RNS Number:7835Q
Northern 2 VCT PLC
10 October 2003
10 OCTOBER 2003
NORTHERN 2 VCT PLC
UNAUDITED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31 JULY 2003
Northern 2 VCT PLC is a Venture Capital Trust (VCT) managed by Northern Venture
Managers. The trust was launched in 1999 and has to date raised a total of #46
million from private investors. The trust invests mainly in unquoted venture
capital situations and aims to provide high long-term returns to shareholders
through a combination of dividend yield and capital growth.
Financial highlights (comparative figures as at 31 July 2002 in brackets):
* Net assets #42,925,000 (#40,169,000)
* Net asset value per share 95.5p (89.1p)
* Investment income #1,067,000 (#995,000)
* Net revenue before tax #813,000 (#747,000)
* Revenue return per share 1.3p (1.2p)
* Interim dividend per share 1.0p (1.0p)
For further information, please contact:
Alastair Conn, Managing Director
Northern Venture Managers Limited 0191 244 6000
Website: www.nvm.co.uk
Lucy Copeman/Marlene Scott
Polhill Communications 020 7655 0540
CHAIRMAN'S STATEMENT
The Chairman of Northern 2 VCT PLC, Dr Matt Ridley, included the following
points in his statement to shareholders:
The half year to 31 July 2003 has been a period of consolidation for our
company. The rate of new investment slackened for several months due to a lack
of new venture capital deals in the marketplace, although there has been an
upturn in activity since the end of July. The sharp falls in the stock market
which occurred in the corresponding period last year have been partly reversed,
but our low exposure to quoted equities has again insulated us from the market's
volatility. The venture capital portfolio is generally making satisfactory
progress, but has required especially close attention from our managers during a
period when underlying confidence in the UK economy has remained fragile.
Net asset value
The net asset value per share at 31 July 2003 was 95.5p, up by 7.2% over the
past 12 months and by 1.1% over the six months since 31 January 2003. The
following table shows the movements in the company's net asset value and share
price compared with the FTSE All-Share and Small Cap indices.
Movement to 31 July 2003 over: Past 6 months Past 12 months
Northern 2 VCT net asset value +1.1% +7.2%
Northern 2 VCT share price No change +6.7%
FTSE All-Share index +18.8% -0.2%
FTSE Small Cap index (excluding investment trusts) +32.4% +10.7%
Investments
Four new investments have been completed since 31 January 2003:
* Crabtree of Gateshead (#641,000) - manufacturer of metal
printing machinery, Gateshead (March 2003)
* Survey Inspection Systems (#195,000) - provider of ground and
airborne surveying services, Stockton-on-Tees (August 2003)
* GSM-Central (#128,000) - provision of mobile telephone call
routing services, Oxford (September 2003)
* John Laing Partnership (#500,000) - management buy-out of the
social housing division of John Laing plc, Elstree (September 2003)
The existing portfolio has made steady progress, with no major valuation
movements during the half year. Two failed investments, SMP Multi-Shot and CLM
Building Services, were written off having been fully provided against in
earlier periods. There were trade sales of T&D Packaging, at a modest surplus
included in these accounts but with the likelihood of a substantial additional
deferred payment, and Chorus Application Software, which was acquired in a
share-for-share deal by the AiM-listed Computer Software Group. The net
realised loss on disposal of investments in the period was #406,000.
Our quoted venture capital investments achieved little increase in value during
the half year, but since 31 July there have been significant share price
movements for Alizyme (up 222%), BioFocus (up 35%), PM Group (up 38%) and
Computer Software Group (up 125%). The net uplift in value of the quoted
venture capital portfolio between 31 July and 9 October was over #1.3 million
(equivalent to approximately 2.9p per Northern 2 VCT share).
Revenue and dividend
The revenue return per share for the half year was 1.3p, compared with 1.2p in
the corresponding period to 31 July 2002. Total investment income was up by
7.2% to #1,067,000, despite a further fall in interest rates during the period.
The directors have declared an unchanged interim dividend of 1.0p per share,
which will be paid on 11 December 2003 to shareholders on the register on 7
November 2003.
Share price
There has been very little trading in the company's shares during the past six
months and the mid-market share price has remained at 80p throughout the period.
A total of 148,900 shares were bought in for cancellation at an average price
of 72p.
VCT qualifying status
Your board monitors closely the company's continuing observance of the Inland
Revenue's VCT rules, and receives six-monthly compliance reports from
PricewaterhouseCoopers. Although the rate of new investment during the current
year has been slower than we would wish, the level of activity has risen during
the past three months. The company's overall qualifying investment position is
carefully managed and the board is satisfied that the company's VCT qualifying
status has been and will be maintained.
Northern Venture Managers
Edinburgh Fund Managers Group plc, the parent company of Northern Venture
Managers, has recently announced an agreed takeover by Aberdeen Asset Management
PLC which is expected to become unconditional by the end of October 2003. Your
board is following developments closely and will seek to ensure that there is no
adverse change to the management of Northern 2 VCT.
Prospects
Our company has substantial liquid funds available for investment and there are
signs that the flow of new deals is beginning to improve. The venture capital
portfolio includes some very promising holdings, and it is to be hoped that the
recent signs of recovery in the UK economy and the financial markets will prove
to be sustainable. Given reasonable conditions we expect to see an increasing
number of disposal opportunities as the portfolio continues to mature.
The unaudited interim financial statements for the six months ended 31 July 2003
are set out below.
STATEMENT OF TOTAL RETURN (INCORPORATING THE REVENUE ACCOUNT)
(unaudited) for the six months ended 31 July 2003
Six months ended 31 July 2003 Six months ended 31 July 2002
Revenue Capital Total Revenue Capital Total
#000 #000 #000 #000 #000 #000
Gains/(losses) on investments:
Realised on disposal - (406) (406) - (313) (313)
Unrealised revaluation movements - 982 982 - (114) (114)
------ ------ ------ ------ ------ ------
- 576 576 - (427) (427)
Income 1,067 - 1,067 995 - 995
Investment management fee (156) (470) (626) (150) (450) (600)
Other expenses (98) - (98) (98) - (98)
------ ------ ------ ------ ------ ------
Return on ordinary activities
before tax 813 106 919 747 (877) (130)
Tax on ordinary activities (208) 148 (60) (188) 117 (71)
------ ------ ------ ------ ------ ------
Return on ordinary activities
after tax 605 254 859 559 (760) (201)
Interim dividend (449) - (449) (451) - (451)
------ ------ ------ ------ ------ ------
Transfer to/(from) reserves 156 254 410 108 (760) (652)
------ ------ ------ ------ ------ ------
Return per share 1.3p 0.6p 1.9p 1.2p (1.7)p (0.5)p
Interim dividend per share 1.0p - 1.0p 1.0p - 1.0p
Year ended 31 January 2003
Revenue Capital Total
#000 #000 #000
Gains/(losses) on investments:
Realised on disposal - (494) (494)
Unrealised revaluation movements - 2,978 2,978
------ ------ ------
- 2,484 2,484
Income 1,983 - 1,983
Investment management fee (297) (893) (1,190)
Other expenses (193) - (193)
------ ------ ------
Return on ordinary activities
before tax 1,493 1,591 3,084
Tax on ordinary activities (428) 289 (139)
------ ------ ------
Return on ordinary activities
after tax 1,065 1,880 2,945
Dividend (1,128) - (1,128)
------ ------ ------
Transfer to/(from) reserves (63) 1,880 1,817
------ ------ ------
Return per share 2.3p 4.2p 6.5p
Dividend per share 2.5p - 2.5p
BALANCE SHEET
(unaudited) as at 31 July 2003
31 July 2003 31 July 2002 31 January 2003
#000 #000 #000
Fixed asset investments:
Venture capital investments
Unlisted 21,641 13,482 21,656
Listed 1,736 1,579 1,205
------- ------- -------
23,377 15,061 22,861
Listed fixed-interest investments 15,830 20,225 17,285
------- ------- -------
Total fixed asset investments 39,207 35,286 40,146
Net current assets 3,718 4,883 2,476
------- ------- -------
Net assets 42,925 40,169 42,622
------- ------- -------
Capital and reserves
Called-up equity share capital 2,247 2,255 2,254
Share premium 33,761 33,761 33,761
Capital redemption reserve 12 4 5
Special reserve 7,825 7,948 7,932
Capital reserve:
Realised (3,001) (1,821) (2,273)
Unrealised 1,894 (2,180) 912
Revenue reserve 187 202 31
------- ------- -------
Total equity shareholders' funds 42,925 40,169 42,622
------- ------- -------
Net asset value per share 95.5p 89.1p 94.5p
CASH FLOW STATEMENT
(unaudited) for the six months ended 31 July 2003
Six months ended Six months ended Year ended
31 July 2003 31 July 2002 31 January 2003
#000 #000 #000 #000 #000 #000
Cash flow statement
Net cash inflow from
operating activities 306 338 738
Taxation:
Corporation tax paid - - (125)
Financial investment:
Purchase of investments (4,218) (7,734) (14,365)
Sale/repayment of investments 5,751 5,493 10,189
------ ------ ------
Net cash inflow/(outflow) from
financial investment 1,533 (2,241) (4,176)
Equity dividends paid (675) (678) (1,129)
------ ------ ------
Net cash inflow/(outflow) before use
of liquid resources and financing 1,164 (2,581) (4,692)
Net cash inflow/(outflow) from
management of liquid resources (1,300) 1,500 1,500
Financing:
Purchase of ordinary shares
for cancellation (107) (40) (56)
------ ------ ------
Decrease in cash at bank (243) (1,121) (3,248)
------ ------ ------
Reconciliation of net revenue before
taxation to net cash flow from
operating activities
Net revenue from ordinary activities
before tax 813 747 1,493
(Increase)/decrease in debtors (9) 6 146
Increase/(decrease) in creditors (28) 35 (8)
Management fees charged to capital (470) (450) (893)
Net cash inflow from ------ ------ ------
operating activities 306 338 738
------ ------ ------
Reconciliation of movement
in net funds
1 February 2003 Cash flows 31 July 2003
#000 #000 #000
Cash at bank 2,614 (243) 2,371
Short-term investments - 1,300 1,300
------ ------ ------
Net funds 2,614 1,057 3,671
------ ------ ------
INVESTMENT PORTFOLIO SUMMARY
as at 31 July 2003
Valuation % of net assets
#000 by valuation
Fifteen largest venture capital investments:
DMN Installations 3,737 8.7
T J Brent 1,981 4.6
John Fredericks Plastics 1,709 4.0
TFB Group 1,634 3.8
Stainton Metal Company 1,595 3.7
Crantock Bakery 1,000 2.3
Longhirst Group 900 2.1
Horncastle Industries 813 1.9
Keith Prowse 790 1.8
Arrow Industrial Group 735 1.7
RBF Industries 650 1.5
Crabtree of Gateshead 641 1.5
Tolwood 504 1.2
Alizyme* 475 1.1
Fitzhardinge** 467 1.1
------- ------
17,631 41.0
Other venture capital investments 5,746 13.4
------- ------
Total venture capital investments 23,377 54.4
Listed fixed-interest investments 15,830 36.9
------- ------
Total fixed asset investments 39,207 91.3
Net current assets 3,718 8.7
------- ------
Net assets 42,925 100.0
------- ------
* Listed on the London Stock Exchange
** Traded on the Alternative Investment Market
The above summary of results for the six months ended 31 July 2003 does not
constitute statutory financial statements within the meaning of Section 240 of
the Companies Act 1985 and has not been delivered to the Registrar of Companies.
The figures for the year ended 31 January 2003 have been extracted from the
financial statements for that year, which have been delivered to the Registrar
of Companies; the independent auditors' report on those financial statements
under Section 235 of the Companies Act 1985 was unqualified.
The proposed interim dividend for the year ending 31 January 2004 will be paid
on 11 December 2003 to shareholders on the register at the close of business on
7 November 2003.
A copy of the interim report is expected to be posted to shareholders on 24
October 2003 and will be available to the public at the registered office of the
company at Northumberland House, Princess Square, Newcastle upon Tyne NE1 8ER.
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
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