Half-yearly report

 
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 
 
                                    ----------  ----------  ----------