Northern 3 Vct Regulatory News (NTN)

8 Dec 2005 09:31

Northern 3 VCT PLC08 December 2005 8 DECEMBER 2005 NORTHERN 3 VCT PLC PRELIMINARY RESULTSFOR THE YEAR ENDED 30 SEPTEMBER 2005 Northern 3 VCT PLC is a Venture Capital Trust (VCT) managed by Northern VentureManagers. The trust was launched in September 2001 and its public share offershave to date raised a total of over £32 million. The trust invests mainly inunquoted venture capital holdings and aims to provide high long-term returns toshareholders through a combination of dividend yield and capital growth. Financial highlights - year ended 30 September 2005:(comparative figures as at 30 September 2004 in italics) 2005 2004• Net assets £29,610,000 £20,802,000• Net asset value per share 94.1p 93.4p• Investment income £1,232,000 £796,000• Profit/(loss) on ordinary activities before tax: Revenue £894,000 £505,000 Capital £(446,000) £85,000 Total £448,000 £590,000• Earnings per share: Revenue 2.4p 2.0p Capital (1.1)p 0.9p Total 1.3p 2.9p• Dividend per share: Revenue 2.0p 1.6p Capital 0.4p 2.8p Total 2.4p 4.4p• Cumulative return to shareholders since launch: Dividends per share 8.9p 6.5p Net asset value plus dividends per share 103.0p 99.9p• Share price at end of year 87.0p 90.0p For further information, please contact:Northern Venture Managers Limited Alastair Conn, Managing Director 0191 244 6000 Website: www.nvm.co.ukLansons Communications Alison Boucher 020 7294 3616 NORTHERN 3 VCT PLC CHAIRMAN'S STATEMENT The Chairman of Northern 3 VCT PLC, John Hustler, included the following pointsin his statement to shareholders: The past year has seen further steady progress by Northern 3 VCT. Our series oftop-up share issues for the 2004/05 and 2005/06 tax years closed in June 2005with a total of £10.7 million raised from investors, with the result that thecompany now has net assets of just under £30 million. The total return toshareholders (year-end net asset value plus cumulative dividends) increased by3.0% over the year, from 99.9p to 103.0p. New venture capital investmentstotalled £4.7 million and one of the holdings acquired in earlier years was soldat a satisfactory profit. Net asset value The net asset value (NAV) at 30 September 2005, after providing for dividendstotalling 2.4p in respect of the year, was 94.1p per share - a modest increaseon the corresponding figure of 93.4p at 30 September 2004. The venture capitalportfolio is still relatively immature and is currently valued at a slightoverall surplus compared with its original cost. Your directors consider thisis a satisfactory position at this stage in the company's development. Investments 15 new investments were completed during the year at a total cost of £4.7million. The increase in the company's size has brought a correspondingincrease in our proportionate entitlement to invest in each new opportunitydeveloped by Northern Venture Managers, and shortly before the year end wecompleted our largest investment to date, £679,000 in Pivotal Laboratories. Asuccessful exit was achieved from Crabtree of Gateshead, where the originalinvestment of £219,000 produced total cash proceeds (including loan stockredeemed in the preceding year) of £322,000 and a profit of £103,000 over cost.Subsequent to the year end our investment in Omnico Plastics has also been soldfor £653,000 in cash, compared with an original cost of £333,000. I am pleased to report that GB Industries, whose valuation was written down tozero last year, is now achieving much improved results and we have been able torestore some value at the year end. However SMS Agencies, a new investmentduring the year, has been performing behind expectations and this is reflectedin a 50% provision against cost. The other investments in the portfolio aregenerally making encouraging progress. Revenue and dividends Income from investments increased from £796,000 in the preceding year to£1,232,000, and the revenue surplus before tax rose from £505,000 to £894,000.The revenue element of earnings per share rose from 2.0p to 2.4p per share,reflecting the benefit of spreading the company's running costs across a widercapital base. The directors propose a final revenue dividend of 1.3p per share(last year 1.1p), making a total of 2.0p for the year (last year 1.6p). A finalcapital dividend of 0.4p is also proposed (last year's capital dividend was2.8p, resulting largely from the gain on the sale of Keith Prowse in September2004). The total dividend for the year is therefore 2.4p (last year 4.4p). Thefinal dividend of 1.7p will, if approved by shareholders, be paid on 20 January2006 to shareholders on the register on 16 December 2005. The dividend investment scheme introduced by the company a year ago was taken upby 20% of shareholders, representing approximately 17% of the company's issuedcapital. £177,000 was reinvested in ordinary shares during the year, withsubscribers benefiting from the attractive tax reliefs currently available onnew VCT investments. Shareholders who are interested in joining the scheme inrespect of the final dividend should contact the company secretary by 23December 2005 for further information. VCT qualifying status Your board, advised by PricewaterhouseCoopers LLP, has continued to monitorclosely the company's progress towards meeting the qualifying investmentrequirements laid down in the VCT legislation, and we are satisfied that thecompany's VCT qualifying status has been maintained. Share price There continues to be relatively little trading in the company's shares. Wehave continued to buy back shares in the market for cancellation, generally at adiscount to NAV of 10%, in order to provide liquidity for shareholders - a totalof 581,620 shares were re-purchased during the year at an average price of 86pper share. A resolution will be proposed at the annual general meeting to renewthe board's powers to purchase shares in the market up to a maximum of 10% ofthe issued share capital. Management performance incentive In the light of experience gained over the past four years, your board has beenconsidering how best to remunerate and incentivise the company's investmentmanagers in the future whilst aligning their interests with those ofshareholders. We believe it is of great importance to the long-term prospectsof our company that NVM should be able to recruit and retain high-calibreexecutives in a competitive market environment. As a result of these discussions, it has been agreed in principle that aco-investment scheme will be established in place of the existing performanceincentive scheme. Under the terms of the new scheme investment executivesemployed by NVM will be required to invest personally, and on the same terms asNorthern 3 VCT and NVM's other funds, in the ordinary shares of new investeecompanies. Your directors are firmly of the view that the change inarrangements will be in the best interests of the company and its shareholders. Future prospects Whilst the outlook for the UK economy is uncertain, the pipeline of venturecapital investment opportunities for the company remains encouraging. The sizeand quality of the team of investment executives at NVM has increased in theperiod and your directors believe that we are in a good position to achieve ourobjective of above-average tax-free returns. On your behalf I would like tothank the team at NVM for the good results which I believe they have achievedfor us. JOHN HUSTLER Chairman The audited financial statements for the year ended 30 September 2005 will showthe results set out below. PROFIT AND LOSS ACCOUNT for the year ended 30 September 2005 Year ended 30 September 2005 Year ended 30 September 2004 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000Profits recognised in the year on realisation of investments - 29 29 - 442 442Income 1,232 - 1,232 796 - 796Investment management fee (158) (475) (633) (119) (357) (476)Other expenses (180) - (180) (172) - (172) ------ ------ ------ ------ ------ ------Profit/(loss) on ordinary activities before tax 894 (446) 448 505 85 590Tax on ordinary activities (233) 152 (81) (116) 94 (22) ------ ------ ------ ------ ------ ------Profit/(loss) on ordinary activities after tax 661 (294) 367 389 179 568Dividends (639) (126) (765) (336) (623) (959) ------ ------ ------ ------ ------ ------Retained profit/(loss) for the year 22 (420) (398) 53 (444) (391) ------ ------ ------ ------ ------ ------Earnings/(loss) per share 2.4p (1.1)p 1.3p 2.0p 0.9p 2.9pDividend per share 2.0p 0.4p 2.4p 1.6p 2.8p 4.4p STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the year ended 30 September 2005 Year ended 30 September 2005 Year ended 30 September 2004 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000Profit/(loss) on ordinary activities after tax 661 (294) 367 389 179 568Unrealised gains on revaluation of investments - 497 497 - 16 16 ------ ------ ------ ------ ------ ------Total recognised gains and losses during the year 661 203 864 389 195 584 ------ ------ ------ ------ ------ ------ NOTE OF HISTORICAL COST PROFITS AND LOSSESfor the year ended 30 September 2005 Year ended 30 September 2005 Year ended 30 September 2004 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000Reported profit/(loss) on ordinary activities before tax 894 (446) 448 505 85 590Realisation of investment revaluation gains of prior years - 103 103 - 173 173 ------ ------ ------ ------ ------ ------Historical cost profit/(loss) for the year before tax 894 (343) 551 505 258 763 ------ ------ ------ ------ ------ ------Historical cost profit/(loss) for the year after taxation and dividends 22 (317) (295) 53 (271) (218) ------ ------ ------ ------ ------ ------ BALANCE SHEET as at 30 September 2005 30 September 2005 30 September 2004 £000 £000Venture capitalinvestments: Unquoted 8,433 4,312 Quoted 1,310 456 ------- ------- 9,743 4,768Listed fixed-interest 14,308 7,413investments ------- -------Total fixed asset 24,051 12,181investments ------- -------Current assets: Debtors 617 395 Cash at bank 5,631 9,184 ------- ------- 6,248 9,579Creditors (amountsfalling due within one year) (689) (958) ------- -------Net current assets 5,559 8,621 ------- ------- Net assets 29,610 20,802 ------- ------- Capital and reserves:Called-up equity 1,573 1,113share capitalShare premium 22,641 13,922Capital redemption 34 5reserveRevaluation reserve 333 (61)Profit and loss 5,029 5,823account ------- -------Total equity 29,610 20,802shareholders' funds ------- -------Net asset value per 94.1p 93.4pshare CASH FLOW STATEMENT for the year ended 30 September 2005 Year ended Year ended 30 September 30 September 2005 2004 £000 £000 £000 £000Cash flow statementNet cash inflow from operating activities 204 192Taxation:Corporation tax paid (24) (22)Financial investment:Purchase of investments (17,372) (12,015)Sale/repayment of 6,028 13,628investments ------ ------Net cash (outflow)/inflowfrom financial investment (11,344) 1,613Equity dividends paid (1,098) (282) ------ ------Net cash (outflow)/inflowbefore use of liquid resources and (12,262) 1,501financingNet cash inflow from management of liquid - 2,371resourcesFinancing:Issue of ordinary shares 9,698 4,776Share issue expenses (490) (239)Purchase of ordinary shares for cancellation (499) (61) ------ ------Net cash inflow from 8,709 4,476financing ------ ------(Decrease)/increase in cash (3,553) 8,348at bank ------ ------Reconciliation of profitbeforetax to net cash flow fromoperating activitiesProfit on ordinaryactivities before tax 448 590(Increase)/decrease in (222) 13debtorsIncrease in creditors 7 31Profit recognised on realisation of investments (29) (442) ------ ------Net cash inflow from operating activities 204 192 ------ ------Analysis of movementin net funds 1 October Cash flows 30 2004 September 2005 £000 £000 £000Cash at bank 9,184 (3,553) 5,631 ------ ------ ------ INVESTMENT PORTFOLIO SUMMARY as at 30 September 2005 Valuation % of net assets £000 by valuationFifteen largest venture capital investments:Pivotal Laboratories 679 2.3Omnico Plastics 633 2.1Crantock Bakery 518 1.8IG Doors 500 1.7Longhirst Group 495 1.7Envirotec 455 1.5Direct Valeting 427 1.4Warmseal Windows (Newcastle) 396 1.3LEDA Holdings 385 1.3Abermed Industrial Doctors 375 1.3Arrow Industrial Group 366 1.2KCS Global Holdings 338 1.1Cello Group* 330 1.1Ithaca Holdings 307 1.0John Laing Partnership 300 1.0 ------- ------ 6,504 21.8Other venture capital investments 3,239 11.0 ------- ------Total venture capital investments 9,743 32.8Listed fixed-interest investments 14,308 48.4 ------- ------Total fixed asset investments 24,051 81.2Net current assets 5,559 18.8 ------- ------Net assets 29,610 100.0 ------- ------*Quoted on the Alternative Investment Market The above summary of results for the year ended 30 September 2005 does notconstitute statutory financial statements within the meaning of Section 240 ofthe Companies Act 1985 and has not been delivered to the Registrar of Companies. Statutory financial statements will be filed with the Registrar of Companiesin due course; the independent auditors' report on those financial statementsunder Section 235 of the Companies Act 1985 is unqualified and does not containa statement under Section 237(2) or (3) of the Companies Act 1985. The proposed final dividend of 1.7p per share for the year ended 30 September2005 will, if approved by shareholders, be paid on 20 January 2006 toshareholders on the register at the close of business on 16 December 2005. The full annual report including financial statements for the year ended 30September 2005 is expected to be posted to shareholders on 16 December 2005 andwill be available to the public at the registered office of the company atNorthumberland House, Princess Square, Newcastle upon Tyne NE1 8ER. ENDS This information is provided by RNS The company news service from the London Stock Exchange