Annual report and financial statements - NVM Private Equity Ltd.

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Business Review Table 3: Investment valuation by category 31 October 2007 31 October 2006 Category £000 % £000 % Venture capital investments: Quoted on AIM 7,491 53.8 8,274 62.4 Unquoted 5,560 40.0 4,697 35.5 Total venture capital investments 13,051 93.8 12,971 97.9 Net current assets 863 6.2 279 2.1 Net assets 13,914 100.0 13,250 100.0 In October 2007 KCS Global Holdings, which provides human resources and payroll software and outsourcing services, was sold to Sage Group in a deal which produced cash proceeds of £622,000 and a realised gain of £388,000. Subsequent to the year end we have also sold Develop Training, originally part of Longhirst Group but demerged during the year, for proceeds of £614,000 and a gain of £190,000 which has been recognised in the year-end valuation. We retain a holding in Longhirst Venues, the other part of the former group, which is an owner of training and conference venues. Improved results have been reported by Crantock Bakery and Stainton Metal Company and this has been reflected in increased valuations at the year end. Following a group reorganisation, the previous investment in modular buildings manufacturer GB Industries now goes under the name of Britspace Holdings. The company currently has a strong order book and we expect good progress over the next year. The valuation of housebuilder John Laing Partnership has been reduced by approximately 20% against a background of more challenging conditions in the housing market, and it is disappointing to report that Nightingales Holdings, the mail order clothing retailer, has been written off at a cost of £298,000 after a period of disappointing trading performance compounded by the impact of postal strikes, which eventually led to the appointment of administrators in October 2007. Portfolio allocation The overall composition of the company’s portfolio at 31 October 2007 and 2006 is shown in Table 3. Key performance indicators The directors regard the following as the key indicators pertaining to the company’s performance: Net asset value and total return to shareholders: the following charts show the movement in net asset value and total return (net asset value plus cumulative dividends) per share over the past five years: 73.5 68.2 60.4 57.6 64.0 2003 2003 2004 2004 2005 Net asset value (p) 74.4 71.5 70.7 69.9 2005 2006 2006 2007 77.3 2007 Net asset value plus cumulative dividends paid per share (p) Dividend distributions: the following charts show the dividends (including proposed final dividends) declared in respect of each of the past five financial years and on a cumulative basis since inception: Capital Revenue 0.6 2003 6.8 2004 4.0 2005 1.0 2006 Dividend per share (p) 1.5 2003 8.3 2004 2005 2006 3.0 2007 12.3 13.3 16.3 2007 Cumulative dividends per share (p) 10 Northern AIM VCT PLC Annual Report and Accounts 2007
Total expense ratio: the following chart shows total annual running expenses (including investment management fees charged to capital reserve) as a percentage of the average net assets attributable to shareholders for each of the past five years: 3.34 3.36 3.38 3.40 3.50 2003 2004 2005 2006 Total expense ratio (%) 2007 Maintenance of VCT qualifying status: the directors believe that the company has at all times since inception complied with the VCT qualifying conditions laid down by HM Revenue & Customs. Risk management 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 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, and by maintaining a wide spread of holdings in terms of financing stage, industry sector and geographical location. The board reviews the investment portfolio with the investment managers on a regular basis. Financial risk: as most of the company’s investments involve a medium to long-term commitment and many are relatively illiquid, the directors consider that it is inappropriate to finance the company’s activities through borrowing except on an occasional short-term basis. The company has very little exposure to foreign currency risk and does not enter into derivative transactions. Stock market risk: the majority of the company’s investments are quoted on the AIM market and will be subject to market fluctuations upwards and downwards. External factors such as terrorist activity can negatively impact stock markets worldwide and the AIM market is no exception to this. In times of adverse sentiment there tends to be very little if any market liquidity in the smaller companies quoted on AIM. 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. Future prospects It appears likely that the rate of growth in the UK economy will slow over the next 12 months in response to past interest rate rises, credit restrictions and events elsewhere in the world. This will tend to create an unhelpful environment for smaller companies, particularly those in traditionally cyclical sectors such as information technology, financial services and construction. However we have a well-diversified portfolio which will continue to be closely monitored by our managers, and we will be looking to build on the progress achieved over the past year. By order of the Board C D Mellor Secretary 21 December 2007 Northern AIM VCT PLC Annual Report and Accounts 2007 11
Page 1 and 2: 2007 31 Northern AIM VCT PLC Annual
Page 3 and 4: Financial Summary Year ended 31 Oct
Page 5 and 6: James Dawnay Chairman The current u
Page 7 and 8: Secretary and Registered Office Chr
Page 9 and 10: maturity in the corporate developme
Page 11: Industry sector analysis as at 31 O
Page 15 and 16: Fifteen Largest Venture Capital Inv
Page 17 and 18: RCG HOLDINGS LIMITED Cost £236,000
Page 19 and 20: Directors’ Report The directors h
Page 21 and 22: meeting of the company (expected to
Page 23 and 24: company setting out the terms of th
Page 25 and 26: esponsible for organising the busin
Page 27 and 28: details of which have been reviewed
Page 29 and 30: Financial Statements Northern AIM V
Page 31 and 32: Balance Sheet as at 31 October 2007
Page 33 and 34: Notes to the Financial Statements f
Page 35 and 36: 5 Tax on return on ordinary activit
Page 37 and 38: 9 Investment disposals Disposals of
Page 39 and 40: 10 Unquoted investments continued 3
Page 41 and 42: 17 Financial instruments continued
Page 43 and 44: Notice of Annual General Meeting No
Page 45 and 46: Form of Proxy NORTHERN AIM VCT PLC
Page 48: Northern AIM VCT PLC Northumberland

Annual report and financial statements - NVM Private Equity Ltd.

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