Northern 2 Vct Regulatory News (NTV)

21 Sep 2007 16:00

Northern 2 VCT PLC21 September 2007 21 SEPTEMBER 2007 NORTHERN 2 VCT PLC UNAUDITED HALF-YEARLY FINANCIAL REPORTFOR THE SIX MONTHS ENDED 31 JULY 2007 Northern 2 VCT PLC is a Venture Capital Trust (VCT) managed by NVM PrivateEquity Limited. It invests mainly in unquoted venture capital holdings and aimsto provide high long-term tax-free returns to shareholders through a combinationof dividend yield and capital growth. Financial highlights:(comparative figures as at 31 July 2006 in italics) 2007 2006 • Net assets £43.1m £41.5m • Net asset value per share 90.1p 84.5p • Return per share Revenue 1.2p 1.2p Capital 4.4p (2.7)p Total 5.6p (1.5)p • Interim dividend per share in respect of the period Revenue 1.0p 1.0p Capital 1.0p - Total 2.0p 1.0p • Cumulative returns to shareholders since launch Net asset value per share 90.1p 84.5p Dividends paid per share* 33.4p 27.9p Net asset value plus dividends paid per share 123.5p 112.4p • Share price at end of period 77.0p 78.0p *Excluding proposed interim dividend For further information, please contact:NVM Private Equity LimitedAlastair Conn, Managing Director 0191 244 6000Website: www.nvm.co.ukLansons CommunicationsKaren Mignon 020 7294 3685 NORTHERN 2 VCT PLC HALF-YEARLY MANAGEMENT REPORT The directors are pleased to report that the company has continued to make goodprogress during the six months to 31 July 2007, with a high level of activity inthe investment portfolio. Results and dividend The net asset value per share at 31 July 2007 was 90.1p (31 January 2007 88.9p).The cumulative return to shareholders (net asset value plus dividends paidsince launch) increased during the half year by 5.7p per share, equivalent to6.4% of the opening net asset value. The revenue return per share for the half year was unchanged at 1.2p, with totalinvestment income marginally up at £1,005,000. The capital return per share was4.4p, compared with a loss of 2.7p in the corresponding period last year. Yourboard has declared an interim revenue dividend of 1.0p per share (last year1.0p) and an interim capital dividend of 1.0p (last year nil), making a totalinterim dividend of 2.0p per share which will be paid on 7 December 2007 toshareholders on the register on 9 November 2007. The increase in the interimdividend is intended to achieve a better balance between the amounts of theinterim and final payments. This takes the cumulative total of dividendsdeclared by the company since launch to 35.4p per share. The company continues to operate its dividend investment scheme, which enablesshareholders to re-invest their dividends in new ordinary shares in the companywith the benefit of zero transaction costs plus income tax relief at 30% on theamount re-invested. Investments The flow of new investment opportunities has been strong and seven new venturecapital investments totalling £3.8 million were completed during the half year: • Gentronix (£173,000) - drug development support services provider, Manchester • Promanex Group Holdings (£1,000,000) - engineering and maintenance services contractor, Nuneaton • Summit Corporation (£220,000) - AIM-quoted provider of drug discovery services, Abingdon (acquired in exchange for the former holding in Daniolabs) • Maelor (£199,000) - AIM-quoted specialist hospital medicines developer, Chester • 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 In April we sold our AIM-quoted shareholding in Computer Software Groupfollowing a recommended cash bid, realising proceeds of £1.8 million and a gainof £1.3 million over original cost. The holding in PM Group was also sold to acash bidder, with proceeds of £257,000 and a gain of £83,000. ArrowTherapeutics was sold to AstraZeneca PLC, recovering our original investment of£298,000, and Daniolabs was acquired by the AIM-quoted Summit Corporation plc(formerly known as Vastox plc) in a share-for-share deal which valued ourinvestment at £220,000, a 50% uplift on cost. Since the end of the half year wehave realised our investment in Ithaca Holdings through a sale to UnitedBusiness Media Plc, the deal generating a total return of approximately threetimes the original cost of £594,000. Our managers are working on several otherprospective disposals. Shareholder issues The share price rose slightly from 75p to 77p during the half year. 254,321 newshares were issued in June under the company's dividend re-investment scheme,adding £215,000 to our funds available for investment. A total of 749,866shares, representing approximately 1.6% of the issued share capital, were boughtin the market for cancellation during the half year at an average price of 78p. The annual general meeting held in Newcastle in May was followed by a Londonshareholder presentation in July which was well attended and well received, witha lively debate on a variety of matters. It is clear that dividend policy andsecondary market liquidity are key issues for shareholders, and the board iscurrently considering both of these subjects in conjunction with its periodicreview of the company's share buy-back policy. The Government has made significant changes to VCT tax reliefs and thequalifying investment criteria over the past two years. As a result the amountof money invested in VCT share issues in the 2006/07 tax year was, at around£270 million, down by two thirds by comparison with the previous year, and it ispossible that there will be a further reduction in 2007/08. Nevertheless webelieve it is important to maintain the company's capital base and replace fundsused in buying back shares in the market, and accordingly your board isconsidering a proposal to launch a "top-up" issue of new ordinary shares duringthe second half of the financial year. We will write to shareholders once thesedeliberations have been completed. Board of directors We are delighted to report that David Gravells was appointed as a director ofthe company on 4 July 2007. David is an experienced entrepreneur with a wideexperience of private equity-financed businesses, and is chairman of theadvisory board of Durham Business School. We look forward to working with him. VCT qualifying status The company has continued to satisfy the qualifying conditions laid down by HMRevenue & Customs for approval as a VCT. We retain PricewaterhouseCoopers LLPto advise the board in relation to VCT taxation matters. The future The recent unsettled conditions in the financial markets have created anunwelcome air of uncertainty about future prospects for the UK economy. Whilsta downturn in the economy would inevitably have an adverse effect on theperformance of some of our portfolio companies, we have a diversified range ofholdings in well-managed businesses which should overall prove capable of makingfurther progress. By order of the Board Christopher MellorSecretary The unaudited half-yearly financial statements for the six months ended 31 July2007 are set out below. INCOME STATEMENT(unaudited) for the six months ended 31 July 2007 Six months ended 31 July 2007 Six months ended 31 July 2006 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000Gain/(loss) on disposal of investments - 553 553 - (107) (107)Unrealised adjustments to fair value of investments - 1,815 1,815 - (929) (929) ---------- ---------- ---------- ---------- ---------- ---------- - 2,368 2,368 - (1,036) (1,036)Income 1,005 - 1,005 955 - 955Investment management fee (126) (378) (504) (119) (357) (476)Other expenses (125) - (125) (112) - (112) ---------- ---------- ---------- ---------- ---------- ----------Return on ordinary activities before tax 754 1,990 2,744 724 (1,393) (669)Tax on return on ordinary activities (179) 119 (60) (181) 113 (68) ---------- ---------- ---------- ---------- ---------- ----------Return on ordinary activities after tax 575 2,109 2,684 543 (1,280) (737) ---------- ---------- ---------- ---------- ---------- ----------Return per share 1.2p 4.4p 5.6p 1.2p (2.7)p (1.5)p Year ended 31 January 2007 Revenue Capital Total £000 £000 £000Gain on disposal of investments - 168 168Unrealised adjustments to fair value of investments - 957 957 ---------- ---------- ---------- - 1,125 1,125Income 2,036 - 2,036Investment management fee (247) (784) (1,031)Other expenses (224) - (224) ---------- ---------- ----------Return on ordinary activities before tax 1,565 341 1,906Tax on return on ordinary activities (343) 243 (100) ---------- ---------- ----------Return on ordinary activities after tax 1,222 584 1,806 ---------- ---------- ----------Return per share 2.5p 1.2p 3.7p RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS(unaudited) for the six months ended 31 July 2007 Six months ended Six months ended Year ended 31 July 2007 31 July 2006 31 January 2007 £000 £000 £000Equity shareholders' funds at 1 February 2007 42,909 38,675 38,675Return on ordinary activities 2,684 (737) 1,806after taxDividends recognised in the (2,160) (1,915) (2,403)periodNet proceeds of share issues 211 6,123 6,168Shares purchased for (591) (624) (1,322)cancellationExpenses charged to capital - (15) (15)reserve ---------- ---------- ----------Equity shareholders' funds at 31 July 2007 43,053 41,507 42,909 ---------- ---------- ---------- BALANCE SHEET(unaudited) as at 31 July 2007 31 July 2007 31 July 2006 31 January 2007 £000 £000 £000Venture capital investments Unquoted 32,739 26,356 28,406 Quoted 3,370 5,042 4,706 ---------- ---------- ----------Total venture capital 36,109 31,398 33,112investmentsListed fixed-interest 5,073 8,646 7,161investments ---------- ---------- ----------Total fixed asset investments 41,182 40,044 40,273 ---------- ---------- ----------Current assets: Debtors 468 736 471 Cash at bank 1,642 852 2,410 ---------- ---------- ---------- 2,110 1,588 2,881Creditors (amounts falling due within one year) (239) (125) (245) ---------- ---------- ----------Net current assets 1,871 1,463 2,636 ---------- ---------- ---------- Net assets 43,053 41,507 42,909 ---------- ---------- ---------- Capital and reserves:Called-up equity share capital 2,389 2,457 2,414Share premium 25,147 24,907 24,949Capital redemption reserve 265 182 227Capital reserve - realised 8,868 11,539 10,779Capital reserve - unrealised 5,507 1,592 3,519Revenue reserve 877 830 1,021 ---------- ---------- ----------Total equity shareholders' 43,053 41,507 42,909funds ---------- ---------- ----------Net asset value per share 90.1p 84.5p 88.9p CASH FLOW STATEMENT(unaudited) for the six months ended 31 July 2007 Six months ended Six months Year ended ended 31 January 2007 31 July 2007 31 July 2006 £000 £000 £000 £000 £000 £000Net cash inflow from operating 313 267 799activitiesTaxation:Corporation tax paid - (185) (184)Financial investment:Purchase of (6,730) (8,288) (10,365)investmentsSale/repayment of 8,189 2,810 7,053investments ---------- ---------- ---------- Net cash inflow/(outflow) from financial 1,459 (5,478) (3,312)investmentEquity dividends paid (2,160) (1,915) (2,403) ---------- ---------- ---------- Net cash outflow (388) (7,311) (5,100)before financingFinancing:Issue of ordinary 215 6,488 6,525sharesShare issue expenses (4) (365) (357)Purchase of ordinaryshares for cancellation (591) (624) (1,322) ---------- ---------- ---------- Net cash (outflow)/inflow from financing (380) 5,499 4,846 ---------- ---------- ---------- Decrease in cash at (768) (1,812) (254)bank ---------- ---------- ---------- Reconciliation ofreturn before taxto net cash flow fromoperating activitiesReturn on ordinaryactivities before tax 2,744 (669) 1,906(Gain)/loss ondisposal of investments (553) 107 (168)Unrealisedadjustments to fairvalue of investments (1,815) 929 (957)Decrease/(increase) 3 (93) (62)in debtors(Decrease)/increase (66) (7) 95in creditorsExpenses charged to - - (15)capital reserve ---------- ---------- ---------- Net cash inflow from operating 313 267 799activities ---------- ---------- ---------- Analysis of movementin net funds 1 February Cash flows 31 July 2007 2007 £000 £000 £000Cash at bank 2,410 (768) 1,642 ---------- ---------- ---------- INVESTMENT PORTFOLIO SUMMARYas at 31 July 2007 Cost Valuation % of net assets £000 £000 by valueInvestments valued at £1,000,000 or more:Envirotec 975 2,183 5.1John Laing Partnership 509 1,859 4.3Crantock Bakery 1,107 1,704 4.0Ithaca Holdings 493 1,524 3.5KCS Global Holdings 702 1,515 3.5TFB Group 700 1,363 3.2Longhirst Venues 353 1,302 3.0IG Doors 1,000 1,273 3.0Liquidlogic 432 1,207 2.8Touchstone Asset Management 900 1,169 2.7Develop Training 1,087 1,163 2.7DMN 1,145 1,145 2.7Arrow Industrial Group 735 1,134 2.6Pivotal Laboratories Holdings 857 1,004 2.3Astbury Marsden Holdings 1,000 1,000 2.3Foreman Roberts Group 1,000 1,000 2.3Product Support (Holdings) 1,000 1,000 2.3Promanex Group Holdings 1,000 1,000 2.3 ---------- ---------- ---------- 14,995 23,545 54.6Other venture capital investments 15,534 12,564 29.3 ---------- ---------- ----------Total venture capital investments 30,529 36,109 83.9Listed fixed-interest investments 5,147 5,073 11.8 ---------- ---------- ----------Total fixed asset investments 35,676 41,182 95.7 ----------Net current assets 1,871 4.3 ---------- ----------Net assets 43,053 100.0 ---------- ---------- The above half-yearly financial statements for the six months ended 31 July 2007do not constitute statutory financial statements within the meaning of Section240 of the Companies Act 1985 and have not been delivered to the Registrar ofCompanies. The figures for the year ended 31 January 2007 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. Thehalf-yearly financial statements have been prepared on the basis of theaccounting policies set out in the annual financial statements for the yearended 31 January 2007. The proposed interim dividend of 2.0p per share for the year ending 31 January2008 will be paid on 7 December 2007 to shareholders on the register at theclose of business on 9 November 2007. The directors confirm that to the best of their knowledge the half-yearlyfinancial statements have been prepared in accordance with the StatementHalf-yearly financial reports issued by the UK Accounting Standards Board andthe half-yearly financial report includes a fair review of the informationrequired by (a) DTR 4.2.7R of the Disclosure and Transparency Rules, being anindication of important events that have occurred during the first six months ofthe financial year and their impact on the condensed set of financialstatements, and a description of the principal risks and uncertainties for theremaining six months of the year, and (b) DTR 4.2.8R of the Disclosure andTransparency Rules, being related party transactions that have taken place inthe first six months of the current financial year and that have materiallyaffected the financial position or performance of the entity during that period,and any changes in the related party transactions described in the last annualreport that could do so. A copy of the half-yearly financial report for the six months ended 31 July 2007is expected to be posted to shareholders on 5 October 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