Half-yearly report
04 June 2011 - 12:13AM
UK Regulatory
TIDMNNA
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 GBP6.5m GBP7.3m
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 0191 244 6000
Website: www.nvm.co.uk
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
GBP1,318,000 to GBP806,000, reflecting the dividend distribution of GBP670,000 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 GBP6 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 GBP37
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 Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Gain/(loss)
on disposal
of - 26 26 - 25 25
investments
Movements
in fair
value
of - 55 55 - 316 316
investments
---------- ---------- ---------- ---------- ---------- ----------
- 81 81 - 341 341
Income 57 - 57 116 - 116
Investment (6) (20) (26) (8) (26) (34)
management
fee
Recoverable 19 55 74 - - -
VAT
Other (94) - (94) (88) - (88)
expenses
---------- ---------- ---------- ---------- ---------- ----------
Return on
ordinary
activities
before (24) 116 92 20 315 335
tax
Tax on
return on
ordinary - - - - - -
activities
---------- ---------- ---------- ---------- ---------- ----------
Return on
ordinary
activities
after tax (24) 116 92 20 315 335
---------- ---------- ---------- ---------- ---------- ----------
Return per (0.1)p 0.5p 0.4p 0.1p 1.4p 1.5p
share
Year ended 31 October 2010
Revenue Capital Total
GBP000 GBP000 GBP000
Gain/(loss) on disposal
of investments - (106) (106)
Movements in fair value
of investments - 197 197
---------- ---------- ----------
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