Northern 2 Vct Regulatory News (NTV)

1 Apr 2005 08:53

Northern 2 VCT PLC01 April 2005 1 APRIL 2005 NORTHERN 2 VCT PLC PRELIMINARY RESULTSFOR THE YEAR ENDED 31 JANUARY 2005 Northern 2 VCT PLC is a Venture Capital Trust (VCT) managed by Northern VentureManagers. The trust was launched in 1999 and has to date raised a total of £46million from private investors. The trust invests mainly in unquoted venturecapital holdings and aims to provide high long-term returns to shareholdersthrough a combination of dividend yield and capital growth. Financial highlights - year ended 31 January 2005:(comparative figures as at 31 January 2004 in italics) 2005 2004• Net assets £39,693,000 £43,233,000• Net asset value per share 89.7p 96.5p• Investment income £2,074,000 £2,015,000• Profit/(loss) on ordinary activitiesBefore tax: Revenue £1,558,000 £1,506,000 Capital £221,000 £(240,000) Total £1,779,000 £1,266,000• Earnings per share: Revenue 2.5p 2.5p Capital 1.2p 0.1p Total 3.7p 2.6p• Dividend per share: Revenue 2.5p 2.5p Capital 6.3p 1.5p Total 8.8p 4.0p• Cumulative return to shareholderssince launch: Dividends per share 22.4p 13.6p Net asset value plus dividends per share 112.1p 110.1p• Share price 80p 82p For further information, please contact:Alastair Conn, Managing Director Northern Venture Managers Limited 0191 244 6000 Website: www.nvm.co.ukCharles Ansdell/Marlene Scott Polhill Communications 020 7655 0540 NORTHERN 2 VCT PLC CHAIRMAN'S STATEMENT The Chairman of Northern 2 VCT PLC, Dr Matt Ridley, included the followingpoints in his statement to shareholders: The past year has seen a greater level of new investment activity andsubstantial dividend payments to shareholders. Earnings per share for the yearwere 3.7p compared with 2.6p in the preceding year, and this along with thesuccessful realisation of some of the revaluation gains that had been recordedin previous years enabled us to declare dividends totalling 8.8p per share.After taking into account the dividend distribution, investment valuationmovements and the effect of share buy-backs, the underlying net asset value pershare fell from 96.5p to 89.7p over the year. The five year performance graph in the annual report shows that on a totalreturn basis the company's net asset value and share price continue toout-perform the FTSE All-share index. Northern 2 VCT remains the clear leaderof its peer group of generalist VCTs launched in the 1998/99 tax year. Investment portfolio During the year ten new venture capital investments were completed and theportfolio now comprises 52 holdings with a total value of £29.4 million.Significant exits were achieved from the unquoted investments in T J Brent andKeith Prowse, whilst BBI Holdings and Vectura Group both floated successfully onthe Alternative Investment Market. Progress made by other portfolio companieshas been mixed, with several of our larger investments showing a reduction invaluation after reporting trading results behind expectations. Our managers areactively involved in working with these companies to achieve improvedperformance. Developments in the portfolio are discussed in more detail in theInvestment Manager's Review in the annual report. Revenue and dividends The revenue surplus before tax for the year was £1,558,000, a slight increasefrom the previous year's figure of £1,506,000. The revenue return per share wasunchanged at 2.5p, enabling us to maintain the revenue dividend at 2.5p pershare for the fourth year in succession. Significant capital gains wererealised from the venture capital portfolio, with the result that capitaldividends totalling 6.3p per share were declared in respect of the year (lastyear 1.5p). The total dividend of 8.8p is equivalent to a 14.7% gross yield to a higher-ratetaxpayer subscribing for shares at 100p, and 18.3% if the 20% income tax reliefon subscriptions is taken into account. The cumulative total of dividendsdeclared by the company over six years is 22.4p per share. Investment company status In April 2004 Northern 2 VCT revoked its status as an investment company underthe Companies Act 1985 so that dividends can be paid out of realised capitalgains. This means that in order for our audited accounts to show a true andfair view we are required by law to publish a profit and loss account and astatement of total recognised gains and losses in place of the previousstatement of total return. We have however included a separate statement oftotal return in the annual report, in the same format as was presented lastyear, to aid shareholders' understanding of the company's financial performance. There will be further changes in accounting presentation in the near futurewith the scheduled introduction of International Accounting Standards for listedcompanies. Dividend investment scheme During the year we introduced a dividend investment scheme, giving shareholdersthe opportunity to re-invest their dividends in new ordinary shares in thecompany at net asset value with the benefit of the 40% income tax reliefcurrently available on new VCT subscriptions. Shareholders representingapproximately 10% of the issued share capital have joined the scheme and a totalof £305,000 was re-invested up to 31 January 2005. Share buy-backs and market liquidity During the year the company bought back for cancellation 895,900 shares,equivalent to approximately 2.0% of the issued capital, at an average price of78p per share. A resolution will as usual be proposed at the annual generalmeeting to renew the board's authority to make market purchases of shares. As Ipredicted last year , the increase to 40% in the income tax relief on VCTsubscriptions which was announced in the March 2004 Budget has depressed thesecondary market in VCT shares and it is difficult to foresee any improvement inthe short term. It is therefore likely that the company will continue topurchase its own shares for cancellation. VCT qualifying status PricewaterhouseCoopers LLP have continued to monitor and report to the board onthe company's compliance with the Inland Revenue's requirements relating to VCTqualifying status. A year ago, as a result of a general market slowdown in newinvestment completions, we had to place £9.5 million temporarily on non-interestbearing deposit in order to ensure that qualifying investments continued toexceed 70% of the total. The rate of new investment has subsequently been goodand I am pleased to report that the balance of non-interest bearing funds hadreduced to less than £1 million by 31 January 2005, and to zero by 31 March2005. The deposit interest income forgone has been more than replaced by thestrong generation of income from the venture capital portfolio, with the resultthat total income for the year was actually slightly higher than in thepreceding year. The future A resolution for the continuation of the company will be proposed at the annualgeneral meeting to be held next year, in May 2006, as the articles ofassociation provide that shareholders must vote on the continuation of thecompany at its seventh annual general meeting and every five years thereafter.Your board will be giving careful consideration to the company's future strategyover the next 12 months, but at this stage I can say that in the absence ofunforeseen developments we expect to recommend continuation for a further fiveyears. The company's pool of funds is now substantially invested, our maturingventure capital portfolio has begun to produce a good flow of dividend incomefor shareholders and we believe that further progress will be made over themedium term. Matt Ridley Chairman The audited financial statements for the year ended 31 January 2005 will showthe results set out below. PROFIT AND LOSS ACCOUNT for the year ended 31 January 2005 Year ended 31 January 2005 Year ended 31 January 2004 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000Profits recognised in the year on realisation of investments - 1,164 1,164 - 702 702Income 2,074 - 2,074 2,015 - 2,015Investment management fee (315) (943) (1,258) (314) (942) (1,256)Other expenses (201) - (201) (195) - (195) ------ ------ ------ ------ ------ ------Profit/(loss) on ordinary activities before tax 1,558 221 1,779 1,506 (240) 1,266Tax on ordinary activities (422) 301 (121) (385) 298 (87) ------ ------ ------ ------ ------ ------Profit on ordinary activities after tax 1,136 522 1,658 1,121 58 1,179Dividends (1,094) (2,786) (3,880) (1,121) (672) (1,793) ------ ------ ------ ------ ------ ------Retained profit/(loss) for the year 42 (2,264) (2,222) - (614) (614) ------ ------ ------ ------ ------ ------Earnings per share 2.5p 1.2p 3.7p 2.5p 0.1p 2.6pDividend per share 2.5p 6.3p 8.8p 2.5p 1.5p 4.0p STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the year ended 31 January 2005 Year ended 31 January 2005 Year ended 31 January 2004 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000Profit on ordinary activities after tax 1,136 522 1,658 1,121 58 1,179Unrealised (losses)/gains on revaluation of investments - (924) (924) - 1,423 1,423 ------ ------ ------ ------ ------ ------Total recognised gains and losses during the year 1,136 (402) 734 1,121 1,481 2,602 ------ ------ ------ ------ ------ ------ NOTE OF HISTORICAL COST PROFITS AND LOSSESfor the year ended 31 January 2005 Year ended 31 January 2005 Year ended 31 January 2004 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000Reported profit/(loss) on ordinary activities before tax 1,558 221 1,779 1,506 (240) 1,266Realisation of investment revaluation gains/(losses) of prior years - 904 904 - (525) (525) ------ ------ ------ ------ ------ ------Historical cost profit/(loss) for the year before tax 1,558 1,125 2,683 1,506 (765) 741 ------ ------ ------ ------ ------ ------Historical cost profit/(loss) for the year after taxation and dividends 42 (1,360) (1,318) - (1,139) (1,139) ------ ------ ------ ------ ------ ------ BALANCE SHEETas at 31 January 2005 31 January 31 January 2005 2004 £000 £000Venture capital investments: Unquoted 25,391 25,018 Quoted 4,023 2,684 ------- ------- 29,414 27,702Other listed investments 6,965 7,238 ------- -------Total fixed asset investments 36,379 34,940 ------- -------Current assets: Debtors 420 350 Cash at bank 3,795 9,500 ------- ------- 4,215 9,850Creditors (amounts falling due within one year) (901) (1,557) ------- -------Net current assets 3,314 8,293 ------- ------- Net assets 39,693 43,233 ------- ------- Capital and reserves:Called-up equity share capital 2,212 2,241Share premium 34,050 33,761Capital redemption reserve 63 18Revaluation reserve 1,032 2,860Profit and loss account 2,336 4,353 ------- -------Total equity shareholders' funds 39,693 43,233 ------- -------Net asset value per share 89.7p 96.5p CASH FLOW STATEMENTfor the year ended 31 January 2005 Year ended Year ended 31 January 2005 31 January 2004 £000 £000 £000 £000Cash flow statementNet cash inflow from operating activities 539 934Taxation:Corporation tax paid (88) (58)Financial investment:Purchase of investments (10,341) (9,081)Sale/repayment of 9,142 16,412investments ------ ------Net cash inflow/(outflow)from financial investment (1,199) 7,331Equity dividends paid (4,563) (1,123) ------ ------Net cash inflow/(outflow) before financing (5,311) 7,084Financing:Issue of ordinary shares 305 -Purchase of ordinaryshares for cancellation (699) (198) ------ ------Net cash outflow from financing (394) (198) ------ ------Increase/(decrease) in (5,705) 6,886cash at bank ------ ------Reconciliation of profitbefore tax to net cash flow fromoperating activities Profit on ordinaryactivities before tax 1,779 1,266(Increase)/decrease in (70) 381debtorsDecrease in creditors (6) (11)Profit recognised on realisation of (1,164) (702)investments ------ ------Net cash inflow from operating activities 539 934 ------ ------Reconciliation of movementIn net funds 1 February Cash flows 31 January 2004 2005 £000 £000 £000Cash at bank 9,500 (5,705) 3,795 ------ ------ ------ INVESTMENT PORTFOLIO SUMMARY as at 31 January 2005 Valuation % of net assets £000 by valuationFifteen largest venture capital investments:DMN Installations 2,140 5.4Stainton Metal Company 1,825 4.6Longhirst Group 1,484 3.7Omnico Plastics 1,450 3.7Arrow Industrial Group 1,292 3.3Crantock Bakery 1,107 2.8SMS Agencies 1,000 2.5IG Doors 1,000 2.5Envirotec 975 2.5Tolwood 942 2.4Direct Valeting 915 2.3RBF Industries 896 2.2Crabtree of Gateshead 841 2.1Computer Software Group* 839 2.1LEDA Holdings 825 2.1 ------- ------ 17,531 44.2Other venture capital investments 11,883 30.0 ------- ------Total venture capital investments 29,414 74.2Listed fixed-interest investments 6,965 17.5 ------- ------Total fixed asset investments 36,379 91.7Net current assets 3,314 8.3 ------- ------Net assets 39,693 100.0 ------- ------\* Traded on the Alternative Investment Market The above summary of results for the year ended 31 January 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 1.5p per share for the year ended 31 January 2005will, if approved by shareholders, be paid on 3 June 2005 to shareholders on theregister at the close of business on 6 May 2005. The full annual report including financial statements for the year ended 31January 2005 is expected to be posted to shareholders on 15 April 2005 and willbe 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