TIDMNTV
30 MAY 2013
NORTHERN 2 VCT PLC
RESULTS FOR THE YEAR ENDED 31 MARCH 2013
Northern 2 VCT PLC is a Venture Capital Trust (VCT) managed by NVM
Private Equity. The trust invests mainly in unquoted venture capital
holdings and aims to provide high long-term tax-free returns to
shareholders through a combination of dividend yield and capital growth.
Financial highlights (comparative figures as at 31 March 2012):
2013 2012
Net assets GBP62.8m GBP55.1m
Net asset value per share 84.9p 80.3p
Return per share:
Revenue 1.2p 1.9p
Capital 9.1p 5.5p
Total 10.3p 7.4p
Dividend per share proposed in respect
of the year 5.5p 5.5p
Cumulative return to shareholders since
launch:
Net asset value per share 84.9p 80.3p
Dividends paid per share* 64.4p 58.9p
Net asset value plus dividends paid per
share 149.3p 139.2p
Mid-market share price at end of year 72p 66.25p
Share price discount to net asset value 15.2% 17.5%
*Excluding proposed final dividend
For further information, please contact:
NVM Private Equity Limited
Alastair Conn/Christopher Mellor 0191 244 6000
Website: www.nvm.co.uk
NORTHERN 2 VCT PLC
CHAIRMAN'S STATEMENT
Your directors are pleased to be able to report that Northern 2 VCT has
performed well over the past 12 months. NAV per share has increased for
the fourth successive year, while the annual dividend is maintained at
the target level of 5.5p. The strong and consistent performance of the
three Northern VCTs was recognised when they were jointly declared
winners of the Best VCT category at the Investment Week Investment
Company of the Year Awards for 2012, sponsored by the Association of
Investment Companies and Trustnet.
Results and dividend
The NAV per share at 31 March 2013 was 84.9p, an increase of 5.7% over
the corresponding figure of 80.3p as at 31 March 2012. The total return
per share for the year as shown in the income statement was 10.3p,
equivalent to 12.8% of the opening NAV. This is a very satisfactory
result, achieved against a continuing background of challenging
conditions in the UK economy.
Investment income for the year fell to GBP1.7 million from GBP2.0
million in the preceding year (a period which included a one-off
interest receipt of GBP0.5 million on the sale of Promanex Group
Holdings in August 2011). As a result the revenue return per share was
0.7p lower at 1.2p.
Ongoing charges (the new terminology for what used to be known as total
expense ratio), excluding performance-related management fees, were
lower than last year at 2.45% of average net assets compared to 2.50%.
An interim dividend of 2.0p per share was paid in January and the
directors propose a final dividend of 3.5p, making a total of 5.5p per
share for the year. This is the ninth consecutive year in which the
company has paid a dividend of at least 5.5p, your board's stated annual
objective, and the final dividend will take the total dividend
distributions since the company was launched in 1999 to over GBP34
million (67.9p per share).
Subject to approval by shareholders at the annual general meeting, the
final dividend will be paid on 26 July 2013 to shareholders on the
register on 5 July 2013.
Investment portfolio
The venture capital portfolio has generally made good progress during
the year and we acknowledge the efforts and achievements of the
management teams we have backed. Three new unquoted holdings - Haystack
Dryers, Intuitive and Silverwing - were acquired at a cost of GBP4.1
million, with a further GBP2.0 million invested in existing portfolio
companies. Outright exits were achieved from the unquoted holdings in
Closerstill Holdings, Interlube Systems, Paladin Group and Spectrum
Interactive, producing aggregate proceeds of GBP7.2 million compared
with original cost of GBP2.9 million. The AIM-quoted holding in Tikit
Group was sold as the result of an agreed bid by BT Group.
In an era of very low interest rates it has become increasingly
difficult to generate an acceptable income return on cash awaiting
investment in venture capital opportunities, and so we have for the
first time allocated some of our funds to a small portfolio of
higher-yielding listed equities which has produced useful income as well
as some capital appreciation.
Shareholder issues
We announced in January that the company would in future buy back its
own shares in the market at a discount of 10% (previously 15%). We
consider this creates a reasonable balance between the interests of
continuing shareholders and those of would-be sellers. During the year
932,551 shares, equivalent to 1.4% of the opening issued capital, were
bought back for cancellation at an average price of 69.3p.
In January we also launched a top-up offer of new ordinary shares to
raise up to GBP4 million of new funds for investment, in conjunction
with a similar top-up offer by Northern Venture Trust. Both offers were
over-subscribed and we are delighted to welcome our new shareholders.
Your directors are now considering possible share offer plans for the
2013/14 tax year and we will be writing to shareholders about this in
the near future. Enabling resolutions relating to the company's share
capital and the date of the next continuation vote will be proposed at
the annual general meeting on 19 July 2013.
NVM Private Equity held its annual seminar for VCT investors in January
and your directors were pleased to have the opportunity to meet a number
of shareholders.
Your company continues to comply with current best practice in corporate
governance as set out in the AIC Code, a new edition of which was
published in February. The board aims to maintain a constructive
relationship with the manager but with an appropriate degree of enquiry
and challenge.
VCT qualifying status
The company has continued to meet the qualifying conditions laid down by
HM Revenue & Customs for maintaining its approval as a VCT. The board
retains PricewaterhouseCoopers LLP as independent advisers on VCT
taxation matters.
VCT legislation and regulation
There has been a series of changes in the VCT legislation in recent
years. The 2012 Finance Act relaxed the size limits for VCT-qualifying
investee companies, but also introduced a new GBP5 million cap on the
amount of funding which a company can raise from VCTs within a 12 month
period. Management buy-outs can be VCT-qualifying investments only to
the extent that they employ funds raised by VCTs prior to 6 April 2012.
These changes have been heavily influenced by European Commission State
Aid rules, which do not always appear to be well attuned to market
conditions in individual member states.
I reported at the half year stage that the Financial Services Authority,
now the Financial Conduct Authority (FCA), had published a consultation
paper on the retail distribution of unregulated collective investment
schemes, apparently proposing the introduction of drastic restrictions
on the marketing of VCT share offers to retail investors. The measure
was strongly opposed by VCTs and the Association of Investment Companies,
and we now understand that the FCA no longer intends to proceed with it.
Outlook
After an extended period of little or no growth, there currently seems
to be a degree of cautious optimism in some quarters about the prospects
for the UK economy. It is too early to judge whether this signals an
end to the difficult conditions which have dominated the business
environment since the banking crisis of 2007/08, but any upturn should
be good news for our portfolio companies and help to maintain your
company's good performance record.
David Gravells
Chairman
The audited financial statements for the year ended 31 March 2013 are
set out below.
INCOME STATEMENT
for the year ended 31 March 2013
Year ended 31 March 2013 Year ended 31 March 2012
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Gain on
disposal of
Investments - 2,497 2,497 - 786 786
Movements in
fair value
of
investments - 5,049 5,049 - 3,124 3,124
---------- ---------- ---------- ---------- ---------- ----------
- 7,546 7,546 - 3,910 3,910
Income 1,669 - 1,669 1,961 - 1,961
Investment
management
fee (286) (1,339) (1,625) (231) (884) (1,115)
Other expenses (306) - (306) (327) (14) (341)
---------- ---------- ---------- ---------- ---------- ----------
Return on
ordinary
activities
before tax 1,077 6,207 7,284 1,403 3,012 4,415
Tax on return
on
ordinary
activities (195) 195 - (288) 239 (49)
---------- ---------- ---------- ---------- ---------- ----------
Return on
ordinary
activities
after tax 882 6,402 7,284 1,115 3,251 4,366
---------- ---------- ---------- ---------- ---------- ----------
Return per 1.2p 9.1p 10.3p 1.9p 5.5p 7.4p
share
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 31 March 2013
Year ended Year ended
31 March 2013 31 March 2012
GBP000 GBP000
Equity shareholders' funds at 1 April 2012 55,128 45,713
Return on ordinary activities after tax 7,284 4,366
Dividends recognised in the year (3,845) (3,730)
Net proceeds of share issues 4,923 13,418
Shares repurchased for cancellation (646) (4,639)
---------- ----------
Equity shareholders' funds at 31 March 2013 62,844 55,128
---------- ----------
BALANCE SHEET
as at 31 March 2013
31 March 2013 31 March 2012
GBP000 GBP000
Fixed assets:
Investments 45,402 41,160
---------- ----------
Current assets:
Debtors 557 311
Cash and deposits 18,088 15,116
---------- ----------
18,645 15,427
Creditors (amounts falling due within one year) (1,203) (1,459)
---------- ----------
Net current assets 17,442 13,968
---------- ----------
Net assets 62,844 55,128
---------- ----------
Capital and reserves:
Called-up equity share capital 3,700 3,432
Share premium 27,618 23,009
Capital redemption reserve 767 721
Capital reserve 22,636 22,473
Revaluation reserve 7,351 4,695
Revenue reserve 772 798
---------- ----------
Total equity shareholders' funds 62,844 55,128
---------- ----------
Net asset value per share 84.9p 80.3p
CASH FLOW STATEMENT
for the year ended 31 March 2013
Year ended Year ended
31 March 2013 31 March 2012
GBP000 GBP000 GBP000 GBP000
Cash flow statement
Net cash inflow/(outflow) from
operating activities (573) 1,931
Taxation:
Corporation tax paid (74) (81)
Financial investment:
Purchase of
investments (9,730) (3,691)
Sale/repayment of investments 12,917 7,912
---------- ----------
Net cash inflow from financial
investment 3,187 4,221
Equity dividends paid (3,845) (3,730)
---------- ----------
Net cash inflow/(outflow) before
financing (1,305) 2,341
Financing:
Issue of shares 5,086 14,185
Share issue expenses (163) (767)
Shares re-purchased for
cancellation (646) (4,639)
---------- ----------
Net cash inflow from financing 4,277 8,779
---------- ----------
Increase in cash and
deposits 2,972 11,120
---------- ----------
Reconciliation of return before tax
to net cash flow from operating
activities
Return on ordinary activities
before tax 7,284 4,415
Gain on disposal of
investments (2,497) (786)
Movements in fair
value of
investments (5,049) (3,124)
(Increase)/decrease
in debtors (246) 487
Increase/(decrease)
in creditors (65) 939
---------- ----------
Net cash inflow/(outflow) from
operating activities (573) 1,931
---------- ----------
Reconciliation of
movement in net
funds
1 April 2012 Cash flows 31 March 2013
GBP000 GBP000 GBP000
Cash and deposits 15,116 2,972 18,088
---------- ---------- ----------
INVESTMENT PORTFOLIO SUMMARY
as at 31 March 2013
% of
Cost Valuation net assets
GBP000 GBP000 by value
Kerridge Commercial Systems 1,740 5,616 8.9
Volumatic 2,096 3,617 5.8
Alaric Systems 1,237 2,522 4.0
Wear Inns 1,868 2,365 3.8
Advanced Computer Software Group* 381 1,941 3.1
Tinglobal Holdings 1,988 1,750 2.8
Arleigh Group 738 1,541 2.5
Intuitive 1,508 1,508 2.4
Silverwing 1,388 1,388 2.2
Control Risks Group Holdings 746 1,315 2.1
IG Doors 101 1,273 2.0
Kitwave One 1,246 1,254 2.0
Haystack Dryers 1,157 1,157 1.8
Cawood Scientific 1,031 1,054 1.7
Promatic Group 987 985 1.5
---------- ---------- --------
Fifteen largest venture capital
investments 18,212 29,286 46.6
Other venture capital investments 12,692 8,765 13.9
---------- ---------- --------
Total venture capital investments 30,904 38,051 60.5
Listed equity investments 3,651 4,025 6.4
Listed fixed-interest investments 3,496 3,326 5.3
---------- ---------- --------
Total fixed asset investments 38,051 45,402 72.2
----------
Net current assets 17,442 27.8
---------- --------
Net assets 62,844 100.0
---------- --------
*Quoted on AIM
BUSINESS RISKS
The board carries out a regular review of the risk environment in which
the company operates. The main areas of risk identified by the board
are as follows:
Investment risk: The majority of the company's investments are in small
and medium-sized unquoted and AIM-quoted companies which are VCT
qualifying holdings, and which by their nature entail a higher level of
risk and lower liquidity than investments in large quoted companies. The
directors aim to limit the risk attaching to the portfolio as a whole by
careful selection and timely realisation of investments, by carrying out
rigorous due diligence procedures and by maintaining a wide spread of
holdings in terms of financing stage and industry sector. The board
reviews the investment portfolio with the investment manager on a
regular basis.
Financial risk: As most of the company's investments involve a medium
to long-term commitment and are largely illiquid, the directors consider
that it is inappropriate to finance the company's activities through
borrowing except on an occasional short-term basis. Accordingly they
seek to maintain a proportion of the company's assets in cash or cash
equivalents in order to be in a position to take advantage of new
unquoted investment opportunities. The company has very little exposure
to foreign currency risk and does not enter into derivative
transactions.
Economic risk: Events such as economic recession or general
fluctuations in stock markets and interest rates may affect the
valuation of investee companies and their ability to access adequate
financial resources, as well as affecting the company's own share price
and discount to net asset value.
Stock market risk: Some of the company's investments are quoted on the
London Stock Exchange or AIM and will be subject to market fluctuations
upwards and downwards. External factors such as terrorist activity can
negatively impact stock markets worldwide and AIM is no exception to
this. In times of adverse sentiment there tends to be very little, if
any, market demand for shares in the smaller companies quoted on AIM.
Credit risk: the company holds a number of financial instruments and
cash deposits and is dependent on the counterparties discharging their
commitment. The directors review the creditworthiness of the
counterparties to these instruments and cash deposits in addition to
ensuring no significant concentration of credit risk is with any one
counterparty.
Liquidity risk: The company's investments may be difficult to realise.
The fact that a stock is quoted on AIM does not guarantee its liquidity
and there may be a large spread between bid and offer prices. Unquoted
investments are not traded on a recognised stock exchange and are
inherently illiquid.
Legislative and regulatory risk: in order to maintain its approval as a
VCT, the company is required to comply with current VCT legislation in
the UK as well as the European Commission's State Aid rules. Changes to
the UK legislation or the State Aid rules in the future could have an
adverse effect on the company's ability to achieve satisfactory
investment returns whilst retaining its VCT approval. The board and the
manager monitor political developments and where appropriate seek to
make representations either directly or through the relevant trade
bodies.
Internal control risk: The board regularly reviews the system of
internal controls, both financial and non-financial, operated by the
company and the manager. These include controls designed to ensure that
the company's assets are safeguarded and that proper accounting records
are maintained.
VCT qualifying status risk: The company is required at all times to
observe the conditions laid down in the Income Tax Act 2007 for the
maintenance of approved VCT status. The loss of such approval could
lead to the company losing its exemption from corporation tax on capital
gains, to investors being liable to pay income tax on dividends received
from the company and, in certain circumstances, to investors being
required to repay the initial income tax relief on their investment.
The manager keeps the company's VCT qualifying status under continual
review and reports to the board on a quarterly basis. The board has
also retained PricewaterhouseCoopers LLP to undertake an independent VCT
status monitoring role.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the annual report and the
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for
each financial year. Under that law the directors have elected to
prepare the financial statements in accordance with UK Accounting
Standards and applicable law (UK Generally Accepted Accounting
Practice).
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of affairs of the company and of the profit or loss of the
company for the period. In preparing these financial statements, the
directors are required to (i) select suitable accounting policies and
then apply them consistently; (ii) make judgements and estimates that
are reasonable and prudent; (iii) state whether applicable UK
Accounting Standards have been followed, subject to any material
departures disclosed and explained in the financial statements; and
(iv) prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the company will continue in
business.
The directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the company's transactions and
disclose with reasonable accuracy at any time the financial position of
the company and enable them to ensure that its financial statements
comply with the Companies Act 2006. They have general responsibility
for taking such steps as are reasonably open to them to safeguard the
assets of the company and to prevent and detect fraud and other
irregularities.
Under applicable law and regulations, the directors are also responsible
for preparing a directors' report, directors' remuneration report and
corporate governance statement that comply with that law and those
regulations.
The company's financial statements are published on the NVM website,
www.nvm.co.uk. The maintenance and integrity of this website is the
responsibility of NVM and not of the company. Legislation in the United
Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
The directors confirm that, to the best of their knowledge, the
financial statements, prepared in accordance with the applicable
accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the company, and
the directors' report includes a fair review of the development and
performance of the business and the position of the company, together
with a description of the principal risks and uncertainties that the
company faces.
The directors of the company at the date of this announcement were Mr D
P A Gravells (Chairman), Mr A M Conn, Mr E M P Denny, Mr C G A Fletcher
and Mr F L G Neale.
OTHER MATTERS
The above summary of results for the year ended 31 March 2013 does not
constitute statutory financial statements within the meaning of Section
435 of the Companies Act 2006 and has not been delivered to the
Registrar of Companies. Statutory financial statements will be filed
with the Registrar of Companies in due course; the independent
auditor's report on those financial statements under Section 495 of the
Companies Act 2006 is unqualified and does not contain a statement under
Section 498(2) or (3) of the Companies Act 2006.
The proposed final dividend of 3.5p per share for the year ended 31
March 2013 will, if approved by shareholders, be paid on 26 July 2013 to
shareholders on the register at the close of business on 5 July 2013.
The full annual report including financial statements for the year ended
31 March 2013 is expected to be posted to shareholders on 7 June 2013
and will be available to the public at the registered office of the
company at Northumberland House, Princess Square, Newcastle upon Tyne
NE1 8ER and on the NVM Private Equity Limited website, www.nvm.co.uk.
Neither the contents of the NVM Private Equity Limited website nor the
contents of any website accessible from hyperlinks on the NVM Private
Equity Limited website (or any other website) is incorporated into, or
forms part of, this announcement.
This announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other
applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the
information contained therein.
Source: Northern 2 VCT PLC via Thomson Reuters ONE
HUG#1705845
http://www.nvm.co.uk/investorarea/northern_2_vct_plc.php
Northern 2 Vct (LSE:NTV)
Historical Stock Chart
From Jun 2024 to Jul 2024
Northern 2 Vct (LSE:NTV)
Historical Stock Chart
From Jul 2023 to Jul 2024
