plus dividends 73.9p 71.7p

* Share price at end of period 55.0p 62.0p

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:

Net asset value per share rose slightly over the six months to 30 April 2006,
although the subsequent fall in the stock market has inevitably had an adverse
effect. The smaller company sector was buoyant in the period under review and
the AiM market continued to perform well, with the number of UK companies quoted
on AiM increasing by 10%, from 1,136 to 1,249. The strength of the AiM market
has again been led by larger companies which are not eligible for a
VCT-qualifying portfolio.

Net asset value

The net asset value (NAV) per share at 30 April 2006 was 61.6p, compared to the
re-stated year end figure of 60.4p at 31 October 2005. The upward movement of
1.2p over the half year comprises a total return (revenue and capital) of 3.2p
as shown in the income statement, less the final dividend of 2.0p declared in
respect of the year ended 31 October 2005 and approved by shareholders in
January 2006. The FTSE AiM index rose by 26.2% in the period, though as I have
pointed out previously the index is strongly biased towards larger companies,
particularly those in the resource sector, to which VCTs have little exposure.
There is as yet no index that reflects the main investment universe of our
company, ie AIM-quoted companies which meet the qualifying investment
requirements of HM Revenue & Customs for VCTs.

On a total return basis (ie taking account of dividends paid), the company’s
performance relative to the FTSE AiM index since inception (October 2000) and
since 31 October 2005 is as follows:

Movement to 30 April 2006 During past 6 months Since inception

Northern AIM VCT PLC net asset value +5.0% -22.7%
Northern AIM VCT PLC share price -2.4% -33.8%
FTSE AiM index +27.0% -8.7%

The unaudited net asset value per share at 31 May 2006 was 58.2p, a fall of 5.5%
since 30 April 2006. The FTSE AiM index fell by 10.8% during the month.

Investments

During the half year five new AiM issues (RC Group, Jelf Group, Adept Telecom,
InterCytex Group and Twenty) were added to the portfolio at a cost of #1.3
million. One new unquoted investment, Nightingales Holdings, was completed at
a cost of #248,000.

The portfolio is now fully invested and new investments will only be made from
the proceeds of realising existing investments. During the past six months the
holding in Sovereign Oilfield Group was sold at a gain of #115,000 (57%); the
company floated in September 2005 and the share price rose strongly on the
positive sentiment in the sector. Our holding in Computer Software Group has
been reduced at a healthy profit. Aero Inventory launched a #90 million
discounted rights issue and placing, in which our managers took up half the
rights and sold the other half nil paid, at a net additional cost of #234,000.
This is now the largest AiM holding in the portfolio – the company is currently
in discussion with several major world airlines with a view to providing an
outsourcing arrangement for aircraft parts.

A number of stocks in the portfolio have achieved good share price performances,
particularly Colliers CRE whose share price doubled in the six months to 30
April 2006. Other companies that have performed well include Pilat Media
Global, PM Group, SectorGuard and Zenith Hygiene. As is often the case in a
diversified portfolio of small companies there have also been some whose trading
performance has disappointed; these include 1st Dental Laboratories, Spectrum
Interactive, Fountains and Widney.

The unquoted portfolio now comprises ten companies with a total value of #4.8
million. On the whole these investments are performing in line with
expectations. The largest holding in the unquoted portfolio, DMN, has
experienced difficult trading conditions and the valuation has been reduced by
approximately one third compared with six months ago. However the performance
of IG Doors and John Laing Partnership has been particularly encouraging and the
valuation of these companies has been increased. As the portfolio continues to
mature our managers will be seeking to achieve profitable exits in order to
generate funds for dividend payments and the acquisition of new investments.

Revenue account and dividend

Investment income in the six months to 30 April 2006 was #208,000, up by 10% on
the corresponding period. We have seen a number of AiM-quoted companies
beginning to pay dividends as their profitability and balance sheets permit.
However the amount of revenue available for distribution at the interim stage is
modest at only 0.4p per share and in the absence of significant distributable
capital gains your board has decided to declare no interim dividend this year.
We will review the dividend position again at the year end.

The Chancellor’s Budget announcement

The March 2006 Budget included proposals, effective for VCT share issues after 6
April 2006, to reduce the rate of initial income tax relief on investment in
VCTs from 40% to 30%, to increase the holding period for investors from three to
five years and to reduce the ‘gross assets’ size limit for VCT-qualifying
investments from #15 million to #7 million. The latter change, although not
applicable to funds raised up to 5 April 2006, is expected to reduce the
proportion of new issues on AiM which are eligible for investment by VCT funds
launched after April 2006. This must place a question mark over the viability
of future share issues by VCTs specialising in the AiM market.

Changes in accounting standards

The results for the six months to 30 April 2006 have been affected by two
changes in accounting standards. Quoted investments are now valued at bid price
rather than mid-market price, and proposed dividends are not deducted from
reported net assets until either payment has been made or there is a firm
commitment to make payment (eg approval by the shareholders in general meeting).
The comparative results for earlier periods have been re-stated on the new
basis, and the effect of the above changes on the previously reported net assets
and net asset value per share of the company is shown in the notes following the
financial statements.

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.

Prospects

Some of the companies in our portfolio are world leaders in their chosen niche
and have substantial upside potential over the medium and longer term. However
the market environment is currently difficult, with concern over the weakness of
the US dollar and the threat of possible rises in interest rates both in Europe
and in the USA. The portfolio has no exposure to the resource sector, which has
been hit hard by the recent market fall. We believe that progress is being
made, despite the challenging conditions, and we will continue to pursue our
objectives of dividend generation and asset growth.

JAMES DAWNAY

Chairman

The unaudited interim financial statements for the six months ended 30 April
2006 are set out below.

INCOME STATEMENT

(unaudited) for the six months ended 30 April 2006

Six months ended 30 April 2006 Six months ended 30 April 2005
Re-stated
Revenue Capital Total Revenue Capital Total

#000 #000 #000 #000 #000 #000
Gain on disposal of
investments held at fair value – 179 179 – 314 314
Unrealised adjustments to fair value
of investments – 608 608 – (345) (345)
—— —— —— —— —— ——
– 787 787 – (31) (31)
Income 208 – 208 189 – 189
Investment management fee (41) (124) (165) (40) (121) (161)
Other expenses (80) – (80) (88) – (88)
—— —— —— —— —— ——
Return on ordinary activities
before tax 87 663 750 61 (152) (91)
Tax on return on ordinary activities (2) 2 – – – –
—— —— —— —— —— ——
Return on ordinary activities
after tax 85 665 750 61 (152) (91)
—— —— —— —— —— ——
Return per share 0.4p 2.8p 3.2p 0.3p (0.7)p (0.4)p

Year ended 31 October 2005
Re-stated
Revenue Capital Total

#000 #000 #000
Gain on disposal of investments
held at fair value – 213 213
Unrealised adjustments to fair value
of investments – (506) (506)
—— —— ——
– (293) (293)
Income 449 – 449
Investment management fee (84) (253) (337)
Other expenses (160) – (160)
—— —— ——
Return on ordinary activities
before tax 205 (546) (341)
Tax on return on ordinary activities (15) 15 –
—— —— ——
Return on ordinary activities
after tax 190 (531) (341)
—— —— ——
Return per share 0.8p (2.3)p (1.5)p

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS

(unaudited) for the six months ended 30 April 2006

Six months Six months Year ended
ended ended 31 October
30 April 2006 30 April 2005 2005
Re-stated Re-stated
#000 #000 #000
Equity shareholders’
funds at
1 November 2005
As previously 14,051 13,751 13,751
reported
Prior year adjustment 257 825 825
——- ——- ——-
As re-stated 14,308 14,576 14,576
Return on ordinary 750 (91) (341)
activities after tax
Dividends recognised in (474) (1,069) (1,541)
the period
Net proceeds of share 55 2,010 2,103
issues
Shares purchased for (232) (254) (489)
cancellation
——- ——- ——-
Equity shareholders’
funds at
30 April 2006 14,407 15,172 14,308
——- ——- ——-

BALANCE SHEET

(unaudited) as at 30 April 2006

30 April 30 April 31 October
2006 2005 2005
Re-stated Re-stated
#000 #000 #000
Fixed asset investments held
at fair value:
Venture capital investments
Quoted on AiM 9,518 7,618 7,469
Unquoted 4,817 4,532 4,762
——- ——- ——-
Total fixed asset investments 14,335 12,150 12,231

Current assets:
Debtors 126 83 59
Cash at bank 7 3,021 2,079
——- ——- ——-
133 3,104 2,138
Creditors (amounts falling (61) (82) (61)
due within one year)
——- ——- ——-
Net current assets 72 3,022 2,077
——- ——- ——-

Net assets 14,407 15,172 14,308
——- ——- ——-

Capital and reserves:
Called-up equity share 1,169 1,197 1,185
capital
Share premium 11,896 11,761 11,846
Capital redemption reserve 93 52 72
Capital reserve – realised 590 1,545 1,061
Capital reserve – unrealised 519 504 (53)
Revenue reserve 140 113 197
——- ——- ——-
Total equity shareholders’ 14,407 15,172 14,308
funds
——- ——- ——-
Net asset value per share 61.6p 63.4p 60.4p

CASH FLOW STATEMENT

(unaudited) for the six months ended 30 April 2006

Six months Six months Year ended
ended ended 31 October 2005
30 April 2006 30 April 2005
Re-stated Re-stated
#000 #000 #000 #000 #000 #000
Net cash outflow from
operating activities (104) (42) (51)
Taxation:
Corporation tax paid – – –
Financial investment:
Purchase of investments (1,837) (1,490) (2,627)
Sale/repayment of 520 1,100 1,918
investments
—— —— ——
Net cash outflow from
financial investment (1,317) (390) (709)
Equity dividends paid (474) (1,069) (1,541)
—— —— ——
Net cash outflow before (1,895) (1,501) (2,301)
financing
Financing:
Issue of ordinary shares 61 2,107 2,218
Share issue expenses (6) (97) (115)
Purchase of ordinary shares
for cancellation (232) (254) (489)
—— —— ——
Net cash (outflow)/inflow
from financing (177) 1,756 1,614
—— —— ——
(Decrease)/increase in cash (2,072) 255 (687)
at bank
—— —— ——

Reconciliation of return
before tax
to net cash flow from
operating
Activities
Return on ordinary
activities
before tax 750 (91) (341)
Gain on disposal of
investments
held at fair value (179) (314) (213)
Unrealised adjustments to
fair value
of investments (608) 345 506
Increase in debtors (67) (10) (10)
Increase in creditors – 28 7
—— —— ——
Net cash outflow from
operating activities (104) (42) (51)
—— —— ——

Analysis of movement in net
funds

1 November 2005 Cash flows 30 April 2006

#000 #000 #000

Cash at bank 2,079 (2,072) 7
—— —— ——

INVESTMENT PORTFOLIO SUMMARY

as at 30 April 2006
Cost Valuation % of net assets
#000 #000 by valuation
AiM quoted investments:
Aero Inventory 598 971 6.7
Pilat Media Global 300 751 5.2
Colliers CRE 236 543 3.8
RC Group (Holdings) 300 489 3.4
PM Group 179 480 3.3
SectorGuard 216 459 3.2
Jelf Group 297 440 3.1
Bond International Software 151 436 3.0
Cello Group 301 382 2.7
Zenith Hygiene Group 225 376 2.6
Media Square 145 365 2.5
Adept Telecom 233 327 2.3
Prologic 300 320 2.2
1st Dental Laboratories 350 311 2.2
Andor Technology 292 308 2.1
Inspicio 250 300 2.1
InterCytex Group 250 252 1.7
IDOX 250 240 1.7
Belgravium Technologies 200 236 1.6
Computer Software Group 147 211 1.5
Quadnetics Group 235 199 1.4
Twenty 198 198 1.4
Fountains 250 140 1.0
Widney 208 126 0.9
Atlantic Global 156 118 0.8
First Artist Corporation 502 102 0.7
Spectrum Interactive 250 83 0.6
OMG 200 76 0.5
PKL Holdings 180 74 0.5
The 4Less Group 251 71 0.5
Fulcrum Pharma 131 43 0.3
AdVal Group 413 34 0.2
Hartest Holdings 450 34 0.2
Bank Restaurant Group 250 22 0.2
Warthog 398 1 –
——- ——- ——
9,292 9,518 66.1
——- ——- ——
Unquoted investments:
DMN 858 908 6.3
Stainton Metal Company 751 862 6.0
Longhirst Group 560 577 4.0
Crantock Bakery 490 567 3.9
John Laing Partnership 228 460 3.2
IG Doors 315 416 2.9
GB Industries 591 295 2.1
Pivotal Laboratories Holdings 250 250 1.7
Nightingales Holdings 248 248 1.7
KCS Global Holdings 234 234 1.6
——- ——- ——
4,525 4,817 33.4
——- ——- ——
Total fixed asset investments 13,817 14,335 99.5
Net current assets ——- 72 0.5
——- ——
Net assets 14,407 100.0
——- ——

The above summary of results for the six months ended 30 April 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.
The figures for the year ended 31 October 2005 have been extracted from the
financial statements for that year, which have been delivered to the Registrar
of Companies, adjusted in respect of the changes in accounting policies as
stated below; the independent auditors’ report on those financial statements
under Section 235 of the Companies Act 1985 was unqualified.

The company is required to comply with a number of new UK Financial Reporting
Standards (FRS), which now represent UK Generally Accepted Accounting Principles
(UK GAAP), in presenting its financial statements for the year ending 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 company’s investments have been designated as fair value through
profit and loss and accordingly the unrealised gain or loss resulting from the
revaluation of 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’.

* 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 and the six months
ended 30 April 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 30 April 2005
Net asset Net asset
value value
Net assets per share Net assets per share

#000 p #000 p
As reported under previous 14,051 59.3 14,915 62.3

UK GAAP
Less: adjustment in valuation of (217) (0.9) (221) (0.9)

quoted investments to bid price
Add: proposed dividends not 474 2.0 478 2.0

accounted for until declared

and paid
——- ——- ——- ——-
As reported under revised 14,308 60.4 15,172 63.4

UK GAAP
——- ——- ——- ——-

A copy of the interim report for the six months ended 30 April 2006 is expected
to be posted to shareholders on 30 June 2006 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
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