Half-yearly report

15 juni 2009 15 JUNE 2009 NORTHERN AIM VCT PLC UNAUDITED HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED 30 APRIL 2009 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 2008) 2009 2008 - Net assets Â£6.9m Â£11.7m - Net asset value per share 31.3p 53.7p - Return per share: Revenue 0.2p 0.2p Capital 1.4p (7.6)p Total 1.6p (7.4)p - Cumulative return to shareholders since launch: Net asset value per share 31.3p 53.7p Dividends per share* 19.3p 16.3p Net asset value plus dividends paid per share 50.6p 70.0p - Share price at end of period 24.5p 40.5p 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 Since the publication of the company's last annual report to shareholders, in December 2008, there have been some signs of stability returning to the financial markets, although it is much too early to talk in terms of sustained recovery. 2008 was a unprecedented year for financial markets around the world. The global financial system was close to breaking point and two of Britain's largest banks might have collapsed had not the Government intervened to provide financial support. Two major US banks, Lehman Brothers and Washington Mutual, did fail and several others were propped up by the US Treasury. Against this background the FTSE AIM index fell by over 60% during the year, with many investors forced or panicked into raising cash at any price. We noted in the annual report that this movement had left many smaller company shares looking extremely good value. The AIM index reached a low point in early March 2009 but since then has bounced back, recording a rise of some 45% by 31 May 2009. Our portfolio of AIM-quoted investments has benefited from this effect, but despite the recent buoyancy we believe that a number of our holdings are still undervalued on fundamentals and have the potential for further growth. Net asset value and share price The net asset value (NAV) per share at 30 April 2009 was 31.3p, after deducting the dividend of 3.0p per share paid in March 2009. The NAV per share as shown in the audited accounts at 31 October 2008 was 32.8p. The return per share for the half year was 1.6p, compared to a negative return of 7.4p in the corresponding period last year. This is a modest but welcome improvement after the difficulties experienced in 2008. The dividend payment absorbed Â£654,000 of cash but this was more than countered by the sale proceeds of two unquoted investments, so that the net inflow of cash for the half year was over Â£1.6 million. The company's share price fell steeply in January 2009, belatedly reflecting the fall in NAV during 2008, and has for the past four months remained steady at around 24p mid-market. On a total return basis (ie taking account of dividends paid), the 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 2009 Past 6 months Past 12 months Northern AIM VCT PLC - NAV total +5.9% -35.3% return Northern AIM VCT PLC - share price -31.4% -32.2% total return FTSE AIM index - total return +8.7% -50.1% Investments There were no significant changes in the AIM portfolio during the period under review. The very poor market sentiment towards smaller companies is reflected in the fact that there have been only 20 new issues by UK companies on AIM in the six months to 30 April 2009, compared to 65 in the corresponding period last year. Despite the difficult conditions prevailing in the UK economy, many of the AIM-quoted companies in the portfolio have produced good results, and those which have found conditions tough have taken steps to reduce costs. When the economy begins to recover, many of these companies will benefit from having developed a leaner cost structure. A good example is Colliers CRE, one of the top ten firms of chartered surveyors in the UK, which has suffered a marked downturn in its transaction-related business and has responded by taking Â£18 million of cost out of the business on an annualised basis. When confidence does pick up in the commercial property sector and transactions return to a more normal level, Colliers should be well placed to achieve a rapid recovery in profitability. RCG Holdings, the Hong Kong-based biometric solutions provider, has successfully floated on the Hong Kong Stock Exchange and although the share price has more than doubled since the end of December, the historic price/earnings ratio remains below 3 times. In August 2008 we invested in a share placing at 17p by Advanced Computer Software, which is building a group of healthcare-related software businesses. The company has recently raised a further Â£43 million from the market at 30p per share and the shares have subsequently been trading as high as 40p. IDOX, the developer of software for local authorities, has announced a series of good contract wins over the past six months and the share price has responded positively. There have been some disappointments within the AIM portfolio. The share price of Aero Inventory, the international aircraft parts procurement company, fell by 35% in the six months to April 2009 despite excellent half-yearly results for the period to December 2008. The shares are trading on a price/earnings ratio of less than 3 and in May 2009 we added to our holding, taking advantage of what looks like an attractive purchase price. We also recorded the failure of Widney, which went into administration having suffered particularly badly from its exposure to the automotive, construction and agricultural machinery sectors. This had little impact on the half-year results as the holding had a very small market value as at 31 October 2008. No new unquoted investments were completed during the period but it is pleasing to report successful exits from Stainton Metal Company and Pivotal Laboratories Holdings, both of which were sold to US trade buyers for cash. The aggregate proceeds received to date from these sales amount to Â£1.9 million, compared with original cost of Â£1.0 million and October 2008 directors' valuation of Â£1.8 million. In both cases it is expected that further consideration will be receivable on a deferred basis but this has not been recognised in our accounts at this stage. Among the other holdings in the unquoted portfolio, Britspace Holdings and John Laing Partnership continue to find trading conditions in the construction sector challenging. Dividend In line with our objective stated 18 months ago, a maintained annual dividend of 3.0p per share was paid in March 2009 in respect of the year ended 31 October 2008. No interim dividend has been declared but it is intended that a final dividend of 3.0p per share will in due course be proposed in respect of the year ending 31 October 2009. VAT on management fees Our managers have continued to pursue the repayment of VAT paid by the company on management fees in past periods, following the landmark European Court decision in the JPMorgan Claverhouse case. Up to 30 April 2009 a total VAT recovery of Â£129,000, plus interest, has been credited to the income statement. It is hoped that a further repayment will result from discussions currently in progress with HM Revenue & Customs, but this is not yet sufficiently certain to be recognised in 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. Risk management The board carries out a regular review of the risk environment in which the company operates. There has been no significant change to the key risks discussed on page 11 of the annual report for the year ended 31 October 2008, including those resulting from the size and relative illiquidity of the AIM-quoted and unquoted investments held by the company. Prospects The UK economy has been hard hit by the events of the past two years and it is clear that a rebalancing is required to reduce dependence on the now depressed financial services sector and on debt-funded consumer spending. A resumption of growth remains uncertain in the short term given the prospect of rising public sector borrowing, increased taxation and inadequately funded pension schemes. Although we believe that many of our portfolio holdings have good upside potential once the market begins to show a sustained recovery, it is likely that patience will be required for some time to come. On behalf of the Board James Dawnay Chairman The unaudited half-yearly financial statements for the six months ended 30 April 2009 are set out below. INCOME STATEMENT (unaudited) for the six months ended 30 April 2009 6 months ended 30 April 6 months ended 30 April 2009 2008 Revenue Capital Total Revenue Capital Total Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Gain/(loss) on disposal of investments - 149 149 - 15 15 Movements in fair value of investments - 158 158 - (1,543) (1,543) ------ ------ ------ ------ ------ ------ - 307 307 - (1,528) (1,528) Income 129 - 129 179 - 179 Investment management (7) (21) (28) (41) (123) (164) fee Recoverable VAT 7 22 29 - - - Other expenses (96) - (96) (96) - (96) ------ ------ ------ ------ ------ ------ Return on ordinary activities before 33 308 341 42 (1,651) (1,609) tax Tax on return on ordinary activities - - - - - - ------ ------ ------ ------ ------ ------ Return on ordinary activities after 33 308 341 42 (1,651) (1,609) tax ------ ------ ------ ------ ------ ------ Return per share 0.2p 1.4p 1.6p 0.2p (7.6)p (7.4)p Year ended 31 October 2008 Revenue Capital Total Â£000 Â£000 Â£000 Gain/(loss) on disposal of investments - (1,009) (1,009) Movements in fair value of investments - (5,254) (5,254) ------ ------ ------ - (6,263) (6,263) Income 467 - 467 Investment management fee (65) (194) (259) Recoverable VAT 25 75 100 Other expenses (190) - (190) ------ ------ ------ Return on ordinary activities before tax 237 (6,382) (6,145) Tax on return on ordinary activities (29) 29 - ------ ------ ------ Return on ordinary activities after tax 208 (6,353) (6,145) ------ ------ ------ Return per share 1.0p (29.2)p (28.2)p RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS (unaudited) for the six months ended 30 April 2009 6 months ended 6 months ended Year ended 30 April 2009 30 April 2008 31 Oct 2008 Â£000 Â£000 Â£000 Equity shareholders' funds at 1 November 2008 7,152 13,914 13,914 Return on ordinary 341 (1,609) (6,145) activities after tax Dividends recognised in the (654) (652) (652) period Net proceeds of share 69 77 77 issues Shares purchased for - (41) (42) cancellation ------ ------ ------ Equity shareholders' funds at 30 April 2009 6,908 11,689 7,152 ------ ------ ------ BALANCE SHEET (unaudited) as at 30 April 2009 30 April 2009 30 April 2008 31 October 2008 Â£000 Â£000 Â£000 Fixed asset investments: Venture capital investments Quoted on AIM 3,284 5,863 2,995 Unquoted 1,954 5,423 3,914 ------ ------ ------ Total fixed asset 5,238 11,286 6,909 investments ------ ------ ------ Current assets: Debtors 87 54 252 Cash at bank 1,670 387 38 ------ ------ ------ 1,757 441 290 Creditors (amounts falling due within one year) (87) (38) (47) ------ ------ ------ Net current assets 1,670 403 243 ------ ------ ------ Net assets 6,908 11,689 7,152 ------ ------ ------ Capital and reserves: Called-up equity share 1,103 1,089 1,089 capital Share premium 2,044 1,989 1,989 Capital redemption 183 183 183 reserve Capital reserve 7,764 8,733 7,760 Revaluation reserve (4,271) (409) (4,139) Revenue reserve 85 104 270 ------ ------ ------ Total equity shareholders' funds 6,908 11,689 7,152 ------ ------ ------ Net asset value per share 31.3p 53.7p 32.8p CASH FLOW STATEMENT (unaudited) for the six months ended 30 April 2009 Six months Six months Year ended ended ended 30 April 2009 30 April 31 October 2008 2008 Â£000 Â£000 Â£000 Net cash inflow/(outflow) from operating activities 239 (71) (61) Taxation: Corporation tax paid - - - Financial investment: Purchase of investments (2) (946) (1,472) Sale/repayment of investments 1,980 1,183 1,351 Net cash inflow/(outflow) from financial investment 1,978 237 (121) Equity dividends paid (654) (652) (652) ------ ------ ------ Net cash inflow/(outflow) before financing 1,563 (486) (834) Financing: Issue of shares 77 77 77 Share issue expenses (8) - - Purchase of shares for - (41) (42) cancellation Net cash inflow from financing 69 36 35 ------ ------ ------ Increase/(decrease) in cash at bank 1,632 (450) (799) ------ ------ ------ Reconciliation of return before tax to net cash flow from operating activities Return on ordinary activities 341 (1,609) (6,145) before tax (Gain)/loss on disposal of (149) (15) 1,009 investments Movements in fair value of (158) 1,543 5,254 investments (Increase)/decrease in debtors 165 19 (179) Increase/(decrease) in creditors 40 (9) - ------ ------ ------ Net cash inflow/(outflow) from operating activities 239 (71) (61) ------ ------ ------ Analysis of movement in net funds 1 November Cash flows 30 April 2008 2009 Â£000 Â£000 Â£000 Cash at bank 38 1,632 1,670 ------ ------ ------ INVESTMENT PORTFOLIO SUMMARY as at 30 April 2009 Cost Valuation % of net assets Â£000 Â£000 by valuation AIM-quoted investments: Advanced Computer Software 198 414 6.0 Pilat Media Global 301 368 5.3 RCG Holdings 236 318 4.6 Andor Technology 292 292 4.2 Aero Inventory 373 253 3.7 IDOX 250 229 3.3 Jelf Group 297 204 3.0 IS Pharma 241 194 2.8 Bond International Software 182 140 2.0 Prologic 300 128 1.9 SectorGuard 117 102 1.5 Quadnetics Group 235 98 1.4 Cello Group 301 96 1.4 Fountains 250 90 1.3 Colliers CRE 332 67 1.0 1st Dental Laboratories 350 52 0.8 Belgravium Technologies 143 46 0.7 Shieldtech 248 40 0.6 Adept Telecom 233 38 0.5 Intercytex Group 250 23 0.3 First Artist Corporation 502 22 0.3 Spectrum Interactive 250 17 0.2 Twenty 198 15 0.2 Baydonhill 251 15 0.2 Hartest Holdings 450 10 0.1 Individual Restaurant Company 250 7 0.1 Advance AIM Value Realisation 21 6 0.1 Company ------ ------ ----- 7,051 3,284 47.5 ------ ------ ----- Unquoted investments: Crantock Bakery 490 618 9.0 Longhirst Venues 136 361 5.2 Britspace Holdings 788 334 4.8 Axial Systems Holdings 251 279 4.0 Optilan Group 250 204 3.0 IG Doors 315 158 2.3 John Laing Partnership 229 - - ------ ------ ----- 2,459 1,954 28.3 ------ ------ ----- Total fixed asset investments 9,510 5,238 75.8 ------ Net current assets 1,670 24.2 ------ ----- Net assets 6,908 100.0 ------ ----- The above summary of results for the six months ended 30 April 2009 does not constitute statutory financial statements within the meaning of Section 240 of the Companies Act 1985, 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 2008 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 Section 235 of the Companies Act 1985 was unqualified. The directors confirm that to the best of their 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 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 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. A copy of the half-yearly financial report for the six months ended 30 April 2009 is expected to be posted to shareholders on 26 June 2009 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. ---END OF MESSAGE--- This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.