Half-yearly report
(Thomson Reuters ONE) - 4 NOVEMBER 2009NORTHERN 3 VCT PLCUNAUDITED HALF-YEARLY FINANCIAL REPORTFOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009Northern 3 VCT PLC is a Venture Capital Trust (VCT) managed by NVMPrivate Equity. It invests mainly in unquoted venture capitalholdings and aims to provide high long-term tax-free returns toshareholders through a combination of dividend yield and capitalgrowth.Financial highlights:(comparative figures for the six months ended 30 September 2008 initalics) 2009 2008Net assets £26.2m £24.9mNet asset value per share 90.5p 86.1pReturn per shareRevenue 1.5p 1.5pCapital 6.9p (11.8)pTotal 8.4p (10.3)pInterim dividend per sharein respect of the periodRevenue 1.4p 1.4pCapital 0.6p 0.6pTotal 2.0p 2.0pCumulative returns toshareholders since launchNet asset value per share 90.5p 86.1pDividends paid per share* 22.9p 18.9pNet asset value plus dividendspaid per share 113.4p 105.0pShare price at end of period 55.5p 85.5p*Excludes interim dividend declared but not yet paidFor further information, please contact:NVM Private Equity LimitedAlastair Conn/Christopher Mellor 0191 244 6000Website: www.nvm.co.ukHALF-YEARLY MANAGEMENT REPORTFOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009The past six months have seen a continuation of the adverseconditions in the UK economy and financial markets. Against thisbackground we are pleased to report that our company has made goodprogress during the period.ResultsThe unaudited net asset value (NAV) per share at 30 September 2009was 90.5p, which represents an increase of 10.1% over the auditedfigure of 84.0p at 31 March 2009 (after adjusting for the dividendpaid during the period). Your directors consider that this is asatisfactory result given the harsh environment in which many of ourinvestee companies are operating. The cumulative return toshareholders (latest NAV plus total dividends paid since launch) is113.4p at 30 September 2009 compared with 105.0p a year earlier.The revenue return per share for the half year was unchanged at1.5p. Income from the investment portfolio was slightly higher thanin the corresponding period, although we expect the income in thesecond half of the year to be adversely affected by the continuinglow level of interest rates.The board has declared an unchanged interim dividend of 2.0p pershare, comprising a revenue dividend of 1.4p and a capital dividendof 0.6p. The interim dividend will be paid on 15 January 2010 toshareholders on the register at the close of business on 11 December2009. We are aware of the importance which our shareholders attachto a consistent flow of tax-free dividends, especially with theprospect of higher income tax rates in the near future.Investment portfolioNew investment activity has remained subdued. £995,000 was investedin Phusion Healthcare, a company formed to acquire businessessupplying pharmaceutical medicines to the healthcare sector, and afurther tranche of £104,000 was drawn down by Wear Inns whichcontinues to add to its estate of managed public houses. Given thedifficult economic climate our managers have taken a cautiousapproach to making new commitments, although there are currently someindications that the quality of potential opportunities is beginningto improve.Encouragingly there were two successful exits during the period.DxS, the Manchester-based molecular diagnostics business, was sold toQiagen NV in September 2009 on terms which enabled us to recognisesale proceeds of £3.3 million and a realised gain over original costof £2.9 million, with the possibility of up to a further £2.5 millionbecoming receivable over the next three years depending on theachievement of certain milestones. Our investment in the publicsector software developer Liquidlogic was sold to the AIM-quotedSystem C Healthcare for £363,000, realising a gain of £314,000.However conditions have remained very challenging for some of ourcompanies and the engineering consultancy Foreman Roberts Groupcontinued to perform poorly in a very difficult market, eventuallyundergoing a financial re-structuring as a result of which ourinvestment was effectively written off. Your directors havecontinued to take a prudent view when valuing the portfolio ofventure capital investments, and as before we are prepared to provideadditional funding where there is a good business case to help ourcompanies overcome the effects of the recession and also thedifficulty of obtaining funding from the clearing banks on acceptableterms.Ordinary sharesIn the annual report six months ago, reference was made to theboard's decision that the company should in principle continue to buyback its shares in the market, although in the prevailing marketconditions it was not considered feasible to maintain a fixed 10%discount to NAV. In May 2009 Singer Capital Markets was appointed asthe company's broker, as well as making a market in the company'sshares. Subsequently the mid-market share price has risen from itslow point of 45p, reaching 64p by early November. The latter figurestill represents a discount to NAV of almost 30% and the directorsare currently considering measures with the objective of reducing thediscount further.We are also planning to launch a further issue of ordinary shares inthe first quarter of 2010, with the objective of raisingapproximately £10 million of new funds. This would bring about astep change in the company's size, which we believe would have apositive effect in terms of allowing a wider spread of investments,reducing the running costs per share and helping improve the marketliquidity of our shares. It would also provide an additional reserveof funds giving the company greater scope to take advantage of theattractively valued investment opportunities which are now beginningto emerge. A further announcement on this subject will be made indue course.VAT on management feesFollowing the European Court decision in the JPMorgan Claverhousecase, management fees paid to NVM Private Equity have been exemptfrom VAT since July 2008. We have also been able to recover some VATpaid in earlier periods, in respect of which a total of £280,000 hasbeen recognised in our financial statements to date. Negotiationsare continuing with HM Revenue & Customs over possible furtherrepayments.VCT qualifying statusThe company has continued to comply with the conditions laid down byHM Revenue & Customs for the maintenance of approved venture capitaltrust status. Our managers continue to monitor the position closelywith the help of our taxation advisers at PricewaterhouseCoopers LLP.Risk managementThe board carries out a regular review of the risk environment inwhich the company operates. There has been no significant change tothe key risks discussed on page 10 of the annual report for the yearended 31 March 2009, including those resulting from the size andrelative illiquidity of the unquoted and AIM-quoted investments heldby the company.ProspectsWe see no reason at this stage to revise our cautious view of theoutlook for UK businesses in the short to medium term. The recentbuoyancy of the financial markets cannot disguise the fundamentalchallenges facing the UK economy, which will inevitably have animpact on the type of small private company in which venture capitaltrusts invest. This means that careful selection and screening ofnew investments will remain crucial. However, our company has thebenefit of a robust balance sheet and an experienced management team,as well as a maturing portfolio of investments which should be wellplaced to take advantage of any upturn in the economy.On behalf of the BoardJames FergusonChairmanThe unaudited half-yearly financial statements for the six monthsended 30 September 2009 are set out below.INCOME STATEMENT(unaudited) for the six months ended 30 September 2009 Six months ended Six months ended 30 September 2009 30 September 2008 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000Gain on disposalof investments - 787 787 - 458 458Movements in fairvalueof investments - 1,365 1,365 - (3,917) (3,917) ------ ------ ------ ------ ------ ------ - 2,152 2,152 - (3,459) (3,459)Income 732 - 732 686 - 686Investment (63) (207) (270) (78) (234) (312)management feeRecoverable VAT - - - 72 228 300Other expenses (100) - (100) (109) - (109) ------ ------ ------ ------ ------ ------Return onordinaryactivities before tax 569 1,945 2,514 571 (3,465) (2,894)Tax on returnon ordinary (129) 60 (69) (128) - (128)activities ------ ------ ------ ------ ------ ------Return onordinary activities 440 2,005 2,445 443 (3,465) (3,022)after tax ------ ------ ------ ------ ------ ------Return per share 1.5p 6.9p 8.4p 1.5p (11.8)p (10.3)pDividend per 1.4p 0.6p 2.0p 1.4p 0.6p 2.0pshare Year ended 31 March 2009 Revenue Capital Total £000 £000 £000Gain on disposalof investments - 814 814Movements in fair valueof investments - (4,460) (4,460) ------ ------ ------ - (3,646) (3,646)Income 1,249 - 1,249Investment management fee (140) (420) (560)Recoverable VAT 67 213 280Other expenses (213) - (213) ------ ------ ------Return on ordinary activities before tax 963 (3,853) (2,890)Tax on returnon ordinary activities (208) 61 (147) ------ ------ ------Return on ordinary activities after tax 755 (3,792) (3,037) ------ ------ ------Return per share 2.6p (13.0)p (10.4)pDividend per share 2.5p 1.5p 4.0pRECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS(unaudited) for the six months ended 30 September 2009 Six months ended Six months Year ended 30 September ended 31 March 2009 30 September 2009 2008 £000 £000 £000Equity shareholders' fundsat 1 April 2009 24,323 28,645 28,645Return on ordinaryactivities after tax 2,445 (3,022) (3,037)Dividends recognised in the (580) 3 (575)periodNet proceeds of share issues 55 - 63Shares purchased for (41) (772) (773)cancellation ------ ------ ------Equity shareholders' fundsat 30 September 2009 26,202 24,854 24,323 ------ ------ ------BALANCE SHEET(unaudited) as at 30 September 2009 30 September 30 September 31 March 2009 2008 2009 £000 £000 £000Fixed asset investments:Venture capitalinvestments Unquoted 11,933 13,778 13,606 Quoted 2,468 1,910 1,603 ------ ------ ------Total venture capital 14,401 15,688 15,209investmentsListed fixed-interest 3,971 7,423 5,700investments ------ ------ ------Total fixed asset 18,372 23,111 20,909investments ------ ------ ------Current assets: Debtors 843 566 848 Cash and deposits 7,282 1,385 2,785 ------ ------ ------ 8,125 1,951 3,633Creditors (amountsfalling duewithin one year) (295) (208) (219) ------ ------ ------Net current assets 7,830 1,743 3,414 ------ ------ ------Net assets 26,202 24,854 24,323 ------ ------ ------Capital and reserves:Called-up equity share 1,447 1,443 1,447capitalShare premium 8,140 8,031 8,089Capital redemption 192 188 188reserveCapital reserve 18,232 15,779 16,432Revaluation reserve (2,522) (1,270) (2,424)Revenue reserve 713 683 591 ------ ------ ------Total equity 26,202 24,854 24,323shareholders' funds ------ ------ ------Net asset value per 90.5p 86.1p 84.0pshareCASH FLOW STATEMENT(unaudited) for the six months ended 30 September 2009 Six months Six months Year ended ended ended 31 March 2009 30 September 30 September 2009 2008 £000 £000 £000 £000 £000 £000Net cash inflow from operating 374 113 42activitiesTaxation:Corporation tax paid - (115) (143)Financial investment:Purchase of (1,237) (4,246) (2,234)investmentsSale/repayment of 5,926 4,876 4,879investments ------ ------ ------Net cash inflow from financial 4,689 630 2,645investmentEquity dividends paid (580) 3 (575) ------ ------ ------Net cash inflow before financing 4,483 631 1,969Financing:Issue of ordinary 70 - 72sharesShare issue expenses (15) - (9)Purchase of ordinaryshares for cancellation (41) (772) (773) ------ ------ ------Net cashinflow/(outflow) from financing 14 (772) (710) ------ ------ ------Increase/(decrease)in cash at bank 4,497 (141) 1,259 ------ ------ ------Reconciliation ofreturnbefore tax to netcashflow from operatingactivitiesReturn on ordinaryactivities before tax 2,514 (2,894) (2,890)Gain on disposal of (787) (458) (814)investmentsMovements in fairvalue of investments (1,365) 3,917 4,460(Increase)/decrease 5 (301) (583)in debtorsIncrease/(decrease) 7 (151) (131)in creditors ------ ------ ------Net cash inflow from operating 374 113 42activities ------ ------ ------Analysis of movementin net funds 1 April 2009 Cash flows 30 September 2009 £000 £000 £000Cash at bank 2,785 4,497 7,282 ------ ------ ------INVESTMENT PORTFOLIO SUMMARYas at 30 September 2009 Cost Valuation % of net assets £000 £000 by valuation15 largest investments:Axial Systems Holdings 1,004 1,215 4.6Paladin Group 861 1,190 4.5Phusion Healthcare 995 995 3.8Advanced Computer Software* 429 947 3.6Optilan Group 1,000 821 3.1Envirotec 456 818 3.1Promanex Group Holdings 1,000 750 2.9CloserStill Holdings 743 743 2.8Britspace Holdings 1,201 735 2.8Crantock Bakery 442 656 2.5Abermed 375 642 2.5Arleigh International 210 437 1.7Promatic Group 568 426 1.6Wear Inns 490 414 1.6IDOX* 298 387 1.5 ------ ------ ----- 10,072 11,176 42.6Other venture capital investments 6,820 3,225 12.3 ------ ------ -----Total venture capital investments 16,892 14,401 54.9Listed fixed-interest investments 4,001 3,971 15.2 ------ ------ -----Total fixed asset investments 20,893 18,372 70.1 ------Net current assets 7,830 29.9 ------ -----Net assets 26,202 100.0 ------ -----*Quoted on AIMThe above half-yearly financial statements for the six months ended30 September 2009 do not constitute statutory financial statementswithin the meaning of Section 240 of the Companies Act 1985 and havenot been delivered to the Registrar of Companies. The figures forthe year ended 31 March 2009 have been extracted from the auditedfinancial statements for that period, which have been delivered tothe Registrar of Companies; the independent auditors' report onthose financial statements under Section 235 of the Companies Act1985 was unqualified. The half-yearly financial statements have beenprepared on the basis of the accounting policies set out in thefinancial statements for the year ended 31 March 2009.Each of the directors confirms that to the best of his knowledge thehalf-yearly financial statements have been prepared in accordancewith the Statement "Half-yearly financial reports" issued by the UKAccounting Standards Board and the half-yearly financial reportincludes a fair review of the information required by (a) DTR 4.2.7Rof the Disclosure and Transparency Rules, being an indication ofimportant 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 anduncertainties for the remaining six months of the year, and (b) DTR4.2.8R of the Disclosure and Transparency Rules, being related partytransactions that have taken place in the first six months of thecurrent financial year and that have materially affected thefinancial position or performance of the entity during that period,and any changes in the related party transactions described in thelast annual report that could do so.The directors of the company at the date of this announcement were MrJ G D Ferguson (Chairman), Mr C J Fleetwood, Mr J R Hustler, Mr T RLevett and Mr J M O Waddell.The calculation of the revenue and capital return per share is basedon the return on ordinary activities after tax for the period and on28,936,373 (2008 29,376,116) ordinary shares, being the weightedaverage number of shares in issue during the period.The proposed interim dividend of 2.0p per share for the year ending31 March 2010 will be paid on 15 January 2010 to shareholders on theregister at the close of business on 11 December 2009.A copy of the half-yearly financial report for the six months ended30 September 2009 is expected to be posted to shareholders by 20November 2009 and will be available to the public at the registeredoffice of the company at Northumberland House, Princess Square,Newcastle upon Tyne NE1 8ER and on the NVM Private Equity Limitedwebsite, www.nvm.co.uk.---END OF MESSAGE---This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 04.11.2009 - 17:43 Uhr
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