Northern 3 Vct Regulatory News (NTN)

15 Nov 2007 15:06

Northern 3 VCT PLC15 November 2007 15 NOVEMBER 2007 NORTHERN 3 VCT PLC UNAUDITED INTERIM RESULTS FOR THETWELVE MONTHS ENDED 30 SEPTEMBER 2007 Northern 3 VCT PLC is a Venture Capital Trust (VCT) managed by NVM PrivateEquity. It invests mainly in UK unquoted companies and aims to provide highlong-term tax-free returns to shareholders through a combination of dividendyield and capital growth. Financial highlights - twelve months ended 30 September 2007:(comparative figures as at 30 September 2006 in italics) 2007 2006 • Net assets £29.5m £29.3m• Net asset value per share 97.9p 95.2p• Return per share: Revenue 2.9p 2.4p Capital 3.6p 0.5p Total 6.5p 2.9p • Dividend per share declared in respect of the twelve month period: Revenue 2.8p 2.0p Capital 1.2p 2.0p Total 4.0p 4.0p • Cumulative return to shareholders since launch: Net asset value per share 97.9p 95.2p Dividends paid per share* 14.9p 10.9p Net asset value plus dividends paid per share 112.8p 106.1p • Share price at end of period 85.0p 83.0p *Excluding proposed second interim dividend For further information, please contact: NVM Private Equity LimitedChristopher Mellor, Director 0191 244 6000Website: www.nvm.co.ukLansons CommunicationsKaren Mignon 020 7294 3685 CHAIRMAN'S STATEMENT The directors present the company's second interim report to shareholders inrespect of the 18 month accounting period ending on 31 March 2008. This reportcovers the 12 month period which ended on 30 September 2007. As explained inlast year's annual report, the company's year end has been changed from 30September to 31 March in order to allow a full three years for the investment ofthe proceeds of the share issues in the 2004/05 tax year. Results The unaudited net asset value (NAV) per share at 30 September 2007 was 97.9p,compared with 97.0p at 31 March 2007 and 95.2p at 30 September 2006. The returnper share for the 12 month period to 30 September 2007 was 6.5p, compared with2.9p in the preceding financial year. The revenue element of the return pershare for the period was 2.9p (preceding year 2.4p). A first interim dividend of 2.0p per share was paid on 20 July 2007. Thedirectors have declared a second interim dividend of 2.0p per share, comprising1.4p revenue and 0.6p capital distribution, which will be paid on 18 January2008 to shareholders on the register on 14 December 2007. The total of the twointerim dividends is 4.0p per share (year to 30 September 2006 4.0p per share).It is envisaged that a final dividend for the 18 month period to 31 March 2008will be paid in July 2008, subject to shareholders' approval at the annualgeneral meeting. Including the proposed second interim dividend, the cumulative total ofdividends declared by the company since inception is 16.9p per share. Investments During the six months to 30 September 2007 seven new investments totalling £3.9million were completed: Maelor (£199,000) - AIM-quoted specialist hospital medicines developer, Chester IDOX (£298,000) - AIM-quoted information management software developer, London Foreman Roberts Group (£1,000,000) - building services consultants, London Astbury Marsden Holdings (£1,000,000) - specialist recruitment consultancy,London Shieldtech (£248,000) - AIM-quoted manufacturer of body armour systems, London Promatic Group (£568,000) - manufacturer of clay target launch equipment,Ellesmere Port Frontier Foods (£542,000) - specialist food products manufacturer, Rotherham This takes the total of new investments in the past year to twelve, with a totalof £6.3 million invested - a considerable step up from the preceding year, wheneight investments were completed at a cost of £2.8 million. This welcomeincrease in activity reflects not only the enhanced flow of new opportunitiesgenerated by NVM's enlarged executive team but also a planned increase in theaverage size of new deals. Whilst the majority of new investments are either in established unquotedcompanies or in AIM new issues, it is still your board's policy to commit asmall part of the portfolio to early stage ventures with high growth potential. Disposals completed in the six months to 30 September 2007 were as follows: Original Disposal RealisedCompany cost proceeds gain/(loss) £000 £000 £000Computer Software Group 135 353 218Ithaca Holdings 308 816 508PM Group 107 157 50RBF Industries 251 131 (120) The AIM-quoted investments in Computer Software Group and PM Group were bothrealised as a result of agreed cash bids completed in April 2007. IthacaHoldings, the business-to-business media and exhibitions company whosemanagement buy-out we backed in 2005, was sold to United Business Media plc for£14 million of which our share was £0.8 million. The investment in RBFIndustries was sold back to the company's management after a protracted periodof under-performance. Since the end of September our investment in human resources software developerKCS Global Holdings has been sold to Sage Group plc for £0.9 million in cash,realising a gain of £0.6 million over original cost. Most of our venture capital holdings continue to make good progress and this hasbeen reflected in a number of valuation increases. However we have reduced thevaluation of housebuilder John Laing Partnership by £0.3 million in recognitionof a deterioration of conditions in the housing market, and it is extremelydisappointing to report that Nightingales Holdings, the mail order clothingretailer, has been written off at a cost of £1.2 million after a period ofdisappointing trading performance compounded by the impact of postal strikes,which eventually led to the company going into administration in October 2007. Shareholder issues In my report six months ago I mentioned that the directors were considering waysof encouraging the development of a more active secondary market in thecompany's shares. As part of this process we have reviewed the provision ofcorporate broking services to the company, as a result of which we haveannounced the appointment of Landsbanki Securities (UK) Limited (formerlyTeather & Greenwood Limited) as our brokers in succession to Brewin DolphinSecurities Limited. Landsbanki will also make a market in the company's sharesand we hope that this will initially lead to a reduction in the quoted bid-offerspread. We recognise that in the longer term the most effective stimulus tomarket liquidity will be strong investment performance and an attractivemaintainable dividend. A number of other VCTs have announced measures aimed atimproving market liquidity and reducing the outflow of funds through companyshare buy-backs, and we will keep our own strategy under regular review. I would like to remind shareholders about the company's dividend investmentscheme, through which shareholders can re-invest their dividends in new ordinaryshares with the benefit of VCT tax reliefs at the current rates. Furtherinformation can be obtained from the company secretary. The annual general meeting in April 2007 was held in London and the directorshad the opportunity to meet a number of shareholders. The next annual generalmeeting will be held in Edinburgh on 3 July 2008. VCT qualifying status Your board continues to monitor progress towards the HM Revenue & Customsqualifying targets with the help of PricewaterhouseCoopers LLP, who are retainedto advise on this and other tax matters. The company has continued to meet theconditions for maintaining VCT status and we are well on track to meet ourimmediate objective of investing the necessary proportion of the 2004/05 shareissue proceeds by 31 March 2008. Prospects The past year has seen a high level of new investment activity and the venturecapital portfolio continues to mature and diversify. Our managers are workingon several further exit opportunities. Recent developments in the financialmarkets suggest that the business environment for small and medium-sizedunquoted companies is likely to become more rather than less challenging overthe next six months, and the Chancellor's proposed changes to capital gains taxhave created an unwelcome disincentive to entrepreneurs. However we believethat our well-established approach to investment monitoring and management willhelp to offset the overall impact of the current economic uncertainty and thatthe nature of our portfolio will lead to good total returns for shareholders inthe medium term. John HustlerChairman The unaudited interim financial statements for the twelve months ended 30September 2007 are set out below. INCOME STATEMENT(unaudited) for the twelve months ended 30 September 2007 Twelve months ended Year ended 30 September 2007 30 September 2006 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000 Gain/(loss) on disposal of - 414 414 - (106) (106) investmentsUnrealised adjustments to - 1,049 1,049 - 605 605 fair value of investments ------ ------ ------ ------- ------- ------ - 1,463 1,463 - 499 499 Income 1,544 - 1,544 1,372 - 1,372Investment management fee (173) (518) (691) (167) (502) (669)Other expenses (197) - (197) (180) - (180) ------ ------ ------ ------ ------ ------Return on ordinary activities before tax 1,174 945 2,119 1,025 (3) 1,022Tax on ordinary activities (291) 164 (127) (265) 160 (105) ------ ------ ------ ------ ------ ------Return on ordinary activities after tax 883 1,109 1,992 760 157 917 ------ ------ ------ ------ ------ ------ Return per share 2.9p 3.6p 6.5p 2.4p 0.5p 2.9p RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS(unaudited) for the twelve months ended 30 September 2007 Twelve months ended Year ended 30 September 2007 30 September 2006 £000 £000Equity shareholders' funds at 1 October 2006 29,281 30,136Return on ordinary activities after tax 1,992 917Dividends recognised in the period (1,217) (1,153)Net proceeds of share issues 141 126Shares purchased for cancellation (675) (745)Expenses charged to capital reserve (18) - ------ ------Equity shareholders' funds at 30 September 2007 29,504 29,281 ------ ------ BALANCE SHEET(unaudited) as at 30 September 2007 30 September 2007 30 September 2006 £000 £000Venture capital investments: Unquoted 16,089 10,012 Quoted 2,487 1,997 ------ ------ 18,576 12,009Listed fixed-interest investments 9,382 13,229 ------ ------Total fixed asset investments 27,958 25,238 ------ ------Current assets: Debtors 463 600 Cash at bank 1,250 3,606 ------ ------ 1,713 4,206Creditors (amounts falling due within one year) (167) (163) ------ ------Net current assets 1,546 4,043 ------ ------ Net assets 29,504 29,281 ------ ------ Capital and reserves:Called-up equity share capital 1,506 1,538Share premium 7,893 22,759Capital redemption reserve 116 77Capital reserve - realised 17,413 3,703Capital reserve - unrealised 1,847 629Revenue reserve 729 575 ------ ------Total equity shareholders' funds 29,504 29,281 ------ ------Net asset value per share 97.9p 95.2p CASH FLOW STATEMENT(unaudited) for the twelve months ended 30 September 2007 Twelve months ended Year ended 30 September 2007 30 September 2006 £000 £000 £000 £000Net cash inflow from operating activities 757 525Taxation:Corporation tax paid (105) (81)Financial investment:Purchase of investments (13,282) (9,740)Sale/repayment of investments 12,025 9,043 ------ ------Net cash outflow from financial investment (1,257) (697)Equity dividends paid (1,217) (1,153) ------ ------Net cash outflow before financing (1,822) (1,406)Financing:Issue of ordinary shares 147 145Share issue expenses (6) (19)Purchase of ordinary shares for cancellation (675) (745) ------ ------Net cash outflow from financing (534) (619) ------ ------Decrease in cash at bank (2,356) (2,025) ------ ------Reconciliation of return beforetax to net cash flow fromoperating activitiesReturn on ordinary activities before tax 2,119 1,022(Gain)/loss on disposal of investments (414) 106Unrealised adjustments to fair value of investments (1,049) (605)Decrease in debtors 137 17Decrease in creditors (18) (15)Expenses charged to capital reserve (18) - ------ ------Net cash inflow from operating activities 757 525 ------ ------Analysis of movement in net funds 1 October 2006 Cash flows 30 September 2007 £000 £000 £000Cash at bank 3,606 (2,356) 1,250 ------ ------ ------ INVESTMENT PORTFOLIO SUMMARY(unaudited) as at 30 September 2007 % of Cost Valuation net assets £000 £000 by value Envirotec 455 1,012 3.4Product Support (Holdings) 1,000 1,000 3.4Promanex Group Holdings 1,000 1,000 3.4Foreman Roberts Group 1,000 1,000 3.4Astbury Marsden Holdings 1,000 1,000 3.4KCS Global Holdings 338 898 3.1John Laing Partnership 305 856 2.9Pivotal Laboratories Holdings 679 843 2.9Paladin Group 593 773 2.6Crantock Bakery 442 732 2.5IG Doors 500 625 2.1Promatic Group 568 568 1.9DxS 325 561 1.9Frontier Foods 542 542 1.8Abermed 375 490 1.7 ------ ------ ------Fifteen largest venture capital investments 9,122 11,900 40.4Other venture capital investments 7,519 6,676 22.6 ------ ------ ------Total venture capital investments 16,641 18,576 63.0Listed fixed-interest investments 9,470 9,382 31.8 ------ ------ ------Total fixed asset investments 26,111 27,958 94.8 ------Net current assets 1,546 5.2 ------ ------Net assets 29,504 100.0 ------ ------ The above financial statements for the twelve months ended 30 September 2007 donot constitute statutory financial statements within the meaning of Section 240of the Companies Act 1985 and have not been delivered to the Registrar ofCompanies. The figures for the year ended 30 September 2006 have been extractedfrom the financial statements for that year, which have been delivered to theRegistrar of Companies; the independent auditors' report on those financialstatements under Section 235 of the Companies Act 1985 was unqualified. Thefinancial statements for the twelve month period ended 30 September 2007 havebeen prepared on the basis of the accounting policies set out in the annualfinancial statements for the year ended 30 September 2006. The proposed second interim dividend of 2.0p per share for the period ending 31March 2008 will be paid on 18 January 2008 to shareholders on the register atthe close of business on 14 December 2007. A copy of the interim report for the twelve months ended 30 September 2007 isexpected to be posted to shareholders on 30 November 2007 and will be availableto the public at the registered office of the company at Northumberland House,Princess Square, Newcastle upon Tyne NE1 8ER and on the NVM Private EquityLimited website, www.nvm.co.uk. ENDS This information is provided by RNS The company news service from the London Stock Exchange